Original reporting by Jenna Carlesso, Dave Altimari, Katy Golvala and Andrew Brown. Compiled by Kat Struhar.
Nearly 100,000 people in Connecticut have long-term care insurance — coverage that, depending on the policy, supports skilled in-home care, rehabilitation therapy, assisted living, nursing home stays and respite care.
But in recent years, the annual cost of maintaining these plans has skyrocketed, creating a system that continues to strangle its customers as they wrestle with canceling coverage or paying ever higher premiums. And the price of new plans for people who want to sign up is out of reach for many.
Finding innovative ways to pay for elder care has taken on fresh urgency, as the nation’s older adult population is set to balloon in the coming years and Connecticut is home to a disproportionate number of older adults.
But as complaints mount, legislative reform has been slow.
Here’s what to know.
What is long-term care insurance?
Many people purchased long-term care insurance plans in the 1980s, 1990s or early 2000s with the understanding that the benefits would be available decades later when they might need them. The policies also help people protect their assets, so they don’t have to spend down their savings to qualify for Medicaid, which covers a majority of long-term care services in the U.S.
Nationally, about 6 million people are covered by traditional long-term care insurance, though enrollment has been declining since 2013, analysts said. In 2000, there were more than 100 providers of these policies. In recent years, there are fewer than a dozen.
When long-term care insurance was first introduced, it was marketed mainly to middle class and wealthy individuals, posing barriers from the beginning. But even for middle class families, maintaining these plans is becoming increasingly difficult.
Why are prices skyrocketing?
Prices are soaring due to miscalculations by insurers on how long people would live, the price of care and how many would need it. Policyholders complain of dramatic rate increases, often exceeding 50% and, for a few dozen people, as high as 174%, a Connecticut Mirror investigation has found.
A combination of lower-than-expected interest rates and more people than anticipated holding onto their plans fueled problems, along with policyholders living longer and needing care for extended periods of time.
“The original price for long-term care was not based upon any type of insurance data. They were general population studies and nursing home longitudinal studies,” Paul Lombardo, director of the Connecticut insurance department’s life and health division, said at a public forum in 2020. “Unfortunately, a perfect storm was brewing with long-term care.”
Insurers had not counted on so many consumers maintaining their coverage. They assumed about 5% of consumers would drop their policies or default on payments, Lombardo said, but the reality has been about one half of 1% per year.
All of those issues resulted in the push for annual premium increases.
What options do policy-holders have to keep down their rates?
The options for struggling plan holders are bleak. Dropping the coverage could mean forfeiting a portion or all of the funds paid over the years. Many policies allow people to preserve some of their accrued benefits, but others don’t.
To curb swelling premiums, consumers can reduce their benefits, but even with fewer benefits, many are still dealing with price hikes.
In Connecticut, the Office of the Health Care Advocate and a special unit in the attorney general’s office help protect consumers who purchase health insurance. But there currently are no similar resources for long-term care insurance policyholders.
What have lawmakers tried to do to curb rising costs?
The issue has stymied lawmakers, who in the last six years introduced more than 50 bills committed to helping consumers, encouraging new enrollees in long-term care insurance plans and increasing transparency around rate hikes. Only a handful have passed, with limited measures of relief.
Legislators have tried to create tax credits for people with policies, suggested capping or freezing annual rate hikes, recommended insurers notify consumers of the risk of premium increases before they purchase plans, and proposed holding public hearings so people can weigh in on price hikes — all to no avail.
A federal solution has also been elusive.
Congress passed the Community Living Assistance Services and Supports (CLASS) Act in 2010 to try to help people pay for elder care. The bill would have established a voluntary and public long-term care insurance program, but it was repealed in 2013 after the initiative was deemed too costly. Subsequent efforts have stalled.
Meanwhile, some states are filling the void by launching their own programs.
Washington state passed a bill in 2019 implementing a 0.58% payroll tax to fund a long-term care insurance pool, and at least 18 other states are considering a similar payroll tax. Legislators in Connecticut say they are open to the idea.
What happens now?
Key lawmakers this month said they are considering a raft of legislation that would provide relief to policyholders and boost transparency around the state’s rate review process.
At least 12 bills have already been introduced this session to address long-term care insurance.
The concepts include a cap on annual rate increases that exceed 4%, a requirement that any rate hike of 20% or more be phased in over five years (instead of three, as current law states), a mandate that carriers offer a full refund for premiums paid to any policyholder who requests it (provided the plan has existed for at least five years and the consumer has not submitted any claims), requirements for public hearings on rate hike requests, tax credits and deductions for policyholders, a four-year moratorium on rate hikes, and an edict that insurers give people “explicit notice” of the “high risk” of premium increases before they purchase coverage, among other proposals.