Increases in long term care costs, federal restrictions on the protection of assets for long term care and continuing publicity about LTC in general are expected to spur now-lackluster sales of LTC insurance, according to industry observers. The Deficit Reduction Act enacted in February made access to Medicaid for LTC services more difficult for many seniors, forcing consumers of all ages to recognize they would have to pay their own LTC costs if they were not insured.
At the same time, the act permitted more states to offer Partnership LTC policies, which allow consumers to protect some assets from Medicaid should they exhaust their policy benefits. By year-end, 21 states had developed legislation or rules enabling companies to introduce such policies.
As of the end of the 3rd quarter of 2006, total sales of individual LTC policies were down around 9% from the year before (see chart), continuing a trend seen in recent years as a number of carriers left the market while others tightened underwriting standards.
Still, some companies report heartening signs of improvement.
UnumProvident Corp., Chattanooga, Tenn., saw individual LTC insurance sales move along steadily, if not spectacularly. It was in group sales where the company saw strong growth in premiums as many employers added LTC coverage for the first time, says Mike Simonds, UnumProvident’s vice president of market development.
As a result, UnumProvident saw LTC premium growth of over 20%, he says.
David W. Simbro, vice president of long term care for Northwestern Mutual Life Insurance Company, Milwaukee, Wis., says his company’s share of the LTC market has grown faster than the industry average for the past 5 years. He credits the increase to a combination of a strong distribution system and a new focus by the company’s agents on including LTC insurance in their needs-based planning for clients.