LTC premiums going up big time

The numbers are eye-popping. Big enough to make your wallet sweat and your purse groan. The premiums for your long-term care insurance policy are going up an average of 83 percent, an increase of $111 per month. And that’s the average. For others premiums will go up as much as 126 percent.

The obvious question is why? What happened? Inflation is low, gas prices are down, so why the big jump in the federal program that has about 264,000 policyholders? Short answer: People are living longer and the last few added years of their lives are often extremely costly. In terms of both dollar costs, pain and suffering and pressure on their families and loved ones, nobody expected this.

Back when I got my LTC group policy (the group was employees of The Washington Post), there were dozens of companies that offered LTC coverage. Now there are only a handful. The company that offered my LTC plan to Post employees has gone out of the LTC business. They’ve grandfathered us (the original policyholders) in but haven’t been taking on new policyholders for more than a decade. Too expensive. The increasing life span of increasingly unhealthy people caught most experts (including insurance actuaries) by surprise. This year when the LTC program was put up for bids, only one company, John Hancock, bid on it. It is the original backer of the program that is run by LTC Partners, which is owned by John Hancock.

The premium hikes jolted everybody. The insurance company and the Office of Personnel Management say that by law “the source of funding is the premiums received from enrollees in the program” and that the premium increase will not benefit or go to the insurance company.

So what now? Is there any way you can reduce the premium increase coming your way? Short answer, yes? There are a variety of ways, including downsizing your current policy. You may be able to opt for a lower daily payment, reduce the number of years your LTC policy covers or make changes in inflation-adjustment options. Where to go first:

Listen to our Your Turn radio show today at 10 a.m. EDT. Our guests will be Paul Forte and Joan Melanson with Long Term Care Partners. They’ll explain why what happened happened. And talk about new rates and options, and key dates enrollees need to be aware of in the EDP (enrollee decision period). That includes how much time you will have to shop around and possibly make changes. This includes a promised state-of-the-are customer website, webinars and videos, and call centers where you can talk to customer reps who understand the program and your options.

Because this is to spell out changes, and your options, we can’t take individual questions on air although we will do that in upcoming shows on the subject. But if you have a question email it to me and we will get it answered.

So listen today (and tell a friend) and remember all our shows are archived on our homepage so you can listen or pass them on anytime.

Nearly Useless Factoid

By Michael O’Connell

Ever wonder what makes “premium” ice cream so special? Generally, it has a lower overrun (more aeration) and higher fat content. Manufacturers will also use higher quality ingredients.

Source: International Dairy Foods Association

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