NAIC’s Long-Term Care Insurance Multistate Rate Review (EX) Subgroup Releases New MSA Framework Draft

NAIC’s Long-Term Care Insurance Multistate Rate Review (EX) Subgroup recently released a new draft of its MSA Framework document. Comments are due by December 6.

The NAIC has charged the Long‐Term Care Insurance (EX) Task Force with developing a consistent national approach for reviewing current LTCi rates that results in actuarially appropriate increases being granted by the states in a timely manner and that eliminates cross‐state rate subsidization.

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Washington State’s New Long-Term Care Public Option Podcast

In our latest podcast, I am joined by Margie Barrie* to discuss Washington’s new long-term care insurance public option, Washington Cares. See generally Wash. Stat. 50B.04.010, et seq. As many of you know, Washington permitted a one-time opt-out from the Washington Cares program—and the associated payroll tax (effective January 1, 2022) being used to fund the program—for people who purchased qualified LTCi by November 1, 2021.

After briefly discussing the key features of the law, we discuss how the exemption to the payroll tax dramatically impacted Margie’s life as a broker selling LTCi; what we heard from our carrier contacts on how it impacted new business in Washington this year; and what we are hearing about other efforts to deploy similar legislation in other states. Margie and I also discuss our plans to continue to track this significant development in long term care. We will be focusing on the impact of the Washington legislation and other states considering LTCI public options.

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The NAIC LTCi Reduced Benefit Options Subgroup Reports on Potential Issues Related to LTC Wellness Benefits

On July 22, 2021, the NAIC Long-Term Care Insurance Reduced Benefit Options (EX) Subgroup, led by Commissioner Altman (PA), posted its first draft of a discussion paper Issues Related to LTC Wellness Benefits online. Comments are due September 5, 2021.

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COVID-19 Driving Insurance Sales Over the Past Year

It should come as no surprise that the COVID-19 pandemic has been one of the biggest, if not the biggest factors driving the insurance market over the last year and a half.

More than half (54%) of Americans said that COVID-19 has made them more anxious about dying early, becoming disabled or needing long-term care (LTC), according to a new survey from the Million Dollar Round Table (MDRT).* Among those surveyed who said they acquired new insurance policies since March 2020, 42% said the COVID-19 pandemic was a factor while other reasons included wanting to provide for their family (36%), a major life event (29%) and new concerns about potential future disability or LTC needs (27%).

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Shifting Trends in Life-LTC Combination Products Due to COVID-19

At the recent 2021 Supplemental Health, DI & LTC Conference, hosted by LIMRA, LOMA, and the Society of Actuaries in early August, panelists discussed the current market trends of long-term care (LTC) products, particularly Life-LTC combination products. The market for these combination products has typically seen a steady 12% growth rate from 2009 to 2020, explained Mohammad T. Reza, CFA of New York Life. However, the pandemic had unprecedented effects in many regards and the Life-LTC market was no exclusion. The total number of life-LTC combination products sold decreased 7% in 2020.

According to LIMRA’s 2020 U.S. Individual Life Combination Products Annual Review, total new premiums for individual combination products decreased by 23% in 2020. A recurring theory for the decline is that the priorities of potential insureds shifted dramatically as a result of COVID-19, which impacted single-premium combination products the strongest at a decline of 41%. With Americans facing more immediate concerns for liquidity and cash during the pandemic, the demand for these life-combination products dampened, derailing the consistent upward trend the market had previously seen.

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Updates to the Long-Term Care Insurance NAIC Model Act and Model Regulation

As part of its effort to revamp and modernize the Model Laws, the National Association of Insurance Commissioners (NAIC) is updating the Long-Term Care Insurance Model Act, Model 640-1, and the Long-Term Care Insurance Model Regulation, Model 641-1 (combined, the Models). The current versions of the Models were finalized in 2017, and all states have adopted the current Models or similar legislation.

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A New Study Highlights the Need for Long-Term Care Planning

A report recently issued by HealthView Services, “Long-Term Care & Financial Planning,”  summarized the likelihood that individuals will require long-term care (LTC) and the expected costs associated with such care. The study indicates that a healthy 65-year-old male/female couple has a 44% and 56% chance (respectively) of needing some level of LTC if each spouse attains their actuarial life expectancy. Combined, there is a 75% chance that at least one of them will require LTC.

The report also projected the future cost of LTC. Taking the same 65-year-old male/female couple, if they both only needed one year of LTC, their projected combined (national average, future value) costs are estimated at $398,000 for a nursing home or $223,000 for 44 hours of weekly home health care.

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Is the WISH Act the Answer to Concerns About the Cost of an Aging Population?

A new bill proposed in Congress seeks to address financial concerns due to an aging population through the Well-Being Insurance for Seniors to be at Home Act (“WISH Act”). The current population of the United States is aging rapidly, leading to an increasing percentage of the population aged 65 and over. In fact, it is estimated that by 2050 the number of people living over the age of 65 will almost double and the number of people living over the age of 85 will triple.

The WISH Act, introduced on July 1, 2021 by U.S. Representative Tom Suozzi (NY), cautions that “the typical U.S. senior could afford only about 12 months of nursing home care, assisted living care, or extensive home care using their financial wealth.” This is consistent with the idea that over “half of Americans entering old age today will have a long-term need for constant attendance by another person, averaging $298,000 costs per person for about 2 years of serious self care disability (as defined in HIPAA), and more than half will be out-of-pocket, according to the U.S. Department of Health and Human Services (HHS).”

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