Avoiding the LTC premium hike

One way to save money paying those pesky premiums is to buy fire insurance the week before your home goes up in flames. You can also save a bundle (though it might be illegal where you drive) to hold off getting car insurance until the Tarot card lady says she sees a Ford in your immediate future as it smacks into your car, or you his.

Delaying getting life insurance until you are 80 could save you a bundle in premiums. And who needs long-term care insurance in their 50s or even 60s? In fact, about 40 percent of long-term care is used by people under age 65.

Adopting a wait-and-see tactic may save you lots of dollars over the long haul. But unless you invest those “savings” into a fund or business that provides you with a high-six-figure nest egg, waiting can be problematic in the extreme. Waiting until you are closer to your expected expiration date will make it difficult, if not impossible, to qualify for coverage. And if you do, your premiums will be massive.

Waiting until you think your house is likely to be destroyed to insure it is also not a smart move. Delaying the purchase of long-term care insurance, or dropping it because the premiums keep going up probably isn’t wise. Especially if the reason premiums are going up big-time, like now, is because more people are needing LTC care and needing it for longer periods of time, running up bills that insurance actuaries didn’t anticipate in 2009, which was the last time federal LTC premiums were raised. Back then, people were flipping out because premiums went up 25 percent for those 65 and under; 20 percent if they were 66; 15 percent of age 67 at the time; 10 percent if they were 68, and 5 percent of aged 69 in 2009. During that premium increase, policyholders 70 and older didn’t have to pay anymore. The new data on actual claims use changed the projections as to how much money would be needed (in the experience fund) to pay claims.

Compared to now, 2009 was the good old days. That’s because premiums in the federal LTC program are rising $1,332 per year for most of the 274,000 people in the program, and as much as 126 percent for some others. Unless …

Unless they do one of several things:

• Drop their coverage and hope/pray they never need long-term care and/or that if they do need it their annuity, savings, mortgage and spouse or kids take them on, and in. While that’s certainly an option, the fact that so many people will need some form of LTC in their lifetime doesn’t make it a very smart move. Prayer, exercise and vitamins can only go so far. Especially if the care is the result of an accident that could happen at any age.

• Modify their coverage. It is possible, through Sept. 30, to tell the insurance company that you don’t want to pay the new higher premiums. If that’s the case, you will change your coverage either by permitting you to reduce your inflation protection going forward without impacting any benefits you’ve accrued to date. The other is to reduce the length of the coverage (from lifetime to five or three years).

• The majority of current enrollees (70 percent) have the automatic compound feature. If they want to avoid the current premium increase (or reduce it), they can choose a lower inflation rate going forward.

• The magic date (when you must make a decision, or it will be made for you) is Sept. 30. LTC Partners said you can also make a selection by calling them (and talking to a real human being, not a robot) at 1-800-LTC FEDS.

• Although D-Day is Sept. 30, you will receive a confirmation of your benefits in mid-to-late-October. You will then have 30 days to review your new choice and you can go back to any option that was available in your personalized package.

• The new higher premium, if any, will be effective Nov. 1. When you actually see it depends on your method of billing.

• On the Wednesday, Sept. 21, Your Turn radio show, Paul Forte and Joan Melanson from LTC Partners talked about the premium increase, how and why it happened and what many people can do to avoid or minimize it. The listen to that show, click here.

To learn more about the LTC premium hike, check out these three webinars created by LTC Partners:

• Webinar 1 – Why the rate increased

• Webinar 2 – Assistance for making a decision

• Webinar 3 – Wrapping up the rate increase

Nearly Useless Factoid

By Michael O’Connell

The substance that comprises Play-Doh was originally designed as a wallpaper cleaner.

Source: American Profile

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