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Groups call for tough LTCI rate rules

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Two advocacy groups are asking state insurance regulators to do more to protect consumers against long-term care insurance premium increases.

The groups want regulators to create new conversion rights for any LTCI policyholder who has held a policy 10 years or more.

If an LTCI policy rate increase occurs after a consumer has owned a policy for 10 or more years, the consumer should be able to convert to a paid-up policy with benefits equal to the amount of premiums paid, the groups say.

Bonnie Burns of California Health Advocates and Amy Bach of United Policyholders have included that proposal in a letter sent to the Senior Issues Task Force at the National Association of Insurance Commissioners (NAIC).

Burns and Bach were commenting on a draft of LTCI rate increase model revisions that the task force will talk about this weekend at the NAIC’s fall meeting in Washington.

Earlier, Burns and Bach suggested that LTCI policyholders should get nonforfeiture benefits when rates increase 10 percent or more.

Members of the task force said that proposal was impractical.

Some insurance regulators say they now agree with insurance company arguments that holding LTCI premiums stable over long periods is often very difficult.

But “many policyholders would not have purchased their policy if they’d known an increase would occur so quickly, and be as large as they’ve recently been asked to pay,” Burns and Bach wrote.

Consumers who have owned policies for 10 or more years are often unable to afford to pay higher premiums and also may have health problems that make buying new, more affordable LTCI coverage impossible, Burns and Bach said.

Creating new conversion rights would be better for consumers than simply letting insurers price consumers out of their coverage, then tap the accumulated premiums the consumers have paid in by having the policy reserves from the lapsed policies flow to the insurers, Burns and Bach added.

Burns and Bach also want LTCI marketing materials and the front page of each LTCI policy to state, prominently, “There is no limit to the amount or the number of times that the premium for this policy can increase.”

“We believe that, until these products can be more accurately priced, consumers deserve to know at the outset how the premium they agree to pay might change in the future when they may be less able to finance a more expensive premium and may no longer be insurable,” Burns and Bach said.

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