“Reaching the middle class”or “messaging” to this market, as some term itis critical for the long term care insurance industry, LTC providers and state/federal governments.
For the industry, it will help expand the market. Historically, many sales have been to affluent people, a market that may not be large enough to sustain the entire business. In more recent years, the industry has been expanding into the worksite market, where middle class messaging on LTC is critical to reaching employees and their relatives. More focused efforts will support that.
For LTC providers, messaging is equally important. They are being tightly squeezed by low government reimbursements for care. Despite significant cost-shifting to “private pay” clients, these providers cannot provide the quality of care they wish to provide. With more LTC insurance, however, fewer clients will be on Medicaid, so the providers will be more profitable.
For state and federal governments, middle class purchases of more LTC insurance will help reduce soaring Medicaid costs, cut state expenditures by reducing the number of Medicaid applications needing evaluation, and lessen the need for estate recovery efforts. Furthermore, the sales will generate government revenue through taxes paid by LTC insurers, agents and providers.
Consumers will benefit, toofrom improved care and broader selection of care-giving options (whereas Medicaid must limit choice because of its financial strains).
Many people support LTC-related tax breaks (such as above-the-line tax deductions, flexible use of IRA or related savings accounts, and/or Section 125 treatment). This would impact LTC insurance messaging significantly, and LTC insurance sales would increase substantially because: 1) LTC insurance would be more affordable; 2) financial advisors and media would speak much more favorably about LTC insurance; and 3) more people would sell LTC insurance. However, though such breaks would have a very positive effect, it is not clear they will occur soon.