Virginians could face surge in long-term-care insurance premiums

Virginians holding long-term-care insurance policies could see double or triple-digit percentage increases in their premiums.

That’s what would happen if the companies selling these policies get their way. Most of Virginia’s long-term-care insurers are asking the State Corporation Commission to approve rate increases, despite having already won approval for double-digit increases in recent years.

The companies claim that they need to raise raises because they misestimated how long people would stay in nursing homes and expected more consumers to drop the expensive policies.

The potential rate increase has policyholders concerned that their already unaffordable rates are going to surge even higher.

Long-term-care insurance was intended to assuage buyers’ concerns about paying for nursing home care, but insurers’ inability to figure out affordable premium prices and faulty estimates on the number of policyholders or pace of claims which has destabilized the entire industry.

Buyers expressed frustration that these insurers assured them they would never dramatically raise premiums, but they’ve since reneged on those promises.

Joseph M. Belth, professor emeritus of insurance at Indiana University, told the Virginian-Pilot that the companies were focused on acquiring market share without regard to the long-term rates.

In essence, insurers kept policy premiums low, marketed those premiums aggressively, and convinced consumers to buy in with the aim of investing that money to build a large enough pool of money to pay out when claims started coming in years into the future.

What insurers didn’t account for was just how many people would hold onto their plans, despite the price increases. This led to more high-priced claim payouts, which has driven the premium increases.

That said, most of the insurers seeking rate increases are still profitable and many of them already received approval for double-digit increases in recent years, according to the Virginian-Pilot.

This hasn’t helped the public perception of an industry that has long faced complaints about misrepresentation about premiums, unfair claims practices, and accusations of fraud.

In Virginia, 29 different insurers are requesting premium hikes that average around 50%, while one company, United Security Assurance, is seeking a 200% increase for policies originally sold by Trigon Blue Cross Blue Shield.

These policies usually cost over $2,500 a year, though some are more than twice that cost. Many Virginians have paid these premiums for decades, knowing they’d need the coverage as they got older.

But now, as the rates continue to surge, some of these buyers fear being priced out and having nothing to show for their years of payments.

It remains to be seen what the Commission decides, but public comments submitted to the state overwhelmingly opposed the insurers’ requests.