Long-Term Care Insurance Premiums Surge Amid Market Adjustment in New York
Lawrence Howard, a retired policyholder in Amherst, faces consecutive annual premium increases of 37.5% for four years on his long-term care insurance policy with Massachusetts Mutual Life Insurance Co. (MassMutual), approved by state regulators. This will raise his annual premium from $3,181 in 2024 to over $11,000 by 2028, representing a 257% increase. Howard's situation highlights widespread issues in the long-term care insurance market, where past pricing miscalculations and longer-than-anticipated policy durations have led to rising premiums and insurer market withdrawals. The aging U.S. population and escalating costs for nursing homes and home care exacerbate affordability challenges for seniors on fixed incomes.
Howard originally purchased his policy in 2005 with an annual premium near $2,800, intending it to cover eventual long-term care needs at home or in assisted facilities. However, New York's Department of Financial Services (DFS) reports that low initial premiums and unexpected low lapse rates undermined the market's sustainability. The state admits prior regulatory approaches limiting rate increases may have prolonged market instability. The number of New Yorkers holding long-term care policies has declined sharply, falling from 754,000 in 2002 to about 394,000 by 2020.
MassMutual's financial standing, with operating earnings of $2.8 billion on $41 billion in sales in 2024, contrasts with the steep hikes imposed on long-term care insurance policyholders. The insurer and others like MedAmerica, First Unum, Mutual of Omaha, John Hancock, and Genworth have sought or received regulatory approval for significant premium raises ranging from 1% up to 96%, reflecting industry-wide pricing corrections. The DFS reviews all rate filings to ensure actuarial justification and policyholder protections, often phasing increases over multiple years.
Case studies, including Dr. Donald Armenia who also bought long-term care insurance from MassMutual in 2005, demonstrate policyholders' concerns about affordability and fairness. Armenia's premiums are projected to reach $13,496 in 2028 after progressive hikes. Both Howard and Armenia cite the prolonged payment of premiums juxtaposed with uncertainty over future costs and whether benefits will ever be utilized, underscoring market challenges.
Policyholders’ complaints to DFS, such as Howard’s formal grievance, have found no violations but underscore growing distress in this segment. To manage rising premiums, some like Howard have reduced coverage parameters, though affordability remains a major concern. The long-term care insurance market continues to navigate regulatory scrutiny, actuarial recalibrations, and consumer trust issues amid rising care costs and demographic shifts.
The long-term care insurance sector exemplifies the complexity of maintaining actuarial balance over extended policy durations, negotiating regulatory oversight, and responding to market and demographic pressures. Key insurers continue to adjust premiums in attempts to sustain solvency and payout capacity for future claims. This evolving regulatory and market environment signals critical challenges for policyholders and insurers alike, emphasizing the need for transparent rate-setting practices and sustainable product designs in long-term care coverage.
Insurance professionals should watch regulatory trends, insurer financial strategies, and demographic impacts as long-term care insurance premiums adapt. Market participants must balance consumer protection with solvency, highlighting the ongoing tension between affordability for aging individuals and actuarial realities driving premium adjustments.