The letter arrives with a return address you barely recognize and a number you can’t miss: Your long-term care premium is going up 60%. You’ve got a few weeks to decide. And your first instinct — I’ll just cancel — is the one move that guarantees you lose.
Here’s why. Suppose you’re 81. You bought a long-term care policy at 62 and paid $2,800 a year for 19 years. That’s more than $53,000 out the door. Now the insurer wants $4,480 a year, an extra $1,680.
Stop paying, and the policy dies. Every one of those 53,000 dollars dies with it. There’s no refund, no cash value, no partial credit. You’re uninsured at 81, at precisely the age you’re most likely to need care.
So don’t cancel. Not yet, and maybe not ever. You have at least five options, and one of them costs you nothing.
Why this is happening to you
First, understand you didn’t do anything wrong. The insurance industry did.
According to the National Association of Insurance Commissioners, older long-term care policies were priced on assumptions that proved badly wrong. Insurers underestimated how many policyholders would qualify for benefits, and how long they’d stay on claim.
And they assumed far more people would drop their policies along the way. They didn’t. Policyholders hung on, which left insurers exposed to claims they never budgeted for.
The Pennsylvania Insurance Department puts it plainly: Policyholders have sometimes been hit with large increases, and it’s one reason fewer companies sell this coverage at all. The federal government’s Administration for Community Living warns buyers up front that the company may raise premiums.
Cold comfort. But you’re not being singled out: The NAIC’s consumer guide says a company can’t raise one person’s rate because they got sick or filed a claim. It’s the whole block of policies, or nobody.
1. Pay the increase
I’ll start with the option nobody wants to hear, because for some people it’s the right one.
Run the numbers on what you’re buying. If your policy pays, say, $200 a day for three years, that’s a benefit pool north of $200,000 — more if an inflation rider has been growing it for 19 years. You’re paying $4,480 a year to protect it.
At 81, the odds you’ll use that coverage are far higher than at 62. If you can absorb the increase without hurting your daily life, pay it. Nobody will sell you a new policy at your age on anything close to these terms.
Then make it tax-smart. I’ve been a CPA since 1981, so here’s what I’d tell a friend. Qualified long-term care premiums count as medical expenses, up to age-based limits. For the 2025 tax year, IRS Publication 502 sets the 71-and-over limit at $6,020, so all $4,480 counts.
The catch: You only deduct medical expenses above 7.5% of adjusted gross income, and only if you itemize. But if you’ve got a health savings account, Publication 969 says you can pay those premiums from it tax-free, up to the same limit.
2. Reduce the daily or monthly benefit
Can’t or won’t pay more? Then the goal is to keep the policy alive at a premium you can live with. Insurers do this by trimming benefits, and the NAIC guide says most of them will let you downgrade if the premium becomes a problem.
The first lever is the benefit amount. If your policy pays $250 a day and you cut it to $200, your premium drops. You’d cover the gap yourself if you ever need care.
Before you choose this one, check what care actually costs where you live today. A daily benefit that felt generous in 2007 may already be short of the bill.
3. Shorten the benefit period
The second lever is how long the policy pays. Cutting a five-year benefit period to three, or three to two, lowers the premium without touching the daily amount.
That’s a real trade-off. But a policy that covers the first two or three years at full strength protects you against the most likely scenario. It’s usually a better trade than gutting the daily benefit and coming up short from day one.
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4. Reduce or drop the inflation rider
This is the biggest lever most people have, and the one insurers are happiest to offer.
An inflation rider raises your benefits automatically every year with no change in your premium. The NAIC guide notes that’s exactly why it’s expensive: It multiplies the insurer’s future exposure.
But if you’ve had that rider for 19 years, it’s already done most of its work. Your daily benefit may have nearly doubled. Freezing it at today’s level, or slowing the growth rate, often knocks a big chunk off the increase while leaving benefits far richer than you started with.
At 81, you’re not buying protection against 25 more years of inflation. You’re buying protection against the next several. Price it that way.
5. Take the paid-up policy
This is the option that costs you nothing, and it’s the one people accidentally throw away.
It’s called contingent nonforfeiture. The NAIC guide describes it as a requirement in some states that kicks in when a premium increase crosses a threshold tied to your age at purchase. When it applies, the insurer must offer a way to keep coverage without paying the higher premium.
Typically, that means a paid-up policy. You stop paying forever. In exchange, your benefit pool shrinks, often to roughly the total premiums you’ve already paid. In our example, that’s about $53,000 in future care for zero additional dollars.
Compare that to letting the policy lapse, where the same $53,000 evaporates.
One critical warning: You have to elect this in writing before the deadline in your letter. Simply not paying isn’t the same thing. Miss the window, and the insurer treats you as lapsed, not paid-up.
How to work the decision
Whatever you lean toward, do these things first.
Ask for the full menu. The letter may highlight one or two options. Call and demand every reduced-benefit alternative, in writing, with the premium for each.
Call your state insurance department. Regulators approve these increases, and some help policyholders facing them. Pennsylvania’s department, for example, says its Consumer Services Bureau will assist with rate hikes. Yours may too.
Bring your kids into it. If you ever need care, they’ll be managing it, and possibly paying the difference. They should know what you decided to keep.
Then lapse-proof the policy. Put the premium on autopay from an account that won’t run dry. Ask the insurer to add a third-party notice, so a child or trusted friend is alerted if a payment is missed. Policies have been lost to an unopened envelope.
The bottom line
A 60% increase feels like a betrayal, and in a sense it is. You held up your end for 19 years; the industry’s math failed.
But the worst response to a bad deal is to make it worse. Canceling hands the insurer everything you’ve paid and leaves you exposed. Paying, trimming, freezing or going paid-up all keep some of that money working for you.
Pick the one you can live with. Put it in writing. Do it before the deadline.
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