By Paul E. ForteChief Executive Officer

Long Term Care Partners, LLC

Long Term Care Discussion GroupWashington, D.C.

April 26, 2012

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TOPICS

• Background/Structure

• OPM Contracts

• The Claims Process

• Enrollment Growth

• Current Scene/Future Directions

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Origins

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• Early LTCI policies: Medicare model/prior hospitalization

• Second generation individual policies• Employer Group plans for associations, state

governments, universities, labor unions, other

• Proctor & Gamble, IBM, GE, AT&T, and Fortune 500 market

• CalPERS LTCI Program

• Small group and work-site policies

Long Term Care Security Act of 2000 (PL 106-265)

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Federal Long Term Care Insurance Program (FLTCIP)

• Created by Long Term Care Security Act of 2000 (PL 106-265)

• Oversight by Congress

• Sponsored and Regulated by U.S. Office of Personnel Management (OPM)

• Master Contracts for seven years

• Fully Insured

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FLTCIP: A Public-Private Partnership

8 Million Core Eligibles

The Federal Long Term Care

Insurance Program

270,000+ Enrolled

U.S. Congress

U.S. Office of Personnel Management (OPM)

• Director of OPM• Healthcare & Insurance• Office of Inspector General• Office of Communications• Financial/Actuarial

GAO, HHS, CBO, OMB, Treasury

Long Term Care Partners, LLC

Long-Term Care Insurance Industry

Long-Term Care Services & Supports

Sta

keho

lders

Sta

keh

old

ers

Annualized Premium: $428 Million Assets under Management: $3 Billion*

*as of March 31, 2012

Non-Profits & Advocates

John Hancock

Federal Long Term Care Insurance Program (FLTCIP)

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• Enrollees subject to medical underwriting standards

• Uniform across all states• Premiums 100% voluntary

• Care Coordination • International Benefits• Assets held in separate account

FLTCIP 1st Contract

• OPM awarded first 7-year FLTCIP contract to John Hancock and MetLife in December 2001

• Initial Early Enrollment Period in March 2002. Main enrollment period (July 2002 through January 2003)

• Largest national marketing campaign on LTCI to date

• 197,000 enrollees after 1st Open Season

• 225,000 enrollees by contract end (Sept. 2009)

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FLTCIP 2nd Contract

• OPM awarded second 7-year FLTCIP contract to John Hancock in May 2009

• Adoption of new 2.0 plan; increase for ACIO enrollees in 1.0 plan

• Special Decision Period: August 2009 through April 2010

• 2nd Open Season: April 4, 2011 through June 24, 2011

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• 146,400 affected with 5%-25% increase depending upon enrollee’s age at purchase

• Personalized options with landing spots

• Support via website and specially-trained customer service representatives

• Special rate quote unit for other options

• 45% choose options to avoid increase; 43% choose to stay in 1.0 and pay increase

FLTCIP Special Decision Period, 2009 - 2010

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FLTCIP Open Season, April - June 2011

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• Open Season: April 4, 2011 – June 24, 2011

• First abbreviated underwriting opportunity for non-enrolled applicants since 2002

• More than 45,000 new people enrolled (20% increase)

• 70% of enrollments electronic

FLTCIP 2.0: New Benefits and Features

– 100 % home health care

– Calendar days

– Stay-at-home benefit

– 500 Informal Care Days

• Higher daily benefit amounts ($100 - $450)

• 2-year benefit period

• 4% Automatic Compound InflationOption

• No catastrophic coverage limitation

• Enhanced home health care benefits

FLTCIP: Home Health Care

• Reimbursed at 100% of Daily Benefit from $100 to $450 per day

• Formal care by Home Health Agencies• Adult day care• Respite Care• Informal care by friends, neighbors, and family members

• Stay-at-home benefits• Care planning visits• Home safety check• Emergency medical response systems• Durable medical equipment• Caregiver training

*Does not reduce maximum lifetime benefit

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• Registered nurses, with clinical experience, act as single point of contact

• Available for enrollees, and their qualified relatives, even if not enrolled

• Assessment, planning, service coordination, and counseling

• Dedicated resources assigned to each case

• Thoughtful utilization of benefits

• Claimants’ Satisfaction Level: 98% (+) since Program’s start

FLTCIP Care Coordination

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AIA Presentation

Claims Activity

• 150 new claims and 50 information/referral calls a month

• 2,600 claims active

• 9,100+ claims opened (program-to-date)

• 7,100 in benefit (program-to-date)

• Program currently paying over $6 million each month in claims

• Only cases of rescission have actually gone to court; no cases pending

Point of Service YTD

AIA Presentation

Independent Third Party Review

• Benchmark for consumer protection

• In cases of disputed eligibilities or claims, after denial of appeal, file may be submitted to independent third party for evaluation

• Third Party decision is binding

• Five Independent Third-Party Reviews, none of which have gone

to court

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AIA Presentation

FLTCIP Technology and Service Enhancements

•Online Consulting Tool

• Full application online•New secure personalized enrollee account and ability to make plan changes

•Enhanced security measures for protection of personally identifiable and personal health information

•Advanced fail-over plan to ensure continuity of administration

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Enrollment Growth

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2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

25,000

50,000

75,000

100,000

125,000

150,000

175,000

200,000

225,000

250,000

275,000

FLTCIP Enrollment 2002 – 2011 *

2002 - 2003 Open Season

2011 Open Sea-son 45,000 enrollees

added

* Enrollment totals are net of lapse and terminations

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Electronic Acquisition Model

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Education & Decision Making - Web

LTC & LTC Insurance Basics

FLTCIP Product Features

Application Web Approximately

70% submitted online 80% in

Open Season

Eligibility

Online Consultant Tool

Cost of Care in your Area

Rate Quote Calculator

Solicitation Email

Email blast Direct clicks to

Full Underwriting

Abbreviated Underwriting

Long Term Care: Current Scene

• Total paid costs for LTC exceeded $250 billion in 2009

• Call for review of major entitlements in view of budget deficits, long-term debt

• Longer life expectancy

• 78 million baby boomers entering retirement

• Millions of boomers under-saved, unprepared for retirement

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Long Term Care: Future Directions

• Investment environment likely to remain challenging, volatile

• Self-insurance through savings, annuities, reverse mortgages

• Private LTCI most reliable form of protection

• More public-private partnerships likely

• Efforts to curb Medicaid costs

• Renewed attention to Medicare

• FLTCIP, other large-scale employer-based programs,

preferred LTCI delivery models

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