Long-Term Care Insurance:
An Emerging Employee Benefit Opportunity
Ruth Larkin
President
LifeCycle Benefits
2000 Wadsworth Blvd., #202
Lakewood, CO 80214
Office: 303-202-5058
Mobile: 303-378-3038
rlarkin@lifecyclebenefits.com
Confidential & Proprietary
Agenda
 Establishing the need for Long-Term Care planning
 Long-Term Care Insurance Overview
 Overview of the CLASS Act
 LifeCycle Benefits
 Integrating LTC Insurance into the client stewardship process
 Establish Next Steps
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The Need for LTC Planning
Consider these facts:
 70% of Americans over 65 will need LTC1
 78 million Baby Boomers in the U.S. will start turning 65 in 20112
 Average LTC claim lasts 2.5 years3
 Average age when a claim starts is 824
 Average cost of care is currently $75,000 and is projected to exceed $300,000
per year in 30 years5
 A 50-year-old couple who each need 2.5 years of care beginning at age 82 can
expect to pay over $1.8 million for that care6
1U.S.
Department of Health and Human Services
www.longtermcare.gov
2U.S. Census Bureau Population Estimates as of 7/1/2006
3Genworth claims department
4Genworth claims department
5Genworth 2010 Cost of Care Survey
6Assumes cost of care increases at 5% per year
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LTC Insurance Overview
Key Components of a LTC Plan:

Daily/Monthly Benefit

Benefit Account Value / Pool of Money (Monthly Benefit x Benefit Period)

Inflation Protection (Automatic – Compound/Simple/CPI, or Periodic - FPO/GPO)

Elimination Period (Calendar or Service Days)

Levels of Care – Nursing Home, Assisted Living, Home Care, Informal Care

Claim Payment Method (Reimbursement, Indemnity or Cash)

Patient Advocacy Component/Provider Locator Assistance
Program Options in the Worksite Market:

Voluntary

Employer Funded Base Plan With Buy-Ups

Executive Carve-Out
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Program Options Overview
Voluntary Plan:

Demographic Analysis is Essential to Set Expectations

Typically Offered to All Eligible Employees/Group Can Be Stratified By Class

Program Access is Driven By Group Size, Industry, Demographics

Program Success is Dependent on Communication Access, Employer Support, Timing
Employer Funded Base Plan With Buy-Ups:

Demographic Analysis is Essential to Set Expectations

Can Be Offered to All Eligible Employees/Group Can Be Stratified By Class

Improves Pricing and Underwriting By Dispersing Risk

Can Bring “Large Group” Access to Mid Size Groups

Program Success is Still Dependent on Communication Access, Employer Support, Timing
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Program Options Overview:
LTC Executive Carve-out
Highlights:
 Discriminatory benefit (excluded from new PPACA nondiscrimination rules)7
 Premium contributions for executives and their dependents are tax
deductible to the employer8
 Employee pays no imputed income for the value of the benefit8
 Long-Term Care Insurance benefits are income-tax free8
 Benefits can be structured to reduce estate-tax liability
7Genworth
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Financial, Bulletin: Providing LTC Insurance only to Highly Compensated Employees, 9/3/2010
8American Association of Long-Term Care Insurance www.aaltci.org
Program Options Overview:
LTC Executive Carve-out
Sample Scenario:
 50 year-old executive
 Company funds and deducts LTC Insurance premium
 Company creates a “golden handcuff” by funding a 10-pay
 Premium is not counted as imputed income to executive
 Plan is fully portable
 Executive retires at age 65
 At age 80, executive has access to $2.4 million in tax-free benefits9
 At age 85, executive has access to $3 million in tax-free benefits9
 At age 90, executive has access to $3.9 million in tax-free benefits9
9
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Assumes $300 per day, 5 year benefit period, and 5% compound inflation
protection
Product Portfolio
Group LTC Plans: Group Policy Held By Employer - Situs Based
 Genworth
 UNUM
 Prudential
 CNA
Multi-life LTC Plans: Individual Policies Held By Insureds – State of Residence
 Genworth
 Prudential
 Mutual of Omaha / United of Omaha
 Transamerica
Asset-Based LTC Options: Annuities & Life Insurance With LTC Riders
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Starting the Process – What We Will Need
Information Needed for Client Evaluation:
 Client Name/Industry
 Situs State
 Current census file – DOB/Annual Salary/Job Title/DOH/Status/Residence State
 Do they have any LTC Program in place currrently?
 Are they looking for a specific enrollment period?
 Do they have other voluntary programs – what is general participation in 401k, etc
 How are benefits typically communicated and enrolled in this population?
 How many major locations do they have?
Copyright 2011 | LifeCycle Benefits | All Rights Reserved
The CLASS Act
Highlights:
 New voluntary Government LTC plan established by PPACA
 Many of the details will be worked out by the Sec of HHS by October 1, 201210
 According to the Department of Health & Human Services , the new plan will be
implemented 2013
 Employers will determine if they will participate in the program (no penalty for
employers not participating)10
 If an employer participates in the program, employees would be automatically
enrolled unless they “opt out”10
 No tax dollars can be used to offset premiums. Premiums must be “actuarially
sound”10
Copyright 2011 | LifeCycle Benefits | All Rights Reserved
10The
Henry J. Kaiser Family Foundation:: “Health Care Reform and the CLASS Act, April 2010
The CLASS Act
Benefits and Eligibility
 Pays a minimum benefit of $50 per day if a person needs assistance with ADLs
 No annual or lifetime maximum
 Enrollees must pay premium for 5 years before they would be eligible for a benefit
 Inflation protection will be based on the CPI
 Intended for working Americans who have a disability or health condition that
would prevent them from obtaining private LTC insurance
 Does not currently address eligibility for family members
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The CLASS Act (timeline)
 Formation of CLASS Advisory Council
 Establishment of CLASS Independence Fund
 Development of alternative CLASS benefit plans
 Establishment of enrollment procedures
 Establishment of state-based eligibility assessment
system
 Secretary to designate a
CLASS benefit plan by
October 1, 2012
 Enactment of CLASS Act,
March 23, 2010
 Issuance of Annual
Secretary Reports to
Congress, beginning
January 1, 2014
 Secretary to establish
procedures for enrollees
to apply for benefits by
January 1, 2012
2010
Copyright 2011 | LifeCycle Benefits | All Rights Reserved
2011
2012
2013
2014
LifeCycle Benefits: Your LTC Partner
Services Include:
 Client Evaluation
 Due Diligence
 Client Meetings/Presentations/Point-of-Sale Support
 Comprehensive Implementation/Enrollment/Account Management
 Ongoing Education/Training/Licensure Support
 CLASS Act Management and Resources
 Client Audits
 Ongoing Plan Management and Subsequent Enrollment
Copyright 2011 | LifeCycle Benefits | All Rights Reserved
LifeCycle Benefits: Your LTC Partner
Expertise Includes:
 25+ Years of Employee Benefit Experience
 16+ Years of Group Long-Term Care Experience –
Sales/Service/Implementation/Enrollment
 Implementation of over 100 major Corporations, Colleges & Universities
 Comprehensive LTC Industry Licensure/Continuing Education,
 CLTC Certification
 Active Participant in key Industry Organizations
 Industry Author and Speaker
 Vital Strategic Partnerships With Industry Leaders for Product Access/Support
 Personal Experience With Alzheimer’s & LTC Insurance Utilization
Copyright 2011 | LifeCycle Benefits | All Rights Reserved
Next Steps
Integrating LTC into the Existing Client Service Model:
 Current client service schedule (monthly, quarterly, pre & post renewal)?
 When are new products or services typically introduced and how?
 Who is responsible for introducing these products?
 Review of Client Opportunities to Determine Best Approach
 Discussion
Copyright 2011 | LifeCycle Benefits | All Rights Reserved
Background Information
Copyright 2011 | LifeCycle Benefits | All Rights Reserved
Contact Information
Ruth Larkin
President
LifeCycle Benefits
2000 Wadsworth Blvd., #202
Lakewood, CO 80214
Office: 303-202-5058
Mobile: 303-378-3038
rlarkin@lifecyclebenefits.com
Copyright 2011 | LifeCycle Benefits | All Rights Reserved