I-TEAM INVESTIGATION: Affording long-term care insurance

Long-term care insurance can help protect your savings if you ever need 24-hour care.
Published: Apr. 5, 2023 at 1:23 PM EDT|Updated: Apr. 8, 2023 at 9:29 AM EDT
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(WFSB) - Long-term care insurance can help protect your savings if you ever need 24-hour care. However, some people are finding as they get closer to needing the service, they can no longer afford it.

States across the country are trying to figure out how to regulate the industry as prices keep going up.

David Schwartzer lives in Newington, Connecticut. In 2004, Schwartzer and his wife each bought a long-term care insurance policy from Genworth Financial. Genworth is the largest provide of long-term care policies in the country. Genworth says it has 17,000 policyholders in Connecticut.

Schwartzer says they bought their policies with their families in mind.

“The last thing we want to do is burden our kids with having to financially take care of us as we get older and should something happen to one of us that we need to go to into assisted living or a nursing home or something like that,” said Schwartzer.

When they bought the policies in 2004, they each paid $1170 a year. Their policy would cover them for 3 years. It is now worth more than $500,000 in benefits.

The Schwartzers each paid $1170 a year through 2012, and then prices started to go up. There was first a 40% increase in 2013. There were 6 more increases through 2022, bringing the price per policy to $3,659. That’s a 213% increase overall, more than 3 times more than the original price.

“My wife and I had a lot of conversations around if we could afford this,” said Schwartzer.

Any time an insurance company wants to raise rates on its Connecticut customers, the increase must be approved by the state’s Department of Insurance.

Right now, the insurance department is deciding on another request. Genworth wants to increase the Schwartzers’ premiums again. Genworth is requesting a 136% increase. If approved, Schwartzer and his wife would each pay $8,635 a year. That’s more than 7 times the original price.

“I think at that point we would have no choice but to give up the policy,” said Schwartzer.

It’s not just Schwartzer’s policies that have gone up. A report of long-term care insurance data call to the National Association of Insurance Commissioners’ Long-Term Care Insurance Task Force in 2021 found there were more than 3500 approved rate increases nationwide. The average single requested rate increase was 78%. The average single approved rate increase was 37%.

There have also been several class-action lawsuits filed against Genworth Financial regarding rate increases. A 2019 lawsuit, Skochin v Genworth, included Schwartzer’s policy.

The lawsuit claimed Genworth intentionally withheld information from policy holders about its plans to increase rates. The lawsuit was settled. Genworth denied any wrongdoing and gave policy holders several options. The options allowed people to lower their annual premiums by lowering their benefits.

To Schwartzer, the options felt like a loss.

“The policy holders essentially got nothing,” said Schwartzer.

Schwartzer is now retired after working for decades in the insurance business, so he started researching. He found what he believes are flaws in Connecticut law that make it difficult for regulators to deny rate increases.

Schwartzer put his research together and sent it over to state representative Gary Turco.

Turco is now proposing a bill (5084) that would give regulators more power when approving rate increases The bill would allow regulators to look at a the financial health of the parent companies and require insurance carriers to provide more proof that rate increases are necessary.

“I think this is an area where government has to step in and provide more regulations because the market itself is not self-regulating, and the consumer is getting hurt in the meantime,” said Turco.

Bill 5084 is one of a number of bills this session addressing the long-term care insurance industry. Turco says it’s a complicated issue that is not unique to Connecticut. There has not been a hearing on HB 5084, but Turco thinks a bill about long-term care insurance in some form will be passed.

“I think it’s a great place to start the conversation and some of the ideas in this bill along with a lot of the other ideas that other legislators have proposed will probably be combine into something that gets passed, “said Turco.

Genworth denied the I-team’s request for an interview and instead sent a statement:

As a result of higher-than-expected claims, Genworth is seeking actuarially justified premium increases on our legacy long-term care insurance business to reduce future losses, move toward economic breakeven, and support our ability to pay all future claims for our long-term care insurance policyholders.

The range of the requested increases varies based on policy benefits and is subject to review and approval by the Connecticut Insurance Department for long term care policies issued in this state.

We are committed to communicating clearly with our policyholders about any approved increase amounts, providing a range of options to help them manage rate increases and retain meaningful benefits, and offering helpful information and other assistance to enable them to make informed choices.”

Genworth provided this statement in regards to the proposed legislation in Connecticut.

Genworth welcomes the opportunity to engage with members of the Connecticut General Assembly as they consider proposed legislation related to long term care insurance.

Genworth reported more than 600 million dollars in profit in 2022.

Schwartzer thinks it all comes down to one thing, “In its simplest terms, this is just corporate greed.”

The department of insurance is still accepting public comment when it comes to the proposed rate increase on Schwartzer’s policy.

People can view all requested rate increases and file public comment here.

The website sorts the filings by company and then by policy form.