We want to bring you some highlights from the in-person LTCi EX Task Force meeting we attended August 12 during NAIC’s Summer National Meeting in Portland. The Commissioners principally discussed the next steps in the rollout of the Multistate Actuarial (MSA) Framework and the results of a survey of financial advisors to help the Task Force understand how policyholders are considering rate increase communications and the accompanying reduced benefit options that the rate increase communications include.
A federal judge has dismissed a putative class action case brought by a plaintiff asserting ERISA violations against The Prudential Company of America (“Prudential”) and Tufts University (“Tufts”), stemming from premium rate increases to an ERISA group long-term care insurance plan sponsored by plaintiff’s employer, Tufts, and issued by Prudential.
On July 12, 2022, United States District Judge Richard Stearns granted Tufts and Prudential’s respective motions to dismiss the action, Parmenter v. Prudential Insurance Company of America, et al., No. 1:22-CV-10079, Dkt. No. 43 (D. Mass. July 12, 2022), which was originally filed on January 20, 2022 in the United States District Court for the District of Massachusetts.
A possible settlement agreement has fallen through in a suit between CalPERS and a group of policyholders over a 2013 proposed 85 percent rate hike. The agreement would have covered approximately 60,000 policyholders.
The suit was filed by California policyholders that elected to pay for inflation protection benefits in their long-term care insurance (LTCi) policies, ranging from policies purchased in the 1990s through 2004. The Plaintiffs alleged that CalPERS proposed rate hike violated their policy agreements. They contended that CalPERS marketing materials promised that the policies’ optional benefit would not increase their premiums, while CalPERS asserted that it had the authority to raise rates to keep plans funded.
NAIC’s Long-Term Care Insurance Multistate Rate Review (EX) Subgroup recently released a new draft of its MSA Framework document. Comments are due by December 6.
The NAIC has charged the Long‐Term Care Insurance (EX) Task Force with developing a consistent national approach for reviewing current LTCi rates that results in actuarially appropriate increases being granted by the states in a timely manner and that eliminates cross‐state rate subsidization.
The cost of long-term care services continued to rise during the pandemic, and many care providers expect their clients’ costs to increase significantly in 2021.1 A new Willis Towers Watson Insurance Marketplace Realities 2021 Spring Update (“Spring Update”) concludes that 2021 will continue to squeeze long-term and senior care providers from both sides—with general and professional liability insurance rates predicted to increase by 30% or more, and a persistence of 2020’s overall reduced liability capacities in the market for the long-term care provider sector.
Over the past few years, insurers, consumers and regulators have asked the question: who, and how, will consumers receive and pay for long-term care? The older, retired population will soon substantially outnumber the working population and the number of private insurers providing long-term care continues to dwindle. A report from the American Council of Life Insurers projects 70% of Americans turning age 65 or older will require long-term care. By 2060, the number of Americans turning age 65 or older will double and those turning age 85 or older will triple. As the population continues to age, the average cost of care continues to rise. Thus, the government faces a looming risk of unbearable expenses as more individuals rely on Medicaid for elder care. In light of this statistical reality, governments, insurers and long-term care (LTC) providers are trying to find cost-efficient ways to offer long-term care to consumers in need and, in turn, increase access to care.
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.
Navigating long-term care insurance (LTCi) can be complicated for people planning the type of care they might need, how long they might need it and how they are going to pay for it, according to retirement expert Glenn Ruffenach. In a recent Wall Street Journal Ask Encore column, he examines the importance of finding a knowledgeable, independent agent who “sells policies from multiple carriers and who specializes in long-term-care planning and insurance.”
Mr. Ruffenach recommends several tips to help find the right agent, including using educational and training programs dedicated to LTCi insurance to find agents and other financial professionals nationwide. (For example Certification for Long-Term Care has a locator on its website that identifies its graduates.) He also suggests searching online for local experts or asking others in professional services, such as accounting or tax law, for recommendations. Once you have identified several agents, it is important to talk to all of them to assess who is the best fit for you based on their experience and education as well as your own comfort level with them.