As Costs of LTCi Rises – So Does the Impact to Largest PayerRyan Hogan
Reading the article form CBSNews by Walecia Konrad “The cost of long-term-care insurance keeps rising” I found it relatively more accurate than most written these days but it fails to look past the immediate to see what the future can hold.
“Long-term-care insurance seemed like such a great idea. Buy a policy when you’re in your 50s or 60s, while you’re still relatively healthy, pay your monthly premiums and in return you’ll have help managing the astronomical costs of a nursing home, assisted-living facility or personal aide when the time comes. … But long-term-care insurance hasn’t exactly worked out that way”
In general the Long Term Care insurance market has stabilized, meaning less potential rate increases for in force policies sold today. However costs of new policies will need to continue raising rates as inflation occurs to keep up with the market over the long term. This is one very good reason for your clients purchasing policies earlier when they can afford the premiums and are at their most healthy.
Ironically, the same problems the article recounts besetting LTC insurance, a relatively small payer, also apply to Medicaid, the major LTC payer. For example: higher premiums for LTCI? Compare decades of exploding costs for Medicaid. Insurance actuaries underestimated LTC costs? Where were the Medicaid actuaries? Assisted living popularity caught LTCI carriers by surprise? Medicaid continues to expand ALF and HCBS coverage which people prefer with no end in sight. Low lapse rates hurt LTCI? Medicaid is the LTC default with no lapses possible to mitigate future costs. Low interest rates hurt LTCI? Imagine what will happen to Medicaid and all the entitlement programs when interest rates return to the norm and the federal government can’t afford the carrying costs for $21 trillion in debt, not to mention another $100 trillion or more of unfunded liabilities. If you think private LTC insurance disappointed, just wait until you see the inevitable outcome for its public sector alternatives.
Help your clients navigate the LTC market now and put them in a good position.