Is Pricing Discriminatory or Good Business Practice?
Some of the leading long-term care insurance companies have recently announced that they will soon offer policies that have different rates for men and women.
Gender-based pricing for insurance is not new. Most insurance policies have premiums that are based upon gender, as well as other factors. Life insurance, auto insurance and disability insurance all have different prices for men and women because the risk factors are different for each gender.
Men pay higher premiums than women for most forms of insurance. One type of insurance for which women have paid higher premiums than men is medical insurance. However, as part of the Affordable Care Act, effective Jan. 1, 2014, all medical insurance policies are required to charge men and women the same rates.
Some reports on the Internet have stated that gender-based pricing for long-term care insurance is a violation of the Affordable Care Act (aka Obamacare). However, the Affordable Care Act does not have any regulations regarding long-term care insurance; it regulates only medical insurance.
As of the publishing of this column, all long-term care insurance policies available for sale still use unisex rates, meaning that men and women pay the same rates. However, this will change in most states sometime in 2013.
If you’re a woman and you’ve been thinking about purchasing long-term care insurance, you may want to buy a policy that has the unisex rates rather than wait for the policies that will have gender-based rates. Some have estimated that the gender-based rates may be as much as 20 percent to 50 percent higher for women than the current unisex rates.
Once you purchase a policy with the unisex rates you will always have the unisex rates; your policy cannot be switched to gender-based rates.
The justification for charging women higher rates than men for long-term care insurance is that women account for roughly two-thirds of long-term-care insurance claims. However, more women own long-term care insurance than men, so the data may not be quite so lopsided. Women tend to become caregivers themselves for the men in their lives, thus reducing the number of claims made by men. With women typically living longer than men, there may be no one left to provide extended care for them.
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