Seniors Struggle To Pay For Long-Term Care Insurance
Feb. 10--Since our article "Long-Term Care Snare" published on Sunday, The Oklahoman has fielded several emails and calls from readers who are struggling to pay soaring insurance premiums on long-term care policies they bought years ago to help cover the costs of nursing or assisted living facilities should they ever need them.
Like the retired Norman couple on which Sunday's story was based, all have policies with Genworth, and all have had their rates raised repeatedly. But many are struggling to maintain even higher annual premium costs -- as high as $7,000 for one couple. Meanwhile, another long-term policyholder who moved into an assisted living facility in March 2014 said Genworth cut off his monthly benefits after 18 months.
In Sunday's story, a Genworth spokeswoman defended the rate increases, saying the potential for rate increases is clearly disclosed in policies and that premium increases are the only way for insurers to manage costs that actuaries horribly misjudged for policyholders, who are living longer and haven't quit their policies.
Regulators with the Oklahoma Insurance Department said they've decided -- starting now -- to institute a new 10 percent cap on annual increases, but not before thousands of seniors, including 10,000 Genworth policyholders in Oklahoma, have felt the financial pinch.
Following three rate hikes, Gerald Lister, 79, of Edmond, and his wife, 78, are paying an annual premium of $4,361.83, or "a whopping 105 percent higher than when we bought our joint policy in 1999," Lister said.
"I called the state some time back and got a customer service person that gave me no usable information and chastised me for obviously not understanding the product that I voluntarily purchased," he said.
After some 19 years, T.J. and Lynne Murphy, 86 and 81, are paying $7,042 annually; $1,760 a quarter.
"Most retired people can't afford this, but we're gritting our teeth and hanging on because we don't know if one of us will need it, and to drop it is to lose all that money and maybe wipe out our savings that we hope to use to help our kids and grandkids," Lynne Murphy said.
Murphy said she remembers what the saleslady said when she asked her about possible rate hikes long ago. " 'Oh, I wouldn't worry much about that,' she told us. 'They'd have to ask the state Insurance Department for permission and the chances they'd allow that is very small.' "
After Sunday's article, Ron Minnix, 70, of Oklahoma City, worked with Genworth and state insurance officials to avoid a 25-percent rate hike this year, after incurring a 16-percent increase the previous year, by cutting back his daily benefit and increasing the number of days before his benefit is triggered.
"I still think that Genworth sells these policies in hopes that you will pay on them for 20 years and then when you get about 70 years old, they try to force you to decrease benefits or drop the policy so they will not have to pay," Minnix said.
Another caller, 90, who asked to remain unnamed, said the premiums for the Genworth policy on which he and his wife, 85, have been paying for years shot up this year from $8,000 to $10,000.
"I took it because the insurance (before a 2006 spinoff) was with G.E., and I thought it must be pretty solid," he said. "But now I think it's a big rip-off."
The couple have paid more than $200,000 in premiums, he said.
Unbearable costs
The most disconcerting call came from longtime Genworth policyholder Hubert Plumlee, a retired 88-year-old minister, who moved into Sommerset Neighborhood Assisted Living & Memory Care in southwest Oklahoma City with his wife, Mary, 86, in March 2014. By then, they were both on walkers, he said, and had trouble scaling the steps at their home, doing their laundry and running the sweeper.
Plumlee said they bought their respective policies when he retired in December 1999 and the premiums "went up nearly every year until it was almost unbearable for retirees to pay." The last annual premiums they paid totaled $3,200, he said.
After paying out-of-pocket for their first 100 days at Sommerset, Plumlee said Genworth began reimbursing him on his $3,150 monthly rate (his wife's rate is $1,100 as the second person in the room), until the company cut off his benefits this year, he said.
In a letter dated Dec. 15, and a followup letter he received just Tuesday, Genworth officials wrote that Plumlee wouldn't qualify for benefits until he was severely cognitively-impaired, as evidenced by his inability to perform two daily activities (such as bathing, dressing, eating, toileting and transferring) without hands-on or standby assistance.
The benefits now are triggered on the policy of Plumlee's wife, who suffered a stroke in September and needs more personal care. But Plumlee vows to continue appealing the decision to cut off his own benefits.
The couple's only income is $2,135 in combined Social Security payments and inconsequential income from a small individual retirement account, he said.
Plumlee has told his adult children not to get involved in long-term care insurance. "I told them to put away as much money as they can, and just hold onto it."
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