Fifteen years ago, there were around 40 long term care providers that offered these types of insurance policies in Massachusetts. Today, there are less than twelve. Genworth is the latest provider of long-term care insurance that has opted to cease offering these types of policies in the state. Unfortunately, it was also the largest insurer in the state. Massachusetts consumers in search of this type of insurance with the goal of helping to pay for the rising prices for nursing homes and elder services are finding a less than ideal market. Genworth’s decision is simply the highlight of this latest quandary many seniors face.
Genworth Financial has attempted to raise its rates in order to cover the rocketing healthcare costs not only in the state, but across the country. It actually ceased its practices this past December, though many are just beginning to feel the repercussions. Its reason is because state regulators never acted on its request for rate increases, some up to 134 percent. Company spokespersons say it’s not about profit, but survivability. The company had tried since 2012 to secure those increases.
Fortunately, if you’re one of the 35,000 policies already in place in Massachusetts, you’re still covered. These 35,000 policies account for 3 percent of Genworth’s 1.1 million long-term care customers nationwide, company officials said.
Insurance for long-term care was designed to fill the gap between Medicare, the health insurance for the elderly that covers only short-term rehabilitation and recovery services, and Medicaid, the program for the poor that pays for long-term care after a senior exhausts assets and meets income requirements.
It doesn’t help that our state is ranked highest in the costs associated with elder care. Last year, the annual costs of a home health care aide was a massive $57,000 – and indicative of a 3 percent increase from 2013. If you live in a semiprivate room in a nursing home, those costs were more than $126,900 each year.
While Massachusetts residents are feeling the heat, the problem extends across the nation. Many are concerned about the growing costs and shrinking options. Genworth isn’t the only insurance company that’s said, “Thanks, but no thanks” to this type of coverage. Metropolitan Life Insurance Co. and Unum Group Corp, both heavy hitters in long term care coverage, have discontinued the policies for new applicants. They cite big losses and no way to recover those losses, even with rate increases.
Genworth is also rescinding its offers for long term care in New Hampshire and Vermont.
Despite the warnings we’ve heard for years about the baby boomer retirement period, many of these insurance companies say they were unprepared and admit to underestimating the number of new applications, which mean new claims. Genworth alone lost $416 million, with most of those losses coming from the long term care division.
For now, the Massachusetts Division of Insurance is working with the industry, regulators from other states, and various stakeholders, such as advocates for consumers and the elderly, to find better solutions. It’s both time consuming and costly. If you’re concerned about long term care coverage for you or a loved one, we invite you to contact DeBruyckere Law Offices, PC to discuss your options.
Latest posts by Daniel DeBruyckere (see all)
- Why Planning Ahead Matters – Death Is Expensive - September 19, 2019
- Are You a Vietnam Vet? If So, What You Need to Know about Veterans Benefits and Help for PTSD - September 17, 2019
- What Is a Spendthrift Provision in a Trust? - September 12, 2019