HIAA Survey Reveals Buyer-NonBuyer Attitudes In The Group LTC Market
By Stephen Piontek
With less than 2% of workers enrolled in group long term care insurance plans, the market potential for the product is huge, says a new survey unveiled here at the annual meeting of the Health Insurance Association of America.
HIAA has previously surveyed attitudes of buyers and non-buyers of individual LTC products, but this is the first time it has surveyed the employer market, said Marc Cohen, vice president of Life Plans, Inc., the firm that prepared the survey for HIAA.
Five insurers or insuring entities–Aetna Life & Casualty, CalPERS, Medamerica, Metropoliltan Life, and UnumProvident–that represent a large share of the employer group market participated in the study by soliciting the cooperation of nine employer groups of varying sizes and type, the survey says.
Cohen said a couple of conclusions stood out from the survey. One was that the policies were perceived as “being comprehensive and providing real value” and the second was that “education that occurs at the employer level is crucial.”
In general, Cohen said, the survey showed that group enrollees “are planners and are less likely to believe the government will pay for care.”
Additionally, he said, group enrollees “perceive their risk of needing long term care to be higher than non-enrollees.” Enrollees also perceive greater personal risk for LTC expenses (in the absence of a policy), he said.
No one reason dominates among the primary reasons for enrolling, he said. But those reasons that enrolled respondents cited as most important include avoiding dependence (21%), guaranteeing affordability of services (19%), protecting assets or leaving an estate (25%), and preserving financial resources for a spouse (12%).
Enrollees also cited the psychological benefits of being insured for LTC, with 98% agreeing with the statement that having a LTC policy “makes me feel secure about the future.”
Additionally, 97% agree that having a LTC policy “makes me feel that I have planned well for my future.”
Among non-enrollees, according to Cohen, the most important reason for non-enrollment is cost.
The survey says that although “one of the incentives to purchase long term care insurance at younger ages is the lower premiumthose who did not enroll still seemed to think that premiums were too high.”
In terms of perceptions of who would pay for long term care, non-enrollees typically had higher levels of misconception than enrollees. For instance, 16% of non-enrollees said Medicare or Medicaid would pay, compared to 14% of enrollees. Twenty percent of non-enrolled said other health insurance would pay, compared to 14% of enrolled. Also, 25% of non-enrolled said they did not know who would pay, compared to 18% of enrolled.
Referring to these findings, Cohen said, “If you believe someone else is going to to pay or that you don’t know how you’ll pay, why would you be interested in buying long term care insurance?”
He called this “one insight into barriers to purchase of the product.”
Although cost was overwhelmingly cited (52%) as the most important reason for not enrolling, other reasons besides cost that respondents cited were that policies are too confusing (9%), that they were too young to enroll (7%), and that there were too many conditions attached to accessing benefits (5%).
Among those actions that would lead to lower costs for employees, Cohen said “full tax-deductibility would have the greatest effect with non-enrollees.”
In fact, he said, offering tax incentives “is the single most important action the government could take in LTC financing.” The survey showed that 95% of non-enrollees would be more or much more interested in purchasing LTC insurance “if I could deduct premiums from my income tax regardless of whether I itemize.”
Cohen said the survey also demonstrated that employer sponsorship of a long term care plan matters. According to the survey, 82% said that an important or very important reason for their enrolling was that “my employer sponsored the LTC insurance program and added it to our available employee benefits options.”
In addition, some 53% cited as important or very important the fact that “my employer emphasized the importance of planning for long term care.”
Reproduced from National Underwriter Life & Health/Financial Services Edition, November 12, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.