MEDICARE LTC INSURANCE
2019 SURE TO BRING CHANGES IN LONG TERM CARE INSURANCE By LOUIS H. BROWNSTONE
t’s sure that there will be more changes in LTC insurance for 2019 than there have been in any of the last 25 years. These changes will tax the knowledge and abilities of both long-term care insurance specialists and general agents and brokers. Let’s make a list of the changes...
The Need The need continues to grow, especially as the almost 80 million babyboomers enter their seventies. The need will explode in 10 years as they enter their eighties and become sick. It’s becoming more apparent that caregiving needs will stress the sandwich generation unless a long-term care plan is in place for their parents. The demographics continue to expand the need. The Market Penetration LTC will continue with about a 6 percent or 7 percent penetration and not much more. There now has been an 87 percent 22 | CALIFORNIA BROKER
decline in placed policies per year since 2003 when sales were robust, and we may not have as yet found the end of the decline. Premiums are up to three times more than what they were in the nineties, and the costs of care continue to rise. Prospects hate the “use it or lose it” feature at these high premiums. In addition, rate increases on older blocs continue to degrade the industry’s reputation. Premium increases above current rates are unlikely. Industry Expansion As a result of rising interest rates, one or two new carriers are likely to enter the traditional long-term care insurance market in 2019. Expect approval delays in California, but not in the compact states. The California Partnership for Long-Term Care The Partnership will become viable again in 2019. Recent legislation has enabled carriers to file plans with the daily benefit as low as $100, the bene- CalBrokerMag.com -
fit limit as low as $73,000, and inflation riders as low as 3 percent compound. Citizens with moderate income and assets will in essence be able to acquire lifetime long-term care protection for premiums as little as $100/month per person. This is a game-changer. This legislation opens up a whole new market: the people with the top 10 percent to 40 percent in income and assets. Carriers will file new and innovative Partnership plans. This will create huge marketing opportunities for agents and brokers who take advantage of this sales potential. It’s time to update your Partnership training. It’s possible that, in time, almost all long-term care policies sold in California will be Partnership policies. Other Solutions The decreases in traditional longterm care insurance will be more than offset by increases in other products JANUARY 2019