In early January, the American Association for Long-Term Care Insurance crunched a few numbers and found that, on average, prices for traditional stand-alone LTC policies have increased only slightly year over year. That's the good news.

The Westlake Village, Calif.-based independent industry organization studied the pricing for typical plans that cover clients who are age 55. It did not include the increasingly popular hybrid or linked-benefit plans, which offer LTC coverage as part of life insurance or another financial product. For many policies, there was no increase at all. For women covered individually, the average price had actually come down.

"That's true by the numbers, but it could just be because one higher priced policy last year is no longer a leading seller," said Jesse Slome, the association’s executive director, who declined to identify individual carriers.

The bad news, though, is the wide price disparity among equivalent policies from different providers. For a married couple, both age 55, the difference between the lowest and highest priced policies surveyed was a whopping 243 percent. That's the biggest spread Slome can recall in years.

Longtime industry watchers were equally surprised, if not outright doubtful. Brian Gordon, president of MAGA Ltd., an LTC specialist based in Riverwoods, Ill., said, "There is a difference from carrier to carrier, but we normally don’t see that big of a difference."

Len Hayduchok, president of Dedicated Senior Advisors in Hamilton, N.J., cited some possible causes behind shifting LTC insurance rates.

LTC insurance prices have risen steadily for years, because when these policies were first written there was very little actuarial data available on which to base prices. So many early plans were underpriced. Older insurers have been playing catch-up ever since.

Newer carriers don't have those liabilities on the books. So they are less likely to jack up rates.

That's one key reason why prices among carriers can vary. Some are "recapturing premiums from previously underpriced policies," as Hayduchok says, while others don't have to. But there may also be geographical reasons for the price disparities. Long-term care is more expensive in some regions than in others.

“[It's] really impossible to say" what's the primary explanation for these price changes, Hayduchok says.

Or, as Whit Cornman, a spokesperson for the Washington, D.C.-based American Council of Life Insurers, put it, "Every LTC insurance carrier sets their premiums differently based on a variety of factors."

Companies set their own rates, but the terms have to be approved by the local regulatory authority. "LTC prices are typically applied for by the insurance company and are subject to approval by the individual state insurance department," said F. Michael Zovistoski, a managing director at UHY Advisors NY, a fee-based advisory service. "Each state insurance department is in place to ensure the insurance company has properly priced the product and to protect the consumer. No insurance product can be sold in a given state without obtaining approval."

In other words, there are limits. It's not anything goes. "Carriers cannot just make up rates," concurred Lewis Walker, a wealth advisor at Capital Insight Group in Peachtree Corners, Ga. "They must be based on actuarial assumptions and pricing models and be realistic if a company wants to be competitive." He added, however, that pricing can be affected by the compensation paid to brokers and agents. "Companies with captive sales forces may be a bit more expensive," he said.

Policyholders can significantly reduce costs, the study reported, by tweaking options such as choosing spousal coverage over individual coverage, scaling back the years of coverage from perhaps three years to two years, or by lowering inflation protection from, say, 3 percent to 2 percent a year. For a 55-year-old couple, these measures could reduce total annual costs from $4,750 to $2,500.

To be sure, prices can and do change. "I tell all of my clients that the only thing I can guarantee about any new LTC insurance policy is that the premiums will increase," said David Beck, an insurance specialist and partner at Egan, Berger & Weiner, a law firm in Vienna, Va. "But hopefully, by dealing with a reputable company, the degree to which the policy increases [will be] more modest."

Needless to say, advisors must help clients navigate the many choices. "Many advisors take what I call a simplified, cookie-cutter approach," said Slome. They may not realize the options and their cost advantages. He urges advisors to tell clients that coverage can be affordable, and any degree of LTC coverage is better than none.