The health and long-term care industries, including continuing care retirement communities (CCRCs), were among those most directly and adversely affected by the COVID-19 pandemic.
From the early stages of the pandemic, it was apparent that COVID-19 exerted a disproportionate impact on elderly individuals, residents of nursing homes, and those with certain preexisting health conditions. These demographics overlap significantly with the CCRC population, making the COVID-19 pandemic an especially challenging and uncertain time for CCRCs.
In this article, Milliman’s Andrew Dalton and Gregory Zebolsky discuss the impact that COVID-19 could have on actuarial assumptions relevant to CCRCs. They also develop and present representative population flow projections for a hypothetical community with three levels of care, focusing on how the pandemic may change experience over the next several years relative to pre-pandemic expectations.
The coronavirus pandemic is affecting every line of
insurance including the long-term care (LTC) marketplace. This reading list
highlights Milliman articles and papers focusing on the various issues and
implications that LTC carriers and other stakeholders must consider due to the
- Impacts of COVID-19 on in-force long-term care insurance
By Jeff Anderson and Mike Bergerson
This paper examines the potential impact of COVID-19 on the LTC insurance industry based on a mortality case study. It focuses on in-force blocks of stand-alone LTC insurance in the United States.
- Pandemic risk on long-term care insurance reserves
By Andrew Dalton, Jeremy Hamilton, Al Schmitz, and Juliet Spector
The coronavirus pandemic will affect underlying LTC insurance cash flows. In this paper, Milliman actuaries provide a useful framework that can help carriers develop appropriate short- and long-term assumptions in order to project future cash flows.
What effects will the new tax reform law have on long-term care (LTC) insurance and other long-tailed health business? That is a question many actuaries are considering as they hurry to understand how it may affect these lines of business. In this article, Milliman’s Andrew Dalton and Al Schmitz provide an actuarial perspective concerning the immediate implications of the tax law. The authors also discuss how the law may alter the LTC marketplace broadly over the coming years.
This article by Milliman actuaries is the fourth in a series on long-term care (LTC) first principles modeling. The first article in the series, released in March 2016, introduced the topic and set the stage for the series of case study discussions that would follow. The second and third articles in the series, released in June 2016 and November 2016, examined the development of mortality and lapse assumptions, respectively, for use in an LTC first principles model. The latest article builds on these discussions with a look into how a first principles model, using these assumptions, can enhance and simplify the modeling of LTC projections. Once the groundwork of developing the key assumptions is completed, first principles models provide an improved platform for modeling by automating many processes and making refinements both easier to implement and more varied.
In this article, Milliman consultants discuss issues related to developing healthy life lapse rates using a long-term care (LTC) first principles model. As noted throughout the article, the common assumption that the ultimate total life lapse rate reaches a constant level produces an increasing healthy life lapse rate by duration. Alternatively, if the healthy life lapse rate remains constant once it reaches an ultimate level, that would imply that the total life lapse rate continues to decrease over time. The article also examines how mortality and lapse assumptions interact and the importance that developing an appropriate mortality assumption can have on setting lapse rate assumptions.
The development of separate mortality assumptions for healthy and disabled lives creates challenges for insurers using a long-term care (LTC) first principles model. In this article, Milliman actuaries discuss those challenges as well as their experience working with companies to overcome them. They also explore the advantages and opportunities of an enhanced approach to modeling mortality in a first principles context.