Yes, it is.
In just a decade and a half, long-term care insurance (LTCi) has regained its popularity. Those of us entrenched in the LTCi field saw this trend looming on the horizon. It’s not rocket science; the demographics speak volumes. With over 50 million family caregivers in the U.S., it’s evident that their efforts can only stretch so far before the need for professional home or facility care arises.
The convergence of aging baby boomers requiring care, states acknowledging the pressing demand, and the strain on family caregivers have thrust LTCi back into the spotlight. Well, somewhat.
You’ve probably heard the tale: Without LTCi foresight, prolonged care expenses become a burden on personal finances. Once savings and assets dwindle, Medicaid steps in. But what happens when even Medicaid coffers run dry?
Fast forward to 2021. Washington State stood at the epicenter, grappling with the nation’s second-highest home care costs. State leaders foresaw a looming crisis and took action. Washington State passed legislation mandating an LTCi payroll tax on all W2 employees lacking private LTC insurance.
With a deadline set six months post-legislation, a frenzy ensued. The outcome? Over 400,000 traditional or hybrid LTCi policies were sold in a single state within six months. The demand was so great that the insurers stopped accepting applications as their underwriting departments were overwhelmed.
What a stark contrast to the paltry national LTCi purchases of the prior year, hitting a generational low of less than 100,000 policies.
One particular hybrid LTCi carrier emerges as a juggernaut, selling nearly 200,000 policies totaling $100 million in premiums, encompassing almost half of Washington’s policies. Remarkable as it may seem, this same carrier surpasses the $100 million mark in 2022 without the looming payroll tax, showcasing sustained demand for their product.
What’s on the horizon? Potentially California, New York, or Minnesota. Stay tuned for further developments.
Introducing New Solutions for LTC Funding
The group hybrid LTCi market is on a rapid ascent, growing by an impressive 50% annually. Carriers are taking notice, and so are other states. As I mentioned earlier, California and New York are cautiously exploring their own payroll tax options, joined by nearly 30% of all other states, as indicated by a recent Nationwide study. Additionally, numerous carriers are stepping into the arena with LTCi riders attached to their group life policies.
These fresh alternatives aren’t just catching attention because of the looming payroll taxes. They’ve hit a bullseye with their target audience: Guaranteed issue underwriting, pocket-friendly price ranges of $500 to $1,000 per year, and easily accessible product offerings facilitated through education and enrollment via employers and associations. These offerings will get better and better in the coming years.
Employer-backed LTCi serves as an entry point for the 97% of Americans currently without long-term care insurance. Providing individuals with a modest plan now may pave the way for comprehensive coverage in the future, fostering ongoing dialogue through continued education.
Exploring Guaranteed Issue Products Up Close
Let’s delve into these LTCi extension riders tailored for the masses. You might be pleasantly surprised by what’s achievable with just $1,000 per year on a guaranteed issue basis. One of the standout products in the individual LTCi realm is a life insurance hybrid that not only accelerates the death benefit but also extends LTCi coverage once the death benefit is exhausted. Following suit, these features have gained traction in group products as well.
For a mere $1,000 per year, you not only secure a $100,000 death benefit if long-term care isn’t required, but should your coverage deplete over 25 months, you could potentially receive an additional 25 or even 50 months (approximately four years) of coverage, amounting to $300,000.
The combination of value and accessibility is fueling this resurgence in LTCi planning solutions.
I’m excited! As many of you may know, I got my start in the financial services industry as an LTCi insurance specialist. From there, I quickly added life insurance and annuities, being an investment advisor, and then passed the 2-day CFP exam. My RICP and CLTC certifications were also added.
If you are or know a business owner who would be open to exploring adding some type of LTC benefits for your employees and/or executives, please contact me for more information.
all the best… Mark
PS – You can also contact me to learn more about the myriad of hybrid or traditional long-term care coverage for individuals and couples. We can find a good plan to suit most budgets.
PPS – My updated and expanded LTC book should be available on amazon.com by May 10!!