NAIC Releases 2021 Strategic Priorities

The National Association of Insurance Commissioners (NAIC) is out this week with its strategic priorities for 2021, including a renewed commitment to long-term care insurance (LTCi).

NAIC says “state insurance regulators will continue on-going efforts to improve the consistency around LTCi rate review processes; examine insurer reserve adequacy; facilitate innovative product offerings; engage with federal policymakers on LTCi policy; and educate consumers on LTCi products and alternative benefit options.” NAIC’s LTCi (EX) Task Force is expected to deliver its proposal to the organization’s Executive Committee by the 2021 Summer National Meeting.

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California Insurance Commissioner Appoints Long Term Care Insurance Task Force

On January 26, California Insurance Commissioner Ricardo Lara announced six appointments to the state’s new Long Term Care Insurance Task Force. The Task Force was established after the passage of AB 567 and is tasked with, among others, exploring the feasibility of developing and implementing a culturally competent statewide public insurance program for long-term care services and support. More information on the Task Force can be found here.  California’s efforts appear to follow a recent trend of policymakers exploring or implementing public programs aimed at long-term care services, including Washington State’s Long Term Care Trust Act and some of the ideas recently discussed at the Federal level, including by U.S. Rep. Thomas R. Suozzi (D-NY).

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Future of Dementia

There is a possibility that the structural and financial costs of caring for elderly Americans will become the issue that overwhelms all others in importance in the coming decades.  Among the myriad issues and problems facing the United States at present, many politicians and policymakers have focused on issues that appear more immediate. As they do, however, the United States grows older and more infirm, all while birth rates fell to 1.73 births per female in 2018 and net immigration has fallen to the lowest levels this decade. Given the aging baby boomer generation, the current scenario has all of the makings of a serious demographic crisis. Among an aging population, dementia has become a very prevalent, very difficult, and very expensive illness that many confront, and so far little progress has been made on a cure.  Indeed, The Economist, in its August 27, 2020 edition, published a special report on dementia that included the following statistics:

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The Future of Wellness Programs Offered by Long-Term Care Insurers

Companies are searching for solutions to the increasing demand for next-generation elder care solutions. As chronic conditions like Alzheimer’s Disease and other forms of dementia increase in the elder population, the necessity for in-home care rises. Insurers finding new ways to meet these needs face hurdles in state regulations on insurance rebating and the tax qualified status of wellness policies. The insurance community is keeping a close eye on potential overhaul of anti-rebating provisions and support for programs intended to allow those in need of long-term care to remain at home.

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Florida Bill Restricting Life Insurers’ Use of Genetic Information Signed by Governor DeSantis

Florida has enacted House Bill 1189, which prohibits life and long-term care insurers from canceling, limiting, or denying coverage or adjusting premium rates based on genetic information.

As we previously reported, the bill amends Florida Statute 627.4301, which currently prohibits health insurers’ use of genetic information for insurance purposes. As amended, the statute removes former carve-outs for life, disability, and long-term care insurers, but certain carve-outs remain, such as those for accident-only policies, hospital indemnity or fixed indemnity policies, dental policies, and vision policies.

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Recent Developments in LTC Rate Increase Litigation

A relatively consistent flow of premium rate increase litiga­tion has been filed against long-term care (LTC) carriers over the past several years. Following the plaintiffs’ bar having early success in a limited number of LTC rate increase class actions in the early 2000s, the tide turned definitively in favor of carriers in what we think of as the first generation of such litigation, where the plaintiffs’ bar focused primarily on an alleged duty to disclose possible rate increases and challenging the language of the contract itself. Despite the industry’s over­all success, premium rate increase litigation has attracted an increased level of sophistication from the plaintiffs’ bar, which shifted to more creative theories based on extra-contractual rep­resentations (e.g., marketing materials) in what we view as the second generation of premium rate increase litigation. While the industry remains mostly successful in warding off rate in­crease litigation, a new trend may be developing as recent cases focus on more nuanced contractual limitations and rate increase implementation issues.

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Responding and Managing the Impact of COVID-19

Assured Allies and Faegre Drinker have partnered to develop a playbook for the long-term care insurance industry. Responding and Managing the Impact of COVID-19 offers insights, guidance and ideas to manage the short- and medium-term impacts of the COVID-19 global pandemic and provides potential avenues for long-term care insurers to explore in the post-COVID-19 world that could change long-term care insurance forever.

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