Long Term Care Insurance (LTCI) rates have continued to rise. Currently, in Massachusetts, LTCI providers are seeking permission for yet another rate increase. Part of the reason for the continuing increase in premiums is the low interest rate environment we are currently experiencing. LTCI providers earn interest on premiums received which helps them keep up with paying claims of other policy holders. As interest rates have declined in conjunction with the aging baby boomers who are increasingly receiving long term care, some LTCI providers are struggling to keep up and have discontinued issuing new policies.
Even though the premiums are rising, the benefits that may be paid in the future are still projected to be offset by the premiums paid. Also, having a LTCI policy is a great tool in asset preservation for couples. It’s also helpful for single people with adult children in that it lessens the financial burden on the adult children in caring for their parents. Even if you are single with no children and need to enter a nursing home or another long term care facility, a LTCI policy gives you a larger choice of facilities. Without a LTCI, if you have limited financial resources, you may need to apply for Medicaid to pay for your care. Most facilities only have a limited number of Medicaid eligible spots.
Here’s a link to a story on this issue in the Boston Globe: