Two nonprofit organizations have asked insurance regulators at the Minnesota Department of Commerce to take a close look at short-term care insurance (STCI).
Bonnie Burns of California Health Advocates and Amy Bach of United Policyholders made that request in a letter sent to Mike Rothman, the Minnesota department’s commissioner, in connection with the department’s recent hearing on the future of long-term care insurance (LTCI).
An STCI policy is a product that pays for home care, nursing home care, or other forms of ongoing, non-acute care for periods of less than one year.
Low interest rates and problems with predicting policyholder behavior have plagued many LTCI issuers in recent years.
Because the performance of an STCI policy is less dependent on long-range assumptions about consumer and market behavior, some members of the LTCI community have suggested that insurers should focus more on selling STCI products.
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STCI products are safer for insurers to write, and consumers may be at higher risk for needing ongoing care for periods of less than a year than for longer periods, STCI supporters say. Using STCI products may also help the insureds get into good care facilities and build relationships that will help them obtain discounted self-pay care later, or help them persuade facilities to provide care at the rates Medicaid pays for care for people who qualify for Medicaid, the supporters say.
Burns and Bach say the STCI products need closer regulator scrutiny.
In some cases, insurers may have designed the products to avoid having to meet the stricter requirements imposed on LTCI policies, Burns and Bach say.
The advocates say they have found at least one policy written in such a way that the insurer can cancel the coverage at any time.
Moreover, “since these only provide benefits for short periods of time, a consumer may ultimately pay more in premium over time than they can get in benefits,” Burns and Bach say.
Regulators should look at the products to make sure “they work well for consumers, are properly priced for the risk they are assuming, and serve a legitimate public purpose,” the advocates say.