As the senior insurance market continues to grow, we have seen many carriers look for ways to expand their presence within the market.  One niche that continues to generate activity is the “recovery care” market.

Recovery Care is a term that is often used to describe health care, therapy, or rehabilitation services provided following a serious injury or sickness.  These services can be provided in a facility (think short-stay nursing home or rehabilitation center) or within the person’s home.  Providing care services in these locations is more cost effective than an extended hospital stay and is typically preferred by the patient.

Even though it is more cost effective to receive care in the home or in a short-stay facility, that does not mean it is cheap!  A one-hour physical therapy session can cost in the range of $200-$400.

One way that people can cover the potential cost of this care is by purchasing a Short-Term Care insurance policy or a Home Health Care insurance policy.  This article will give you an overview of the two products and highlight some of the new product activity in Texas.

Short-Term Care Insurance (“STC”)

STC products are structured to pay indemnity benefits based on the number of days the insured is confined to a facility.  It is typically filed as a guaranteed renewable contract (i.e., companies cannot cancel the coverage) and the premiums are based on the applicant’s issue age.

Companies commonly offer it with benefit periods that range from 30 days to a maximum of 360 days.  These limited benefit periods are the key differentiator between STC policies from Long-Term Care Insurance (“LTC”) policies.  The shorter benefit periods make it significantly less risky than the LTC counterparts, which means the company can use a more relaxed underwriting approach and can charge a lower premium.

Other key features of this product are the Elimination Period (typically 0-Days or 20-Days), the range of available Daily Benefit amounts, the covered sites of care, and the optional inflation protection riders that can be added.

Monthly premiums for this product are typically in the range of $30-$45 for the base policy with a $150 daily benefit.  However, premiums can increase significantly if the insured elects an inflation coverage rider.

Home Health Care Insurance (“HHC”)

This product type is designed to provide coverage for scenarios when the insured suffers an injury or illness and needs to continue receiving care while at home.  Daily indemnity benefit amounts can vary based on the type of nursing or therapy service that is needed.  In addition to the nursing and therapy benefits, many HHC products that are sold today also include a Prescription Drug reimbursement benefit.  When available, this benefit will pay a fixed amount for each generic prescription that is filled and a higher amount for each brand name prescription that is filled.

Monthly premiums for this product are typically in the range of $25-$35 for the base policy.

Recent Market Activity

Over the past two years there has been a steady increase in activity in the STC and HHC markets.  There have been new carriers entering the market and carriers filing new and enhanced versions of existing products.

The following table lists the new products that have been approved for use in Texas[1] since January 2022. This is a significant increase in activity as there had previously been just 4 or 5 carriers that had a meaningful market presence.

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