How To Handle A Long-Term Care Insurance Rate Increase

Long-term care (LTC) insurance provides financial protection against the high costs of extended care services, such as nursing home stays, assisted living, and in-home care. However, policyholders often face unexpected rate increases, which can pose financial challenges. If you’ve received notice of a premium hike, here’s how to assess your options and make an informed decision.

1. Understand the Reason for the Increase

Insurance companies must obtain state approval before raising LTC premiums, usually citing increased claims costs, longer life expectancies, and underpricing of original policies. Contact your insurer or state insurance department for details on the specific reasons behind your increase.

2. Review Your Current Policy

Examine your policy’s benefits, including coverage limits, inflation protection, and elimination periods. Determine whether your coverage still aligns with your needs and financial situation. If you’re unsure, consult a financial advisor or insurance specialist.

3. Consider Adjusting Your Policy

To manage costs, you may be able to modify your policy by:

• Reducing benefits: Lowering daily benefit amounts or shortening benefit periods can significantly cut costs.
• Increasing the elimination period: Extending the waiting period before benefits kick in can reduce premiums.
• Adjusting inflation protection: Reducing or removing inflation riders may lower costs while still maintaining essential coverage.

4. Compare Alternative Coverage Options

If the new premium is unaffordable, compare other LTC policies or hybrid policies that combine life insurance with LTC benefits. While new policies may have higher rates due to age or health changes, they may offer different benefits that better suit your needs.

5. Explore Non-Insurance Alternatives

If maintaining LTC insurance becomes too expensive, consider alternatives such as:

• Self-funding: Using personal savings, retirement funds, or home equity to cover future care expenses.
• Government programs: Medicaid and veteran benefits may provide LTC support if you meet eligibility requirements.
• Family support: Some families create care plans that involve shared caregiving responsibilities among relatives.

6. Consult a Financial Professional

A financial advisor or insurance expert can help you evaluate your options and determine the best course of action based on your health, financial situation, and long-term goals.

7. Take Action Promptly

Most rate increase notices come with a deadline for making changes. Waiting too long could lead to automatic premium increases or policy lapses. Review your options carefully and respond within the given timeframe.

Final Thoughts

While an LTC insurance rate increase can be frustrating, you have options. By understanding the reasons behind the increase, reviewing your policy, and exploring adjustments or alternatives, you can make a well-informed decision that balances affordability with essential coverage. Staying proactive will help you maintain financial security and peace of mind in your long-term care planning.