Market Changes Pushing Update Of LTC Model Act
A discussion over updating current long term care regulation offered some interesting observations about how the market is developing.
Regulators talked about reopening the Long Term Care Insurance model act and regulation during the spring meeting of the National Association of Insurance Commissioners here.
One change in the LTC market is the increase of sales through financial planners, LTC specialists and worksite market programs in the last two years, according to Bob Glowacki, chair of the LTC committee of the American Council of Life Insurers. The average age for those sales, he said, is between 58 and 62.
“This is a clear indication that financial planning and worksite marketers are making huge inroads. It is no longer a senior age product.”
Glowacki also told regulators that lapse rates are 1.2% per year. “That tells us that older blocks of business are not lapsing.”
Older LTC policies were tied to hospital stays with a trigger that could vary from a minimum of three days and more depending on the contract. Those policies since have been changed to reflect changing options in the LTC marketplace.
Many companies with older policies on their books have offered a 0-day stay to replace a three-day stay that were in contracts. Speaking from experience with a company he had worked with, Glowacki said that when such a switch was offered, 60% of contract holders elected to take the 0-day option.
Another feature being elected by significant numbers of contract holders, particularly younger buyers, is inflation protection, he said.
Care coordination was also touched upon. This occurs when a carrier contracts with a care coordinator to go out and assist contract holders in locating and providing services. It can be particularly valuable when there is a distance between family and a contract holder, he added. “We dont see any health care coordinators trying to skinny down benefits,” he said.
On that issue, Bonnie Burns, a NAIC-funded consumer advocate and a director of consumer education with California Health Advocates, Scotts Valley, Calif., said “the independence of the care coordinator from the carrier as well as payment for ongoing care management after the initial care coordination is put in place” are two points that need to be examined.
“There is still a lot of confusion about the marketplace,” she said, which may be compounded because it continues to change.
Consequently, uniform regulation is important to the consumer, she said, but what LTC insurance counselors are finding when consumers come to them for help is that there is not much uniformity. What companies and agents are and are not allowed to do varies by state, Burns said.