Long Term Care Insurance

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path2thecenter
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Joined: Sat Jul 01, 2017 2:11 pm

Long Term Care Insurance

Post by path2thecenter »

I purchased a long term care policy 7 years ago for me (51 yrs old) and my wife (58 yrs old) through Calpers. We pay $350/month. They are raising rates by 77%. They are also no longer allowing new applicants due to the "uncertainty of the long term care market". Although I've invested a lot into this program over the past seven years, I've written a letter to cancel the policies, but just can't seem to send it yet. I suspect the whole program will slowly go down the drain while premiums will continue to increase. I've heard of seniors getting forced out due to premium increases after 30 years of paying into it! I'm thinking I should cut my losses now and put those premiums toward long term index funds. Does anyone have any advice that can help me think through this? I think I made a horrible mistake by purchasing the policies, but terminating them now could end up to be a mistake, too.
chemocean
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Re: Long Term Care Insurance

Post by chemocean »

I understand that the cost of the premiums is due to 1) coverage from the policies being used more that predicted, and 2) not as many people cancelling their policies early as predicted. For my perspective, the fact that that the premiums are going up suggests that I am more likely to need the coverage in the future. If you cancel, I hope you are in my cohort so as to keep my premiums down (factor 2).
Rex66
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Re: Long Term Care Insurance

Post by Rex66 »

Need more data about the policy
Likely you have several options on price vs benefits going forward

It may or may not have been a mistake to purchase but likely you should keep it
Silk McCue
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Re: Long Term Care Insurance

Post by Silk McCue »

I would shop new policies given your ages assuming you are still in good health and see how they compare. You might be served better by the newer generation of Partnership Policies that have superior terms and protection against these kind of over the top increases.

Cheers
Rex66
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Re: Long Term Care Insurance

Post by Rex66 »

Very unlikely a new policy will provide the same benefits

Highly likely even with price increase, it’s cheaper than a new with the same benefits.
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ResearchMed
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Re: Long Term Care Insurance

Post by ResearchMed »

path2thecenter wrote: Mon Jun 14, 2021 8:01 pm I purchased a long term care policy 7 years ago for me (51 yrs old) and my wife (58 yrs old) through Calpers. We pay $350/month. They are raising rates by 77%. They are also no longer allowing new applicants due to the "uncertainty of the long term care market". Although I've invested a lot into this program over the past seven years, I've written a letter to cancel the policies, but just can't seem to send it yet. I suspect the whole program will slowly go down the drain while premiums will continue to increase. I've heard of seniors getting forced out due to premium increases after 30 years of paying into it! I'm thinking I should cut my losses now and put those premiums toward long term index funds. Does anyone have any advice that can help me think through this? I think I made a horrible mistake by purchasing the policies, but terminating them now could end up to be a mistake, too.
What is your more general financial situation, especially with respect to future long term care if you do not keep this coverage. That matters.

Perhaps your need now is less, if you've accumulated enough to cover such care?
Or perhaps you don't really have enough, or not yet, etc.

Try to think through it from a "We are here, now" perspective.
Forget those previous premiums; those are sunk costs. What matters now is... from this point on.

It also makes a difference what those policies include: the benefits. Some older policies are looking very good these days, and those terms are no longer available.

RM
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BruDude
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Re: Long Term Care Insurance

Post by BruDude »

Did they give you any options of reducing the inflation protection or benefits to keep the cost the same? If it’s been compounding at something like 5% per year already and you reduce to 3% it might still be fine without a huge jump in price. But yes that is one of the unfortunate problems with LTC insurance in general.
mrsgoldilocks
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Re: Long Term Care Insurance

Post by mrsgoldilocks »

The last 7 years of money into the LTC insurance is a sunk cost. Yes, it's very painful to see it gone, but it shouldn't really affect your current decision to continue the LTC.

Can you check if it's possible that you and your wife can be self-insured? you can use projection based on your asset allocation to get a sense of where your balance will be when you're 80. Plus, a lot of care at the old age can managed by having a part time helper in the house; that will be drastically lower in cost compared to a nursing home or facility.

While I don't know much details, I am leaning towards not paying the premium and just walk away. Now, you're still in 50s, and you're facing a 77% hike. Who know what will happen in 10, 20 or 30 years. Since it is really a long time to project and your insurance is totally in the hands of how the insurance company operates and how the market is. There are so many unknowns to continue.
Topic Author
path2thecenter
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Re: Long Term Care Insurance

Post by path2thecenter »

Thanks for the replies. This is a great forum. There's no easy answer for anyone who is facing large premium increases or is thinking about purchasing LTC insurance. For those who asked for details of the policy:

Total coverage amount = $342K per person with 3% constant inflation protection (not compounded).
$313/day for assisted living
$9,375 / month for home care
90 day deductible period

To keep this coverage, premium for both me and my wife will increase from $346 to $612. Calpers raised premiums by 100% about 8 years ago. My concern is that we will be in retirement eventually and premiums will become unaffordable. The dilemma of terminating will become more and more difficult. If the premium were to double every 7 to 10 years, we could be hit with $2,400/month premiums by the time I'm in my early 70s! I can't imagine how difficult it would be to either keep paying at that point or to terminate after paying for so many years.

They also say they are raising premiums because they can't get investment returns in this low interest rate environment. Did they miss out on this 13 yr bull market for stocks?? If the S&P500 does average over the next 20 to 30 years, I suspect I could self insure by allocating $1,000 per month for this purpose alone. Assuming a 7% return for 25 years, that would equal $759K. It's really the risk of any tragedy in the short term that could ruin us. If stocks do poorly, well I can guarantee they will have no choice, but to increase premiums anyway to fund the program.

I'm leaning toward possibly keeping the insurance but eliminating the inflation protection to keep premiums lower. This will still offer a little protection in case something tragic were to occur during the next 15 years or so. For needs beyond 20+ years, I might add $1,000 per month to my 401k roth and just consider that to be my long term care fund. I just don't know.
Sandwich
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Re: Long Term Care Insurance

Post by Sandwich »

path2thecenter wrote: Tue Jun 15, 2021 6:37 pm ....
Total coverage amount = $342K per person with 3% constant inflation protection (not compounded).
$313/day for assisted living
$9,375 / month for home care
90 day deductible period
....
So it looks like your policy "benefit period" is 3 years with an average monthly premium of $ 300+ for each of you. I can see why you are considering discontinuing the insurance.

As a contrast, I have an mid 80s relative with a LTC policy with a benefit period of 3 years, monthly premium approximately $ 120 per month. Daily benefit amount of $ 200. She has had the contract for 19 years so perhaps the longevity is also a factor in the premium.
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Allocationist
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Re: Long Term Care Insurance

Post by Allocationist »

I believe there is a class-action lawsuit against CalPERS because to the large premium increases for their long-term care insurance program. You may wish to wait until the court rules on the lawsuit before making a decision.
Point
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Re: Long Term Care Insurance

Post by Point »

What’s you’ve paid in prior years isn’t sunk cost as it has no value other than positioning you in a rate and benefit plan at a point in time. The beauty is had you needed it, it would have been there for you. It may not be the case moving forward. Some offerings in CA have gone upside down and the state comes in at 50% of benefits.

Take a good look ar your family history, your medical history and ask yourself if you’ll have a need, at what age, and for what. Compare the plan you have and the expected costs to determine what you’ll need given that these plans are limiting in terms of years of coverage, prerequisites, activities of daily living, and number of years max coverage.

You may find that at 350/month increasing at 5% annually x two people, invested for a number of years may meet your predicted need.
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Allocationist
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Re: Long Term Care Insurance

Post by Allocationist »

On July 22, 2021 the court hearing the CalPERS LTC case granted preliminary approval of the class action settlement reached with CalPERS. More information is available at:

http://www.calpersclassactionlawsuit.com/index.html

The information includes a transcript of the hearing and a Power Point presentation that summarizes the tentative settlement.

The Power Point presentation includes estimates for potential replacement policies for certain members of the class funded by a full refund of all payments made into the CalPERS program. My layman interpretation of the potential replacement polices make them a poor choice. Two better choices, IMO, may be to accept a total refund of all premiums paid and "self-insure" or stick with the CalPERS LTC program perhaps with the reduced premium/benefit options.

Hope this helps :happy
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JaneyLH
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Re: Long Term Care Insurance

Post by JaneyLH »

I don't know if this will be helpful, but my husband and I bought LTC policies from John Hancock at about the same time that you did. We pay about $215/month for a 6-year policy with a 5% inflation increase per year. This is after two small annual price increases.
Last edited by JaneyLH on Tue Aug 03, 2021 3:52 pm, edited 1 time in total.
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ResearchMed
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Re: Long Term Care Insurance

Post by ResearchMed »

JaneyLH wrote: Sun Aug 01, 2021 8:02 pm I don't know if this will be helpful, but my husband and I bought LTC policies from John Hancock at about the same time that you did. We pay about $215/year for a 6-year policy with a 5% inflation increase per year. This is after two small annual price increases.
$215 per *year*?
What amount of coverage per day does that get you?

RM
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JaneyLH
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Re: Long Term Care Insurance

Post by JaneyLH »

ResearchMed wrote: Sun Aug 01, 2021 8:06 pm
JaneyLH wrote: Sun Aug 01, 2021 8:02 pm I don't know if this will be helpful, but my husband and I bought LTC policies from John Hancock at about the same time that you did. We pay about $215/month for a 6-year policy with a 5% inflation increase per year. This is after two small annual price increases.
$215 per *year*?
What amount of coverage per day does that get you?

RM
[See ResearchMed's post below --admin LadyGeek]
Last edited by JaneyLH on Tue Aug 03, 2021 11:51 am, edited 2 times in total.
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JoeRetire
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Re: Long Term Care Insurance

Post by JoeRetire »

path2thecenter wrote: Mon Jun 14, 2021 8:01 pm Although I've invested a lot into this program over the past seven years, I've written a letter to cancel the policies, but just can't seem to send it yet.
You didn't invest anything - you paid insurance premiums. And what you paid over the past seven years is a sunk cost. The only thing that matters now is if you want to pay the $620/month premiums and be covered by the insurance or not.

How much do you estimate you would have to save to cover the amount that your LTC insurance now covers?
I suspect the whole program will slowly go down the drain while premiums will continue to increase.
I don't know what "slowly go down the drain" means in this context. But if you feel this way, why are you continuing to pay the premiums?
Last edited by JoeRetire on Sun Aug 01, 2021 8:30 pm, edited 1 time in total.
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Silk McCue
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Re: Long Term Care Insurance

Post by Silk McCue »

JaneyLH wrote: Sun Aug 01, 2021 8:10 pm
ResearchMed wrote: Sun Aug 01, 2021 8:06 pm
JaneyLH wrote: Sun Aug 01, 2021 8:02 pm I don't know if this will be helpful, but my husband and I bought LTC policies from John Hancock at about the same time that you did. We pay about $215/month for a 6-year policy with a 5% inflation increase per year. This is after two small annual price increases.
$215 per *year*?
What amount of coverage per day does that get you?

RM
FYI - your reply didn’t include a reply, just the prior quoted post. You can use the pencil icon to edit that post.

Cheers
bsteiner
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Re: Long Term Care Insurance

Post by bsteiner »

Unless something were to happen in the near future, there isn't that much insurance in it. If you were to invest the $7,000 or so for the next 30 or so years it would grow to a significant percentage of the maximum benefit. It might be better to have a policy that paid for life, but not for the first 3 years of care, rather than for the first 3 years of care. That probably would cost much less. However, I'm not aware of any such policies.
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JaneyLH
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Re: Long Term Care Insurance

Post by JaneyLH »

Silk McCue wrote: Sun Aug 01, 2021 8:30 pm
JaneyLH wrote: Sun Aug 01, 2021 8:10 pm
ResearchMed wrote: Sun Aug 01, 2021 8:06 pm
JaneyLH wrote: Sun Aug 01, 2021 8:02 pm I don't know if this will be helpful, but my husband and I bought LTC policies from John Hancock at about the same time that you did. We pay about $215/month for a 6-year policy with a 5% inflation increase per year. This is after two small annual price increases.
$215 per *year*?
What amount of coverage per day does that get you?

RM
FYI - your reply didn’t include a reply, just the prior quoted post. You can use the pencil icon to edit that post.

Cheers
Thank you for pointing that out. Just corrected it.
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JaneyLH
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Re: Long Term Care Insurance

Post by JaneyLH »

JaneyLH wrote: Sun Aug 01, 2021 8:10 pm
ResearchMed wrote: Sun Aug 01, 2021 8:06 pm
JaneyLH wrote: Sun Aug 01, 2021 8:02 pm I don't know if this will be helpful, but my husband and I bought LTC policies from John Hancock at about the same time that you did. We pay about $215/month for a 6-year policy with a 5% inflation increase per year. This is after two small annual price increases.
$215 per *year*?
What amount of coverage per day does that get you?

RM
Our approximate $2600/year/person policy started out @$6000 monthly benefit and has 5% annual inflation.
Last edited by JaneyLH on Tue Aug 03, 2021 3:40 pm, edited 1 time in total.
Chuckles960
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Re: Long Term Care Insurance

Post by Chuckles960 »

JaneyLH wrote: Tue Aug 03, 2021 12:24 pm Our approximate $2600/year/person policy started out @$6000 annual benefit and has 5% annual inflation.
$6000 annual benefit is $16 per day, which doesn't buy a lot of care.

$215/year would be a reasonable premium for this.
.
Last edited by Chuckles960 on Tue Aug 03, 2021 1:10 pm, edited 1 time in total.
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starboi
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Re: Long Term Care Insurance

Post by starboi »

Chuckles960 wrote: Tue Aug 03, 2021 12:40 pm
JaneyLH wrote: Tue Aug 03, 2021 12:24 pm Our approximate $2600/year/person policy started out @$6000 annual benefit and has 5% annual inflation.
$6000 annual benefit is $16 per day, which doesn't buy a lot of care.
It's good for a couple lattes from Starbucks! :beer
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JaneyLH
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Re: Long Term Care Insurance

Post by JaneyLH »

Chuckles960 wrote: Tue Aug 03, 2021 12:40 pm
JaneyLH wrote: Tue Aug 03, 2021 12:24 pm Our approximate $2600/year/person policy started out @$6000 annual benefit and has 5% annual inflation.
$6000 annual benefit is $16 per day, which doesn't buy a lot of care.

$215/year would be a reasonable premium for this.
.
So sorry — tried to fix my earlier mistake quickly but just made it worse! We each pay about $2600 per year and our initial amount of coverage was $6000 per month. That coverage increases each year @5%.
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JaneyLH
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Re: Long Term Care Insurance

Post by JaneyLH »

ResearchMed wrote: Sun Aug 01, 2021 8:06 pm
JaneyLH wrote: Sun Aug 01, 2021 8:02 pm I don't know if this will be helpful, but my husband and I bought LTC policies from John Hancock at about the same time that you did. We pay about $215/month for a 6-year policy with a 5% inflation increase per year. This is after two small annual price increases.
$215 per *year*?
What amount of coverage per day does that get you?

RM
[See ResearchMed's post below (next post) --admin LadyGeek]
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ResearchMed
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Re: Long Term Care Insurance

Post by ResearchMed »

JaneyLH wrote: Tue Aug 03, 2021 3:53 pm
ResearchMed wrote: Sun Aug 01, 2021 8:06 pm
JaneyLH wrote: Sun Aug 01, 2021 8:02 pm I don't know if this will be helpful, but my husband and I bought LTC policies from John Hancock at about the same time that you did. We pay about $215/month for a 6-year policy with a 5% inflation increase per year. This is after two small annual price increases.
$215 per *year*?
What amount of coverage per day does that get you?

RM
It's better form not to edit someone else's embedded writing, and especially not without any comment. Instead, if you want to fix something that you originally posted, you could either quote the entire comment AS IS, and then mention below the quoted section what should be corrected. (And fix your original first, as soon as you realize you want to make a correction.)
Or, PM the person who quoted your mistake, after you've corrected *your* original, and ask if they might fix the error, perhaps with a comment about the correction.

These will help avoid confusion by others who come across the posts.

RM
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VanGar+Goyle
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Re: Long Term Care Insurance ( CalPERS )

Post by VanGar+Goyle »

Allocationist wrote: Sun Aug 01, 2021 1:01 pm On July 22, 2021 the court hearing the CalPERS LTC case granted preliminary approval of the class action settlement reached with CalPERS. More information is available at:

http://www.calpersclassactionlawsuit.com/index.html

The information includes a transcript of the hearing and a Power Point presentation that summarizes the tentative settlement.

The Power Point presentation includes estimates for potential replacement policies for certain members of the class funded by a full refund of all payments made into the CalPERS program. My layman interpretation of the potential replacement polices make them a poor choice. Two better choices, IMO, may be to accept a total refund of all premiums paid and "self-insure" or stick with the CalPERS LTC program perhaps with the reduced premium/benefit options.

Hope this helps :happy


I would be very surprised if you got a total refund of all premiums paid. Long term care return of premium may not mean what you think it means. The state department of insurance page is down now, but documents many requests for raising LTC rates over 60%.
You may need to see if you still can afford and need LTC, and shop for a better policy.
Your old policy may have been a good deal, but not as good as you hoped.
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OpenMinded1
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Re: Long Term Care Insurance

Post by OpenMinded1 »

My wife and I got policies at about the same time as the OP. She was 51 and I was 55. We have had one relatively small premium increase. We pay $308 total per month.

MY INFO: Monthly Premium - $137, Will pay up to $197 per day, 3-year benefit period, Max benefit - $216,142 , 90-day waiting period, 4% yearly inflation adjustment.

HER INFO: Monthly Premium - $171, Will pay up to $211 per day, 3-year benefit period, Max benefit - $231,122, 90-day waiting period, 5% yearly inflation adjustment.
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WoodSpinner
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Re: Long Term Care Insurance

Post by WoodSpinner »

path2thecenter wrote: Mon Jun 14, 2021 8:01 pm I purchased a long term care policy 7 years ago for me (51 yrs old) and my wife (58 yrs old) through Calpers. We pay $350/month. They are raising rates by 77%. They are also no longer allowing new applicants due to the "uncertainty of the long term care market". Although I've invested a lot into this program over the past seven years, I've written a letter to cancel the policies, but just can't seem to send it yet. I suspect the whole program will slowly go down the drain while premiums will continue to increase. I've heard of seniors getting forced out due to premium increases after 30 years of paying into it! I'm thinking I should cut my losses now and put those premiums toward long term index funds. Does anyone have any advice that can help me think through this? I think I made a horrible mistake by purchasing the policies, but terminating them now could end up to be a mistake, too.
FWIW, we are in a similar position via Calpers LTC but my initial premiums are lower and I purchased in my forties

I am going to keep the insurance since it’s still a good value (relative to the market) and a LTC event may crop up sooner rather than later.

Here are a couple of thoughts:
  1. Price a new policy on the open market compared to Calpers
  2. Consider cutting back on the coverage and taking on partial funding for LTC
  3. Review your Retirement plan to see if you have enough to self fund (I am using $1MM as a rough placeholder)
It was great while it lasted and I wish it would continue.

Please keep us updated …

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WoodSpinner
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Re: Long Term Care Insurance

Post by WoodSpinner »

Allocationist wrote: Sun Aug 01, 2021 1:01 pm On July 22, 2021 the court hearing the CalPERS LTC case granted preliminary approval of the class action settlement reached with CalPERS. More information is available at:

http://www.calpersclassactionlawsuit.com/index.html

The information includes a transcript of the hearing and a Power Point presentation that summarizes the tentative settlement.

The Power Point presentation includes estimates for potential replacement policies for certain members of the class funded by a full refund of all payments made into the CalPERS program. My layman interpretation of the potential replacement polices make them a poor choice. Two better choices, IMO, may be to accept a total refund of all premiums paid and "self-insure" or stick with the CalPERS LTC program perhaps with the reduced premium/benefit options.

Hope this helps :happy
:sharebeer

Thanks for the info! I was not aware of the lawsuit or settlement!

Will review…

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dougp29
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Re: Long Term Care Insurance

Post by dougp29 »

I bought CalPers Long-Term Care policy when it came out in 1995. I initially paid $61 a month for the policy, which includes a 5% inflation benefit and lifetime coverage. A newly announced rate increase will raise my premium to about $470 a month this November and by another 25% next year. I have serious concerns about the solvency of CalPers Long-Term Care. (I've recently spent hours reading every article posted online about the insurance and the lawsuit.) CalPers Long-Term Care is not a part of CalPers, and it is also NOT regulated by the California Department of Insurance. In my case, I'm included in the Class covered by the lawsuit, and if the settlement is given final approval next Spring, I will receive all my premiums back (approximately $47,000) if I surrender my policy, which I will do.

The first thing I would do, if I were in your situation, would be to read about the lawsuit that was preliminarily approved by the Court on July 22. As others have said, all the information is included on this website: www.calpersclassactionlawsuit.com. It's important to see if you are a member of the Class. The lawsuit, as I understand it, only pertains to those who purchased an inflation-protected policy and who were subject to drastic rate increases announced in 2013. But please read through the document yourself to verify that.

Had I known that CalPers Long-Term Care was not a part of CalPers and that CalPers Long-Term Care is not subject to regulation by the California Department of Insurance when I bought in 1995, I would not have purchased the coverage. That information was omitted from all documentation.
SanseiWarrior
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Re: Long Term Care Insurance

Post by SanseiWarrior »

Doug,
I am a similar situation to you, buying into CalPERS LTC in 2000 for my wife and me. We have paid about $75,000 in premiums. I am really at a loss on what to do. If I opt out of the lawsuit do I pay another huge rounds of increases to maintain my current coverage or reduce benefits to offset the increases? Do I opt in and received past premiums paid, but what do I do about LTC?

Doug, do you have a plan on what you are going to do?
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Re: Long Term Care Insurance

Post by BruDude »

SanseiWarrior wrote: Mon Aug 16, 2021 5:56 pm Doug,
I am a similar situation to you, buying into CalPERS LTC in 2000 for my wife and me. We have paid about $75,000 in premiums. I am really at a loss on what to do. If I opt out of the lawsuit do I pay another huge rounds of increases to maintain my current coverage or reduce benefits to offset the increases? Do I opt in and received past premiums paid, but what do I do about LTC?

Doug, do you have a plan on what you are going to do?
I think we may have spoke on the phone earlier today. Small world!
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WoodSpinner
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Re: Long Term Care Insurance

Post by WoodSpinner »

dougp29 wrote: Sat Aug 07, 2021 9:04 am I bought CalPers Long-Term Care policy when it came out in 1995. I initially paid $61 a month for the policy, which includes a 5% inflation benefit and lifetime coverage. A newly announced rate increase will raise my premium to about $470 a month this November and by another 25% next year. I have serious concerns about the solvency of CalPers Long-Term Care. (I've recently spent hours reading every article posted online about the insurance and the lawsuit.) CalPers Long-Term Care is not a part of CalPers, and it is also NOT regulated by the California Department of Insurance. In my case, I'm included in the Class covered by the lawsuit, and if the settlement is given final approval next Spring, I will receive all my premiums back (approximately $47,000) if I surrender my policy, which I will do.

The first thing I would do, if I were in your situation, would be to read about the lawsuit that was preliminarily approved by the Court on July 22. As others have said, all the information is included on this website: www.calpersclassactionlawsuit.com. It's important to see if you are a member of the Class. The lawsuit, as I understand it, only pertains to those who purchased an inflation-protected policy and who were subject to drastic rate increases announced in 2013. But please read through the document yourself to verify that.

Had I known that CalPers Long-Term Care was not a part of CalPers and that CalPers Long-Term Care is not subject to regulation by the California Department of Insurance when I bought in 1995, I would not have purchased the coverage. That information was omitted from all documentation.
Well it turns out I am part of the class (must have forgotten about enrolling) and just received my letter outlining my options. My current thinking is to pass and keep the LTC coverage.

Although the timing of the latest rate increase has me re-considering my options but my costs are much lower than yours. See this post for details of the latest increase.

The costs even with the rate increase(s) still seem to be a good deal and I think this type of insurance is valuable.

Are you saying that the current Calpers LTC product offered is not regulated by the state Insurance commissioner? If so, who regulates it? Any links would be appreciated.

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jhawktx
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Re: Long Term Care Insurance

Post by jhawktx »

This should be a cautionary tale for anyone thinking of getting suckered into LTC insurance. 77% increase! Wow...just wow.
Silk McCue
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Re: Long Term Care Insurance

Post by Silk McCue »

jhawktx wrote: Tue Aug 17, 2021 7:00 am This should be a cautionary tale for anyone thinking of getting suckered into LTC insurance. 77% increase! Wow...just wow.
This is the horror story for older policies. Long term care partnership policies that are available in a majority of states deal with this. Premium increase must be approved by the State in which they are sold and the insurance company will be required to reduce their profit on the policy if they get the rate increase.

https://www.aaltci.org/long-term-care-i ... -plans.php

Cheers
VanGar+Goyle
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Re: Long Term Care Insurance

Post by VanGar+Goyle »

WoodSpinner wrote: Mon Aug 16, 2021 10:35 pm
dougp29 wrote: Sat Aug 07, 2021 9:04 am I bought CalPers Long-Term Care policy when it came out in 1995. I initially paid $61 a month for the policy, which includes a 5% inflation benefit and lifetime coverage. A newly announced rate increase will raise my premium to about $470 a month this November and by another 25% next year. I have serious concerns about the solvency of CalPers Long-Term Care. (I've recently spent hours reading every article posted online about the insurance and the lawsuit.) CalPers Long-Term Care is not a part of CalPers, and it is also NOT regulated by the California Department of Insurance. In my case, I'm included in the Class covered by the lawsuit, and if the settlement is given final approval next Spring, I will receive all my premiums back (approximately $47,000) if I surrender my policy, which I will do.

The first thing I would do, if I were in your situation, would be to read about the lawsuit that was preliminarily approved by the Court on July 22. As others have said, all the information is included on this website: www.calpersclassactionlawsuit.com. It's important to see if you are a member of the Class. The lawsuit, as I understand it, only pertains to those who purchased an inflation-protected policy and who were subject to drastic rate increases announced in 2013. But please read through the document yourself to verify that.

Had I known that CalPers Long-Term Care was not a part of CalPers and that CalPers Long-Term Care is not subject to regulation by the California Department of Insurance when I bought in 1995, I would not have purchased the coverage. That information was omitted from all documentation.
Well it turns out I am part of the class (must have forgotten about enrolling) and just received my letter outlining my options. My current thinking is to pass and keep the LTC coverage.

Although the timing of the latest rate increase has me re-considering my options but my costs are much lower than yours. See this post for details of the latest increase.

The costs even with the rate increase(s) still seem to be a good deal and I think this type of insurance is valuable.

Are you saying that the current Calpers LTC product offered is not regulated by the state Insurance commissioner? If so, who regulates it? Any links would be appreciated.

WoodSpinner
The California Department of Insurance only lists only 9 active companies for LTC. http://www.insurance.ca.gov/01-consumer ... active.cfm
Bankers Life And Casualty Company - NAIC 61263
Genworth Life Insurance Company - NAIC 70025
Massachusetts Mutual Life Insurance Company - NAIC 65935
Mutual Of Omaha - NAIC 71412
New York Life Insurance Company - NAIC 66915
Northwestern Long Term Care Insurance Company - NAIC 69000
Transamerica Life Insurance Company - NAIC 86231
Knights Of Columbus - NAIC 58033: The company reported that they do not have LTC rate increase history.
Thrivent Financial - NAIC 56014: The company reported that they do not have LTC rate increase history.

There are thousands of rate increases listed, some over 160%, some initially offered by other companies.
This lawsuit only involves the 85% premium increase that was announced by CalPERS in February 2013.
They seem to raise rates every 4 or 5 years. I would read all the FAQs on the classactionlawsuit site,
as there are many interesting details involving getting full refund, or not paying future premiums.
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WoodSpinner
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Re: Long Term Care Insurance

Post by WoodSpinner »

As I understand it, the policy is actually via Genworth (at least that is the company mentioned in their correspondence). I will review the FAQs as suggested.

I am including details of the policy below, would love some insights on its cost vs. value.

Option 1 - Benefit Amounts:
Nursing Home Daily Max: $300
Assisted Living Daily Max: $150
Home & Community Care Monthly Max: $4,950
Total Coverage Max: $1,095,000
Total Coverage Years Min: 10 Years
New Quarterly Premium: $557.25. (up 52% from current rates)

Option 2 - Benefit Amounts:
Nursing Home Daily Max: $300
Assisted Living Daily Max: $150
Home & Community Care Monthly Max: $4,950
Total Coverage Max: $328,500 (this is the BIG change)
Total Coverage Years Min: 3 Years
New Quarterly Premium: $321.70. (Current Rates)

Both options carry a possible 25% further increase in 2022 ....

Even with this increase it seems like a good value to me….

Anything else I might be missing?

WoodSpinner
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Dylan
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Re: Long Term Care Insurance

Post by Dylan »

There is the possibility of future additional cost increases. I believe that CalPERS may discontinue the LTC program if a small number of participants choose to remain in it. The possible consequences of that are unclear to me. I see that the attorneys for the plaintiffs have scheduled webinars on Aug. 20th, Aug. 25th, Sept. 3rd and Sept. 10th. Details are available at https://www.calpersltcclassaction.com/
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Re: Long Term Care Insurance

Post by Dylan »

Surprisingly because the CalPERS Long Term Care policy was offered through a government agency it does not fall under the regulation of the California Department of Insurance, nor does the state bear responsibility for backing up the obligations of the issuer of the coverage. Those factors were not communicated to all policy holders at the time of purchase. CalPERS has agreed to the settlement. If the settlement receives final court approval in the summer of 2022, certain purchasers who opted into the class action lawsuit earlier this year and whose policies are currently in force at the time of the settlement may receive a refund of premiums paid; however, no interest will be included. As with many class action lawsuits, most proceeds go to the attorneys. I am considering either taking the refund of premiums or a prepaid LTC policy through an insurance company if it becomes available. For now I have reduced my CalPERS LTC coverage and monthly premium.
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AnnetteLouisan
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Re: Long Term Care Insurance

Post by AnnetteLouisan »

I have a John Hancock policy through my job and pay $63/mo, up from $55 ten years ago (started early when I was 44 because they waived underwriting). I’m in the demographic it makes sense for: I can’t self insure but I have enough to afford the policy and not to want to see it lost to nursing home care, plus I am single with longevity risk, and its longer lived people who tend to get old enough to actually need it.

The broker told me -after I peppered him with 50 questions and noted my aversion to large rate increases- that the way to minimize premium increases is to get a large daily amount but no inflation protection. He said it’s the inflation protection feature that generally triggers large increases and getting a high dollar amount is effectively accomplishes inflation protection without the premium volatility. my coworkers who got it around the same time but were a little older got large, alarming increases and I didn’t .... make of that what you will.
Last edited by AnnetteLouisan on Fri Oct 01, 2021 7:46 am, edited 2 times in total.
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willthrill81
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Re: Long Term Care Insurance

Post by willthrill81 »

We were told that states' laws against such huge premium increases would curtail the problem, but they apparently haven't. Others have recently complained about this very issue in other states.

I would strongly consider cancelling the policy and self-insuring, if you're able. The likelihood of you and your spouse consuming more than $300k of LTC over the course of your lives is tiny, and if you have something like $1.5 million or more in assets, you can just pay for it if needed. Yes, it's a big pill to potentially swallow, but so are the increasing premiums which will surely increase again in the future.
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Re: Long Term Care Insurance

Post by Silk McCue »

willthrill81 wrote: Thu Sep 30, 2021 7:51 pm We were told that states' laws against such huge premium increases would curtail the problem, but they apparently haven't. Others have recently complained about this very issue in other states.
Doesn’t that protection only apply to qualifying policies in states that are in the Long-Term Care Partnership program?

Cheers
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Re: Long Term Care Insurance

Post by willthrill81 »

Silk McCue wrote: Thu Sep 30, 2021 8:26 pm
willthrill81 wrote: Thu Sep 30, 2021 7:51 pm We were told that states' laws against such huge premium increases would curtail the problem, but they apparently haven't. Others have recently complained about this very issue in other states.
Doesn’t that protection only apply to qualifying policies in states that are in the Long-Term Care Partnership program?

Cheers
The way that WoW2012 seemed to me to describe it, it was in place in something like 49 states and covered all policies written for many years now.
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ResearchMed
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Re: Long Term Care Insurance

Post by ResearchMed »

willthrill81 wrote: Thu Sep 30, 2021 10:34 pm
Silk McCue wrote: Thu Sep 30, 2021 8:26 pm
willthrill81 wrote: Thu Sep 30, 2021 7:51 pm We were told that states' laws against such huge premium increases would curtail the problem, but they apparently haven't. Others have recently complained about this very issue in other states.
Doesn’t that protection only apply to qualifying policies in states that are in the Long-Term Care Partnership program?

Cheers
The way that WoW2012 seemed to me to describe it, it was in place in something like 49 states and covered all policies written for many years now.
I didn't quite get that impression.

Perhaps WoW2012 could post again, and maybe give the states that do have that type of limit on increases, and for each, for policies written starting with what date.
That could be really useful information.
(I wasn't able to find it clearly.)

RM
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willthrill81
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Re: Long Term Care Insurance

Post by willthrill81 »

ResearchMed wrote: Thu Sep 30, 2021 10:54 pm
willthrill81 wrote: Thu Sep 30, 2021 10:34 pm
Silk McCue wrote: Thu Sep 30, 2021 8:26 pm
willthrill81 wrote: Thu Sep 30, 2021 7:51 pm We were told that states' laws against such huge premium increases would curtail the problem, but they apparently haven't. Others have recently complained about this very issue in other states.
Doesn’t that protection only apply to qualifying policies in states that are in the Long-Term Care Partnership program?

Cheers
The way that WoW2012 seemed to me to describe it, it was in place in something like 49 states and covered all policies written for many years now.
I didn't quite get that impression.

Perhaps WoW2012 could post again, and maybe give the states that do have that type of limit on increases, and for each, for policies written starting with what date.
That could be really useful information.
(I wasn't able to find it clearly.)

RM
I found a post of his from back in February in another thread where he described the situation and am quoting it below.
WoW2012 wrote: Sun Feb 21, 2021 11:30 am It is true that many of the older long-term care insurance policies have had large premium increases. Fortunately, insurance regulators today do not allow the new long-term care policies to use the old pricing methods.

To prevent rate increases, 41 states have enacted very strict pricing regulations for new policies. It's called the Rate Stability Regulation.

For an insurance company to get approval to sell a new long-term care insurance policy today, the policy must comply with the following pricing regulations:

It must include ALL prior rate increases in the pricing, and
It must include a pricing “cushion” (about 15%) as extra protection from rate increases.

For example, if the older policy sold by the insurance company cost $1,000 per year for X benefits and that policy had an 80% rate increase, a new policy with X benefits must be priced no less than $2,070. Here’s how that’s calculated:

$1,000 (older policy pricing)
plus 80% (older policy rate increase)
plus 15% (cushion)
= $2,070 (new policy pricing)

Additionally, these states have removed the profit incentive from rate increases. If an insurer requests a rate increase they have to lower their profits. Also, if they don't request a rate increase the insurers are rewarded with higher profit levels. (e.g. the "pricing cushion" can be turned into higher profits for them.

But, don't worry. You won't read this in the New York Times!
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Re: Long Term Care Insurance

Post by Silk McCue »

willthrill81 wrote: Thu Sep 30, 2021 10:57 pm

I found a post of his from back in February in another thread where he described the situation and am quoting it below.
WoW2012 wrote: Sun Feb 21, 2021 11:30 am It is true that many of the older long-term care insurance policies have had large premium increases. Fortunately, insurance regulators today do not allow the new long-term care policies to use the old pricing methods.

To prevent rate increases, 41 states have enacted very strict pricing regulations for new policies. It's called the Rate Stability Regulation.

For an insurance company to get approval to sell a new long-term care insurance policy today, the policy must comply with the following pricing regulations:

It must include ALL prior rate increases in the pricing, and
It must include a pricing “cushion” (about 15%) as extra protection from rate increases.

For example, if the older policy sold by the insurance company cost $1,000 per year for X benefits and that policy had an 80% rate increase, a new policy with X benefits must be priced no less than $2,070. Here’s how that’s calculated:

$1,000 (older policy pricing)
plus 80% (older policy rate increase)
plus 15% (cushion)
= $2,070 (new policy pricing)

Additionally, these states have removed the profit incentive from rate increases. If an insurer requests a rate increase they have to lower their profits. Also, if they don't request a rate increase the insurers are rewarded with higher profit levels. (e.g. the "pricing cushion" can be turned into higher profits for them.

But, don't worry. You won't read this in the New York Times!
As I understand it the older existing policies already approved for sale in those states are still available. And certainly any older polices not conforming will not be subject to the same standard. Hopefully WoW2012 will come along and elaborate.

Cheers
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WoodSpinner
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Re: Long Term Care Insurance

Post by WoodSpinner »

Dylan wrote: Thu Sep 30, 2021 6:30 pm Surprisingly because the CalPERS Long Term Care policy was offered through a government agency it does not fall under the regulation of the California Department of Insurance, nor does the state bear responsibility for backing up the obligations of the issuer of the coverage. Those factors were not communicated to all policy holders at the time of purchase. CalPERS has agreed to the settlement. If the settlement receives final court approval in the summer of 2022, certain purchasers who opted into the class action lawsuit earlier this year and whose policies are currently in force at the time of the settlement may receive a refund of premiums paid; however, no interest will be included. As with many class action lawsuits, most proceeds go to the attorneys. I am considering either taking the refund of premiums or a prepaid LTC policy through an insurance company if it becomes available. For now I have reduced my CalPERS LTC coverage and monthly premium.
Dylan,

Well it seems both of us assessed our situation and the information available in the Calpers policy and decided on different approaches. Should be interesting to see how it plays out. I hope we are both comfortable with our decisions in 20 years.

For others who have joined, I would be careful about using the Calpers situation and extending it to other LTC policies and providers. Calpers is a very different animal vs. purchasing LTC insurance on the open market.

WoodSpinner
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