Long-Term Care Q&As

Updated 5/3/2013
1.     What is the current state of long-term care insurance?
 Current state is not at all positive for group LTC plans.  There is really only one carrier left (Genworth) in the marketplace.  The other “leaders” in the field have all pulled out of the group business.  This includes John Hancock, Aetna, MetLife, Prudential and others.  Insurance carriers have exited the market for several key reasons:
a.     Low interest rate environment has affected the ability of insurers to realize target returns on their block of LTC reserves.
b.     Participation in group plans has been very low creating an anti-selection problem
c.      Medical inflation higher than predicted; utilization of LTC policies higher than predicted.
d.     Accounting rules changes require carriers to set aside more capital for future liabilities than originally contemplated.

On the individually underwritten side, there is still a market, but these policies are not guarantee issued – so applicant must pass medical tests/questions before a policy is issued.

2.     Is affordable long-term care insurance even available in the U.S.?
If applicant is young and in good health, affordable LTC is available.  For older people (50+) coverage can be very expensive and there is no guarantee the insurance premiums won’t increase with time.

3.     Does Intel support any long-term care insurance programs today?
Yes, the MetLife group program which has guaranteed rates through 2014.  This program currently is not accepting new enrollees.

4.     Are there particular states where long-term care costs or capabilities are better/worse than other states?
Long term care costs are less expensive in states like Florida and Arizona.  More expensive in NY and CA.  Cost of care aligns with general cost of living.

5.     When do you think the long-term care insurance market place will stabilize? (Or when do experts think)
Very difficult to predict.  As part of President Obama’s healthcare reform effort, there was a provision called CLASS, which was a government sponsored voluntary LTC plan.  However, this provision was scrapped once they figured out how much it would cost.  Right now, there is no clear solution for this problem, especially for older and/or people with medical conditions.

6.     Are there recommendations Intel has for retirees to prepare for long-term care needs in the future?
Speak with their financial planner.  Look into annuities or other safe income generating financial vehicles that will help fund the costs of long term care should it be necessary.  Plan ahead.  If healthy, investigate individual LTC marketplace.

7.     Are there alternatives to insurance that Intel retirees might want to consider to help them if long-term care is needed in the future?
Yes, a good financial planner can help map out what the costs and risks may be.

8.     How should retirees keep themselves informed about current developments in long-term care issues?
Retirees should continue to read the many articles that are published on this topic.

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