Women Can Still Avoid Long Term Care Insurance Rate Increase

While several of the nation’s largest long term care insurance companies have started charging women more than men, there is still time for women on their own to obtain lower cost coverage from leading insurers that have not yet adopted sex-distinct pricing.

“The window of opportunity for women in their 50s and 60s is closing,” declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance. “Women who are single, divorced or widowed are advised to act sooner rather than later.”

The national trade group released an analysis report of how the adoption of sex-distinct pricing is impacting long term care insurance costs. According to the organization’s studies, a single woman can now pay as much as 80 percent more than a same aged single man. ”Long term care insurance companies are charging women more because women account for two-thirds of all claims and the vast majority of the $6.6 billion paid out yearly in long term care insurance claims,” Slome explains.

Not all insurance companies have adopted the sex distinct pricing. “Other major long term care insurance companies have already filed new policies that will charge women more and once approved, they will withdraw their current offerings,” Slome shared with a group of Midwest insurance professionals.

According to the Association study, a 55-year old woman purchasing $164,000 of current protection with the option to increase her coverage in future years would pay about $1,800 yearly for coverage from an insurance company utilizing the new sex-distinct pricing. “The same amount of coverage from one of the highly rated insurers still utilizing equal rates for men and women would cost under $1,000 yearly,” Slome reports. “That is a significant savings to lock in.”

The national long term care insurance expert shared concerns raised by consumers calling the trade group regarding the risk of future rate increases that would specifically target single women. “The risk of future rate increases for women purchasing cheaper policies still utilizing unisex pricing exists but new state imposed regulations require that insurers show significant increases in claims, claim costs or factors not related to profitability,” Slome notes. “Sex distinct pricing is new territory for both insurers and state regulators but what might happen is an insurer requests rate increases for both men and women, requesting a larger increase for women. It would then be up to the state to approve the difference.”

CalPERS Long Term Care Insurance Presentation

A new presentation targets some 60,000 members of the California Public Employees’ Retirement System who are facing rate increases for long term care insurance policies purchased.

“We are hearing from a growing number of CalPERS long term care insurance policyholders who are confused about what to do,” explains Jesse Slome, executive Director of the American Association for Long-Term Care Insurance. The organization has created a new online presentation designed to outline considerations and next steps and to share pricing for long term care insurance available currently to California residents.

The impacted long term care insurance policies tend to offer lifetime or unlimited benefits coupled with an annual five percent compounded increase in daily benefit amounts the Association director notes. “This was the Rolls Royce level of coverage when they purchased it and is not even available from most insurers today,” Slome notes.

According to the Association, a 65-year old single individual applying for $547,500 of long term care insurance coverage without the future five percent inflation growth option will pay between $4,200 and $8,200 a year. Similar level of immediate coverage including the five percent annualized benefit growth option will cost between $10,100 and $19,900 per year according to the long term care trade group.

“Individuals with CalPERS long term care insurance policies facing rate increases have time to decide and they can avoid paying more by accepting some of the changes being offered,” Slome notes. “Inflation is not a factor so why pay to have your benefits increase if you have a pension or Social Security that could pick up some of the cost? In the end, it makes little sense to even try to compare what you have with new coverage that will cost a whole lot more assuming g you can even health qualify.”

Medicaid Enrollment Surge Concerns Long Term Care Insurance Expert

Some 54 million Americans will be enrolled in Medicaid in 2013 an increase from 45 million in 2008, a growth that concerns one of the nation’s leading long term care insurance experts.

“Medicaid is a valuable and very necessary safety net for America’s poor and less fortunate and it is by far the largest payer for long term care expenses,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance. “But, the more who need, the less this taxpayer-paid program will be able to provide and those who have means need to consider what that means to them.”

In a conference call with consumers earlier today, Slome noted that the data reported in yesterday’s Wall Street Journal noted that food stamp use is swelling, as is Social Security disability recipients. “In 2008 there were around 9 million recipients and in 2013 there will be nearly 11 million, and there is a definite limit to what programs can provide in the face of greater need,” Slome noted. “This will be especially true looking ahead as millions of Baby Boomers reach the age when they need long-term care services without any savings or assets to pay for care.”

“If you are in your mid-to-late 50s, have some savings and assets, own a house and have a job then long term care planning is something everyone needs to do,” Slome advocated. “This is when you’ll have the most options available to you, including long-term care insurance which isn’t a universal solution but certainly can be an important part of avoiding a future need for government assistance.”

“It’s a mistake to look at long-term care insurance as a means of paying the full cost of long term care expenses,” Slome shared with the consumers. “You’ll have savings and retirement income including Social Security that can be used to pay some of the cost with insurance augmenting and enabling you to have more options such as bringing a caregiver into your own home.” The Association director advocates a ‘Good, Better, Best’ approach to long term care insurance planning. “You can make this coverage far more affordable than you think,” he advised the group.

Handling Long Term Care Insurance Rate Increases

A growing number of individuals who purchased long-term care insurance in the 1990s and early 2000s have been receiving notifications of premium increases. They have options worth understanding explains one of the nation’s leading experts.

“While notification that your rate will increase is never welcome news, headlines often misstate and sensationalize the matter, creating confusion among consumers,” declares Jesse Slome, executive Director of the American Association for Long-Term Care Insurance. The expert was citing recent flurry of headlines citing an 85 percent rate increase for California retirees who purchased long term care insurance through the State’s benefit offering.

“Only certain policies are impacted and some policyholders could actually pay less, which is something you never hear about,” Slome shared this past weekend with California-based insurance professionals as part of his regular long term care insurance industry update. “Typically, those people who purchased policies with automatic, annual five percent increase in yearly benefits and those who have lifetime or unlimited policies are impacted by rate increases.” He noted that the low-interest rate environment has forced many insurers to seek rate increases.

“Insurers invest the premiums paid by policyholders to accumulate the dollars needed to pay future claims,” the long term care insurance expert told the group. “How can you increase benefits by five percent yearly when you are only able to earn one or two percent? You can’t so you are forced to raise premiums or give the policyholder the option of changing their policy provisions.”

Policyholders are offered more choices than just ‘pay the new premium’ Slome explained. Options include changing the daily benefit maximum, converting a lifetime or unlimited policy into one that offers benefits for a specific time period or accepting a different inflation growth option. “The company will typically maintain the value your policy has grown to but reduce future growth from say five percent yearly to three or three-and-a-half percent for future growth.”

Rate increases typically affect policyholders who have had coverage in place for a number of years. “The same coverage today would be far more expensive even after the rate increase and that assumes the individual can still health qualify,” Slome shared with the group. “When consumers call the Association office we explain if they have had their policy for more than two years, equal coverage will cost them more.”

Newer policies, those being marketed today, are less prone to future rate increases, Slome forecasts to the group. “First, interest rates are at historic lows and likely to increase removing that problem and second, new regulations are in place that offer consumers today added protection from future rate increases,” Slome concluded.