LTC Insurance Premiums Skyrocket As Insurers Struggle With Costs

Jan. 31--Premiums for long-term care insurance -- which helps pay for nursing home stays and extended care services during consumers' elder years -- are continuing to skyrocket and Florida seniors are getting blindsided by the increases.

Longtime Blue Cross Blue Shield of Florida policyholders have been notified by mail in recent weeks that annual premiums for their coverage will increase by an average of 94 percent through 2021.

They're not taking much comfort from the news that it could have been worse. The company originally requested a 280 percent hike but state regulators refused to grant that, telling the company the request was not "adequately demonstrated to be reasonable in relation to the benefits provided," according to a consent order by the state Office of Insurance Regulation.

The consent order requires the company to phase in the 94 percent hike over three years by increasing premiums about 25 percent each year. After the full increase is achieved, the rate will be frozen for five years.

Average annual premiums for Blue Cross Blue Shield of Florida's 6,197 policyholders will increase from $1,454 to $2,820 after the full premium increase takes effect, according to the filing.

Long-term care insurance is typically bought by adults in their 50s to cover costs of daily help should they later be unable to dress themselves, walk, use the bathroom, eat, drive, or take part in other basic activities.

Boca Raton resident Alan Shefter thought it was "an April Fools joke" when notified of the increases that would commence upon renewal of his and his wife's policies on April 1. When the increases are fully phased in on April 1, 2021, the couple's combined premiums will have increased from $2,621 to $5,273, Shefter said in an email.

"The question [is] how such an exorbitant increase can be justified?" Shefter wrote.

When Fredi Greenwald received notice of the increase in January, she fired off an email to Florida Insurance Commissioner David Altmaier. "I am appalled that you have given your OK to such an egregious increase," the Lake Worth resident wrote. Greenwald said she and her husband, 74 and 77, have been paying for their policies for the past 14 years and are currently paying a combined $7,300 annually.

"We took these policies out to do the responsible thing, to not be a burden to our children and to not have to rely on [Medicaid] to have to cover us should we live to need the care," Greenwald wrote.

Jon Moore, communications director for the Office of Insurance Regulation, said long-term care insurance providers nationwide have been seeking rate increases to compensate for trends they did not foresee when they originally priced and marketed the policies.

"The market has seen challenges in recent years," he said.

Moore identified the same trends as executives of MetLife and Unum did in 2016, when the state office convened public hearings over rate increases requested by the companies. Executives said their companies were paying out more in benefits than they were collecting in premiums.

Fewer customers let their plans lapse than originally projected, while policyholders have been using more benefits and living longer, they said. Also, lower-than-expected interest rates in the investment market have cut into expected income from reserves, they said.

"Long-term insurance is based upon predictions related to health care needs and cost-of-care analysis, often decades out, and these recent rate changes reflect LTC industry trends around increased life expectancy and growing medical inflation," Blue Cross Blue Shield of Florida spokesman Doug Bartel wrote in an emailed statement.

Financial shortfalls have caused many companies to withdraw from the long-term care insurance market over the past decade, and some companies continue to offer long-term care insurance only as an annuity to existing life insurance customers, state officials said at the time.

Blue Cross Blue Shield of Florida's notice to the Greenwalds gave the couple a choice, as required by state regulators: Pay the increased premium to maintain the coverage level as originally purchased, continue to pay the old premium and accept reduced benefits, or freeze the policy and accept a maximum lifetime benefit equal to the cumulative premium paid by the couple.

Freezing the policy would mean the couple would lose "inflation provisions, additional coverage purchase options, or other rights that increase the lifetime or periodic benefits," according to the consent agreement.

Greenwald said freezing the policy would result in no accrued value on the money they have been paying. Investing it wisely or even leaving it in the bank would have provided some sort of return, she said.

In addition, they would also lose a benefit they have been paying extra for: If one dies before the other, that spouse's policy benefits will accrue to the other.

Reached by phone on Thursday, Greenwald said she and her husband decided they have no choice but to pay the higher premiums to maintain the coverage they want -- which would provide each of them about $480 a day for up to three years in a long-term care facility after the first 90 days. Greenwald said she can't walk away from a potential maximum benefit of $482,400.

In his statement, Bartel urged Blue Cross Blue Shield of Florida policyholders impacted by premium increases to call the numbers on their policies to discuss coverage alternatives.

Since 2016, premium increases have been approved in Florida for 30 long-term care insurance providers. Nearly all of the increases were approved under similar terms, with consumer opt-out choices, and a required phase-in period of two to five years followed by rate guarantees of five to 10 years.

Premium increases

Comprehensive long-term care insurance providers approved for premium increases since 2017 include:

Continental General (338 policyholders) -- requested 241 percent increase, approved for 87.3 percent hike.

Medico and Ability Insurance companies (1,025 policyholders) -- requested 94 percent increase, approved for 81 percent hike.

Constitution Life Insurance Co. (701 policyholders) -- requested 120 percent increase, approved for 84.2 percent hike.

Penn Treaty Network America Insurance Co. (5,760 policyholders) -- requested 79 percent hike, approved for 48.5 percent.

John Alden Life Insurance Co. (246 policyholders) -- requested 95 percent hike, approved for 76.9 percent.

State Farm Mutual Auto Insurance Co. (6,176 policyholders) -- requested 34.1 percent increase, approved for 38.5 percent.

Lincoln Benefit Life Insurance Co. (2,120 policyholders) -- requested 102 percent hike, approved for 61.2 percent.

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