State lawmakers have a huge stake in improving private long-term care planning.
States now spend about $100 billion per year, or about 6 percent of their $1.7 trillion in annual revenue, on Medicaid nursing home benefits and other Medicaid long-term care benefits for the poor, and for residents who have used “Medicaid planning” to protect their assets. The share of state revenue going to fund Medicaid long-term care benefits could rise sharply starting around 2031, when the baby boomers begin to flow into the 85-and-older age category.
The state senators, representatives and assembly members are continuing to work on long-term care insurance models laws and model law updates at the National Conference of Insurance Legislators. Private long-term care insurance showed up often in session agendas and document packets for NCOIL’s recent summer meeting, which took place in Portland, Oregon, and ended Sunday.
Lawmakers also continue to shepherd long-term care insurance bills through state legislatures.
For a look at five state lawmakers’ recent long-term care insurance goals, read on:
1. An Arkansas state senator wants to protect long-term care insurance premium tax credit programs.
The National Conference of Insurance Legislators first adopted a long-term care insurance premium tax credit model law in 2001. A state that chooses to adopt a law based on the model can provide a state income tax break for residents who buy private long-term care insurance. The model itself provides a tax credit for up to 15 percent of the cost of the premiums.
The group puts models through a routine renewal process every five years. The group renewed the long-term care insurance tax credit model at its spring meeting.
A look at the meeting summaries in the group’s summer meeting packet shows that lawmakers had to defend the existence of the tax credit model. Some state lawmakers, for example, wondered whether the tax credits cause anyone to buy long-term care insurance. Some wondered why supporters were in a rush to renew the model law.
Arkansas state Sen. Jason Rapert, who is the president of Bigelow-based Rapert Financial & Associates, a firm that sells long-term care planning services along with a wide range of other financial and insurance services, spoke up for renewing the model quickly at a National Conference of Insurance Legislators Life Insurance & Financial Planning Committee meeting in February. He said policymakers need to encourage people to buy long-term care insurance now, to reduce the future strain on state budgets when people retire.
2. A Vermont state representative wants to get more information about how long-term care insurance premium tax credits are actually working.
Some participants at the National Conference of Insurance Legislators life committee meeting in February wondered whether the long-term care insurance premium tax credit actually works.
Vermont state Rep. William Botzow said he would like to see more information about whether the long-term care insurance premium tax credit is really important, and whether it’s good government policy, according to the meeting minutes.
North Dakota state Rep. George Keiser said he does not believe there is any evidence showing that the tax credit has had a significant effect on sales of long-term care insurance. “The people who were going to buy it have bought it, and the tax credit is an added benefit,” according to the summary of Keiser’s remarks.
3. A North Dakota state representative wants states to help consumers move Long-Term Care Partnership program coverage across state lines.
A state can use a Long-Term Care Partnership program to encourage residents’ own, private long-term care planning efforts, by coordinating Medicaid nursing home benefits with the private long-term care insurance benefits. Residents who buy an approved Partnership policy can protect more assets than usual if they run out of private long-term care insurance benefits and end up needing Medicaid benefits.
North Dakota state Rep. George Keiser said in February, at a meeting that brought National Conference of Insurance Legislators members together with representatives from the National Association of Insurance Commissioners, that one big concern is getting states to recognize partnership policy protection purchased in other states.
When the National Association of Insurance Commissioners wrote its partnership program model act, it focused on encouraging “portability,” or provisions letting consumers move partnership protection from one state to another.
“The portability has not worked, because states are not honoring it,” according to a summary of Keiser’s remarks.
4. A California state senator wants to help holders of existing long-term care insurance policies get extra flexibility when using their benefits.
California state Sen. Carol Liu introduced Senate Bill 1091, a bill that formally lets long-term care insurance issuers and insureds proposed using policy benefits for purposes not described in the policy.
Either the issuer or the insured could, for example, propose using the benefits from a nursing home benefit policy to pay for assisted living facility care, or from a traditional long-term care insurance policy to pay for adult day care services, or home modification technology. The current version of the bill would make the maximum benefit available for the “alternate plan of care” the same as the maximum benefit available under the contract. “Nothing in this section shall prohibit an insurer from requiring that an alternative plan of care be a cost-effective alternative,” according to the bill text.
An earlier version would have let an issuer call a long-term care insurance policy “family friendly” only if the policy let family members provide the covered care, provided caregiver training, and let two or more insureds share the pool of benefits.
In the current version, either an insurer or an insured could reject an alternate plan of care proposal. An insurer that rejected a proposal would have to explain why it rejected the proposal.
The bill passed 37-0 in the state Senate in May. It’s now in the state Assembly.
The American Association for Long-Term Care Insurance supports the bill, according to a legislative analysis prepared in May.
5. An Arizona state senator wants to give her state more time to digest existing long-term care insurance model updates.
The National Association of Insurance Commissioners responded to waves of big long-term care insurance premium increases by adopting a major long-term care insurance rate model act update and a major long-term care insurance rate model regulation update.
States have to decide for themselves whether to adopt the models, and how quickly.
Arizona state Sen. Nancy Barto came up with a quick patch for Arizona: Senate Bill 1441. The bill simply gives the state’s insurance department to adopt rules implementing the model regulations on an emergency basis. The department has to give the public a chance to comment on the emergency regulations, but it can continue to use the regulations without going through the state’s full rulemaking process until June 30, 2018.
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