Long-term care insurance lawsuits are legal actions filed by policyholders against insurance companies for allegedly failing to honor the terms of their coverage, misrepresenting costs, or wrongfully denying claims. These cases have grown significantly in the past three years as retirees and their families discovered unexpected premium increases, coverage denials for facility types they believed were covered, and disputes over what qualifies for benefits. The CalPERS settlement in 2023 exemplifies this trend: the California Public Employees’ Retirement System agreed to pay approximately $800 million ($740 million to plaintiffs and $80 million for legal fees) to settle claims that it misled retirees about long-term care insurance costs, making it one of the largest settlements of its kind.
Long-term care insurance was designed to protect aging Americans from catastrophic costs of nursing homes, assisted living, and in-home care. However, over the past decade, the industry faced severe financial pressure as people lived longer, care costs surged, and mortality assumptions proved wrong. Rather than absorb the losses, many insurers responded with substantial premium increases, restrictive claim interpretations, and coverage limitations—actions that sparked a wave of litigation from policyholders who felt betrayed.
Table of Contents
- Why Are Policyholders Suing Long-Term Care Insurers?
- The CalPERS and Genworth Settlements—What They Reveal
- Types of Wrongful Denials and Misrepresentation Claims
- Premium Increases as the Catalyst for Lawsuits
- The Red Flags Policyholders Should Know
- How the Insurance Industry Is Restructuring
- Regulatory Changes and the Future Outlook
- Conclusion
Why Are Policyholders Suing Long-Term Care Insurers?
The primary legal claims in these lawsuits center on breach of contract, bad faith practices, and wrongful claim denials. Policyholders allege that insurers prioritized shareholder profits over their obligations to pay claims as promised. A common grievance involves premium increases that far outpaced inflation or the original policy illustrations—sometimes doubling or tripling within a few years. Insurers claim these increases were necessary due to actuarial miscalculations and changing demographics, but plaintiffs argue they were never adequately disclosed or warned about in the original sales materials.
Another major category of claims involves denial of coverage for specific care settings or services. For example, assisted living facility expenses have been a particular flashpoint. Some policyholders believed their policies covered assisted living care, only to have claims denied when they submitted bills. insurance companies have argued that assisted living didn’t meet policy definitions of “skilled care,” but courts in several cases have found the policy language ambiguous enough to favor the policyholder’s interpretation. The CNA financial litigation currently pending in federal court in Connecticut illustrates this exact issue: policyholders allege the company wrongfully denied coverage for assisted living facility services while simultaneously imposing substantial premium increases, leaving them caught between rising costs and denied benefits.
The CalPERS and Genworth Settlements—What They Reveal
The CalPERS settlement is historically significant not just for its size but for its scope. CalPERS, managing retirement benefits for over 2 million current and retired California public employees, had sold long-term care insurance to retirees as an add-on benefit. The class action alleged that CalPERS misled retirees about future premium increases, presenting a product as stable and affordable when internal projections already anticipated severe cost escalation. The settlement requires CalPERS to provide affected retirees with various remedies, though the exact distribution method reflects the complexity of determining who was harmed and by how much. The Genworth settlement, approved by the U.S. District Court for the Eastern District of Virginia on February 15, 2023, follows a similar pattern.
The Haney v. Genworth class action accused Genworth Financial of failing to adequately disclose planned premium increases to existing policyholders. Unlike outright claim denials, this lawsuit targeted the company’s disclosure practices—the theory being that had policyholders known about impending increases, they would have made different decisions about their coverage. The settlement included policy adjustment options, which allowed some class members to reduce their benefits to avoid premium increases, along with potential cash refunds or credits. This remedy structure reveals a key limitation: legal settlements cannot undo the years of unexpected costs already paid. For retirees on fixed incomes, those years of premium strain had real consequences.
Types of Wrongful Denials and Misrepresentation Claims
Long-term care insurance disputes often hinge on the definition of covered services. Policies frequently require that care be “medically necessary” or provided in a “skilled care” setting, terms that sound clear but become contentious when applied to real situations. A retiree receiving occupational therapy in an assisted living facility may believe therapy costs should be covered, while the insurer argues that the facility itself doesn’t qualify as skilled care. The policyholder’s perspective is reasonable—they believed they were purchasing protection against long-term care costs, without expecting to perform legal analysis of facility classifications. Yet insurers argue they must strictly interpret policies to remain solvent.
Another source of litigation involves the definition of cognitive or physical impairment triggering benefits. Some policies require certification by a physician that the insured meets specific functional limitations—inability to perform two of six activities of daily living, for instance. Policyholders have sued claiming that insurers improperly rejected their physicians’ evaluations, demanded second opinions from company-selected doctors, or applied inconsistent standards across similar claims. Sandstone Law Group has documented a growing wave of such complaints, noting that bad faith claim handling appears to be a deliberate strategy in some instances rather than isolated errors. Insurance companies deny this characterization, but the sheer volume of litigation suggests systematic problems rather than random mistakes.
Premium Increases as the Catalyst for Lawsuits
When long-term care insurers discovered their actuarial models were broken—people lived longer and costs rose faster than assumed—many responded with dramatic premium increases. Some policyholders faced increases of 50%, 100%, or even more, often repeatedly over a period of years. These increases create a painful choice: continue paying escalating premiums for coverage you may never use, or surrender the policy and lose all premiums paid to date. A policyholder who paid $1,500 annually for ten years—$15,000 total—faced with a sudden jump to $3,000 or $4,000 per year cannot easily walk away from that sunk cost, even if the coverage is no longer affordable. The CNA Financial litigation exemplifies this problem.
CNA has imposed substantial premium increases on its long-term care policyholders while simultaneously tightening claim denials. Policyholders allege that CNA is using premium increases to effectively force cancellations among lower-income retirees while narrowing benefits for those who remain. This creates a tradeoff most retirees never anticipated: pay more for less coverage, or lose coverage entirely. Courts have not yet ruled on the merits of these claims, but Connecticut legislators took notice. In April 2026, Connecticut senators advanced a bill imposing consumer safeguards and requiring greater financial transparency from insurers, with provisions giving regulators tools to curtail potential premium increases. This regulatory response suggests that at least some lawmakers view the current system as broken.
The Red Flags Policyholders Should Know
One warning sign is receiving a premium increase notice that seems disconnected from the inflation rate or your actual care experience. If you haven’t filed claims and your premium jumps 30% or 40%, the insurer is essentially telling you they made a mistake pricing the policy—not a sign of stability. A second warning involves difficulty obtaining clear claim approval in advance. Before incurring significant long-term care expenses, policyholders should submit detailed information about the proposed care setting and services, then obtain written pre-approval. If an insurer hedges, delays, or refuses to provide clear written approval before care begins, that’s a red flag suggesting the company may dispute the claim later.
A third limitation to understand is that even winning a lawsuit or settlement doesn’t restore the years of stress and uncertainty. The Genworth settlement, for example, offered policy adjustments and potential refunds, but the refunds were typically modest compared to premiums paid. Moreover, the settlement process itself took years, and many eligible class members never received full notice or didn’t pursue claims because the paperwork was complex. For older policyholders, this delay meant they aged out of coverage or passed away before the settlement was final. Litigation can provide justice and validation, but it rarely makes people whole financially.
How the Insurance Industry Is Restructuring
Behind the scenes, large insurers have been exiting or drastically shrinking their long-term care insurance businesses. In July 2025, Unum completed a major transaction, ceding $3.4 billion in individual long-term care reserves and $120 million in individual disability insurance premium to Fortitude Re on a coinsurance basis. This is not a formal exit—Unum retains some risk—but it’s a clear signal that the company wanted to offload the exposure. Dreamsscape Industries took a different approach, acquiring LifeSecure Insurance Company’s legal entity in October 2025, including approximately $650 million in long-term care reserves. These transactions reflect the reality that managing existing long-term care insurance portfolios is costly and risky, and many large insurers prefer to shift that burden to smaller, more specialized carriers or reinsurers.
Brighthouse Financial’s situation illustrates the continuing challenge. Brighthouse’s gross long-term care insurance reserves exceed $5.8 billion, yet the company has retained net reserves of under $100 million—meaning it has ceded the vast majority of its long-term care risk to reinsurers. This structure helps Brighthouse avoid catastrophic losses, but it doesn’t solve the policyholder problem. Someone still holds the ultimate risk, and that someone must eventually pay claims or face litigation. The consolidation and risk-shifting occurring across the industry suggests that long-term care insurance is becoming a niche product managed by smaller carriers or heavily protected by reinsurance, rather than a mainstream product offered by major insurers.
Regulatory Changes and the Future Outlook
Connecticut’s April 2026 legislative action signals a shift in how regulators view the long-term care insurance crisis. Rather than allowing market forces to work, Connecticut senators moved to impose consumer safeguards and require greater financial transparency. The bill would give regulators explicit tools to review and potentially curtail future premium increases, a significant restriction on insurer freedom. Other states may follow, especially as more retirees encounter unaffordable premiums and denied claims. Regulatory intervention could stabilize the market but may also discourage new entry, further shrinking the number of insurers willing to offer long-term care coverage.
On the tax side, changes effective in 2026 may provide modest relief to some policyholders. Tax deductible limits for long-term care insurance increased by 3% for 2026. Additionally, new rules allow penalty-free withdrawals from retirement savings specifically for long-term care insurance premiums, giving some flexibility to those struggling with premium payments. However, these changes are incremental and don’t address the core problem: many existing policies are no longer economically viable for aging retirees on fixed incomes. Going forward, expect continued litigation against major insurers, ongoing industry consolidation, and regulatory experiments to prevent the problems that plague current policyholders from recurring with future generations.
Conclusion
Long-term care insurance lawsuits reflect a fundamental disconnect between what policyholders thought they were buying and what insurers ultimately delivered. Companies sold a product as permanent protection against catastrophic care costs, then used fine print and actuarial recalculations to justify dramatic premium increases and restrictive claim interpretations. The CalPERS and Genworth settlements validate that many policyholders have legitimate grievances, though settlements rarely make plaintiffs financially whole given the time and effort required to litigate and the modest refunds often awarded.
If you hold a long-term care insurance policy and face a large premium increase or a denied claim, consult with an attorney who specializes in insurance law before making decisions. Regulatory changes and legal trends are shifting in favor of policyholders, but only those who actively challenge insurer decisions or join class actions will see the benefit. For potential buyers, the instability of the long-term care insurance market should factor into your decision—the product may not exist in the form you bought it by the time you need it.