LIMRA Study: Group LTC Sales Continue Decline

For the second consecutive year, sales of new group long-term care plans sponsored by employers declined, according to a LIMRA International study of 12 participating companies. Windsor, Conn.-based LIMRA says the 12 companies represent most of the employer-sponsored group long term care market.

In 1995, sales of new employer groups dropped in two of the three categories measured. Number of participants dropped 27 percent, annualized new premiums fell 34 percent, and sales were up only in the number of new employer groups sold and only by a modest 5 percent over 1994 sales results.

As sales continued to drop, however, the coverage in force continued to rise, with the number of employer groups increasing 23 percent and overall participation increasing 9 percent.

Last year was the first year that the number of employer groups with plans in force exceeded 1000 and the first year of only single-digit growth in amount of in-force premium and number of participants.

The steady growth of in-force coverage against declining sales widened the disparity in average group size. A new group in 1995 was little more than one third the size of an in-force group in 1995. In 1994, a new group was roughly half the size of an in-force group.

The tax status of long-term care remains uncertain despite legislation introduced in 1995 and support from both political parties for clarifying it.

According to LIMRA, treating the coverage as an accident and health benefit for tax purposes may provide the incentive needed to spur more buyers to purchase long term care and more employers to offer it.

The diverse needs, circumstances and ages of the at-risk population mean that great flexibility of plan design and administration will be needed to provide a long-term care solution to the marketplace, LIMRA says.

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