Long Term Care Insurance Premium Increase

Because of a personal tragedy I have been away from this blog for an extended period. I may write about this tragedy when the time is right but for now, I need to return to retirement planning and related topics. The need for retirement planning and living has not ended. Today, the topic is long term care insurance. There have been some important developments worth sharing.

I have been insured for long term care since 2008 by MetLife.  In 2010, MetLife stopped selling new long term care insurance policies because it had not properly analyzed the market. Because of this, I knew that sooner or later, MetLife would attempt to substantially increase the premiums on existing policies, hoping that such increases would cause its insureds to cancel the coverage.

Well, that has happened, sort of. In July I receive a letter from MetLife that stated that it had requested approval from the Tennessee Department of Insurance for a 58% premium rate increase. Yes, you read that right – 58%! Amazingly, MetLife also said that even a larger increase was justified.

MetLife did not receive approval for a 58% increase – “only” a 20% increase was approved. For my policy, this would mean a monthly premium change from $158 to $189.

MetLife provided other options to avoid this increase. The first option was to decrease my coverage from $182 to $158 daily. (This coverage started at $150/day when we bought the policy but is automatically increased by 5% each year.)  The second option was to reduce the benefit period from 5 years to 3 years. A third option was to cancel the policy which would leave paid up insurance in the total amount of  all premiums paid prior to cancellation.

None of these options appealed to me. I still feel a need for long term care insurance, and in an amount sufficient to cover a reasonable period of exposure to a long term care event.  In Tennessee, for example, the average annual cost of nursing home care is approximately $72,000.  Assisted living costs an average of $48,000. Even home care costs over $27,000 annually. I don’t want to risk burning through a large chunk of my retirement nest egg (or burdening my family) if I need long term care.

We investigated and determined that even with the 20% premium increase, the cost of the coverage I had was less than could be purchased now on the open market.

Therefore, I decided to accept the premium increase. Currently, those premiums are paid for my firm as a benefit to the owners. When I retire, I will have to assume responsibility for payment.  Right now, I am OK with that. Retirement planning is all about risk management.

Have any of you experienced significant increases in the cost of your long term care insurance?


  1. John S. says

    I have a Genworth policy through AARP and am waiting for the inevitable increase but nothing so far. At the risk of getting off the topic, my current issue is with hefty annual increases in my Medicare Advantage plan. I am just informed that it will go up 24 percent on Jan. 1. With this latest increase, it will bring my monthly rate up a whopping 108 percent over what it was when I first enrolled in January 2011. That’s an average annual increase of 36 percent. If it continues at that rate, I would be paying just over $1,100 per month in five years. When I retired, I felt that the cost of a basic Medigap policy and Part D drug plan was too high to afford, but that’s what I’m switching to now because I can get a Plan C Medigap policy with no Part B copays and a full Medicare drug plan for within a dollar of what my Medicare Advantage Plan will cost next year. Are others facing these kinds of increases?

  2. Don L says

    I have Met Life LTC through a group plan at work in Florida. In March of 2012 they informed me that they were requesting a 45% increase effective January of 2014. As of today, 10/20/13, I have not heard any further news from them. So I am waiting to see how much of an increase the State of Florida allows them. At least they gave me plenty of warning to anticipate the increase.

  3. says

    Hi Mark!

    We think that you absolutely did the right thing by just accepting the increase and keeping your coverage. Thank you for sharing your experience. What you wrote here will give our readers a fresh view on long term care insurance and the possibility of rate increases. That’s why we included this post in LTC Options’ Weekly Digest. You can read the whole compilation here http://www.ltcoptions.com/weekly-digest-planning-for-long-term-care-long-term-care-insurance-and-annuities

  4. Charlie R says

    I’m 67 and pay Genworth $1,852/year. My wife is 64 and pays Genworth $1,350/year. Both these payments are due 11/1/2013 and are a large increase from last year. We got these LTC policies back in the 1990’s.

  5. says

    The cost of long term care these days are also on the rise, so for me it’s more practical to embrace the premium increase if you have extra funds. If you bow down to this price hike, you will most likely shoulder most of your long term care expenses in the future. There are people who choose to shorten their benefit period and decrease their coverage in order to save on premiums. This may be beneficial on their part right now because they can save money but what about in the coming years? This is one of the hardest decisions that one can make, so it’s best to contemplate on this first, weigh your options carefully and choose the option that will greatly benefit you. Don’t choose something just because it’s cheap, choose something that can secure your future and satisfy your long term care needs.

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