CDI Issues Bulletin Warning Insurers of False and Misleading Advertisements Related to Public Option Legislation Pending in California

Insurers and brokers selling long-term care (LTC) insurance in California should be aware of the California Department of Insurance (CDI) bulletin of August 23, 2023, expressing concern over certain complaints received by CDI regarding marketing efforts being used to encourage California residents to purchase LTC insurance in advance of any LTCi public option that may be implemented in California. Specifically, the complaints alleged that marketing efforts have included statements that such LTCi public option will be implemented in 2024; that a payroll tax will be levied on California residents as part of the public option program; and that – like the regime in Washington – such tax can be avoided by purchasing LTCi before the end of 2023.

As part of the bulletin, the CDI emphasized that no legislation concerning a public option has been passed. Rather, pursuant to California Assembly Bill 567 (2019), a task force has been created to study potential design structures, which feasibility study was issued in December of last year. Additionally, the task force is currently working on an actuarial analysis of the proposed design structures, due to be issued by January 1, 2024. The CDI emphasized that, following the issuance of any actuarial report, the Legislature “may choose to adopt some, all, or none of the recommendations of the Task Force.”

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NAIC Privacy Protections Working Group Meets to Discuss New Model Privacy Law

On June 5-6, 2023, the NAIC Privacy Protections (H) Working Group (“PPWG”) held an in-person interim meeting (“session”) to continue its work on drafting a new model privacy law, the Insurance Consumer Privacy Protection Model Law #674 (“Model Law”). Model Law #674 is intended to replace the current Models #670 and #672. The session was intended to be a drafting session focused on certain provisions of the current exposure draft not yet covered during the three preceding PPWG open drafting calls.

During the session, the working group covered third-party service providers, definitions of “insurance transactions” and “additional permitted transactions,” marketing (and joint-marketing agreements), consent to marketing (opt-in versus opt-out), and consumer privacy notices. The PPWG announced it intends to release a new exposure draft (version 1.0) of the Model Law by the end of June to address many of the comments the working group has received and discussed to date. There will be no 60-day comment period for this draft and instead, open calls to discuss drafting will restart once the new exposure draft is released.

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Webinar: How COVID Has Changed Long-Term Care Insurance

Although the masks are for the most part behind us, the residual impacts and effects of COVID-19 will be felt by all for many years to come. In a webinar hosted this week by the Long Term Care Discussion Group, our colleague Sandy Jones (Partner, Philadelphia) discusses some of the considerations for long-term care insurance companies that have been caused by, exacerbated by or are attendant to the COVID-19 pandemic. The Long Term Care Discussion Group is an informal non-partisan networking group of long-term care (LTC) policy, provider, payer, academic and other stakeholders. Visit Faegre Drinker’s event page for more information.

The Impact of Florida’s Tort Reform Bill on Insurance Litigation

We wanted to bring your attention today to a new client alert two of our Insurance practice colleagues have written highlighting Florida’s recent tort reform bill and its impact on insurance litigation.

On March 24, 2023, a sweeping tort reform bill was signed into law by Florida Governor Ron DeSantis. House Bill 837 was touted by DeSantis as being designed to reduce frivolous lawsuits and prevent predatory practices of trial attorneys. Notably, the bill will have a significant impact on insurance litigation as it modifies the bad faith framework, eliminates one-way attorneys’ fees, shortens the statute of limitations for negligence claims and changes the comparative negligence standard.

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NAIC LTCI Task Force Adopts Revised RBO Checklist, Receives Update on Industry Trends

NAIC’s Long-Term Care Insurance (LTCI) Task Force recently adopted a revised checklist for regulators to use when drafting and reviewing LTCI reduced benefit options (RBO) policyholder communications. The checklist is meant to provide regulatory guidance only (i.e. does not carry the weight of law) and can be used with the RBO Communication Principles. Following the most recent exposure, the task force established a drafting group made up of consumer groups and regulators from California, Pennsylvania, Vermont, and Virginia. The drafting group incorporated some changes in response to stakeholder feedback – those changes are highlighted in Attachment Two of the Meeting Materials.

Fred Andersen (MN) provided an update on industry trends in light of regulators’ review of year-end 2021 reserve adequacy filings. Here were the main takeaways from Andersen’s report:

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See You Soon! ILTCI 2023 Annual Conference

In just over a week, members of Faegre Drinker’s LTCi team will attend the 2023 Intercompany Long Term Care Insurance Conference in Denver. We are proud to once again support ILTCI as a diamond-level sponsor of the conference and our team will be presenting on a number of panels throughout the Conference. We look forward to connecting with our colleagues and friends throughout the industry. Make sure to check out our team members on the following panels!

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Evaluating Long-Term Care Health Programs

As long-term care insurance (LTCi) claims continue to climb, insurance carriers are also facing the increasing need for additional ways to manage their long-term care insurance (LTC) blocks and find health programs that best work for their policyholders. There are many factors that go into evaluating if an LTC health program is going to be beneficial. A new article, “Evaluating LTC Population Health Programs,” published in Long-Term Care News (February 2023) by the Society of Actuaries takes a closer look at two different methods to measure the impact of health programs.

Authors include Robert Eaton, Juliet Spector, Jeff Anderson, Joe Long, Brian Hartman and Missy Gordon.

LTCi Benefits Paid Grow in 2022

A record $13.25 billion was paid out to policyholders by long-term care insurance companies in 2022, according to new numbers out last week from the American Association for Long-Term Care Insurance (AALTCI). That is in comparison to $12.3 billion in 2021 and $11.6 billion in 2020. AALTCI says benefits were paid to about 345,000 policyholders last year, an increase from 336,000 claimants in 2021 and 325,000 in 2020. The reported amounts represent claims for those owning traditional, stand-alone long-term care insurance, according to AALTCI. The Association says LTCi benefits are “mostly paid to individuals receiving benefits for qualifying care in their own home or in an assisted living facility.”  For more information on this and other AALTCI reports, visit the Association’s website.