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How to navigate premium increases for long-term care insurance

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Supporting aging parents is an extremely difficult situation that comes with both emotional and financial complications.

The cost of long-term care insurance is a prime example.

This insurance, essential for covering costs not typically included in standard health insurance or Medicare, such as nursing home stays or in-home support, can be a financial lifeline. However, it’s not without challenges, especially when faced with an unexpected premium increase.

I know this situation all too well, having purchased long-term care policies for both of my parents in 2000.

For my dad, who was 68 at the time, I purchased 5% simple inflation protection, which accrues interest only on the original benefit. By the time my dad needed in-home care starting in 2014, his daily benefit had grown from $125 to $212.50.

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Given our family history of longevity, and because my mom purchased her policy when she was a young 54 years old, we selected 5% compound inflation protection. The daily benefit with compound inflation grows quickly because the interest earns interest.

Now, with that compound inflation protection, her daily benefit has increased from $125 to $403.

But her costs have increased, too, in part because that compound inflation protection costs more. Since 2000, my mom’s long-term care insurance premium has jumped 54%, from $1,224 to $1,885 per year. Along the way, we have experienced three rate increases.

How much can long-term care insurance increase?

While rate increases can be expected, most people are shocked by how much rates can go up over the long term, specifically for policyholders who have had their policies for a decade or more. It’s not uncommon for rates to increase by 50%. However, the National Association of Insurance Commissioners has reported rate spikes as high as 500%.

For those with limited financial means, a significant premium increase can be overwhelming and devastating, often forcing people to choose between financial security and compromising their parents’ quality of life and access to quality care.

We all want what’s best for our aging parents. Here are some ways I recommend clients navigate premium increases to protect their long-term care coverage.

3 ways to handle long-term care insurance premium hikes

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A significant premium increase can threaten your or your parents’ financial stability, but so does not having the right insurance coverage. It’s a catch-22 that often leaves people feeling trapped. I don’t believe that people should be forced to choose between simply accepting the increase or dropping the policy.

The good news is that you have options that don’t result in an all-or-nothing choice.

As a certified financial planner professional, I often encourage my clients to start by exploring three options — accepting the rate increase, freezing benefits or adjusting policy terms.

1. Accepting the rate increase

In some situations, the best course of action is to do nothing. If your parents’ financial situation allows them to comfortably absorb the higher rate, accepting the premium increase can ensure continuous coverage without sacrificing any benefits.

From my personal experience, this was the best choice for my mother’s situation. Despite a 54% premium increase, we chose to accept the rate rather than settle for fewer policy benefits. I know all too well the cost of in-home care, as my dad had Parkinson’s disease for nine years and needed 24-hour care the last four months of his life.

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2. Freezing the benefits

If you have financial concerns about a higher premium, you may be able to eliminate or reduce the rate increase by electing to freeze your benefits. When this happens, you agree to pause the inflation protection benefit for a predetermined time frame in exchange for a lower rate. Freezing benefits helps to keep premium costs down without losing coverage altogether. It can be a good choice for parents in their early to late 80s, especially if the premium increase exceeds 20%.

Recently, I advised one of my clients to freeze their benefits when faced with a 22% premium increase since they are in their late 70s and the cost difference wasn’t a good fit for their situation. This change allowed them to maintain the current daily benefit amount but forgo future increases, helping manage costs while still providing some coverage.

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3. Finding a middle ground

Sometimes, the full premium increase isn’t manageable, but you’re not ready to freeze benefits completely. If you’re able to accept some but not all of the premium increase, it’s best to call your insurance company to negotiate your rates.

For example, if the cost is going up 15% but you can only afford 10%, discuss it with your insurer. You could uncover alternatives that an adjusted premium might offer, like a shorter benefit period, longer elimination period or reduced daily benefit amount. However, reducing daily benefits should be a last resort because it decreases the insurance payout and can increase out-of-pocket costs for your parents’ care.

Making the best long-term care insurance decisions

Age is just a number, but so is the cost of long-term care insurance. Begin by having transparent conversations with your parents and siblings, so you can work together to ensure that everyone’s needs and concerns are met. This discussion should cover everyone’s perspectives and financial considerations, especially the needs and preferences of your aging parents.

This can be a difficult conversation to navigate.

If you’re feeling stuck weighing the long-term implications of your available options, it’s important to seek guidance from a financial professional for clarity and insight. A financial expert can go over the specifics of your situation, offer tailored advice, and even suggest alternatives you might not have considered.

In the end, the decision should balance financial foresight with the care and comfort of your loved ones.

 — By Marguerita (Rita) Cheng, a certified financial planner and the CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. She is also a member of the CNBC Financial Advisor Council.

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Personal Finance

the job market in five charts

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Job seekers at a job fair hosted by the Metropolitan Washington Airports Authority to support federal workers looking for new career opportunities, at Ronald Reagan Washington National Airport in Arlington, Virginia, on April 25, 2025.

Ting Shen/Bloomberg via Getty Images

While the unemployment rate in the U.S. is still fairly low, data shows it’s not uncommon to see individuals job hunting for extended periods of time.

The unemployment rate remained flat at 4.2% in May, the Bureau of Labor Statistics reported Friday.

However, over the past six months, it’s become “drastically harder to find a job,” whether you’re entering the job market for the first time or you’ve been looking for a while, according to Alí Bustamante, an economist and director at the Roosevelt Institute, a liberal think tank.

“It’s not that folks are losing their jobs,” Bustamante said. “It’s just that businesses are much more reticent to hire people, to make investments, because they just feel this very uncertain economic climate.”

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Bustamante and other economists say several data points beyond the headline job market numbers — the job-finding and quits rates, the share of workers who have been unemployed for 27 weeks or more, a broader rate of unemployment and the state of so-called “white collar” jobs — showcase deeper issues within the labor market.

“Employers aren’t hiring, they’re not firing. People aren’t leaving their jobs, and there’s just fewer opportunities right now,” said Cory Stahle, an economist at Indeed, a job search site.

As career coach Mandi Woodruff-Santos put it during a recent interview with CNBC: “The job market is kind of trash right now.”

Here’s what’s happening with unemployed Americans, in five charts.

Job-finding, quits and hires are down

The job-finding rate reflects the share of unemployed workers who successfully found a job, Stahle said. Over the past few years, the job-finding rate for unemployment has been declining, he said. 

In other words, people who are looking for work are not finding jobs, Stahle said.

On the flip side, the quits rate reflects the share of employees who have left their jobs in a given month, Stahle said. That figure has also been declining, meaning people are not voluntarily leaving their jobs.

The quits rate was at 2.0% in April, little changed from 2.1% in March, both numbers seasonally adjusted, according to the latest Job Openings and Labor Turnover report by the Bureau of Labor Statistics. The number of quits was down by 220,000 over the year.

Hiring activity has also been down in recent years. The rate of hires was at 3.5% in April, little changed from 3.4% in March, both seasonally adjusted, per the JOLTs report.

As people stay put in their jobs and employers are reluctant to hire, such factors create a “low hiring, low firing” environment, Stahle said.

Many workers are job hunting for at least 27 weeks

But the recent decline may not be an improvement. It could be signaling that a large number of long-term unemployed workers left the labor force altogether, he said. 

Considering that 139,000 jobs were added in May and about 218,000 workers are no longer in the unemployment cohort, there’s a significant gap of workers who were unemployed but did not secure new roles, Bustamante said.

What’s more, the number of people not in the labor force jumped by 622,000 in May.

“All the data point to long-term unemployment declining because people left the labor force,” Bustamante said.

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A broader unemployment rate is high

Marginally attached workers are those who are neither working nor looking for a job — but indicate that they want and are available for work, and looked for a new role recently. There’s a subset of this group called discouraged workers, or those who are not currently looking for a job due to labor-market reasons. 

People employed part time for economic reasons are those who want and are available for full-time work but settled for a part-time schedule. 

As of the latest BLS data, the U-6 rate remained unchanged from April at 7.8%.

This data tells us that more and more Americans have either stopped looking for work out of labor-market frustrations, or are picking up part-time gigs to get by financially, experts say.

‘White collar’ industries contract; other sectors grow

When looking at professional and business services — the industry that represents “white collar,” and middle and upper-class, educated workers — there hasn’t been much hiring, experts say. 

Fields such as marketing, software development, data analytics and data science have far fewer opportunities now than they did before the pandemic, Stahle said.

On the other hand, industries such as health care, construction and manufacturing have seen consistent job growth. Nearly half of the job growth came from health care, which added 62,000 jobs in May, the bureau found.

“There’s been a divergence in opportunity,” Stahle said. “Your experience with the labor market is going to depend largely on the type of work it is you’re doing.”

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Personal Finance

How markets performed for investors so far

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Traders work on the New York Stock Exchange floor on Dec. 18, 2024.

Spencer Platt | Getty Images

For all the drama in the stock market of late, investors’ portfolio balances may not look too different from when President Donald Trump entered office.

There have been some unnerving days amid the Trump administration’s tariff policies. The S&P 500 dropped by 2% or more on six days between Jan. 20 and June 6, according to data provided to CNBC by Morningstar Direct. During that period, there were 18 days where the index shed 1% or more.

Still, the S&P 500’s annualized return for Trump’s second presidency is positive, at 1.58%, Morningstar Direct found.

With more market swings on the horizon amid threats of a worsening trade war and warning signs in the labor market, the numbers serve up an old lesson for investors: When the market is freaking out, it pays to stay calm.

“I always remind clients that volatility doesn’t predict direction,” said Cathy Curtis, the founder of Curtis Financial Planning in Oakland, California. She is a member of CNBC’s Financial Advisor Council.

Other early presidential terms led to bigger returns

Investors have reaped bigger returns in the early days of previous presidents.

The S&P 500’s annualized return was over 34% in the roughly first five months of former President Joe Biden’s tenure, Morningstar Direct calculated. Meanwhile, the index was up around 30% during that same period in former president Barack Obama’s first and second term.

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An ‘unmistakable’ long-term trend

In practice, investors want to keep their money in the market over decades, and many presidencies.

Almost all presidential terms since President Jimmy Carter saw healthy stock market returns for the full four or eight years, Mark Motley, portfolio manager at Foster & Motley in Cincinnati, wrote in a pre-election market update. The exception: President George W. Bush, due to the Great Recession.

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To prove that point to clients, Curtis will show a chart of the S&P 500 going back to 1950.

For example, if you invested $1,000 in the index on Jan. 20, 1950, when Harry S. Truman was president, you’d have around $3.8 million as of the market’s close on June 6 of this year, Morningstar Direct found.

“The short-term dips are unmistakable, but so is the overall upward trend,” Curtis said.

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Trump’s ‘big beautiful’ bill may curb access to low-income tax credit

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As Senate Republicans debate President Donald Trump‘s “big beautiful bill”, a lesser-known provision from the House-approved package could make it harder to claim a low-income tax credit.

If enacted as written, the House measure in the “One Big Beautiful Bill Act” would require precertification of each qualifying child for filers claiming the so-called earned income tax credit, or EITC, starting in 2028.

Under current law, taxpayers claim the EITC on their tax return — including Schedule EIC for qualifying children.

The provision aims to “avoid duplicative and other erroneous claims,” according to the bill’s text. But policy experts say the new rules would burden eligible filers, who may forgo the EITC as a result. The measure could also delay tax refunds for those filers, particularly amid IRS cutbacks, experts say.

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“You’re going to flood the IRS with all these [EITC] documents,” said Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center. “It’s just not clear how they’re going to process all this information.”

Holtzblatt, who has pushed to simplify the EITC for decades, wrote a critique of the proposed precertification last week.

“This is not a new idea, but was previously considered, studied and rejected for very good reasons,” Greg Leiserson, a senior fellow at the Tax Law Center at New York University Law, wrote about the proposal in late May.

Studies during the George W. Bush administration found an EITC precertification process reduced EITC claims for eligible filers, Leiserson wrote. During the study, precertification also yielded a lower return on investment compared to existing EITC enforcement, such as audits, he wrote.

EITC eligibility is ‘complicated’

Eligibility is complicated.

Janet Holtzblatt

Senior fellow at the Urban-Brookings Tax Policy Center

“Eligibility is complicated,” and residency requirements for qualifying children often cause errors, said Holtzblatt with the Tax Policy Center. 

For 2025, the tax break is worth up to $8,046 for eligible families. You can claim the maximum EITC with adjusted gross income up to $61,555 for single filers and $68,675 for married couples filing jointly. These phase-outs apply to families with three or more children.

As of December 2024, about 23 million workers received the EITC for tax year 2022, according to the IRS. But 1 in 5 eligible taxpayers don’t claim the tax break, the agency estimates.

Changes could ‘complicate’ existing issues

Nine Democratic Senators last week voiced concerns about the House-approved EITC changes in a letter to Senate Majority Leader John Thune, R-S.D., and House Speaker Mike Johnson, R-La.

If enacted, the updates would “further complicate the EITC’s existing challenges and make it more difficult to claim,” the lawmakers wrote.

Higher earners are more likely to face an audit, but EITC claimants have a 5.5 times higher audit rate than the rest of U.S. filers, partly due to improper payments, according to the Bipartisan Policy Center.

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The proposed EITC change, among other House provisions, still need Senate approval, and it’s unclear how the measure could change.

However, under the reconciliation process, Senate Republicans only need a simple majority to advance the bill. 

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