One of the misconceptions about LTCI is that many potential buyers are turned off by possible rate increases. Not so, says a report from the U.S. Government Accountability Office (GAO).
The GAO examined what participants in the Federal Long-Term Care Insurance Program (FLTCIP), the largest private long-term care insurance program in the country, did after they were told their premiums were to increase.
About 146,415 enrollees, or two-thirds of the program’s participants at the time, were notified in 2009 of a premium hike of up to 25 percent. All of those enrollees had previously selected the 5 percent automatic compound inflation option (ACIO).
Despite the rise in premiums, 46 percent, or 67,511 individuals, maintained their coverage with the 5 percent compound inflation option and opted to pay the premium increase. An equal percentage chose to reduce their future inflation growth protection benefits (ACIO) to 4 percent by either switching to a new plan with enhanced coverage for home care (26 percent) or retaining the original plan (20 percent). Only 1.6 percent, or 2,344 enrollees, decided to forego coverage altogether.
Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), pointed out that the GAO study is a good representation of attitudes toward LTCI because the federal program is voluntary and consists of “typical employees.”