AUGUSTA, ME (WGME) -- Long-term care insurance for more than 4,000 Mainers could soon get more expensive as one provider asks state regulators to approve a triple-digit rate increase.
Genworth Life Insurance, based in Virginia, has introduced a proposal to increase premiums between 56 percent and 178 percent on eight different groups of long-term care policies, according to the Maine Bureau of Insurance.
Long-term care insurance covers costs related to nursing home and assisted living care.
Thursday, the Bureau of Insurance held a public forum for policy holders to share their concerns related to the possible increase.
"We're on a fixed income. These rate increases are an outrage," one of the hundreds of Maine policy holders who testified said.
"It's going to create a hardship on people who have paid in," another said.
Under Maine law, insurance rates may not be "excessive, inadequate, or unfairly discriminatory."
The Bureau of Insurance will get the final say on if those increases are justified, but they say, because of underpricing when the plans were first offered, the long-term care insurance industry has been financially strained for years.
"It was sold with the expectation that premiums wouldn't increase but every contract I've seen allows the premiums to increase," Maine Bureau of Insurance Superintendent Eric Cioppa said. "There's no easy answers in long-term care. If companies don't get some rate increase we could end up with an insolvency."
But while the financial stability of long-term care insurance providers could be in jeopardy because of low rates, the bureau admits increasing them could become a major financial burden for policy holders, especially those on fixed incomes.
During Thursday's hearing, representatives Genworth laid out their reasoning behind the rate increase proposal and also highlighted options for impacted policy holders in the even the increases are approved.
"Policy rate increases are difficult for policy holders," Genworth Vice President Jamala Arland said. "The rate increases that we're requesting, that range up to 178 percent, would bring Maine more in line with the rate increases granted in the rest of the nation."
Arland explained the company must increase rates in order to keep paying out claims to policy holders.
"Genworth will not make money on these policies and we are not seeking to recoup past losses with the rate increases that are being requested," Arland said. "We are very sensitive to the impact rate increases have on our policy holders and Genworth is sharing in the cost of the underpricing."
But for those directly impacted, the thought if yet another increase has become hard to handle.
"I was just shocked that it went up as high as it did," Maine policy holder Jeff Gordon said. "When we bought in originally, the literature from Genworth said that they had never had a price increase in 28 years. They said it could raise in price but they didn't expect it to."
Gordon says he and his wife's policy rates have more than double in the past 20 years and if this latest increase is approved, he believes their rate would more than double again in just one year.
"It won't fit in the budget," Gordon said. "It will, pretty much, be unaffordable for us."
Thursday's public forum was just the beginning of the state's process in reviewing Genworth's rate increase proposal. It could take several more months before the review is complete and a decision is made.
As for resources for policy holders who can no longer afford the rate increase, Genworth says it will offer a number of options that include benefit adjustments and nonforfeiture benefit that would essentially equal a policy pay-out.