A recent Forbes article examined potential changes in the manner in which individuals pay for long-term care insurance. Currently, most long-term care insurance companies charge flat fees for coverage over a period of several years, followed by big rate hikes. This is referred to as the Annual Rate Sufficiency Model, which has been highly criticized in recent years as driving most long-term care insurance providers out of the business of long-term care coverage.
However, Genworth, the largest single seller of individual long-term care insurance, is proposing an annual rate review that would result in more modest hikes each year. In turn, if Genworth expects to pay out fewer claims in a year, then it could even reduce rates in its annual rate review process. Essentially, long-term care insurance coverage policies would become much more like other insurance policies, such as medical insurance and auto insurance. According to Genworth, pricing long-term care insurance policies in this manner would result in an overall savings for the consumer. In proposing this model, Genworth hopes to attract younger buyers.
Genworth rolled out its new pricing proposal to the National Association of Insurance Commissioners (NAIC) at its annual meeting. While approval by NAIC is likely to take a few years, states have the option of acting more quickly on the proposal if they choose. In fact, Genworth is hoping to have at least a few states on board with its proposal by 2018.
Genworth’s proposal arises largely from a long-term care industry that has suffered greatly in recent years. Roughly 90% of the firms who previously carried long-term care policies no longer do so. Annual sales have decreased from more than 700,000 per year to about 100,000 in 2016. Premiums continue to be steep, which turn off many buyers; instead, buyers tend to seek short-term, lower-cost policies over the significantly more expensive long-term policies.
No matter how you choose to fund your loved one’s long term care, and what type of facility you choose, risks for neglect and abuse still exist. The community based residential facility (CBRF) lawyers of Boller & Vaughan are experienced in ensuring that nursing homes and other elderly care facilities live up to reasonable standards in caring for their residents. When a nursing home or other type of facility fails to do so, and injury to a resident occurs, the facility may be liable for those injuries. We know how to investigate your case, assess your situation and determine whether you or your loved one has any potential claims against nursing home staff or the nursing home itself. Contact Boller & Vaughan today and learn how we can help you through this difficult situation.