Long-term care insurance has benefited policyholders more than a recent Wall Street Journal front-page story indicates, according to the nation’s largest LTC insurance trade group.
“To sell newspapers and get people to watch television news, the media must focus on disasters and scary news,” said Jesse Slome, executive director of the American Association for Long-Term Care Insurance. He suggested this explains why the July 2 WSJ story focused on the problems in the LTC insurance market, such as skyrocketing premiums and major insurers discontinuing sales. The report says insurers miscalculated how fast medical costs would rise, how many seniors would use their policies and how many beneficiaries would hold onto coverage even without making claims.
The Journal also cited many disturbing statistics, such as that initial premiums on LTC policies would have been 35% higher if insurers had correctly predicted the low cancellation rate. But it did not include statistics about how many beneficiaries have tapped their policies, Slome pointed out.
In 2012, insurers paid $6.6 billion in claims benefits to 264,000 people, according to Slome.
“The largest (still open) claim has reached $1.8 million paid over almost 16 years,” Slome stated. “The policy was purchased for $881 annually with premiums paid for three years until the claim began.”
Public insurers as well as private companies have hiked LTC rates and suspended new coverage, which dampened a recent victory for same-sex couples in California who are newly eligible for coverage through the state’s largest public pension fund.
