As healthcare costs rise year after year, and the need for extended care becomes a growing reality for the U.S. aging population, insurance brokers and financial advisors face an increasingly difficult challenge of offering solutions that are both comprehensive and accessible. For many middle-income clients, traditional long-term care (LTC) insurance and hybrid life/LTC policies are out of reach—too expensive, too complex, or too restrictive in terms of medical underwriting. Short-term care (STC) insurance can be a powerful alternative.
The Coverage Gap
According to a report from the U.S. Department of Health and Human Services, nearly 70% of Americans over age 65 will need some form of long-term care. Yet, traditional LTC policies are declining in enrollment. Why?
- Cost Prohibitive: Premiums for LTC insurance have skyrocketed in recent years, pricing out many middle-income households.
- Underwriting Hurdles: Health qualifications and the underwriting processes for LTC insurance are often stringent, making approval difficult.
- Complexity and Uncertainty: Many clients struggle to understand hybrid plans or balk at tying up large sums for lump-sum premiums in a product they may never use.
Middle-income clients—those who are too “wealthy” for Medicaid coverage, but not wealthy enough to self-fund—often face a coverage gap later in life when they inevitably need extended care services.
Short-Term Care Insurance
Short-term care insurance is designed to provide coverage for up to 12 months of care (and, sometimes up to 24 months with restoration of benefits), which is often sufficient for recovery from an illness, injury, or temporary disability. It fills the gap between acute hospital care and long-term care, which most health and Medicare plans don’t cover.
Why Offer STC?
- Affordability
STC premiums are significantly lower than traditional LTC or hybrid policies. For clients on fixed or limited incomes, this makes these plans much more attractive and accessible.
- Simplified Underwriting
Many STC products offer simplified underwriting or guaranteed issue for certain age ranges. This opens the door to clients who may have been declined for traditional LTC insurance due to pre-existing conditions.
- Flexibility
STC policies can be customized with features like home health care, assisted living, or nursing facility coverage. This adaptability allows clients to tailor coverage to their expected needs, wishes for aging, and budget.
- Bridge Coverage
For clients planning to self-insure or with assets tied up in investments, STC provides valuable short-term liquidity and peace of mind during transitional periods of care.
- Client Education Opportunity
Offering STC allows brokers to initiate a conversation about care planning in a low-pressure way. It’s an entry point to broader discussions on estate planning, health care directives, and risk management.
Positioning STC in Your Product Portfolio
It’s important not to treat short-term care insurance as a “lesser” product—it’s a strategic alternative providing real value to your clients. When positioned correctly, STC can:
- Complement Medicare Advantage or Medicare Supplement plans
- Serve as a fallback for clients who’ve been declined LTC
- Act as a starter policy for younger clients building their financial safety net
- Give caregivers and family members greater confidence in support continuity
In a market where many clients feel priced out of traditional solutions, short-term care insurance offers a pragmatic, effective option. Brokers who embrace STC not only expand their portfolio—they demonstrate a deeper commitment to understanding and serving the nuanced needs of the middle-income market.
Offering short-term care insurance like HCG’s Home Care Secure isn’t just good business—it’s the right thing to do for your clients. Call 844-424-2757 to discuss if HCG’s STC offering is a good fit for your clients.