Long-term care insurance

Customers, insurers, brokers and regulators gather to discuss recent hikes in premiums for long-term care insurance plans at a Tuesday meeting organized by the S.C. Department of Insurance in Columbia. 

COLUMBIA — Companies that marketed insurance plans covering long-term care for the elderly during the last years of life broke promises by hiking costs, a group of frustrated customers said during a meeting in Columbia Tuesday.

Some said those insurance costs have become so high that they may be forced off the plans they bought years ago and planned to use to ward off the high price of nursing homes and assisted living. But as long-term care insurance premiums have risen, the cost of those facilities has skyrocketed, too — something no one guessed when the plans were first marketed.

About 60 people gathered at the South Carolina Bar Conference Center Tuesday to discuss long-term care insurance in a forum organized by the S.C. Department of Insurance. Ray Farmer, director of the department and a member of Gov. Henry McMaster's cabinet, said addressing the problem of these high-cost plans is his first priority.

Regulators, insurers, brokers and consumers alike vented for hours into a microphone about the issue.

Long-term care insurance has been sold for about 30 years, though far fewer plans are for sale today. Expenditures on nursing homes and assisted living are now more than 10 times what they were in the 1970s, according to the National Association of Insurance Commissioners. Insurance companies never expected so many people to hold on to their plans and cash in on them.

Farmer said he has not approved any rate increase for long-term care insurance premiums more than 20 percent, though companies have asked for more. For now, however, there is no end to the hikes in sight.

Jerry Cooke of Columbia told the group he retired recently. He and his wife bought long-term care insurance plans 12 years ago. In the last three years, they've seen three premium increases, one for 12.5 percent and two for 20 percent. 

Cooke said it's hard to make a choice about whether to keep the coverage without knowing how much more the prices will go up.

"It just keeps going on and on. When does it end? That's what I want to know," he said. "How high will it go up?"

Cooke said the problem reminds him of the V.C. Summer project's failure. There was no incentive to get it right when companies sold the insurance plans, he said, and now the cost of the companies' mistakes are being passed to the consumer.

Most customers agreed they wanted to keep their plans. Insurers present at the meeting commended the crowd for having the foresight to buy them. 

But most at the meeting were also reluctant to accept indefinite premium hikes. 

Each of those increases has to be approved by the S.C. Department of Insurance. 

Farmer said some companies have asked to increase their premiums by upwards of 80 percent in the last several years. While the companies have been able to justify raising their fees, he said consumers cannot continue to pay. 

"We’ve seen rate increases that are astronomical," Farmer said. He owns a plan himself, he added. "We’re being priced out of the product.”

At least two people mentioned the possibility of a class-action lawsuit.

Information from the Department of Insurance shows in 2016, nearly 95,000 South Carolinians were covered by the plans. Premiums collected amounted to $162.7 million.

A group of insurance company representatives, including from Genworth Life, Prudential, John Hancock Life, Northwestern Long Term Care and Metropolitan Life maintained that the increases were inevitable. They laid out ways customers could reduce their benefits rather than accept a higher price. But those aren't good options, Farmer said.

One Genworth representative said 235,000 people have called the company to discuss rate increases in the last two years.

People buy the plans to help cover the costs of nursing homes and other long-term care facilities. The plans typically cover a certain amount per day; one customer who spoke said their benefit covered $215 for every day. 

By comparison, the cost of a private nursing home room in 2017 was about $8,000 per month, according to a Genworth survey. That's roughly $266 per day. The terms differ on what they cover.

Doug Jolley, who lives in Columbia and works as an insurance agent, said his parents each have long-term care insurance policies. And their plan has more than proven its worth. They paid several thousand dollars in premiums every year, he said.  

"Even with the kind of rate increases we've been talking about, in two months my parents will have received every dime that they paid into those policies for 18 years back," he said. "That's a pretty good return compared to anything else you can buy out there."

Bill McKinnon, a Columbia resident, thinks he will never need the return. He bought the insurance in a group plan from Aetna at $21 per month. Aetna later sold the plan to Prudential, and in recent years, the price has gone up to $32 per month, he said — some of the lowest costs mentioned by customers at the meeting.

McKinnon said he was promised that his rates wouldn't go up when he bought it. Now, he said it seems Prudential wants him to drop the plan.

He hopes he'll die before he ever uses it, he said. But he's been paying the monthly price for 24 years, and he refuses to abandon it, even if the hikes continue.

Reach Mary Katherine Wildeman at 843-937-5594. Follow her on Twitter @mkwildeman.