Long-Term Care Cost Inflation Picks Up: Genworth

Long-Term Care Planning Strategies

Fifteen years ago, issuers of long-term care insurance typically encouraged clients to buy coverage with 5% compound annual inflation protection, or at least 5% simple inflation protection.

In recent years, low interest rates and high long-term care insurance claim rates have reduced insurers’ ability to offer policies with 5% inflation protection at an affordable price. The insurers that still offer new stand-alone long-term care insurance policies have been encouraging consumers to buy policies with 3% inflation protection.

The 4.5% increase in long-term care services costs for 2017 means that, for many long-term care insurance benefits users, increases in care costs may have outstripped growth in policy benefits for the first time in several years. 

Genworth’s Strategy

Genworth is using the long-term care cost report to draw consumers’ attention to the fact that Medicare does not pay for long-term care, and that Medicaid pays for nursing home care only for people who meet strict income limits.

Genworth is encouraging consumers to consider buying stand-alone long-term care insurance and single-premium immediate annuities.

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