Whats the Deal with Long-Term Care?

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Aging in America: Crisis in long-term care

They used to be in the health care industry, they got rid of that, but they still had these remaining policies. And the core of the problem that GE is dealing with right now has to do with these long-term care insurance policies. Americans are living longer, on average. And the people who bought these policies? Because the premium payments? Medicaid is really our public long-term care service policy. You have to be, in essence, poor in order to qualify. Remember, lots of times people have to go from full-time work to part-time work, they have to go from part-time work to quitting their job in order to take care of their elders.

And a lot of millennials — one in about 25 percent of caregivers — are millennials, people who are just launching their careers. So this informal care system is totally strained. These commissioners may not approve premium increases on existing policies until the increases are absolutely necessary for the insurance company to remain viable and maintain their ability to pay claims. Infrequently-approved increases and undercharging due to inaccurate underwriting lead to large increases. Here are four actions you can consider to retain LTC insurance but slow some of the acceleration of premiums.

If your policy has been in force for several years and your original benefit has grown due to benefit-compounding riders, this could be a good first place to reduce coverage.

The Basics

Benefit period. Typically, LTC policies pay for three to five years of benefits. Lifetime benefits are practically unavailable for purchase today. Reducing the benefit period reduces the risk of a large claim for the insurance company, which reduces your premium. Reduce the rate of policy growth or inflation rider. You want your benefits to increase over time to keep up with rising costs. Reducing the growth rate of your benefits reduces the growth of your premium.

Group Long-term care versus individual long term care insurance information

Check your original policy, as well as the notification of your rate increase, to see if non-forfeiture benefits are available to you. Group vs.

Conventional wisdom says that group insurance policies cost less than a policy you could purchase on your own. That may be true for certain types of insurance, but it is not always true for long-term care insurance. With employer-offered long-term care insurance LTCi there are important factors consumers need to evaluate. By doing careful comparison shopping, you might find you are able to get equal or even better coverage for less money.

Keep reading to learn how to evaluate which is better, the group long term care insurance being offered by your employer or trade group or an individual long-term care insurance policy. The following is an actual comparison of current rates for a 55 year old employee seeking coverage for themselves and their spouse.

What Is Long-Term Care?

Rates are for virtually identical coverage from the very same insurance company a top-rated carrier offering both group and individual plans. The group plan is one offered to employees of a relatively large state and only offers a home care benefit equal to 50 percent of the skilled nursing home benefit. By comparison, the individual policy offers a percent home care benefit and still costs 25 percent less for a healthy married couple.

Summary: Employer offered long-term care insurance will almost always be your best deal if you have health issues and would be ineligible for coverage on an individual basis or would be 'rated' and required to pay substandard health rates.

What is behind long term care rate increases? Why are premium increases so large?

If you are in reasonably good health or you are married living with a partner you will likely pay more for employer-offered coverage than you would for identical protection purchased on an individual basis. Many employers and professional organizations and alumni groups now offer long-term care insurance. In theory, the purpose of a group plan is to spread the risk of claims over a wider group of people and to secure savings typically achievable when more people are buying coverage.

It works well for some forms of insurance such as group life or group health. Savings may not be the outcome when it comes to LTC insurance. Today, there are two common forms of employer-offered long-term care insurance. Larger employers, generally those with or more employees, typically use traditional "true group" policies.

Currently, only a few larger insurers offer true group LTCi coverage.

Long-Term Care Costs: Ticking Time Bomb for American Healthcare and Our Economic Future

Prudential and Genworth are two who make coverage available to new groups. Most group long-term care insurance plans offered by employers are voluntary employee pays all costs though some employers offer a minimal benefit to all eligible employees allowing individuals to buy additional coverage. The most significant benefit of true group policies is their willingness to offer coverage to individuals with health issues.


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Not only may individuals with health limitations or conditions be offered coverage, they typically pay the very same rate as healthy individuals. For example, the recent open enrollment for the Federal long-term care insurance plan, the nation's largest true group LTCi plan, accepted those with conditions such as insulin-dependent diabetes, AIDS, HIV-positive, history of stroke or a history of alcoholism or drug addiction. The insurance company factors the expectation of increased enrollment by individuals with health conditions as well as the greater likelihood they will eventually need care into their premium rates.

They spread this greater risk among the cost paid by all enrollees. Or, more succinctly stated, those in good health subsidize those in poor health.