A short-term care insurance (STCI) policy is a policy that pays for home care, skilled care or other types of non-acute care for a period of less than one year.
STCI policies are already available in most states, but not in states like California, Florida and New York.
Why should all states approve the sale of STCI policies?
Here are nine reasons.
1. Long-term care Insurance (LTCI) policies aren’t cheap anymore.
Fifteen years ago, in the heyday of the LTCI market, the average age of a client was 65 years old. Since then, the premium for a 65-year-old has tripled, and, for single women, the increase has been even bigger. Now, for the premium to be affordable, the clients need to be between 55 and 59 years old. This LTCI environment leaves older clients with few options.
2. Even if a client can afford the premium for LTCI, getting approved to buy a policy can be difficult.
According to the American Association of Long-Term Care Insurance (AALTCI), 27 percent of LTCI applicants ages 60 to 69 and 45 percent of LTCI applicants ages 70 to 79 are declined. These people have already decided they need some sort of insurance to help them. Once they are declined for traditional LTCI, they should have the option of purchasing a short-term care policy.
According to Jesse Slome, executive director of the National Advisory Center for Short-Term Care Information (NAC-STCI), an AALTCI affiliate, the average STCI premium is just $1,403 per year. or less than $125 per month for most people. Premiums can go as low as $50 per month, making STCI an extremely attractive option for older clients.
3. The application process for STCI policies is simpler.
The typical STCI application only has 11 to 12 yes/no health questions. Few carriers request medical records. Most rely on the application, a telephone interview and a prescription drug screen. Some do cognitive screening and others do not. (One carrier says it issues 88 percent of everything submitted.) The result is more people have coverage that they wouldn’t have had otherwise.
A study done by the NAC-STCI tells us that the vast majority of buyers (90 percent) of short-term care insurance policies were 60 or older.
4. There is no 90-day certification required for benefits.
Many agents confuse the 90-day elimination period (EP) and the 90-day certification. These are two different things.
When a client is buying any tax-qualified LTCI plan, a medical professional has to certify that the client is expected to need care for at least 90 days before the policy will pay a claim.
So, even if the client has a 0-day exclusion period for home care (as most do), that won’t make any difference if the client can’t get the doctor to say the client will need care for at least 90 days. STCI policies don’t face the 90 day certification requirement, so a 0-day exclusion period is really a 0-day exclusion period. This can save the insured thousands of dollars out of their own pocket.
5. Almost half of LTCI claims are for less than one year.