Issue link: http://clhia.uberflip.com/i/354914
8 Long-term care insurance is a supplemental coverage that may become payable when an individual is struck with a debilitating, severe or chronic illness. There are generally two types of long-term care insurance. One reimburses the insured for eligible expenses received on a given day, up to a pre-set maximum. The other is the income-style plan, which offers a pre-set monthly payment amount. Typically, benefits are payable when an individual can no longer perform at least two essential activities of daily living (e.g., bathing and dressing), or requires daily supervision because of a cognitive impairment. As of 2010, there were only about 385,000 Canadians with long-term care coverage and the life and health insurance industry paid out total annual benefits of $12 million. It is clear that the long-term care insurance market in Canada is underdeveloped. This differs materially from the situation in the U.S., where the long-term care market is much more developed and consumers are more proactive in seeking coverage. There are over 10 million Americans that are protected by long-term care insurance. 19 The difference between the U.S. and Canadian markets is likely due to several factors. For instance, Canadians generally do not understand that there are limited government programs to support long- term care, many of which are income tested. Therefore, in many cases governments will not cover the long-term care needs of Canadians. In addition, Canadians are generally sheltered from the costs of health care and, as a result, they are surprised at the price of long-term care solutions. As well, the U.S. provides tax credits for qualified long-term care insurance which provides a positive inducement to purchase long-term care insurance in the U.S. 20 Taken together, this impacts Canadians' relative demand for such coverage. The CLHIA believes that governments have an important role to play in both educating Canadians about the need to save for their long-term care needs as well as incenting such activity. Accordingly, the CLHIA believes that governments should introduce a tax credit against the long-term care insurance policy premiums of qualified long-term care insurance. 21 Recommendations The CLHIA recommends that governments introduce a tax credit against the long- term care insurance policy premiums of qualified long-term care insurance. The CLHIA recommends that federal, provincial and territorial governments in collaboration with key stakeholders develop an awareness campaign to educate Canadians on the responsibility they will have for funding their own long-term care needs as well as the existing options available to them. This could be rolled out in 19 American Association for Long-term Care Insurance. Long-term Care Insurance Information from America's Long- term Care Insurance Experts (http://www.aaltci.org). 20 American Association of Long-term Care Insurance, http://www.aaltci.org/long-term-care-insurance/learning- center/tax-for-business.php. 21 Further detail on the industry's long-term care tax credit proposal can be found at [insert link to LTC tax credit proposal on CLHIA website].