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2014
Last Updated January 20, 2014

Advocacy Group Challenges Long Term Care Insurance Gender Based Pricing

A women’s advocacy group filed sex discrimination complaints against four of the nation’s largest long term care insurance carriers this week.

Long Term Care Insurance Pricing Model

The National Women’s Law Center filed the complaints with the long term care insuranceOffice for Civil Rights at the Department of Health and Human Services on Thursday, according to a press release. The complaints claim the new gender based pricing implemented by these companies amounts to gender discrimination.

Genworth, John Hancock, Transamerica, and Mutual of Omaha each introduced gender based pricing last year. The pricing practice involves charging women higher premiums for long term care insurance to better manage the risk that they pose to the insurance company. Studies have found that women make up approximately 70% of all long term care claims. On top of that, 80% of nursing home residents and 75% of assisted living facility residents are women.

The complaints state that this pricing model violates the Affordable Care Act, which prevents any kind of discrimination in health care. This is the first law of its kind to exist in the health care industry and the complaints are believed to be the first to challenge the industry based on this new law.

Violation of ACA

The advocacy group also filed complaints against various states to challenge the nationwide partnership plans that include this new pricing model, and against the federal Medicaid agency for allowing policies that use gender-based pricing to be sold.

“By gender rating their long-term care insurance policies, these companies are charging women 20 to 40 percent more than men for the same product,” said NWLC Co-President Marcia D. Greenberger. “Requiring women to pay higher prices just because they are women is wrong, unfair and, thanks to the Affordable Care Act, is now illegal sex discrimination.”

Although this argument was first aired when gender based pricing was originally introduced, the truth is that gender based pricing is nothing new.

Gender Based Pricing

In the automobile insurance industry, young men have notoriously been charged more because they have a higher risk of getting in a car accident than women or older men.

Similarly, men pay more for life insurance because they have shorter life expectancies. Asking women to pay more for long term care insurance because they live longer is no different than these other industries, which recognize the importance of classifying policyholders by risk to assure profits.

Because women are expected to live longer and are therefore more likely to need long term care, it only makes sense to charge them more for a policy that they are more likely to use. Estimated risk is the basis on which most insurance companies work, and to remove that factor would impede the companies’ ability to properly function and remain solvent.

Read more about the introduction of gender-based pricing or find out more about the new policies that include this new pricing model. If you are interested in learning more about long term care insurance, click here to learn the basics or fill out this form and we will send you a personalized comparison of the top policies for you to review.

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