Urgent need for insurance as long-term care fund expected to run at a deficit

The expenditure of Taiwan’s long-term care fund will exceed NT$80bn ($2.5bn) this year when the budget is expected to fall into a deficit, according to estimates from the Ministry of Health and Welfare.

It is suggested that reference be made by the government to international experience in developing a long-term care insurance system. For example, Japan’s mixed system places equal emphasis on taxes and insurance premiums, so as to reduce the burden on the national finance and individuals, says Dr Wang Li-Ling, chairperson of the Pension Fund Association and the Taiwan Risk and Insurance Society, in a commentary on long-term care financing in an article published by Economic Daily.

The long-term care insurance gap in Taiwan is big, with the long-term care insurance subscription rate standing at only 4.32% as of the end of June 2023, according to statistics from the Financial Supervisory Commission. The rate drops significantly after the age of 60. mainly because people are unwilling to buy the insurance due to high premiums, or they are unable to insure as they are older than the ceiling age for insurance or they are suffering from deteriorating health.

At present, the care insurance plans provided by insurance companies can be divided into three types, namely, long-term care insurance; disability assistance insurance; and insurance for specific illnesses.

Some insurance companies have also launched long-term care policies that specifically cover dementia, Alzheimer’s disease and Parkinson’s disease. Such products can help people prepare in advance so that they will have sufficient financial resources to support themselves when they face long-term care risks in the future.

Statistics from the Ministry of the Interior indicate that Taiwan will become a super-aged society in 2025. More than 20% of the population will be over 65 years old then, and the number of disabled people in need of care will exceed 1m, highlighting the urgent need for long-term care services.

Based on past trends, the average time of care for the elderly in Taiwan is about 7-10 years, and nearly 65% ​​rely on family care. Currently, family caregivers spend an average of 11 hours a day on care.