QUESTION: I have a long-term care (LTC) policy that I purchased about 10 years ago and have just received a notice that my premium is going to increase by a substantial amount. I am provided with several options for reducing the premium amount but not sure what is best and how it will reduce the premium. Could you provide some information?
ANSWER: I have seen the type of letter you describe and have read the usual options available.
Before I talk about the changes available I would like to talk about what you are provided with when you first purchase a LTC policy.
When a person first decides to invest in a LTC policy the salesman provides them with information about the terms of the policy so they can compare one policy against another. These terms usually are spelled out as daily amount covered for care in a facility, number of years the policy will cover those expenses, elimination period and an inflation factor.
Each of these items carries a price tag and the premium is based on the cumulative amount.
When the issuing company increases the premium they usually send a letter which includes several options that you can select in order to reduce your premium. These options have provided you with new different coverage amounts and in turn have reduced the premium for that coverage.
Let’s talk about each item mentioned above. The daily amount covered for care in a facility usually falls between $100 and $250 a day. If you decide to lower this amount you will be covered for the lesser amount each day you are in a facility. With the cost of care charged by facilities I would not cut this amount too far, however, by lowering the amount of coverage you will reduce your premium.
The number of years of coverage reflects the amount of time the policy will pay. On many of these older policies I have seen the number of years being for “lifetime” – and this is a very expensive choice. Choices you may have in this area could be changed from “lifetime” to 3 years, 5 years, 6 years or 10 years. Reducing the number of years to a lesser coverage will greatly reduce the premium. It would seem that two year period is often what the options offer.
The elimination period is just a fancy term for deductible. Usually the elimination period is for 30 days, 60 days or 90 days. The longer the elimination period is helps reduce the cost of the premium. But you must remember that during the elimination period the policy does not pay and you are responsible for the cost of care. So if you selected 90 days you would be responsible for the first 3 months of care before your policy would begin to cover the cost.
The inflation factor increases your coverage by approximately 5% to 5 ½% each year. This attempts to keep your coverage in line with inflation. By eliminating the elimination factor your coverage will stay at the current level it is but your premium will be less.
The letter you have received should show you several options for reducing your coverage and lowering your premium. The items that are usually offered for change are reducing the number of years of your coverage and dropping the inflation coverage.
I hope this gives you an idea about what you can change and still keep good coverage should you need it.
If you have questions about the rate increase you can call the California Department of Insurance at 1-800-927-4387. If you need help understanding the choices provided you can call the Advocate’s office at (805) 495-6250.
SATURDAY – September 7 – 6:30 to 10:00 pm – Dance – Goebel Center Ballroom Dance – doors open 6:00 pm – dance lesson – 6:30 to 7:20 (West Coast Swing); dance begins at 7:30 – at Goebel Adult Community Center, 1385 E. Janss Road. Tickets are $10 – cash or check only. For more information call (805) 381-2744.
SATURDAY – – September 14 – 5:00 pm – Sock Hop – Live music, dancing & dinner – at Goebel Adult Community Center. Tickets are $10 and available at Goebel Center Front Desk. For more information call (805) 381-2744.
Betty Berry is a senior advocate for Senior Concerns. The advocates are located at the Goebel Adult Community Center, 1385 E. Janss Road, Thousand Oaks CA 91362 or call (805) 495-6250 or e-mail (please include your telephone number.) You are invited to submit questions on senior issues.

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