ElderWeb

The Office of the Assistant Secretary for Planning and Evaluation (ASPE) of the Department of Health and Human Services sponsored a survey of employer group long term care insurance plans. The study was done by the Lewin Group, and it identified some of the norms and trends in group long term care insurance. ASPE pointed out that the group market for long term care insurance offers benefits to everyone since it will reduce premiums and make insurance more broadly available. Putting LTC insurance in group plans hopefully will also increase the participation of younger people, which will decrease premiums overall. Selling plans in a group also reduces administrative costs, which should also decrease premiums.

Employer plans were closely split between "service models" which reimburse the beneficiaries for incurred costs (57% of the plans), and "disability models" which make a per diem payment regardless of actual costs (43%).

All plans covered nursing home costs, over 80% covered home health costs and another 14% made home health an optional benefit. Over 70% covered adult day care, with another 9% making that an optional benefit. About 65% covered assisted living, and another 10% made assisted living an optional benefit. Over half the plans include some coverage for respite care, personal care services, and homemaker/chore services. Very few offered reimbursement for a family caregiver or the cost of home modifications.

The average daily benefit amount for nursing home care was $100 a day, but ranged from $40 a day to $300 a day. The average daily benefit for home health care was 60%-100% of the nursing home benefit, and ranged from $20 a day to $200 a day. The average lifetime maximum was $200,000, but ranged from $24,000 to $1,000,000.

Almost all employers require the employee to pay the full premium. Premiums for a base plan with nursing home and home health benefits for a person age 50 ranged from $7.30 to $92.10 a month. The report included an example from one employer where an employee age 50 would pay anywhere from $31 a month to $132 a month, depending on how many optional benefits they chose.

Over 90% of the plans covered the employee, spouses, parents, and parents-in-law. Slightly over 50% included retired employees.

Most employers provided a 60-90 elimination period before benefits would become available. Most included inflation protection, about half as immediate inflation protection provided through a higher premium and the other half as an option for inflation protection in the future as a benefit upgrade. Just under half the employers offered a non- forfeiture benefit to provide protection if the individual stops paying premiums, most commonly as a "reduced paid up benefit" to provide reduced benefits over the original period of time, rather than the more beneficial "shortened benefit period." 44% of the plans included "return of premium at death" that would return a portion of the premiums to the insured's estate if not used by the time the insured dies.

The survey found that employee participation was greatest when only a few choices were offered. Participation rates varied from less than 2% to over 10%. They also found that employee education was critically important in getting employees to participate, but very difficult to do. The highest participation rates were seen in companies where senior management was actively involved.

In the future, they want to research several other issues, like whether employees are retaining their coverage or letting it lapse, and what features employees seek in LTC insurance and how badly they want it.

For more information, contact John Cutler