This is a topic of interest to me since there seems to be different ways that people are dealing with this threat to one's estate - or even the ability of the healthy spouse to maintain a normal lifestyle.
Several years ago we looked into LTC insurance and I opted to not take it for the very reason that seems to be happening now - rates that are quoted are meaningless since they can be raised at any time and the increases can be exorbitant to the extent that they no longer are affordable or cost justified. In that case your only option appears to be to cut back on your policy or terminate it and say goodbye to all of the payments that you have made over the years.
In speaking with elder care lawyers, another option that exists is a Medicaid Asset Protection Trust which effectively and legally shields all or a portion of your estate from what the government uses to determine your eligibility for Medicaid. According to these lawyers, nursing homes are not allowed to discriminate against you because you are on Medicaid - you are afforded the same care as someone who pays out of private funds and/or LTC insurance. One local attorney said that one of her clients uses funds from the trust to pay for a private room in an upscale nursing home where his wife is and where Medicaid is picking up the basic charges (since Medicaid only will pay for a semi-private room).
I don't know what other ramifications of this approach would be, but I was surprised in seeing Morningstar data that showed fully 49% of all nursing home revenue comes from Medicaid. This was significantly greater than the amount from private pay. LTC insurance was an extremely small portion of total nursing home income. While certainly "poor" people don't make up 50% of the population, what was not clear from the Morningstar numbers was of those who were using Medicaid for payments, what percentage were also using asset protection trusts versus those who had essentially bled their household assets dry to the point that both spouses had become impoverished by the nursing home stay.
Can anyone provide any insight concerning asset protection trusts and/or caveats about using Medicaid for nursing home expenses?
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