Long-Term Care Insurance Rates Surging in Pennsylvania

Long-term care insurance rates are skyrocketing in Pennsylvania, signalling potential insolvency risks and shocked insureds.
By: | January 24, 2019 • 2 min read

Long-term care insurance rates are skyrocketing in Pennsylvania, signalling potential insolvency risks and shocked insureds. In just October of 2018 alone, some insureds saw a 20 percent rate increase. But that’s just the beginning.

Snapshot​: The long-term care insurance market is facing a series of issues, especially in states like ​Pennsylvania​, as insureds live longer than expected, and years of depressed interest rates caused insurance company investment income to plummet. The biggest long-term care insurer operation in Pennsylvania, Genworth Life Insurance Co., has issued a letter to its policyholders, stating that it anticipates at least a 150 percent premium increase in the next six to eight years.

The company needed to act. Genworth, to put it into perspective, reported a $34 million loss in its third-quarter last year, naming long-term insurance as the cause. It estimates it has lost a grand total of $3.1 billion on long-term care insurance business.

The Good​: The long-term care market is being substituted with other products, like fixed annuities that offer some flexible benefits for long-term care or life insurance plans with features for non-hospital medical treatment. For those that do hold long-term care policies (and face a premium increase), Genworth is offering policyholders who don’t want to pay the premium anymore a paid-up policy equal in value to what has already been paid.  Genworth is doing that so policyholders who wish to drop their policies do not lose the premiums they’ve paid to date and still have some coverage in place and can still access care coordination services, which can be critically important at the time of need.  Genworth also gives policyholders who are receiving premium increases options to help them reduce or avoid premium increases altogether by adjusting their benefits, while still retaining some coverage.

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The Bad​: This is a growing trend. One Pennsylvania long-term care insurance company, Penn Treaty of Allentown, has already been forced into liquidation by state regulators, and more collapse could be on the horizon unless policyholders are willing to pay sharp increases in premium.

National Association of Insurance Commissioners data shows that there were 100 companies selling long-term care insurance in 2002. Today, only 17 remain. In addition to increased longevity among the United States’ senior population and investment income issues, some companies expected more policyholders to drop coverage before receiving benefits — this didn’t happen.

Why It Matters​: A 2016 Population Reference Bureau ​Fact Sheet​ on Aging in the United States found that the number of Americans age 65 and older is projected to more than double — from 46 million today to over 98 million by 2060, and the 65-and-older age group’s share of the total population will rise to nearly 24 percent from 15 percent. The actuarial mistakes that led to this crisis are compounding the already-depleted long-term care insurance market. If these products are no longer available, it could put the squeeze on other markets catering to retirees just as the U.S. sees an increase in people needing these services.

Learn More: The Philadelphia Inquirer ran an in-depth article on long-term care insurance premiums earlier this month, diving into the lives of those affected, as well as the advice insurers and brokers alike are giving to curb long-term care insurance rate spikes.

Nina Luckman is a business journalist based in New Orleans, focusing primarily on the workers' compensation industry. Her credentials include a B.A. and M.A. from Tulane University, both in the study of English Literature. Over the last several years, Nina has served as Editor of Louisiana Comp Blog, a news site she started in 2014 under the auspices of a group self-insurance fund. Louisiana Comp Blog won the WorkersCompensation.com Best Blogs award in 2016, 2017, and 2018. She can be reached at [email protected]

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]