The following is a reformatted version of an article published in National Underwriter Life & Health Magazine Jan. 10, 2000.
Insurers and actuaries are still not sure how many young, able-bodied workers end up needing long-term care while they are still young. But some disability experts believe long-term care insurance could eventually help fill gaps in workers current health and disability coverage.
Today, employers help buy health insurance for more than 90 percent of U.S. residents between the ages of 18 and 65, and long-term disability insurance for more than 25 percent. Meanwhile, fewer than 2 percent of working-age residents have any kind of private long-term care coverage.
Lex Frieden, senior vice president at The Institute for Rehabilitation and Research, Houston, a rehabilitation hospital affiliated with Texas Medical College, sees the effects of the LTC coverage gap first-hand when talking to young patients who are coping with the effects of strokes, automobile accidents and other catastrophic illnesses and injuries.
“Some people come in with Cadillac health insurance, but they dont have long-term care insurance” Mr. Frieden reported, adding he could not remember ever hearing about a patient under age 45 who came in with long-term care coverage.
“Its not included in your typical health insurance policy,” Mr. Frieden said. “If it were available as a rider, most people wouldnt pay extra for it.”
But Mr. Frieden gave himself as an example of someone who first needed long-term care at a young age.
An automobile accident injured Mr. Frieden 32 years ago, when he was 18. Since 1967, he has earned a masters degree, founded an independent living research program and joined the faculty of Baylor College of Medicine. But he continues to depend on family members for home care. “Heaven forbid that something should happen to one of my family members,” Mr. Frieden said.
LifePlans Inc., Waltham, Mass., and the other major long-term care think tanks, are just beginning to gather information they need to study the LTC needs of young U.S. workers.
“There are no good statistics on group LTC claims experience,” said Nancy McGee, a vice president in the LTC division in the Portland, Maine, office of UNUMProvident. “The markets just too young.”
Insurers that have entered the worksite market have been relying heavily on their group LTD experience to set LTC rates. Worksite LTD programs tend to produce an average of three to five claims for every 1,000 active employees enrolled, according to Carl Westman, a Chattanooga, Tenn., consulting actuary.
For a worker between the ages of 25 and 45, that compares with an 800-to-1 risk of dying from any cause and a 4,000-to-1 risk of dying in an automobile accident, according to figures from the U.S. Census Bureau and the National Safety Council.
Eamon Walsh, a benefits expert in the New York office of Willis, predicted worksite LTC claims rates will converge with worksite LTD claims rates as the LTC market matures and insurers complete the task of adding LTC-type benefit triggers to their LTD policies.
For now, though, worksite LTC claims rates may be somewhat lower than worksite LTD rates.
An executive for one company in the group LTC and LTD markets said the company is experiencing an average between one and two LTC claims for every 1,000 active employees enrolled in an LTC program, compared with an average of 3.5 claims for every 1,000 active employees in an LTD program.
Carriers in the worksite LTC market have coped with the lack of solid actuarial data by charging relatively high rates for LTC coverage. The average stand-alone LTC policy costs about twice as much as a comparable worksite LTD policy, Mr. Walsh said.
UNUMProvident and other carriers are trying to reduce the cost by selling LTC coverage options together with other insurance products.
Affordable private LTC insurance could be a big help to young workers who end up using it, because many are eager to keep enough assets to maintain their families standard of living, Mr. Walsh said.
Many retirees are resigned to the idea of spending their assets on nursing home bills until they qualify for Medicaid, the government program that pays most nursing home bills for the poor. But, “if you have any sort of assets, Medicaid is not an option,” Mr. Walsh said.
Depending on Medicaid nursing home benefits is a terrible option even for poor, young single people, because of the difficulty of finding suitable facilities, Mr. Frieden said.
Younger residents “die because theyre not where they should be,” Mr. Frieden said. “Theres no stimulation for them.”
An ideal private LTC policy would help younger beneficiaries live on their own for as long as possible, and keep up payments when beneficiaries are able to find jobs, Mr. Frieden said.
Reproduced from National Underwriter Life & Health/Financial Services Edition, January 10, 2000. Copyright 2000 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.