Long Term Care Pennsylvania
Parade story on long-term care insurance was inaccurate, misleading
by STEPHEN I. NUSSBAUM
As a professional long-term care planner and insurance agent, I believe the Feb. 17 Parade Magazine article "Do You Need Insurance for Long-Term Care?" was misleading and
irresponsible, not to mention factually incorrect.
First, the article is presented as a newsworthy informational item; in reality, it is an op-ed piece that should be noted as such. Second, we
know nothing about the author beyond her name. I would like to know her level of expertise and the extent to which her orientation or profession may have resulted in the obvious negative bias she displays toward LTC
insurance.
Based on some of her statements and prognostications, it sounds like she gleaned much of her material from interviews with the ubiquitous "experts" and one named attorney (who happens to
be suing a LTC company).
Specifically, her comments about the "inevitability of class-wide premium rate increases" is way off the mark. All risk-based insurance has the potential for future premium
rate increases. (Between 2002 and 2005, my homeowners insurance doubled).
A few renegade companies in poorly regulated states have increased their rates significanlty in the past, sometimes causing those
insured to lapse their policies. This result -- more the exception than the rule -- was often the consequence of intentional premium "low-balling" rather than actuarial miscalculations of future
utilization.
Very few legitimate companies across the country have raised premiums of existing policy holders. All the leading companies -- the majority of which have never had the type of premium increase
the article refers to -- offset higher claims experience by charging higher premiums to new purchasers.
In New York, only 1 of the 15 companies actively marketing LTC insurance in the individual market has
requested and obtained a class-wide premium rate increase from the state Insurance Department (which frowns on such measures). That company raised premiums on LTC policies it sold in the 1990s from 8 to 12 percent.
Meanwhile, the cost of the same insurance coverage facing current buyers is from 25 to 40 percent higher than the rates that existed in the 1990s.
Absent a crystal ball that predicts future utilization of
long-term care services, it is absolutely normal and correct for insurance companies to charge current premiums based on their best current actuarial estimates. If future utilization exceeds current estimates, we
must anticipate the need to pass the increase along to the pool of current or prospective insureds.
This is insurance. And, until the government is willing to implement a national LTC entitlement program --
not in your lifetime -- private LTC insurance is the best way to protect your financial resources and family from the potential outcomes of a long-term care episode.
STEPHEN I. NUSSBAUM
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