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This paper aims to classify long-term care (LTC) financing in developed countries and examine policy options and challenges for Korea. Financing for elderly LTC has been influenced by history and path dependence associated with welfare state development, relationship with existing health care financing and public assistance, culture, political ideology, etc. Social insurance for LTC can be separate from health insurance (Japan & Germany) or an extension of health insurance to LTC (France & Netherlands). Tax-based financing for LTC have developed by extending the public assistance program in its population and benefit coverage, which takes into account not only the physical functions but also economic status of the beneficiary. Tax-based system varies in terms of universal coverage (Scandinavian countries), near-universal coverage (UK), and program based on means test and residualism (US). In the design of LTC insurance, Korea needs to consider the role of cash benefits for informal care, level of benefits, diversification of funding sources, and whether to cover all types of disability rather than age-related LTC.
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