Group LTC is changing - Not what it was

For many years the only way for employers to offer long-term care insurance (LTC) was using group plans. Plans were guaranteed issue (no exams or questions) and premiums were level for the lifetime of the employee.

Group enrollment was employee census driven and the payroll deduction of premiums and coverage was based on the employer state.

Now, Employers who want group are only being offered individual contracts - so called 'Multi-Life' LTC.   

Why?

Group carriers have mostly left the market. Most true “group” carriers aren’t enrolling new groups, and some of them have stop accepting applications on existing groups as well. This can cause a problem for employers’ HR departments and how to handle possible discrimination issues.

1)     LTC Insurance was underwritten on a guaranteed issue basis.

2)     Plans were voluntary programs so employees who saw themselves as more likely to need care in the future were the ones to sign up. You can see the problem where rates were based on a mix of high and low risk individuals but on the high risk ones actually enrolled.

The Shift to “Multi Life”

Multi Life uses Individual Contracts but the Billing is done through the company via Payroll Deductions (like supplement health products). By using individual contracts, carriers can ensure that the products they are placing are using the latest underwriting standards and pricing assumptions.  Many older group plans can be rigid, only offering one type of benefit such as professional home care. Also, no protection for inflation. Individual plans allow new employees or late entrants to the plan to get the latest product features and premium rates. Policy upgrades can also be accomodated.

• More flexibility in policy benefits: Individual multi-life products offer more flexibility in up to date product features. For example newer plans often can offer "cash alternatives' that can pay a benefit even if an at-home spouse is doing the caregiving - a feature often not available on "one-size fits all" group plans.

• Technology allows for individual products to be enrolled online: As mentioned above, an appeal of group products was a census driven enrollment - individual contracts years ago would have required pages of paper applications. Now, individual multi-life plans offer online applications.

What was once an easy selling and purchasing decision for Agents and HR has now forced both sides to be fully knowledgeable about all the options, new rules and a new level of detail.