It wasn’t supposed to be like this. When you purchased your long-term care insurance (LTCI) policy all those years ago, you made a thoughtful decision. You planned ahead, carefully investing in coverage to protect your future and your peace of mind. Back then, it felt like a smart, responsible step to make sure you could access quality care when you needed it most.
But now, the promise of stability has begun to unravel. Letters arrive in the mail with alarming news about steep premium hikes. While you’ve faithfully paid your policy every month for decades, suddenly, the cost has surged beyond what you can afford. It feels wrong, doesn’t it? It feels unfair.
You’re not alone in this struggle. Across the country, many policyholders just like you are facing these same challenges. And many are wondering if there’s anything they can do to fight back. If you suspect your insurer is acting in bad faith, speaking with an experienced insurance bad faith lawyer can help you understand your legal options.
This post is for you. We’re going to explore why these premium hikes are happening, how they’ve left policyholders in impossible situations, and what you should know if you are caught in this situation.
The Broken Promise of Long-Term Care Insurance
When LTCI policies became available decades ago, insurers marketed them as a safety net. Pay your premiums now, and later, when age or health complications make daily tasks difficult, your insurance will help cover the cost of nursing homes, assisted living, or even in-home care.
It sounded like a good deal, and many people signed up, encouraged by the idea of planning ahead for their golden years. But fast forward to today, and those very policies have become an overwhelming financial burden for the insurance companies. .
Insureds who have paid premiums are finding the following:
- Premium hikes can feel astronomical. Insurers aren’t just raising premiums by a few dollars. Some have doubled or even tripled premiums.
- Options are limited. Many policyholders can’t continue paying the increased rates, forcing them to exercise an option to reduce coverage.
- The fine print is confusing. Some insurers have pushed policyholders into “revised” plans that reduce benefits in exchange for lower premiums. Sadly, these alternative options rarely provide the protection people originally thought they were buying.
This leaves many policyholders feeling cornered, helpless, and angry. And rightly so.
Why Are Premiums Increasing?
To understand why insurers are raising their premiums, it helps to look at how LTCI has evolved over the years. When these policies were first introduced, insurance companies miscalculated their long-term costs in significant ways.
Mistakes in early projections included:
- Policyholders’ longevity and behavior. People are living longer than anticipated, which means insurers are paying benefits for longer periods of time. Lapse rates are also extremely low – people tend to hold onto LTC policies as they age. Insurers did not anticipate this.
- Higher-than-expected claims. Many policyholders need expensive care, often in nursing homes or assisted living facilities, driving up insurer payouts. More policyholders have needed benefits than anticipated by insurers
- Low investment returns. Insurance companies rely on investments to fund their operations. But over the last few decades, lower interest rates have reduced their returns. When interest rates dropped (especially after 2008), insurers earned far less on their reserves than they projected when pricing policies.
- Cost of care. The cost of care has far outpaced inflation, especially in-home and assisted living care. Insurers were stuck paying claims based on low premiums set decades earlier. Some policies included lifetime benefits or compound inflation riders, which became very expensive over time.
Rather than accepting accountability for their miscalculations, insurance companies have shifted the burden onto policyholders. The result? Premium increases.
This isn’t just an unfortunate trend; it’s left real people grappling with loss and financial strain.
A Devastating Impact on Policyholders
Mary, a retired teacher in her late 70s, is one such example. She purchased her LTCI policy 25 years ago. At the time, it seemed like a wise decision to protect herself from future uncertainty. For two decades, she paid her premiums faithfully. But in recent years, she has gottn premium increase notices. Today, her monthly payment is significantly higher than when she started paying premiums.
Mary’s fixed income can’t keep up. She has reluctantly reduced benefits on her policy just to afford the premiums. But deep down, she worries. Will the coverage still be enough if she needs extensive care?
Her story is all too familiar. Many policyholders face heartbreaking decisions. Do they sacrifice other financial necessities, like medication or groceries, to keep their policy? Or do they give up the coverage altogether and risk needing care they can’t afford in the future?
When Insurance Companies Breach Trust
At its core, the issue isn’t just about financial challenges. It’s about trust. Policyholders like you relied on insurance companies to honor their commitments. These premium hikes feel like a betrayal of that trust.
While insurers often argue that these increases are legal and necessary, many policyholders believe their actions are exploitative.
How Insurance Companies Raise Premiums
Unfortunately, insurance companies can raise rates, but in most states, state increases must be filed with and approved by the state Department of Insurance. There are legal protections in place, and premium hikes are overseen and approved by those departments of insurance. Rate stabilization rules exist in many states (especially post-2000) to limit frequency or size of increases. Any premium hikes must be applied uniformly to all policyholders in the affected class, not selectively to only individual policyholders.
Taking Action – What You Can Do
In some cases, policyholders have alleged that insurers act in bad faith by raising premiums beyond what’s reasonable or failing to uphold their end of the agreement. If you are faced with a premium hike, you should be given options and notice, so that you have time to consider your options. Policyholders are usually given 30–60 days’ notice. Options usually include:
- Paying the higher premium,
- Reducing benefits to maintain affordability, and sometimes
- Accepting a nonforfeiture option (limited paid-up policy)
Insurers are generally required to offer at least one alternative to outright cancellation.
Importantly, approved rate hikes affect future premiums, not past ones. Insurance regulators do not allow retroactive premium increases and often require state-by-state approval for any hike.
When you are considering your options, here’s some information to keep in mind about the common choices:
1. Pay the Increased Premium
- This maintains your full coverage as originally purchased.
- Recommended only if it remains affordable and the policy is still valuable compared to alternatives.
2. Reduce Benefits to Offset the Increase
You may be able to:
- Lower the daily or monthly benefit amount
- Reduce the benefit period (e.g., from lifetime to 3 years)
- Remove inflation protection (though this reduces future value significantly)
- Increase the elimination period (i.e., longer waiting period before benefits start)
This helps preserve coverage while keeping premiums more manageable.
3. Elect a Nonforfeiture or Paid-Up Option
- You stop paying premiums and receive a limited benefit based on what you’ve already paid in.
- This is often called a “reduced paid-up” policy.
- May not provide meaningful coverage for future long-term care costs.
In considering your options, understand what your original contract promised and compare it to the changes your insurer has made. A long-term care insurance lawyer can help evaluate your options and how you should proceed in the face of a premium increase.
Because insurance laws vary by state, the viability of claims and potential legal remedies will depend on your specific policy language and applicable state regulations.
Lawsuits Against Long-Term Care Insurers Are Growing
Cases against insurers for LTCI denials are growing nationwide. These policies were written decades ago and are now reaching the stage where policyholders need to use them.
Common allegations in a LTC lawsuit can include information about premium hikes. This is because premium increases can be evidence of an insurance company’s bad faith motives to deny claims. Premium increases disproportionately target senior citizens who may not realize their rights are being violated. Policyholders signed up for specific terms, and insurers must keep those promises to their policyholders.
Protecting Yourself and Your Rights
If you’re struggling with long-term care insurance premium hikes, you deserve support. There are proactive steps you can take to protect your rights and prepare for potential legal challenges.
Here’s what you can do:
- Educate yourself. Learn as much as you can about your policy and how long-term care insurance works. The more informed you are, the better equipped you’ll be to advocate for yourself and evaluate your options.
- Ask questions. If you receive a notice about premium increases or policy changes, don’t hesitate to reach out to your insurer for clarification. If something feels unclear or unfair, push for answers.
- Know your benefits. Take a close look at what’s covered and what’s not. The more confidently you understand your policy, the stronger your position will be when disputes arise.
And most importantly, remember that you’re not powerless. Standing up to insurance companies can seem daunting, but you don’t have to do it alone.
How Sandstone Law Group Can Help
We understand the frustration, fear, and betrayal that premium hikes have caused. These aren’t just numbers on a page; they’re real, life-altering challenges. You deserve to have your voice heard.
At Sandstone Law Group, we’re here to help. Our attorneys focus on fighting for policyholders like you. Whether you’re grappling with premium increases, claim denials, or other challenges, we’ll listen to your story, explain your options, and work tirelessly to achieve the best possible outcome.
If your long-term care insurance is causing more stress than it’s solving, don’t wait. Contact Sandstone Law Group today for a free consultation. We’ll stand with you every step of the way.
FAQs About LTCI Premium Increases
Dealing with premium hikes for your long-term care insurance can be confusing and frustrating. To help clarify your options, here are answers to some of the most common questions policyholders have.
What happens if I stop paying my premiums?
If you stop paying your LTCI premiums, your policy will likely lapse, which means you’ll lose all the benefits you’ve paid for over the years. This is why it’s so important to carefully consider your options before making this decision.
Some policies come with a “non-forfeiture benefit,” allowing you to retain reduced coverage even if you can no longer continue paying premiums. Check your policy documents to see if you qualify for this provision.
If you’re struggling to keep up with payments, reach out to your insurer to discuss reduced benefits or other alternatives before letting your policy lapse.
Are premium increases legal?
Yes, premium increases can be legal, but they come with specific guidelines companies must follow. Insurers are generally allowed to raise premiums on a group-wide basis if they can demonstrate financial necessity, such as higher claims costs or unexpected longevity of policyholders. However, they cannot single out individuals for rate increases.
State insurance departments regulate these hikes, and companies must prove to regulators that increases are justified and proportional. If you believe your premium increase is excessive or unfair, you may be able to challenge it or file a complaint with your department of insurance.
How can I appeal a premium increase?
While you may not be able to stop an increase outright, you have options to push back or negotiate terms. Here are some steps to consider if you want to appeal or address a premium hike:
- Request detailed justification. Ask your insurer for a clear explanation of why your premiums are increasing and how they calculated the new rate.
- File a complaint with your state insurance department. If the explanation feels inadequate or unreasonable, contact your state insurance regulator to investigate the matter.
- Consult your policy documents. Review the terms to see if the increase violates any provisions of your original contract.
- Negotiate with your insurer. Sometimes, insurers may offer adjustments, such as reduced coverage at a more affordable rate, if you bring the issue to their attention.
- Speak with an attorney. If the premium hike seems excessive or exploitative, legal action may be an option. An attorney can help assess whether the increase breaches contract terms or if the insurer is acting unfairly.
What are my options if I can’t afford the increase?
If the increased premiums are unmanageable, you might want to consider the following options:
- Explore payment plans. Ask your insurer if they offer payment plans or temporary relief options while you assess your long-term finances.
- Seek financial counseling. A financial advisor can help you evaluate ways to adjust your budget or explore additional resources to afford the premiums.
- Consider legal recourse. If you believe the increase is unwarranted or that your insurer is acting in bad faith, consulting a long-term care insurance lawyer could provide clarity and support.
These questions represent some of the most pressing concerns policyholders face when dealing with premium increases. Remember, it’s okay to ask for help. Navigating these challenges may feel overwhelming, but with the right information and support, you can make decisions that protect both your future and your peace of mind.