Long-Term Care Insurance Rate Increases: The Raw Truth & What It Means for Your Policy
Why older policies saw skyrocketing premiums, how modern Rate Stability Regulations protect new buyers, and what options you have if your rate goes up.
Why Do Long-Term Care Insurance Rates Increase?
Long-term care insurance premiums increase primarily because historical actuarial assumptions underpriced older policies issued before the early 2000s. Actuaries originally assumed a 5% annual policy cancellation (lapse) rate; in reality, less than 1% of policyholders cancelled, leading to claims payouts that were double initial projections. Additionally, historically low interest rates reduced bond returns for insurance company reserves.
Premium increases cannot be applied to an individual based on age or health changes. Instead, rate adjustments must be applied class-wide across an entire state and require explicit state insurance commissioner approval.
Are New Long-Term Care Insurance Policies at Risk of the Same Rate Increases?
The Bad News is the Good News. Policies issued today are the most conservatively priced long-term care policies ever offered by insurance carriers. While older policies were priced cheaply and required massive adjustments later, modern policies already price in decades of real-world claims data, low interest rates, and low lapse rates.
The NAIC Rate Stability Regulation Protection
In 41 states, policies purchased after the implementation of the National Association of Insurance Commissioners (NAIC) Rate Stability Regulation are governed by strict pricing rules:
- Profit Restrictions: Insurers are forced to limit profit margins if they seek a rate increase, removing the financial incentive to underprice initial policies.
- Mandatory Actuarial Cushions: Insurers are required to build a financial margin for error (typically ~10–12%) into initial pricing to absorb unexpected claim spikes without raising rates.
- Actuarial Certification: Qualified actuaries must certify that initial premiums are expected to remain level over the lifetime of the policy.
Select Your State Below to View Local Rate Stability Laws and History
Rate stability laws are non-retroactive; protection depends on the specific date your state enacted the NAIC Rate Stability Regulation relative to your policy's issue date. Click on your state below to review enactment dates, rate history rules, and state-specific Long-Term Care Partnership asset protection guidelines.
Rate Stability Regulation Map
Click on your state to learn more about long-term care insurance rate increases and consumer protections under the Rate Stability Regulation (RSR).
Frequently Asked Questions & Actionable Strategies
What should I do if I receive a rate increase notice on an existing LTC policy?
If you receive a rate increase notification, do not immediately cancel your coverage[cite: 1]. Insurance regulations mandate that carriers provide options to mitigate the cost[cite: 1]. Options include:
- Reducing the Inflation Rider: Lowering a 5% compound inflation rider to 3% or a lower rate can often reduce your premium back to its original level while retaining substantial pool value[cite: 1].
- Shortening the Benefit Period: Reducing your lifetime maximum pool (e.g., from 5 years to 3 years) scales down premium burdens while keeping catastrophic protection in place[cite: 1].
- Lengthening the Elimination Period: Extending your deductible period (e.g., from 90 days to 180 days) reduces ongoing annual rates.
- Utilizing Contingent Nonforfeiture: If a rate hike exceeds a regulatory threshold, you may qualify to stop paying premiums entirely and keep a paid-up policy equal to 100% of the premiums you have paid to date[cite: 1].
Are Hybrid Life/LTC policies immune to rate increases?
Most Asset-Based (Hybrid Life/LTC) policies feature fully guaranteed premiums that cannot increase[cite: 1]. However, hybrids are often two to four times more expensive than stand-alone traditional LTC insurance for equivalent care benefits. Additionally, hybrids do not qualify for State Long-Term Care Partnership Medicaid Asset Protection programs[cite: 1].
How do I verify if my policy is protected under Rate Stability Regulation?
Your policy is covered under Rate Stability rules if it was issued after your home state officially enacted the NAIC Rate Stability Regulation[cite: 1]. Group policies (such as federal or municipal group plans) and older individual policies issued prior to your state's enactment date are generally exempt from these pricing rules[cite: 1].
To protect consumers purchasing LTC policies today, 41 states have passed strict pricing regulations.
Click on your state to learn more.
RSR Map