Wall St. Journal – 12/16/02 – Encore section, p. R6 “Corporate Care – What Could Be Wrong with Buying Long-Term Care Insurance at the Office? More Than You Think”

This article attempts to point out the shortcomings of group long-term care insurance and that employees who purchase it can be lulled into a false sense of security. It mentions inflation several times, which is the greatest weakness of most group plans, in my opinion. Future purchase offers are normally advanced to keep initial premium low, and the uneducated purchaser won’t understand how high premiums can go in the future as additional increments of daily or monthly benefit are priced at older ages. Errors in the article are:

1. Future costs are projected to be $190,000 annually in 30 years, when the real future cost projection will be over $300,000 a year, based on the 5.8% projected by the Centers for Medicare and Medicaid Services.
2. A failure to mention that a lifetime benefit period usually isn’t an option in group plans, or if it is, additional underwriting is required. The rank and file employee usually doesn’t pursue that option and that’s another reason why group premiums tend to be lower.
3. A failure to mention that another reason for lower premiums for group plans is that most group plans are sold with 90 day waiting periods, which may not be appropriate for a middle America family. The article does mention that lower home care benefits are a reason for lower premium.
4. The erroneous statement that there are more than 140 companies that sell group LTCI plans. This is the number of companies that sell LTCI; the group sellers are much fewer.
5. Misinformation that adult siblings of active and retired Federal employees and members of the uniformed services are eligible for the Federal LTCI Program, and that’s not true.

The intention of the article to educate employees to find out exactly what they’re buying in a group LTCI plan is really good, and provides a service, which is the overall intent of the Encore section of the Wall St. Journal. www.WSJ.com