When working on a plan for a local resident, our New York elder law attorneys often advise on the importance of long-term care insurance (LTCI). Where affordable, long-term care insurance is an incredibly powerful tool that both protects assets from the possible costs following disability and creates an avenue by which seniors can receive at-home care to age in place. In some cases LTCI is coupled with a Medicaid Asset Protection Trust. In these cases, it may be helpful for the LTCI to be purposefully underfunded to provide a somewhat more affordable, but still helpful, approach to planning for possible care needs down the road.
In any event, while LTCI has clear benefits, it remains out of reach for some residents. The main problem is the cost–this insurance is expensive. Unfortunately, there are no signs that LTCI is going to get more affordable any time soon.
A story this week from the NY Daily News, for example, explores how some companies are raising rates and even getting out of the LTCI business. There are radical transformations taking place in the industry, which may have consequences on many local families wanting to protect themselves with this insurance.
Most starkly, according to the American Association for Long-Term Care Insurance, LTCI premiums have jumped between 30%-50% over the last five years alone. Not only are rates going up, but the options on the policies may be axed. Lifetime benefits are being trimmed in exchanged for set yearly benefit periods. On top of all of that, many companies are simply refusing to sell LTCI altogether. One research group found that more than half of the top 20 insurers got out of the business in the last five years.
The reasons for the changes are clear. Seniors are living longer, making benefits more costly and trimming the profits of the companies. In addition, interest rates are low, making it tougher for these companies to grow reserves.
Even though purchasing LTCI may becoming more difficult, if the resources are there, it is still a prudent option. The changing of needing a nursing home stay or close at-home care are quite high. It is not wonder then that, even with all of these changes, sales of LTCI rose steeply, up 56% last year alone.
If nothing else, our New York City elder law attorneys know that this new reality is a strong reminder that the earlier one investigates their options the better. LTCI costs skyrocket the older one gets, and so taking the time to invest in this security now can make all of the difference down the road.
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