Incredible increase in LTC policy premium
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JoeWras
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We don't have inflation protection. Perhaps that is why the policy is reasonable.
LTC can be useful in another way.
I stumbled upon this site and saw this discussion on LTC. I recently purchased some a couple of years ago and did a lot of research and still do some as I find it an interesting topic and always wonder if I did the right thing.
I bought the policy because I did not want to burden my family and did not want my wife to be stressed out over taking care of me. My father had cancer and no such long term care insurance and my sisters and I had a lot of difficulty taking care of him especially when two of us lived cross country. That left the one closest to him with the overwhelming responsibility. That us other two feeling very guilty and all threw of us had our own families to maintain.
I can tell you that those of you who feel you can self insure must really be millionaires. My dad was in a facility in New York and the cost was nearly $400 per day. His first visit was for 6 weeks. That was 400 x 42= $16,800. Medicare covered that because he was in a skilled nursing facility and they were rehabilitating him. The second time he went there, he was kind of forced to leave as he was there for an extended period of time but the Medicare benefits were running out and they felt he could go home. The bottom line was that they wanted the bed for a higher paying customer. He needed someone at home and the bills started to come in for his home health care because he could not be home alone. He was at home for a year and a half. We had to consider selling the house, but we were finally able to get some assistance because he did not have much income. This was a huge worry.
I write all of this to say that you can go through your savings and assets very quickly. If you should get Alzheimer's or dementia, you could have extended stays and leave you're spouse high and dry quite easily.
LTC has its place. If you have assets somewhere in the ballpark of $100,000 to $600,000 and you want to protect those funds from potential pocketbook clearing long term care needs. Many states like California have partnership LTC programs that allows you to protect assets you may have if you use up your LTC insurance. For example, if you have a partnership LTC policy and need care and your policy pays $300,000 for your care. If your policy runs out you can protect $300,000 of your assets not including your house and car. So if you had say, $400,000, all but $100,000 would be protected from the look back period to pay for your care and you could potentially receive Medicare if you qualify.
Yes, these policies can increase the premiums. However, all it takes is one lengthy stay and you can be wiped out. I have seen people have strokes and heart attacks and they are in great need of care for lengthy periods of time.
I am in education and live in California. CALPERS is a government retirement system. They are not an insurance company and their longterm care program was amongst the members who paid into it. They closed the LTC program because of the lack of funds to pay claims. They have continuously increased premiums because like the insurance companies they were negatively affected by the low interest rates of the banks and the increasing costs of long term care. CALPERS greatly underpriced their products. I considered them myself, but had other priorities in my forties and delayed in buying their LTC. I am glad I did.
There are a variety of ways to handle LTC. There are many moving parts that you need to be aware of. I have learned that you could get the exact same policy from two different companies and pay literally thousands of dollars difference. I would be happy to answer questions on this topic. I feel pretty comfortable. I can't refer you to anyone because that's not my business, but I will tell you to find an independent broker who can show you a few different companies rates so that you can get a good rate with a good strong company. I a policy with a company called Genworth. It's a comprehensive policy for 4 years at $200/day with a 5% compound interest to it. My wife has the same. We pay $2900/per year for both of our policies for nearly $600,000 of coverage. One thing I did check was the rate increase history for Genworth as it pertains to the partnership policy which is what I have. Genworth has never raised its premiums on their partnership policies in California. I did not say that will always be the case, but that's the way it has been so far. States with partnership policies encourage their residents to buy a policy. California tries to encourage this by not having the rates increase.
I hope this helps folks.
I stumbled upon this site and saw this discussion on LTC. I recently purchased some a couple of years ago and did a lot of research and still do some as I find it an interesting topic and always wonder if I did the right thing.
I bought the policy because I did not want to burden my family and did not want my wife to be stressed out over taking care of me. My father had cancer and no such long term care insurance and my sisters and I had a lot of difficulty taking care of him especially when two of us lived cross country. That left the one closest to him with the overwhelming responsibility. That us other two feeling very guilty and all threw of us had our own families to maintain.
I can tell you that those of you who feel you can self insure must really be millionaires. My dad was in a facility in New York and the cost was nearly $400 per day. His first visit was for 6 weeks. That was 400 x 42= $16,800. Medicare covered that because he was in a skilled nursing facility and they were rehabilitating him. The second time he went there, he was kind of forced to leave as he was there for an extended period of time but the Medicare benefits were running out and they felt he could go home. The bottom line was that they wanted the bed for a higher paying customer. He needed someone at home and the bills started to come in for his home health care because he could not be home alone. He was at home for a year and a half. We had to consider selling the house, but we were finally able to get some assistance because he did not have much income. This was a huge worry.
I write all of this to say that you can go through your savings and assets very quickly. If you should get Alzheimer's or dementia, you could have extended stays and leave you're spouse high and dry quite easily.
LTC has its place. If you have assets somewhere in the ballpark of $100,000 to $600,000 and you want to protect those funds from potential pocketbook clearing long term care needs. Many states like California have partnership LTC programs that allows you to protect assets you may have if you use up your LTC insurance. For example, if you have a partnership LTC policy and need care and your policy pays $300,000 for your care. If your policy runs out you can protect $300,000 of your assets not including your house and car. So if you had say, $400,000, all but $100,000 would be protected from the look back period to pay for your care and you could potentially receive Medicare if you qualify.
Yes, these policies can increase the premiums. However, all it takes is one lengthy stay and you can be wiped out. I have seen people have strokes and heart attacks and they are in great need of care for lengthy periods of time.
I am in education and live in California. CALPERS is a government retirement system. They are not an insurance company and their longterm care program was amongst the members who paid into it. They closed the LTC program because of the lack of funds to pay claims. They have continuously increased premiums because like the insurance companies they were negatively affected by the low interest rates of the banks and the increasing costs of long term care. CALPERS greatly underpriced their products. I considered them myself, but had other priorities in my forties and delayed in buying their LTC. I am glad I did.
There are a variety of ways to handle LTC. There are many moving parts that you need to be aware of. I have learned that you could get the exact same policy from two different companies and pay literally thousands of dollars difference. I would be happy to answer questions on this topic. I feel pretty comfortable. I can't refer you to anyone because that's not my business, but I will tell you to find an independent broker who can show you a few different companies rates so that you can get a good rate with a good strong company. I a policy with a company called Genworth. It's a comprehensive policy for 4 years at $200/day with a 5% compound interest to it. My wife has the same. We pay $2900/per year for both of our policies for nearly $600,000 of coverage. One thing I did check was the rate increase history for Genworth as it pertains to the partnership policy which is what I have. Genworth has never raised its premiums on their partnership policies in California. I did not say that will always be the case, but that's the way it has been so far. States with partnership policies encourage their residents to buy a policy. California tries to encourage this by not having the rates increase.
I hope this helps folks.
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes, if I had it to do over, knowing what I know now about the LTC companies' ability to double rates at will (with the blessing of the regulators, no less) I probably would not have bought in originally. But, it's sort of like a poker game where you have a lot in the pot. You may stay instead of fold. We've had our policies for about 14 years and rates have doubled. Still, looking at other companies, our rate is not available for the coverage. Will our rates go up again. Probably. But at our ages, it's likely we'll need coverage sooner rather than later. It's a tough situation, made more difficult by the economy and the incredible increases in the overall cost of health care in general and LTC specifically. What's a person to do? YMMV
TOOLMAN
Recycles dryer sheets
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IMHO - I am all for this option, but the problem parts are; "when to end" and "if self able to end". Final Exit - Wikipedia, the free encyclopedia
ziggy29
Moderator Emeritus
This is exactly why I have passed on the product and will continue to do so most likely, unless some form of cost certainty *and* solvency can be ensured. Still, that isn't realistic especially since that would likely mean only the government could backstop it (and no, not advocating that or even that this turn into a debate on that).
The current system really feels like bait and switch. You can buy into a product and pay it for 10-15 years, and then they can really jack up the rates and you can either drop the coverage, flushing your premiums already paid down the rathole (since you buy younger to lock in the lower rates, not because you're likely to need it under 60) or sucking it it and paying much higher premiums.
brewer12345
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The problem is that your policy (and all the policies in CA) are very underpriced and over the long term there are two choices that the state and policyholders will face: allow an increase in rates, or risk the solvency of the insurer. In the face of CA's refusal to allow rate increases, I bet it is really tough to buy a new LTCI policy in CA.
i can't speak for all parts of the country but my wife and i bought 4 year policies
with GE-predecessor to GEnworth- in 2003. 150 dollars per day(about 220 now with 5 percent inflation factor). 50 day deductible. total for both of us 2700 dollars.
we have never had a price increase. I researched GE(genworth) 10 years ago and found them to be the most solvent/priced correctly policies.
from my research i found that they usually create a new plan and raise prices on those but rarely increase old policies.
will it be worth buying it.-i hope never to have to use it so i don't know.
i live in massachusetts
CA allows increases but...
Genworth was approved for an 18% increase in CA for some of their individual and group policies, but not their partnership policies.
CA allows increases, but they are not just giving insurers an automatic pass to raise their rates by 50 to 90 per cent.
Genworth was approved for an 18% increase in CA for some of their individual and group policies, but not their partnership policies.
CA allows increases, but they are not just giving insurers an automatic pass to raise their rates by 50 to 90 per cent.
You can still buy a policy in California, but the companies are raising their rates.
Rich_by_the_Bay
Moderator Emeritus
+1
The saving grace for some is, as Ken with good reason likes to remind us, the mean stay length of roughly 3 years. A lot of damage but at that exposure risk, many can get through it.
Is Long-Term Care Insurance Just a Ripoff? (CNA, GNW, MET, MFC, PRU)
The article essentially validates a lot of comments in this thread. It touched on CALPERS 85% increase in premium comes 2015 and Genworth leaving the field. And on reflecting on the trend of increasing premium and reduction of benefits facing existing policy holders and new buyers trying to decide whether they want to buy LTC policy , the article said this of the dilemma faced by existing policyholders
"For existing policyholders, the main problem is one of sunk costs. Insurance agents typically advise people to obtain long-term care insurance as early as possible to reduce costs, as premiums are much lower for younger policyholders who are less likely to need benefits in the immediate future. What that means, though, is that those who've held onto their policies a long time have already paid tens or even hundreds of thousands of dollars in policy premiums without having gotten a dime in benefits to show for it. Now, to avoid losing their coverage, these long-time policyholders have to find hundreds of dollars to cover extra premium payments each month. For many retirees living on a fixed income and already facing substantial price increases for other basic living expenses, that will prove an impossible task, and they will have to accept lower benefits or even give up their policies entirely -- thereby having essentially wasted all the money they've spent on premiums for years."
The article essentially validates a lot of comments in this thread. It touched on CALPERS 85% increase in premium comes 2015 and Genworth leaving the field. And on reflecting on the trend of increasing premium and reduction of benefits facing existing policy holders and new buyers trying to decide whether they want to buy LTC policy , the article said this of the dilemma faced by existing policyholders
"For existing policyholders, the main problem is one of sunk costs. Insurance agents typically advise people to obtain long-term care insurance as early as possible to reduce costs, as premiums are much lower for younger policyholders who are less likely to need benefits in the immediate future. What that means, though, is that those who've held onto their policies a long time have already paid tens or even hundreds of thousands of dollars in policy premiums without having gotten a dime in benefits to show for it. Now, to avoid losing their coverage, these long-time policyholders have to find hundreds of dollars to cover extra premium payments each month. For many retirees living on a fixed income and already facing substantial price increases for other basic living expenses, that will prove an impossible task, and they will have to accept lower benefits or even give up their policies entirely -- thereby having essentially wasted all the money they've spent on premiums for years."
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I know we've discussed this a "few" times, but I submit the following statement from the article is flawed:
"Having underestimated the true costs of the health care that long-term care policies offer, insurance companies have struggled to price their policies correctly."
In fact, as far as I know, the "benefits" of each policy are stated to the penny. IOW, your benefit is stated in terms of dollars per day. Many (most?) policies have inflation riders as well - again, known to the penny in any given future year. Now, any insurance company worth it's "blimp" will have done research to determine how many of their customers (on a statistical basis) will end up using their benefits. So, the "costs" should be known!
The article goes on to say that insurance companies have not made enough money on the money they have essentially "borrowed" from still healthy policy holders. True enough. What the article fails to point out (and I have heard at least one insurance company admit) NOT ENOUGH FOLKS WHO BOUGHT EARLY LET THEIR POLICIES LAPSE WITHOUT EVER RECEIVING BENEFITS. That was the actuarial "mistake" the insurance companies made. They assumed folks would begin to lapse policies after year 1 to 20 (when they rarely need them). That has not happened enough to let the insurance companies make money. Unfortunately, the insurance "regulators" have allowed the companies to raise rates to cover for their flawed "predictions". (A cynical person might even think the companies knew this all along and counted on the regulators not to leave them twisting in the wind - fortunately, I'm not cynical. Just skeptical.) This has the two-fold effect of "bailing out" the insurance companies for their mistakes AND causing many folks to LAPSE their policies - just like the companies had wanted all along.
All around, it seems like a dirty deal. I'm in the "sweet spot" now that I've paid in for a long time AND I'm getting to an age when it gets more likely I'll need my policy. So far, they have not raised the rates high enough to "force" me to lapse the policy. Stay tuned.
Probably nothing will happen to help policy holders (if the banks can get away with it, why not the insurance companies, right?) Naturally, YMMV.
"Having underestimated the true costs of the health care that long-term care policies offer, insurance companies have struggled to price their policies correctly."
In fact, as far as I know, the "benefits" of each policy are stated to the penny. IOW, your benefit is stated in terms of dollars per day. Many (most?) policies have inflation riders as well - again, known to the penny in any given future year. Now, any insurance company worth it's "blimp" will have done research to determine how many of their customers (on a statistical basis) will end up using their benefits. So, the "costs" should be known!
The article goes on to say that insurance companies have not made enough money on the money they have essentially "borrowed" from still healthy policy holders. True enough. What the article fails to point out (and I have heard at least one insurance company admit) NOT ENOUGH FOLKS WHO BOUGHT EARLY LET THEIR POLICIES LAPSE WITHOUT EVER RECEIVING BENEFITS. That was the actuarial "mistake" the insurance companies made. They assumed folks would begin to lapse policies after year 1 to 20 (when they rarely need them). That has not happened enough to let the insurance companies make money. Unfortunately, the insurance "regulators" have allowed the companies to raise rates to cover for their flawed "predictions". (A cynical person might even think the companies knew this all along and counted on the regulators not to leave them twisting in the wind - fortunately, I'm not cynical. Just skeptical.) This has the two-fold effect of "bailing out" the insurance companies for their mistakes AND causing many folks to LAPSE their policies - just like the companies had wanted all along.
All around, it seems like a dirty deal. I'm in the "sweet spot" now that I've paid in for a long time AND I'm getting to an age when it gets more likely I'll need my policy. So far, they have not raised the rates high enough to "force" me to lapse the policy. Stay tuned.
Probably nothing will happen to help policy holders (if the banks can get away with it, why not the insurance companies, right?) Naturally, YMMV.
i read they expected a 5 percent default rate and only got a 1 percent default rate
my wife and i have had policies for 12 years and have not had an increase yet
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martyp
Thinks s/he gets paid by the post
It's not a total waste. If I had had an illness or accident during this policy period that resulted in long term care then I would have coverage. But more importantly, this is the way insurance is supposed to work. Insurance only works if most people who pay for it don't collect the benefits. Besides calculating who will drop out of the program before collecting anything they also have to calculate who will die before receiving the benefit payout equal to what they paid in. That's why they call it insurance.
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obgyn65
Thinks s/he gets paid by the post
Great timing - I was just reading this WSJ article on this topic a few hours ago :
The Experts: Should People Buy Long-Term-Care Insurance? - WSJ.com
"Should people buy long-term-care insurance? The Wall Street Journal put this question to The Experts, an exclusive group of industry and thought leaders who engage in in-depth online discussions of topics from the print Report. This question relates to a recent article featuring a debate over long-term care."
The Experts: Should People Buy Long-Term-Care Insurance? - WSJ.com
"Should people buy long-term-care insurance? The Wall Street Journal put this question to The Experts, an exclusive group of industry and thought leaders who engage in in-depth online discussions of topics from the print Report. This question relates to a recent article featuring a debate over long-term care."
brewer12345
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Did you read the fine print when you bought your policy? If you did, then you would have known that rates were not guaranteed until the end of time. If it was fully disclosed, you have nothing to squeal about.
MooreBonds
Thinks s/he gets paid by the post
If auto insurers price up a new policy product for insurance for a new flying car, based on their guesses for what accident rates would be for this new flying car, and 10 years after they come out with the new policy they're loosing their asses because their claims history is much higher than they expected, and they have to jack up the rates to pay for the net cost, is that somehow 'unfair'?
Or when many people purchased whole life insurance policies in the 80s/90s, when the 'non-guaranteed current policy interest rate' was in the 6%-9% range, and rates dropped like a rock in the late 90s/2000s to the point of people having to double their annual premiums - and many having to let their policies lapse or cash out because they couldn't afford the higher rates - was that unfair?
The state insurance commissions exist to oversee the insurers, and verify that they're not simply gouging consumers with oligopolistic pricing practices - and they have been verifying that such pricing practices are based on reality, not an attempt to gouge the consumer. It is unfortunate that prices have had to be jacked up so high based on a variety of factors (one of which is a lower-than-forecasted policy lapse rate)....but the fairness of realistic pricing has to work both ways to be truly fair.
Everything is a bit of a gamble in life...
I am very happy with my policy. Mine is with Genworth and I took a gamble. I bought a policy for my wife and me. I have a 10 pay so it will be paid off in 10 years so when I am retired I will not have to worry about paying it and I won't have to worry about price increases. Whenever, we buy any kind of insurance it's a gamble. We don't know if we will need it or not. However, if we do need it we want to it in force so that it guard us against whatever peril we thought might/could occur.
I am very happy with my policy. Mine is with Genworth and I took a gamble. I bought a policy for my wife and me. I have a 10 pay so it will be paid off in 10 years so when I am retired I will not have to worry about paying it and I won't have to worry about price increases. Whenever, we buy any kind of insurance it's a gamble. We don't know if we will need it or not. However, if we do need it we want to it in force so that it guard us against whatever peril we thought might/could occur.
obgyn65
Off topic, since I just read your post
I am watching this film by Akira Kurosawa called Red Beard. It is Dostoyevskian, and reminds me of some of the free clinic work you talk about. You may relate quite a bit to the film.
Off topic, since I just read your post
I am watching this film by Akira Kurosawa called Red Beard. It is Dostoyevskian, and reminds me of some of the free clinic work you talk about. You may relate quite a bit to the film.
obgyn65
Thinks s/he gets paid by the post
Thank you. I will get this movie from Netflix.
Should Long-Term Care Be an Entitlement?
"Under current policies, Medicaid is the only mechanism available to handle the steep projected increase in care costs. It provides care mostly in nursing homes and other institutional settings, and only after patients have spent down much, if not all, of their wealth. Even as the provider of last resort, however, Medicaid is not equipped to fund what amounts to a blank check on future care costs."
A tough problem for which a workable solution is still elusive.
"Under current policies, Medicaid is the only mechanism available to handle the steep projected increase in care costs. It provides care mostly in nursing homes and other institutional settings, and only after patients have spent down much, if not all, of their wealth. Even as the provider of last resort, however, Medicaid is not equipped to fund what amounts to a blank check on future care costs."
A tough problem for which a workable solution is still elusive.
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Dakotah
Dryer sheet wannabe
I also bought a ten pay plan from Allianz in about 2001. It is now paid up and assuming they remain solvent I should be covered. They did raise my premium once before it was paid up and have since stopped selling the product I purchased. I think the early plans far underestimated the expenses when they priced the product
I just received a letter from CALPERS indicating that there will be 7 options offered:
1) continue current coverage - lifetime coverage with built in inflation protection -5% increase in premiums in 2013, 5% in 2014, 85% in 2015
2) Maintain Lifetime Coverage with inflation protection but reduce Daily Benefit amount to keep current premium - 5% increase in 2014 and 85% in 2015
3 and 4) Reduce Lifetime coverage to 6 or 3 year benefit period and keep inflation protection - avoid 2013 and 2014 increases but keep 2015 85% increase
5, 6 and 7) Reduce lifetime coverage to 10,6 or 3 year benefit period and drop inflation protection - reduce premium amount and avoid future 2013, 2014, and 2015 premium increases.
8) not mentioned but stop pouring money down this rat hole.
Obviously the way this thing is structured they are counting on lots of folks going the option 5,6,7, or 8 route.
There is supposed to be a subsequent letter with actual premium amounts tailored to each policy holder I assume.
1) continue current coverage - lifetime coverage with built in inflation protection -5% increase in premiums in 2013, 5% in 2014, 85% in 2015
2) Maintain Lifetime Coverage with inflation protection but reduce Daily Benefit amount to keep current premium - 5% increase in 2014 and 85% in 2015
3 and 4) Reduce Lifetime coverage to 6 or 3 year benefit period and keep inflation protection - avoid 2013 and 2014 increases but keep 2015 85% increase
5, 6 and 7) Reduce lifetime coverage to 10,6 or 3 year benefit period and drop inflation protection - reduce premium amount and avoid future 2013, 2014, and 2015 premium increases.
8) not mentioned but stop pouring money down this rat hole.
Obviously the way this thing is structured they are counting on lots of folks going the option 5,6,7, or 8 route.
There is supposed to be a subsequent letter with actual premium amounts tailored to each policy holder I assume.
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