Jesse Slome, leading long term care insurance expert, director AALTCI

No matter how many Presidential candidates espouse a national long-term care insurance agenda, passage and more importantly implementation is unlikely predicts Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).

“America has a serious long-term care problem and addressing it is necessary but we’ve been down this road previously,” shared Slome, AALTCI’s director.  “A national long-term care insurance program was passed by Congress, signed into law by President Obama as part of the Affordable Care Act (ACA).  The administration shut it down very quietly one night never to be heard from again.”

Commonly known as the CLASS Act, the program was abandoned.  “It really was a first,” Slome admits, “because I can’t think of any other new benefit signed into law that the federal government has just walked away from.”

Slome was sharing his opinion with some leading insurance professionals as part of a general overview of future trends.  “It’s true that the State of Washington has implemented a modest long-term care insurance plan that will be paid for by younger taxpayers who I suspect really didn’t take notice,” Slome commented.  “But, down the road when those in need realize that the benefit payments are really not sufficient, the State will have to return to taxpayers for more money just the way Medicare has increased the amount paid by workers to remain solvent.”

Taxpayers already pay the lion’s share of long-term care costs, Slome admits.  “Medicaid pays for billions of long-term care expenses for those who are needy, and expanding the Medicare program to include long-term care is fine if American taxpayers understand what it will cost and choose to bear that added cost.”

“The real risk of all the election-season discussion is that many individuals who are in their late 50s and early 60s will mistakenly put off thinking about their own future long-term care needs,” Slome warns.  “It’s natural to think that a government plan will arrive to take care of me, but if the CLASS Act teaches one any lesson, it’s that even after passed into law, the Federal government decided to abandon the program as unworkable.”

Slome urged planning for long-term care begin prior to age 65.  “There are many reasons to plan prior to 65,” Slome explained.  “If you want long-term care insurance to be an option, meeting the insurer’s health qualifications is more difficult after 65 and, of course, insurance is less expensive if you lock in coverage earlier.”

The American Association for Long-Term Care Insurance advocates for the importance of long-term care planning.   Established in 1998, the organization connects consumers with knowledgeable professionals who are independent advisors for no-cost, no-obligation long-term care insurance costs quotes and policy comparisons.

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“As a voluntary plan consisting of typical employees, this is a most representative group,” states Jesse Slome, executive director of the American Association for Long-Term Care Insurance (www.aaltci.org), one of those interviewed by GAO staff  preparing the study.  “Instead of hyperbole, we now have facts to prove that the majority of consumers understand the value of their long-term care insurance protection and do not drop or reduce their coverage even when faced with a rate increase.”

In 2009, some 146,415 participants in the Federal program, about two thirds of the enrollees at the time, were notified that their premiums were subject to an increase of up to 25 percent.  All of these enrollees had selected a particular inflation protection option – the 5 percent automatic compound inflation option (ACIO).

The majority of FLTCIP enrollees facing the premium increase made no change to their benefits.  Specifically, 46 percent or 67,511 individuals maintained their coverage with the 5 percent compound inflation option and elected to pay premium increases. 

An equal percentage of individuals chose to reduce their future inflation growth protection benefits to 4 percent (ACIO) by either switching to the new FLTCIP II plan (26 percent) or retaining the original plan (20 percent).  The new benefit plan provides enhanced coverage.  For example, it covers 100 percent of the cost of home care and adult day care.  The prior plan covered these costs up to 75 percent. 

All plan enrollees who decreased their ACIO protection to 4 percent retained their (current) accrued daily benefit amount that would then increase at the reduced ACIO rate.

Only 1.6 percent of enrollees facing the premium increase, or 2,344 individuals lapsed their coverage and are no longer enrolled in the program.  “We have long attempted to counter the perception that rate increases caused large numbers of people to drop coverage,” Slome acknowledged.  “People understand the risk they face when they purchase long-term care insurance and the protection becomes even more valuable as they age themselves.” 

“What may surprise many is that 23 percent of policyholders actually experienced up to a five percent  decrease in their premium,” Slome adds.  Some 18 percent had a decrease between 0.1 percent and five percent.  

The Federal Long-Term Care Insurance Program currently has 268,200 enrollees (as of June 30, 2011).   In 2009, a 7-year contract for the program was awarded to John Hancock Life Insurance Company. 

Established in 1998, the American Association for Long-Term Care Insurance (http://www.aaltci.org/) is the national trade organization committed to increasing consumer awareness and support of insurance and financial professionals offering long-term care solutions.

Chart 1

Benefit Selection Of Federal Lontg-Term Care Insurance Program
Enrollees Facing Premium Increases

46.1%       No Change (FLTCIP 1.0 plan with 5% ACIO)
25.7%       FLTCIP 2.0 plan with 4% ACIO
20.0%       FLTCIP 1.0 plan with 4% ACIO
5.6%          FLTCIP 2.0 plan with 5% ACIO
1.6%          Lapse
0.5%       Other benefit changes (changing a benefit amount)
0.4%       No selection (many died or became claimants before rate increase took effect)

Chart 2
 
Premium Change

Decrease more than 5%       5%
Decrease 0.1% to 5%          18%
No change                          2%
Increase up to 5%               17%
Increase 5.1% to 10%          6%
Increase 10.1% to 15%       2%
Increase 15.1% to 20%       1%
Increase 20.1% to 25%       43%
Increase more than 25%       6%

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