What if your Long Term Care insurance goes bankrupt? or you were told that your premiums would never go up and they have increased so much in the past 11 years (from $69 to $189) you can no longer afford the premiums. Can I get my $13,000 back and cancel? My policy is with CalPers Long Term Care. G.P. Idaho

I’m sorry that you have experienced so many rate increases. No, you can’t cancel and get your premiums back. But maybe I can help you feel a little better about your situation. You have paid $13,000 in premium over 11 years. The cost of care in Boise, ID is about $200 a day for 10 hours of home care and $224 a day for semi-private care in a nursing facility.  Even assisted living facility is around $3000 a month. So the premium you’ve paid over 11 years would only pay for a couple of months of daily home care or nursing home care at current costs or four months in an assisted living facility. I don’t know what your benefits are but I’m sure they would pay for much, much more than that if you have a claim, and your premium should stop when you start receiving benefits.  Without your policy, Medicaid in Idaho will pay if you spend down your assets to $2000 and if you are married, your spouse could only keep half of your assets up to a maximum of about $110,000 this year. Your choice of care under Medicaid will likely be more limited than if you use your CalPers benefits to pay for your care.

As for the bankruptcy question, there is a state guaranty fund in each state that may provide help for an insolvent insurance company, but these funds have been rarely tapped for long-term care insurance. Many more banks have gone under than insurance companies. However, you didn’t buy from an insurance company.  You bought from a self-insured plan.  You are in a unique place compared to the rest of the industry since you are dependent on what the California LTCI plan does for its employees and retirees.  It is a plan rated all by itself instead of mixed in with many other insureds like would be the case had you bought it from an insurance company. Even so, you should have never been told that your premium would never go up as it certainly can based on claims experience vs. premiums coming in, and the CalPers plan was unfortunately quite underpriced when it was first brought out.

 

I don’t know your age or your health, but if you are really worried, you might look into buying a small plan from an insurance company to supplement what you have, and decrease your benefits on the CalPers plan if you get another rate increase to lower the premium.  However, I can’t make that recommendation without seeing what you have now and knowing more about your health to see if that would even be an option for you.  At any rate, you do have the option of decreasing your benefits to lower your premium now and I would certainly advise that before letting your coverage go.  If you would like my help further, please email rhonda@GotLTCi.com to set up a telephone consultation so I can ask you some questions and customize a recommendation.

 

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