Emerging Issues with Long-Term Care Insurance in 2025: What Policyholders and Providers Need to Know
Jan. 7, 2025
Long-term care insurance (LTCI) is an essential part of many individuals’ retirement planning, designed to provide financial support for those who need extended assistance with daily living activities due to age, illness, or injury. However, as we approach 2025, the long-term care insurance industry is facing significant challenges, both from a legal and operational perspective. From rising costs to regulatory changes, policyholders and providers alike must prepare for an evolving landscape that may affect the availability, affordability, and effectiveness of long-term care insurance.
In this blog post, we’ll examine the key issues facing the long-term care insurance market in 2025, providing insights into the challenges and considerations for both consumers and insurance companies.
1. Rising Premiums and Affordability Concerns
One of the most pressing issues for long-term care insurance policyholders is the rising cost of premiums. Over the past decade, insurers have raised premiums on many existing policies, leaving many policyholders struggling to keep up with the increased costs. This trend is expected to continue in 2025, driven by the increasing demand for long-term care services, higher-than-expected claims, and the overall aging population.
As the number of individuals requiring long-term care increases, insurance companies are facing financial strain, which often results in premium hikes. The aging Baby Boomer generation, coupled with longer life expectancies, has created a significant demand for long-term care, pushing premiums higher for both new policyholders and those with existing policies.
What policyholders should know:
Review policy terms regularly: If you hold long-term care insurance, regularly review your policy for potential premium increases and assess whether it’s still affordable. Some policies include clauses that allow insurers to raise premiums, particularly for group policies, which may affect individuals as the policyholders age.
Shop around for new policies: If you’re considering purchasing long-term care insurance, compare different plans to find one that suits your needs and budget. Look for policies with guaranteed premiums and those that allow flexibility in adjusting coverage as circumstances change.
Consider hybrid policies: Hybrid policies that combine life insurance and long-term care benefits may offer a more predictable premium structure and provide flexibility in case long-term care is not needed.
2. Regulatory Changes and Potential State-Level Reforms
Regulatory changes at both the federal and state levels are poised to significantly affect the long-term care insurance market. For example, several states are exploring or have already implemented initiatives aimed at expanding long-term care coverage options. These include state-run insurance programs and mandates that require employers to offer long-term care insurance to their employees.
The most notable of these initiatives is Washington’s state-funded long-term care program, which was launched in 2022. Other states may soon follow suit, leading to a more complex regulatory environment for insurers and policyholders alike. Additionally, in response to the rising costs of long-term care, some states are exploring reforms to protect consumers from unreasonable rate hikes or offer tax incentives for purchasing long-term care insurance.
What policyholders should know:
Stay informed about state initiatives: Monitor any legislative changes in your state related to long-term care insurance. Some states may provide financial incentives, while others could introduce new requirements or restrictions.
Understand your coverage options: If you live in a state that is considering or has enacted state-run long-term care programs, understand how this will impact your current long-term care insurance policy. In some cases, you may need to adjust or supplement your existing coverage.
3. Access to Care and Network Limitations
Long-term care insurance policies often come with restrictions on the type of care that is covered and where it can be provided. Some policies limit coverage to care received in certain facilities or by licensed providers, while others may restrict benefits to home-based care or require the use of in-network providers. These limitations have been a source of frustration for many policyholders, especially as the demand for long-term care rises.
In 2025, more individuals are expected to need long-term care at home due to the growing preference for aging in place. However, many traditional long-term care insurance policies do not cover in-home care adequately, leading policyholders to either face out-of-pocket costs or explore supplemental insurance options.
What policyholders should know:
Understand your coverage limitations: Review your policy carefully to understand which care settings are covered and which are not. Ensure that the type of care you anticipate needing in the future is included in your policy, or consider adding riders or supplemental coverage.
Plan for aging in place: If you prefer to remain in your home as you age, make sure your long-term care insurance plan includes sufficient home care benefits. This may involve upgrading your policy or supplementing it with additional coverage.
4. The Impact of Technological Advances on Care Delivery
Technology is transforming the long-term care industry, with innovations such as telehealth services, remote monitoring, and robotic assistance becoming increasingly common. These technologies promise to improve the quality of care while reducing costs, which may have a long-term effect on the costs associated with long-term care insurance.
However, insurers have been slow to adapt their policies to accommodate new forms of care. Many existing policies do not clearly cover services like virtual doctor visits or remote monitoring, leading to potential gaps in coverage for those who rely on these technologies. Additionally, the use of telemedicine and other tech-based services may not always meet the criteria outlined in long-term care insurance policies, which are often based on traditional models of care.
What policyholders should know:
Check for coverage of technology-based services: If you expect to use technology-based services for long-term care, ensure that your policy covers these options. If it does not, explore whether you can add supplementary coverage or adjust your plan to include modern care options.
Prepare for care innovations: As the use of technology in long-term care expands, stay informed about new care options that may become available in the coming years. While insurers are gradually catching up with these innovations, you may need to advocate for your needs with your provider.
5. Changes to Claim Processing and Claims Denials
A persistent issue in the long-term care insurance industry is the frequency of claims denials. Policyholders may find themselves denied benefits due to a variety of reasons, including failure to meet the definition of "chronically ill" or not providing sufficient documentation to support a claim. As long-term care claims become more frequent, insurers are tightening their criteria for approving claims, which can result in increased disputes and delays.
In 2025, with a growing number of Baby Boomers needing long-term care, insurers are under increased pressure to manage claims efficiently and fairly. However, given the complexity of many claims, the potential for denial or delay remains high. Policyholders will need to be vigilant in ensuring that their claims are processed correctly.
What policyholders should know:
Know how to file a claim: Ensure that you understand the process for filing a claim and the documentation required. Policyholders should work with healthcare providers to gather the necessary medical records, assessments, and recommendations.
Appeal denials promptly: If your claim is denied, understand your right to appeal and follow the insurer’s appeal process carefully. In many cases, working with an experienced attorney can help you navigate the appeals process and increase the chances of success.
6. The Shift Toward Hybrid Long-Term Care Policies
As premiums continue to rise and standalone long-term care policies become more expensive, hybrid policies—those that combine life insurance with long-term care benefits—are gaining popularity. These hybrid policies allow individuals to use their life insurance to pay for long-term care, either in the form of a lump sum or a monthly benefit. They offer more flexibility and may provide a safety net if long-term care is not needed.
However, hybrid policies come with their own set of complexities. They may be more expensive than traditional life insurance policies, and the terms surrounding long-term care benefits can vary widely between providers.
What policyholders should know:
Evaluate hybrid policies carefully: If you’re considering a hybrid policy, make sure to evaluate the terms carefully. Ensure that the policy offers the coverage you need and that it is cost-effective for your situation. Compare hybrid options with standalone long-term care policies to determine which is better suited for your needs.
Consider your long-term care needs: Assess whether a hybrid policy meets your long-term care expectations, particularly if you anticipate needing a significant amount of care in the future. These policies are often better suited for individuals who are looking for more comprehensive coverage that combines both life insurance and long-term care.
Conclusion: Preparing for a Changing Landscape in 2025
As we move into 2025, long-term care insurance faces numerous challenges, including rising premiums, regulatory changes, and the increasing demand for care services. Policyholders must be proactive in understanding their coverage, evaluating their long-term care needs, and staying informed about new legislative developments and insurance options.
For individuals looking to purchase long-term care insurance, it’s essential to review available policies carefully and consider alternatives, such as hybrid insurance plans. Additionally, staying on top of changes in care delivery, claim processes, and regulatory frameworks will help ensure that policyholders are prepared for whatever challenges the long-term care insurance market may face in 2025 and beyond.
By being informed and proactive, policyholders can continue to protect themselves against the high costs of long-term care, while insurers must continue to innovate and adapt to meet the evolving needs of a growing, aging population.