Federal LTC Program Gets The Job Done The federal long term care insurance program has been successful by any measure. Almost 265,000 federal employees have applied for insurance through the program, which was created in 2000 by Congress and organized by the U.S. Office of Personnel Management.
When the program completes underwriting on all open-season applicants by early spring, managers expect the program to be the largest employer-sponsored long term care insurance program in the country, with more than 215,000 enrollees, says Long Term Care Partners L.L.C., San Antonio, Texas, which sells the policies.
The program is owned by John Hancock Life Insurance Company, Boston, and Metropolitan Life Insurance Company, New York.
The support of the federal government has clearly been a factor in helping sales, industry experts say. Private insurers that sell long term care insurance policies at the worksite can copy the success of the federal plan by asking employers to support their plans through regular communication with employees, says Robert Pearson, president of CareQuest University, Madison, Wis.
Simply offering long term care insurance at the worksite is not enough, Pearson says. He wants employers to let employees know that long term care insurance is a benefit of significant value.
If the employer "doesnt get behind it and give their blessing verbally and through company newsletters and through communications, the program moves very sluggishly, if at all," Pearson says.
"Unlike disability and life offerings and other things that are traditionally offered through voluntary worksite benefits, this is least understood, so it requires additional education."
He cites the state of Wisconsin as an example of what can happen when an employer is not vocal in support of the program.
In 1991, CareQuest developed a division called HealthChoice for State Employees, primarily to help the state of Wisconsin develop a voluntary LTC program for state employees.
Like the federal government, Wisconsin gets its coverage from a highly trusted source. But, unlike the federal government, the state has shown official indifference about whether employees bought coverage.
"We can contrast the success of that, which has been minimal, compared to the success of the federal program," Pearson says. "The state of Wisconsin did not want to over-emphasize the importance of [long term care insurance] so all they did is allow a notification, but they didnt allow need build."
The notifications simply informed recipients that LTC options were available through the state for state employees, retirees and family members.
"I dont call that getting behind it, thats just making it available, and thats the difference we see in the marketplace between the employer who gets behind it and those who dont," Pearson says.
Minnesota also set up a voluntary LTC program for its employees. Like the federal government, Minnesota gave its program strong support.
"It wasnt that the policy was competitive," Pearson says. "To the contrary. But, in a little over one year, [it] garnered over 15,000 insureds."
If Minnesota had not backed the program so strongly, it "would have probably been lucky to get a thousand or two" insureds, Pearson says.
Paul Forte, chief executive officer of LTC Partners, agrees that the marketing of the product has had an impact on sales.
"This has been the largest effort that the country has had in LTC awareness," Forte says.
"It has a multi-phase, multi-media program that used print, a Web site, over 100 face-to-face meetings with people who are able to buy the policy. Education is really important in LTC insurance selling success.
"You get over a quarter of a million people to apply for a program over a six-month period and there is a connection to the media effort."
Tom Hoover, a financial representative in the Waukesha, Wis., office of Northwestern Mutual Life Insurance Company, says the federal program has helped the industry by increasing awareness. But consumers who are able to buy the federal product may not realize that they might find more competitively priced products in the general marketplace, Hoover says.
"Quite frankly, when I run across a federal employee, I suggest to them they look at their own private options," he says.
"They need to compare the whole thing and not assume the federal program is this great program that will solve their needs."
Hoover is quick to point out that John Hancock and MetLife are reputable companies indeed, but he says federal employees and qualified relatives should know that comparing the federal program to private plans is an important part of researching long term care options.
"My concern with the federal program is that people will buy it blindly and not sit down with an agent who can explain and examine what their actual need is," he says.
All in all, Hoover says the federal program is "a wonderful program because it educates the public, and thats what we need to do."
Reproduced from National Underwriter Edition, April 7, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.
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