Important Work Happening at Milliman

Cash buyouts

Randy Beams, a Milliman LTC and hybrid product actuary, presented with two other LTC professionals at the 2024 Intercompany Long-Term Care Insurance (ILTCI) Conference about cash buyouts. The presentation covered cash buyout trends arising from legal settlements and voluntary carrier programs. Additional topics included actuarial considerations for the valuation of buyout offers, operational considerations for successful program implementation, and legal considerations to mitigate risk of adverse legal action.

Evaluating effectiveness of wellness programs

We have been evaluating the effectiveness of on-claim and pre-claim studies for clients. Please contact us if you would like a playbook to set up your data and contracts before setting up your program.

LTC wellness initiatives

With the goal of improving the sustainability of LTC blocks, the private sector insurance industry has increased its attention on LTC wellness and aging-in-place programs. As value-based care in the healthcare space continues to evolve, it is important for stakeholders to understand the components of LTC wellness arrangements, in addition to the practical issues and impediments that determine success and failure. Milliman has been actively involved in discussions on this topic and has published a report on this as discussed below.

2023 Milliman LTC Guidelines

The Milliman 2023 Guidelines are published and include two years of additional data from the prior release. The Guidelines include incidence, claim termination rates (including deaths and recoveries), and claim costs. With the update, Milliman has been actively discussing with our clients on reflection of the updated and enhanced industry experience presented in the Guidelines. Please contact us if you would like to learn more.

Upcoming Studies

Valuation survey

Milliman has conducted its eighth triennial LTC insurance valuation survey. This year’s survey is based on responses from 20 major LTC insurance (LTCI) issuers and examines how reserve testing, active and disabled life reserve calculation, and asset assumptions vary among them. We also explore how responses have changed over time.

We are currently analyzing the results of the survey but plan to release our findings to survey respondents at the end of August or early September. Thank you to all respondents for your participation.

Rate increase survey

Thank you to all of those who have responded to Milliman’s third LTC rate increase survey. We are currently reviewing and analyzing the survey responses. The survey will be summarized in a report, which will include a comparison to prior years. This report will be released to participating companies in October; the report will be released publicly in the spring of 2025.

As a reminder, companies that participated in the survey can request a meeting that will summarize their responses relative to those of all other respondents. If you’d like to know more, please contact [email protected], Courtney Williamson ([email protected]), or Mike Bergerson ([email protected]).

Industry News

ILTCI recap

The March ILTCI Conference in San Diego brought a great variety of sessions. Two sessions that left a lasting impression on the authors of this newsletter were a debate-style wellness session and a live focus group of LTC policyholders. For the wellness session, three panelists represented a different wellness program and had one minute to answer a variety of questions regarding the effectiveness of their wellness program and future improvements.

The live focus group consisted of insureds who all valued their long-term care policies. In general, this sample of policyholders wanted to keep their policies in force, even if it meant continued rate increases are necessary. That said, building in wellness programs was not well received. This was likely due to a lack of knowledge of the programs and a perceived waste of premiums, which in their view was better spent on supporting future claims. As insurers are working to implement these wellness programs, it suggests that implementation may need to go hand-in-hand with more policyholder education on this topic.

Milliman presented at the following breakout sessions.

Actuarial & Finance

• Data Science and AI in Action: Driving Modernization and Enhanced Outcomes – Monday, March 18, 10:00am-11:00am – Joe Long
• Through the Looking Glass – How Current Trends May Impact Future LTC Experience – Monday, March 18, 11:15am-12:15am – Jeremy Hamilton
• Projecting the 5th Decade of LTC Insurance from Its First 40 Years – Monday, March 18, 2:00pm-3:00pm – Al Schmitz
• The Future of Worksite LTC Insurance, Part 2: Hybrid Products – Monday, March 18, 3:30pm-4:30pm – Robert Eaton
• What’s In It for Me? LTC Benefits and Actuarial Value – Tuesday, March 19, 8:45am-9:45am – Annie Gunnlaugsson

Legal, Compliance, & Regulatory

• C.R.E.A.M. – Cash (Buyouts) Rule Everything Around Me – Monday, March 18, 2:00pm-3:00pm – Randy Beams

Marketing, Engagement, & Research

• Can We Chat (GPT)? Using AI and Predictive Modeling to Engage with Customers – Tuesday, March 19, 11:15am-12:15am – Robert Eaton

Wellness & Aging-in-Place Solutions

• Pt 1 – The Results Are In… Updated with Another Year of Program Experience! – Monday, March 18, 2:00pm-3:00pm – Jeff Anderson
• Pt 2 – The Results Are In… Updated with Another Year of Program Experience! – Monday, March 18, 3:30pm-4:30pm – Jeff Anderson

LTC reform update

LTC reform activity remains active in 2024.

• Washington: Milliman is currently working to prepare a 2024 valuation study for the WA Cares Fund program. The study will consider updated morbidity, economic, and demographic assumptions as well as an updated picture of the program as defined under current law (which, relative to our 2022 Actuarial Study, is most impacted by the passage of HB 2467, which will allow individuals who move out of state to be eligible for benefits if they continue paying into the program). Additionally, as we move toward election season, we continue to monitor Initiative 2124, an initiative that will appear on the November ballot in the state of Washington, which proposes making the program voluntary rather than mandatory. A fiscal note covering the estimated potential fiscal impact of Initiative 2124 by state agency can be found here, including a letter from the Office of the State Actuary starting on page 48.
• Massachusetts: The Massachusetts Executive Office of Health and Human Services (EOHHS) recently selected Milliman to perform a feasibility study for a potential LTC insurance program to be offered. The study will involve both stakeholder engagement and actuarial analysis and will be conducted over the next six months. We look forward to working with EOHHS on this exciting development in LTC reform!
• We continue to monitor developments in other states and are closely following activity in California, Minnesota, New York, and others over the course of 2024.

NAIC Actuarial Working Group

The National Association of Insurance Commissioners (NAIC) LTC Actuarial Working Group recently exposed two proposals as candidates for a Single LTCI Multistate Rate Review Approach. The proposals are intended to address concerns with the “85/25/400” issue—policyholders who are faced with rate increases that are attained age 85 or older, have had their policy in force for 25 durations, and have experienced cumulative rate increases of 400%. The proposals are based on the Minnesota Method, with adjustments to cost-sharing components or additional rate increase limitations. Additional information can be found here.

Milliman Publications and News

Milliman HealthVision360

Milliman is hosting an exclusive client gathering centered around the theme of “navigating unseen opportunities.” We are especially looking forward to connecting with our clients in person and engaging with others who are passionate about improving healthcare and long-term care. Juliet Spector will be hosting a session, “Get to know your policyholders! How can Milliman’s Long-term care Advanced Risk Analytics (LARA) help?” Other topics of interest include GLP-1 drugs, Alzheimer’s therapies, incorporating social determinants of health (SDOH) and clinical data, policy updates, and more. The forum will be hosted at the end of September in Phoenix. Contact your Milliman representative for more information.

Long-term care wellness initiatives: Key components of building and evaluating a sustainable program

Milliman published a report on LTC wellness initiatives earlier this month. The report includes an executive summary as well as general steps and considerations for LTC wellness programs including:

• Design considerations
• Discussions on risk-sharing framework
• Measuring success
• Key assumptions for LTC projections

The report also includes case studies.

How can Milliman Long-term care Advanced Risk Analytics help?

We recently released a brochure that looks at the pre-claim insights we have received from Milliman Long-term care Advanced Risk Analytics (LARA) after running it on 400,000 lives.

Evaluating California LTC proposed plan designs through a different lens (milliman.com)

We estimate the California insurance program designs recently proposed by the task force to cover roughly 2% to 18% of LTC costs.

Impacts and considerations of statistical bias in LTC due to benefit reductions

This article explores the potential impacts that may arise due to benefit reductions over the life of an LTC block. The article focuses on assumption development and lifetime loss ratio analyses, specifically when evaluating assumptions and experience by different benefit cohorts.

Milliman in the Community

Milliman awards 20 Opportunity Scholarships in program's seventh year

The program was created to assist students from racial and ethnic groups who are underrepresented in the fields of actuarial science, data science, computer science, economics, programming, mathematics, statistics, data analytics, or finance. Since 2017, its inaugural year, Milliman has awarded 126 scholarships.