Yes, long-term care insurance premiums do increase, and on traditional standalone policies the increases have often been large. A nationwide data call reported to the NAIC found the average cumulative approved rate increase across existing policy blocks is 112%, meaning the typical affected policyholder now pays more than double the original premium.1National Association of Insurance Commissioners (NAIC). Long-Term Care Insurance Rate Increases and Reduced Benefit Options What your insurer cannot do is single you out. Every increase has to be approved by your state insurance department and applied to an entire class of policyholders, regardless of anyone’s age, health, or claims history.
How Large the Increases Have Been
When insurers first sold these policies in the 1980s and 1990s, they certified that initial premiums were “reasonably expected to be sustainable over the life of the form with no future premium increases anticipated.” That language sits in the NAIC model regulation that governs the product.2National Association of Insurance Commissioners (NAIC). Long-Term Care Insurance Model Regulation The projections turned out to be badly wrong.
A data call covering more than 3,500 approved rate increases found insurers requested an average single increase of 78%, while regulators approved an average of 37% per request.1National Association of Insurance Commissioners (NAIC). Long-Term Care Insurance Rate Increases and Reduced Benefit Options Because many policyholders have been through several rounds of increases, the cumulative hikes are far larger than any single filing. The 112% cumulative average is the typical experience. Financial planners interviewed for the same NAIC study reported clients facing increases of up to 500%.
Why Insurers Raise Premiums
Three mispriced assumptions explain most of the gap between what early policies were expected to cost and what insurers actually owe.
Care costs rose faster than priced in. Actuaries working in the 1980s and 1990s had limited data on where long-term care costs would eventually land. The federal Long-Term Care Partners program estimates care costs have been rising at a 30-year average rate of about 2.54%.3FLTCIP. Costs of Long Term Care Compounded over two or three decades, a nursing home stay priced at $50,000 a year when the policy was written can cost well over $100,000 by the time a claim is filed.
Fewer policyholders dropped their coverage than projected. Early pricing counted on a meaningful share of policyholders lapsing before ever filing a claim, with those forfeited premiums effectively subsidizing the people who stayed. Research on policies issued in the early 1990s found only about 26% had lapsed after five years, and roughly 41% after fifteen. Real numbers, but lower than the models assumed, which left insurers owing benefits to a larger pool than they had budgeted for.
Investment returns fell short. Insurers invest premium dollars in bonds and other fixed-income assets to grow the reserves that pay future claims. Policies sold in the 1980s and 1990s assumed higher returns than materialized during the prolonged low-interest-rate stretch from roughly 2008 through 2021. When investment income lags, premium is the only other source of money.
What Keeps the Insurer From Raising Your Rate Individually
Federal tax law and the NAIC model regulation both require long-term care insurance policies to be guaranteed renewable.4Office of the Law Revision Counsel. 26 US Code 7702B – Treatment of Qualified Long-Term Care Insurance Your insurer cannot cancel your coverage or raise your personal premium because of changes in your age or health, as long as you keep paying.
Approved increases must apply to an entire class of policyholders. A class is typically defined by the policy form, the state where the policy was issued, or the year of purchase. If your class gets a 30% increase, everyone in that class gets the same 30% increase regardless of whether they have filed claims or developed health conditions. An insurer that tried to single out high-risk individuals would face regulatory penalties and breach-of-contract litigation.
The class-based rule has one wrinkle worth knowing about. Approved increases can vary by benefit tier within a class. Policyholders who selected richer benefits, such as lifetime benefit periods or generous inflation protection, sometimes see larger percentage increases than those with leaner coverage, because the richer benefits are driving disproportionately more of the insurer’s projected costs. Whether that variation is permissible or crosses into impermissible sub-classification has been the subject of litigation.
How State Regulators Review Rate Increases
No insurer can raise your premium on its own. Every long-term care insurance rate increase has to be filed with and approved by the state insurance department in each state where policyholders live. These departments work from standards shaped by the NAIC model regulation, which most states have adopted in some form.
To request an increase, the insurer submits actuarial data showing current premiums cannot sustain projected obligations. Regulators evaluate whether the proposed amount is justified by actual claims experience, investment performance, and reasonable future projections. The legal standard in most states requires rates not to be excessive, inadequate, or unfairly discriminatory. Inadequacy matters too: premiums set too low can push the insurer toward insolvency, which would leave claims unpaid.
If the data does not support the full amount requested, regulators can approve a smaller increase or deny the request outright. That is a common outcome. The gap between the 78% average request and the 37% average approval shows regulators routinely cut these filings by roughly half.1National Association of Insurance Commissioners (NAIC). Long-Term Care Insurance Rate Increases and Reduced Benefit Options
Notice You Will Receive Before an Increase Takes Effect
Once a rate increase is approved, your insurer cannot just start billing the new amount. The NAIC model regulation requires at least 45 days’ written notice.2National Association of Insurance Commissioners (NAIC). Long-Term Care Insurance Model Regulation Some states require longer, typically up to 60 days.
The notice has to include several specific pieces of information:
- The new premium schedule that will apply going forward.
- An offer of options to reduce benefits so your premium stays at or near the current level.
- A summary of every premium increase applied to your policy form over the past ten years in any state, including the percentage of each increase and the years the form was sold.
- Information on contingent nonforfeiture rights if cumulative increases have hit the threshold tied to your age at issue.
These requirements exist because insurers used to bury rate increases inside routine billing notices. The ten-year history disclosure is particularly useful: it lets you see the trajectory of increases on your policy form and decide whether to keep paying, scale back, or exercise your nonforfeiture rights.
What You Can Do When a Hike Arrives
Paying the full increase is the simplest response, not the only one. Insurers are required to offer ways to adjust coverage so your premium stays closer to what you have been paying. The common levers, roughly in order of how much long-term protection you give up:
- Shorten the benefit period. Going from, say, five years of coverage to three years lowers the insurer’s maximum exposure and cuts your premium while keeping the same daily benefit and inflation protection. Often the first lever worth pulling.
- Extend the elimination period. This is the number of days you pay for care yourself before the policy starts paying. Moving from 30 days to 90 days reduces premium but increases out-of-pocket cost at claim time.
- Lower the daily or monthly benefit amount. A direct cut to coverage that preserves features like inflation protection.
- Reduce or remove the inflation rider. Stepping compound inflation from 5% to 3%, or dropping it, can meaningfully cut premium. For a policyholder in their 70s or 80s whose rider has already done most of its compounding, that trade can make sense. For someone in their 50s, giving up inflation protection could gut the policy’s value over another two decades.
Contingent Nonforfeiture Benefits
If cumulative rate increases push your premium past a specified threshold, you gain the right to stop paying and convert the policy to a paid-up status with a shortened benefit period. That is the contingent nonforfeiture benefit, and it exists specifically for policyholders who have paid in for years and can no longer afford the increases.2National Association of Insurance Commissioners (NAIC). Long-Term Care Insurance Model Regulation
The trigger depends on your age when you bought the policy. For a purchase at age 55, the right kicks in when cumulative increases reach 90% of the original premium. At age 65, the threshold is 50%. At older issue ages, the thresholds drop further. If your premium has been pushed to the trigger level and you stop paying within 120 days, you are deemed to have elected the paid-up benefit rather than lapsed. The paid-up benefit is typically equal to the total premiums you have paid over the life of the policy, payable toward qualifying long-term care services.
Without this protection, someone who could no longer afford an inflated premium after 15 or 20 years of payments would walk away with nothing. The contingent nonforfeiture benefit means you get something back even when the economics of the policy have shifted beyond what either side originally planned for.
Do Hybrid Policies Avoid Rate Increases
Most of the rate-increase problem is concentrated in traditional standalone long-term care policies sold before the mid-2010s. In response to consumer pushback over unpredictable premiums, the industry has shifted heavily toward hybrid policies that combine life insurance with long-term care coverage.
Hybrid policies typically use a single lump-sum payment or a limited series of guaranteed payments spread over a set number of years, often ten. Once the pay-in period ends, you are done. There is no ongoing premium to raise. If you never need long-term care, the policy pays a death benefit to your beneficiaries instead of expiring worthless.
The trade-off is cost. Hybrid policies require substantially more money up front. A traditional policy might have started at $2,000 to $3,000 per year, while a hybrid could require $50,000 to $150,000 as a single premium, or $10,000 or more annually during the pay-in period. For a buyer with the assets available who wants certainty, the fixed-premium structure removes rate-increase risk. For a buyer who needs to spread the cost over many years, a traditional policy with the possibility of future increases may still be the only workable option.
Any premium increase on a hybrid product would apply to the long-term care rider rather than the underlying life insurance premium, and such increases are rare in practice. The guaranteed-premium design is the main reason hybrids now dominate new sales in this market.