Scott Olson writes: I support the proposed Community Living Assistance Services and Supports Act, which was the topic of the October LTC e-Wire feature (see the article here).
This is not because I think it’s good policy. And it is not because I think the act will help solve the approaching tsunami of long term care financing. I support the CLASS Act because it will dramatically help to improve private LTC insurance sales in this country.
The Number 1 reason why people don’t buy LTC insurance is because they are just not aware of the need. The CLASS Act would instantly make 150 million American workers aware of the need to plan for LTC.
Would some of those people think that they would be “fully covered” with the $50 per day CLASS Act benefit? Yes. But many would seek supplemental coverage. Just as millions of Americans buy Medicare supplement coverage, so too would millions of Americans to seek supplemental LTC insurance policies for the coverage they would have under the CLASS Act.
The Number 2 reason why people don’t buy LTC insurance is because they say “it’s too expensive.” Well, the CLASS Act demonstrates that private LTC insurance is priced very competitively. I’ve run the numbers and a healthy married person, under age 64, can get $50 of daily benefit, an automatic inflation benefit linked to the Consumer Price Index, and a lifetime benefit period, for less than the average projected $65 per month that the CLASS Act will charge.
The Number 3 reason why people don’t buy LTC insurance is because “they think the government can do better” or they think there are too many problems with private LTC insurance (such as exorbitant rate increases or arbitrary denial of claims). But the CLASS Act demonstrates how great private LTC insurance is, in these four ways:
- No LTC insurer states that the premiums could increase four-fold (200%) in the next 20 years; but the CLASS Act states that. (To my knowledge, only one LTC insurer had increases that approached those percentages and that insurer has been taken over by the Pennsylvania Department of Insurance.)
- No LTC insurer could decide to decrease benefits at anytime (without your consent) in order to maintain financial viability; but the CLASS Act requires the Secretary of Health and Human Services to do that.
- No LTC insurance policy would deny all claims within the first five years you pay the premium; but the CLASS Act will do that.
- No LTC insurer requires that the insured be employed for three of the next five years in order to keep the coverage; but the CLASS Act requires that.
When I bought my wife’s engagement ring, I compared several rings at different stores. At the last store, I was holding a beautiful ring that was in my price range. But, I wasn’t sure if I should buy it. I had looked at so many rings that day, I was feeling kind of punchy. The salesperson found another ring that was about the same size as the ring I was looking at, but about 15% cheaper. When she put the two rings side-by-side the difference in color and the difference in brightness were evident.
I didn’t appreciate the great ring I was holding in my hand until I saw a ring of lesser quality. The CLASS Act is that ring of lesser quality. It will help demonstrate to the market the “brightness” and “beauty” of private LTC insurance.
Scott Olson, CLTC
LTC Insurance Shopper.com