Americans Greatly Underestimate the Cost of Homecare

The average American underestimates the cost of in-home care by almost 50%, according to a Genworth study. Thirty percent say that home care costs less than $417 a month when the national median rate is $3,861 a month for an in-home aide or $3,813 a month for homemaker care. Homemaker costs are up 2.6% from 2015, marking the highest year-over-year increase across all care categories. In comparison, home care aide services rose modestly at 1.25% since 2015. Over the past five years, home maker costs have risen 11% and 6.6% for health aides.

Interestingly, people who stand to be affected most by long term care events are more likely to underestimate the cost of care. This includes women (who are more likely to enter caregiving roles), single adults (who may not have a partner to rely on for caregiving needs), and younger adults (aged 25 to 45), who are more likely to deal with the reality of a parent needing care).

The national median cost of care rose across all care settings, except adult day care, which decreased slightly. The monthly cost of a private nursing home room is $7,698, up 1.24% from 2015. The cost of a semi-private room is up 2.27% to $6,844 a month. Assisted living communities saw a slight increase in costs of .8% to $3,628 a month. Adult day care costs fell 1.25%.

Voluntary Long-Term Disability Plans Are Getting More Popular

As employers move away from fully funding products, they are becoming more interested in voluntary long-term disability (VLTD) solutions to fill benefit gaps. In fact, the number of employers that fully fund LTD benefits has decreased from 51% in 2009 to only 24% in 2014, according to a 2014 Eastbridge study.
With this increased interest comes the demand for more flexible and innovative VLTD plans. Some innovations include higher maximums, new benefit options, more hybrid products, and plans that can meet the needs of not only the middle and large-employer market, but also smaller employers. In 2011, carriers added survivor benefits and cost-of-living adjustments. Since that time, carriers have also added optional benefits, such as employee-assistance programs, ADL increases, and financial counseling.

Although the majority of benefit options are chosen at the employer level, carriers are also looking at ways to offer more options at the employee level. These include more choices of benefit amounts, varying benefit durations, and the ability to buy less than the amount for which the employee is eligible.
More features and benefits offered by carriers, both at the employer and employee levels, have helped meet much of the increased demand for voluntary long-term disability coverage. Carriers should continue to look for ways to truly differentiate their product from others on the market, according to the report.

Cigna Settles Over LTD Claims

California and three other states have settled with CIGNA over claims handling practices for long-term disability insurance. The settlement is the result of individual examinations by the insurance departments of Calif., Conn., Maine, Mass., and Penn.

Insurance department officials cite claim handling irregularities, such as not giving enough consideration to the medical findings of independent physicians, workers compensation records, or Social Security Disability decisions.

Cigna is re-evaluating certain claims and has set aside $77 million to pay policyholders whose claims were handled improperly. CIGNA is paying a $500,000 penalty to the California Dept. of Insurance. The company is also paying $150,000 to reimburse the department for the cost of ongoing monitoring required under the settlement agreement.

Cigna must do the following under the settlement agreement:
• Improve the claims handling.
• Apply enhanced claim procedures to certain previously denied or adversely terminated claims.
• Participate in a 24-month monitoring program, conducted by the insurance departments, involving random sampling and ongoing consultation.
• Undergo a re-examination upon completion of the monitoring period.
• Pay $1.7 million in fines and administrative fees to the five states involved in the settlement.

Last Updated 08/10/2022

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