Also, the industry as a whole paid out a total of $6.6 billion in claims to 200,000 individuals in 2011.

The association annually collects data on claims including the largest open claims (still being paid as of December 31, 2011). The second largest claim still open is for a male who purchased his long-term care insurance policy paying an annual premium of $3,374. Three years later his claim began and has continued for just over six years ($1. 2 million in benefits has already been paid for his care).

So what should the average consumer know about rate increases? Here are some thoughts from a recent article that appeared in the wall Street Journal’s online edition that provides some helpful information:

“Insurers can’t raise rates on individuals, but they can do so on a defined group of policyholders if they get state approval……

The lesson: It pays to look for insurers that have strong financial statements and conduct significant business in your state.

The majority of rate increases should be over, now that insurers have factored in the impact of low interest rates on their ability to generate income to pay claims and lengthening life expectancies, says Dawn Helwig, a principal with actuarial firm Milliman in Chicago.

But many insurance brokers tell their clients to expect at least one increase in the 20% range at some point. If that happens, most insurers will allow you to reduce the increases in exchange for trims in benefits.”

Another point that should be kept in mind is that not all policyholders see their premiums raise since only certain classes of policies receive the state insurance commissioner approved rate increase. In fact, many policyholders that are clients of the major insurers have not seen any rate increase at all.

According to the 2012 National Long-Term Care Insurance Price Index published by the American Association for Long Term Care Insurance (www.AALTCI.org) prices for long-term care insurance policies currently being offered are between six and 17 percent higher than comparable coverage a year ago. “Insurance prices have increased as a result of the historic low interest rates and yields on fixed income investments,” explains Jesse Slome, AALTCI’s executive director. Between 40-and-60 percent of the dollars an insurer accumulates to pay future claims comes from investment returns.

The Association annually analyzes what consumers will pay for the most popular policies offered by 10 leading long-term care insurance policies. The study found that the average cost for a 55-year old single individual who qualified for preferred health discounts is $1,720 for between $165,000 and $200,000 of current coverage. In 2011, the same coverage would have cost an average of $1,480 annually.

In addition to across the board increased rates, the Association found that the spread between the lowest cost and the highest cost policy had increased compared to the prior year. “For the 55-year-old single policy applicant the highest price policy cost almost 80 percent more than the lowest priced policy,” Slome noted. “For some categories, the difference was as much as 132 percent and no single company always had the lowest nor the highest rate which is why we stress the importance of comparison shopping.”

The Association study examined prices for single individuals age 55 as well as couples, ages 55, 60 and 65. According to the report, a 60-year old couple purchasing the same level of protection ($340,000) could expect to pay about $3,335 -per-year if both spouses qualified for preferred health discounts. The preferred health discount would save them approximately $500 compared to standard health rates and are a good incentive to act at younger ages, Slome points out. “The available benefit pool for the 60-year-old couple would only grow to about $610,000 when the couple turns 80,” Slome notes. “To have future coverage of $700,000, equal to what the 55-year-old couple would have, they will have to buy a higher, more expensive policy,” Slome explains.

The Association priced policies that included a three percent compound inflation growth factor. “You want the value of the benefit you buy today to grow to keep pace with rising costs,” Slome noted. A policy valued at $170,000 for each policyholder would grow to roughly $300,000 in 20 years. “Married couples have the option of buying policies with a “shared care rider” meaning the combined benefits can be used by either spouse or spouse or split between them.

“For roughly 15-to-25 percent more, instead of having having access to a benefit pool of $350,000, either spouse has access to a combined pool in excess of $700,000,” says Slome. “The ability to purchase a more affordable shorter duration policy but have access to a much larger combined pool of dollars is easy to explain and of great value to the buyer.”

“Over 70 percent of people today buy a 3-to-5 year benefit period,” states Larry Moore, Director of Marketing for American Independent Marketing, a leading national marketer. “When you factor in discounts available to couples, good health discounts and some of the lower-cost inflation options, long-term care insurance can be far more affordable than many people think.”

But it has been more difficult to determine the deductions that are also available to long-term care insurance policyholders from their state income tax. Of course, with 50 states to track, it is a major effort to assemble this information and keep it current.

I am glad to say that the American Association for Long-Term Care Insurance has done the work necessary to gather this data and you can find the information at the link listed below. Just visit that page and scroll to the state where you live and it will tell you what, if any, tax deductions are available for you on your state income tax.

You can find the state income tax deductibility list for LTCI by clicking here.

Unfortunately, many consumers cannot afford a policy with those kind of rich benefits simply because the premium cost for such coverage is very high. So does that mean that LTCI is basically an all-or-nothing type of product? Is there no middle ground?

Jill Schlesinger, CFP, is the Editor-at-Large for www.CBSMoneyWatch.com and she has written an article that shows how consumers can approach LTCI on a more cost-conscious basis and still get good coverage. Here is an excerpt from that article:

“There is a middle road. On average, women need care for 3.7 years and men 2.2 years. One way to reduce the cost of an LTC policy is to choose a three- or five-year benefit period. Yes, there are some who will need care beyond five years (about 20 percent), but the cost of an unlimited benefit period could outweigh the risk.

Another way to reduce the cost of LTC insurance is to insure a portion of your daily need, rather than the whole thing. As you shop for LTC providers, stick with the highly rated companies with a proven record of not hiking premiums.

The bottom line is that there’s no sure-fire way to eradicate long-term care risk, but at the very least, you can reduce it.”

You can read the rest of the article by clicking here.

They often are not perfectly insured when it comes to health insurance, or auto and home insurance. But they take an extreme position on long-term care insurance anyway.

Here is an article that I feel can be well worth considering that discusses the reasons for getting good LTCI coverage even if you can’t afford perfect coverage:

“Don’t let your search (or an adviser’s clamoring) for perfect coverage prevent you from considering policies that are simply good. Indeed, we choose good frequently in our lives — in cars and investments, to name two. When it comes to long-term-care insurance, options other than the so-called best can do more for you and your family than you might realize.

I recently spoke with John Manchester, 60, who runs a packaging business in Hartland, Mich. His mother died several years ago at age 80, after spending time in an assisted-living facility and a nursing home. Before she became ill, in her 60s, her children purchased a long-term-care policy — for about $1,700 a year — that provided $50 a day for life, once a claim was filed. That coverage, when coupled with his mother’s savings, paid for her care without exhausting her estate. “Would we have liked having more than $50 a day?” Manchester asks. “Absolutely. But that money kept us from getting into a serious downward spiral with her assets.”"

You can read the rest of the article by clicking here.

They also provide a nice explanation of what deductions are available to which policyholders. It’s very convenient to have all of this information in the same spot.

Click here to view the LTCI tax schedule for 2012.

“Having practiced Elder Law for more than thirty years, it becomes more and more apparent to me that our current “needs based” system that provides government benefits to pay the cost of long-term care may become a thing of the past. As “baby boomers” approach their senior years, they should consider the purchase of Long Term Care Insurance to help pay the cost of their long term care needs.

“One of the great benefits of Long Term Care Insurance is that you can access funds when the needs arise for assistance at home. It has been my experience over the years that most people prefer to live at home rather than in an assisted living facility or a skilled-care nursing home. When it is possible, consideration for care in the home should be given to the elderly and if Long Term Care Insurance has been purchased the elder maybe able to realize that goal.

“Even under our current Medicaid system, very little benefit is available for persons residing at home. In the early years Long Term Care Insurance policies were not very good. However, as the insurance industry has become more comfortable with the cost of long term care, the under-writing development of policies has improved greatly. I recommend that those approaching their senior years consider the purchase of Long Term Care Insurance before the costs become prohibitive.”

Mark Clements
Certified Elder Law Attorney by
The National Elder Law Foundation

You can read the rest of the article by clicking here.

A report released by AARP’s Public Policy Institute, The Commonwealth Fund and The SCAN Foundation found that states collectively need to improve vastly in areas such as home care, assisted living, nursing home care and support for family caregivers. Additionally, most states need to more efficiently spend the money they allocate to long-term care.

The report measures state systems using 25 indicators in four categories, using data from a variety of sources.

The three states who performed the worst — Mississippi, Alabama and West Virginia — had a limited number of providers, very little support services available for family caregivers and fewer private long-term care insurance policies available for residents.

Minnesota, Washington and Oregon, on the other hand, offered a wider variety of alternatives to nursing homes, such as home health aide services. These states also had lower rates of hospitalization for nursing-home occupants and other long-term care recipients.

You can read the rest of the article by clicking here.

“The biggest modifiable risk factors for preventing Alzheimer’s among Americans, according to researchers at the San Francisco VA Medical Center, include physical inactivity, depression, smoking, mid-life hypertension, mid-life obesity, low education and diabetes. In analyzing data from other Alzheimer’s studies with thousands of participants, lead researcher Deborah Barnes, Ph.D., found that together these risk factors are linked with 54% of Alzheimer’s cases in the United States (2.9 million cases) and 51% of cases worldwide (17.2 million cases). Additionally, the number of Alzheimer’s cases is expected to triple within the next 40 years, according to the study.

“What’s exciting is that this suggests that some very simple lifestyle changes, such as increasing physical activity and quitting smoking, could have a tremendous impact on preventing Alzheimer’s and other dementias in the United States and worldwide,” Barnes said.”