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ILTCI attendees hope traditional LTCI gets better soon

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San Antonio — Intercompany Long-Term Care Insurance Conference has attracted about 1,000 attendees here this week. The sky is sunny. The beef for the fajitas has been tender. Ernst & Young is giving away a drone.

But the conversation is more somber than it was a year ago, at the ILTCI conference in Colorado Springs, Colo., with news of MedAmerica’s departure from the long-term care insurance (LTCI) market still fresh.

Ross Bagshaw, a principal and consulting actuary at Wakely Actuarial, said he’s been very busy — with work on LTCI rate increases.

“I’d say the people here are long-term care true believers,” Bagshaw said. ‘It’s a tight-knit industry.”

Word that LTCI sales are down “is kind of weighing heavily on people,” he said.

See also: 5 possible cures for what ails LTCI

Shawn Britt, director of the advanced consulting group at Nationwide, which sells products that combine LTC benefits with universal life insurance or variable universal life insurance, said the sessions at the conference have been very valuable. “It doesn’t matter how much you think you know,” Britt said. “There’s always something to learn.”

But the tone of conversation at the conference “depends on which side of the industry you’re on,” Britt said.

Nationwide, for example, has just released an LTC benefits rider that goes together with a survivorship universal life policy. 

During a conference session on annuity-LTC and life-LTC combo products, speakers noted that sellers of traditional LTCI have generally been skeptical of, or even hostile toward, the combo products.

Traditional LTCI pays off only when need people need long-term care (LTC) services, speakers said. It can turn a relatively small stream of premium dollars into a large stream of LTC benefits.

The combo products pay benefits whether the purchaser ever needs LTC services or not. That makes the products easier for consumers to understand, and easier for actuaries to analyze, but it also means that the amount of LTC benefits provided is relatively modest relative to the amount of cash put in.

The combo products are growing mainly because they meet a need, not because of the problems in the traditional LTCI market, said Steve Schoonveld of Lincoln Financial Group. 

“There’s a place in the market for both,” Schoonveld said. ”We need more players, not less players.”

“We want that traditional side to survive,” Britt said. “The industry as a whole needs to be thought of as healthy.”

Speakers at another panel talked about many proposals for transforming private LTCI, and possibly supplementing it with new public programs.

The speakers themselves said most of the proposals seem to involve use of government-provided catastrophic LTCI, and that many seem to involve measures that would let consumers use retirement plan money to pay for LTCI.

Brian Collins of the Bipartisan Policy Center, a group formed by former Senate majority leaders, said his own group supports letting taxpayers use retirement account money to buy LTCI without paying the usual 10 percent penalty on early withdrawals. But Collins said his group does not want to endorse letting non-Roth retirement savers use retirement plan money on private LTCI without paying income taxes on the withdrawals, because of what that might do to the federal budget deficit.

Collins said his group sees three chances to get an LTC system change measure in 2017.

He expects to see Congress develop a Medicaid reform proposal, a pension reform proposal and a retirement savings proposal. LTC measures could be part of any of those three packages, Collins said.

See also:

Regulator: Market may need to reinvent LTCI

LTCI lawyers: Regulatory delays contribute to market woes


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