Writer’s Note: This article was originally written for consideration of publication on a major media site in early March. That didn’t pan out, nor did it garner interest from other publications within the last couple of months. Therefore, I am posting it to my site because long-term care access and affordability is an issue faced (and will be faced) by the majority of women (it’s also now on Medium!). It is a serious feminist issue that needs more attention as rising LTC costs is making survival that much more difficult for our older women. I also recommend reading @thewayoftheid’s fantastic article on related issue of eldercare here. – Annamarya Scaccia
For many aging women, long-term care insurance is a matter of survival.
Women live longer than men and experience higher rates of chronic illness. They’re also far more likely to be single, divorced or widowed in the elder years and living alone in poverty.
Purchasing long-term care insurance helps women procure the medical and living assistance they need while protecting against the rising costs not covered by Medicare, Medicaid or the health insurance they may be paying 20 to 50 percent more for in some states.
But for single women, long-term care protection could now be further out of reach.
As of last year, insurance giants Genworth Financial, John Hancock, Mutual of Omaha and Transamerica have all introduced what is known as gender-based rating that will charge women buying new long-term care policies higher annual premiums simply for being a woman. Thanks to this system, in 2014, the average single woman can now expect to pay 12 percent more for a new policy than last year, reports the American Association for Long-Term Care Insurance (AATLCI).
But, in a groundbreaking move, the National Women’s Law Center (NWLC) has challenged this pricing structure. In January, the D.C.-based legal group lodged sex discrimination complaints against these four carrierswith the Department of Health and Human Services’ Office of Civil Rights, contending gender-distinct pricing in long-term care violates the Affordable Care Act’s (ACA) nondiscrimination provision.
Emily Martin, NWLC’s vice president and general counsel, calls the ACA’s crucial provision, Section 1557, a “Title IX to healthcare.” It prohibits discrimination based on race, sex, gender identity, age, disability or national origin in health programs and activities either federally operated or that receive federal monies. It also prohibits healthcare insurance carriers from charging higher premiums on new and renewing policies due to an applicant’s gender—a practice that disproportionately affects women seeking insurance.
The reasons why single women are now shilling out more for new long-term care policies is oft repeated: women outlive men by five years on average and spend twice as many years living with a disability, therefore requiring more assistance than men. (Seventy percent of nursing home residents are female, according to AALTCI.) Women are also less likely to have help with daily living activities in the household to offset the costs of long-term care. As the economic think tank Wider Opportunities for Women (WOW) reports, over 50 percent of elderly women live without a spouse or a partner, with 32 percent of single elderly women who live alone renting their home.
And, says Jesse Slome, AALTCI’s executive director, women account for most of the long-term care costs, receiving “two-thirds of the $7.5 billion in benefit dollars paid out by insurers last year” according to a study his association released. With gender rating, he says, “people who buy insurance will be paying basically the appropriate price based on their risk.”
“That’s what we call sex discrimination,” counters Martin. “You have to treat people as individuals rather than as representative of their sex. That’s what sex discrimination rules are supposed to get at.”
Martin argues a person’s sex is “not a precise enough category” for insurance carriers to make assumptions about their level of risk, unlike say a history of health issues (or, in industry speak, impaired risks) such as high blood pressure or heart disease.
While gender rating might be a good practice for insurance companies, as Slome claims, it’s a problematic policy for women—not only as a matter of equal treatment, but also as an issue of economic security.
After all, says Martin, women already earn less than men, making 77 cents for every dollar paid to men—an average gap of over $11,500 less per year, according to the National Partnership for Women & Families. Broken down by race, and it’s even more disparate—for every dollar paid to white, non-Hispanic men, Black women earn 64 cents and Latinas earn just 54 cents.
Women are also at an increased risk of poverty, especially in older age. In 2013, the NWLC reported women age 65 and older experienced poverty at 4.4 times the rate of their male counterparts—11 percent compared to 6.6 percent. For older women of color, this number spikes: 21.2 percent of Black women, 21.8 percent of Hispanic women, and 27.1 percent of Native American women live in poverty. That’s compared to 8.6 percent of elderly White, Non-Hispanic women.
Once a woman reaches retirement age, their income drops drastically. According to WOW, the median yearly income for retired women age 65 and older is $14,225—more than $10,000 less than retired elder men. Elderly Black, Asian, and Hispanic women report even lower incomes: $12,231, $10,284, and $9,673 respectively. Single elderly women also have a reported median household income of $18,328, which is over $22,000 less than an elderly couple’s household income of $41,442.
“That’s precisely why a woman might be seeking [long-term care] insurance, because she’s trying to guard against these costs because she’s aware she’s economically vulnerable,” Martin says.
If a 65-year-old single woman making less than $20,000 were to procure a new long-term care policy today, it’s possible nearly a third of her income could be spent on premiums alone.
A hypothetical insurance illustration run for Genworth’s Privilege Choice Flex 2—its product launched last year introducing the new pricing strategy—yielded an estimate of over $4,920 in annual premiums for a 65-year-old male in good health seeking $180,000 in full benefit coverage in Pennsylvania. For a healthy 65-year-old female, that number increased by over 40 percent to $6,950 annually.
Illustrations run for Mutual of Omaha and Transamerica bore similar results. Transamerica, the least expensive carrier, returned an annual premium estimate of $5,442 for a 65-year-old female, and $2,944 for a 65-year-old male. Mutual of Omaha landed in the middle with annual estimates of $6,212 and $3,402 respectively. Both carriers show a difference of nearly 85 percent in rates.
This is, of course, at the affluent end of the spectrum.
According to AATLCI’s 2014 price index, a 55-year-old single woman purchasing a new, gender-rated policy can expect to pay, on average, $1,225 per year for $164,000 of benefits. For a 55-year-old man, premiums for the same benefit amount costs $925 a year—nearly 33 percent less.
Implementing gender-based rating on new long-term care policies, which increased premiums on an already expensive product, “puts this kind of care completely out of financial reach” for single women, Martin says.
“It’s really important women who are earning less on average than men don’t have the extra burden of also being charged drastically more for this sort of insurance,” she stresses.
While the ACA standard does not extend to long-term care, the NWLC maintains the gender-neutral standard applies because the carriers are involved in the Long-Term Care Partnership Program: a joint federal-state health program established three decades ago to allow people buying private LTC policies shield used benefits from consideration of their Medicaid eligibility.
Since these partnerships give incentives to consumers to buy approved products from involved carriers, Martin says, it “amounts to assistance that comes from the Medicaid program to these long term care insurance policies.” And because the ACA provision prohibits discrimination in health programs receiving government dollars, she continues, carriers like John Hancock by extension cannot discriminate based on gender. (The NWLC also filed complaints against state agencies operating partnerships in Kentucky, Washington, and Minnesota.)
Although gender-based pricing in long-term care insurance is a new—and potentially growing—trend, it’s still common in other insurance markets.
As Slome notes, men generally pay higher premiums for life insurance policies. This is because, statistically, men die at younger ages and at a faster rate: 41 percent higher than women, according to Harvard Medical School.
“In some cases women pay more than men, in some cases men pay more than women,” he says. “If there’s equality for one, there should be equality for all and equality in all situations.”
Martin agrees. Although current anti-sex discrimination laws don’t extend to all insurance markets, she believes a gender-neutral rating standard should apply across the board as “a matter of policy.” “It shouldn’t be dependent on who happens to be the administrator of your insurance, if it’s an employer or some other actor,” she says.
At the moment, the NWLC is waiting for the OCR to make a jurisdictional determination as to whether the Affordable Care Act provision reaches both the long-term care market and the partnership programs in question. If a determination is not made in the NWLC’s favor, there’s an option to pursue private legal action, but Martin says the NWLC is “confident that the Office of Civil Rights is going to come to the right decision here.”
– By Annamarya Scaccia