The Alaska Division of Insurance recently ordered long-term care insurers to suspend enforcement of family member exclusions until December 15, 2020, or until such time that Governor Mike Dunleavy determines that the declared public health disaster emergency resulting from COVID-19 no longer exists. See Order R20-10 (November 16, 2020). In the Order, the Division expresses its determination that insureds be able to access their benefits notwithstanding family member policy exclusions due to the increased risk of exposure attendant to home health care providers traveling between households. The Division has extended similar orders during the pandemic, so this Order may be extended beyond December 15. Although the industry has become accustomed to COVID-19-related accommodations pursuant to orders from state regulators, the Division’s decision to suspend family member exclusions is a first during the COVID-19 pandemic and may present administrative and compliance challenges.
Most immediately, the language of the order is pretty direct and unequivocal. Thus, in Alaska, companies will need to identify ways to exempt policyholders from family member exclusions during the effective period of the order. Over the longer term, however, we see at least two issues that long-term care insurers will need to be prepared for:
- As the virus continues to spread rapidly in rural areas, will other states (particularly western, less densely populated states) adopt similar regulatory restrictions? If so, how widespread will this regulatory contractual modification extend, and will it impact a material number of insureds (recognizing that, at present, Alaska represents a very small number of long-term care insureds)?
- How do carriers transition insureds back to the policy restrictions on family member caregivers once the emergency requirements expire? Family member exclusions are important components of the policy terms and conditions, and typically those exclusions are clearly and unambiguously expressed in the terms of coverage. Once this Order expires, carriers will need to be similarly clear about how and when insureds will again be subject to the clear terms of family member exclusions.
As COVID-19 continues to spread rapidly, particularly in rural areas, we will continue to monitor whether other states adopt similar regulatory restrictions.
For more information about the legal, regulatory and commercial implications of COVID-19, check out our firm’s COVID-19 resource center here.