Sale of LTC Insurance Gaining Momentum In the seven years between 1987 and 1994, the sale of long-term care (LTC) insurance policies jumped from 815,000 to over 3.8 million, an annual growth rate of about 25% per year, according to the Health Insurance Association of America (HIAA). With the passage of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the number of policies being sold appears to be growing even faster, due in part to tax incentives included in the Act. Premiums for qualified policies may, within certain limits, be tax deductible, and benefits paid under the policy will not be taxed as income. Perhaps the biggest incentive, however, is in the message HIPAA brings - the government cannot afford to cover everyone's LTC expenses in addition to paying for Medicare and Medicaid. And with LTC expenses increasing at over two times the rate of inflation, a room in a nursing home that now costs, on average, between $100 and $125 a day may be beyond the reach of most of us within just a few short years. Baby boomers, 10,000 of whom are now turning age 50 every day, need to be especially aware of these rising costs. Studies show that 43 percent of those now turning 65 will spend time in a nursing home and one out of 4 people will be in a nursing home for more than a year. One out of ten will have to stay in a nursing home for five years or longer.
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