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Genworth Study: LTC Recipients Are Happier When They're Insured

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Long term care recipients who are covered by insurance are generally happier with their LTC providers than are those who pay for the care out of their own pocket or by other means, a new survey finds.

The study by Genworth Financial Inc., Richmond, Va., found that 48% of providers believed that their clients paying for services with LTC insurance were happier with their experience than were those paying privately or using Medicare, Medicaid or some other means to pay.

“Providers think that long term care insurance clients are more satisfied with their situation and are less stressed and less anxious,” says Beth Ludden, a senior vice president in Genworth’s long term care insurance division.

Overall, 80% of LTC providers believed clients using insurance to cover care costs were satisfied with their experience, including 40% who thought insured clients were “very” satisfied, Genworth reports.

Principal reasons for the higher satisfaction of insured clients, according to providers, are increased security and greater freedom of choice in selecting services.

Roughly 81% of clients paid for at least some of their services with LTC insurance, according to providers in the study.

Of 191 LTC providers participating in the study, 85% offer home health services, 14% are assisted-living facilities, and 14% are administrators of nursing homes or other custodial care facilities. (Some classified themselves under more than one category.)

For about 71% of providers, fewer than half of their clients paid for their services with LTC insurance, while 10% reported that more than half of their clients used LTC insurance to pay for at least some of their costs, Genworth found. For 13% of providers, insurance paid for none of their clients’ expenses, while 6% were not sure what proportion of their charges were covered by insurance.

Medicare, which pays for up to 100 days of post-acute care, covered some clients for 14% of LTC providers taking part in the survey, while 74% said it paid for none of the cost and 12% were not sure.

Medicaid paid for roughly 14% of the clients of LTC providers, while 60% had no Medicaid clients, Genworth found. The remainder were not sure of how many Medicaid patients they served.

For 72% of providers, half or more of patients paid for their care privately, while 23% reported fewer than half of clients paid for their care out of pocket. The remainder were not sure of the percentages.

One of the biggest shockers to adult children of LTC recipient’s clients is finding that Medicare won’t pay for more than 100 days of extended care, notes an executive of one home health care provider. “Even some medical referral sources don’t understand that,” says Jennifer Tucker, vice president of business development for Homewatch Caregivers, Greenwood Village, Colo.

For brokers and agents, Genworth’s Ludden thinks that the survey holds important lessons about dealing with their boomer and Generation X clients.

“The survey suggests the point we’ve been talking about with long term care insurance, which is that it’s peace-of-mind insurance,” Ludden says. “Agents are concerned when they talk to clients about showing whether LTC insurance will work at the time it’s needed.”

When financial advisors discuss LTC planning with clients, some clients worry about whether the policy will work for them if the time ever comes for extended care.

“It can be hard for producers to illustrate why clients should buy when they think [an LTC policy] won’t pay benefits,” Ludden says. “The survey suggests that’s not the experience of people who are actually in care. They are happy with the program they purchased.”

Among other survey findings, providers reported a rise in the number of clients having LTC insurance. Genworth found 40% of providers reported seeing a jump in the number of clients paying for services with insurance, while 44% said the number stayed the same, and 10% reported a decrease.

One of the reasons for the increase is that more people are in need of care as the boomer generation ages, says Genworth. It found, too, that providers believe consumer awareness of LTC insurance has increased due to stepped-up marketing and publicity by the industry.

Speaking for providers in general, Tucker of Homewatch says if more clients had LTC insurance, “we’d be nothing less than thrilled. And not having to pay out of pocket means less concern for the family about what to do with mom when they have to go back to work.”

Most providers have been hurt by the current economic downturn, with 82% saying their facility or services have been affected at least to some extent by the recession, Genworth reports. In fact, 32% said they were affected “a great deal” or “quite a bit.” Only 14% said they had not been affected at all.

Most providers who reported being affected by the economy said clients were not spending as much out of pocket as in the past and are choosing fewer services.

One reason for the recession’s adverse impact, suggests Genworth: The rise in unemployment has made many out-of-work family members available to care for relatives, albeit unintentionally.

Higher costs are also putting pressure on many providers, Genworth found. Costs increased last year for 54%, while 35% said their costs stayed about the same and 8% reported that costs fell.

A similar number of LTC providers, 53%, expected their costs to increase this year.

Labor costs were the biggest factor in the cost rise, cited by 46%, while 28% and 20% blamed operating costs and administrative costs, respectively, as the primary reasons.

Ultimately, the recession may help reduce expenditures by making more workers available to provide support services, LTC administrators said.

The study found 56% of providers thought it has been easier to hire and keep staff in the current economy, compared to 25% who said the economy has had no impact on hiring and retention, and 14% who said the economy has made it harder to find good workers.

Although 60% of providers plan to keep prices the same in the next year, 29% plan to increase them, Genworth found.