|
Long-term care insurance grows up
Superb record for payouts, providers-insurers on same page
By Lisa Schork
I Recently had the pleasure of speaking before a wonderful organization, Elder Service Providers (ESP). These are the local assisted living facilities, nursing homes, home care providers, DSHS, Alzheimer’s Society, community services, adult day care, group home administrators, elder law attorneys, financial advisers, long-term care insurance (LTCi) specialists, senior information and assistance – all the folks whose goal it is to support our aging population. In my next column I’ll spend more space on the great work they are doing in our community.
Long-term care todayThe point of my talk was a review of the state of long-term care insurance in 2008. With all the concerns we share in this time of financial crisis and uncertainty, a little good news is always welcome. As background, although Long Term Care Insurance has existed since 1970, it is still a relatively young industry and the insurance companies are still working to get a handle on appropriate pricing and the diagnosing of claims.
The good news is that long-term care insurance has paid out more than $3.5 billion in claims. And for every 100 claims filed, 97 are paid. So what about the remaining three? Typically, they were invalid or fraudulent or still in the waiting elimination period. That’s a remarkably positive record.
As in other industries, we are seeing some company consolidations as decisions are made to stay in the market or retreat. Most of the companies are fairing well enough, but looking into the future, how does one plan?
Shopping aroundWhen thinking about LTCi, remember the basics, and consider that you still need to be able to afford the premiums after you retire. It’s always prudent to buy well within your budget rather than to buy the absolute best and lose sleep over it. I had one client recently tell me that after looking at their 401K, they were rethinking the benefits of taking on a policy – until they realized with the downturn they really couldn’t afford not to have the coverage. Are you looking to build your nest egg or protect it? LTCi is for protecting that nest egg from further erosion.
When looking for a LTCi policy, stay with the top three providers – Prudential, Metlife and John Hancock. Along with these three are a bunch of lesser players with dodgy financials. Look for Comdex ratings above 90. The Comdex rating is a percentile ranking which blends all the major rating agencies such as A.M. Best, Standard and Poor’s, Fitch and Moody’s to a ranking easily understood by the average human being and not just some fairy dust from the back-office actuaries.
Beyond the financials, have your specialist help you with comparisons between the top three in terms of both their health underwriting as well as the actual wording of the contracts, because that’s where your ultimate satisfaction will lie down the road when you are filing a claim. Considerations such as the company’s claims paying service are very different than when I started specializing 12 years ago. Just think about it, adult foster care didn’t exist five years ago and assisted living is an idea that came into its own only 10 years ago.
Finally, and best of all, we are finally seeing better communication between the providers of the care and the insurance companies. A colleague of mine recently participated in a national dialogue between the home care/assisted living companies and the major long-term care insurance companies. For the home care companies there was a greater understanding of what’s reimbursable and what’s not, and for the insurance companies, they learned that they must be even more proactive in handling claims. It’s a positive step in the maturing of the industry.
|
