On July 22, 2021, the NAIC Long-Term Care Insurance Reduced Benefit Options (EX) Subgroup, led by Commissioner Altman (PA), posted its first draft of a discussion paper Issues Related to LTC Wellness Benefits online. Comments are due September 5, 2021.
It should come as no surprise that the COVID-19 pandemic has been one of the biggest, if not the biggest factors driving the insurance market over the last year and a half.
More than half (54%) of Americans said that COVID-19 has made them more anxious about dying early, becoming disabled or needing long-term care (LTC), according to a new survey from the Million Dollar Round Table (MDRT).* Among those surveyed who said they acquired new insurance policies since March 2020, 42% said the COVID-19 pandemic was a factor while other reasons included wanting to provide for their family (36%), a major life event (29%) and new concerns about potential future disability or LTC needs (27%).
At the recent 2021 Supplemental Health, DI & LTC Conference, hosted by LIMRA, LOMA, and the Society of Actuaries in early August, panelists discussed the current market trends of long-term care (LTC) products, particularly Life-LTC combination products. The market for these combination products has typically seen a steady 12% growth rate from 2009 to 2020, explained Mohammad T. Reza, CFA of New York Life. However, the pandemic had unprecedented effects in many regards and the Life-LTC market was no exclusion. The total number of life-LTC combination products sold decreased 7% in 2020.
According to LIMRA’s 2020 U.S. Individual Life Combination Products Annual Review, total new premiums for individual combination products decreased by 23% in 2020. A recurring theory for the decline is that the priorities of potential insureds shifted dramatically as a result of COVID-19, which impacted single-premium combination products the strongest at a decline of 41%. With Americans facing more immediate concerns for liquidity and cash during the pandemic, the demand for these life-combination products dampened, derailing the consistent upward trend the market had previously seen.
A report recently issued by HealthView Services, “Long-Term Care & Financial Planning,” summarized the likelihood that individuals will require long-term care (LTC) and the expected costs associated with such care. The study indicates that a healthy 65-year-old male/female couple has a 44% and 56% chance (respectively) of needing some level of LTC if each spouse attains their actuarial life expectancy. Combined, there is a 75% chance that at least one of them will require LTC.
The report also projected the future cost of LTC. Taking the same 65-year-old male/female couple, if they both only needed one year of LTC, their projected combined (national average, future value) costs are estimated at $398,000 for a nursing home or $223,000 for 44 hours of weekly home health care.
A new bill proposed in Congress seeks to address financial concerns due to an aging population through the Well-Being Insurance for Seniors to be at Home Act (“WISH Act”). The current population of the United States is aging rapidly, leading to an increasing percentage of the population aged 65 and over. In fact, it is estimated that by 2050 the number of people living over the age of 65 will almost double and the number of people living over the age of 85 will triple.
The WISH Act, introduced on July 1, 2021 by U.S. Representative Tom Suozzi (NY), cautions that “the typical U.S. senior could afford only about 12 months of nursing home care, assisted living care, or extensive home care using their financial wealth.” This is consistent with the idea that over “half of Americans entering old age today will have a long-term need for constant attendance by another person, averaging $298,000 costs per person for about 2 years of serious self care disability (as defined in HIPAA), and more than half will be out-of-pocket, according to the U.S. Department of Health and Human Services (HHS).”
The number of people who purchased traditional long-term care insurance policies last year dropped significantly compared to previous years, based on new figures released by the American Association for Long-Term Care Insurance (AALTCI).
AALTCI reports that at its peak in 2000-2001, sales of traditional LTCi policies soared to more than 700,000. Numbers have fallen over the last two decades and hit their lowest point in 2020 with just 49,000 policies sold. AALTCI says while the need for LTCi hasn’t changed, “more people are opting for a linked-benefit product such as a life insurance policy that can also pay long-term care benefits.”
The pandemic shifted the way a lot of Americans view long-term care and insurance according to a new LIMRA survey.* LIMRA says more than a quarter (26%) of the people it surveyed say they are “extremely or very likely” to consider a combination/hybrid life product when shopping for insurance (a life policy with an LTCi component). In 2019, that number was just 17%. More than a third (36%) said they were “somewhat likely” to consider it.
An astounding 88% of Americans would prefer to receive any ongoing living assistance they need as they age at home or with loved ones, according to a new nationwide survey released this week by The Associated Press-NORC Center for Public Affairs Research.
Furthermore, 69% of participants reported they have done only a little or no planning for their long-term care needs, and 49% of participants over the age of 40 reported that they expect the majority of their long-term care costs will be paid by Medicare. Considering Medicare currently covers very limited long-term care costs, and the Medicare trust fund is at risk to become insolvent in the near future, 89% of participants reported that strengthening the Medicare trust fund should be a priority for the Biden administration and Congress.