Evolution of LTCI Plans

[Brian Anderson]

Posted a new article by Christine McCullugh of LTC Solutions (link below) where she says today's LTCI plans have evolved to meet consumer preferences, such as elimination of hospital stay requirements and coverage applying to in-home care and assisted living.

Yes, there are fewer carriers in the market, but are the ones remaining now getting it right with their current plans and pricing? What features have you found most helpful in communicating the value of the products to clients?

Insurance Forums | Better plans mean better opportunities in long-term care insurance

 

[ltcadviser]

Posted a new article by Christine McCullugh of LTC Solutions (link below) where she says today's LTCI plans have evolved to meet consumer preferences, such as elimination of hospital stay requirements and coverage applying to in-home care and assisted living.

Yes, there are fewer carriers in the market, but are the ones remaining now getting it right with their current plans and pricing? What features have you found most helpful in communicating the value of the products to clients?

Insurance Forums | Better plans mean better opportunities in long-term care insurance

Plans have evolved? Really? Give me a break. The policies today are slightly more restrictive than they have ever been. Unlimited benefits? Only available with a few underwriters. 100% cash benefits? One carrier. Unlicensed caregivers allowed? Bye bye. Call an agency. Survivorship benefits. Disappearing. Cost of insurance. Greatly increasing. Type I Diabetic and want coverage? Good luck. Evolved? Really. Enough of this bullshit marketing spin already.

 

[scagnt83]

I have to agree with Jack. LTCI Plans have devolved not evolved. Or you could say they have evolved into a watered down version of what they once were.

Carriers dropping out of the market aside; if you compare a plan from 8 years ago to a plan today the benefits were much richer on the old plans.

Sure rates on new policies will most likely be more stable than on old policies. But part of that is due to the watered down benefits. The other part is due to legislation that has yet to prove itself in the market as a whole.

 

[TriciaS]

But look at the policies 15-20 years ago. No hospital stay trigger, Assisted Living is covered, one time EP. Alternate plans of care for things we can't think of today. Yes carriers are limiting benefits more, no lifetime benefits, paid up policies, care thru an agency. Yes prices are going up on new business, and we can't get the ridiculous high benefits, but what is a better option?

 

[Arthur Rudnick]

I'm a little late to the party, but I totally agree with Jack & Tyler and I'd like to take this a step further.

In all due respect to Christine McCullugh, it appears that she is nothing more than another LTC "expert" who either knowingly sings the party line or has consumed so much industry kool aide she fails to understand the reality of today's long term care industry.

She discusses the "Exciting Changes" in the industry in recent years. Exciting?
* Is she referring to the exit of LTC carriers that have been in the industry since its inception, 30 years ago?
* Is she referring to the industry's rate increases of 10%-100%?
* Is she referring to the changes in policy options that have limited the benefit amounts and benefit periods over recent years?
* Maybe she's referring to the exciting changes in underwriting that now require an applicant to have a paramedic visit for blood & urine samples?
* Or is it exciting that recent changes to the pricing structure now enables a single female to pay substantially more than a single male at the same age & health status?

She claims that the remaining carriers are the ones who have the "best products and who's pricing reflects market experience."

I always thought that UNUM, who offered a 100% cash-benefit was one of the better products on the market. That's the policy that I own. Is she suggesting that UNUM's exit from the market is an "exciting change"? How about Prudential, who also had a 100% cash-benefit option? How about MetLife that offered an excellent array of policies?

Is Christine suggesting that all these changes are exciting? Exciting for who?

Understand that I've been a LTC specialist for a long time. Twenty years ago the gold standard was an Unlimited Benefit Period with a 5% Compound Inflation Rider. That's the product that was sold and that's the product that the carriers pushed and also a product that was fairly priced.

But then we arrived at the "Exciting Recent Change Period" and it appears that carriers are now pushing 3-year benefit periods and 3.5% inflation riders.

Christine states "the carriers in the marketplace are committed to matching the products to the needs of today’s consumers, at prices that are fair and reflective of the risk"

What's pushing these exciting changes are not consumers. The consumer only knows what the agent presents. If there's no unlimited benefit option, the consumer is unaware it ever existed. In reality, the only reason that carriers today are "committed to matching the products to the needs of today's consumer" is that premiums are so off-the-wall, the carriers came to the realization that consumers could no longer afford what they wanted (unlimited benefit periods & 5% compound inflation rider) so they limited benefits in order to lower the premiums.

The carriers are now telling consumers that anything over a 3-year benefit period is really over-insurance. Why is that when 20 years ago a 3-year benefit was considered under-insurance? The risk hasn't changed, we're still hearing that the average nursing home stay is 3 years. So why was an unlimited benefit period OK 20 years ago, but not OK today?

The obvious reason is that it's now unaffordable.

Christine also mentions: "Significant improvements have been made, based upon consumer preferences and market experience". She refers to the change of a LTC policy no longer requiring a 3-day hospital stay before benefits can be accessed. She claims that this change was caused by "consumer preferences".

Not true. The elimination of the 3-day hospital stay requirement was due to the federal HIPAA act of 1997.

Yup, exciting changes. Maybe in Christine's world, but certainly not mine.

I was watching TV last night and there was a press conference of White House reporters, with press secretary Josh Earnest.

A reporter stated that ISIS is taking over Iraq. Every city they enter, they take it over. They are now less than 10 miles from the Bagdad airport and approaching the city of Bagdad. Every military person, from Private to General says that the air war is insufficient to defeat ISIS. In spite of 2 months of air attacks, ISIS has not been slowed.

And, Josh Earnest, with a straight face looks the reporters in the eye and says, "The air war is working and we are achieving our goal in defeating ISIS".

Nothing more than a political hack who thinks the people he's talking to are idiots.

Sort of reminds me a little of Christine.....................

 

[ltcadviser]

I'm a little late to the party, but I totally agree with Jack & Tyler and I'd like to take this a step further.

In all due respect to Christine McCullugh, it appears that she is nothing more than another LTC "expert" who either knowingly sings the party line or has consumed so much industry kool aide she fails to understand the reality of today's long term care industry.

She discusses the "Exciting Changes" in the industry in recent years. Exciting?
* Is she referring to the exit of LTC carriers that have been in the industry since its inception, 30 years ago?
* Is she referring to the industry's rate increases of 10%-100%?
* Is she referring to the changes in policy options that have limited the benefit amounts and benefit periods over recent years?
* Maybe she's referring to the exciting changes in underwriting that now require an applicant to have a paramedic visit for blood & urine samples?
* Or is it exciting that recent changes to the pricing structure now enables a single female to pay substantially more than a single male at the same age & health status?

She claims that the remaining carriers are the ones who have the "best products and who's pricing reflects market experience."

I always thought that UNUM, who offered a 100% cash-benefit was one of the better products on the market. That's the policy that I own. Is she suggesting that UNUM's exit from the market is an "exciting change"? How about Prudential, who also had a 100% cash-benefit option? How about MetLife that offered an excellent array of policies?

Is Christine suggesting that all these changes are exciting? Exciting for who?

Understand that I've been a LTC specialist for a long time. Twenty years ago the gold standard was an Unlimited Benefit Period with a 5% Compound Inflation Rider. That's the product that was sold and that's the product that the carriers pushed and also a product that was fairly priced.

But then we arrived at the "Exciting Recent Change Period" and it appears that carriers are now pushing 3-year benefit periods and 3.5% inflation riders.

Christine states "the carriers in the marketplace are committed to matching the products to the needs of today’s consumers, at prices that are fair and reflective of the risk"

What's pushing these exciting changes are not consumers. The consumer only knows what the agent presents. If there's no unlimited benefit option, the consumer is unaware it ever existed. In reality, the only reason that carriers today are "committed to matching the products to the needs of today's consumer" is that premiums are so off-the-wall, the carriers came to the realization that consumers could no longer afford what they wanted (unlimited benefit periods & 5% compound inflation rider) so they limited benefits in order to lower the premiums.

The carriers are now telling consumers that anything over a 3-year benefit period is really over-insurance. Why is that when 20 years ago a 3-year benefit was considered under-insurance? The risk hasn't changed, we're still hearing that the average nursing home stay is 3 years. So why was an unlimited benefit period OK 20 years ago, but not OK today?

The obvious reason is that it's now unaffordable.

Christine also mentions: "Significant improvements have been made, based upon consumer preferences and market experience". She refers to the change of a LTC policy no longer requiring a 3-day hospital stay before benefits can be accessed. She claims that this change was caused by "consumer preferences".

Not true. The elimination of the 3-day hospital stay requirement was due to the federal HIPAA act of 1997.

Yup, exciting changes. Maybe in Christine's world, but certainly not mine.

I was watching TV last night and there was a press conference of White House reporters, with press secretary Josh Earnest.

A reporter stated that ISIS is taking over Iraq. Every city they enter, they take it over. They are now less than 10 miles from the Bagdad airport and approaching the city of Bagdad. Every military person, from Private to General says that the air war is insufficient to defeat ISIS. In spite of 2 months of air attacks, ISIS has not been slowed.

And, Josh Earnest, with a straight face looks the reporters in the eye and says, "The air war is working and we are achieving our goal in defeating ISIS".

Nothing more than a political hack who thinks the people he's talking to are idiots.

Sort of reminds me a little of Christine.....................

Nice post Arthur. Took the words right out of my mouth.

 

[scagnt83]

Lets not forget the group LTCI market that is now almost non-existent... very "exciting" change there

 

[Sam]

I think that evolve is a somewhat charged word, and with all of the negative changes that you have seen in the market, maybe it is hard to see that evolution as meaningful, when balanced against the negative changes.

I won't take a position on that issue, because you guys are all much bigger experts than I, but I will say, I believe that she is legitimately a true expert, and she does understand the reality of today's ltc market, she is no lightweight....

Arthur, I believe you have plugged the Center for Long Term Car Reform in the past...here is what Steve Moses, the President said about her "I've known Christine McCullugh for two decades. She and her company -- LTC Solutions -- are leaders in the LTC insurance industry for their expertise, services, educational programs and for their good corporate citizenship as strong supporters of our public policy research and advocacy at the Center for LTC Reform. Congratulations on your success protecting Americans from the enormous risks and costs of long-term care."

I have no dog in this fight, I don't know her, and she isn't an advertiser, but the fisking seems just a little knee-jerk to me

 

[Arthur Rudnick]

Hi Sam,
I was with you until your last sentence.
Took me a while to find it but Wikipedia tells me:

"The term fisking is blogosphere slang describing a point-by-point criticism that highlights perceived errors, or disputes the analysis in a statement, article, or essay.[1] Eric S. Raymond, in the Jargon File, defined the term as "a point-by-point refutation of a blog entry or (especially) news story. A really stylish fisking is witty, logical, sarcastic and ruthlessly factual; flaming or handwaving is considered poor form."2]

"A really stylish fisking is witty, logical, sarcastic and ruthlessly factual"

I plead guilty!

Yes, I am a supporter of The Center For LTC Reform and think very highly of Steve. However, my "knee-jerk" reaction was caused only by Christine's analysis of an industry that has gone through a number of major changes over the past 10 years, very few of them positive.

I am very passionate about the LTC industry and have always defended it when I feel it is unjustly attacked and have always criticized it when I felt that was justified.

Christine may very well be a true expert, and understand the reality of today's ltc market and she is no lightweight.....

If the above is true, how can she in good faith claim that "LTCI plans have evolved to meet consumer preferences"? In my opinion, anyone who makes that claim will immediately lose credibility with the LTC community.

With her credentials, she should know better.

 

[Mr_Ed]

I think that evolve is a somewhat charged word, and with all of the negative changes that you have seen in the market, maybe it is hard to see that evolution as meaningful, when balanced against the negative changes.

I won't take a position on that issue, because you guys are all much bigger experts than I, but I will say, I believe that she is legitimately a true expert, and she does understand the reality of today's ltc market, she is no lightweight....

Arthur, I believe you have plugged the Center for Long Term Car Reform in the past...here is what Steve Moses, the President said about her "I've known Christine McCullugh for two decades. She and her company -- LTC Solutions -- are leaders in the LTC insurance industry for their expertise, services, educational programs and for their good corporate citizenship as strong supporters of our public policy research and advocacy at the Center for LTC Reform. Congratulations on your success protecting Americans from the enormous risks and costs of long-term care."

I have no dog in this fight, I don't know her, and she isn't an advertiser, but the fisking seems just a little knee-jerk to me

Sam,

Just ignore the naysayers.
It's easy to look at the negative.
You can always find whiners sitting at the coffee shop.

The fact is that today's policies have good benefits, lots of benefit choices, are priced conservatively, and have a very low probability of future rate increases.

As much as everyone here is complaining about "how bad" the new policies are and how they yearn for the "good ole days", none of them want policies with huge premium increases.

So, what do they want: 5% compound with an unlimited benefit period that gets hit with a huge premium increase OR do they want stabilized pricing with 3% compound and a 5 year benefit period.

Rate Stability Regulations in over 40 states REQUIRE that every new policy series be priced HIGHER than all previous policy series. That's OK, though. That helps protect consumers. The insurers are doing a superb job of balancing that strict regulation with good benefits and features.