Long term care insurance was sold aggressively in the 1980s and thereafter to offset the costs of seniors needing to live in a nursing home, assisted living or needing at home health care. Now, however, the business of long term care insurance has dramatically changed. What was once over 100 insurers providing LTC policies for sale has shrunk to a pool of less than 20 insurers who continue to sell the health care product.
The big financial problem was that the majority of insurers had badly underestimated the longevity of these long term care policy holders and how many claims would be filed during their lifetime. The model became unsustainable from a business perspective.
As reported by the Wall Street Journal, the industry is now in financial turmoil and has turned to the old adage of privatize the gains and socialize the losses; the translation being that millions of people 65 or older with long term care policies are facing steep rate increases.
It is not uncommon for a policy holder to face a 50% increase in their premium while some of the worst cases are upwards of 90%. Because the industry itself used such poor benchmarks and miscalculated projections, policy holders are seemingly left with two choices: Pay the money or leave your coverage after paying into it for years, and sometimes decades.
What if you want a different choice? Everyone would agree that being price gouged for premiums as you age is inherently unconscionable but if the policy is discontinued what then will happen to the peace of mind long term care brings? What was once the safety net of senior aging care (without becoming a burden to family members) is rapidly disappearing.
CNBC recently reported about this very issue and suggests getting financially creative for long term care. (https://www.cnbc.com/2018/02/27/heres-a-surprise-source-you-can-tap-for-long-term-care-services.html) There are surprising sources that you can tap in order to maintain protection for yourself but it requires planning, professional help and time. Do not delay!
To begin you will need to retain the services of a qualified elder law attorney, who may also bring in an accountant and a financial advisor. Ideally, you should begin this planning while you are still healthy and not in need of long term care, but it is really never too late to discuss a plan. Your elder law attorney can review with you federal and state programs such as Medicaid, Veteran’s Aid & Attendance Benefits and services through the Department of Aging to see what you may be able to qualify for in the future.
Our firm’s elder law attorneys closely watch changes in Medicaid and Veteran’s benefits laws, as Congress is often proposing legislation to change the programs. Eligibility requirements can change in each state, and sometimes in each county.
Though you may never have thought you would find yourself creatively trying to qualify for benefits while protecting assets, the current long term care premium prices preclude a large portion of seniors from being able to pay the cost of the policy. Genworth Financial reports the national median cost of a private nursing home room to be $97,455 a year. It doesn’t take long to be wiped out at that cost without long term care. Government benefits may be your solution and time is of the essence for planning.