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:
- Cost of Care: The number one thing (by far) regulators are seeing relates to the cost of care inflation issue – leading to higher use of maximum daily benefits than anticipated. There is a consensus among LTCI companies that home care costs have increased significantly over last 5-6 years. This will be a continued area of focus and likely will result in long-term impacts on LTCI blocks. Andersen suggested that home care per day costs are catching up to facility care.
- Shift of Situs of Care: Andersen reported that regulators are also seeing shift in situs of care from facilities to home care, which started during COVID. Regulators have seen varying reports on the shifting of that trend back to facilities.
- Incidence/Length of Claim: Regulators are also seeing an increase in incidence and length of claims. COVID had resulted in lower incidence and shorter claims, but this is being viewed as a temporary phenomenon. According to Andersen, COVID is being seen as having a short-term impact on finances of LTCI blocks.
- Pre-claim wellness impact: At the end of 2021, the NAIC adopted some guidance related to wellness programs. These programs have yielded a positive impact on policyholder health; however, it remains to be seen whether investments in these programs will be offset by the claims cost reductions.
Finally, Andersen highlighted two requests for comment coming out of the LTC Actuarial Working Group on: 1) Suggested improvements on the LTCI Rate Increase Review and MSA Supplemental Information Checklists (both of which are contained in the Information Checklist section of the MSA Framework); and 2) the actuarial approaches described in the MSA framework. The goal of these exposures is to increase the efficiency of state-level rate reviews. Comments on both items are due April 24, and the working group anticipates that any checklist changes will be completed this year.
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