Your Long-Term Care Premium Just Doubled. Now What?

Herb and Judy's Letter in the Mail

Herb and Judy are a composite couple I use to illustrate a situation I see often in my practice, not actual clients, but their numbers are typical of what's landing in mailboxes across Ponte Vedra Beach and the rest of Florida this year. They're 72 and 70. They bought a long-term care policy back in 2004, back when premiums were priced low and insurers didn't yet understand how long people would live or how much home care and memory care would eventually cost. Their renewal notice just arrived: premium jumping to $9,800 a year, combined, for a policy they've paid into for over two decades.

Their first instinct is panic. Their second instinct, once they calm down, is the right question: keep paying, reduce the benefit to lower the cost, or let it lapse and build a Medicaid plan instead. All three are legitimate choices. None of them is automatically correct. What follows is the framework I walk clients like Herb and Judy through.

Why the Premium Doubled, and Why It's Legal

Florida families are often stunned to learn that an insurer can raise the price of a policy they've held for twenty years. Here's the mechanic: most traditional long-term care policies are guaranteed renewable, not guaranteed level-premium. That means the carrier cannot cancel your policy, single you out, or raise your rate because you got older or filed a claim. But it can request a class-wide rate increase, approved by state insurance regulators, applied to everyone who holds that same policy series.

These increases have become common industry-wide because insurers in the early 2000s underpriced these policies. They assumed higher lapse rates and lower claims than actually happened. Carriers exiting the long-term care market entirely, and steep systemic rate hikes, are the result. Herb and Judy's letter isn't a mistake or a targeted penalty. It's the industry catching up to reality on a policy written before anyone had good data.

Option One: Keep Paying, and the Questions That Justify It

Keeping the policy in force makes the most sense when the numbers and the health picture line up. Before writing that $9,800 check, I'd want Herb and Judy to answer:

• What's the elimination period? This is the waiting period, often 30, 60, or 90 days, before benefits start paying. A longer elimination period means more out-of-pocket cost up front even with the policy in force.
• What's the benefit cap? Older policies often have a lifetime maximum dollar amount or a maximum number of days or years of coverage. If the cap is modest compared to what a Florida nursing home or assisted living facility actually costs today, the policy's real-world value has eroded even though the premium hasn't shrunk.
• What's the current health status? A couple in reasonably good health who could still qualify for a new policy has more flexibility than one who couldn't get coverage at any price today. If replacing this policy is impossible, that changes the math on keeping it.
• Can the household actually absorb the increase without touching principal or changing their standard of living? A premium that strains monthly cash flow defeats the purpose of insurance, which is to protect financial stability, not threaten it.

If the answers favor keeping it, in my practice I still recommend pairing the policy with a Medicaid backup plan. Insurance and Medicaid planning are not competitors. They're two tools that work best together, which I'll come back to below.

Option Two: Reduce the Benefit Instead of Dropping the Policy

Most carriers facing a rate increase are required to offer policyholders a menu of ways to lower the premium by reducing coverage, rather than forcing an all-or-nothing choice. Common versions include:

• Reducing the daily or monthly benefit amount, which lowers the maximum the policy pays per day of care.
• Reducing or eliminating an inflation protection rider, which stops the benefit from growing each year but locks in the current benefit level.
• Shortening the benefit period, for example moving from a five-year maximum benefit to a three-year one.
• Extending the elimination period, which lowers the premium in exchange for a longer wait before benefits begin.

This is often the middle path for a couple like Herb and Judy: keep meaningful coverage in force, at a premium that's sustainable, even if the benefit is smaller than what they originally bought. It preserves the policy's core value, an insurance-funded bridge for home care or assisted living, while bringing the annual cost back down to earth.

Option Three: Let It Lapse and Plan for Medicaid

Sometimes the honest answer is that the policy has become unaffordable, the benefit cap is too thin to matter, or health has changed enough that a smaller reduced-benefit version isn't worth keeping. In that case, the responsible move isn't to simply drop the policy and hope. It's to drop the policy and start Medicaid planning in its place, deliberately and early.

Letting a policy lapse doesn't mean giving up on protecting assets. It means shifting the tool from private insurance to a legal and financial planning strategy built around Florida's Medicaid rules, ideally started years, not months, before a nursing home level of care becomes necessary.

How Insurance and Medicaid Planning Work Together, Not Against Each Other

This is the piece families most often miss. Long-term care insurance and Medicaid planning aren't rival strategies where you pick one and abandon the other. They solve different problems on different timelines.

A private policy can pay for home care, an aide, or assisted living during the years before someone needs full nursing-home-level care, which is generally the threshold for Medicaid's long-term care benefit. That means insurance buys time: time for a family to plan properly, time for assets to be positioned correctly, time to avoid a crisis-mode decision. Then, if care needs escalate to nursing-home level and the policy's benefits run out or were never designed to cover that level indefinitely, Medicaid can step in as the long-term backstop.

Florida also has a specific program built for exactly this handoff. The Florida Long-Term Care Partnership Program allows certain state-certified policies to earn a dollar-for-dollar asset disregard for Medicaid eligibility purposes. In general terms, for every dollar a qualifying Partnership policy pays out in benefits, an equivalent amount of the policyholder's countable assets is protected and excluded from Medicaid's asset test if that person later applies. Partnership policies must meet specific state and federal standards under Florida law (F.S. § 409.9102) and be tax-qualified long-term care policies. Not every policy sold in Florida, and certainly not every policy sold in 2004, qualifies as a Partnership policy, so this is worth confirming directly with the carrier or an elder law attorney reviewing the actual policy documents.

Where Hybrid Life/LTC Policies Fit In

For families who haven't yet bought long-term care coverage, or who are dropping an old policy and want some kind of insurance replacement, hybrid life insurance with a long-term care rider has become a common alternative as traditional standalone LTC policies have grown more expensive and harder to find. A hybrid policy pairs a permanent life insurance death benefit with a long-term care benefit. If care is needed, the policyholder draws against the death benefit while living. If care is never needed, the beneficiaries still receive a payout.

This structure appeals to families worried about paying decades of premiums into a standalone LTC policy and never using it. It isn't automatically better or worse than a traditional policy or Medicaid planning. It's simply another tool, and for a couple like Herb and Judy evaluating a lapsing 2004 policy, it may be worth comparing against a Medicaid-planning-only approach when they meet with their financial advisor and attorney.

Sources

• LegalClarity, "Florida Long Term Care Partnership Program Explained," December 10, 2025
• Florida Department of Financial Services, "Long-Term Care Overview," myfloridacfo.com
• Florida Administrative Code 69O-157.201, Standards for Approved Long-Term Care Partnership Program Policies
• LTC Tree, "Long Term Care Insurance Rate Increases in 2026," August 20, 2026
• Berg Bryant Elder Law Group, PLLC, "Long-Term Care Insurance vs. Medicaid Planning in Florida," September 24, 2025

This article is for general informational purposes only and does not constitute legal advice, nor does reading it create an attorney-client relationship. Florida estate, elder, probate, and real estate law are fact-specific and change over time. Consult a licensed Florida attorney about your individual circumstances. Arthur Simpson, Esq. is licensed to practice law in the State of Florida. Attorney advertising.