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.
Given the LTCi industry’s unique position, balancing unexpectedly high claims costs over significant periods of time, and as a result, necessitated increases in premium costs to maintain solvency, technology firms have stepped in to propose wellness approaches intended lower costs. According to the draft discussion paper, this new space is called “LTC Wellness” and includes early interventions in wellness such as:
- Fall prevention programs;
- Home modification consultations, analysis and implementation to facilitate aging in place;
- Caregiver support programs for both formal and informal caregivers;
- Next generation care coordination services;
- Technological solutions aimed at improvements in cognitive impairment prevention and early diagnosis
Although LTC Wellness presents a compelling opportunity to benefit policyholders while also potentially reducing claims costs, wellness programs are not without perceived risk. Some of the perceived risks or concerns raised in the discussion paper include:
- Uncertain effectiveness
- Consumer confusion
- Tax considerations
- Data Privacy considerations
- Regulatory role in approving or evaluating the wellness efforts
Underlying many of these concerns is also the concern of inadvertent discrimination or unfair treatment of certain groups. Concerns raised by the Subgroup in its draft paper include issues such as how policyholders could be classified for wellness effort purposes; how to collect information and dispense information in a way that is accessible to all (e.g. if older populations have less access to social media, will they have the same opportunities to participate or will programs be less geared to them?); and how to conduct efforts uniformly among states while complying with regulations for both LTC and wellness programs.
Although LTC Wellness is gaining traction with the industry, it remains an open question whether and to what extent such programs will be adopted by LTCi carriers. Wellness programs can often be expensive, with little cost savings at first. This would require LTCi to engage in possibly high cost initiatives with the hope that they will produce positive effects and cost savings eventually.
As this exciting new space continues to develop, we will continue to monitor regulatory changes, guidance from NAIC, as well as industry standards that may adapt to adopt a more preventative cost savings approach.