A long term services and supports catastrophic insurance program could improve the way LTSS needs are financed in the United States, according to a recent Urban Institute study (PDF).

An LTSS catastrophic insurance program requiring enrollees with LTSS needs to wait a few years before collecting benefits but then extending those benefits as long as necessary “could substantially improve” the way LTSS needs are financed across the nation.

The authors said this type of program could reduce Medicaid spending and lower out-of-pocket spending for families facing catastrophic costs and fund new services for older adults with LTSS needs.

“By setting aside funds today to cover future LTSS spending, a new catastrophic insurance program could raise national saving. And it could provide families with stronger incentives to save by reducing reliance on Medicaid, which discourages savings because it only pays benefits to people with virtually no wealth outside of their home.”

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