Everything seems to cost more these days, but a La Vista woman says her insurance rate hike is beyond outrageous. She’s a widow being asked to come up with more money to keep a policy she's had for 15 years. A Nebraska senator has been asked to make a federal case of it.
Sixty-seven years old and not ready for a nursing home, Patricia Rief-Heskett has a policy to pay the cost when and if the time comes. “I have known people here in Nebraska who have lost their home due to nursing home care."
She’s shocked by a notice that the monthly premium is going up by 90 percent. “I had to sit down when I read that.”
In April, the widow on a fixed income will see her premium jump from $192 to $369 dollars a month. Patricia has an expensive decision to make, either pay higher premiums for a policy she's had for 15 years to protect her assets or a lesser policy and perhaps put it all in jeopardy.
“I paid my premiums, I've never been late, now this hits you over the head.”
An expert in long-term care policies says insurance companies missed the mark. “They thought people would be dying, they thought people would stop paying for policies, those things are not coming to fruition as they projected,” says insurance expert Mark Lisko.
The notice from John Hancock offers options, but Patricia says it’s not the same. “It’s not fair and down the road what are they going to do? Just run us out of our policies.”
Patricia would like some assurance from the insurance company that rates won't go up 90 percent again before deciding if she''ll put her "John Hancock" on the policy renewal.
John Hancock sent Fact Finders an email response, saying people are simply living longer and using nursing home coverage more than anticipated.
"Long-term care insurance is still a relatively young industry and carriers are now seeing and learning from the claims experience of policyholders at the older ages and later policy durations when most long-term care is needed. What we’ve seen is that people are living longer and significantly more people are using the insurance for longer periods of time than anticipated.
It is mainly this new experience that is driving the change in our future claims projections and the subsequent need to increase premiums so we are able to meet all of our claims obligations going forward.
Most carriers with extensive experience in this business have raised premiums for their existing individual policyholders over the past few years."
Nebraska Department of Insurance Director Bruce R. Ramge emailed Fact Finders this response:
"Before it increases long-term care insurance premiums, a company must file the proposed rates with the Department of Insurance and it must demonstrate that the rates are reasonable in relation to the benefits provided. By law, long-term care insurance premiums are deemed reasonable if at least 60 percent of the premium collected by the company is expected to be returned to policyholders in benefits.
A check of the Department’s records confirms that John Hancock filed the rates with this department along with actuarial documentation showing that the required and expected loss experience has been exceeded.
Apparently, the company had loss experience greater than expected as the number of anticipated policyholders keeping their policies and using benefits was initially underestimated.
The Department of Insurance recognizes the adverse impact this type of rate increase has on people, particularly those with fixed incomes. Although the rate increase was actuarially justified, we were able to encourage the company to offer alternative options to help minimize the rate increase, such as accepting lower benefits or reducing future inflation protection.
Callers with questions should be encouraged to contact the Department’s consumer hotline at 877-564-7323."
Sen. Mike Johanns is looking into whether the large rate increase is justified. Some companies are now offering long-term policies that lock in premiums for about five years, but expect those monthly payments to be high.
