From time to time, colleagues in our larger Insurance practice, along with other non-insurance-related practices, write on issues that we feel are important enough to highlight on this blog. Emerging attention to Artificial Intelligence (AI) by lawmakers and regulators alike is one such issue. Among the topics highlighted in Faegre Drinker’s latest Artificial Intelligence Briefing is the Collaboration Forum on Algorithmic Bias held during NAIC’s Summer Annual meeting that featured various presentations, including one from our own Scott Kosnoff on how companies can mitigate their regulatory, litigation and reputation risk through AI risk management and governance.
On Wednesday, June 22, the Senate Finance Committee advanced the Enhancing American Retirement Now (EARN) Act, including an amendment containing retiring Sen. Pat Toomey’s Long-Term Care Affordability Act. The Amendment would allow people to use up to $2,000 per year in 401(k) assets to pay for their LTCi premiums. The Amendment aims to promote a more viable LTCi marketplace by increasing participation, as the use of 401(k) funds would expand the asset pool available to pay premiums. The bill would apply to “eligible retirement plans,” defined as a qualified retirement plan that is a defined contribution plan, a section 403(a) annuity plan, a section 403(b) plan, a governmental section 457(b) plan, or an IRA. The qualifying coverage may be for the individual or the individual’s spouse or dependent. Distributions for the purpose of LTCi premiums would be exempt from the additional 10% tax on the amount of the distribution.
In our latest podcast, I am joined by Margie Barrie* to discuss Washington’s new long-term care insurance public option, Washington Cares. See generally Wash. Stat. 50B.04.010, et seq. As many of you know, Washington permitted a one-time opt-out from the Washington Cares program—and the associated payroll tax (effective January 1, 2022) being used to fund the program—for people who purchased qualified LTCi by November 1, 2021.
After briefly discussing the key features of the law, we discuss how the exemption to the payroll tax dramatically impacted Margie’s life as a broker selling LTCi; what we heard from our carrier contacts on how it impacted new business in Washington this year; and what we are hearing about other efforts to deploy similar legislation in other states. Margie and I also discuss our plans to continue to track this significant development in long term care. We will be focusing on the impact of the Washington legislation and other states considering LTCI public options.
As part of its effort to revamp and modernize the Model Laws, the National Association of Insurance Commissioners (NAIC) is updating the Long-Term Care Insurance Model Act, Model 640-1, and the Long-Term Care Insurance Model Regulation, Model 641-1 (combined, the Models). The current versions of the Models were finalized in 2017, and all states have adopted the current Models or similar legislation.
A new bill proposed in Congress seeks to address financial concerns due to an aging population through the Well-Being Insurance for Seniors to be at Home Act (“WISH Act”). The current population of the United States is aging rapidly, leading to an increasing percentage of the population aged 65 and over. In fact, it is estimated that by 2050 the number of people living over the age of 65 will almost double and the number of people living over the age of 85 will triple.
The WISH Act, introduced on July 1, 2021 by U.S. Representative Tom Suozzi (NY), cautions that “the typical U.S. senior could afford only about 12 months of nursing home care, assisted living care, or extensive home care using their financial wealth.” This is consistent with the idea that over “half of Americans entering old age today will have a long-term need for constant attendance by another person, averaging $298,000 costs per person for about 2 years of serious self care disability (as defined in HIPAA), and more than half will be out-of-pocket, according to the U.S. Department of Health and Human Services (HHS).”
An astounding 88% of Americans would prefer to receive any ongoing living assistance they need as they age at home or with loved ones, according to a new nationwide survey released this week by The Associated Press-NORC Center for Public Affairs Research.
Furthermore, 69% of participants reported they have done only a little or no planning for their long-term care needs, and 49% of participants over the age of 40 reported that they expect the majority of their long-term care costs will be paid by Medicare. Considering Medicare currently covers very limited long-term care costs, and the Medicare trust fund is at risk to become insolvent in the near future, 89% of participants reported that strengthening the Medicare trust fund should be a priority for the Biden administration and Congress.
Recently, long-term care insurers have focused a substantial investment of resources in evaluating and assessing the feasibility of wellness programs aimed at keeping policyholders healthier and at home as they age. This goal meets the stated desires of almost all policyholders, and also delays and/or lessens the severity of any long term care insurance claims that policyholders might be eligible for. Many of these wellness programs utilize predictive analytics of various types, including algorithmic data analysis, predictive models and artificial intelligence. Regulators and lawmakers have been focused on these types of Insurtech offerings, and have been particularly attentive to potential discrimination issues that might arise.
On March 9, 2021, the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services announced that it was extending public comment on the proposed changes to the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule from March 22, 2021 to May 6, 2021.
OCR first released the proposed modifications to the HIPAA Privacy Rule on December 10, 2020. Specifically, OCR announced it was proposing changes “to support individuals’” engagement in their care, remove barriers to coordinate care and reduce the regulatory burdens on the health care industry.”