Long Term Care Industry Snapshot
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A snapshot of the long term care and LTC insurance industry in the U.S. Part of summer internship with Genpact april-2009
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Long Term Care Industry Snapshot
- 1. LTCI Industry Snapshot Date: 05-June-2009 Location: Genpact-Genworth COE
- 4. Self Insure Vs LTC insurance Source: Long-Term Care: Taking Care of the Future Sí, Money! Vol. 2, No. 3 June 2008 By Michael Grodsky Long term care expenses are beyond the reach of many individuals. LTC is the best option looking forward
- 5. Diversity in population The older population is financially and socially diverse Source: AARP-Across the states profiles of long term care and independent living – By ari houser, 2009
- 7. Penetration of LTCI Source: The current state of LTC insurance in the U.S – Milliman consultants - 2004
- 8. Porters’ Five forces model LTC industry is an industry of intense competition High Low High High Image source: Michael.E.Porter, Harvard business review, January 2009
- 13. Current share of private LTC Insurance 35% of Long term care is privately financed Source: Long term care – an essential element in health care reform- The scan foundation- Dec 2008
- 17. Potential market for LTC Insurance- contd Source: AARP-Across the states profiles of long term care and independent living – By ari houser, 2009
- 18. Potential market for LTC Insurance Source: AARP-Across the states profiles of long term care and independent living – By ari houser, 2009 Family caregiving is the main source for LTC in all U.S states. The economic value of family caregiving is higher than Medicaid LTC in all states
- 20. Impact of recession on LTC sales Consumers at workplace are less affluent and susceptible to economic variations Source: Looking at the impact of recession on Insurance industry- October 2008 – Limra.com Individual LTCI sales
- 21. Consumer outlook on Economy Consumer opinion on the economy is slowly turning favorable – As per LIMRA
- 22. Consumer outlook on Insurance companies Consumer opinion on the Insurance industry is not very favorable now– As per LIMRA
- 25. Shift from Medicaid to private LTC carriers The shift is from Medicaid funded LTC to private LTC insurance as government makes Medicaid LTC more stringent Source: The kaiser commission on the uninsured feb 2008
- 28. Contact Information Salar Bijili [email_address] +91-96544-49412 www.genpact.com Thank You Confidential. All trademarks appearing herein belong to their respective owners.
Hinweis der Redaktion
- Benefits need not be fixed, however, because of a policy feature called inflation protection. For example, a $310,000 lifetime benefit might cost a 48 year-old married person $2,000 during the first year of coverage. 30 years later at age 78, the lifetime benefit is now over $1,250,000 because of 5% annual compounding. The premium is still $2000 per year Currently, 83% of long term care is provided in the home or community, while only 17% is provided in a nursing home. 2 However, 40 percent of people over the age of 65 will need care in a nursing home for some period of time Long-Term care insurance can be expensive because the costs it insures against are so high. The value is in spreading out possible costs over many years instead of having potentially massive expenses occur over a short period. If ltc insurance is an appropriate choice, there are powerful reasons not to delay purchasing: 1) If accepted, you’re covered from day one; 2) Unlike health insurance premiums that increase with a person’s age, long-term care premiums are determined by the age when you first obtain insurance. Rates typically rise after the age of 30, so it’s usually not cheaper to purchase than when you’re 30 years old, and 3) the cost of waiting exceeds the money you’d save by delaying—assuming that ltc insurance is eventually purchased. For example, a $310,000 lifetime benefit might cost a 48 year-old married person $2,000 during the first year of coverage. 30 years later at age 78, the lifetime benefit is now over $1,250,000 because of 5% annual compounding. The premium is still $2000 per year (It is possible that future rate increases may be approved by the State of California, affecting everyone equally. Individual rate increases are not allowed).
- Half of ppl above 65 are below 300% of poverty line 20% live in non urban areas 20% have a degree or higher 33% of ppl above 75 years are living alone 40% of ppl above 65 years have atleast one disablilty
- The earliest Long-term Care Insurance product was offered in the 1970's. Of the original ten carriers, only two are still offering these products. The early products covered only Nursing Home Care. They were designed to be compatible with Medicare and included a three-day hospital wait and Medicare parallel language regarding skilled care. When Medicare payment system was restructured to Diagnostic Related Groups (DRGs) in 1983, the hospitals moved toward "sicker/quicker" discharge decisions. The next generation of LTCI policies in the mid to late 1980's recognized the need for Home Health Care compensation. Riders were attached for Home Health Care reimbursement. In the early 90's, Traveler was the first major LTCI issuer to interpret the LTCI contract into "one pool of dollars" and the first to integrate contracts, which covered the full range of benefits including Home Health Care, Adult Day Care, Assisted Living Care and Nursing Home Care. These policies were site neutral meaning that the consumer had a choice of where to use the policy benefits. Today's LTCI Options The newest generation of comprehensive LTCI policies offers care outside of America in foreign countries, coverage for family members on the same policy and policies that can be paid up after a specific number of years. All of these enhancements have continued to keep pace with the consumer's input as to what they want in an LTCI policy.
- Long tail of LTC insurance product Bargaining power of corporate clients Any existing insurance company may launch LTC product High entry barriers High exit barriers
- http://www.iii.org/media/facts/statsbyissue/longtermcare/
- 2007 marked a year of growth for long-term care insurance, with nearly $ 650 million in new annualized premium sales. But growth was reversed during the second half of 2008, the record sales of just over $ 600 million for the year. The number of new buyers almost 277,000 individual LTCI, down nine per cent for the end of 2008. Limra believes that this decrease in sales is returned to where they were in the early 1990s. There were approximately 4.8 million people LTCI policies in force at the end of 2008, an increase of two percent over the end of 2007. Despite economic pressures to which the Americans, the LTCI lapse rates continue to be low, with only four percent of policies (life), brought to the end of the year. Total premiums in force at the end of 2008 was approximately $ 8.6 billion, an increase of five per cent. Consumers at workplace are less affluent and susceptible to economic variations.
- Average age for LTCI is 58, life is 50 and universal life is 65
- The bank does not own the home but owns a lien on the property just as with any other mortgage You continue to hold title to the property as with any other mortgage The bank has no recourse to demand payment from any family member if there is not enough equity to cover paying off the loan There is no penalty to pay off the mortgage early The proceeds from a reverse mortgage are tax-free and available as a lump sum, fixed monthly payments for as long as you live in the property, a line of credit; or a combination of these options There are no income, asset or credit (except for current bankruptcy) qualifications The borrower(s) must be at least 62 years old The property must be the borrower's primary residence The money is withdrawn tax-free, does not affect Social Security or Medicare benefits, and can be used for any purpose the homeowner wishes The money can be received as a lump sum, a line of credit, a monthly payment, or any combination of these three options There are no mandatory monthly repayments. Most programs can be repaid at any time without penalty (the interest may be deductible) The title of the home does not change The maximum loan amount is set by the lender
- Remove state option to increase HEAT from 50000 to 75000 More stringent norms for qualification