From the October 2009 Issue of Senior Market Advisor Magazine
Here comes Uncle Sam
The late Senator Edward Kennedy's Community Living Assistance Services and Supports (CLASS) Act of 2009, which would create an LTCI program for adults who become functionally disabled, is on everyone's radar. Jesse Slome, executive director of the American Association for Long-Term Care Insurance in Westlake Village, Calif., believes the act will increase inertia among prospective LTCI buyers who will use the act's potential passage to delay purchasing private policies. "In the short term, it will give millions of people a reason not to act," says Slome. "That will chase the incidental agent or broker out of the marketplace. The only ones who will remain are specialists because the marketplace will be that much smaller."
Nancy Morith, CLU, CASL, shares Slome's concerns that the CLASS Act could cause consumers to put off LTCI decisions. Morith, an adjunct professor of insurance at the American College and owner of the N.P. Morith Inc. insurance brokerage in Princeton, N.J., notes that approximately two dozen states have implemented partnership programs that promote the insureds' participation in the LTC coverage process. The act could cause confusion over which coverage a buyer should consider, she says. "We had, on the one hand, the partnerships saying we can't, as a state or federal government, take care of this (expense)," says Morith. "On the other hand, now, we have the possibility of a public program, so everybody has just stopped in their tracks."
From a longer-term perspective, Slome believes LTCI will become positioned as another government entitlement program, similar to Medicare supplement insurance. As the initial confusion over the government's coverage clears up, he says, it will be easier for producers to position traditional LTCI against a federal plan. Eileen Tell, senior vice president with the Long Term Care Group in Natick, Mass., agrees that a CLASS-type public solution might benefit the industry in the long run because a public program would provide widespread consumer education and awareness of the LTC-problem. Additionally, if a public program provides a limited benefit–such as the CLASS program's current configuration–consumers might look to supplement or elect not to participate in that program, Tell notes. "People would evaluate the cost of buying into that program and buying something to supplement it or just going with a straight private product," she says. "I think if it passes, you'll see private products designed to compete and complement the public program more effectively."
