LTC Association Marks Long-Term Care Awareness Month

November is Long-Term Care Awareness Month, an industrywide event established in 2001 by the American Association for Long-Term Care Insurance (AALTCI).

"Each year awareness efforts tied to Awareness Month grow," explains Jesse Slome, executive director of the industry's trade group. "From a Congressional Resolution, to proclamations issued by governors and mayors across America, support for the campaign's goal continues to grow."

Slome urges insurance professionals to capitalize on the occasion by using November as an opportunity to discuss long-term care planning with clients. "It's as simple as asking people if they have a long-term care plan in place," Slome notes. The vast majority of individuals and families over age 50 have no plan in place he adds. "As the saying goes, a failure to plan is a plan for failure and while insurance isn't a solution for all, everyone needs to weigh their options."

The Association makes available free marketing tools that insurance professionals can use to promote awareness during Long-Term Care Awareness Month. They can be accessed via the organizations website: http://www.aaltci.org/aware.

Congressman Launches Effort To Stop The CLASS Act

A letter from Congressman Charles W. Boustany, Jr. (R-LA) seeks cosponsors for proposed legislation (H.R. 5853) that reverse legislation creating a new federal long-term care program (CLASS). According to Jesse Slome, executive director of the American Association for Long-Term Care Insurance (AALTCI), CLASS will likely not be implemented until 2013. "If the plan is going to be changed now would be the time before employers have to evaluate the pros and cons and dollars are withheld from employee paychecks," Slome notes.

The Congressman's letter released reads as follows: Most Americans remain unaware of the CLASS program, a new government-run long-term care insurance program that was slipped into the health-care law.

Speaker Pelosi and her allies behaved recklessly when they used the CLASS program as a $70 billion budget gimmick to fund other portions of the new health-care law. Congress has a duty to stop the implementation of this new unfunded entitlement before a single premium dollar is collected from hard-working Americans.

Instead of setting money from CLASS premiums aside solely for promised benefits, Democrats used it to pay for other parts of the new health law and merely put an IOU in a government trust fund. Americans could be required to repay these IOUs in the form of higher taxes.

Actuaries and budget experts widely agree CLASS is fatally flawed. Senate Budget Committee Chairman Kent Conrad publicly called the program “a Ponzi scheme of the first order, the kind of thing Bernie Madoff would be proud of."

The Congressional Budget Office, the American Academy of Actuaries and CMS’s own actuary warn the program will disproportionately attract enrollees with the highest costs. Premiums will skyrocket and discourage young and healthy workers from enrolling. The program will enter what Medicare Chief Actuary Rick Foster called “an insurance death spiral.”

The Chief Actuary predicted that CLASS will begin to run deficits in 2025 and continue to run deficits thereafter. He also estimated that an initial average premium of about $240 per month would be required to adequately fund CLASS program costs. CBO said CLASS “…would add to budget deficits in the third decade – and in succeeding decades—by amounts on the order of tens of billions of dollars for each 10-year period.”

I urge you to cosponsor the Fiscal Responsibility and Retirement Security Act (H.R. 5853). This bill would stop the Obama Administration from implementing a final CLASS plan without a vote of approval by two-thirds of the House and Senate.

2010 Long-Term Care Sales Achievement Awards Announced

"Rookie of Year" Category Added To Recognize Industry's Newer Producers

Insurance and financial professionals who market long-term care insurance protection are invited to enter the Eighth Long-Term Care Sales Achievement Awards. The annual program, conducted by the American Association for Long-Term Care Insurance, recognizes producers based on sales made during 2009.

"Awards are given for sales of individual long-term care insurance policies as well as multi-life long-term care," explains Jesse Slome, the organization's executive director. A new category has been added to recognize producers who began selling long-term care insurance in 2009.

Award recipients are ranked on a national as well as a state-by-state basis with their names published in the Association's annual LTCi Sourcebook. "This is an excellent way for agents and brokers, even those who have just started selling, to show prospects they have been recognized as a leading producer in the industry," Slome notes. The minimal placed premium for 2009 is $2,500. "All those who enter and qualify are recognized," he adds.

Information and the entry application can be accessed online via the Association's website: http://www.aaltci.org/awards. Established in 1998, the American Association for Long-Term Care Insurance is the national association serving insurance and financial professionals who provide long-term care financing solutions.

Audio Recordings From Long-Term Care Insurance Producers Summit

Audio recordings from the recent LTCi Producers Summit are now available. The link to see the listing of all 36 sessions can be found below. Audios start at $15 each. Audios with synchronized Power Point presentations are $22 each. A discount code for AALTCI members will save you 20%.

To support the Association's efforts, the recording company provided us with a few DVDs containing all the sessions including synchronized Power Points. You can view these presentations on your computer while listening to the presentations (each is between 60 and 90 minutes long).

We are making A DVD-ROM WITH ALL 36 SUMMIT PROGRAMS available for $229 (while supplies last). Mail requests with checks only (details below). If you order online, the cost is $339. For use on computers.

To see all available 2009 LTCi Summit audios and order: click on this link: http://www.fleetwoodonsite.com/aaltci

AALTCI members can save 20% on their orders: Enter the Code "QRR7UU" during checkout on the payment page.

To order the complete DVD of all 36 sessions for $229 (Save $110 versus online cost of $339) send a check payable to AALTCI.
Mail to AALTCI - DVD, 3835 E. Thousand Oaks Blvd., Ste 336, Westlake Village, CA 91362

Here are the top-rated Summit sessions based on Evaluation Forms submitted by Summit attendees.

LTC 828 Public Policy Impacting LTC - The Latest From Washington DC - The CLASS ACT (Attendees' Evaluation Score 5.0)

LTC 834 The Instincts Of Success - Frank Maselli, Keynote speaker (Score 5.0)

LTC 836 $100,000 Of Marketing For FREE - How To Be The "Go To" LTC Expert In 2010 - Jesse Slome, AALTCI (Score 5.0)

LTC 830 How To Sell Partnership Long-Term Care Insurance - Panel (Score 4.78)

LTC 817 Yes You Can ! . Create A No-Cost Internet Presence For Google - Jesse Slome, AALTCI (Score 4.70)

LTC 831 Keynote: Referrals The Professional Way - by Frank Maselli (Score 4.70)

LTC 807 The Impending Collapse Of The Roadblocks To LTC Insurance - Steve Moses - Center For LTC Reform (Score 4.29)

To see all available 2009 LTCi Summit audios and order: click on this link: http://www.fleetwoodonsite.com/aaltci

Wishing you a great start to 2010.

Jesse Slome
American Association for Long-Term Care Insurance

How To Respond To The Passage Of CLASS

It appears that any final efforts to remove the CLASS Act from the Senate Health legislation have failed and thus it looks almost assured that we are witnessing the birth of a long-term care insurance plan that will be offered by the federal government.

Inevitably, the new plan will be included within newspaper and magazine stories that help American consumers understand what it all means to them. That will likely generate questions from people who already purchased long-term care insurance. It will inevitably bring up questions from those who are looking into it. It will certainly impact employers who will be the ones offering the federal plan to employees.

The American Association for Long-Term Care Insurance will develop succinct and factual talking points for consumers. The federal plan will provide benefits to many who would otherwise never be able to secure long-term care insurance protection.

It will likely also confuse many and will give people a false sense of security or a reason to put off planning for long-term care. That would be an enormous mistake.

We will be soliciting input from thought leaders and from the various insurers. Undoubtedly they will want to be prepared to handle calls from inquiring customers.

If you have suggestions or wish to share statements you have seen, that would be most welcome.

Send them on to: Jesse Slome, E-mail: mailto:jslome@aaltci.org

LTC Association Membership Counts For MDRT

To be a member of MDRT (Million Dollar Round Table) one has to belong to at least one qualifying organization.

We are very pleased to advise you that Membership in the American Association for Long-Term Care Insurance qualifies.

And, because AALTCI membership currently costs $49 for a year a number of members have found it possible to join MDRT. If you belong to MDRT, you can certainly indicate you are an AALTCI member to meet their qualification.

If you know or work with other agents or brokers who qualify for MDRT membership but have put off joining because of the expense of belonging to other industry organizations, you have a solution to remove that objection. Of course, there are many other benefits available to members of the nation's only industry trade organization focused exclusively on long-term care insurance.

Please feel free to forward this information to others.

Membership in the American Association for Long-Term Care Insurance is $49 for 1-year. (Please note that dues will increase to $99 in January 2010.)

Here is the link to see all benefits of AALTCI membership:
http://www.aaltci.org/ltc-marketing/membership/benefits.php

Here is the link to our online membership application:
https://www.aaltci.org/ltc-marketing/membership/

Penn Treaty May Need More Than $1 Billion for Claims

Many long-term care insurance agents have clients who they placed with Penn Treaty and others have asked to be kept aprised. I thought the following would be of interest and value.
Jesse Slome
American Association for Long-Term Care Insurance

Summarized from a Bloomberg Report: Penn Treaty Network American Insurance Co., facing the biggest insurer failure in at least five years, may need more than $1 billion in additional funds to pay claims, a state regulator said.

Penn Treaty “is far more insolvent than originally believed,” Pennsylvania Insurance Commissioner Joel Ario’s office said in an Oct. 2 request for liquidation. Penn Treaty American Corp., the Allentown, Pennsylvania-based parent of the insurer, included the document in a regulatory filing yesterday.

Sellers of long-term care coverage, including Penn Treaty, suffered after underestimating expenses, while the broader life insurance industry has reported losses on declines in stocks and bonds. Penn Treaty, with about 120,000 customers, was hurt by investment losses in the recession and “seriously under- reserved” for claims in previous years, the regulator said.

“It’s potentially a big deficit mostly that will come from guarantee funds,”a spokeswoman for Ario’s office, said in an interview. Policyholders pay Penn Treaty about $249 million in annual premium for coverage, and the regulator ruled out using rate increases to bridge the potential $1.3 billion gap between assets and future claims. That deficit will be left to state guaranty funds, which are funded by solvent insurers.

Penn Treaty is among at least eight carriers in the U.S. facing forced rehabilitation or liquidation by regulators this year, according to data collected by the National Organization of Life & Health Insurance Guaranty Associations. That compares with four in 2008.

Ario, who seized Penn Treaty in January, didn’t find an insurer to purchase or assume any of its policies. According to Nolhga, Penn Treaty has about $1 billion in assets. Cash from premiums will be sufficient to pay claims for several years, Placey of the Pennsylvania regulator said.

“There’s enough money to pay claims going forward and get the guaranty associations ready for the transition,” Placey said. Guaranty funds are used to pay claims when regulated insurers are unable to meet obligations. Penn Treaty policies will remain active for customers who continue to pay premiums. A state court will weigh Ario’s request to liquidate the company, his office said in statement last week.

Long Term Care Insurance Women Planning Matters

Long term care insurance planning for women is vitally important. Women have the greatest need for long-term care. Women receive 65 percent of all benefit payments from individual long-term care insurance. Women who are married can benefit from significant spousal discounts. Women living alone pay the exact same for long-term care insurance protection as men (even though they are far more likely to gain a benefit from their coverage).

Consumers seeking free information or no-obligation quotes for this protection should visit the Consumer Information Center of the American Association for Long-Term Care Insurance.

This consumer education video has been produced by the American Association for Long-Term Care Insurance, the industry's professional trade organization.

Study Reveals Federal Long-Term Care Insurance Plan Flaws

The proposed federal health plan being discussed by the U.S. Senate includes proposed long-term care protection. The Community Living Assistance Services and Supports Act (CLASS Act) would provide coverage paid by individuals who would have the ability to opt out.The goal of the American Association for Long-Term Care Insurance, the industry's professional organization, is to serve as an advocate for sound long-term care planning that ensures the future of all Americans -- those who can afford private long-term care insurance, and those who can not.

That said, the proposed CLASS Act (Senator Kennedy's new tax on Americans) is not the solution and a report released today by the American Academy of Actuaries reveals the plan's significant flaws. The plan's proponents believe a $65-per-month tax for individuals would be sufficient to provide a $50 average monthly benefit. The study reveals that the sound monthly premium level would be closer to $110 a month or over $1,300 a year per-individual.

The CLASS Act proposes a voluntary federal program that is sustainable and actuarially sound over a 75-year horizon. Based on the current assumptions, the independent actuaries project the new government fund established to pay long-term care claims will be insolvent by 2027. Sometime well before that date, taxpayers can expect the voluntary plan to become a new mandatory tax.

The report notes that part of the problem with the proposed plan is the increased likelihood of adverse selection. Simply stated, those individuals in poorer health will sign-up for the plan and those who are in better health will likely opt-out. Once claim payments begin after the five-year waiting period, one can expect an increasingly steady flow that will stretch the fund beyond what proponents expect.

The American Association for Long-Term Care Insurance is the independent trade organization providing information on long-term care planning to consumers and providing marketing and sales support to information. The organization maintains the industry's most comprehensive website on long-term care planning which can be found at http://www.aaltci.org/

If you would like to receive a PDF copy of the American Academy of Actuaries letter to the U.S. Senate Committee on Health, Education, Labor and Pensions, please click here to send an E-mail to Jesse Slome, Executive Director.

Five Questions to Ask Before Hiring a Home Care Provider

When it comes to needing long-term care, the majority of Americans today receive care in their own home. "People mistakenly associate long-term care with nursing home care," explains Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance.

"Today most long-term care takes place outside of a skilled care facility and the vast majority of long-term care insurance claims are not nursing home related."According to studies conducted by the industry trade group, some 42 percent of long-term care insurance benefits paid are for care at home (AALTCI's 2009 Long-Term Care Insurance Sourcebook). "Another 28 percent was for care in assisted living communities and only 30 percent was for care in skilled nursing facilities," Slome notes."

Home care services cover a wide range of needs, from memory care and companionship to meal preparation and medication reminders," says Jennifer Tucker, Vice President with Homewatch CareGivers, a national provider of homecare services. "They may also include help with the activities of daily living, including home care services like bathing, dressing, and grooming or care coordination services rendered by a registered nurse."

When selecting a home care agency, it is important to know what questions to ask. Here are five important questions that consumers should ask of a prospective service provider:

How long has the agency been providing private duty home care?

Is a written, customized care plan developed in consultation with the client and family members, and is the plan updated as changes occur?

How are emergencies handled after normal business hours?

Do they closely supervise the quality of care, including maintenance of a daily journal in the client’s home and non-scheduled supervisory visits?

Does the agency employ a nurse, social worker, or other qualified professional to make regular visits to the client’s home?

"A great way to find quality home care providers is to speak to a knowledgeable long-term care insurance professional," states Jesse Slome. "If they've been in the business for a few years, they likely have clients who are receiving care."

For additional information on home care for long-term care needs or to find local long-term care insurance professionals, visit the online Consumer Information Center from the American Association for Long-Term Care Insurance and request information from any of the organization's 3,500 members nationwide.

2009 Long-Term Care Insurance Price Index Announced

A 55-year-old individual considering long-term care insurance protection can expect to pay $723-per-year for a base level of protection if they are married or $1,060 if they are single according to the 2009 Long-Term Care Insurance Price Index published by the American Association for Long-Term Care Insurance.

Across various age groups, costs for coverage increased about two percent from the prior year. The index published annually measures costs for top-selling long-term care insurance policies that offer consumers approximately $115,000 in current benefits, with protection increasing yearly as the individual ages.

"A solid base plan of protection will grow in value to over $305,000 of protection 20 years from now," explains Jesse Slome, Executive Director of the national trade organization that conducted the research. The study compares costs for different levels of plans that provide long-term care benefits for 3-years or longer with a compound inflation option that increases the available insurance benefits by five percent compounded each year.

"For some age bands the cost of long-term care insurance actually declined," Slome notes. "What we did see is a far wider range of prices between insurers offering basically the same coverage." According to the Association study, costs can vary by as much as 100 percent. "This could reflect different benefits or simply the individual insurer's pricing assumptions," Slome explains. "Consumers should compare policies or work with a knowledgeable insurance professional who can analyze for them."

Lower Interest Rates Impact Costs For Insurance Policies

The cost for long-term care insurance is closely related to interest rates that have significantly declined in recent years. "Investment income comprises between 40 and 60 percent of the dollars used to pay eventual long-term care claims," Slome explains. "Premiums paid by policyholders make up the other portion and as interest rates have declined, insurers have found it necessary to raise premiums for protection." The industry paid out $5.8 billion in claims in 2008 to some 180,000 policyholders.

"The cost of long-term care insurance is directly related to how much protection you purchase, the age you first apply and your health at the time of application," explains Slome. "Over half of all individual applicants are between ages 55 and 64, and one third purchase a daily benefit of between $100 and $149." The daily benefit amount actually equals either a cash benefit or a pool of money that the policyholder can access. Most insurers offer significant discounts when both spouses apply for coverage.

The survey compared costs for individuals age 55 with those age 65. "A married individual purchasing $172,000 in current protection will pay about $20 a week ($1,084-per-year) by qualifying for available good health discounts," Slome explains. "By waiting until they are age 65, they'll likely pay $63-a-week because they will need to buy more coverage to keep pace with inflation and will likely no longer qualify for the good health savings."

Long-Term Care Insurance Association Study Looks At Buyers of Life Insurance Plus LTC Benefits

Los Angeles, CA - June 23, 2009 -- Nearly half of individuals purchasing asset-based long-term care protection in 2008 were under age 65 according to the first national study of buyers. Two thirds (66%) of purchasers were women and the average single premium paid was just under $71,000 ($70,975). Research conducted by the American Association for Long-Term Care Insurance (AALTCI), the national trade organization, examined 2008 sales data for over 5,000 new policies.

"Asset-based long-term care insurance protection is becoming an increasingly popular way for individuals to protect against the risk," explains Jesse Slome, AALTCI's Executive Director. Asset-based long-term care policies offer the dual benefit of access to long-term care benefits as well as life insurance protection. "Many individuals find this coverage attractive because if they don't use their long-term care protection, their beneficiaries still benefit from the life insurance coverage," Slome explains.

The average single premium paid for an asset-based LTC policy in 2008 was $70,975, according to the Association study. This represented a four percent increase compared to 2007 when the average premium was $68,300. Just under half of policies (49.7%) had a base face amount of between $100,000 and $200,000. Some 30 percent had a face amount of life insurance protection of between $50,000 and $100,000. "Policies offer a long-term care insurance protection in multiples of the life insurance benefit," Slome explains.

Purchasers of asset-based LTC policies were almost equally divided between pre-65 (49%) and 65-or-older (51%). Just over 10 percent (11.2%) of purchasers were between ages 45 and 54. Exactly two-thirds of purchasers were women (66%). "Buyers are older than individuals purchasing traditional long-term care insurance protection," Slome notes. According to the Association's study, some 84 percent of buyers of traditional LTCi protection in 2008 were younger than age-65.

Asset-based long-term care protection and traditional LTC insurance policies share the requirement that applicants health qualify for coverage. The percentage of accepted applicants declined with age according to the study's findings. Some 70.2 percent of submitted policy applications by individuals between 45 and 54 were accepted. The percentage declined to 60.5 percent for applicants between ages 65 and 74.

"We anticipate the market for asset-based long-term care protection will increase in the years ahead," predicts Slome. "Leading insurers such as Genworth Financial and Lincoln Financial Distributors are focused on the growth of this market and policy sales."

The American Association for Long-Term Care Insurance is the national organization serving insurance and financial professionals who provide long-term care financing solutions. Consumers can obtain information from the organization's Consumer Information Center, the nation's leading resource for LTC insurance information. Insurance agents and financial professionals can visit the organization’s online Producer's Resource Center at www.aaltci.org.

New Study Examines Long-Term Care Insurance Claims

The largest open long-term care insurance claim has surpassed $1.2 million in paid benefits, according to a just-released report from the American Association for Long-Term Care Insurance. The claimant, a woman, purchased coverage at age 43, paying an annual premium of $1,800. Three years later her claim began and has continued for almost 12 years. [Note: Payment of policy premiums ceases when an individual is receiving policy benefits.]

"As a result of increased longevity and medical advances, the need for long-term care is a new phenomenon for a generation of Americans," said Jesse Slome, Executive Director of the industry trade group. "The pervasive concern about purchasing long-term care insurance is will I ever use it?"

According to Association data 180,000 Americans received benefits from their long-term care insurance policy and some $8.5 billion in claims was paid in 2008. "This is a significant increase in benefits paid compared to the prior year," Slome explains. "Long-term care insurance is not the lottery. This is not something you really want to win; but having protection in place can certainly pay off and for thousands of people it increasingly is."

The organization collected data on claims including the largest open claims (still being paid as of December 31, 2008) paid by six of the nation's leading insurers. The second largest claim is by a woman who purchased her long-term care insurance policy at age 72, paying an annual premium of $12,766. Three years later her claim began and has continued for almost nine years ($1.02 million in benefits has already been paid for her nursing home care).

The largest claim being paid to a man exceeds $690,000. The individual purchased long-term care insurance protection through his employer at age 54, paying an annual premium of $2,560. The coverage was designed to pay benefits for five years. Two years later his claim began and has continued for almost seven years.

Nearly one in 10 (8.9%) of new individual claims initiated during 2008 prior to age 70 the study revealed. "While most long-term care insurance claims begin at older ages, typically in ones late 70s or 80s, accidents and illnesses are a common reason younger people need this care," Slome notes. The Association's study revealed that 30.5% of claims start between ages 70 and 79; some 60.6% after age 80. "Almost two-thirds of claimants receiving benefits (65%) are women," Slome reports, "and the largest percentage of benefit payments (42.0%) are for care in ones own home versus a nursing home (30.5%)."

The five most common reasons for a long-term care insurance claim, according to the Association, are Alzheimer's Disease, stroke, arthritis, circulatory issues or injury. "One in eight persons age 65 and over has Alzheimer's," Slome says. "The number of new cases is expected to increase to 450,000 a year by 2010 and to 615,000 new cases a year by 2030. It’s time for individuals to start planning for care should they need it in the future." The study shows that planning can certainly pay off.

The six largest claims will be published in the upcoming summer issue of LTCi Sales Strategies magazine which is sent to all Association members.

Readers of this blog: Let me know if you'd like to see more information on long-term care insurance claims.

Women And Long-Term Care Insurance

Some quick facts about women and long-term care.

All statistics show that women live longer than men. Women who reach age 65 have a life expectency of (another) 20 years versus 17 years for men.

Women over age 75 are far less likely to be married (than men) and are twice as likely to be living alone.

Women over age 65 include 980,000 nursing home residents; versus 337,000 men.

Women are also typically the caregivers. Women provide between 60% and 75% of family or informal care.

These facts come from the Association's 2009 Long-Term Care Insurance Sourcebook and they will be an important part of the upcoming guide the Association will publish specifically for women.

But, facts support the issue and I am hoping readers of this blog will share their insights with me as I prepare the booklet. What have you found resonates with women - both those who are living alone ... as well as those who are married? My intent is to address both of these audiences with messages they will relate to.

What should be included in this brochure?

Please share your thoughts by sending me an E-mail to Jesse Slome.

Thanks. I can't think of a more important topic.

Jesse Slome
mailto:jslome@aaltci.org

Long-Term Care Insurance: What Happens After They Buy

One of the most interesting aspects of my job is compiling the data for the annual Long-Term Care Insurance Sourcebook. This is a compilation of all the most relevant data we can compile ... acquire ... and share with members of the Association.

One of the questions I've been asked is "what happends after someone purchases long-term care insurance? How many people keep their policies? How many drop them? How many die?"

It is important information for several reasons. First, most people who purchase long-term care insurance understand the value of what they have purchased. Compared to other forms of insurance, fewer drop this protection that say life insurance or diability products. Thus, one can assure people who buy, they will likely have and keep this coverage should the need for benefits arise.

The 2009 Sourcebook will provide detailed (cumulative) data on what happens after people buy long-term care insurance protection. Here's what it will note based on data reported by the Indiana Partnership for Long-Term Care. Of some 43,475 policies purchased, some 8,086 have been dropped (35,412 are still in force).

The Indiana Partnership was implemented in 1993. Thus, in the 15 years since sales began, 82% of policies sold remain in-force.

Primary reasons for dropping the policies are:
Voluntary (2,016 or 25%)
Died (990 or 12.3%)
Unknown (2,543 or 31.5%)
Not Taken Up (2,381 or 29.5%)
Converted (78 or 1%)

A little tid bit worthy of including should you ever be asked the same question by a prospect or client.

For more information, visit the Association's Producer Resource Center where we will continually add new audios and information.

If you have suggestions for data you want included, send me an E-mail: Click Here.

Court Approves Order to Protect Penn Treaty Policyholders

January 6, 2009: Pennsylvania Insurance Commissioner Joel Ario announced today that the Commonwealth Court approved his petition for an Order of Rehabilitation for Penn Treaty Network America Insurance Co. and its subsidiary, American Network Insurance Co.

The order places the company under the statutory control of the Pennsylvania Insurance Department. It also grants the commissioner direct authority to preserve the company's assets and oversee its current financial situation and operations, while continuing to pay policyholder claims.

"It is the Insurance Department's responsibility to take action when a company is in financially hazardous condition," Ario said. "Placing Penn Treaty into rehabilitation will make certain that long-term care policyholder claims are paid, helping to ensure continuity of care for a community in need. "We gave Penn Treaty time to find a buyer and infuse new capital. To date, the company has been unable to raise enough capital, so we must protect the company's assets and put policyholder protections into place. I want to assure policyholders that their policies remain in effect during this rehabilitation and that their premiums should continue to be paid in order for coverage to remain in place."

This rehabilitation is the first receivership action the department has taken in more than four years. Penn Treaty, headquartered in Allentown, provides long-term care insurance to more than 126,000 policyholders. Together, Penn Treaty Network America Insurance Co. and its subsidiary, American Network Insurance Co., write long-term care insurance in all 50 states and the District of Columbia.

The Insurance Department will perform an independent, comprehensive evaluation of the company's finances. Based upon this review and analysis, the department then will determine the viability of a rehabilitation plan. Any plan will give payment priority to policyholder claims.
Policyholders and other interested parties will receive further information about the rehabilitation in the future. In the interim, policyholders with questions on claims or non-claim matters may use the following toll-free number: 800-362-0700, ext. 3190.

Media interested in discussing consumer protections for those purchasing long-term care insurance, can contact Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance. Call 818-597-3227 or E-mail: Jesse Slome

Long-Term Care Insurance Partnership Protection - What Most People Overlook

To prepare the 2009 Long-Term Care Insurance Sourcebook, which will be sent to all Association members in March, I take the time to review countless studies and reports.

One of the more interesting was published recently by the California Partnership for Long-Term Care. One of the requirements imposed on the initial four Partnership states (California, New York, Indiana and Connecticut) was the preparation of very detailed reports on buyers as well as utilization of policies. Thus, these provide some of the best snapshots of real situations ... what consumers choose and how they use benefits when needed.

I was involved with the launch of the California Partnership and I think many people either overlook or are not familiar with why the Partnership concept came about ... and why it is such a powerful solution for consumers. Bottom line: it is designed to help expand the market to "middle income" consumers who could afford shorter-duration policies with the added protection of being able to qualify for Medicaid while protecting a larger sum of assets from the spend-down requirement.

So, some of the interesting findings from the California report. Some 142,650 applications were initially submitted of which 118,390 resulted in issued policies (some 98,528 are currently active). To date, 2,082 policyholders have qualified to receive benefit payments ... and the total asset protection earned by policyholders who received benefits was $75,367,500 (which means the average payout was $36,199).

Some 187 policyholders exhuasted their benefits (722 died while in benefit) and of these 44 accessed Medicaid (Medi-Cal in California).

There is excellent data that looks at the duration of policy benefits by the people who exhausted their policy and then accessed Medi-Cal. We'll publish that and discuss it more.

But the bottomline message for those marketing Partnership protection, this is excellent coverage for those seeking more affordable plans of protection.

Response To Conseco Situation

I received a request for commentary on the Conseco Trust situation by Mark Miller who authors an excellent Website and blog: Retirement Revised.

Here is the response from the American Association for Long-Term Care Insurance:

When it comes to Conseco and the issue of long-term care insurance, it is very important for people considering buying protection to understand that the past does not equal the present nor the future. Conditions and state regulations mandated and approved in most states are designed to prevent just this type of situation. It is also important for consumers to know that insurers fund state guarantee funds. These guaranty funds guaranty policyholders in the case of an insurer insolvency. The limits range from $100,000 to as much as $500,000 in some states.But, let's look back. The Conseco situation was very unfortunate but other than lawyers attempting to create much ado by crying foul, the resulting agreement provides what many reasonable experts deemed the best of a lousy situation.

Why have insurers who issued policies in the late 1980s and 1990 found themselves facing unanticipated financial strains. One of the primary reasons has been declining interest rates. Insurers collect small amounts of premiums each year, invest the money in anticipation of paying future claims. When many of these policies were priced, interest rates were say 8-9 percent. As we've all seen, they've declined steadily to the point where last week the U.S. government sold treasuries at zero percent interest.

Falling interest rates are wonderfully advantageous to those financing a home or car purchase. The exact opposite is true for long-term care insurers. For every one percent drop in interest rates, an insurer would need a 10 percent premium increase (back to the issue date) to maintain targeted profitability.

Some of the larger, better capitalized insurers raised premiums on policies (these increases ranged from 8 to 18 percent). Others found themselves in a worse situation.

Bad news makes headlines and lawyers create profit for themselves by scaring people. Let's balance that with some positive news; in 2007 long-term care insurers paid $3.5 billion to 180,000 Americans who purchased this valuable protection and got exactly what they needed.

Long Term Care Insurance Videos - Featured Claims Stories

Five videos discussing the importance of purchasing long-term care insurance have been posted by the American Association for Long-Term Care Insurance on the new YouTube page established by the organization.

The first video features a three-minute television appearance by Jesse Slome, the Association's executive director. Slome recently appeared on the noon news in St. Louis, MO to discuss key facts consumers need to know about long-term care planning and insurance protection options.

Two additional videos feature Association members Harry Crosby and Fred Frauhiger who appeared on their local television news shows during 2008's Long Term Care Awareness Month. Both experts share relevant information for consumers.

The final two videos feature interviews with real claimaints who were featured in the 2008 Long-Term Care Insurance industry advertisement that appeared in the December 2008 edition of Kiplinger's personal Finance magazine. The ad was supported by eleven leading long-term care insurers. Click here to link to the page where the ad can be viewed.

All five videos can be viewed online. Click on this link or paste the following text into your web browser's address box: http://www.youtube.com/LongTermCareInfo . The Association plans to add additional long-term care insurance claims stories throughout 2009.