While still relatively small, the employer-sponsored group Long-Term Care Insurance (LTCI) market has been growing at a steady if not dramatic pace over the last few years.  Exhibits 1 and 2 present the steadily climbing numbers in-force of participants and employer groups in the employer-sponsored LTCI with a slower growth trends in the most recent years (LIMRA, 1999-2004).

The steady and relatively high growth of 18% between 1987 and 2001 has been replaced by more volatile trend patterns in the first half of the new decade. Exhibit 3 (LIMRA: 2005 Group LTCI Sales and In Force) presents the trends in the employer-sponsored LTCI in terms of premium dollars.  The introduction of the Federal Long-Term Care Insurance Program (FLTCIP) in March of 2002 is the source for the significant jump in sales of 223% in 2002.  Due to a large backlog of applicants, a big portion of the new certificates were issued during 2003, which became the strongest year for the group LTCI industry (20% more growth in sales than during 2002). From March 25, 2002, through March 31, 2005, 218,890 employees, retirees, relatives, and others were enrolled in the federal program making it the largest LTCI program in the nation.

The negative growth of 73% in 2004 is again compared to the very strong sales in 2003 and hence does not represent an absolute decline, but rather a contrast to the Federal Program induced growth in prior year.  Then, in 2005, a slight upswing was experienced with a positive growth of 12%.  We expect these growth trends to continue, with an increasing number of programs including an employer contributory element.

Why is true group long-term care so important?

• Many Americans will have no way to pay for long-term care services when they are needed.
• Insurance for long-term care will not become widespread if only available on an individual basis, which means that the change will need to come first from employers.
• Group coverage needs to include employer contributions to make it affordable to employees and vesting to make it affordable to employers.