Image of male nurse pushing senior woman in a wheelchair in nursing facility

An article in the April edition of the AARP Bulletin casts an extremely skeptical eye on the long-term care insurance industry. The monthly is the largest circulation publication directly targeting the elderly in the United States.

The article, titled “Big Premium Hikes Jolt Owners of Long-Term Care Insurance,” discusses how well intentioned seniors unexpectedly have seen payments for policies soar.

One couple spoke of paying premiums without a hitch for eight years – until a 50% premium increase (from $3,245 to $4,862) kicked in last August. They had been told by an insurance agent and a lawyer that premiums would never go up.

A provision in the fine print, however, apparently gave the company its path to higher charges: The company couldn’t raise premiums because of enrollees’ age or claim histories, but it could get the state insurance commission to allow for across-the-board increases based on total claims.

“They grossly underestimated their ability to get pools of policyholders large enough to spread the risks,” said Boston-based insurance broker Benjamin Lipson about insurance companies in the 1990s. “And they grossly underestimated the fact that nursing home costs have been rising so rapidly.”

Only three of the top 10 insurers did not have “fairly significant” premium increases last year, according to the Kansas Commissioner of Insurance.

A recent study by AARP’s Public Policy Institute cautioned that “unjustified rate increases” for long-term care insurance might be occurring in all states. “Only a small number of states exercise their regulatory authority to disapprove premium increases,” the study found.