LTC Increase

[East Texas]

Good points, tightasadrum. Another point on having LTC is we have a lot more choices for care. It may mean the difference between percent of nurses to patients, the type of care facility, or even the ability to stay in the home as long as possible with the assistance of paid caregivers.

It also removes the burden of care, even the perceived burden of care, from our children. We told every one of them we're not going to leave them anything nor are we going to cost them anything. Texas does not have a filial responsibility law; however, 30 other states mandate children are financially responsible for their parents.

There is a misconception only older people use LTC. Young people also use it. Catastrophic accidents, illnesses, strokes don't just happen to the old folks.

 

[Koolau]

I thought one of the advantages of buying LTC insurance in one's 50's or even 40's was the expecation that they could not raise the premiums much since one was paying in for some many years. I guess I was wrong. What is the point of buying the insurance if the company raises the premiums so high that one drops the coverage as one approaches the age where one needs it What am I missing?

The concept of purchasing LTCI at a younger age is that your premiums will be lower but usually will be paid for a longer period of time. If they DO raise premiums, they don't just raise them on the folks who started early. They raise rates for everyone (AFAIK).

I agree that it seems unfair to be able to raise rates until folks drop their coverage, but, keep in mind: Some "governing" authority (such as a State Insurance Commission) or other body must approve such rate increases. Not saying that makes it all okay, I'm just saying that, in theory, the LTCI companies can't be sneaky about it and "lay in wait" for you until you are 60 and then charge you what ever they want to so that you will then drop your policy. I agree that that is one of the big advantages to the LTCI companies of their rate increases. Many folks DO drop their policies when the rates go up and YES, that is good for the LTCI companies. BUT, at least in theory, the companies have to get "permission" to raise rates from a quasi-governmental agency. If anyone has evidence to the contrary, please correct my statement.

So, Chuckanut, the only thing I would suggest you are "missing" is that this is all legal AND sanctioned by some arm of your government(s) - it's not just at the whim of the LTCI company AFAIK. Of course, that doesn't make it any more pleasant when the rates go up. Once again, my only hope is that the LTCI companies have now finally figured out the rates they need and we have seen the last of the huge increases . Naturally, YMMV.

 

[samclem]

I just don't know why LTC garners such adverse attention.

You don't know why?
- Because insurers keep leaving the market and then their current "orphan" policyholders are stranded? You can count on great customer service and attention to your needs from a company that no longer sells that type of insurance--what type of reputation do they need to keep up? Or they sell their whole book to Joe's Insurance and Lawn Ornament Company--"Don't worry, you're still in good hands with Joe! He's got a call center very close to you" (if you live in Bangalore).
- Because policyholders are receiving unexpected increases in their premiums? How would the insurance company react if Mrs Whinklethorp called them to say "Hey, this nursing home is more expensive than I thought it would be when I bought my policy 20 years ago. That $150 day we agreed on just isn't cutting it. Send me $250 a day." They'd laugh and tell the old lady that her failure to anticipate costs wasn't their problem. Well, why should we feel good when ABC Insurecorp convinces regulators that they made a mistake in estimating costs and all policyholders need to pay more--to get the exact same $$ in daily benefit that they originally bought. Or, they can abandon their policy and all that "pay more now for higher future benefits" accrued value. All a big win-win for ABC Insurecorp. Some deal.

No, LTC insurance has earned it's poor reputation.

 

[ProGolferWannabe]

I purchased a LTC policy from Genworth a few years ago, while I was in my mid 40's. So far (knock wood) the premiums have not increased, but I clearly understood that an increase was a possibility as the rates were not guaranteed. I would not be happy if the price increased, but I certainly knew the rules going into this. I can't be terribly sympathetic to the argument that insurance companies are acting in "bad faith" or that people have some how been harmed if/when a prices go up. If you don't want to take that chance (which is perfectly understandable) don't buy a policy.

I would also add that LTC policies can also be utilized well before one becomes elderly. You may buy a policy tomorrow, be in an accident, and need extended long term care when you are 45. Old age does is not the sole cause of needing assistance in day-to-day living.

 

[East Texas]

<snip>Some "governing" authority (such as a State Insurance Commission) or other body must approve such rate increases.

Yep. This is why the JH rate increase has been going between TDI (Texas Department of Insurance) and JH for a couple of years. I suspect, when it's all said and done, JH won't get the increase they're asking and what they do get will have staggered implementaion over a few years.

 

[Koolau]

I purchased a LTC policy from Genworth a few years ago, while I was in my mid 40's. So far (knock wood) the premiums have not increased, but I clearly understood that an increase was a possibility as the rates were not guaranteed. I would not be happy if the price increased, but I certainly knew the rules going into this. I can't be terribly sympathetic to the argument that insurance companies are acting in "bad faith" or that people have some how been harmed if/when a prices go up. If you don't want to take that chance (which is perfectly understandable) don't buy a policy.

I would also add that LTC policies can also be utilized well before one becomes elderly. You may buy a policy tomorrow, be in an accident, and need extended long term care when you are 45. Old age does is not the sole cause of needing assistance in day-to-day living.

Golfer, I don't disagree with what you say. Indeed, the possibility of a raise in rates was pointed out in the policy. However, I was shocked when I got the increase. I could have guessed a few percent or 10 % or even 20%, but not the 50% to 90% I and others experienced. Yes, they "warned" us, but the bottom line for many was the difference between "affordable" at the offering price, but 9 years later, totally unaffordable at the new, nearly double price. What policy purchaser would have ever "guessed" that? What policy purchaser would have signed on if the warning was "Warning - we have no idea how to price these policies, so your rate could suddenly double." Nor was that eventuality ever discussed by the agent.

Yes, there was a possibility that a few would collect early on such a policy, but clearly, that was not anticipated in great numbers. In fact, that was the ONE thing the LTCI companies were able to plan for, probably down to the 2nd decimal place (they know how many auto accidents/strokes, etc. to plan for - actuaries are their bread and butter).

What they missed was the lapse rate. They missed it big time - and now, we either pay or lose the premiums we paid to get us to "old age". We bought in early to keep rates down (front loading) and now we could lose that advantage if we can't keep up with the price increases. Yes, all pointed out, but not in any language a typical policy holder would have ever understood. I would not have signed on for that had I any idea of the "risk" I was taking. IOW, the LTCI company's screw up becomes MY problem. YMMV

 

[Mulligan]

Insurance definitely has its place and depending on your asset and family situation the amounts will vary. Im sure there are a few oddballs like me. I will never be "house poor" or "insurance poor". I drive a car that is old enough that I can carry liability only. I carry house insurance with a $1 k deductible. I carry HI, but a $5k deductible. For me it pays off year after year. LT care, the premium would suck the life out of my lifestyle. Cant do that! If I am in nursing home for a year, I can pay it. If its longer, Im not coming home, sell the house. Besides Im in a lower cost area, they can confiscate my pension and that will cover yearly nursing home expenses, it as I wont be in any shape to spend it myself anyways.

 

[FinBiz]

I purchased a Hancock LTC policy when I was 49 (originally a Time/Fotis policy. Now John Hancock). I am now 63, single and have only one sister who lives 600 miles away and is 12 years older. Almost no family. The purpose of buying young was for price, to offset expense of a possible catastrophic accident, illness or whatever and then have it in place for home care, assisted living or nursing home needs. And, to have help available if needed. It was written for $110 per day, 5% compound. 60 day elimination and lifetime benefits. It covers at 100% benefits: home care, assisted living and nursing home. Price was about $300 per quarter ($1200 annual) to start and increased over the years to $361 per quarter ($1444 annual). Not bad at all.
NOW, I just received a notice it was increasing 69.49% or to $612 per quarter ($2448 annual). The options offered are: Keep coverage intact and pay the increased premium, keep the same premium, but lower inflation rider from 5% to 3.2% or “call to discuss lowering the daily benefit, elimination period or benefit period.” Due to the 5% inflation rider, my daily benefit is now $217 or about the cost of nursing homes in my area (middle Tennessee). I really don’t want to reduce the benefit period, but did call JH to get a premium based on 5 years benefits. The price was $1852 annual vs the increased premium of $2400 or the reduced 3.2% inflation offer and keep my current premium intact at $1444 annual.
I assume there will be future increases or trade-off offers. My agent says the lower inflation rider offer is a one-time “landing place” that won’t be offered again. I don’t think 3.2% will keep up with cost of facilities, but sure beats nothing and keeps my premium the same. I could afford to pay the increased premium now, but am apprehensive I might not with future increases/tradoffs and be forced to cut my benefits or even drop it if the premium got too high. Anyone's thoughts are appreciated.

 

[samclem]

FinBiz,
What did the rep say about the impact of increasing the exclusion period, and how much would they allow you to extend it? If this is supposed to be true insurance (to cover a catastrophe you can't cover yourself), and if you could cover a longer exclusion period via some other means, that might be something to consider. We've discussed this idea in other threads, and those familiar with these LTC insurance products indicated that a longer exclusion period might not reduce premiums very much. I'd be interested in what you were told and what you think of this approach.

 

[FinBiz]

I didn't get info on premium effect of extending the exclusion period, but will. I appreciate your thoughts. My agent commented that she was suprised at how little effect any one varible had on the premium other than reducing the inflation rider.

 

[samclem]

FinBiz,
For reasons you mentioned, I'd be reluctant to lower the inflation increase. Also, when you bought this policy Tennessee wasn't a LTC "Partnership" state, but now it is. If you don't know about this program, you should look into it. (here's some more information) It's a cooperative arrangement between the states and the federal government. Basically, if you buy LTC insurance that meets the criteria of this program, you will be allowed to qualify for Medicaid coverage of LTC once you've spent your resources down to the coverage amount of the LTC policy you purchased (rather than having to spend your assets down to virtually nothing as would normally be required). While most of us don't want to be on Medicaid, this option at least lets you keep some assets. Also, some nursing home facilities that normally charge much more than Medicaid pays will "grandfather" their present patients and allow them to stay under Medicaid if they've previously been admitted under private insurance.
You might want to find out if your present policy qualifies under this partnership program. If it does, it may be important to you to assure the policy continues to meet the Partnership criteria set by Tennessee after you make any adjustments. The states set their own minimum standards for inflation protection, so you might want to be sure you don't inadvertently disqualify yourself if you choose a lower inflation amount.

Sorry about your rate increase. There's a lot of that going on.

 

[Koolau]

I just received a notice it was increasing 69.49% or to $612 per quarter ($2448 annual). The options offered are: Keep coverage intact and pay the increased premium, keep the same premium, but lower inflation rider from 5% to 3.2% or “call to discuss lowering the daily benefit, elimination period or benefit period.” Due to the 5% inflation rider, my daily benefit is now $217 or about the cost of nursing homes in my area (middle Tennessee). I really don’t want to reduce the benefit period, but did call JH to get a premium based on 5 years benefits. The price was $1852 annual vs the increased premium of $2400 or the reduced 3.2% inflation offer and keep my current premium intact at $1444 annual.
I assume there will be future increases or trade-off offers. My agent says the lower inflation rider offer is a one-time “landing place” that won’t be offered again. I don’t think 3.2% will keep up with cost of facilities, but sure beats nothing and keeps my premium the same. I could afford to pay the increased premium now, but am apprehensive I might not with future increases/tradoffs and be forced to cut my benefits or even drop it if the premium got too high. Anyone's thoughts are appreciated.

I'm no expert by any means, but do have LTC ins. and have had significant premium increases. Here are my thoughts:

My memory is hazy, but I believe I was told MOST people do not need benefits for longer than 3 years. First reason is that people either get better (they are in a nursing facility because they can not convalesce at home - e.g., stroke - before 3 years they recover enough to go home.) or they die from what put them in the nursing home. Obviously, there is an actuarial element to this. Some folks linger for 20 years and others are in and out within a few weeks. BUT, the bulk use the benefit for 3 or fewer years (IIRC). Check this out yourself!!

Regarding further premium increases. Supposedly, the increases were due to the insurance company miscalculating how many people would lapse their policies (without ever using the benefit). Hopefully, they now have that right. Any other reason to raise a premium SHOULD be cooked in the broth, actuarially. THESE kinds of things, the insurance companies should KNOW to the 3rd decimal point already. SO, in (my) theory, the major increases should be behind us. (Here's hoping.) Maybe your rep will share her thoughts on this - sometimes the true info leaks to the reps.

The LAST thing I would sacrifice would be the inflation rider. Even 5% is not currently keeping up with LTC inflation. If you can, look at the costs of the LTC facility you are familiar with and see if they have increased their rates at 5% or MORE in the last several years. You might have to play dumb with them to get this info (just planning for LTC insurance, you see - which is true.)

Finally, the big question is whether you have the assets to go naked or whether it makes sense to have LTC insurance. One strategy might be to drop your coverage to 2 years (or even one if they will allow it). This will GET YOU IN THE DOOR of the LTC facility. Once you are there for some period of time, I believe they are required (or at least usually DO) keep you and accept Medicade coverage.

Next to plain old medical insurance, LTC is the wild card that plagues all but the "rich" when it comes to ER (my opinion, of course). WE NEED TO GET THIS RIGHT PERHAPS MORE THAN WHEN TO TAKE SS. Lots of strategies (go naked, limited coverage, full coverage, set aside cash, have an annuity, the 9mm solution, etc. etc.) No one answer.

Keep in mind, you are getting this from a dummy who cares, but isn't an expert. Use lots of grains of salt and DO LOTS OF RESEARCH! Very best of luck.

 

[REWahoo]

FinBiz, were it me I'd opt for a shorter term of benefits. See chart below from a 2010 study on Length of Stay in Nursing Homes at the End of Life. Looks like three years for a male would be overkill (no pun intended).

One out of every four of us will die while residing in a nursing home. For most of us, that stay in a nursing home will be brief, although this may depend upon social and demographic variables like our gender, net worth, and marital status. These are the conclusions of an important new study published in JAGS by Kelly and colleagues (many of whom are geripal contributors, including Alex Smith and Ken Covinsky).

The study authors used data from the Health and Retirement Study (HRS) to describe the lengths of stay of older adults who resided in nursing homes at the end of life. What they found was that out of the 8,433 study participants who died between 1992 and 2006, 27.3% of resided in a nursing home prior to their death. Most of these patients (70%) actually died in the nursing home without being transferred to another setting like a hospital.

The length of stay data were striking:

• the median length of stay in a nursing home before death was 5 months
• the average length of stay was longer at 14 months due to a small number of study participants who had very long lengths of stay
• 65% died within 1 year of nursing home admission
• 53% died within 6 months of nursing home admission

​

The authors also found that length of stay varied based on a number of demographic, social, and clinical factors. For instance:

• men died sooner after admission than women (men had a median length of stay of around 3 months versus 8 for women)
• married nursing home residents died sooner after admission than unmarried participants (an average of 4 months sooner)
• nursing home residents in the highest quartile of net worth died six months sooner than those in the lowest quartile.

YMMV.

 

[powerplay]

I've had a LTCIIP for 10 years. Three years ago there was a rate increase and I opted to take the reduced inflation option (5% to 4%) which kept my premium the same. My expectations are to have this as a supplement should I ever need long term care. If it never gets used then I have basically won the game although spent the $$ to have the coverage.

The policy has a 90 day waiting period, 4% inflation, a daily benefit amount of $189, and a benefit period of 5 years. Premiums are $82/month.

 

[FinBiz]

FinBiz,
What did the rep say about the impact of increasing the exclusion period, and how much would they allow you to extend it? . . . I'd be interested in what you were told and what you think of this approach.

Spoke with John Hancock rep. They only allow elimination period to be increased from 60 to 90 days and reduce the annual premium by $136. Not much help.

 

[Nords]

It was written for $110 per day, 5% compound.

You don't specifically say, but does that inflation rider compound forever? When my father purchased a similar policy from Time/Fortis in 1992, the inflation rider was only good for 20 years. In other words it only kicks up 5% one more time and then it's done.

I don't know how to evaluate whether you'd want the inflation rider to compound forever or until a certain date. However as REWahoo! has pointed out, you may only want benefits for a few years and you may not need an inflation rider to last forever.

 

[FinBiz]

You don't specifically say, but does that inflation rider compound forever? When my father purchased a similar policy from Time/Fortis in 1992, the inflation rider was only good for 20 years. In other words it only kicks up 5% one more time and then it's done.

I don't know how to evaluate whether you'd want the inflation rider to compound forever or until a certain date. However as REWahoo! has pointed out, you may only want benefits for a few years and you may not need an inflation rider to last forever.

My policy reads "Lifetime Automatic Benefit Increase Rider (compounded). So, it is forever unless I change it. I agree that as I age the lifetime stuff is not as crucial ...or doesn't seem so. Since I first posted, I asked my agent if she knew when Hancock would let me review this again. She said I could lower benefits anytime. But, she'd also said the offer of lowering the inflation rider from 5% to 3.2% and keeping current premioum was a one time deal. I need to clarify further on Monday, but I'm considering leaving my policy as is for now. Letting the 5% run a while and then perhaps either lowering that or the benefit period to control premium costs later. Just thinking for now ...have a couple weeks yet. But, you guys are right. 5 yrs is probably the most any of us will need.

 

[FinBiz]

FinBiz, were it me I'd opt for a shorter term of benefits. See chart below from a 2010 study on Length of Stay in Nursing Homes at the End of Life. Looks like three years for a male would be overkill (no pun intended).

YMMV.

I bought the policy when I was younger and probably just got the best available. I did things like that then! Now, I’m taking a reality check. Your information is helpful. I mentioned in another post I'm considering keeping my policy as is now and let the 5% run a while since I understand I can reduce benefits and premium rate at any time (w/ John Hancock). In reality, I have the best benefits ever offered -- or close. If I reduce somewhere, I still have a good policy. I have a little time before deciding and really appreciate the input.

 

[samclem]

But, you guys are right. 5 yrs is probably the most any of us will need.

Of course laws can be changed, but I think 5 years is the present "lookback period" for Medicare asset testing for most states. If I've got that right, you could put your assets into a trust when you check into a nursing home, stay there for 5 years (on your insurance policy), then apply for Medicaid and you'd qualify because you have no assets. I'm not passing any judgement on this from an ethical standpoint, but I believe it is one rational reason to consider 5 years of coverage, especially if you have a spouse. Obviously, check into the laws/policies of your state.

 

[FinBiz]

FinBiz,
For reasons you mentioned, I'd be reluctant to lower the inflation increase. Also, when you bought this policy Tennessee wasn't a LTC "Partnership" state, but now it is. If you don't know about this program, you should look into it. (here's some more information) It's a cooperative arrangement between the states and the federal government. . . .You might want to find out if your present policy qualifies under this partnership program. If it does, it may be important to you to assure the policy continues to meet the Partnership criteria set by Tennessee after you make any adjustments. The states set their own minimum standards for inflation protection, so you might want to be sure you don't inadvertently disqualify yourself if you choose a lower inflation amount.

Sorry about your rate increase. There's a lot of that going on.

I was not aware of this. Thanks. I hope to never be on medicaid, but having the "Partnership" as a backup is sensible. My policy does qualify in TN. Guidelines indicate an inflation % of any amount at my age ... just so long as there is one. I agree that keeping the 5% inflation rider is beneficial-- at least, for now if I can manage the cost.

 

[Nords]

Of course laws can be changed, but I think 5 years is the present "lookback period" for Medicare asset testing for most states. If I've got that right, you could put your assets into a trust when you check into a nursing home, stay there for 5 years (on your insurance policy), then apply for Medicaid and you'd qualify because you have no assets. I'm not passing any judgement on this from an ethical standpoint, but I believe it is one rational reason to consider 5 years of coverage, especially if you have a spouse. Obviously, check into the laws/policies of your state.

This is not the jackpot that the urban legends would have us believe. I suspect that Medicaid would successfully pierce the trust.

I think it's also unnecessary, especially considering the risks of the state disallowing benefits due to the maneuver. The Medicaid rules would leave his spouse enough assets to maintain her lifestyle, and the heirs would probably want him to have the money available to use for his quality of care.

 

[East Texas]

My JH policy is lifetime benefits, 5% compounded inflation, 60 day elimination. My policy is around $1,500 (discounted for paying annually). I have absolutely no intention of reducing anything when the time comes for me to get hit with a premium increase. It's still a lot cheaper than paying assisted living / nursing home expenses.

I know the stats say most people will only need LTC for 3 to 5 years. My family history is a long life with the last several years in some kind of care facility. One of my relatives was in a nursing home for over 10 years with Alzheimers. It's not just age that puts us in an extended care situation. Strokes. Congestive heart failure. Accidents. There are all kinds of medical conditions that can impact every age.

This is insurance. It's all about risk. Would you drop your homeowner's insurance just because you don't think you'll ever have a claim? Maybe it would make more sense to correlate LTC to auto insurance. Would you lower your liabilty coverage on your auto policy to save a few dollars.... and then at some unknown time and place you need that coverage and it's just too late for anything except to regret your earlier decision to lower coverages.

As with all insurance it's about peace of mind. I just paid our Farm and Ranch policy that's a heck of a lot more than my LTC premium. My auto premium went up again. I'm making sure I have all the discounts in place, the policies are rated correctly, and paying annually if there is a discount for doing so. I pay the premiums because not having the coverage is not an option.

Where I'm going with this is insurance is a personal decision. For me, it comes down to this: I would rather have the coverage and not need it than need it and not have it.

I do want to address the post about "partnership" policies. I bought my JH policy before Texas created the partnership so my policy is not eligible for the partnership privileges. I called DOI (Department of Insurance) about a year ago and they have no plans to retro existing policies. At this specific point in time I neither lose nor gain being in their program. Other states may have brought in all policies to their partnership programs.

 

[LARS]

On the issue of length of stay I would ask does your policy also cover Assisted Living. If it does, the length of stay could be considerable longer than nursing home averages. Both my parents are going on five years in AL now.

 

[FinBiz]

My JH policy is lifetime benefits, 5% compounded inflation, 60 day elimination. My policy is around $1,500 (discounted for paying annually). I have absolutely no intention of reducing anything when the time comes for me to get hit with a premium increase. It's still a lot cheaper than paying assisted living / nursing home expenses.

I know the stats say most people will only need LTC for 3 to 5 years. My family history is a long life with the last several years in some kind of care facility.
Where I'm going with this is insurance is a personal decision. For me, it comes down to this: I would rather have the coverage and not need it than need it and not have it.

.

East Texas. Do you mind sharing your JH policy's currect daily rate and how long you've had it -- as a comparison to my new/proposed $2400 premium (from $1444). Mine is $217. Purchased in 1998. Otherwise, identical to yours. My situation is similar and I'm learning toward your train of thought. My mother died at 95 and was in independant care the last 5 years. Four other siblings of my mom/dad lived into their 90's also). You're right. This is a personal decision. One I will finalize after gathering all information I can. This forum is a great source.

 

[East Texas]

I bought the JH policy through USAA (group price) in 2004. I started off a bit low when I got the policy even though the coverage was in line (at that time) for San Antonio. Daily rate for 2012 is $177 ($63,822 annual); will be up to $289 ($103,959 annual) in ten years. It grows 5% a year with a flat premium of $1,514 (until the rate increase finally catches up with me). I got a discount for paying annually.

My policy also covers assisted living and in-home care. I have lifetime coverage as I previously stated.

My spouse has a variation of my LTC he bought as a benefit before retirement. Under that policy, an increase in coverage can be purchased every three years - it comes out to a 16% increase in coverage. There is lifetime coverage; but, with a 90 day elimination (I have a 60 day). That policy was acquired under JH a few years ago and, interestingly enough, qualifies for the Texas partnership program even though the policy was bought long before I got my policy.

If we wind up in Assisted Living, a nursing home, or a memory care facility, we want to be in good facilities with low nurse/patient ratios, above average ratings, and very nice accommodations. That's why we happily pay for LTC insurance. I wouldn't be without it.