Abstract
Hong Kong is a fast‐aging society. More than 775 000 citizens (around 11% of the total population) in Hong Kong were aged 65 or above in 2002, and it is expected the figure will increase to 2.2 million (or 24% of the total) in 2031. In this paper, an actuarial projection of the demand of long‐term care (LTC) services in Hong Kong using the US National Long‐Term Care Surveys (NLTCS) data, is provided. The need for LTC in Hong Kong will be growing drastically for older ages in the next few years; around 10% for elderly aged between 65 and 74 and the proportion would mount to 60% for the elderly at age 85 or above. Using a Markov Chain model, an individual's (age–gender specific) future LTC expenditures in Hong Kong have been projected. The net actuarial present values of total future LTC costs are expected to be HK$83 000 and HK$160 000 for males aged 65 and females aged 65, respectively. Alternative funding strategies for these liabilities are discussed. A simple private insurance scheme is chosen to illustrate the actuarial calculations. The results could be useful for funding and planning LTC services in Hong Kong.
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