Long-Term Care insurance is a product that started gaining popularity in the 1980’s. There was no previous product in the market that provided the benefits offered by Long-Term Care policies. There was also no data on claims costs that companies could rely upon to help set the product price. So, insurers had to base the price of the product on predictions of what long term care expenses would cost 20, 30, or even 40 years later. This resulted in a product insurers have struggled to price appropriately. Insurers across the country have been raising rates over the past several years to address the fact that key assumptions used to price their product initially have turned out to be incorrect. Some examples are as follows:

• Far fewer policyholders have allowed their policies to lapse than anticipated.
• People are living longer and using more services than expected.
• Claim costs are higher than anticipated because more policyholders are using benefits than expected and the cost for long-term care is rising faster than the rate of inflation.

The Department of Insurance can, and often does, modify or limit the premium increases requested by insurance companies after a deliberative actuarial review process. We can also block the premium increases altogether.

Our challenge is to ensure consumers are treated fairly and not subjected to unreasonable premium increases while also making sure companies receive sufficient premiums to pay claims over time.  Regulators often have few options to approve at least a portion of requested rate increases, as the ability of insurers to pay future claims is the best-case scenario that protects all consumers. 

Consumers do have options when faced with premium increases for their long-term care policies. One option is to discuss with their insurers ways to hold down or eliminate a premium increase, through reducing benefits of the long-term care policy. Consumers should ask whether their insurer will reduce or eliminate a proposed premium increase if the consumer agrees to such changes as eliminating or reducing an inflation adjustment on the policy, increasing the number of days the policyholder pays for care before then insurance policy kicks in, or limiting the length of care for which the policy will pay.

Consumers should make sure they understand any benefit changes, and that their policy will continue to provide the level of protection they may need in the future.  Consumers should work with a financial advisor on what option is best. 

• Understand your policy.  Review your policy to make sure you understand any specific requirements including:
  • Elimination Period - I specified number of days you meet plan requirements before benefits begin to pay out.
  • Activities of Daily Living - Many policies require your need for assistance to perform specific such as grooming and bathing prior to qualifying for benefits.
  • Pre-existing Conditions - Many policies may have provisions that exclude coverage for conditions which exist prior to policy eligibility.
• Understand the determination.  Obtain a copy of the determination in writing and follow up with the administrator regarding any questions you have regarding the determination.  Request a copy of the policy if you do not already have access.
• Inquire if any documentation is outstanding which may alter the adverse decision.  Examples may include outstanding claim forms or medical documentation.
• Contact the Connecticut Insurance Department with any questions or concerns regarding the handling of your Long-Term Care policy, or if necessary, file a complaint.