The 1970s saw the birth of long-term care insurance (“LTCI”) providing financial assistance for costs not typically covered by health insurance, Medicare or Medicaid. At the time dozens of insurers offered policies with benefits typically limited to traditional nursing home care.

The maturing market for LTCI has brought both pain and pleasure. The upside has been expanded coverage for the wide ranging needs of the elderly and infirm including assisted living and home care. The downside has been much worse with a smaller number of providers offering more expensive policies with declining appeal.

The fact is insurers are losing money on LTCI. Early policies were mispriced and few policyholders were drawing benefits. As policies have begun to pay out the underpriced policies are bringing in too little income to cover the insurer’s costs. This is one reason large players like Prudential and MetLife have left the LTCI space leaving standing only a few – the most prominent and recognizable being Genworth, Transamerica, John Hancock and New York Life.

What can consumers expect from LTCI offerings from the remaining players?

HIGHER COSTS: New policies will clearly come with a higher price tag.

GENDER-BASED PRICING: Women should expect to pay more as, actuarially, they live longer.

LOCATION-BASED PRICING: Residents in states such as Florida with large gray(ing) populations should expect to pay more.

REPURPOSED MARKETING: Insurers will stop proposing LTCI as a full coverage option and, instead, offer it as a mass market means of obtaining partial asset protection.

SPOUSAL SHARING: Couples will be able to purchase coverage for a designated number of years and then split the benefits.

VANISHING OPTIONS: Refund of premium provisions are going the way of the dinosaur as a means of making policies more affordable.

INFLATION-RIDERS: Typical 5%/year benefit increases are being reduced to a pseudo-industry standard (and more appropriate?) 2%/year.

The good news for consumers is that the costs which LTCI aim to cover are dropping. Consider the market for home care services provided by visiting nurses and heath aides. Competition is up as more and more providers are entering the market. Similarly technology advances continue to drive costs from the system with options such as automated drug delivery and wireless in-home monitoring.