Much has been written in recent years about the slowdown in sales of long term care insurance, the exit of carriers from the market, consolidation among existing carriers and the challenges of being successful in the market.
Often lost in the discussion is whether or not the product actually is doing what it is designed to do: namely, providing individuals with the means to access the services they want, when they need them, and in a way that upholds independence and the family support system. Given that the industry pays billions of dollars in claims to disabled policyholders, we now have information to begin to answer these questions.
Studies funded by the U.S. Department of Health and Human Services and the Robert Wood Johnson Foundation have examined the impact of private LTC insurance on disabled policyholders and their families. The results of these studies are overwhelmingly positive and demonstrate the value these policies provide. Moreover, they support the notion that insurers are responding in a flexible and positive way to policyholders who become disabled and need to obtain benefits under their policies.
This article briefly summarizes a number of key findings from these studies as well as results from a longitudinal study currently under way.
LTC insurers help meet policyholders’ needs at claim time. Among a sample of roughly 1,600 home care, nursing home care and assisted living claimants, the vast majority indicated that policy benefits were meeting their care needs at the outset of their spell of disability (see Figure 1). Furthermore, they did not feel that policy coverage definitions encumbered their choice of providers. Not shown is the fact that 92% of claimants indicated that they either (1) had no disagreement with the insurance company at claim time (82%) or (2) that if there was a disagreement, it was resolved satisfactorily (10%). Thus, more than 90% of claimants had no significant claims-related issues that remained unresolved.
This is a particularly important finding because an impediment cited by individuals who choose not to buy LTC insurance has been a fear that insurers will not pay for benefits as stated in the policy. And, among buyers of LTC insurance, an important reason for purchasing the insurance in the first place is the belief that having the insurance will give them the freedom to choose the care they prefer. Thus, while the hopes of buyers seem supported by these findings, the fears of non-buyers about not getting the benefits they desire when they need them seem to be unwarranted.
LTC insurance pays significant benefits, which in part explains such high levels of claimant satisfaction. Policies pay a significant amount in benefits to disabled policyholders. In fact, one month of benefit payments in a facility will typically exceed a full year of premium costs. LTC policies also pay for most of the daily costs of LTC expenses.
Moreover, given the duration of coverage that individuals choose, the vast majority of policies will pay for an entire spell of disability. Noteworthy is the fact that of roughly 1,200 claimants who had been receiving services for a little more than a year, more than four in five indicated they were satisfied or very satisfied with their policy. This is not surprising, given that out-of-pocket expenditures are reduced by thousands of dollars a month for most claimants.
LTC insurance has a particularly positive effect on disabled individuals living independently in their own homes and impacts families, as well. A majority of both family caregivers and claimants who were receiving home care benefits felt that in the absence of policy benefits, they would have to seek institutional alternatives, that they would not be able to afford current service levels, that they would receive fewer hours of care and that they would have to rely more on family supports (see Figure 3). Not shown is the fact that two-thirds of family caregivers claim the presence of insurance-financed benefits has reduced the stress associated with caregiving.
Taken together, this data suggests policyholders are satisfied with their insurance at the time they need it most; that policy benefits are helping people live independently in the community; that choice is not being limited; that, by and large, interactions with insurers at claim time are positive; and that the policies also benefit family caregivers.
Thus, it is clear that the industry focus on expanding the market and increasing sales has not come at the expense of continuing to provide meaningful protection and to serve current customers. On the contrary, in conjunction with more comprehensive policy coverage, the investments in customer service and in claims- and care-management capabilities have ensured that LTC insurance continues to make a significant and positive contribution to disabled policyholders and their families.