Business starts to offer group coverage for long-term care

The bulk of long-term-care insurance, covering a half-million Americans, was sold to individuals. Until recently few policies were part of employer-sponsored health coverage, but that is changing. For instance, Alaska and Maryland have begun offering long-term-care insurance to their employees, through private companies. Two insurance companies, Aetna and John Hancock, offer plans to their employees as do Proctor & Gamble and American Express. The American Association of Retired Persons (AARP) offers its 28 million members long-term-care insurance, at group rates.

Most employers pay part of the cost of conventional health insurance. But most employees foot the entire bill for long-term-care protection, says Robert Hall, an underwriting officer at Aetna.

That's because employers ``face a great unfunded liability'' of tens of millions of dollars of health insurance, says John Dwyer, ``and they are certainly not looking to add to that.'' Mr. Dwyer is an actuary in the employee-benefits department of Travelers Insurance Company.

Yet plans that employers sponsor and their employees finance have definite advantages over individual plans, Mr. Hall says. The costs are less, for one thing.

Premiums are ``very difficult'' for many elderly, concedes Ronald Hagen, AARP's director of insurance services.

Aetna, which began offering individual policies three years ago, now has more than 40,000 in force, Karl Michaelson says, and is adding new ones at the rate of 250 a day. But it's not cheap: ``Our average [annual] premium has been running a little under $1,000.'' He is director of health underwriting of Aetna's personal financial security division.

Policies ``have become more comprehensive,'' says Bruce Boyd, chairman of the long-term-care task force of the Health Insurance Association of America. An increasing percentage of the policies no longer require prior hospitalization, cover Alzheimer's costs, are guaranteed renewable, and promise that the premium will not increase.

Some policies offer innovative features. First Penn-Pacific Life Insurance Company recently came out with a life-insurance rider that will help meet the cost of nursing-home care by beginning to pay in advance the death benefit for a policyholder admitted to a nursing home.

Thus far, most long-term-care insurance is ``institutionally biased,'' AARP's Hagen says. It's much more likely to provide money for care in nursing homes than for assistance at home.

There are good reasons for this, says Ian Rolland, president of Lincoln National Insurance Corporation. ``It's hard to define'' not only long-term care but who requires it. An insurer would have ``to make sure that the person is in need of long-term care, and should get the benefit.'' Inasmuch as the potential exists for aid to literally millions of American homes, enormous amounts of checking would be required.