The Financial Reality Behind Dementia Villages and Rising Long-Term Care Costs

The 'Dementia Village' Pitch Meets Long-Term Care's Premium Math

The financing mechanics tell a harder story: Maryland's Insurance Administration is reviewing proposed long-term care insurance premium increases that could raise costs by 40% to as much as 242%, per testimony from a Sept. 17 public hearing. About 12,600 state policyholders sit in the crosshairs of rate filings from four carriers.

The Filings on the Table

The requests come from John Hancock Life Insurance Company, MedAmerica Insurance Company, Transamerica Life Insurance Company, and Union Security Insurance Company. Insurers told state regulators the increases reflect higher-than-expected benefit utilization, longer-than-projected policyholder lifespans, and shifts in financial assumptions including interest earnings.

MedAmerica is seeking 242% on coverage held by 82 Marylanders — the steepest filing on the docket. John Hancock requested increases across 19 policy types, with proposed average hikes between 27% and 142%. State rules cap any individual annual increase at 15%, so even the largest approvals would phase in across multiple policy years.

What a Policyholder Should Evaluate

AARP Maryland's Nancy Carr advised against panic surrenders. Her guidance to 7News: treat any proposed increase as one variable inside the broader retirement portfolio, not a standalone trigger for cancellation. Carr also flagged that reducing benefit levels — rather than dropping the policy outright — can preserve a floor of protection at a lower premium.

The Maryland Insurance Administration has not issued a final decision. Its review process includes actuarial review, peer review, the public hearing, and a final ruling. The agency can approve the requested increase, approve a lower figure, or take other action.

What to Track

Written comments from Maryland residents are accepted through Sept. 24, 2026. The administration's long-term care insurance page tracks rate requests, hearings, and approved rates alongside consumer resources. Any redesign of the long-term care model — dementia village or otherwise — runs into the same downstream question: the actuarial assumptions behind existing coverage have already broken once. Carriers are now passing the correction to policyholders, and the state's rate review is the only buffer between filed rates and approved rates.