Editorial Board, Author at LTCi Summit

New Hampshire Supreme Court Strikes Down Long-Term Care Insurance Premium Rate Increase Caps

The New Hampshire Supreme Court recently ruled that New Hampshire’s regulation that places certain caps on long-term care insurance premium rate increases exceeds the Insurance Commissioner’s rulemaking authority and, therefore, is invalid. See Genworth Life Ins. Co. v. New Hampshire Dep’t of Ins., No. 2019-0727, 2021 WL 621005 (N.H. Feb. 17, 2021).

Some states, either by regulation or administrative practice, place caps on long-term care insurance premium rate increases. In 2015, New Hampshire promulgated amended long-term care insurance regulations that capped premium rate increases based on an insured’s attained age and applied the new caps retroactively to all long-term care insurance policies issued in the state (Amended Regulations). See generally N.H. Code Admin. R. § 19. As drafted, the regulation did not afford the Commissioner discretion to approve increases that exceed the caps. The rate caps were implemented on a sliding scale from 50 percent for all policyholders with attained ages 70 and below down to 10% for policyholders with attained ages over 90. As with caps implemented by other states, the caps adopted by New Hampshire had no actuarial basis.

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Alaska Orders Long-Term Care Insurers to Temporarily Suspend Enforcement of Family Member Exclusions

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.

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SHIP Rehabilitation Plan Amended

Senior Health Insurance Company of Pennsylvania (“SHIP”) was placed in rehabilitation in Pennsylvania in January. As required by the Order of Rehabilitation, the Rehabilitator filed a Proposed Plan of Rehabilitation (the “Plan”) in April.¹ Several interested parties, including three state insurance regulators, intervened in the rehabilitation proceedings in the Commonwealth Court of Pennsylvania (the “Court”). Other interested parties filed formal comments with the Court, generally expressing concerns about or opposition to the Plan. On October 21, the Rehabilitator filed an Amended Plan of Rehabilitation (the “Amended Plan”). When filing the Amended Plan, the Rehabilitator stated that it “addresses most or all of the material and substantial concerns raised in response to the initial Proposed Plan.”

The core of the Plan is charging policyholders the “If Knew Premium” for the benefits under their policies. The If Knew Premium is the rate that, if charged since inception, would have produced the greater of the initial target loss ratio or the minimum loss ratio applicable to the policy form. Policyholders would be offered options to increase premiums or reduce benefits so that they are paying the If Knew Premium for the benefits provided. Many objections to the Plan asserted that the Rehabilitator does not have the authority to implement rate increases without seeking approval from state insurance regulators. Under the Plan as originally filed, no such approval was contemplated.

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