Nursing Home Studies Reveal Benefit of Long Term Care Insurance

While less than a third of benefits from U.S. long-term care insurance companies pays for nursing home care, most Americans still associate policies with a costly nursing home stay according to the American Association for Long-Term Care Insurance. Two studies now look at the benefits of this increasingly popular protection.

A report published in the organization's annual Sourcebook revealed that nine percent of nursing home residents would have delayed going to a nursing home for necessary care in the absence of a nursing home policy. Some 13 percent reported they would have used a less costly provider in the absence of having long-term care insurance.

A new report issued this week has found that non-profit nursing homes provide better care than for-profit facilities. According to Canadian researchers, a review of 82 studies conducted starting in 1965 reported that 40 studies found that non-profit nursing homes provided significantly better quality care, while three studies concluded that for-profit homes delivered better care. The remaining studies had mixed results. Most of the studies were conducted in Canada and the United States.

Non-profit homes did better in four important quality measures: more or higher quality staffing; lower rates of pressure ulcers; less use of physical restraints; and fewer deficiencies cited by regulatory agencies. Based on their findings, the researchers calculated that if all nursing homes were non-profit, nursing home residents in the United States would receive 500,000 more hours of nursing care per day, while those in Canada would receive 42,000 more hours of nursing care per day.

The findings of the second study which were published online in the British Medical Journal suggest a trend toward higher quality care in non-profit nursing homes than in for-profit homes, said the researchers.

Last year American long-term care insurance companies paid some $8.5 billion in benefits to some 180,000 individuals. Some of the largest claims, typically for care in skilled nursing home facilities, exceed $1 million according to the industry organization. Long-term care insurance provides individuals with the ability to choose where care is provided, notes one industry expert. Choice and control are great benefits.

Posted On E-Max health by Jesse Slome from the American Association for Long Term Care Insurance

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.

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.