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Insurance Continuing Education Online - LTCI Plans - Insurance - Long Term Care

Insurance Continuing Education Online - LTCI Plans   by edward hulse

in Insurance / Long Term Care    (submitted 2010-09-24)

In 1987 insurers began offering the first employersponsored or group Long Term Care Insurance plans. As has been the case with policies marketed to individuals, insurance companies have both entered and withdrawn from the market since that time. Ten years ago, of the 121 companies marketing LTCI policies at that time, less than 20% offered employer sponsored plans. Still, the number of employers offering group LTCI has begun to rise dramatically, with the most noticeable increase being in small businesses with less than 500 employees.

Many of the employersponsored LTCI plans in place are located in very large employee environments such as IBM, Ford Motor Company, Proctor & Gamble, and state government employee groups. In addition, most of these plans are not "off the shelf" policies. Instead, they have been designed specifically for a given group through consultation between the employer and the insurance company. As can be seen from the figures above, some insurance companies have begun to target small companies as lucrative markets for their plans, though the numbers show that only a very small percentage of all U.S. employer groups have been affected to date.

WHAT FACTORS AFFECT THE GROUP MARKET?

It has taken some time for insurance companies to enter the group LTCI market, the delay usually attributed to the high cost of entering this market. A significant start-up investment, including case management structures to deal with a myriad of variables in longterm care, is required. With a little more than a decade of experience in group LTCI, insurance companies do not yet have a large body of statistical data that they would like to finely hone policy provisions and pricing factors that can either promote profitability or contribute to high losses. Things are changing, however.

Insurer reluctance is not the only factor responsible for the small number of employersponsored LTCI plans. Employers who aren't exactly scouring the marketplace for additional employee benefits to offer have not yet fully embraced the concept. Perhaps the main stumbling block to a rapid growth is usually attributed to the high cost of other health benefits - medical insurance, by itself, can create a drain on profitability of a company as it still continues to grow. Therefore, they are really not interested in an additional benefit. However this is changing also as employers recognize tax breaks for premiums paid on an LTCI policy.

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