Advantages-20

Advantages of Long Term Care Insurance Page 20

A third simulation, MEDIGAP, tests the idea that the elderly who purchase medicare supplemental insurance (medigap) would also buy insurance for long- term care. Like BIGBEN and LOWBEN, this policy is assumed to be marketed to the elderly as an individual rather than a group policy. The objective of this alternative is to introduce a potential link between acute care and long- term care insurance. People who purchase medicare supplemental insurance are assumed to buy a policy that covers one year of nursing home care after a 90-day deductible period and that pays $50 a day (indexed for inflation) for nursing home care. There is no affordability test, as such, for this simulation. Thus this option primarily extends medicare supplemental insurance to encompass short- or medium- term nursing home care. We used a one-year policy because many medicare supplemental insurance policyholders would be unable to afford more extensive coverage. Social Security Administration actuaries estimate that in 1986 these policies would cost $362 a year at issue age 65. (Robyn Stone, Gail Lee Cafferata, and Judith Sangl, October 1987)

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