Long Term Care Increases in Texas
December 16th, 2014
Long Term Insurance is something that everyone needs but no one likes to think about. That is, until long-term care policy holders in Texas were told that their premiums would increase by 75%. Read on to learn more about the Long Term Care increase, reasons behind the increase, and what may lie ahead for Texas policy holders in the future.
How did the LTC increase in Texas get passed?
After the 75% increase was approved by the Texas Department of Insurance (TDI), many people are asking whose side the department is on. Are they designed to support the large insurance corporations or to support insureds in need of affordable care? Did the agency have a choice or are its powers so limited that they could not prevent the increase?
The answers to the above questions are somewhat complicated. Many Texas residents were upset about the Long Term Insurance increase when they found out that most other states in the US only agreed to a 20-25% premium increase for the same policies. The TDI maintains that it agreed to a higher increase for two reasons. One, by agreeing to the high increase, Allianz Life Insurance Co (who requested the increase in the first place) will not come back for more in the next several years, whereas other states will likely see further premium increases over the next several years. Two, TDI can’t approve a rate increase of an amount less than what the company can prove it needs. TDI can’t take the increase into their own hands – regulators must review the insurance company’s financial records and prove that the company needs the premium increase.
In order to change this law, legislative action is required, which explains why other states were able to approve a smaller premium increase.
Why do insurance companies need such a high increase?
The reason for the drastic increase is simple, there were more claims in the past several years than insurance companies can afford at the current premiums. In order to stay afloat and be able to continue offering the policies, customers must pay a higher price. One reason for the increase in claims can be attributed to the baby boomer population aging and requiring a heavier investment in long-term care.
The policies that many customers signed up for ten or more years ago had much cheaper premiums because there were simply fewer claims to process and pay out.
What does the increase mean for Texas residents | What other options do I have?
The first and most obvious effect of the approved premium increases is that those with long-term care policies will have to re-evaluate their budgets to include the higher premium, or elect to seek alternative long-term care options. However, one positive aspect of the higher premium increase is that policies will continue to be available as the insurance companies are able to better keep up with the number of claims being processed as opposed to just getting rid of the expensive policies altogether. Many seeking a less costly coverage have turned to Group Policies through Employment Coverage Options. At Carlisle Insurance, we are prepared to quote Employee Benefit Programs including Short Term Disability and Long Term Disability contact us today for a quote.
Texas residents should understand that the decision of Long term Care increases of premiums by 75% was not necessarily the choice of the Texas Department of Insurance, but that the increase was necessary for insurance companies to be able to continue providing long-term care policies. This increase should be a one-time increase for the foreseeable future, so policy holders can plan budgets around the new premium without worrying that it will continue to increase over the next few years.
Visit or contact our office Carlisle Insurance in Corpus Christi, Kingsville, Premont, or Alice TX to review the different coverage options available to you. We are glad to assist you in finding the affordable care coverage you deserve within Individual Care policies or Employee Benefits Program coverage options.