Why insurance premiums have gone up so much in recent years
Insurance companies can raise premiums, which will increase your costs over time - and past history indicates that premiums will likely rise. The issue with long-term care premium increases is not unique to Washington state. It’s a nationwide trend.
Long-term care insurance is a fairly new product and early policies were significantly under priced. Most insurance companies underestimated the cost of paying claims and overestimated the number of people canceling the policies.
Insurance companies have to adjust premiums to compensate for inaccurate pricing assumptions so there are enough reserves to pay long-term care claims under each plan. If rate increases didn’t occur, the insurance carriers could run into financial trouble, leaving them unable to pay claims.
If you're thinking about buying a policy, be sure to ask about the company's history of premium increases for all long-term care policies, not just the one you're considering buying.
Reviewing and approving proposed rate increases
- Under Washington state law, all long-term care rates increases must be filed with and approved by our office.
- Within the company’s rate increase proposal, they must include supporting documentation (leg.wa.gov) to demonstrate their need for a rate increase.
- Our actuaries conduct a very thorough review of each long-term care rate increase filing to ensure the increase is necessary and complies with Washington state law.
- If the rate increase is justified and complies with our state’s law, we do not have a legal basis to deny it.
What to do if the increase is more than you can afford
Depending on the amount of the increase, you may have several options:
- Reduce your daily benefit.
- Reduce the benefit period duration. For example - decrease the period from five years to two.
- Increase the elimination period.
- Reduce the amount of your optional inflation protection.
- Choose the contingent non-forfeiture option. This option allows you to keep your policy in force and stop paying premiums. Your coverage does not end and the company provides benefits for qualified long-term care services covered under your policy - generally equivalent to the premiums you’ve paid.