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Does your family own a long term insurance policy for your aging parents? This valuable insurance sets the minds of many people at ease, ensuring that they will be able to pay for assisted living or home health care in La Jolla when their parents need help with daily tasks. A widespread crisis among companies that provide this insurance, however, is threatening to leave policyholders responsible for far higher costs than they thought possible.
Errors in Analysis of Home Health Care Costs
The root of the crisis at hand goes back many years, when insurance companies first began selling long term insurance policies. Analysts estimated what a typical situation, whether in a nursing home or for home health care, would cost the insurers in the end, and based the monthly premiums they charged on that estimated amount. Unfortunately, it is now clear to everyone involved that those analysts grossly underestimated how much the necessary services would actually cost.
Other Factors Contribute To Costs
There were a few other things that insurance providers were not quite prepared for. For one thing, once a person bought a long term policy, they hardly ever let it lapse—that is, companies end up paying out on almost every policy they sell. Also, the investments made by companies using the money gained from monthly premiums have not brought in the kind of returns they anticipated.
The End Result For Home Health Care in San Diego County
Many companies have responded to these issues by simply closing up shop and getting out of the business. Others, though, have done something that policyholders thought was impossible: they are raising premium rates. Small loopholes allow companies to raise the amounts they charge customers for their policies, even though they represented them as “level premium” policies in the first place. In the worst case scenario, customers are seeing their monthly premiums rise by 90 percent.
If you hold a long term insurance policy for covering the costs for in-home care or for assisted living services, you should review your policy carefully and keep an eye out for any updates. You might even contact your insurance company directly and ask if there are any plans to raise rates.