Long term care insurance premiums are rising
The New York Times recently reported that people are being notified that their long term care insurance premiums are being increased.
Long term care insurance helps cover the costs of assisted living, nursing home, or in-home care (services not covered by Medicare). It’s purchased separately from other types of life insurance.
When premiums go up, you’ll have to pay more each month to keep the same coverage from your existing policy.
Many policyholders face monthly payment increases of 50% or more
Insurance regulators in many states have approved large increases in long term care premiums for older policies. This is happening because insurance companies are losing money on those policies because they set the premiums too low.
Policyholders have reported getting letters from their insurance companies notifying them of 48% to 60% increases for policies they bought years ago.
Increases don’t affect new policies, but those rates are rising too
These large increases apply to older policies and not to newly issued insurance policies. But it’s much more expensive to get a new policy now than it was before.
In one example, a healthy 55 year old man would pay $2,075/month for a policy that would have cost $1,765/month last year. That’s 18% more in just one year!
Don’t cancel your older policy thinking you can get a new one cheaper
If you bought a long term care insurance policy more than 2 years ago, it’s not likely that you’ll be able to get a cheaper one today (assuming the same coverage).
Plus, the underwriting (how you qualify based on health and risk factors) is more strict, so it might be harder to qualify for coverage.
What happens if you drop your coverage
Some policies have clauses that give you benefits even if you have to drop the coverage because the premiums become too expensive. To find out if you can get these benefits, you’ll need to check your specific policy or ask your insurance company.
To get a basic understanding of these benefits, check out the bottom of page 28 of this guide from the National Association of Insurance Commissioners.
How to reduce premium increases
There are options to keep premiums down. Some policyholders can lower their inflation protection. Others may choose to reduce the amount of daily benefit or increase the elimination period.
Basically, these are changes that can reduce the amount of benefit you’ll get in the future and could mean that you’d pay more out of pocket for your care.
Don’t lose hope or make a rash decision if you see a huge premium increase. Investigate your situation to see if you can reduce that increase, decrease the policy coverage, or if you can get money back if you need to drop coverage.
By DailyCaring Editorial Staff
Image: Long Term Care Now