Long Term Care Premium Increase
Hi Terry,
Both my wife and I received letters that our premiums are going up next year. Mine is going up from about $2,700 this year to about $3,200 next year. They offer pre-selected ways to decrease the increase (this is our second time through an increase). We went through the anger and frustration the first time (about five years ago). We really feel as if we have been misled with these increases, even though the company’s ability to increase is indeed in the fine print of the contract. They offer several pre-selected options in their letter: Reduce future inflation rate from 5% to 4%; Reduce daily benefit amount: $208; Reduce total lifetime benefit to six years; Cancel coverage. We have had this coverage for fifteen years, and the last option does not sound smart. Do you have any suggestion as to how to manage this decision? Thank you.
Terry Says
Welcome to the club. It has happened to many, including myself! The insurance companies have convinced each state regulator that they will go out of business if they don’t raise premiums for all. A combination of low interest rates, more people being delighted to actually use their benefits (no icky nursing homes, but assisted living), and poor actuarial projections have put a big dent in insurance company profits. (Not enough to sell their trophy buildings or slow expensive advertising, of course!)
So now you are faced with tough choices. If you have LIFETIME coverage, they especially hate you. Don’t give it up. (I refuse to!). Think about the premium increase compared to the benefits. If you can afford to pay the whole thing, stick with all the benefits. Don’t cancel, for sure. A lot depends on your health prospects. The average claim is far less than 6 years — except for Alzheimer’s victims. And inflation is surely going to push care costs higher so you want the great inflation protection you have.
My decision was not to let the increase raise my blood pressure. Pay it– because if you need the coverage this is a relatively small price to pay.
