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What to Do About Long-Term Care Insurance


The decision to buy long-term-care insurance and how long to keep it is among the toughest people make as health-care consumers.' '  The product is difficult to buy'confusing, complicated, and costly.'  Many won't qualify for it because of preexisting health conditions that insurers don't want to insure.'  (Long-term care policies are exempt from the rules of the health reform law, which if upheld by the Supreme Court, will bar carriers from considering applicants' health.)'  And once you have a policy, do you keep it when the premiums continue to climb?

That's the dilemma thousands of policyholders have faced in the last few months as insurance companies have raised their rates as much as 40 and 50 percent for some policies.'  According to the trade group, the American Association for Long-Term Care, average premiums are now six to seventeen percent higher than they were a year ago.

A Consumer Reports study conducted in the late 1990s found that many policies sold then were under priced and projected that companies would need large rate increases as the years went on.'  That's happening now.'  But insurers are increasing premiums not just on older policies but on new ones too, and consumers who hold them are trying to keep them despite the large premium hikes, says Bonnie Burns, a long-term care expert with California Health Advocates.'  They are following the advice Burns and others have given:'  once you have a long-term care policy, you need to hang on to it.

I asked Burns what strategies consumers are using to stay insured.'  None are ideal, she explained.'  They are reducing the benefits they will eventually get which will leave them with large out-of-pocket expenses if they do go to a nursing home.'  Or they are robbing assets that, too, will be gone when they will need them in very old age.

Some people simply stop paying premiums in exchange for a benefit equal to the amount of premiums they have already paid.'  In other words, if they've paid $40,000 in premiums over the years, the benefit will be $40,000 when they need care.'  You can do that only if your state insurance regulations allow it.' '  Be sure to check with your state's insurance department to see if it has adopted regulations that permit this protection if this option sounds appealing to you.

What do you do if a sales agent or a financial planner suggests that you buy long-term-care insurance?'  Think very carefully about whether you can afford the premium now and in five or ten years.' '  You'll have to consider your current resources and what they'll be down the road.'  You'll also need to consider future expenses. Health care will be a big one and is likely to get bigger.

If you're under age 65, consider that you will likely have to pay more out-of-pocket for your medical expenses as employers increasingly offer skimpier policies that cover less.'  If you're over 65, you'll be paying more too.'  Congress is considering changes to Medigap policies that will result in seniors paying more out-of-pocket for health care.'  A new issue brief from the Kaiser Family Foundation warns that even with Medicare coverage, medical costs are a significant portion of a senior's budget.

Given higher premiums for long-term care insurance combined with expanding out-of-pocket health care costs, the prospect of many seniors being covered for nursing home care appears slim. ' 'It looks like seniors with moderate incomes will be less likely to have this coverage and less likely to afford it,' Burns says.'  'This is the population most likely to spend down and become eligible for Medicaid.'  The promise of long-term-care insurance being the savior of Medicaid is less and less likely.'

That still leaves one huge question on the political table since the Obama Administration junked the CLASS Act, which represented the beginnings of a national program for paying for long-term care under the health reform law:

How will Americans pay for their long-term-care?' ' ' 

More Blog Posts by Trudy Lieberman

author bio

Trudy Lieberman, a journalist for more than 40 years, is an adjunct associate professor of public health at Hunter College in New York City. She had a long career at Consumer Reports specializing in insurance, health care, health care financing and long-term care. She is a longtime contributor to the Columbia Journalism Review and blogs for its website,, about media coverage of health care, Social Security and retirement. As a William Ziff Fellow at the Center for Advancing Health, she contributes regularly to the Prepared Patient Blog. Follow her on twitter @Trudy_Lieberman.

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Health Insurance   Trudy Lieberman   Pay for your Health Care   Inside Healthcare  

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