Long-term care insurance premiums can increase after purchase

Long-term care insurance premiums increase in some cases after a policy is purchased, CBS News reports, but the jump is generally tied to a group of similar policyholders rather than one buyer getting older, becoming ill or filing a claim.

The distinction matters for families trying to budget for care that may be years away. Long-term care insurance is designed to help pay for services such as in-home assistance, assisted living and nursing home care, which CBS News says can put heavy pressure on retirement savings when paid out of pocket.

Can long-term care insurance premiums go up after you buy?

Yes. According to CBS News, insurers generally cannot single out an individual policyholder for a higher premium because that person has aged, developed medical issues or begun using benefits. Once the policy is active, a change in personal health does not trigger a custom rate hike.

Insurers can, however, ask state insurance regulators for permission to raise rates across a class of similar policyholders. If regulators approve the request, people in that policy group could pay more regardless of their own health or claim history, CBS News reports.

That makes long-term care coverage different from auto insurance, where a person’s driving record or claims can affect pricing. With long-term care insurance, companies look at how an entire block of policies is performing financially, according to the report.

Why older long-term care policies saw premium hikes

CBS News says premium increases have been a real issue for some older policies because insurers misjudged key costs decades ago. People lived longer than expected, care costs rose, and years of low interest rates cut into investment returns insurers had expected to use toward future benefits.

Those pressures helped drive increases on some legacy policies. CBS News also reports that newer policies may be less exposed to the sharp adjustments some older policyholders experienced, because insurers now tend to use more cautious pricing assumptions and have more claims data.

Future increases are still possible. Policy terms also vary, with some contracts offering more predictable premiums and others giving different kinds of flexibility, so CBS News advises buyers to read the policy closely before signing.

How can buyers keep long-term care costs down?

CBS News says shoppers can reduce their starting cost and limit financial risk by applying earlier, before their late 60s or 70s. Premiums are largely based on age and health at the time of application, and waiting can raise both the price and the risk of being declined because of medical conditions.

Choosing only the coverage a person realistically needs can also help. CBS News points to shorter benefit periods, different elimination periods, and appropriate daily or monthly benefit amounts as ways to keep premiums more manageable while still preserving meaningful protection.

Comparing several insurers is another key step, because pricing can differ between companies for similar coverage. CBS News says buyers should also look at an insurer’s financial strength and experience in the long-term care market, since the policy may be held for decades.

Hybrid long-term care policies may be an option for some shoppers. These products combine long-term care benefits with life insurance or an annuity, and CBS News reports they often use different pricing structures than traditional long-term care insurance. They may require more money upfront and are not suited to every buyer.

The takeaway for retirees and near-retirees: premiums can rise, but typically through approved increases affecting a broader group. Careful shopping, earlier buying and right-sized benefits can make the coverage more sustainable over time, according to CBS News.

This story draws on original reporting from CBS News.