A Report on the Actuarial, Marketing, and Legal Analyses of the CLASS Program. C. Outputs

10/14/2011

Upon each run of the model, five primary output tables are produced: premiums, fund operations, detailed nursing home benefit projections, detailed home health care benefit projections, and program demographic projections. Just as input settings can be saved, output results can be saved along with the corresponding inputs. This is convenient for keeping records of previous model runs, as well as comparing differences in outputs among different scenarios.

Premium Output

There are a few tables describing the premium calculation and resulting cohort premiums. One premium table shows the estimated present value of benefits and premiums by issue age for the first year’s issues from which the issue-age premiums are derived. This table includes the calculated premium and cohort income, which can be compared to the expected benefit. Another table shows premiums by age at issue that result from the given input assumptions. These premiums are given for all ages within the specified issue age limits and all years within the specified years of issue. After the first year of issue, succeeding year’s premiums are calculated by increasing the prior year’s premium (at the same issue age) by the rate of increase in benefits, as opposed to projecting benefits and premiums.

Fund Balance Output

The cash flow table shows the year-by-year operations of the LTC trust fund, including income, outgo, and balance. Income is shown separately for premiums, interest, and (if applicable) other. Outgo is shown separately for benefits and expenses. The premium income is the result of the participation assumptions for each age by year and the premiums at each age. The fund is described by the change in the fund balance from the previous year and the overall fund balance at the end of the year. Premiums generally increase each year for any given age at issue, while premiums for past purchasers may or may not increase depending on the specifications of the law or regulations. Interest is a function of the assumed interest rate and the size of the trust fund. Benefits are based on a combination of incidence rates and average length of episode.

Cash flow is projected year-by-year for the policies issued in the first year by issue age and sex. The cash flow for each subsequent year is based on the cash flow from the first year of issue adjusted for increases in benefits, increases in premiums, changes in the inforceat each duration, and changes in the claim rates. The fund balance table accumulates the cash flow for all issue years.

Nursing Home and Home Health Benefits

The detailed nursing home benefits table shows the number of nursing home residents, the average yearly benefit, and total yearly benefits separately for males and females. The detailed home health care benefit table shows similar statistics for those residing in the community. This table also includes the daily maximum benefit amount for each year during program operation.

Demographic Projections

The demographic table shows premium payers and beneficiaries in nursing home and in home care. The premium payers are reported in total as well as broken out into those who pay the subsidized and unsubsidized premiums. Deaths, lapses, and new issues are shown by year, and the beneficiaries are reported as new incidences for the year as well as by the total number of current beneficiaries for nursing home and home care.

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