Last Updated 3 weeks ago
According to a recent report by the Office of the Assistant Secretary for Planning and Evaluation (ASPE) and the U.S. Department of Health and Human Services (HHS), changes in the Long-Term Care (LTC) insurance market, including higher-than-expected benefits and lower than anticipated returns on investments, have caused many major carriers to exit the market.
Why are LTC insurance companies disappearing from the marketplace?
- Consumer demand for policies remains sluggish. Genworth, for example, reported that it sold only $83 million in long-term care policies in the first half of 2013, compared to $128 million in the same period last year.
- LTC insurance companies earn much of their revenue from their investments. Recently, investment income has become weak due to a long period of historically low interest rates.
- As premiums rise, fewer consumers are likely to buy LTC insurance. In addition, rate increases are forcing existing policyholders to dig into savings, sacrifice elsewhere, or drop their coverage.
- Only about a dozen companies are still selling stand-alone policies, and this number is dwindling (source: Wall Street Journal).
Keep in mind that even if a major carrier stops selling new policies, buyers can generally keep their existing policies as long as they keep paying premiums. Those premiums, however, may be increased, or buyers may be forced to accept reduced benefits in exchange for keeping a level premium. Medicare’s hundredday rule explained can help clarify how long benefits are available for skilled nursing care. Understanding this rule is crucial for policyholders, as it directly affects their coverage options after a hospital stay. It’s essential to stay informed about such regulations to make the best decisions regarding healthcare needs.
If you are considering LTC insurance, first look at each policy very closely, and be sure to pay close attention to the insurer’s claims payment history and whether they have been increasing premiums for existing policy holders. For more details, please read our recent blog post: “Long Term Care Insurance is Not for Everyone.” The impact of life insurance on Medicaid can be significant for individuals planning their long-term care. Understanding how these two systems interact is crucial for making informed decisions about healthcare coverage. Many families may not realize that certain life insurance policies can affect eligibility for Medicaid benefits. Medicare coverage for nursing home costs plays a vital role in ensuring that seniors receive the care they need. It is important to understand the limitations and qualifications for such coverage to avoid unexpected expenses. Consulting with a financial advisor can help clarify the best options available for managing long-term care expenses.
If you have done your research and decide LTC insurance is right for you and your family, you should incorporate it as part of your long-term care plan, not as the only form of planning for long-term care. There are dozens of long-term care asset protection strategies other than long-term care insurance. For example, the Living Trust Plus™ Medicaid Asset Protection Trust is just one of many long-term care asset protection strategies. If you have not done Long-Term Care Planning, Estate Planning or Incapacity Planning (or had your Planning documents reviewed in the past several years), or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, call The Fairfax and Fredericksburg Medicaid Asset Protection Law Firm of Evan H. Farr, P.C. at 703-691-1888 to make an appointment for a consultation.
