Long Term Care Insurance Unaffected by Obamacare

One of the mandates behind Obamacare is to treat men and women equally under the health insurance umbrella. However, Long Term Care Insurance is not under the same guidelines so they will continue to charge more for women.

According to Genworth Financial, $2 out of every $3 claim dollars is for women. Women live longer than men and a big reason they require more claim dollars. Insurers will ratchet up rates on women who buy long term care insurance as a result. Women’s premiums are expected to increase 20-40%.

Long Term Care Insurance provides coverage for those unable to care for themselves in a nursing home or need partial care – assisted living. Costs for these services are very high if paying out of pocket. Insurance plans generally coverage a specific dollar amount of coverage for a specific number of years, typically two years or five years.

For example, a LTC policy might provide $200 per day coverage for 2 years.

The rising rates are not expected to impact existing clients or clients who apply together as husband and wife.

Insurers selling group health insurance, beginning 2014, will be able to vary rates based on geography, age, family size and tobacco use but not for gender. So far, Long Term Care plans have avoided this stipulation.

LTC Rates Rising in California

The California Public Employees Retirement System has announced plans to raise long term care insurance rates by 85% in 2015. Not all employees purchase the optional long term care insurance in their benefits package. But those who do will see their premiums nearly double. John Hancock raised rates by 40% and CNA Financial increased rates by 45%.

Long Term Care Insurance helps cover costs associated with nursing home assistance or assisted living. Most everyone knows someone who has been in a nursing home or in an assisted living facility. Costs are rising in both. It makes some wonder if the LTC industry will eventually be an insurance product that is only available to the very wealthy.

At least with life insurance almost everyone can afford a cheap term life insurance policy. That is, until you get into the retirement years when all life insurance is pricey. But long term care will eventually be a product that ceases to exist or becomes known as the rich man’s insurance plan. And you cannot blame the insurance industry. Costs are skyrocketing. They have to do what is needed to remain solvent and hopefully ensure profitability.

The long term care industry has seen staggering increases over recent years as they begin to experience an onslaught of claims. LTC sales took off in the 1980’s. Customers are now in their 70’s and 80’s or beyond and many are needing long term care assistance. Claims are rising. Many carriers sold policies that offered lifetime benefits for as long as the client lives and needs care. Life expectancy has risen and is causing issues with profitablity.

The economy is also causing issues for the insurance industry. Once upon a time, the insurance industry could put money into conservative and fixed investments and earn a sizable return on their hundreds of millions of dollars. Now, as everyone else knows, there are few places to earn a decent, safe return. The lack of investment opportunities is costing the insurance industry profits. And those fewer profits are being passed along to consumers as the need to not lose money on basic insurance products is more important than ever.