Long-term care is help at home with basic daily activities such as bathing, dressing, and eating; community services like adult day care and transportation; or ongoing care in a nursing home, assisted living residence or other facility. To help pay for such services individuals may sign-up for long-term care insurance.
Long-Term Care 101 / Consumer Information
Long-term care (LTC) insurance policies include several long-term care service alternatives, including home health care, respite care, hospice care, personal care in the home, services provided in assisted living facilities, adult day care centers and other community facilities. Public programs, such as Medicare and Medicaid, also cover certain limited LTC services. As our population ages, the need for LTC support and services will increase and require innovative new approaches.
According to the U.S. Department of Health and Human Services (HHS), about 12 million of America's senior citizens will require long-term care by 2020. Despite the growing need, the number of insurers offering LTCI coverage has decreased from slightly over 100 in 2004 to about a handful in 2022. Additionally, annual premium rates for newly issued policies have risen to a range of $9,000 to $15,000 (or more).
The Department hosted a video forum to educate consumers about LTC rate increase requests from companies. We invite you to learn about the issues facing the companies and the Department that have brought these issues front and center for consumers.
The Commissioner of the Department of Financial Regulation, Michael Pieciak, and Department staff understand that LTC premium increases may be unsettling. Most LTC companies have filed rate increase requests with the Department. Contracts state that companies may increase rates if they can demonstrate that anticipated claim costs are significantly higher than the reserves on hand to pay claims. To increase rates, companies must raise rates on all policyholders and cannot single out any consumer for increases based on age or health status. Please know that we are committed to helping you understand your options so that you can make the best decision for you.
Companies continue to see claims costs higher than expected: people are living longer, filing more claims, and staying on claim longer than initially anticipated. Many companies have made the necessary decision to increase the premiums on long-term care insurance policies. The Department must review these requests. We have approved some long-term care rate increase requests and plan to approve more in the future.
The Department has selected 15% as a threshold for affordability. If a company is justified in requesting an increase of 15% or less, the company may implement that rate increase. For increases greater than 15%, companies must provide ways for consumers to mitigate the increase by reducing benefits. Consumers are notified at the beginning of the process what to expect, even if the increase implementation happens over 3 years, to assist with planning. The regulation requires that consumers receive at least 45 days’ notice in advance of the rate increase.
The Department of Financial Regulation wants to ensure Vermont policyholders receive the benefits of your long-term care policies when you need them.