# Presentation: 347414

## Long-Term Care Insurance:Improving 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

- 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

## 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?

## Long-term Care InsuranceMarket Realities and TrendsWhat research suggests consumers need to know

- Marlene S. Stum, PhD
- Family Social Science
- University of Minnesota

## 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”

## 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 it’s beginnings in 1987.  Average buyer age is 50.
- Group market penetration:  5-6% of eligible employees purchase

## 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

## 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.

## 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.

## 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

## 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

## 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)?

## 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

## 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

## 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

## Role of Resources

- Buyers were more likely to have:
- Higher household incomes
- More long-term care prior experience
- Higher financial literacy
- More self-efficacy

## Prior Long Term Care Experience

## Perceived Sources of PaymentWithout Long Term Care Insurance

## Consistent findings

- Enrollment barriers include:
- Perceived lack of affordability
- Insufficient information
- Confusion
- Complexity of policy features

## 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)

## Attitudes RegardingLong Term Care Coverage

## To improve consumer decision making

- Recognize this is a new decision making experience—confusion and lots of questions should be expected
- Who should buy LTCI?
- What’s the best age to buy?
- How much will it cost me?
- What happens to all the money I’ve paid if I never need LTC?
- What if the company I’m insured with goes out of business?
- When and how much will the premiums increase?
- If I’m interested, how do I select coverage features
- inflation protection, benefit amounts

## 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

## 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

## LTC: Educating the Consumer

- Dr. Ron Wall
- Hawaii Cooperative Extension Service
- University of Hawaii at Manoa

## 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?

## What is at stake?

- Getting needed care
- Getting into desired facility
- Paying for needed care
- Avoiding impoverishment
- Avoiding loss of estate

## 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.

## 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

## Your LTC Risk and Reality

- Family LTC history
- Your medical history
- Family support system
- Living arrangements
- Income and assets

## 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**

## 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**

## LTC Problems Beyond Money 

- Hiring home care
- Managing home care
- Supporting family care
- Adapting to group home
- Abiding institutional care
-       --**Impersonal?**
**      ****--Detached?**
**      ****--Regimented?**
**      ****--Isolating?**

## 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

## 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

## 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

## 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

## 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

## 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.

## 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

## 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

## 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

## Long Term Care InsuranceCritical ConceptsMary 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?

## 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?

## 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)

## 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

## 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

## 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