Originally Posted by Valar Morghulis

Long term care insurance was one of those things that seemed like a good idea, but got overtaken by the normal "fleece insurance companies for all they have". Don't get me wrong, I have zero love for any insurance companies, but this is an example of how OPM makes life difficult for everyone.

Back in the 80s, long term care was a moderate expense, but not super, catastrophically expensive. A couple of insurance companies thought "hey, people need long term care, they usually only live to XX, here is the expected pay out, and we can make money off of that." But as is typical, once insurance got involved, that generated a whole secondary market for people looking to grab their money. All of a sudden, you had a bunch of new, expensive long term care facilities and providers (didn't say anything about nice or livable), and, no surprise, costs went right to the limits of the policies. The facilities that had been around said "well, we're leaving money on the table", so everyone jacked the prices up to match. That the secondary effect of wiping out the people were just going along and paying out of pocket.

In the meantime, several underwriters who had based their entire data set on such and such costs for XX amount of time, and were offering essentially lifetime benefits if you paid into the plan for 10-15-20 years, got completely wiped out. It put a couple underwriters into the dirt, and the rest had to go to the regulators and drastically retrench their benefit portfolios. It really hammered people who had been policy holders for years, because the retrenched benefits (with $ and time limits) were a fraction of what they had signed up for, and paid into.

Like most things insurance related, there is a huge market for jacking things up that aren't directly related to insuring, paying benefits or providing services. The insurance companies, no surprise, go into pure defense mode, and trying to get any money out of them is a exercise in colossal frustration. THAT has led to yet another market of for people who's so job is to extract money from insurance for people with legitimate claims. As a bonus, if you're uninsured, you have to pay the jacked up insured rate.