Long Term Care Insurance 60% premium hike--yikes!

[wesnyc]

I've seen posts on Long Term Care Insurance but haven't found a thread on this so forgive me if this is a duplication. I've just received a very rude surprise from Genworth. I have LTC insurance through them--began this policy in 2008 and it has cost me just under $5,000 a year--so that means I've paid out approximately $35,000 so far--my premium payment comes due at year's end. Well, Genworth has just requested, and received, the right to raise premium rates in New York State by 60%. I am gobsmacked. This means if I want to keep this policy my rate will skyrocket to $8,000 a year. I have options if I want to continue to pay my original premium price--less of a monthly maximum and/or lifetime maximum--longer elimination period, etc. But frankly I almost think it's better to cut my losses and walk away from the policy. What's to keep Genworth from raising premium rates again in a couple of years? And if I continue to pay my original premium, what will this policy cover when/if I ever need it? And in doing a web search on Genworth, I'm quickly losing confidence in this company. They've posted massive quarterly losses, their share price is falling, etc. And this is a company that was a shining beacon in the LTC insurance field--they still control 35% of the LTC insurance market--the biggest share; but it appears they are being crushed by long term care costs. How they got this way appears to be largely due to the fact that they sold policies--up until about 2002, that were hugely underpriced; now they are trying to make-up for that. Has anyone else who carries LTC insurance ever been socked with this kind of increase? Now I really feel dumb for even taking out this policy--had I ever thought massive increases like this would be possible, I would have never gone down this path. Clearly I didn't do my homework. Would love to hear feedback. Thanks

 

[Lakewood90712]

A bitter pill to swallow. The insurance companies were kidding themselves IMO , when entering this line of coverage , kind of like the insurers in CA , when a moderate quake with damage occurred. " Oh Crap, we actually have to pay claims ! ".

Unless under a group , LTC insurance is scary expensive, and most of the left the business.

Some details about your current age and policy $ coverage ?

 

[wesnyc]

I'm 62--the current LTC policy has an elimination period of 90 days; monthly maximum of $10,000; lifetime maximum of $600,000. I know that sounds like I've massively over-covered but not for New York City.

 

[brewer12345]

I think the best way to look at this situation is to ignore the sunk costs. Pretend you just got offered this policy brand new and the first year premium will be 8k. Would you do it?

 

[wesnyc]

Good question--I'm not sure. Interestingly my financial advisor told me that the policy I currently have would now cost me between $12,000 and $14,000 a year were I just signing on--which obviously makes $5,000 seem like a real bargain--frankly even $8,000. My concern is though that with new policies priced at these exorbitant rates, what is the future of LTC insurance? I don't see many new signees coming on board at those rates--not that everyone will sign up for maximum benefits. But it gives one pause--with insurers dropping out of the LTC market, I really wonder if it's going to survive.

 

[brewer12345]

FWIW, I think it is a terrible product and would never buy it. YMMV.

 

[mathjak107]

I've seen posts on Long Term Care Insurance but haven't found a thread on this so forgive me if this is a duplication. I've just received a very rude surprise from Genworth. I have LTC insurance through them--began this policy in 2008 and it has cost me just under $5,000 a year--so that means I've paid out approximately $35,000 so far--my premium payment comes due at year's end. Well, Genworth has just requested, and received, the right to raise premium rates in New York State by 60%. I am gobsmacked. This means if I want to keep this policy my rate will skyrocket to $8,000 a year. I have options if I want to continue to pay my original premium price--less of a monthly maximum and/or lifetime maximum--longer elimination period, etc. But frankly I almost think it's better to cut my losses and walk away from the policy. What's to keep Genworth from raising premium rates again in a couple of years? And if I continue to pay my original premium, what will this policy cover when/if I ever need it? And in doing a web search on Genworth, I'm quickly losing confidence in this company. They've posted massive quarterly losses, their share price is falling, etc. And this is a company that was a shining beacon in the LTC insurance field--they still control 35% of the LTC insurance market--the biggest share; but it appears they are being crushed by long term care costs. How they got this way appears to be largely due to the fact that they sold policies--up until about 2002, that were hugely underpriced; now they are trying to make-up for that. Has anyone else who carries LTC insurance ever been socked with this kind of increase? Now I really feel dumb for even taking out this policy--had I ever thought massive increases like this would be possible, I would have never gone down this path. Clearly I didn't do my homework. Would love to hear feedback. Thanks

how long is your coverage for . many of the older policies were unlimited and as such grossly under priced.

i have a 3 year new york state partnership plan with genworth and rates have been steady .

many older lifetime policies have seen huge increases but that is because they were lifetime.

realize too that your premium is only for that years coverage .

it is no different than your home , medical or car insurance .

it isn't like you paid in all that money and if you drop it you are out.

you are no more out the money than if your home insurer doubled your premium.

each years premium is only to cover you for that year

 

[bingybear]

I looked at LTCI last year. Early in the year I got one quote from Genworth... and another one late in the year. They kept the amount of premium almost the same, but the amount of insurance and terms got quite a bit worse. You also need to know how much a month they pay toward LTC... not just the total amount. While your monthly insurance may be good now, if not inflation indexed, it may really suck in 20 years.

Look at this as what you are paying for shifting risk.... what happens if you invest the premium? what are the likely LTC stays (look at the statistics). Judge what is best. And...do expect more increases. If your LTC stay is late in life, they will likely be paying with cheaper dollars.

 

[Independent]

... but it appears they are being crushed by long term care costs. How they got this way appears to be largely due to the fact that they sold policies--up until about 2002, that were hugely underpriced; now they are trying to make-up for that.

IF the reason they are losing money is that they are paying far more in claims than their premiums will support, then that makes the policy attractive from a buyer's perspective.

There request for a premium increase should have come with some documentation on claims. I don't know if any of that is public information.

My primary concern would be what happens if they go belly up. Maybe somebody here knows if there is a guarantee association that covers LTCi.

 

[mathjak107]

we have a ny partnership plan through genworth. WE TOOK A PLAN NOT FOR THE INSURANCE BUT FOR WHEN THE 3 YEARS INSURANCE ENDS .

so now i will tell you why i think it is an amazing deal .

we got it last year and pay 6800.00 for both of us but nys gives us a 1600.00 tax credit and we can write some off our federal taxes.

i am 62 and wife 64 , i did get a small surcharge for being pre diabetic. had i taken it a year earlier i would not have had the surcharge going forward so waiting to get coverage can suck. .

we took the 3 year / 6 year total asset plan.

we DIDN'T buy it for the 3 years coverage in a home or 6 years in home or assisted living , we bought it for the perks when the 3 years are up.

there is no look back , no shifting of assets , no trusts needed , we get to pick the home of our choice on private money and medicaid pays later .. but most important , even if you manage to shift assets to trusts the stay at home spouse's income is limited if medicaid is needed.

All well and good you preserved a million or more in assets but the stay at home spouse is restricted to low incomes regardless. in ny it is under 3k.


the partnership plan picks up all bills after the 3 years insurance using a special form of medicaid which has no asset shifting needed , no look back and NO INCOME LIMITATIONS for the stay at home spouse.

even if you used non revocable trusts you cut the spouse off from a portion of the assets and she cannot have free access to them.

for those who say i will self insure i will say this .

generally self insuring means there is no plan . because if there was that money would have to be kept safe ,secure and liquid at all times .

you can't risk needing care when markets are down and it is 1/2 gone.

my 55 year old co-worker fell off a ladder painting . he broke his wrist and hip. well during hip surgery he had a stroke and is no paralyzed and full time care needed.

so we figured we are a head of the game if we take just a percent or so of that money that can stay invested and protect all our assets with that money vs keeping a huge chunk at zero.

usually what happens also is the stay at home spouse goes in to survival mode with those assets too. the spouse needing care may not get the best or everything they need as corners are cut.

so like i say few really self insure , they just use hope as a plan and hope nothing happens .

if anyone saw our story profiled by money magazine many years ago , they wanted their team of pro's to review my self made plans and go head to head.

the only area we differed was we were going to self insure long term care.

they opened our eyes to all the issues wrong with that including look backs already went from 3 to 5 years so it can change again.

i was very anti LTC insurance .

well they were right . the more i learned about the perks and the real issues trying to self insure we saw the insurance was actually a bargain for all the guarantees our state gives us after the insurance .

almost every state now offers partnership plans. they usually offer some form of state back medicaid as part of your deal .

if you leave the state you get the insurance just like a normal policy but you lose the perks as ny has no say when it comes to protecting assets in other states or guaranteeing you medicaid with no income limitations.

my suggestion for those who say i will never buy a policy is learn all you can about the ramifications if you have no insurance and no perks in your state.

only then can you make an informed choice like we did . once i actually learned about it , spoke to our estate attorney we found there was so much we didn't know and that opened our eyes to how powerful some of these plans can be.


but i want to clarify , these must be state partnership plans otherwise all you are buying is a few years insurance and then you go on YOYO . YOU'RE ON YOU'R OWN!

 

[big-papa]

We were hit with that last year, but at around 30% from NY-Life. One of the reasons we bought from them is that they had never had a history of rate increases.... Until they did. For us, I went back and adjusted both of our policies downward: Mine much more so than my wife's after looking at current costs in Texas in both big cities as well as smaller towns. Net result was annual premiums were about the same as before.

In my case, I did a lot of thinking about family history - quite a bit of Alzheimer's in my wife's family history (Mom, Mom's twin, Mom's brother, an aunt) and nearly none on my side, nor much of a history of nursing care either.

Absolutely YMMV.

Big-Papa

 

[bingybear]

we have a ny partnership plan through genworth. WE TOOK A PLAN NOT FOR THE INSURANCE BUT FOR WHEN THE 3 YEARS INSURANCE ENDS .

we took the 3 year / 6 year total asset plan.

the partnership plan picks up all bills after the 3 years insurance using a special form of medicaid which has no asset shifting needed , no look back and NO INCOME LIMITATIONS for the stay at home spouse.


but i want to clarify , these must be state partnership plans otherwise all you are buying is a few years insurance and then you go on YOYO . YOU'RE ON YOU'R OWN!

When I was presented plans, they were partnership plans for my state, but not total asset plans as you describe. So I searched for these in my state, the state does not support this option. The only thing available is dollar for dollar. I agree that this option would make me reconsider my choice.

 

[pb4uski]

....What's to keep Genworth from raising premium rates again in a couple of years? .....And in doing a web search on Genworth, I'm quickly losing confidence in this company. They've posted massive quarterly losses, their share price is falling, etc. And this is a company that was a shining beacon in the LTC insurance field--they still control 35% of the LTC insurance market--the biggest share....

There is nothing to keep them from raising premiums again. One of the reasons they have the biggest market share is because most other companies have decided that they don't want LTC and exited the market.

 

[Koolau]

There is nothing to keep them from raising premiums again. One of the reasons they have the biggest market share is because most other companies have decided that they don't want LTC and exited the market.

Actually, my understanding is that there IS something that can keep them from raising rates - namely gummint insurance regulating bodies. For the most part, rate increases on many types of insurance have to get past these regulators. At least SOME evidence of a need to raise rates is typically required. Now, I can't say with assurance that the process is more than a rubber stamp job, but I'd like to think we get SOMETHING for the tax dollars we pay the regulators.

When we discussed this subject before (and before that, and before that...) I think we (almost) agreed that the single biggest issue (causing at least the first couple of rounds of rate increases) is that buyers of these products FAILED to drop out at the expected rate. IOW, the Ins. Cos. based their initial rates on relatively healthy 50 +/- year olds buying in early (to get the "low" rates) and then dropping the coverage at some time in the future - well before most folks might find a need for payouts. The very low payouts of the "younger" payers could then be "saved up" to cover the "few" who hung in there for 10, 15, 20 years and started to need the expensive payouts promised.

You might suggest an alternative (and some have): More folks needed LTC (and thus payouts) than expected. I suggest that the one thing insurance companies do well is actualizing such risks. A good insurance company (or more likely, the actuary they pay) should know within a few "basis points" the number of folks who will eventually need to use their LTC policy - and how long they will need a payout - if they should keep their LTC so long.

As in all insurance situations, you have to ask yourself "Do you feel lucky? Well, do you, punk?" (apologies to Clint). Can you cover the downside "risk" yourself or do you feel the need to spread the risk over a larger number of folks. If the insurance companies didn't have to make a profit, the decision might be a bit easier. But even knowing that some "greedy" insurance company plans to make money from your fear, the same questions still apply (IMHO).

The fact that more folks have opted to stay IN instead of dropping out, simply means that more folks will eventually be in the system and actually "benefit" from the "investment". With that in mind, the costs to those who stay in will naturally trend higher. As more insurance companies drop out (because they can't get the regulators to allow them as much profit??) the situation will probably become worse -- unless some smart (and greedy) insurance company comes up with some other model to make it "work." I can conceive of a "pool" type insurance - much as is available in the Islands for Hurricane Insurance. Essentially, you pay in, and if it's a small hurricane and not too many claims get made, you get to fix your roof or blown-down lanai. But, if Iniki is ever reincarnated, you might find your share of the pool will cover 15% of your cost (or more or less). (Note to insurance companies: I will license my idea to you for a modest fee, heh, heh.)

If all this sounds as if I'm an apologist for insurance companies in general or those offering LTC, I most certainly am NOT. The greedy $0B's screwed up and we will pay for it - if we choose to stay and play the game. YMMV

 

[Bamaman]

The insurance industry has long since priced me out of the LTC market. As a Type II diabetic on insulin and a DW that's a 7 year cancer survivor, it's not an option.


Look at the average time spent in nursing homes, and it's just not that long. We're living in an inexpensive region and we're very fortunate in that our assisted living residences and full nursing home care is priced substantially less than national averages--maybe half. That's one of the plus' of living in The South.


We buried my 100 year old aunt last May after being in assisted living 8 years and full nursing home care 3 years. I had forgot that nursing homes are a sea of blue hairs--100% of which are in wheel chairs. Few are at themselves mentally. It's not a place I'd want to live in long term--if you can call that living.


We continue to go to the best of physicians and are taking a proactive approach to our healthcare. I'd hate to think I've gone through all my assets and ended up on Medicaid. We don't have any quality physicians that even accept Medicaid.


Who knows what the future holds for any of us. We're just fortunate to have saved for our future and lived well below our means. That's all we can do.

 

[Koolau]

Who knows what the future holds for any of us. We're just fortunate to have saved for our future and lived well below our means. That's all we can do.

Heh, heh, there IS always the 9mm solution. YMMV

 

[Dog]

Not sure I want to hang around if I need a nursing home or the type of care that requires LTCI. I don't want to be hand fed (or tube fed) and planted in front of a TV every day. DH and I are in agreement on that and it is addressed in our medical directives. I was POA for my parents and observed the severe decline in a lust for living their last two years of life (both passed right before needing nursing home care). It's so difficult to go from being independent to depending on others for the daily tasks of living.
I know there are different degrees of care from Independent Assisted Living Homes to Nursing Homes. Nothing is guaranteed, but we feel fairly secure that our LCOL, nest egg and mortgage-free home will cover Assisted Living if needed.
Doesn't mean I don't worry about it, but I would also worry about the sustainability of LTCI as well as them actually paying out when needed. I've read some sad stories of the battles to get LTCI to pay out when it is finally needed.

Just my opinion of course.



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[mathjak107]

The insurance industry has long since priced me out of the LTC market. As a Type II diabetic on insulin and a DW that's a 7 year cancer survivor, it's not an option.


Look at the average time spent in nursing homes, and it's just not that long. We're living in an inexpensive region and we're very fortunate in that our assisted living residences and full nursing home care is priced substantially less than national averages--maybe half. That's one of the plus' of living in The South.


We buried my 100 year old aunt last May after being in assisted living 8 years and full nursing home care 3 years. I had forgot that nursing homes are a sea of blue hairs--100% of which are in wheel chairs. Few are at themselves mentally. It's not a place I'd want to live in long term--if you can call that living.


We continue to go to the best of physicians and are taking a proactive approach to our healthcare. I'd hate to think I've gone through all my assets and ended up on Medicaid. We don't have any quality physicians that even accept Medicaid.


Who knows what the future holds for any of us. We're just fortunate to have saved for our future and lived well below our means. That's all we can do.

statistics mean zero when it comes to this stuff. we can only have two outcomes , things work out as planned or they don't.

my dad spent 5 years in a home after a stroke.

statistics only count to an insurer , not us humans. for us it like trying to be a little bit pregnant .

 

[rodi]

Not sure I want to hang around if I need a nursing home or the type of care that requires LTCI. I don't want to be hand fed (or tube fed) and planted in front of a TV every day. DH and I are in agreement on that and it is addressed in our medical directives. I was POA for my parents and observed the severe decline in a lust for living their last two years of life (both passed right before needing nursing home care). It's so difficult to go from being independent to depending on others for the daily tasks of living.
I know there are different degrees of care from Independent Assisted Living Homes to Nursing Homes. Nothing is guaranteed, but we feel fairly secure that our LCOL, nest egg and mortgage-free home will cover Assisted Living if needed.
Doesn't mean I don't worry about it, but I would also worry about the sustainability of LTCI as well as them actually paying out when needed. I've read some sad stories of the battles to get LTCI to pay out when it is finally needed.

Just my opinion of course.



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That's all well and good but what if the aging impacts cognitive decline, not just physical decline. MIL just entered the system (assisted living, memory care unit) after years of living reasonably independently - then independent with a lot of assistance... She was no longer safe by herself and refused to move in with her children... Her actions (due to dementia) resulted in a hospitalization/injury and then a move to nursing home, then assisted living.

We don't always make the choices - because we sometimes can't.

 

[jebmke]

Heh, heh, there IS always the 9mm solution. YMMV

Nembutol. Or a bottle of tequila and a lawn chair at low tide.

The problem comes if I am not mobile or my mentally capable of finding the pill.

 

[pb4uski]

Actually, my understanding is that there IS something that can keep them from raising rates - namely gummint insurance regulating bodies. For the most part, rate increases on many types of insurance have to get past these regulators. At least SOME evidence of a need to raise rates is typically required. Now, I can't say with assurance that the process is more than a rubber stamp job, but I'd like to think we get SOMETHING for the tax dollars we pay the regulators. .....

I suggest that the one thing insurance companies do well is actualizing such risks. A good insurance company (or more likely, the actuary they pay) should know within a few "basis points" the number of folks who will eventually need to use their LTC policy - ................

I should have been clearer in my post, that any rate increase usually require regulatory approval, but I thought that would be common knowledge. The reality is that most companies won't apply for a premium increase unless there is a reasonable basis for doing so and most are approved in whole or in part. In this case, things must be pretty bad if NYID, one of the most conservative departments in the country, approved a 60% premium increase.

My understanding is that the actuaries have missed the mark big time on utilization and it is not as near as predictable as you suggest (unlike life insurance mortality, which is quite predictable for large groups), and that is why many of the bigger, more established players have exited the LTC business.

 

[Al in Ohio]

I have a LTC policy with NW Mutual. Its small, $55 per day with inflation increases. Costs me abt $95/ mo. My wife wanted it. I wasnt keen on it. It has a 25 week waiting period! Seems like a lot. What do you all think? While she is comforted by hers( same amount), Males on my side have been independant til then end, then they die at home historically.


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[brewer12345]

I should have been clearer in my post, that any rate increase usually require regulatory approval, but I thought that would be common knowledge. The reality is that most companies won't apply for a premium increase unless there is a reasonable basis for doing so and most are approved in whole or in part. In this case, things must be pretty bad if NYID, one of the most conservative departments in the country, approved a 60% premium increase.

+1. I would also guess that unless things go completely pear-shaped that is all the NYSID will allow by way of premium increases for at least 3 or 4 years.

 

[Dog]

Rodi, I don't disagree. Both my parents were in Assisted Living Centers. Dad was showing signs of dementia and thankfully passed in his sleep before the move to memory care took place.
My mother's health declined severely her last year in Assisted Living and we were just arranging for additional care when she ended up in the hospital and passed away within the week as she did not want life support.
So, I've seen severe decline up close and personal and have had to make the decisions.
Dementia and Alzheimer's is very scary. I'm hopeful that our laws will progress to allow for end of life options rather than wasting away in a nursing home.


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[Koolau]

My understanding is that the actuaries have missed the mark big time on utilization and it is not as near as predictable as you suggest (unlike life insurance mortality, which is quite predictable for large groups), and that is why many of the bigger, more established players have exited the LTC business.

You may be correct but the way I read this Long-Term-Care Rate Hikes Loom-Kiplinger the REASON they missed the claims utilization is that folks haven't dropped their policies in the expected numbers. No point in debating the issue as it "is what it is" when it comes to rate hikes. A real bummer, but LTC may still be something that some of us are willing to buy. YMMV