The Plot Thickens

Is it the beginning of the end or the end of the beginning? Our sales engagement troops are decimated. Too many of the valiant long term care specialists have long ago gone home to tell war stories of the once glorious quest to solve the LTCI conundrum. The intense marketing days of a million sales per year have begun to fade from memory. The past has become a ghost that continues to haunt the memories of the scarred veterans who remain at or near the sales battlefield. In truth the only visible historical evidence of past success is the myriad closed books of business being managed by a very small handful of premium and claims administrators. We can waste as much time as you wish debating what happened to bring us to this point. There seems, however, to be a general acceptance of the current reality of where we find ourselves. What will not leave my fevered and aging mind alone is where are the voices asking where do we go from here? We need to begin with the sure and certain knowledge that we cannot go back. Over a hundred companies will in my humble opinion never again sell/market a stand-alone accident and health individual comprehensive long term care policy. I do however hold out hope that some form of creative benefit and or innovative premium configuration may yet resurrect sales in the group market. Competitive employee benefits, particularly in a tight labor market, coupled again loudly with corporate premium deductibility may return sufficient gravitational pull to keep that market alive. I also believe that the combo life story will continue to have sales traction. However, we are equally aware that these options have built in structural limitations. Hopefully it comes as no surprise that selling life insurance does not include an “Easy” button. Doubling down on that difficulty remains problematic. Compound benefits require compound premium. This is true even if you are giving away that benefit with no current cost. There of course remains a cost; it has simply been postponed to the end of the exercise. Even the most casual analysis of LIMRA production numbers paints a clear picture that the great and vast majority of long term care look-alike chronic illness benefits are given away not sold. We should also take note that the growing evils of inflation may have a very positive corollary influence on interest sensitive products, particularly annuities, which still potentially represent the most cost effective method to pay for the additional benefit of custodial care.

Will we even raise an alarm that a catastrophic birth is still gestating in Washington State? Rosemary’s baby now has a due date of July 1,2023. It is more than a unique mandatory aberration of a publicly promoted very “progressive” state government. It is at its core a public recognition that our cumulative efforts to shift this enormous financial burden from public to private coffers has as yet proven inadequate.

As background The WA Cares Act was signed into law April 2021, a “first of its kind mandatory, state run, long term care insurance program.” It was supposed to go into effect January 1, 2022, but there were several “flaws” in its design that needed to be addressed in the legislative session that ended March 30, 2022. Implementation has been delayed until July 1,2023. Two new laws were passed and signed by the Governor to enhance the program:

  • Those who were allowed to “opt-out” of the program were increased to include disabled veterans, spouses of active duty military, and nonimmigrant status temporary workers. Employees with a permanent/primary residence outside the state as long as they never came back across state lines.
  • The program has a 10 year vesting requirement. Those retirees with less than 10 years may now receive a prorated benefit.

The largest flaw was not addressed, and this is the seminal event in time and space that you must understand will alter all our futures in the long term care market space. The existing opt out provision for all other employees was left standing intact. Almost a half million tried to get out from April to November 1, 2021, representing almost a third of the current workforce. Please understand that this door is now permanently and forever closed. You can still turn your paper work in, but only if your insurance was in place by last November 1. The program simply is content with cutting its losses to those few who actually got out during the brief opt out stampede. No one will ever again escape. I would have bet the ranch that additional provisions would have been enacted to regulate and affirm continued private insurance ownership. Staying out of the new payroll tax you might logically surmise would be a time sensitive concern. Certainly, there would be some circumstances where you could enter or leave the program. The program does not care that a few escaped past the concertina wire at the border, remaining prisoners will never escape. Portability and private policy ownership at the state border was also ignored traveling in either direction. Bottom line, you will be in the program now and forever.

Pandora’s Box will now be opened July 1,2023. Like Greek mythology, the security of the box had actually been left in our care. Curiosity now focused on panacea solutions of Medicaid relief and public trust fund largess will again be releasing physical and emotional curses on all mankind.

Other than that I have no opinions on the subject.

Ronald R. Hagelman, CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products.

A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing “friend” of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman and his partner Barry J. Fisher are principles of Ice Floe Consulting, providing consulting services for Chronic Illness/LTC product development and brokerage distribution strategies.

Hagelman can be reached at Ice Floe Consulting, 156 N. Solms Rd., New Braunfels, TX 78132 Telephone: 830-620-4066. Email: