Is a 0.3% long-term care insurance premium rate expensive? Is it worth it? Experts answer ten questions.

The biggest challenge facing long-term care insurance isn’t money, but “service.”

After a decade of pilot programs, it has finally become a system.

On the 25th, the “Proposal for Accelerating the Establishment of a Long-Term Care Insurance System” was officially released. Long-term care insurance, often called the “sixth social security” program, has moved from local exploration to nationwide implementation.

With a rate of 0.3%, is it expensive? Who can benefit? How do they benefit? To address the ten most pressing questions from the public, First Financial Journalist interviewed Professor Dai Weidong from Zhejiang University of Finance and Economics.

Why is the rate set at 0.3%?

Question 1: People are very concerned about money. Long-term care insurance operates on a “rate-based” system. How does this differ from the “fixed amount” system used in urban and rural residents’ medical insurance and pension schemes? What are its advantages?

Dai Weidong: The core of the rate-based system is “capacity-based funding.” The contribution base for employed individuals is their own wages, while for unemployed urban and rural residents, it’s the previous year’s per capita disposable income in their area. The rate is fixed (for example, 0.3%), but the base increases over time. This means contributions will naturally grow with income levels, avoiding the issue of fixed contributions increasing year after year and causing dissatisfaction among the public.

Because income levels vary across regions, contributions differ accordingly. For example, residents in Hainan have lower incomes and pay less; residents in Zhejiang have higher incomes and pay more. This is fair because service costs also differ. For instance, in Zhejiang, an hour of home visit service might cost around 100 yuan or more, while in Hainan, it could be 50 yuan or less. So, we shouldn’t just look at the absolute difference in contributions but whether it effectively addresses the service needs of disabled people in each area.

Question 2: Why is the rate set at 0.3%? How was this number calculated?

Dai Weidong: The 0.3% rate is based on data from ten years of pilot programs. Long-term care insurance targets a low-probability event—disability—with an incidence rate of about 3%. This means not everyone will benefit from this coverage. Because it’s a low-probability event, the rate can remain low. This rate is comparable to the contribution rate for low-risk industries in workers’ compensation insurance and is one of the lowest social insurance rates, fully considering the capacity of different groups to bear the costs.

Question 3: Will long-term care insurance increase the burden on businesses and individuals?

Dai Weidong: This needs to be viewed dialectically. From international experience, Germany and Japan established long-term care insurance during economic downturns. It is a social crisis response system, showing that this system is a pragmatic choice to address social pain points under limited resources. The 0.3% rate provides families with disabled members a sense of security without adding financial strain.

Currently, many pilot regions fund it by reallocating from medical insurance funds. Employers’ contributions come from the medical insurance pooling account, and individuals contribute from their personal medical accounts, without extra cash burden. But this is only a temporary measure. Moving forward, long-term care insurance must become an independent “sixth insurance” with its own funding channels. Relying solely on the medical insurance fund long-term isn’t sustainable. This doesn’t mean the burden will increase; rather, resources need to be re-integrated. Departments like civil affairs and the Disabled Persons’ Federation also provide various subsidies for disabled seniors. If these funds are integrated into long-term care insurance, it can be more effective.

What’s new about the “sixth social security” insurance?

Question 4: Long-term care insurance is called the “sixth insurance” in social security. How does it fundamentally differ from the familiar pension and medical insurance? What kind of risks does it address?

Dai Weidong: The key lies in “risk.” Insurance exists because of risk. No risk, no insurance.

Pension insurance addresses income risk after workers leave the workforce. For example, if you earn 10,000 yuan monthly, your retirement income might drop to 5,000 or less, affecting your quality of life. Medical insurance covers health risks—“treating illnesses”—with acute, treatable diseases managed by doctors and nurses in hospitals.

Long-term care insurance, however, deals with “disability risk”—the risk of losing or partially losing the ability to care for oneself due to aging, illness, or injury. This isn’t a health problem per se but a functional issue. Once disabled, recovery is generally not possible. Therefore, the purpose of long-term care insurance isn’t treatment but improving quality of life and maintaining dignity.

Question 5: Many confuse “long-term care” with “medical care.” What’s the difference between the “care” provided by long-term care insurance and the “nursing” covered by medical insurance?

Dai Weidong: Medical insurance covers professional nursing (Nursing care), prescribed by doctors and carried out by nurses, mainly addressing disease treatment during hospitalization. After recovery, patients usually need to be discharged within the treatment period.

Long-term care insurance provides “basic daily living assistance” and “basic medical care.” Basic medical care isn’t high-tech but includes common services for chronic illnesses, post-surgery or post-illness rehabilitation, such as tracheal intubation, urinary catheterization, wound care, etc. These can be provided at community health centers, grassroots hospitals, or through home visits. Service providers include not only professional nurses but also family members, community volunteers, and trained eldercare workers or long-term care specialists.

Services provided in hospitals fall under medical insurance; those at community or home settings fall under long-term care insurance. This delineates responsibilities. Many grassroots hospitals and community clinics are shifting focus because they can’t compete with top-tier hospitals on advanced treatments, so they are returning to providing basic nursing and home care, which long-term care insurance can cover.

Question 6: The design of long-term care insurance emphasizes “urban-rural integration.” Is this an advanced feature compared to other social security systems?

Dai Weidong: Yes. Long-term care insurance is a “newly established” system without historical baggage, allowing it to be designed from scratch. It no longer perpetuates the old urban-rural dual structure seen in basic pension and medical insurance but instead covers both urban employees and rural residents uniformly. This is a significant progress.

There will be differences in benefits between employees and residents, but this is “formal inequality, substantive fairness.” Employees pay higher contributions and receive higher benefits; residents pay less and get less. Social insurance is “cooperative insurance,” emphasizing rights and obligations. Forcing equal benefits regardless of contribution level would be unfair to high-contributors.

Question 7: Are beneficiaries of long-term care insurance divided by age? For example, does it only cover the elderly?

Dai Weidong: Absolutely not. The eligibility is based on disability assessment, not age. Anyone—elderly, middle-aged, or children—who, due to illness or injury, is assessed by professionals as disabled to the required degree can qualify. Of course, given aging demographics, seniors are the main group, but young people disabled due to accidents or rare diseases are also covered.

Last September, the national government issued a unified set of 36 service packages, establishing standards and rules. Previously, standards varied—Shanghai had its own, Zhejiang another—now it’s standardized nationwide. This is the foundation for the systematic development of long-term care insurance.

What are the challenges in nationwide rollout?

Question 8: Besides funding, what is the biggest challenge in implementing long-term care insurance?

Dai Weidong: I’m most concerned about “service” issues, not money. Funding can be managed, but if the service supply system can’t keep up, money will be wasted or ineffective.

First, the professionalization of frontline caregivers. There are only about 300,000 licensed eldercare workers nationwide, and the profession of long-term care specialists is just beginning. According to international standards, one caregiver should care for 3–4 severely disabled individuals. With 12 million severely disabled people in China, at least 3 million caregivers are needed. Currently, most are middle-aged, rural women and men with inconsistent training. We can’t just use domestic helpers for professional eldercare—tasks like medication management, turning patients, psychological support are entirely different from household chores like cleaning or cooking.

Second, the professionalization of caregiving staff. To attract young people, there must be clear career advancement paths and decent pay. Their wages should be at least comparable to local service industry averages, not just minimum wages. Zhejiang has policies offering tuition reimbursement for undergraduates working in public eldercare institutions for five years, which is a good example.

Question 9: As the nationwide implementation approaches, what key areas should local governments focus on?

Dai Weidong: I see four priorities. First, ensure smooth transition between old and new systems. Many places already have pilot programs—some national, some local. When the nationwide system is launched, how to transition smoothly without creating unfairness or instability among beneficiaries is crucial.

Second, government departments must coordinate. Long-term care insurance involves multiple agencies—civil affairs, health, disabled persons’ federations, human resources, finance, public security. Without clear responsibility boundaries and cooperation, the system risks becoming “insurance without service,” diverging from its original purpose.

Third, properly address funding concerns. Don’t overreact to funding issues. The contribution rate is low—comparable to workers’ compensation. Besides individual contributions, sources include lottery funds, charitable donations, and even state-owned asset allocations. Funding is a short-term concern; the key is to use the funds effectively.

Fourth, and most importantly, build a robust service supply system. This involves developing private sector eldercare providers, with government setting standards and implementing digital supervision. Equally important is making the professionalization and career development of caregivers a top priority. Without a stable, skilled workforce, long-term care insurance cannot succeed.

Question 10: From an ordinary person’s perspective, how should we understand the value of long-term care insurance?

Dai Weidong: To understand long-term care insurance, you need to grasp the core concept of “intergenerational responsibility transfer.” Today’s young people pay into the system not for their own immediate benefit but to support current disabled elderly. When they grow old and potentially become disabled, the next generation will take over. It’s not an immediate benefit but a responsibility passed down through generations.

Medical insurance treats diseases; long-term care protects people. The 0.3% rate means “broad participation, narrow benefit,” with financial support from the government for low-income families. In today’s context of family smaller units and high chronic disease prevalence, long-term care insurance can uphold the dignity of disabled families and prevent the “disaster” of a single family member’s disability destabilizing the entire household.