Group long-term care insurance is in a slump, and it is unclear when, if ever, the slump will end. The latest bad news for the market is that the percentage of organizations that offer the benefit either as a true group plan or voluntary benefit fell to 31% last year, from 46% in 2006, according to the Society for Human Resources Management, Alexandria, Va.
Of those now offering the benefit, 5% planned to eliminate LTC insurance as a benefit in the next year, SHRM reports.
A study by LIMRA, Windsor, Conn., yielded similarly dismal data. New premium for group coverage reported by LTC carriers in 2009 totaled $123 million, a 25% decline from the year before.
Sales to new participants of existing group plans declined over 30%, while sales to new employer groups posted a decline of 3% for the year, according to LIMRA.
One problem for group sales is that many employees are too young to be pondering a future need for a product the main purpose of which is to protect retirement income.
“The majority [of employees] are not in an age group who would pay much attention to long-term care,” says Bonnie Brazzell, vice president of Eastbridge Consulting Group Inc., Avon, Conn. “They see it as an old person’s product.”
A Bright Spot
There is one sector of LTC that could provide some relief, however: group LTC. Although it has a history of low sales, it can still be a growth market for some producers, says Amy Pahl, principal and consulting actuary in the Minneapolis office of Milliman Inc.
One reason for her confidence is that as Americans age, they are becoming increasingly aware that there is a need to protect their assets at some point in their lives.
Helping to nurture this interest is the recent passage of the Community Living Assistance Services and Supports Act, known as CLASS, enacted as part of health care reform this year.
The CLASS Act created a government LTC insurance program available as a voluntary worksite benefit. CLASS will provide a lifetime cash benefit to people who need assistance with activities of daily living, to help them remain in their homes and communities, and payments can also be applied toward the costs of a nursing home or assisted-living facility. Initial estimates are that this benefit would be $75 a day.