Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

A Market in Collapse Long-Term Care Insurance Policyholders Face Tough Choices as Premiums Skyrocket

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

A Market in Collapse Long-Term Care Insurance Policyholders Face Tough Choices as Premiums Skyrocket

Article excerpt

The following CORRECTION/CLARIFICATION appeared on January 9. A story Sunday contained incorrect information on Genworth Life Insurance Co.'s financial results. In its third-quarter report, Genworth recorded a loss of $34 million from long-term insurance year-to-date, not just in that quarter, and said it had received approval from state agencies for average rate increases of 53 percent year-to-date. In addition, it had submitted 53 rate hike filing requests with state agencies year-to-date, although some are still waiting for approval. In addition, David Rivera's premiums were annual, not monthly.

A 20 percent rate increase in his long-term care insurance premiums in October was bad enough, David Rivera said.

But the clincher came in the letter he received about the new rate: His insurance carrier, Genworth Life Insurance Co., planned to seek at least 150 percent more in premium increases over the next six to eight years for coverage that Mr. Rivera bought nearly 20 years ago for long-term care for his wife, Clara, 67, and himself.

"The letter is really meant to scare people," said Mr. Rivera, who is 73 years old and lives in West Mifflin. "A lot of people want to do the right thing and not be a burden to their families. I was trying to be responsible about our care."

Long-term care policyholders faced with painful rate hikes are in a bind. Canceling coverage because of rising premiums could mean forfeiting money that was paid over the years to the carrier or accepting skimpier benefits. Keeping the coverage means swallowing rates that keep rising.

But the only wonder may be why Mr. Rivera's rate hike wasn't higher.

In its third-quarter report to shareholders, the Richmond, Va.-based Genworth - which recorded a loss of $34 million from long-term insurance to date -- said it had received approval from state agencies for average rate increases of 53 percent year-to-date.

And more rate increases are on the horizon. In the fourth quarter, Genworth submitted 53 rate hike filings with state agencies, year-to-date, -- although some are still awaiting approval --affecting $335 million in premiums, according to a report accompanying the financial results.

All together, Genworth has lost $3.1 billion on long-term care insurance business. "We continue to lose money on these older policies each year - losses we will never recover," spokeswoman Julie Westermann said in a statement. "We continue to file for premium rate increases to bring these older policies closer to break-even."

For policyholders who don't want to pay the premiums anymore, the company provides a paid-up policy equal in value to what has already been paid, so the consumer has some coverage for long-term care expenses, she said.

Pennsylvanians are feeling the sting of those rising rates. Genworth is the biggest long-term care insurer operating in the Keystone state, with more than 49,500 members here.

Behind the rate hikes is a market that's collapsing. Genworth is among a decreasing number of companies selling insurance to cover medical care provided outside the hospital.

Last year, for example, long-term care insurer Penn Treaty of Allentown was forced into liquidation by state regulators because its assets no longer covered its liabilities, Pennsylvania Insurance Commissioner Jessica Altman said.

"Many of the assumptions that were used, which were believed to be accurate, weren't accurate," Ms. …

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