Consumer Connection: Long-term Care Insurance Premium Increases

By Sonya Sellmeyer, Consumer Advocacy Officer for the Iowa Insurance Division

According to the U.S. Department of Health and Human Services, someone turning 65 today has almost a 70% chance of needing some type of long-term care, and 20 percent will need care for more than five years.  Long-term care insurance provides benefits, including long-term nursing facility stays or in-home care, not covered by Medicare or other health insurance.  Many consumers purchase long-term care policies in their 50s or 60s to help pay for their healthcare needs later.

Due to the rising costs of healthcare, consumers living longer, and more claim filings, long-term care policy premiums may increase.  The Iowa Insurance Division is required under Iowa law to review long-term care rate increases.  The insurance company must provide the Iowa Insurance Division with supporting documentation to demonstrate the need for the rate increase.  An essential part of the rate review is the company’s financial ability to pay future claims absent the increase.  

If you have received a rate increase notification, please review the information closely, note any deadlines, and understand the coverages under your current policy.  If you cannot or don’t want to pay the premium increase, you may have options available. Consider your age, health conditions, financial condition, marital status, potential caregivers, when you may need the benefits, and the care settings such as home, nursing home, or assisted living when considering your premium reduction options. 

To lower your premium payments, you may have several options to reduce your current benefits such as lowering your inflation protection percentage, reducing your number of covered years, or increasing your elimination period from 0 to 90 days or more.  You can also consider lowering your maximum daily benefit amount.  Currently, the average nursing home cost in Iowa is $245 a day for a private room.  Call the company at any time to discuss reduction in benefit options which may produce a lower premium.  

There may also be an option to select a paid-up policy with no further premiums, but this option will drastically reduce your policy benefits.  Review the options provided closely and discuss the alternatives with a licensed insurance agent or financial advisor.   If cash buyout options apply, consult your tax advisor.  If you have a Partnership policy, consider the consequences of changing benefits. 

If you have further questions regarding the rate increase, please call the Iowa Insurance Division at 515-654-6600.  Knowing your available options will assist in making an informed decision for your situation.