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General Business IssuesYounger Market Drives Insurer Interest in Long-Term Care ProductsReprinted from the Sept. 18, 2006, issue of HEALTH PLAN WEEK (formerly Managed Care Week), the industry's leading source of business, financial and regulatory news of health plans, PPOs, and POS plans. The average age of people who purchase long-term care (LTC) insurance is decreasing, providing health plans with new avenues to market these plans, according to a new survey of the individual market for such insurance. Insurers such as Blue Cross Blue Shield of Michigan say recent government moves also could help sell these policies. In 1996, the average age for buyers of LTC products was 68. In 2005, that age dropped to 61, according to a new survey from America's Health Insurance Plans (AHIP) of 1,247 people who purchased LTC through the individual market. Both MedAmerica Insurance Co., a subsidiary of Excellus BlueCross BlueShield that offers LTC coverage through 34 Blues plans, and Blue Cross Blue Shield of Michigan subsidiary LifeSecure Insurance Company say they've also seen younger members enroll in such products. That's because health plans are now marketing LTC products, which typically cover services such as home health care, assisted living facilities and adult day care centers, as financial planning and pre-retirement products, the insurers say. Blue Cross Blue Shield of Michigan next month will be the latest player to enter the LTC market. In October, the plan will begin selling LTC insurance to Michigan residents through LifeSecure. For years, the bane of LTC products was that most people thought Medicare and Medicaid, which covers some long-term care, would cover all services, says LifeSecure President and CEO Lisa Wendt. But more people, especially those in the Baby Boom generation who take care of their parents, are now aware that many of those services are not covered in government programs. "That generation is dealing with long-term care issues and with their own issues. People see the stress that can be afflicted on caregivers for someone that needs long-term care," says Christopher Perna, president of MedAmerica Insurance Co. A new LTC Partnership Program that created an exemption in the law that allows those who purchase certain LTC policies to protect some of their assets and still qualify for Medicaid will help spur interest in such policies, Perna and Wendt say. The LTC Partnership Program was created in the 1980s, but Congress put a moratorium on such products after only four states developed programs under the partnership. A new law has lifted the moratorium and created incentives for younger customers to purchase LTC policies. AHIP and others are also pushing Congress to change the federal tax code to permit "above-the-line" federal income tax deductions for LTC premiums. Still, cost continues to be the biggest reason why people don't purchase LTC products. Fifty-three percent of the 214 people who answered the survey and opted not to purchase LTC insurance cited high costs as the biggest reason. Wendt says yearly premiums for those between the ages of 45 to 65 could be $600 to $1,800 per year and would cost more than $1,600 above age 65. MedAmerica in 2005 signed an agreement with Blue Cross and Blue Shield
Association to offer group LTC coverage through national accounts. But
that program has been "slow to get off the ground" says Perna.
MedAmerica would not disclose how many policies it had sold through
the program, but said it had 103,150 members in its LTC products as
of Aug. 31. With more health plans offering consumer-directed plans
and attempting to manage health costs, plans "have their plates
full," Perna says. But both Perna and Wendt say the new partnership
programs and a heightened awareness in the market about the costs and
coverage options for LTC will change that.
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