The cost of insuring yourself against a nursing home stay keeps climbing, and a new batch of rate increases is landing on policies that many families bought expecting the price to stay flat.
A couple who buys coverage in their mid-60s can now expect to pay roughly $5,000 a year combined for a typical policy, according to industry pricing surveys.
Buy the same coverage at 75, and the annual bill can easily top $8,000.
That gap is the part that catches people off guard.
Long-term care premiums are not locked in like a 30-year mortgage.
Insurers can — and repeatedly do — ask state regulators for permission to raise rates on existing customers, and many carriers have done exactly that over the past decade.
A policy quoted at $1,800 a year in 2015 may now cost $3,400, with no change in benefits.
Most policies reimburse care at home, in an assisted living facility, or in a nursing home, up to a daily or monthly cap, after you've paid out of pocket for a waiting period that typically runs 90 days.
The average private nursing home room runs well over $100,000 a year nationally, and in expensive metros it can clear $200,000.
Medicare generally does not cover long-term custodial care, which is why this insurance exists at all.
Someone who has paid $40,000 in premiums over 15 years and then needs two years of care at $100,000 a year still comes out ahead — but only if they actually file a claim.
Roughly a third of buyers never do, and those who drop coverage because of a rate hike get nothing back.
Some states now offer a bare-bones alternative: a "long-term care partnership" policy that lets you keep more assets before Medicaid kicks in, but it doesn't lower the premium.
If you're staring at a renewal notice, three moves are worth making this week.
First, call the insurer and ask what a shorter benefit period or a smaller daily cap would do to the price — trimming a five-year benefit to three years often cuts the bill by 20% to 30%.
Second, check whether your state's insurance department publishes a rate-increase history for your carrier; a company that has filed for four hikes in six years is likely to file again.
Third, price a hybrid policy — a life insurance or annuity product with a long-term care rider — and compare it side by side, because those premiums are usually fixed, even though the upfront cost is higher.
Also worth knowing: if you let a policy lapse after paying for years, you walk away with zero.
Some carriers allow a "reduced paid-up" option, where you stop paying and keep a smaller benefit.
It's rarely advertised, and you have to ask.
None of this is a reason to panic, but it is a reason to read the annual notice instead of filing it.
Premiums on this product have gone up faster than groceries, and the letters keep coming.
Final Thoughts
Treat a rate increase like a bill you can negotiate — because sometimes you can.