Shawn Britt on LTC planning: Status report

2. Insurers as a group are committed to coming up with funding solutions.

In spite of all of the headlines about low interest rates and problems with older LTCI policies, insurers recognize the need for LTC funding tools, and the life-LTC hybrid market is doing well, Britt said.

Britt said she thinks the hybrids appeal to consumers who are uncomfortable with spending money on a product with benefits they might not use. With a hybrid, “there’s going to be a payment in the end,” she said.

She noted that surveys show that women who buy LTC-related products are more likely to focus on the need for solid protection, whereas men who buy LTC-related products are more likely to want to feel as if they made the best possible investment.

3. Policymakers are struggling to keep up.

Britt sees state insurance regulators overloaded with trying to keep up with basic product review tasks, and little time to update LTC planning rules and regulations.

The federal government has a voluntary group LTC benefits program for its employees, including members of Congress and congressional aides, but Britt said she sees little increase in LTC planning literacy at the federal level.

When Congress killed the CLASS Act — a Patient Protection and Affordable Care Act (PPACA) provision that would have likely created an actuarially unsustainable voluntary LTC benefits program — it created a Federal Long-Term Care Commission to try to create an alternative to the CLASS Act.

In the real world, Britt said, the commission never got anything done, partly because none of the members had a solid background in any kind of financial services, let alone LTCI.

In Congress itself, “they have some unrealistic myths in their heads,” she said. A serious effort at LTC funding reform “just keeps being pushed aside,” Britt added.

She cited state regulations that require consumers to cash in annuities before they can qualify for Medicaid nursing home benefits as an example of what she believes to be foggy policymaker thinking and neglect of LTC funding rules. In many cases, she said, having the consumer keep an annuity and make the state Medicaid program be the first beneficiary would be a much better deal for both the state and the consumer.

In other cases, Britt said, old, outmoded state rules keep insurers from offering LTC hybrids that behave in the way consumers expect the hybrids to behave. An LTC rider might not be able to cover home care, or a chronic care rider may be able to cover home care, but not for an insured who has had an operation and hopes to need home care for only a few months.