Only about 3 percent of Kansans have purchased long-term care insurance, but interest in the policies appears to be growing, state officials said.
Some of the interest is because of a new program that allows seniors with qualifying plans to protect more of their assets when applying for Medicaid, which many elderly rely upon to pay for nursing home care.
So-called Long-Term Care Partnership plans became available to Kansas consumers in 2007, said Cindy Hermes, director of Government and Public Affairs at the Kansas Insurance Department.
Seniors who need long-term care now must “spend down” virtually all their assets before they are eligible for Medicaid, Hermes said. They are allowed to keep only $2,000.
But for every dollar a partnership insurance policy pays out in benefits, the policyholder is allowed to keep a dollar in assets once they move to Medicaid. For example, a person with a $100,000 long-term care partnership policy that has been exhausted, they could then qualify for Medicaid and keep $100,000 in assets.
The insurance department has promoted the policies, Hermes said, and officials are noticing more people calling or coming to the department’s offices to learn about them.
Some of those most interested, Hermes said, have limited assets.
“If they just want to save their house, or just want to save their 10 acres, a plan like this would allow them to do that,” she said. “Then, when the policy is used up, they’d still be able to go onto Medicaid.”
The insurance department doesn’t know how many Kansans have signed up for partnership plans, Hermes said. But officials can tell that overall enrollment is increasing – 97,206 Kansans in 2007 were enrolled in long-term care insurance plans, up from 84,925 in 2006.
Partnership plans are more expensive than other long-term insurance plans but offer some additional benefits. One major requirement, Hermes said, is that they provide some protection against inflation for policies sold to people ages 75 or younger.
For example, a policy with a 5 percent inflation protection provision, would increase the policyholder’s base benefit by 5 percent a year.
Unlike some states’, Kansas insurance regulations do not mandate a particular percentage of inflation protection built into them, Hermes said
“Partnership policies in Kansas currently offer inflation protection from 2 percent to 5 percent,” she said. “Higher inflation protection means higher premium costs.”
Each plan’s costs depend on a number of factors, but a 55 year old could pay an annual premium of about $1,551 for a “regular” policy versus $1,815 for a partnership policy.
Seventeen companies have been approved by the state to sell partnership plans, Hermes said.
State employee plan struggles to attract vendor
Officials who run the state employees’ health plan have struggled to provide a long-term care option for members.
The plan is required by law to include a group long-term care insurance product for its members, said Doug Farmer, the plan’s director.
The state had a vendor in the past, but participation rates “weren’t fantastic,” Farmer said, and the vendor declined to extend its contract. About 700 members had signed up for the product.
Those members may still be enrolled in that vendor’s plan or other private plans, Farmer said, but not in affiliation with the state.
The state does not pay a percentage of its workers’ long-term care premiums. Employees paid the full costs themselves.
“The difficulty is that the statute requires us to offer a group policy,” Farmer said. “But when you’re writing a policy, you have to know what your group is to set the rate. You have to know their experience, their ages, gender, and general health status.
“The difficulty with the state option is that it’s not something the employer is offering to pay a percentage of, we’re just offering access to it. We can’t tell a company coming in how many people are in the group.”
A bid for proposals in January yielded one company applying to be the next long-term care vendor. But the firm’s proposal didn’t quite fit the state’s needs, Farmer said.
The state attempted to work with the company to build a suitable plan, he said, but could not reach agreement.
The Kansas Health Policy Authority, which administers the state employee health plan, will continue to look for another vendor, Farmer said. The Health Care Commission, the group of participants that approves the plan’s design, briefly discussed the matter at a recent meeting.
Farmer suggested that the Health Care Commission consider asking lawmakers to change the statute to allow the plan to offer access to individual long-term care policies within certain parameters.
“That way we could offer something more attractive than what people could get in the private marketplace on their own,” he said. “The Health Care Commission noted that this was something we could discuss going forward.”
-Sarah Green is a staff writer for KHI News Service, which specializes in coverage of health issues facing Kansans. She can be reached at sgreen@khi.org or at 785-233-5443, ext. 118.