A Demographic and Attitudinal Profile of Buyers of the Federal Long-Term Care Insurance Program

08/01/2004

U.S. Department of Health and Human Services

A Demographic and Attitudinal Profile of Buyers of the Federal Long-Term Care Insurance Program

LifePlans, Inc.

August 2004

PDF Version: http://aspe.hhs.gov/daltcp/reports/2004/buyprof.pdf (23 PDF pages)


This policy brief was prepared under contract between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and LifePlans, Inc. For additional information about the study, you may visit the DALTCP home page at http://aspe.hhs.gov/_/office_specific/daltcp.cfm or contact the ASPE Project Officer, Hunter McKay, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. His e-mail address is: Hunter.McKay@hhs.gov.


This policy brief is one of five commissioned by the Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation on Medicaid eligibility policies for long-term care benefits. This brief presents the fundamentals of Medicaid liens -- what they are, why they are permitted, and how they are applied by state Medicaid programs. Liens are a tool that states may use to ensure their right to recover past Medicaid spending on the property owner’s behalf when he or she, or certain close relatives, no longer needs the property. The remaining briefs address: a Profile of Non-Buyers; a Profile of Non-Responders; a Comparison of Active and Retired Buyers, Non-Buyers and Non-Responders; a Comparison of Engagement and Participation among Buyers, Non-Buyers and Non-Responders; and a Multivariate Analysis of Buyers and Non-Buyers. A Literature Review is also available.

I. BACKGROUND

One of the more ambitious proposals for encouraging growth in the private insurance market was the passage of the Long Term Care Security Act (Public Law 106-265). This act was passed in the summer of 2000 and was signed into law on September 19th of that year. It authorized the U.S. Office of Personnel Management (OPM) to contract for a long-term care (LTC) insurance program for federal employees. Medically underwritten coverage was made available to active federal employees and annuitants (civilian retirees), as well as active and retired members of the uniformed services. It was also made available to “other qualified relatives,” who would include current spouses of employees and annuitants, including surviving spouses of members and retired members of the uniformed services who are receiving a survivor annuity, adult children of living employees and annuitants, and parents, parents-in-law, and stepparents of living active employees. Because this coverage is medically underwritten, certain medical conditions prevented some people from being approved for coverage. OPM expected that, like the health and life insurance programs it administers, the Federal Long-Term Care Insurance Program (FLTCIP) would become the largest employer-sponsored LTC insurance program in the nation.

Naturally it was expected that implementation of the federal LTC program would spur additional interest and growth in the market. The program began in earnest in July of 2002, which constituted the beginning of the open enrollment period. The carriers underwriting the program -- John Hancock and MetLife -- formed a joint venture called Long Term Care Partners, LLC, which is devoted exclusively to administering the Program.

Long Term Care Partners conducted one of the largest LTC educational campaigns ever. More than one million people requested enrollment kits. As of August 2003, 273,000 applications had been received. About 64% of enrollees were active employees and spouses, 31% annuitants and their spouses, and another 5% surviving spouses, parents/in-laws and adult children. Thus, in relatively short order, the FLTCIP became the largest group programs in the United States. In part this was due to the significant marketing and enrollment activities including more than 2,100 educational meetings, briefings to human resources staff and outreach programs to affinity groups.

The large number of enrollments affords a unique opportunity to better understand the attitudes and perspectives of both working and retired individuals regarding LTC concerns, the importance of planning, and the role that insurance may (or may not) play in meeting the needs of disabled individuals. An examination of such attitudes can assist policymakers as well as insurers to better understand marketplace opportunities and barriers, and devise strategies to encourage growth in the market.

II. PURPOSE

The purpose of this project is to analyze survey data collected by Long Term Care Partners from members of the federal family regarding the LTC insurance offering available to them. The analysis focuses on the attitudes, opinions and motivations of both active employees and retirees who have enrolled in the program (“buyers”), those who have expressed an interest in the program but chosen not to enroll (“non-buyers”), and those who are members of the federal family but have not enrolled or expressed any interest in doing so (“non-responders”). As part of this project, we also compare the results to available data from other studies of non-federal buyers and non-buyers in both the individual and group markets. In this way we are able to determine the extent to which there are significant differences, which could influence both the marketing and future design of LTC insurance. Finally, we examine specific issues within each of he three sample groups.

This is the first in a series of data briefs based on the information collected from the three aforementioned surveyed groups. The analysis focuses on the attitudes, opinions and motivations of individuals who purchased policies. Where appropriate, we also compare these buyers to other individuals who have purchased private LTC insurance either in the individual or employer group markets. Relevant research questions we intend to answer in this brief include but are not limited to the following:

  • What are the socio-demographic characteristics of active and retired buyers as well as individuals who were not accepted into the insurance program (declinees)?
  • What are the principal factors motivating active and retired buyers to participate in the federal LTC insurance program?
  • What is the attitudinal profile of active and retired buyers with respect to retirement planning, experience with LTC, attitudes about insurance, and knowledge of risk?
  • What are the types of policies that these individuals have chosen and what process did they undertake as they approached the purchase decision?
  • How do these buyers compare to those who have purchased either individual policies or other employer group policies?

III. METHOD AND SAMPLE

We used mail surveys to collect information from buyers. A “buyer” is someone who has purchased the insurance plan through the federal program and paid premiums beyond the free look period. Between the months of January 2003 and April 2003, roughly 2,700 surveys were mailed out to individuals who had enrolled in the federal program. About 63% of these individuals -- 1,756 respondents -- returned their surveys. This is a particularly high response rate for a mail survey. Of these, 642 were active employees and 1,114 were retirees. Once returned, these surveys were linked by a unique identifier to administrative data at Long Term Care Partners. This data contained information on the policy designs chosen by these buyers. The identifier was then stripped from the data file so that specific information could not be correlated to a specific individual.

IV. FINDINGS

A. Demographic Characteristics of Buyers

In the analysis that follows, we segment all data by work status. That is, we focus separately on active employees versus retirees. Figure 1 below summarizes key demographic characteristics of the sample of buyers.

FIGURE 1: Socio-Demographic Characteristics of Federal Buyers
Bar Chart: % Male -- Active Federal Buyers (50%), Retired Federal Buyers (70%); % Married -- Active Federal Buyers (59%), Retired Federal Buyers (68%); % College Graduate -- Active Federal Buyers (70%), Retired Federal Buyers (58%); % Incomes greater than $75,000 -- Active Federal Buyers (60%), Retired Federal Buyers (29%); % Assets greater than $100,000 -- Active Federal Buyers (55%), Retired Federal Buyers (67%).
SOURCE: Analysis of Buyer Data from Federal Long-Term Care Insurance Program, 2003.

As shown, a much higher percentage of retirees is male and this reflects the fact that a large proportion of those who comprise the group of retired federal employees were made up of retired military. Most buyers are married and have a college education. While active employees are much more likely to have annual incomes greater than $75,000, a higher percentage of retirees have assets in excess of $100,000. This is not surprising given that retirees have had many more years to save. The average income of active buyers is about $86,000 and about $65,000 for retired buyers. The average age of active employees is 53 whereas the average age of retirees is 66.

Figure 2 below shows differences between the federal retiree sample and a sample of buyers age 55 and over that purchased policies in the individual market in the year 2000.

FIGURE 2: Socio-Demographic Characteristics of Retired Federal Buyers and Buyers in the Individual Market
Bar Chart: % Male -- Retired Federal Buyers (70%), Individual Market Buyers (45%); % Married -- Retired Federal Buyers (68%), Individual Market Buyers (70%); % College Graduate -- Retired Federal Buyers (58%), Individual Market Buyers (47%); % Incomes greater than $50,000 -- Retired Federal Buyers (49%), Individual Market Buyers (42%); % Assets greater than $100,000 -- Retired Federal Buyers (67%), Individual Market Buyers (71%).
SOURCE: Analysis of Buyer Data from Federal Long-Term Care Insurance Program, 2003 and Health Insurance Association of America, 2000.

Retired federal buyers tend to be more male, somewhat more educated, and have higher annual incomes than individual market buyers. On the other hand, a greater proportion of individual market buyers have asset levels greater than $100,000.

Figure 3 summarizes socio-demographic differences between active federal buyers and individuals purchasing group policies in other employer settings. Active federal buyers tend to have a higher proportion of males, are less likely to be married and have somewhat higher incomes than buyers derived from other employer groups. In contrast, a higher proportion of non-federal actives have assets in excess of $100,000.

FIGURE 3: Socio-Demographic Characteristics of Active Federal Buyers and Employer Group Market
Bar Chart: % Male -- Active Federal Buyers (50%), Employer Group Buyers (43%); % Married -- Active Federal Buyers (59%), Employer Group Buyers (66%); % College Graduate -- Active Federal Buyers (70%), Employer Group Buyers (73%); % Incomes greater than $75,000 -- Active Federal Buyers (60%), Employer Group Buyers (56%); % Assets greater than $100,000 -- Active Federal Buyers (55%), Employer Group Buyers (63%).
SOURCE: Analysis of Buyer Data from Federal Long-Term Care Insurance Program, 2003 and Health Insurance Association of America, 2000.

Declinees

The vast majority of individuals -- 85% -- applying for the federal program qualified to receive policies.1 Of the small number of individuals who were declined based on medical underwriting, most already had chronic conditions or heart- or bone-related issues that made them probable immediate or near term claimants. All individuals not accepted into the insurance program were given the opportunity to enroll in the Federal “Service Package” Program. For a flat annual fee, enrollees to this non-insurance option would have access to a care coordinator, general information and referral services and access to a discounted network of LTC providers and services.

As of October 2003, 2,092 individuals had enrolled in the service package program. The average age of these individuals was 73. Slightly more than half (52%) were female and 60% were married. Slightly more than four in five are annuitants.

It is also worth noting that a small number of individuals who were declined from the program due to health reasons were offered alternative insurance, that is, insurance with more limited benefits than those offered to the vast majority of applicants. Of the roughly 2,700 individuals who fell into this category, about 500 accepted this alternative insurance.

B. Attitudes and Opinions about Retirement Planning and Long-Term Care

Previous research indicates that individuals purchasing LTC insurance tend to be “planners” who think about their retirement, understand the LTC risk and take steps to secure their retirement (HIAA, 2000; ACLI, 2000). In these respects, federal buyers are no different. More than 80% have engaged in active retirement planning, have a good idea about how much they will need to save to live comfortably during retirement and are confident that they have enough money to meet their retirement needs. Almost four in five are also confident that they will have enough money to maintain their living standards during retirement. This applies to both the active and retired sample. Almost all buyers -- more than 90% -- have thought about how to pay for LTC expenses during retirement and similar percentages view having LTC insurance as an important component of a retirement plan.

While there may be many reasons why an individual chooses to purchase insurance, knowledge about the potential impact of a long term care event would certainly play a role. Figure 4 below shows the experience that buyers have had with LTC.

FIGURE 4: Experience with Long-Term Care among Federal Buyers
Bar Chart: Parent needed LTC -- Active Federal Buyers (56%), Retired Federal Buyers (61%); Knew someone who spent most of assets on LTC -- Active Federal Buyers (54%), Retired Federal Buyers (56%); Knew someone who had financial hardship due to LTC -- Active Federal Buyers (44%), Retired Federal Buyers (37%); Have been a Caregiver -- Active Federal Buyers (26%), Retired Federal Buyers (31%).
SOURCE: Analysis of Buyer Data from Federal Long-Term Care Insurance Program, 2003.

A majority of buyers in both groups have had parents that required LTC or knew someone who spent most of their assets paying for these services. Somewhat surprisingly, despite the difference in age between the two samples, differences regarding LTC experience are not that great. Between one-quarter and one-third of the buyer samples have had personal experience being a caregiver. Given the high level of awareness among the sample, it is therefore, not surprising that more than two-thirds of each sample believed that they were likely to need LTC at some time in the future. This is consistent with data from national surveys of buyers in the individual market and in the employer group market, most of whom -- 60% to 70% -- believe that they will need LTC sometime before they die.

C. The Purchase Process

Most buyers -- 58% of actives and 72% of retirees -- indicated that even before the federal offering they were considering purchasing LTC insurance. Moreover, between 30% and 40% offered that they were planning to buy the insurance even if the Federal Government had not offered it. While it is difficult to gauge the strength of this stated intention, it does suggest that even before the marketing campaign got under way, a meaningful proportion of future buyers had seriously explored the purchase of LTC insurance. This is not inconsistent with national surveys, which show that roughly 45% of individuals age 55 and over have at some point thought about or considered buying a policy (HIAA, 2000).

Most buyers -- 54% of active buyers and 67% of retirees -- did compare the federal program to other LTC insurance plans. When asked why they purchased the federal plan instead of another LTC insurance plan, 52% of actives and 62% of retirees indicated that federal sponsorship was the most important reason. About one in six also indicated that they felt that the federal program had lower rates, thus making it more attractive to them. Although not among the most important reasons, about two in five active buyers indicated that they felt it was easier to qualify for the federal program and slightly less than a third also felt it was important that the program was underwritten by Long Term Care Partners. Among retirees, lower rates, better benefits and the program underwriters were cited as important reasons to prefer the federal program over competing individual plans.

Most buyers had a relatively easy time with the application process. More than 90% found it easy to obtain an application, to understand the application and to complete the health questions. On the other hand, 15% found it difficult to read through all of the application materials. This may relate more to the quantity of information rather than the quality of the materials. Most married buyers discussed their purchase with their spouse and among active buyers, three-quarters also discussed their decision with their co-workers. Across both samples, spouses had the greatest influence on the purchase decision.

Program sponsors invested significant resources into the marketing of the program. Educational meetings, mailings, articles, satellite broadcasts, and advertisements were some of the methods used to reach people. Buyers were asked whether they had been exposed to some of these activities and which they felt were particularly useful. Among active buyers, visiting the website (69%), reading program brochures (89%) and advertisements (45%), and attending educational meetings (34%) were viewed as helpful. While trends are similar among retirees, far fewer -- 40% -- visited the website.

There are many reasons why individuals purchase LTC insurance. Some people want to avoid being a burden on family and friends, others want to have the financial wherewithal to choose certain providers, whereas others want to assure living standards. Figure 5 below summarizes the single most important reasons why individuals in the federal and non-federal markets purchased their LTC insurance policy.

FIGURE 5: Single Most Important Reason for Purchasing Long-Term Care Insurance among Federal and Non-Federal Buyers
Bar Chart: Assure Affordability of Care -- Federal Actives (28%), Employer Group Market (19%), Federal Retirees (23%), Individual Market (14%); Avoid using own income/assets -- Federal Actives (22%), Employer Group Market (25%), Federal Retirees (25%), Individual Market (31%); Avoid relying on family/relatives -- Federal Actives (34%), Employer Group Market (21%), Federal Retirees (36%), Individual Market (19%); Assure spouse living standards -- Federal Actives (7%), Employer Group Market (12%), Federal Retirees (10%), Individual Market (12%); Other -- Federal Actives (9%), Employer Group Market (23%), Federal Retirees (6%), Individual Market (24%).
SOURCE: Analysis of Buyer Data from Federal Long-Term Care Insurance Program, 2003.

As shown, among active employees, the desire to avoid being a burden on family and friends is a primary reason for purchase among federal employees; in contrast, individual buyers in the non-federal employee group market are most likely to cite protecting income and assets as the primary purchase reason. The same pattern persists among retirees and individual buyers. The key point is that there are a variety of reasons that are related to the purchase decision in the federal market as well as other markets.

D. Policy Designs

Individuals interested in purchasing the federal LTC insurance plan could choose among four pre-packaged plans or they could choose to customize their own plan. The four pre-packaged plans included (A) a facilities-only plan that pays $100 per day for three years; (B) a comprehensive plan that pays $100 per day for three years; (C) a comprehensive plan paying $150 per day for five years; and (D) a comprehensive plan paying $150 per day for an unlimited benefit period. All of these plans had a waiting period of 90 days and individuals could choose to purchase automatic benefit increases or a guaranteed future purchase option. The custom plans allowed individuals to choose daily benefit amounts in increments of $25, whether the plan covered facility care only or a comprehensive set of services, a 30 or 90 day waiting period and benefit period choices of three, five or unlimited durations. There was also an option to have benefits calculated on a weekly basis. Again, individuals could choose to purchase automatic benefit increases or a guaranteed future purchase option.

Table 1 summarizes the policy designs chosen by active and retired buyers of the federal program as well as by buyers in the non-federal individual market and the employer group market. As shown, the clear trend across all groups is to purchase comprehensive coverage. Fewer than one in five purchase facility-only policies. Also, a smaller percentage of federal buyers purchase unlimited duration policies than buyers in other markets. In fact, federal buyers are only half as likely to purchase policies with unlimited durations. On the other hand, a much higher percentage -- 72% of federal actives and 62% of federal retirees -- chose automatic benefit increases as part of their policy design. The difference is particularly pronounced in the retiree market where three times as many federal buyers chose automatic benefit increases compared to buyers in the individual market. Potentially, these buyers traded off unlimited duration for more protection of daily benefit levels. Given the three-year difference in data collection times -- 2003 for federal buyers and 2000 for non-federal buyers -- it seems that daily benefit amounts are roughly comparable. Daily benefits are higher among actives than they are among retirees.

TABLE 1: Policy Design Characteristics Chosen by Federal and Non-Federal Buyers of Long-Term Care Insurance
Policy Features   Active Federal  Buyers   Buyers in the  Employer Group Market1   Retired Federal  Buyers Buyers in the  Individual Market  
Policy Type
   Comprehensive 93% 97% 85% 77%
   Facility Only 7% 3% 15% 14%2
Duration of Coverage
   3 years 41% 26% 62% 22%
   5 years 40% 25%3 23% 10%
   Lifetime 19% 39% 15% 30%
Elimination Period
   30 days 15% 36% 8% 16%
   90 days 85% 56% 92% 55%
Inflation Protection
   Automatic 72% 40% 62% 22%
   Future Purchase 28% 48% 38% ---4
Average Daily Benefit Amount $135 $124 $120 $109
   Up to $100 3% 8% 3% 25%
   $100 to $149 40% 61% 59% 55%
   $150 and over 57% 31% 38% 20%
Average Premium $1,206 $722 $1,661 $1677
   Up to $500 16% 43% 6% 5%
   $500-$999 30% 35% 22% 24%
   $1,000-$1,499 24% 13% 27% 26%
   $1,500-$1,999 17% 6% 17% 18%
   $2,000 or greater   13% 3% 28% 27%
SOURCE: Analysis of Buyer Data from Federal Long-Term Care Insurance Program, 2003 and Health Insurance Association of American, 2000. NOTES: Data from the non-federal buyers was derived from 3,212 individuals in the employer group market and 5,407 individual buyers age 55 and over. Data was for policies sold in 2000.
  1. Numbers may not sum to 100% because other options are available in the employer group and individual market that were not available to federal employees.
  2. Does not sum to 100% because 9% purchased policies only covering home care services.
  3. Duration was classified as 3 to 5 years. The percentage is divided equally between 3 and 5 years.
  4. Future purchase option data was not collected uniformly at this time.

Finally, premiums are strikingly similar among retirees and buyers in the individual market but markedly different among actives. In fact, premiums are 67% higher among active federal buyers compared to buyers in the employer group market. In large part this is a function of the fact that more than twice as many federal buyers have automatic benefit increase options built into their policies than their counterparts in the employer group market. It also reflects more recent experience data related to lapse rates of LTC insurance policies and claims data, which have a major impact on policy premiums.

Because LTC insurance has a variety of features that affect levels of coverage as well as policy premiums, it is often seen as a complicated product that may be difficult to understand. Buyers were asked about certain specific features of their policy. Their answers were then compared to what was on record as having been purchased. About 90% correctly identified whether their policy covered home care, slightly more than 80% correctly knew whether they had chosen automatic inflation protection and 77% knew whether they had unlimited coverage. Taken together, however, the data suggests that a meaningful proportion of buyers were uncertain of at least one feature of their purchase decision. About one-third of active buyers and 38% of retirees did not know at least one of their policy design features.

V. CONCLUSIONS

While there are many similarities between buyers in the federal and non-federal markets, there are some important differences. There are fewer married federal buyers. This may reflect the fact that in the individual and employer group-markets many companies offer premium discounts for married couples who purchase policies. This tends to attract a higher percentage of married applicants. Also, in both the active and retired market, federal buyers tend to have higher levels of income and lower levels of assets. This may explain why protecting assets is a primary purchase reason among non-federal employees whereas among federal buyers, the desire to avoid being a burden on family and friends is the primary purchase motivation.

Clearly, federal buyers have a greater likelihood of having more of their LTC expenses covered by insurance than do non-federal buyers. This is because of the extremely high proportion of buyers who purchased automatic benefit increases. This assures that even as service costs increase, the purchasing power of insurance benefits will not decline. Given that this point was emphasized during the marketing campaign, it would appear to have been very successfully communicated. It appears that overall experience with LTC, both knowing someone who needed care and/or knowing someone who used significant monetary resources for LTC may have “prepared” those who purchase. Finally, use of the Internet appears to have played a major and significant role in the purchase process, even among federal retirees. This is instructive for other affinity or employer-groups that are interested in implementing an LTC insurance program.

REFERENCES

American Council of Life Insurers (2001). Long-Term Care Insurance at Work. The Retirement Link and Employer Perspectives. Research Findings. Washington, D.C. July.

American Council of Life Insurers (2001). Making the Retirement Connection. The Growing Importance of Long-Term Care Insurance in Retirement Planning. Research Findings. Washington, D.C. March.

Cohen A. M. and J. S. Miller (2000), “Long-Term Care Insurance and Retirement Planning: The Road to Retirement Security,” LifePlans, Inc. Waltham, MA.

Health Insurance Association of America (2000), “Who Buys Long-Term Care Insurance in 2000? A Decade of Study of Buyers and Nonbuyers,” Washington, D.C.

Health Insurance Association of America (1990), “Who Buys Long-Term Care Insurance?” Research Findings. Washington, D.C.

Health Insurance Association of America (1995), “Who Buys Long-Term Care Insurance? 1994-95 Profiles and Innovations in a Dynamic Market,” Washington, D.C.

NOTES

  1. Applicants had to answer a series of health related questions when applying for the insurance. A decline rate of 20% in the individual LTC insurance market is about the industry average.

APPENDIX

Notes for Tables

Unless otherwise indicated, the analysis of the data is based on the responses of 6,870 active and 487 retired non-responders.

All significance tests are based on 5% level or better. Notations for significance are as follows: If one category out of three contains the symbol (*), then the category starred is statistically different from each of the other two categories, but the non-starred categories are not different from each other. If two categories out of the three contain the symbol (*), then those two categories are statistically different from each other, but each of those categories is not statistically different from the third one. If all three categories contain the symbol (*), then all three are statistically different from each other.

Unless otherwise specified, only the response category that has a notation of significance was tested against all other categories. In some cases, it was determined that a combination of categories would be tested. These are indicated in the footnotes. It also may be the case that if categories were or were not combined, it could change the results of the test of significance.

Unless otherwise indicated, only the first response category (i.e., strongly agree, very important, very likely, etc.) or the yes response was tested. Therefore, if there are no notations for significance, the test was not significant at the 5% level.

TABLE A-1: Socio-Demographic Characteristics of Active and Retired Buyers1
  Socio-Demographic Characteristics     Active Buyers     Retired Buyers  
Average age 53 66
   Less than 50 27% 1%
   50 to 54 25 3
   55 to 59 26 14
   60 to 64 15 24
   65 and over 7 58
Gender
   Male 50 70
   Female 50 30
Marital status
   Never Married 17 9
   Married 59 68
   Divorced/separated 18 10
   Widowed 4 12
   Domestic Partner 2 1
Presence of children living within 25 miles
   Yes 42 51
   No 58 49
Education level
   Less than high school graduate 0 1
   High school graduate 6 14
   Technical/trade/business school   4 5
   Some college 20 22
   College graduate2 37 30
   Graduate degree 33 28
Average income3 $86,929 $64,796
   Less than $15,000 0 1
   $15,000 to $24,999 0 3
   $25,000 to $34,999 3 8
   $35,000 to $39,999 2 9
   $40,000 to $49,999 8 15
   $50,000 to $59,999 9 15
   $60,000 to $69,999 10 12
   $70,000 to $74,999 8 8
   $75,000 to $99,999 23 16
   $100,000 to $124,999 15 7
   $125,000 or more 22 6
Average liquid assets3 $201,176 $209,405
   Less than $10,000 7 4
   $10,000 to $19,999 3 3
   $20,000 to $29,999 5 3
   $30,000 to $49,999 10 7
   $50,000 to $74,999 13 9
   $75,000 to $99,999 7 7
   $100,000 to $124,999 8 8
   $125,000 to $149,999 6 6
   $150,000 to $199,999 9 9
   $200,000 to $249,999 10 7
   $250,000 and above 22 37
Home ownership
   Yes 90 92
   No 10 8
  1. Unless otherwise indicated, the analysis of the data is based on the responses of 642 active buyers, 575 active non-buyers, 6870 non-responders, 1114 retired buyers, 586 retired non-buyers and 487 retired non-responders.
  2. Here, having a college degree or better is tested for significance against not having a college degree.
  3. Averages were calculated by taking the midpoints of the ranges.
TABLE A-2: Attitudes and Opinions About Retirement Planning and Long-Term Care Among Active and Retired Buyers1
  Attitudes and Opinions     Active Buyers     Retired Buyers  
Done retirement planing
   Yes 86% 87%
   No 14 13
Determnied how much to save to live comforably in retirement
   Yes, a definite sense2 24 28
   Yes, a general sense 56 58
   No 19 14
   Do not plan to retire 1  
Confident that there is enough money to live comfortably in retirement
   Very confident 62 32
   Somewhat confident 12 59
   Not very confident 3 8
   Not at all confident 2 1
   Do not plan to retire    
Standard of living during retirement will be:
   Better than during working years   8 18
   Same as working years 70 71
   Worse than during working 20 11
   Do not plan to retire 2  
Thought given to paying for LTC expenses
   A great deal 57 66
   Some 33 32
   Not much thought 8 2
   No thought at all2 2 0
How important is LTC insurance to retirement planning
   Very important 57 59
   Somewhat important 38 39
   Not very important 4 2
   Not at all important 0 0
   Have not started planning 1 0
I worry how to pay for LTC3
   Strongly agree 16 17
   Agree 42 52
   Disagree 32 26
   Strongly disagree 10 5
It is important to plan now for the possibility of needing LTC services in the future
   Strongly agree 51 48
   Agree 44 51
   Disagree 3 1
   Strongly disagree 2 0
LTC insurance programs sold today will cover the cost of LTC services needed in the future
   Strongly agree 9 10
   Agree 67 69
   Disagree 21 19
   Strongly disagree 3 2
How would LTC costs be paid3
   Medicaid 3 2
   Medicare 9 6
   Medigap Supplement Policy 1 1
   Own health insurance or retiree health care plan   28 18
   Own income 36 62
   Children will help pay 1 0
   Other 4 2
   LTC insurance    
   Don't know 18 9
  1. For the purpose of the analysis in Tables 5 through 11, active non-buyers and non-responders and retired non-buyers and non-responders of the FLTCIP that have LTC insurance with another company are considered to be buyers. The sample sizes for the six samples are: 989 active buyers, 516 active non-buyers, 6582 active non-responders, 1264 retired buyers, 479 retired non-buyers and 444 retired non-responders.
  2. Here, having a general or a definite sense of how much needs to be saved were combined and tested as a single yes response. Those who did not plan to retire were removed from the analysis.
  3. Active buyers were asked whether they worried about how to pay for LTC services before they purchased the FLTCIP and how they would pay for LTC in the absence of their LTC policy.
TABLE A-3: Experience with Long-Term Care Among Active and Retired Buyers
  Experiences with LTC     Active Buyers     Retired Buyers  
Respondent needed LTC
   Yes   1% 1%
   No 99 99
Spouse needed LTC
   Yes 2 3
   No 98 97
Parent needed LTC
   Yes 56 61
   No 44 39
Close friend needed LTC
   Yes 8 11
   No 92 89
The respondent has been a caregiver
   Yes 26 31
   No 74 69
The respondent knew someone who used most of his/her assets to pay for LTC
   Yes 54 56
   No 46 44
The respondent has experienced financial hardship as a result of caring for an elderly relative
   Yes 8 5
   No 92 95
The respondent knew someone who has experienced financial hardship as a result of caring for an elderly relative
   Yes 44 37
   No 56 63
TABLE A-4: Self-Assessed Risk of Needing LTC Among Active and Retired Buyers and Views About LTC Coverage of Costs
  Type of LTC     Active Buyers     Retired Buyers  
How likely is it that:
a) the respondent thinks he/she will need help with everyday activities like bathing and dressing
   Very likely 11% 8%
   Likely 16 17
   Somewhat likely   40 45
   Not very likely 26 24
   Not at all likely 7 6
b) the respondent thinks he/she will need home care services for more than three months
   Very likely 11 7
   Likely 19 18
   Somewhat likely 42 47
   Not very likely 22 22
   Not at all likely 6 6
c) the respondent thinks he/she will need nursing home care for more than three months
   Very likely 11 6
   Likely 16 16
   Somewhat likely 39 44
   Not very likely 25 27
   Not at all likely 9 7
d) the respondent thinks he/she will need care provided in an assisted living facility for more than three months
   Very likely 14 9
   Likely 20 20
   Somewhat likely 38 45
   Not very likely 21 20
   Not at all likely 7 6
What % of your expenses do you expect your LTC insurance to pay
   100% 12 8
   61%-99% 68 68
   40%-60% 17 20
   35%-39% 3 4
TABLE A-5: Decision Making Process of Active and Retired Buyers
  Decision Making Process     Active Buyers     Retired Buyers  
I considered buying LTC insurance prior to the federal offering
   Yes 58% 72%
   No 42 28
I would have bought LTC insurance if the Federal Government had not offered it
   Yes 33 42
   No 17 13
   Not sure   50 45
I discussed LTC insuarnce purchase with:1
a) spouse
   Yes 92 94
   No 8 6
b) children
   Yes 43 50
   No 57 50
c) HR officer
   Yes 16 2
   No 84 98
d) colleagues
   Yes 76 34
   No 24 66
e) financial planner
   Yes 26 27
   No 74 73
f) other relative
   Yes 62 53
   No 38 47
g) insurance agent
   Yes 17 16
   No 83 84
  1. The percentage distribution of the answers has been calculated after the removal of the “does not apply” category.
TABLE A-6: Experience with the Application Process Among Active and Retired Buyers
  Experience with the Application Process     Active Buyers     Retired Buyers  
How easy/difficult was the application process
   Very easy 57% 37%
   Easy 40 59
   Difficult 3 4
   Very difficult 0 0
Was the following easy/difficult for you:
a) getting an application1
   Easy to get an application 98 99
   Difficult to get an application 2 1
b) understanding the application1
   Easy to understand the application 94 94
   Difficult to understand the application 6 6
c) answering health questions1
   Easy to answer health questions 98 92
   Difficult to answer health questions 2 8
d) reading the application materials1
   Easy to read the application materials 84 85
   Difficult to read the application materials   16 15
Easy/difficult to obtain answers to questions about the federal program
   Very easy 32 34
   Easy 62 62
   Difficult 5 3
   Very difficult 1 1
  1. The responses for “easy” and “difficult” are calculated on the basis of only those respondents who did the specific activity.
TABLE A-7: Exposure to Promotional Activities Among Active and Retired Buyers1
  Promotional Activities     Active Buyers     Retired Buyers  
Did you do any of the following:
a) talk to colleagues about the federal program
   Did not talk to colleagues 31% 72%
   Did talk to colleagues 69 28
   Found it to be helpful 72 79
   Did not find it to be helpful 28 21
b) talk to human resource representative
   Did not talk to human resource representative 83 97
   Did talk to human resource representative 17 3
   Found it to be helpful 82 90
   Did not find it to be helpful 18 10
c) read “Get Smart About Your Future”
   Did not read “Get Smart About Your Future” 27 28
   Did not know about “Get Smart About Your Future” 7 6
   Did read “Get Smart About Your Future” 66 66
   Found it to be helpful 95 97
   Did not find it to be helpful 5 3
d) read advertisements
   Did not read advertisements 42 36
   Did not know about the advertisements 8 4
   Did read advertisements 50 60
   Found it to be helpful 90 94
   Did not find it to be helpful 10 6
e) visit websites describing the federal program
   Did not visit websites describing the federal program 26 54
   Did not know about the websites describing the federal program   3 4
   Did visit websites describing the federal program 71 42
   Found it to be helpful 98 96
   Did not find it to be helpful 2 4
f) call toll-free number
   Did not call a toll-free number 61 55
   Did not know about the toll-free number 4 2
   Did call a toll-free number 35 43
   Found it to be helpful 94 98
   Did not find it to be helpful 6 2
g) read newspaper articles
   Did not read newspaper articles 58 58
   Did not know about the newspaper article 8 5
   Did read newspaper articles 34 37
   Found it to be helpful 89 92
   Did not find it to be helpful 11 8
h) read general brochures
   Did not read general brochures 14 12
   Did not know about the general brochures 1 1
   Did read general brochures 85 87
   Found it to be helpful 97 98
   Did not find it to be helpful 3 2
  1. The responses for “helpful” and “not helpful” are based on those who did activity.
TABLE A-8: Reasons for Planning and Buying the Federal Program: Active and Retired Buyers
  Reasons for Buying     Active Buyers     Retired Buyers  
Single most important reason for buying the FLTCIP
   Avoid using own income 22% 25%
   Assure that care is affordable 28 23
   Assure greater freedom in choosing service providers 5 3
   Avoid having to rely on relatives for care 19 17
   Avoid being a burden on family 15 19
   Assure that spouse’s standard of living will not decline if individual needs care   7 10
   Avoid relying on Medicaid 2 2
   Other 2 1
What was the motivation for planning for LTC:
a) seeing someone not prepare and then struggle to pay for services
   Yes 18* 11
   No 82 89
b) realizing that time is running out to prepare for future needs
   Yes 23* 35
   No 77 65
c) encouragement from someone who is trusted
   Yes 13 13
   No 87 87
d) receiving information/educational materials about LTC
   Yes 30* 41
   No 70 59
e) easy to do since offered at (former) work
   Yes 39* 21
   No 61 79
f) had personal experience caring for someone with LTC needs
   Yes 17 16
   No 83 84
How important was the Federal Government’s sponsorship to the purchase decision
   Very important 60* 69
   Somewhat important 35 29
   Not very important 4 2
   Not at all important 1 0
How important was the abbreviated/less restrictive underwriting to the purchase decision
   Very important 35* 68
   Somewhat important 38 31
   Not very important 23 1
   Not at all important 4 0
TABLE A-9: Comparison of FLTCIP to other programs Among Active and Retired Buyers
  Reasons for Buying     Active Buyers     Retired Buyers  
Was the FLTCIP program compared to other programs
   Yes   54%* 67%
   No 46 33
Why was the FLTCIP purchased instead of a different program
a) lower rates
   Yes 31* 44
   No 69 56
b) better benefits
   Yes 25* 33
   No 75 67
c) recommended by others
   Yes 9 7
   No 91 93
d) easier to qualify
   Yes 40* 18
   No 60 82
e) easier to get benefits
   Yes 15* 7
   No 85 93
f) easier to understand coverage
   Yes 22 21
   No 78 79
g) Federal Government sponsorship
   Yes 74* 84
   No 26 16
h) underwritten by Long Term Care Partners
   Yes 28* 34
   No 72 66
TABLE A-10: Do Buyers Know What They Are Buying: Active and Retired Buyers
  Policy Features     Active Buyers     Retired Buyers  
Does your current FLTC plan cover the following:
a) Home care services
   % of people who know that their policy covers home care services 91% 90%
   % of people who did not know that their policy covers home care services 9 10
b) Automatic compound inflation
   % of people who know that their policy has an automatic compound inflation option 84 83
   % of people who did not know that their policy has an automatic compound inflation option   16 17
c) Unlimited benefit period
   % of people who know that their policy has an unlimited benefit period 77 77
   % of people who did not know that their policy has an unlimited benefit period1 23 23
   % of people who believed they had unlimited coverage, but had coverage for 3 years 3 5
   % of people who believed they had unlimited coverage, but had coverage for 5 years 4 3
   % of people who believed they did not have unlimited coverage, but do have it 1 0
   % of people who are unsure of what type of coverage they have 15 15
d) % of people who did not know at least one of the three features (presented above) about their policies 32* 38
  1. The percentage of people who did not know what type of coverage they bought is broken down in the next four lines by type of misconception. This is done both for the active and the retired buyers.
TABLE A-11: Characteristics of Long-Term Care Insurance Policies Bought Through the Federal Program
  Policy Characteristics     Active Buyers     Retired Buyers  
Duration
   3 years 41% 62%
   5 years 40 23
   Unlimited 19* 15
Policy type
   Comprehensive 93* 85
   Facility Only 7 15
Benefit amount
   Daily 89 92
   Weekly 11 8
Elimination period
   30 days 15 8
   90 days 85* 92
Inflation protection
   Future purchase option 28 38
   Automatic compound inflation   72* 62
Average daily benefit amount $135* $120
   Up to $100 3 3
   $100-$149 40 59
   $150-$199 50 36
   Greater than $200 7 2
Average annual premium $1,206* $1,661
   Up to $500 16 6
   $500-$999 30 22
   $1,000-$1,499 24 27
   $1,500-$1,999 17 17
   Greater than $2,000 13 28
  1. Based on a sample of 2,999 active buyers and 3,000 retired buyers obtained directly from Long Term Care Partners Administrative data.
This policy brief was prepared under contract between the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Office of Disability, Aging and Long-Term Care Policy (DALTCP) and LifePlans, Inc. For additional information on this subject, or to view the other briefs in this series, you can visit the ASPE home page at http://aspe.hhs.gov, the DALTCP home page at http://aspe.hhs.gov/_/office_specific/daltcp.cfm or contact the ASPE Project Officer, Hunter McKay, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201, Hunter.McKay@hhs.gov.

LONG-TERM CARE INSURANCE FOR THE FEDERAL FAMILY: A STUDY OF BUYERS, NON-BUYERS AND NON-RESPONDENTS REPORTS AVAILABLE

A Comparison of Demographic and Attitudinal Characteristics Among Active and Retired Buyers, Non-Buyers and Non-Responders to the Federal Long-Term Care Insurance Program
HTML   http://aspe.hhs.gov/daltcp/reports/charcom.htm
PDF   http://aspe.hhs.gov/daltcp/reports/charcom.pdf
A Demographic and Attitudinal Profile of Buyers of the Federal Long-Term Care Insurance Program
HTML   http://aspe.hhs.gov/daltcp/reports/2004/buyprof.htm
PDF   http://aspe.hhs.gov/daltcp/reports/2004/buyprof.pdf
A Demographic and Attitudinal Profile of Non-Buyers of the Federal Long-Term Care Insurance Program
HTML   http://aspe.hhs.gov/daltcp/reports/nonbuyprof.htm
PDF   http://aspe.hhs.gov/daltcp/reports/nonbuyprof.pdf
A Demographic and Attitudinal Profile of Non-Responders of the Federal Long-Term Care Insurance Program
HTML   http://aspe.hhs.gov/daltcp/reports/nonresprof.htm
PDF   http://aspe.hhs.gov/daltcp/reports/nonresprof.pdf
Marketing Activities: A Comparative Analysis of Engagement and Participation Among Buyers, Non-Buyers and Non-Responders of the Federal Long-Term Care Insurance Program
HTML   http://aspe.hhs.gov/daltcp/reports/markact.htm
PDF   http://aspe.hhs.gov/daltcp/reports/markact.pdf
Multivariate Analysis of Buyers and Non-Buyers of the Federal Long-Term Care Insurance Program
HTML   http://aspe.hhs.gov/daltcp/reports/2004/FLTCIanal.htm
PDF   http://aspe.hhs.gov/daltcp/reports/2004/FLTCIanal.pdf
What We Know About Buyers and Non-Buyers of Private Long-Term Care Insurance: A Review of Studies
HTML   http://aspe.hhs.gov/daltcp/reports/LTCIlr.htm
PDF   http://aspe.hhs.gov/daltcp/reports/LTCIlr.pdf

LONG-TERM CARE INSURANCE FOR THE FEDERAL FAMILY: ANALYSIS OF FOLLOW-UP SURVEY DATA REPORTS AVAILABLE

A Comparative Analysis of the Socio-Demographic and Attitudinal Characteristics of Active Buyers and Non-Buyers of Long-Term Care Insurance in the Federal, Private and Public Sectors
HTML   http://aspe.hhs.gov/daltcp/reports/LTCIchar.htm
PDF   http://aspe.hhs.gov/daltcp/reports/LTCIchar.pdf
Does Geographic Location Make a Difference? A Comparative Analysis of the Socio-Demographic and Attitudinal Characteristics of Active Buyers and Non-Buyers of the Federal Long-Term Care Insurance Program
HTML   http://aspe.hhs.gov/daltcp/reports/FLTCIloc.htm
PDF   http://aspe.hhs.gov/daltcp/reports/FLTCIloc.pdf

To obtain a printed copy of this report, send the full report title and your mailing information to:

U.S. Department of Health and Human ServicesOffice of Disability, Aging and Long-Term Care PolicyRoom 424E, H.H. Humphrey Building200 Independence Avenue, S.W.Washington, D.C. 20201FAX:  202-401-7733Email:  webmaster.DALTCP@hhs.gov


RETURN TO:

Office of Disability, Aging and Long-Term Care Policy (DALTCP) Home [http://aspe.hhs.gov/_/office_specific/daltcp.cfm]Assistant Secretary for Planning and Evaluation (ASPE) Home [http://aspe.hhs.gov]U.S. Department of Health and Human Services Home [http://www.hhs.gov]

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