Deciding to buy long-term care insurance is a big financial commitment — even more so if you are a woman.
Last year, Mutual of Omaha, Genworth Financial and other big insurance companies adopted gender-distinct rates for long-term care insurance, which means that if you are a woman, you will now pay more than a man for the same coverage. Long-term care insurance pays for help with daily activities like bathing and dressing, if you can no longer do them yourself.
The new approach faces a challenge, however. The National Women's Law Center in January filed administrative complaints against Genworth and three other insurers on the grounds that gender-based premiums for long-term care insurance violated a provision of the Affordable Care Act that bars sex discrimination in health care.
The complaints were filed with the Office for Civil Rights at the Department of Health and Human Services against Mutual of Omaha, Genworth, John Hancock and Transamerica.
The complaints say that because the insurers offer long-term care policies through Medicaid partnership programs in some states, they receive federal assistance, so under the health law, they cannot discriminate on the basis of sex.
“It's pretty simple,” said Marcia Greenberger, co-president of the women's law center. “These discriminatory premiums now in effect should be eliminated.”
Long-term care insurers say they adopted gender-based premiums to reflect the reality that women tend to live longer than men and are more likely to use benefits.
Genworth uses gender-based pricing because it is supported by actuarial data, Tom McInerney, the company's chief executive, said in an email. Women own about 58 percent of policies, he said, but account for nearly 67 percent of all claims. “Insurance companies must be able to charge premiums that appropriately account for the underlying risks being insured,” he said.
Transamerica said it was “confident the complaint does not have any merit” with respect to its participation in any partnership plans, adding that it intended “to participate in any HHS inquiry to demonstrate that our policies do not violate any provision of the ACA.”
Mutual of Omaha said it did not comment on pending legal matters. John Hancock did not respond to a request for comment.
Women typically account for about two-thirds of the long-term care insurance claims paid annually, said Jesse Slome, spokesman for the American Association for Long-Term Care Insurance, an industry group. Last year, companies paid $7.5 billion in claims.
The effect is that women will now pay several hundred dollars more a year in long-term care premiums than a man would for a comparable policy, according to the association's 2014 report, based on data from insurers. (The new gender-based premiums apply to new policies, not policies that were in place before the change took effect.)
If you are a single, 55-year-old man in good health buying a new policy, you can expect to pay $925 a year, on average, for a policy providing $164,000 in current benefits, without any built-in inflation protection. If you are a woman of the same age and health, you will pay an average of $1,225 a year for the same policy — a difference of $300, or more than 30 percent.
The difference in premiums is greater if you buy a policy that builds in inflation protection of 3 percent, compounded annually, for your benefits. (Your pool of benefits under this option would grow to $325,000 at age 80.) A 55-year-old healthy man would pay $1,765 a year for that policy, but a woman would pay $2,307.
A typical single woman will pay an average of 12 percent more than in 2013, the association found.
The impact of gender pricing for couples who buy a policy together varies by insurer, Slome said. Some companies price policies for a couple based on their rates for single men or women, while others offer a blended couples rate. (Genworth said its gender-specific pricing applied only to single policies.) Insurers typically offer a significant couples discount.