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.
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?