LTC Bullet:  Why Buy LTCI?

Friday, October 24, 2014


LTC Comment:  Ironically, despite its recent trials and tribulations, more people—including reporters—emphasize reasons to buy long-term care insurance.

*** THIS JUST IN:  Registration is now open for the Fifteenth Annual Intercompany Long-Term Care Insurance Conference, scheduled for March 22-25, 2015 at the The Broadmoor resort in Colorado Springs, CO.  Your Center for Long-Term Care Reform will be there, as usual.  See you in Colorado Springs.  Check out the details here: *** 

*** LTC CLIPPINGS:  Did you catch these stories this week?  Our LTC Clippings subscribers received them in real time including Steve Moses’s always trenchant, often ironic, sometimes humorous, usually Twitter-length “LTC Comments.”  To subscribe or for a free trial, contact Damon at 206-283-7036 or

10/23/2014, “Raise Pay for Home-Care Aides? Disability-Rights Groups Say No Way,” by Josh Eidelson , Bloomberg BusinessWeek

10/22/2014, “Older Women and Challenges of Wealth,” by Fran Hawthorne, New York Times

10/21/2014, “Genworth, Once Part of GE, Offers Breakup Gains: Real M&A,” by Zachary Tracer and Brooke Sutherland, Bloomberg BusinessWeek

10/21/2014, “Assets Can Be Spent Down Safely to Qualify for Medicaid,” by Bernard A. Krooks, New York Elder Law and Planning Blog

10/20/2014, “5 ideas for selling LTCI to the Medicare generation,” by Stephen D. Forman, LifeHealthPRO ***



LTC Comment:  We’re seeing a gradual change in the tone of media articles about private long-term care insurance.  Less doubt and criticism; more focus on need.

Just yesterday, we clipped this piece in the New York Times for our LTC Clippings subscribers:

10/21/2014, “Finance Lab: They have a pension, long-term care insurance and savings. But is it enough?,” by Martha M. Hamilton

Quote:  “‘She owns a long-term care policy, which is good,’ Nathani said. Johnson added that many long-term care costs are not covered by Medicare or ordinary health insurance and end up depleting many people’s assets.

LTC Comment:  Long article in highly regarded national newspaper that takes for granted the value of LTCI.

In other words, we’re seeing more articles that assume the need for protection against the risk and cost of long-term care and fewer articles that focus on the product’s presumed shortcomings or cost.

Furthermore, it seems the public—even LTC experts—are coming around as well.  This week I received an inquiry from Cynthia Morton, Executive Vice President of the National Association for the Support of Long Term Care.  NASL is a trade association that advocates on behalf of professionals who provide medical services to long term care facilities.  She asked:

Steve, I wanted to see if you could steer me to some places on your website or others regarding why buy LTC insurance?  I get this question ALL the time and I have my own personal opinions but I want to keep up to date.  With several of the big companies getting out of the market, I need to be able to explain that simply and quickly.  Are there a couple pages on your site I should look to?  Actually, I am in the process of qualifying for my own LTC insurance. Yes, I am a little young for it but my broker says that [carrier omitted] is about to seriously raise their premiums and so he advised we get in now.  Don’t they always say that? 

I replied:

Hi Cynthia, 

How nice to hear from you.  Congratulations on your career success and on starting your LTC planning early.  Smart move.

I know you don’t need a lot of extra stuff to read, so I’ll give you my “elevator speech” answer to your question and then follow up with some links to relevant items on our website.

While people over 65 have a 70% probability of needing some LTC, they have only a 20% probability of needing five years or more.  In other words, LTC represents a small risk of catastrophic loss, which makes it ideal for a private-insurance risk-sharing solution. 


Most expensive LTC in the USA is paid for by Medicaid, which is a mean-tested “welfare” program with a poor reputation for access, quality, reimbursement and institutional bias.  Few people plan to go on Medicaid, but most who need long-term custodial care end up there, because of the program’s relatively easy and elastic financial eligibility rules.


The main reason to own LTC insurance is to ensure access to the best care in the most appropriate setting.  Private payers command red-carpet access to high quality care wherever it’s needed, in a nursing home, assisted living facility or in their own homes.  Unlike Medicaid recipients, private-payers can change providers easily if they or their families are unhappy.


The usual arguments against LTC insurance—denial and cost—are specious.  “It won’t happen to me” is belied by the facts.  “It’s too expensive” ignores the cost of the insured risk.  It’s usually better to trade the small risk of a big loss for the certainty of an affordable premium.


Finally, some carriers have left the LTC insurance business and most have raised their premiums.  That’s largely because of government fiscal policy (making Medicaid too easily available to too many at huge public cost thus depleting demand for private insurance) and monetary policy (forcing interest rates to near zero obviating insurers’ ability to get actuarially anticipated returns on their reserves.)


Bottom line:  LTC insurance is still a smart buy although government policy has made it more expensive.

OK, so it was a long elevator ride, but you get the picture.  Searching (Control-F) for “insurance” in our archive of LTC Bullets gave these returns among many more.

LTC Bullet:  Buy or Wait?, Friday, May 2, 2014:  The lead:  “ObamaCare has launched; Vermont is moving toward a single-payer health care system; surely long-term care is next.  So why buy LTCI?” 

LTC Bullet:  WSJ Misfires on LTC Insurance, Friday, February 14, 2014:  I dissected Susan Kaplan’s “The Case for Skipping Long-Term-Care Insurance” (Wall Street Journal, 2/10/14)

LTC Bullet:  The Insurance Dilemma, Friday, November 1, 2013:  The lead:  “What a mess!  The roll out of ‘health care reform,’ AKA the Affordable Care Act, AKA ObamaCare is almost universally panned in the media.  But most coverage misses the real story.  Real insurance is disappearing.”

LTC Bullet:  Why Don’t More People Buy LTC Insurance?, Friday, July 13, 2012:  The lead:  “Distinguished researchers have taken another stab at this perennial question, but they still miss the blindingly obvious answer, which follows.”

I concluded my reply there, but Damon chimed with this:

A Brief History of Long-Term Care Financing – This Bullet serves as an overview of how our long-term care financing system became so dysfunctional and, by extension, provides a framework for understanding why LTCi is so important and will become more so in the future.

These two Bullets in our Thousand Bullets Retrospective series are pretty good as well:

·       Reality Check: The Facts on LTCI:  Thousand Bullets Retrospective – A compilation of some of Steve’s best Bullets (dating back to 1998) that address misguided media coverage of LTCi and focus on the importance of taking personal responsibility and planning ahead financially for one’s own long-term care needs.

·       LTC Services:  Thousand Bullets RetrospectiveAnother compilation of some of Steve’s best Bullets (dating back to 1998) that focus on the link between quality services and private financing.

LTC Comment:  Bottom line:  the tide is turning.  We encourage LTCI carriers, distributors and producers to keep the faith and carry on.  Your time is coming.