Jan 8th, 2019
Long-Term Care Insurance remains a very affordable way to address the financial costs and burdens that come with aging. A national study of insurance companies shows premiums for new coverage in 2019 varies slightly from plans available in 2018.
It appears Long-Term Care Insurance premiums for newly approved policies will remain stable and affordable in 2019. The American Association for Long-Term Care Insurance (AALTCI), a national consumer education and advocacy group, released its initial data from its annual pricing study that has tracked costs data for over two decades.
According to the 2019 Long-Term Care Insurance Price Index shows prices for coverage have increased slightly overall compared to the prior year. Premiums are intended to remain level once you purchase a policy, a new policy is priced based on your age at application, health, family history, and the amount of benefits you wish to have in your policy.
“In general costs increased slightly compared to our 2018 analysis, but for many insurers, there was no increase compared to the prior year,” reports Jesse Slome, director of the AALTCI.
Insurance premiums are regulated and must be filed by each insurance company with the state’s department of insurance. Experts are indicating premiums should remain stable for new policies in 2020, although several asset-based "hybrid" policies will see refreshed rates.
The spread between the lowest and highest cost for virtually identical coverage was as high as 243 percent according to AALTCI’s 2019 Price Index analysis for a 55-year old couple.
“This is the largest spread I can recall in recent years,” Slome notes. “It’s rare to see one policy costing more than twice another policy when both are large insurers but each company gets to set their own pricing and each has their own target market,” he adds.
Most companies offer spousal or partner discounts and good health discounts. The younger you are the lower the premium will be.
“Married couples often benefit from a significant spousal discount,” Slome explained. Married couples or older adults living together purchase the majority of long-term care insurance policies the association director notes.
“There are smart ways to protect yourself and save money that agents may fail to suggest or consumer fail to take advantage of,” Slome noted. For example, Slome recommends married couples look into the shared care option where one spouse can use the benefit pool of the other. “Or, consider a two (2) percent inflation growth option instead of the three (3) percent which can save nearly 20 percent yearly,” he adds.
Slome says these features are not offered by all insurers. A Long-Term Care specialist often will be able to help compare the top companies and make appropriate recommendations based on your age, health and the number of assets you wish to protect.
Today’s Long-Term Care Insurance is also rate stable. Unlike legacy policies that were sold a decade ago before the interest rate crash and rate stabilization rules, today’s plans are priced correctly and are expected to remain level.
“Policies priced years ago using different assumptions have seen rate increases so consumers today assume they face the same risk,” Slome said. “That’s simply not the case.”
Slome says that actuaries responding to a research study conducted by the association see little or no the risk of needing future rate increases on recently priced policies. This means people can plan in their 40s or 50s and have peace-of-mind from a budgeting standpoint.
The AALTCI showed examples of premiums based on a 55-year-old couple. Depending on the benefit levels premiums can range from $2,465 annually (about $200 a month) for a couple. Long-Term Care Insurance is custom designed. Consumers, with the assistance of a licensed specialist, can design a plan to fit their budgets and concerns.
Many people can find coverage for under $100 a month depending on the benefit design, age, and health. 45 states offer special Long-Term Care Partnership policies that provide dollar-for-dollar asset protection.
There are also limited duration plans that are available in many states with a very affordable premium. Asset-based policies, with death benefits, can be paid on an annual basis with a guaranteed never to increase the premium. Single premium options are also available.
Start your online research by researching the cost of care services in your state. You will also discover tax incentives and the availability of special Long-Term Care Partnership plans which provide additional dollar-for-dollar asset protection.
A great research tool is the LTC NEWS cost of care calculator. This will show you both the current and future cost of care services where you live. This will assist you in determining how much benefit you will need to safeguard savings and income from the high costs of extended care.
LTC NEWS can also help you find a qualified LTC specialist. By using a specialist, instead of a general insurance agent or financial advisor, you can find the best plan at the best value based on your specific situation.
Like premium, underwriting criteria can vary dramatically from one company to another. In addition, tax incentives might be available to you a specialist can help you determine if you qualify for them.
One thing is for certain, the cost of Long-Term Care Insurance is always substantially less than the future cost of care services. Your spouse or adult children are not the best options to provide care. Caregiving is hard on loved ones and paid care is expensive and drains income and savings ... adversely impacting your lifestyle and legacy.