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Long-Term Care Insurance: Improving Consumer Education

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Brief introduction to long term care insurance as one long term care financing option ... HIPAA (Health Insurance Portability and Accountability Act of 1996) ... – PowerPoint PPT presentation

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Title: Long-Term Care Insurance: Improving Consumer Education


1
Long-Term Care InsuranceImproving Consumer
Education
  • Marlene Stum, University of Minnesota
  • Paul McNamara, University of Illinois
  • Ron Wall, University of Hawaii
  • Mary Ellen Rider, University of Nebraska
  • Financial Security in Later Life
  • National Roll-Out Conference Panel Presentation
  • March, 2002 Myrtle Beach, SC

2
  • Plan
  • For changes in health and independence, including
    long term care
  • Act
  • Increase knowledge of risks,
  • costs and financing options for health,
  • including long term care
  • Develop a plan for managing long-term health risks

3
Purposes
  • Brief introduction to long term care insurance as
    one long term care financing option
  • What does research suggest consumers need to know
    about long term care insurance?
  • What are key decision making points and
    considerations for consumers?
  • What have we learned about target audiences and
    delivery strategies?

4
Long-term Care InsuranceMarket Realities and
TrendsWhat research suggests consumers need to
know
  • Marlene S. Stum, PhD
  • Family Social Science
  • University of Minnesota

5
Long Term Care Insurance
  • One financing alternative
  • Personal Resources
  • Private insurance--currently pays 5-7 of bills
  • Government options (Medicaid)
  • A changing and growing market
  • Gaps in perception versus reality
  • Complex and overwhelming for consumers
  • Increasing messages of personal responsibility

6
Market Realities and Trends
  • Individual market has focused on older
    buyers--average age 67.
  • About 6 of population has purchased individual
    policy
  • Group market, especially in the workplace, has
    increased over 30 annually since its beginnings
    in 1987. Average buyer age is 50.
  • Group market penetration 5-6 of eligible
    employees purchase

7
Market Realities
  • Over 3,000 employers offered LTCI to their
    employees in 1999.
  • 21 states offer to state/public employees
  • Federal government offering to the federal
    family--20 million potential purchasers
  • Includes spouses, parents, in-laws, step-parents,
    adult children 18 and over

8
Market Realities and Trends
  • www.opm.gov/insure/ltc/index.htm
  • Early enrollment March 25-April 15
  • Open Season July 1- Dec.31, 2002
  • Will generate many consumer questions
  • Need to understand LCTI and how to compare it
    with other financing alternatives given risk,
    cost, and later life goals.

9
Market Realities and Trends
  • Financial incentives offered to encourage market
    growth
  • HIPAA (Health Insurance Portability and
    Accountability Act of 1996) brought tax
    incentives (IF itemize deductions and exceed 7.5
    of AGI threshold)
  • 20 states offer tax incentives (tax credits)
  • 18 states allocate resources for public
    education about long term care risk, exposure,
    and availability of LTCI.

10
Is there a research base?
  • Primarily market research focused examining role
    of socio-demographic variables of
    buyers/non-buyers
  • Majority on individual versus group market
  • Conducted by and for industry
  • Just beginning to examining claims and
    experiences of LTCI users

11
To Buy or Not to Buy Examining Long term Care
Insurance Employee Decision Making
  • Principle Investigator Co-Investigator
  • Marlene Stum, PhD Virginia Zuiker, PhD
  • Family Social Science
  • University of Minnesota

12
Research Questions
  • What impact did offering the long term care
    insurance benefit have on employee long term care
    risk management decision making and planning?
  • What is the relative significance and
    contribution of factors within and outside the
    family system on the decision to enroll or not
    enroll in Long Term Care Coverage (LTCC)?

13
Gaps Addressed
  • Group vs. individual market research
  • Micro-level data (employee perspective)
  • Guided by existing theory
  • Family decision making
  • Ecological systems
  • Focus on decision making processes as well as
    outcomes
  • Sample representative of entire State of
    Minnesota eligible employee population
  • Examines how multiple factors contribute to
    enrollment decisions

14
Methods
  • Written mailed surveys (February 2001)
  • Random sample of 1600 buyers and non-buyers from
    total population of 61,000
  • 53 overall response rate (64 buyers / 42
    non-buyers)
  • 830 completed surveys

15
Reinforced other study findings
  • A new decision-making experience for most
    consumers
  • Non-buyers have good intentions
  • 63.2 intend to purchase
  • 72 very likely or likely to buy (Stucki)
  • Too young and far away from retirement years
  • Too many competing lifestage demands

16
Role of Resources
  • Buyers were more likely to have
  • Higher household incomes
  • More long-term care prior experience
  • Higher financial literacy
  • More self-efficacy

17
Prior Long Term Care Experience
18
Perceived Sources of PaymentWithout Long Term
Care Insurance
19
Consistent findings
  • Enrollment barriers include
  • Perceived lack of affordability
  • Insufficient information
  • Confusion
  • Complexity of policy features

20
Comparison to other studies
  • Majority of employees believe in personal
    responsibility to plan and pay for long-term care
  • Majority of employees believe long-term care
    insurance should be purchased (79)
  • Non-buyers concerned insurance is not a good
    value for the money (65 in HIAA 63 this study)

21
Attitudes RegardingLong Term Care Coverage
22
To improve consumer decision making
  • Recognize this is a new decision making
    experienceconfusion and lots of questions should
    be expected
  • Who should buy LTCI?
  • Whats the best age to buy?
  • How much will it cost me?
  • What happens to all the money Ive paid if I
    never need LTC?
  • What if the company Im insured with goes out of
    business?
  • When and how much will the premiums increase?
  • If Im interested, how do I select coverage
    features
  • inflation protection, benefit amounts

23
Improve financial literacy and self-efficacy
  • Risk of needing long-term care
  • Risk of long-term care versus other lifecycle
    risks
  • Differences in disability and long term care
    insurance
  • Costs of various types of long term care
  • Who pays if there is no LTCI
  • How to judge if plan is a good value
  • How to judge affordability for two family members
  • Reality of existing health plans coverage of LTC
  • Potential costs of doing nothing
  • Selecting specific coverage features

24
To Buy or Not to Buy Examining Long term Care
Insurance Employee Decision Making
  • Executive Summary and information on couple-level
    qualitative research in progress available at
  • http//fsos.che.umn.edu/stum/research/ltc.dm

25
LTC Educating the Consumer
  • Dr. Ron Wall
  • Hawaii Cooperative Extension Service
  • University of Hawaii at Manoa

26
LTC Consumer Education
  • What is the reality of long-term care?
  • How can the risks be reduced or minimized?
  • How can the risks be addressed financially?

27
What is at stake?
  • Getting needed care
  • Getting into desired facility
  • Paying for needed care
  • Avoiding impoverishment
  • Avoiding loss of estate

28
Things to Keep in Mind
  • Percentage of elderly in the future depends on
    births, deaths, and immigration policy.
  • Facts regarding recipients of long-term care
    depend on what constitutes long-term care.
  • Projection of those needing paid LTC care depends
    on health, medicine, family factors.
  • Severity of LTC as a societal problem based on
    population not same as personal problem.

29
Figuring the Odds--0 to 100
  • Projected need for Nursing Home Care
  • 57 no need
  • 10 0-3 months
  • 8 3 months-1 year
  • 14 1-3 years
  • 11 3 plus years

30
Your LTC Risk and Reality
  • Family LTC history
  • Your medical history
  • Family support system
  • Living arrangements
  • Income and assets

31
LTC Risk Reduction Factors
  • Level of health fitness
  • Living arrangements
  • single family home
  • elderly community
  • assisted living
  • Family support system
  • living with spouse or relatives
  • living near extended family
  • living isolated from any relatives

32
Good Preparations for the Future
  • Prepare for old age
  • fitness and health program
  • communal housing lifestyle
  • family/friends support system
  • Put finances in order
  • sock away retirement funds
  • reduce debt solidify assets
  • low cost, simplified investments
  • encumber and ensure income
  • set aside funds for special needs
  • ready estate for timely transfers

33
LTC Problems Beyond Money
  • Hiring home care
  • Managing home care
  • Supporting family care
  • Adapting to group home
  • Abiding institutional care
  • --Impersonal?
  • --Detached?
  • --Regimented?
  • --Isolating?

34
LTC Insurance Considerations
  • Adequate, inflation protected daily benefit
  • Good coverage over return on premiums
  • Indemnity basis over reimbursement of costs
  • Pooled benefits over segregated benefits
  • No or less home care coverage if not feasible
  • Shorter period over unprotected daily benefit
  • No waiver of premium over less coverage
  • Realize premiums and costs will increase
  • Recognize commitment is for the long-haul

35
Inherent Risks of LTC Insurance
  • Premium risk
  • Coverage risk
  • Reimbursement risk
  • Company default risk
  • Government entry risk
  • Personal budget risk
  • Competing needs risk
  • Investment return risk

36
LTC Situation in Hawaii
  • Proposed CarePlus 10/month for 70/day
  • Elderly housing and assisted living options
  • Employer sponsored LTC insurance policies
  • Consumer education and counseling

37
Hawaii LTC-related Services
  • LTC Ombudsman-- LTC patient advocate
  • Project Dana--social support for homebound
  • SAGE Plus--volunteer insurance counseling
  • Nursing Home without Walls--home care help

38
Consumer Education in Hawaii
  • Publications in print and on university web site
  • Articles in newspapers and newsletters
  • Workshops in workplace and community venues
  • Videotapes distributed to unions and other groups
  • Individual counseling and e-mail responses

39
Some Curious Conclusions
  • If everyone had LTC policy with 90 day
    elimination period only 1 of 3 would receive any
    benefit.
  • 89 of all elderly would be covered by an LTC
    policy having a 3-year maximum benefit period.
  • Since entry occurs 30-90 days before benefits
    paid, getting in not a function of having LTC
    insurance.
  • Institutionalized care is most inevitable for
    those who have no family support system to rely
    on.
  • If all those who can afford LTC insurance buy it,
    LTC will still be societal problem due to the
    rest.

40
Envisioning the Future of LTC
  • Caregiver shortage worsens
  • LTC costs outpace inflation
  • Premiums increase more
  • Insurance less affordable
  • Companies quit or divest
  • Government more involved
  • Tax breaks for care giving
  • Institutionalization of loners
  • Insurance for estate benefit

41
What I believe is needed
  • Consumer view of critical information
  • Preparation for full range of old age risks
  • Recognition of need for financial flexibility
  • Consideration of long-term affordability
  • More realistic options

42
Purposes of Consumer Education
  • Enable consumer to make informed choices
  • Help consumer to use resources wisely
  • Assist consumer in avoiding waste and loss
  • Empower consumer to act on own behalf
  • Encourage consumer to act responsibly

43
Long Term Care InsuranceCritical ConceptsMary
Ellen Rider, Ph.D.Extension Specialist, Consumer
Health Policy
  • What is your risk for various levels of care?
  • Home Health Care?
  • Bed and Board Care?
  • Assisted Living?
  • Skilled Nursing Facility?
  • Continuing care community?

44
Long Term Care Insurance Risk Considerations
(continued)
  • What is the relationship of your risk
    considerations to the purchase of long term care
    insurance?
  • - If you need it, is it covered? Price?
  • How does your health history relate to projected
    cost of coverage?
  • How does your age at purchase relate to projected
    cost?

45
Long Term Care Insurance Risk Considerations
(continued)
  • Financial stability of insurer
  • Transferability of coverage when changing
    employers (if purchased through employer) cost
    if picking up yourself
  • Financial stability of care facility
  • ability to change facilities? (if important or
    available to you)

46
Long Term Care Insurance Educational Concerns
  • Target markets for education
  • (Not a low income issue)
  • Age of students
  • Socioeconomic level of students
  • Singles
  • Women
  • Couples

47
Potential Partners
  • Regional CMA Partnership
  • training and update relative to changes in
    Medicare
  • State Departments of Insurance
  • SHIPP/NICA programs
  • counseling relative to Medicare specifics,
    supplemental (Medigap), or long term care
    coverage relative to duplication of coverage
    through Medicare
  • State Health Care Association
  • Professionals associated with long term care
    industry
  • State Departments/Divisions on Aging

48
On-line Experience
  • Wrote a lesson limit on print due to cost
  • Developed an on-line, non-credit module password
    protected - with grant funds
  • Reviewed by peers (state agency reps and family
    economists)
  • Offered 2 sessions (students from various states)
    in 2001 2 more sessions to be offered
    spring/summer 2002
  • Problems publicity discussion participation
    evaluation feedback
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