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LTC service contracts

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Jonas Roeser — one of the people who helped promote the 3in4 Need More long-term care insurance (LTCI) outreach campaign with a tireless ability to generate publicity — is now trying to get attention for a different kind of long-term care (LTC) planning 

He has been working with people like Mark Golberg, Tom Skiff and Peter Gelbwaks, long-time LTCI marketers, on an effort to develop and sell non-medical long-term support services (LTSS) service contracts.

LTCI is getting to be more expensive, and many people over age 65 are not healthy enough to qualify for medically underwritten coverage, Roeser said recently in an interview conducted via e-mail.

“This has caused a demand for alternative solutions,” Roeser said.

Roeser is thinking service contracts could be the answer.

The LTCI community has been creeping through one of those frustrating patches of economic quicksand that lead either to hopeless exhaustion or desperate creativity.

Baby boomer Americans continue to get older and continue to eat poorly and do other things that seem likely to increase their need for LTSS in their later years.

The same boomers have fewer children than their parents did, and fewer siblings and cousins to turn to for informal care in an emergency.

The state of government programs and agencies that might pick up the tab appears to be increasingly precarious.

But the actuarial intricacies involved with writing LTCI coverage have been more complicated than insurers had expected, the Wall Street investors who own the stock company LTCI carriers have been demanding, and the interest rates the insurers can get on the kinds of investments that please regulators and rating agencies have plummeted.

LTCI carriers are like water sellers who have come to sell water at a rock concert in the desert and have discovered that the water company has cut off their hoses.

Some companies are trying to overcome the gap between what consumers need and want and what the economy will let them write by focusing on sales of other, existing types of products, such as critical illness insurance and short-term care insurance (STCI).

Access to care
Roeser and colleagues at American Senior Services Inc. (ASSI) are taking a different route: Having an association sell a package that provides access to LTC planning services and a set amount of discounted non-medical long-term support services, such as companion care services and homemaker services.

Paying for a service contract program can be much cheaper than paying for services directly out of pocket, and the program managers can help hold down costs down by limiting the number of hours of that care members can get each day.

The ASSI program also holds down costs by requiring members to pay for a service contract for a set amount of time before making use of the contracted services, Roeser said.

One step a service contract provider should take is to work with lawyers and insurance regulators to make sure that the contract provider is classified as a contract provider, and not as an insurance company, Roeser said.

At the program Roeser and his colleagues are developing, “we do not rate, classify or rescind memberships,” he said. “Instead of us selecting members, members select us.”

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