Long-term care insurance: towards a single rate guarantee to finance the loss of autonomy?

Finally an affordable solution to finance the risk of loss of autonomy? During the presentation to the press of its white paper on dependency on Tuesday, December 7, the French Insurance Federation (FFA) put on the table the creation of a new “dependency guarantee”. This tool would include a financial component and would make it possible to “pay a life annuity of between 300 and 500 euros per month to all people in total dependence,” said Jean Malhomme, chairman of the FFA’s personal insurance commission. This maximum of 500 euros corresponds roughly to the remainder of the charge (the amount that the dependent person must pay once the various aids have been deducted), estimated on average at 490 euros per month in a parliamentary report published in 2019. Policyholders who switch to iso-resource groups (Gir) 1 and 2 would therefore be compensated to enable them to cover these expenses, in whole or in part, without any waiting period.

The first component, financial, would be supplemented by a second, linked to prevention. Among the planned services: “a health check-up by telephone interview, a diagnosis of housing, assistance to caregivers with administrative procedures, the search for funding and the organization of care”, detailed Jean Malhomme. These are all services to which policyholders would have access, upon subscription, without having to wait to become dependent.

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A guarantee backed by responsible health contracts

This new tool desired by insurers is intended to be integrated into responsible complementary health contracts. Concretely, the French Insurance Federation promotes that the long-term care guarantee be backed by these “responsible” contracts, marketed since January 1, 2015 and which currently represent 95% of the health insurance market. As a reminder, these envelopes must respect several constraints fixed by decree, in particular the non-reimbursement of excess fees for medical consultations, as well as a zero charge on dental and optical costs (within the limit of equipment every two years and in certain ceilings) and hearing aid. These contracts benefit from preferential taxation, with an additional solidarity tax (TSA) – which affects all contributions – limited to 13.27% instead of 20.27% for non-responsible contracts.

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Increasing the tax advantage granted to these new responsible contracts is also one of the “conditions for the success” of the long-term care guarantee, argues Jean Malhomme. So that the latter is democratized thanks to an affordable price, and thus covers the greatest number, the FFA asks the public authorities to abolish the TSA on these contracts, or, at least, a reduced TSA from 13.27 to 6, 27%. A reduction in taxation which would allow, according to the president of the FFA’s personal insurance commission, “to reduce the individual cost for each person”.

A single rate according to the age of the contributors

But what, exactly, would such a guarantee cost the insured? The FFA expects monthly premiums limited to 5.70 euros for a person who would start to contribute from the age of 22 for a monthly pension, once dependent, of 300 euros. To receive a life annuity raised to 500 euros, the contribution would climb to 9.50 euros. A contributor who subscribes to the guarantee at age 62 would pay for his part a premium ranging between 14.60 and 24.20 euros. The tariff would therefore be single, regardless of the age of entry into dependency, and would vary only according to the age at which the guarantee was taken out.

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Note, however, the amounts indicated take as an assumption a maximum mutualisation of the risk, “ensured within a co-insurance pool which allows total transparency in the management of the risk”, indicates the white paper of the FFA… and in the event of launch of this solution from 2022. Because, as specified by the president of the FFA, Florence Lustman, “there is an urgent need to find solutions”. According to the Federation, “for each year that the implementation of this insurance solution is postponed, a temporary increase in contributions (until 2043), of around 2%, should be applied to the initial balance rate. (…) For example, an implementation in 2030 would suppose a premium of 11.10 euros (instead of 9.50 euros) ”, illustrates the FFA in its document. The date of creation of this guarantee is not the only unknown. What about the tax (TSA) that will be applied to it? Will contributions be funded at least 50% by the employer, as responsible contracts are currently? Will certain insured persons, such as beneficiaries of complementary health insurance (CSS), be exempt? So many questions to which the candidates for the presidential election of 2022 could quickly provide answers, this proposal to be presented to them in the coming days according to Florence Lustman.

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