Tough choices for some long-term care policyholders
He said he recently advised a 75-year-old California customer with an unlimited lifetime benefit policy — meaning his pool of benefits never runs out — to ignore the settlement offer because his policy allowed for a better way to control costs. Mr. Robinson recommended that the client switch to a six-year benefit period and reduce his daily benefit from $546 to $300. His premium will be $2,340 per year instead of the $16,400 he pays now, and he will still have a benefit limit of about $660,000. He can also invest his annual savings of $14,000 in future care. Even if Genworth gets approval for significant rate increases, Mr. Robinson said, the customer could afford to pay them, based on its lower rate.
“People have no idea they have options,” Mr Robinson said.
Here are some questions and answers about long-term care policies:
Where can I get help understanding a long-term care offer?
The settlement offer includes a customer service number, but if you have a financial advisor or insurance agent you trust, get their advice first, Mr. Robinson said. You can also try contacting your state’s federally funded State Health Insurance Assistance Program office, known as SHIP, said Mrs. Burns. SHIP advisors cannot make recommendations, but can help consumers understand their options, she said.
The New York Times recently published a helpful guide to long-term care insurance.
How likely are government regulators to approve large premium increases?
Regulators must balance the need for a company to raise rates to pay claims and remain solvent with the need for policyholders to pay for their cover, Ms Burns said. “It’s a terrible battle,” she said. Some states limit annual rate increases, so larger increases must be spread over time.
Some regulators, such as those in New York, are realizing that their previous increases may have been too modest given the scale of the problem. Genworth has also said it may sue states that refuse to approve “justified” increases.
My settlement letter has a deadline. What if I need more time?
Contact the customer service center listed in the letter, Mr. Robinson said. Deadlines vary, but he said he has found that some can offer a grace period of at least 45 days upon request.