Long-term Care Insurance (Susan Coronel)

8/7/2019 Long-term Care Insurance (Susan Coronel)

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Susan A. Coronel

LTC Director

Americas Health Insurance Plans

What is LTC Insurance and

Where is the Market Headed?


2/24

Overview

Status Report on Current LTC InsuranceMarketplace

Benefits of LTC Insurance

Current Federal and State Proposals on LTC

Future Trends

Conclusions


3/24


4/24

LTC Insurance Products by Percentage

of Policies Sold and Average Age of Buyer

LTC product% of

compani

(n =103)

% of Polici Sol

as of 12/02

% of

Polici s

Sol in2002

Avg Age

of Buyerin

2002

Individual 0

Employer-sponsored 20

18 32 45

LTC as part of a lifeinsurance policy

7 3 N/A N/A

Source: AHIPLTC Market Surveys


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Claims Paid by LTC Insurance

Insurers

Paid as of December 31, 2002 $8.4 billion

Paid between January 1 and December 31, 2002 $1.4 billion

Source: AHIP LTC Market Surveys


6/24

Average Annual Growth Rates in

the LTC Insurance Marketplace

18

12

22

6

0

5

10

15

20

25

Tot l I i i l Em l oyer Life Ri ers

Percent



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Number of Employer-Sponsored

LTC Insurance PlansO

ffered

2 7 54 135288

506

968 1,0281,260

1,532

1,953

2,749

3,520

3,956

4,776

5,675

0

1000

2000

3000

4000

5000

6000

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Year

NumberofPlans



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Typical Coverage under LTC

Insurance PoliciesServices Covered:

Nursing Home CareAssisted Living FacilityHome Health CareAlternate CareHospice Care

Respite Care

Other Benefits Offered:

Bed ReservationCare Coordination/

ManagementMedical EquipmentCaregiver Training

Restoration Benefit



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Typical Coverage under Long-

Term Care Insurance Policies (contd)Policy Type: Comprehensive integrated policies/

Facility only / Stand-Alone home health careDaily Benefit Amounts: $50-$500

Benefit Periods: 1 year to lifetime coverageDeductible Periods: 0-365 days

Age limits for purchasing: 18-99Limited pay policies: single premium/ 10-pay/

pay until 65

Waiver of Premium30-Day Free Look PeriodInflation Protection OptionsNonforfeiture Benefit Options


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Average Annual LTC

Insurance PremiumsAge Base With 5% compounded

inflation protection (IP)

40 $422 $890

50 $564 $1,134

65 $1,337 $2,346

79$5,330

$7,572

Note: Coverage is $150 daily benefit amount, four years of coverage, and a 90-day elimination period.

*Reported by 11 of the 13 sellers identified as having sold 80 percent of allindividualand group association

LTCinsurance policies in 2002.



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Comparison of Using LTC Insurance vs.O

ut-of-Pocket Dollars to Pay for LTC CostsScenario: A 50-year old purchases a LTC insurance policy that covers $150/day, for 4

years of coverage, with 5% comp inflation protection. He pays $1200/year for thispolicy. When he turns 85, he goes to a nursing home for 2 years (averagenursing home stay). How much would his nursing home stay cost? How does thiscompare to premiums he would have paid over 35 years?

LTCiPremiumsPaid for 35Years (1)

Benefits PayableUnder LTCiPolicy

Actual NursingHome CostsPolicyholder WillFace* (2)

Difference betweenLTCi Payments andPotentialOut-of-PocketCosts

$42,000 $788/day for 4

years or up to atotal of$1,150,483 inbenefits

$367,734 per year

or a total of$919,335 for 2 year stay

$877,335 in savings for

LTCi policyholder

Average annual premiums of $1,200 x 35 yearsAssuming current costs are $70,000/year and increases at annual 5% comp rate for 35 years


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Benefits of LTC Insurance to

Policyholders Having LTC insurance allows disabled elders to

remain in their homes and delay or avoid usinginstitutional services.

LTC insurance reduces the out-of-pocket expenses average savings of $60,000 and $75,000 fornursing homes and can total more than $100,000for assisted living costs.

Buying this insurance makes these purchasers feelmore secure about their future and better about theway they plan to secure that future. Thesepurchasers also feel that they have takenappropriate steps to protect their spouses.


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Caregiv

ers Family caregivers suffer less stress if the disabled

elder they are caring for has private long-term careinsurance.

Working age family caregivers double their chancesof remaining in the workforce if the disabled elderthey are caring for has private long-term care

insurance. These caregivers also experiencesignificantly fewer work disruptions and socialstresses.


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Medicaid and Medicare Long-term care insurance reduces state and federal

Medicaid expenditures and federal Medicare homehealth expenditures. Medicaid savings are

projected to total about $5,000 per policyholder andMedicare savings are estimated to exceed $1,600per policyholder.

Aggregate savings to Medicare and Medicaid for

the current number of policyholders are estimatedat about $30 billion. These savings will grow asmore people acquire policies and the average ageof purchasers continues to decline.


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Federal Long-Term Care

Legislativ

e Activ

ity Long-Term Care &Retirement Security Act

Ronald ReaganAlzheimer's Act

Presidents Proposal

Other LTC-related BillsLTC PartnershipsIRAs and other vehiclesOthers


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Long-Term Care &

Retirement Security ActBill sponsors: Grassley-Graham and Johnson-Pomeroy

Introduced in 105th, 106th ,107th and 108th Congress;

In 108th Congress, about of Senate sponsored andover 130 House sponsors.

Phase in an above-the-line deduction for QualifiedLTC insurance premiums and LTC coverage under

cafeteria plans/FSA

LTC caregiver tax credit up to $3,000

Updates HIPAA consumer protection standards


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LTC Partnerships - Providing Medicaid

Protection for LTCI Purchasers4 Existing Partnerships (California, Connecticut, Indianaand New York)

Dollar for dollar protection

Total asset protection

Hybrid

Tightening Medicaid Eligibility Rules

Future Partnerships National model Simplicity

Reciprocity

Consumer Education


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State LTC Initiatives

State Tax IncentivesState-sponsored LTC

employer plansOther innovative stateinitiatives


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CA

ORID

MTND

UTCO

IA

MN

MO

WI

AL

INOH

KY

WV

VA

NC

NY

MD

ME

WA

NV

AZNM

TX

FL

SC

GAMS

LA

AR

IL

TN

PA

OK

KS

WY

SD

NE

MI

AK

HI

DE

NJ CT

RI

MA

VTNH

States Offering Long Term Care Insurance

Prepared by:

www.ltcg.com 2/04


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Other Possible Legislative

ActionsCreating/enhancing LTC Education campaigns

Setting up multi-purpose LTC information centers

Using websites and clearinghouses

Promoting other vehicles for LTCI purchase Health Savings Accounts; Reverse Mortgages

Others

Combination of different approaches

Establishment on new and innovative Medicaidapproaches/demonstrations


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Future Market Trends

Awareness of LTC issues and LTC insurance willincrease but there will remain the need for more LTCconsumer education efforts

Partnerships between public and private sectors willincrease.

Federal/State legislative proposals to encourageLTCI

Federal/State Innovative programs ordemonstrations on LTC


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Conclusions

The LTC insurance market is growing. LTC insurancepolicies offered today are comprehensive and providegood value.

LTC insurance benefits policyholders, caregivers andstate and federal budgets.

Demographics and market trends will inevitably look toprivate sector for help in financing LTC. Future LTC

insurance products must continue to be flexible andconsumer-friendly.

Media will play a key role in expanding the LTC marketand encouraging savings for LTC.


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Additional Resources

HHS LTC Awareness Campaign www.ltcaware.info or call 1-866-PLAN-LTC

Guides to LTC Insurance available through the Federal

Citizen Information Center by calling 1-888-8 PUEBLO orwww.ahip.org

LTC Champions Networkwww.ltcchampions.org

Long-term Care Insurance (Susan Coronel)

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