LTC Sellers: More Uniform Licensing Of Facilities Would Help Sales Grow
Long-term care insurers are taking stock of what lies in store for the product over the next few years and believe that more uniform licensing of LTC facilities would accelerate sales. But they leave no doubt there will be plenty of qualified producers to make those sales even if greater uniformity is not immediately achieved.
While the Health Insurance Portability and Accountability Act of 1996 helped clarify standards such as benefit triggers, diverse state licensing requirements still create disparity in what is covered in different states. HIPAA requires at least two of six activities of daily living be met before benefits are triggered where, for example, previously some states looked at two of seven ADLs.
States vary in how they regulate the product, according to Jack Kispert, vice president-claims with IDS Life Insurance Company, a unit of American Express Financial Corp. in Minneapolis. In some cases, that variation is significant, he adds. There are also differences among product, although the core features of are similar, Kispert notes.
The issue was recently brought to the attention of regulators by consumer advocates during a meeting of the National Association of Insurance Commissioners, Kansas City, Mo.
For example, the definition of a nursing home can vary because of requirements such as the number of beds, type of care provided and required staff, such as licensed nurses, Kispert says.
The laws of the state in which the product is issued govern the terms of the product, says Marie Roche, director of LPC contracts and legislative services with John Hancock Financial Services in Boston.
So, if a policy is purchased in a state where, for instance, home health care is not paid if the insured is in a facility that offers institutional care, then those requirements would apply.
But it works both ways, Roche says. If a contract is purchased in a state like California where home health care benefits can be received even if the insured is in an institutional setting, then that would hold if the insured moved to another state with more restrictive requirements, she adds.
“We do occasionally get questions when people move across the country,” she says, but “for the most part, it is not a problem.”
What is important, Roche continues, is to create consistency in what the contract states and what the customer feels has been purchased.
“Uniformity in state licensing would be a godsend to the insurance industry,” she adds. Lack of uniformity can confuse consumers, she says.
Case management, according to Kispert, helps match benefits with the correct facility. It examines factors such as the distance to the nearest facility, he continues. So, if the nearest licensed facility is 250 miles away, then that would be evaluated in considering how benefits are provided and options that should be made available to the insured, he says.
What is preferable is to make sure at the start that a contract holder is in the appropriate facility for the type of benefits needed, Kispert continues. Case management can direct a contract holder or a family to the proper facility, he adds.
Even if licensing is made more uniform, Kispert continues, issues will continue to arise because the types of facilities and care available continues to evolve. For instance, “15 years ago, an assisted living facility did not exist. The demand has ballooned over the last five years.”
“The states almost work against uniformity,” says John Noble, director-LTC products, UnumProvident Corp., Portland, Me.
UnumProvident files one product licensing application in all states and then adjusts the filing, according to what states say they need to grant a license, he says.
Typically, the product filing portion takes 3-6 months, Noble says.
There are also advertising requirements that have to be coordinated, Noble continues. In 18 states, there are no advertising requirements and a product can be promoted for the day an approval is given. But in other states, there are requirements that must be coordinated, he adds.
Once the product is out in the market, Noble says an educated agent can build a strong customer relationship. “A qualified producer is really key.”
Education starts with a core block of knowledge as a building stone with more information added, he says.
The education needed is very different than for other products, Noble continues. There are many brokers who used the same terminology as they do for other products when it is really a very different product, he adds.
There are a sufficient number of qualified producers to meet the expected growth in the LTC product, according to Chris Rogers, general director of the marketing division in LTC for John Hancock Financial Services.
Regardless of the channel-career agent, bank channel, wire house or regional brokerage, Rogers says extensive training is necessary. Education is critical for any financial services product including LTC, he adds.
Reproduced from National Underwriter Life & Health/Financial Services Edition, February 11, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.