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AALTCI: Group LTC Buyers Are Different

By Trevor Thomas

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Consumers who get long term care insurance through employer-sponsored group plans tend to be relatively young – and they tend to file claims relatively early.

Researchers at the American Association for Long-Term Care Insurance, Westlake Village, Calif., have reported that finding in a summary of results from an analysis of data on 95,000 participants in group LTC insurance plans and more than 200,000 individuals who bought coverage on their own.

In 2008, 24% of buyers buying LTC coverage through group plans were ages 35 to 44, AALTCI researchers found. Another 36% were ages 45 to 54, and 23% were ages 55 to 64.

In contrast, about 5% of the individual coverage buyers were ages 35 to 44, 24% were ages 45 to 54 and 53% were ages 55 to 64.

The researchers found a considerable spread between the low and high amounts paid per-employee by group sponsors

For example, for insureds ages 45 to 54, the low premium was $430 per year, while the high premium was $985. The average annual premium for this age band was $690.

The researchers also looked at claims paid to individuals covered by an employer-sponsored group LTC insurance contract. They found that 13% of new claims opened during 2008 were for individuals under age 60.

About 11.5% of new group LTC claimants file their claim during the fourth or fifth year of their coverage, the researchers report.

The largest open claim under a group plan exceeded $490,000, and the individual involved had been on claim for more than 9 years.

“Because many employer-sponsored plans offer some form of simplified underwriting or even guaranteed issue, we expected to find more people qualifying for benefits at younger ages,” says AALTCI Executive Director Jesse Slome.