The letter arrives, and the number inside is bigger than last year's.
For a growing number of Americans in their 50s and 60s, the annual premium notice for long term care insurance has become one of the most dreaded pieces of mail — and the increases show no sign of stopping.
A policy bought in the 2000s might have cost a healthy 60-year-old couple around $3,000 a year combined.
Today, a comparable policy for the same couple can run $5,000 to $8,000 or more, depending on the daily benefit, the elimination period, and how long the coverage lasts.
A single 60-year-old man buying a typical plan now often pays $2,000 to $3,500 a year; a woman the same age pays considerably more, because insurers price in that women live longer and file more claims.
First, low interest rates for most of the past decade meant insurers earned less on the premiums they held in reserve.
Second, people are living longer and needing care for more years than the industry's old actuarial tables assumed.
Third, the cost of care itself keeps rising — a private room in a nursing home now averages well over $100,000 a year in many states, and home health aide rates have jumped sharply too.
More than a dozen major insurers exited long term care entirely, leaving a handful of carriers.
And many existing policyholders have faced 50% to 100% cumulative rate hikes over the past decade — increases the companies can legally pass along because these policies were never fixed-price contracts.
That doesn't mean the coverage is a bad deal.
One year in a nursing home can wipe out a retirement account that took 40 years to build.
Medicaid only kicks in after you've spent down most of your assets, and it generally won't pay for the kind of care most people want — help at home.
Long term care insurance remains one of the few tools that protects a spouse from going broke paying for the other's care.
If you already hold a policy, don't ignore a rate increase.
Most carriers offer reduced-benefit options — a shorter benefit period, a lower daily amount, or a longer waiting period before benefits start — that can keep the premium closer to what you were paying.
Call and ask for the menu of options; it's rarely offered unless you request it.
If you're shopping now, compare hybrid policies too.
These combine life insurance or an annuity with a long term care benefit.
You pay a lump sum or fixed premiums, and if you never need care, your heirs get a death benefit.
Premiums generally won't rise, but the upfront cost is higher and the coverage is often less generous per dollar.
One more option worth knowing: some employers and professional associations offer group long term care plans with simpler underwriting.
They're not always cheaper, but they can be easier to qualify for if you have health issues.
Whatever you choose, run the numbers against your actual budget before signing.
A policy you can't afford in year ten is worse than no policy at all, because lapsing means losing everything you paid in.
The honest takeaway: this is one of the rare purchases where waiting almost always costs more, since premiums are based on your age and health at purchase.
But it's also a product that rewards careful reading over fast decisions.
Final Thoughts
Get quotes from at least two or three carriers, ask what happens if rates rise, and make sure the math still works if your premium jumps 40% a decade from now.