Retirement News : Seniors : Blue Cross unit to have long-term care plans

Blue Cross unit to have long-term care plans

Date Added: 03-08-2005

Blue Cross Blue Shield of Michigan will start a new company that will offer long-term care insurance policies beginning in July 2006.

The company, which doesn't have a name yet, would be a subsidiary of Blue Cross Blue Shield and would concentrate on providing long-term care services to individuals. Blue Cross Blue Shield, Michigan's largest insurer, has never offered long-term care policies before.

Financial terms of the company weren't disclosed Monday.

However, Blue Cross officials said the new company would require a premium be paid, which would cover some or all of the costs for long-term healthcare needs of a customer. The individual policies would include coverage for assisted living and nursing care. The company also said there will be no group coverage products available.

Unlike traditional medical insurance coverage, long-term care coverage helps patients address chronic illnesses and disabilities that employer policies and Medicare don't cover. They usually include meals and help with daily activities such as bathing and getting dressed.

The average cost of nursing home care is more than $50,000 a year, according to the AARP.

Medicare supplemental insurance is a federal program that assists older and some disabled people in paying their medical costs.

U.S. Census data suggest that the population of people 65 and older will double to more than 70 million by 2030. In Michigan, the figure is expected to double by 2020. Meanwhile, the average growth in the number of long-term care policies has been 18% a year.

"With the changes in population, you need products that will create a private sector solution for the people of Michigan as well as nationally," said Ken Dallafior, who was named president and chief executive officer of the new company. "That's why we plan on taking our ideas to the marketplace."

The new company expects to have about 12 employees the first year. In three to five years, the company hopes to have 50-70 workers. In addition, Blue Cross Blue Shield expects to expand its long-term care business to other states.

Currently, there are about 100 insurance companies, including 24 so-called Blue Plans, across the nation that sell long-term health insurance products. Several of them operate in Michigan.

Blue Cross Blue Shield of Michigan, which provides health care benefits to 4.7 million members, will be the sole investor in the newly formed company.

Other companies such as MetLife offer a variety of products geared toward older Americans seeking long-term insurance.

"What you will see, traditionally, is that there have been several companies that offer such products," said Mohit Ghose, a spokesman for America's Health Insurance Plans, a Washington, D.C.-based healthcare association representing 1,300 member insurance companies. "I think more choice for consumers is always a good thing."

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