Should you be selling Short Term Care Insurance Plans?
Short-term care (STC) plans, also known as Recovery Care, are geared toward people who need temporary medical insurance in order to bridge the gap between longer term plans.
Although the premiums can be much less expensive than long-term care insurance, the coverage provided is also far less robust than with long term care.
Having said that, short-term plans do have their place. It is important to perform a good needs analysis to define the gaps in coverage for each of your clients to properly determine if they might benefit from Short-term care.
Statistics from the Census Bureau project that Americans 85 years old or older will grow an astronomical 189% by 2050. This will leave a lot of seniors who are simply unable to qualify for or afford a Long-term care.
When you add to that statistic the fact that 41% of LTC claims don’t last longer than 1 year, STC will likely be a piece of the puzzle that can alleviate the burden of healthcare costs for those seniors.
Commissions on short-term care (STC) are hard to ignore. Understanding the proper placement of STC will help fill coverage gaps for your clients, and help grow your bottom line.
What is short-term care insurance?
Short-term care insurance, also called Temporary health insurance or Term health insurance, can provide a temporary solution to help fill gaps in Medicare coverage or as an alternative option to long-term care insurance.
STC health insurance plans are intended to protect against unforeseen accidents or illnesses, and, therefore, don’t typically include coverage for preventive care, physicals, immunizations, dental or vision care.
Starting in 2019, in some states, consumers will be able to purchase STC which are renewable for up to one year with the option to extend twice. This could give those who qualify a 3 year extended coverage.
STC plans can be used to pay for services from any doctor or hospital. So, you’re client can keep their doctor. In addition, there are no open enrollment restrictions with STC plans.
Customers can apply any time of the year and it only takes minutes to find out if their application is approved. Once approved, they can use their coverage as early as the next day.
What are the average costs of STC plans?
According to eHealth, the average monthly premium for a 3 month STC plan was just $107 in 2018. For family coverage, a short term plan was $258 a month in 2018, compared to $1,168 a month for an ACA plan.
Plan costs will vary based on what is covered and the length of the coverage period. A plan that lasts one year may be 30% - 50% higher than the rates for a three month plan.
So a 90 day plan that costs $105 a month could go up to $150 a month for one year of coverage. Plans that are renewed up to three years without additional underwriting would be even more expensive.
It’s important to review all of these details in full with your client to align their expectations and ensure they fully understand the coverage being discussed and how long that coverage would last.
These plans are certainly less expensive than other plans, but it’s important to remind your clients of the difference in coverage.
Who is the ideal customer for short-term care insurance?
An STC plan may be beneficial to some of your clients based on their insurance needs and employment situation. Your client may be a fit for STC if:
- They have been declined for traditional long-term care coverage.
- They are waiting to be eligible for Medicare coverage.
- They are without health insurance, outside of Open Enrollment.
- They are between jobs.
- They can’t afford long-term care.
- They’re preferred doctor or hospital doesn’t accept Obamacare or an Obamacare plan isn’t available in your area.
- They are too old for long term care.
- They are a single woman (STC rates are not gender based like LTC rates.)
- They are concerned of the elimination period of their LTC plan and would appreciate a STC plan to cover that gap.
- In most cases, Medicare Advantage plans and Original Medicare only cover the first 20 days of home health care or nursing home stays. After that period, the patient is responsible for part of or all of the costs. Short-term care insurance is a great solution for some clients who need that gap coverage.
We should also consider who would NOT be a good fit for an STC plan:
- People that may have had a major health event may have a hard time qualifying for an STC plan to cover their pre-existing condition.
- People with poor health or chronic conditions.
- People with complex medical needs, mental health needs, or may require maternity coverage.
Summary of short-term care
Insurance agents are selling more short-term insurance to seniors to fill in the gaps left by medicare and as an alternative to long-term care when cost, age, or health are an issue.
With the right mix of plans in your portfolio and an understanding of your customers needs, you will be able to offer a wide range of coverage for clients of all ages for years to come.
Talk to one of our experienced marketers today about what plans may be right for your portfolio.
Thanks for reading and happy selling.