Insurers have many ideas for saving the U.S. market for stand-alone long-term care insurance market that require the Democrats and Republicans in Congress to work smoothly together.
Executives from Genworth Financial and John Hancock talked about some of those big, complicated, well-known ideas recently during a conference call with members of the Long Term Care Innovation Group, but they also spent some time talking about some smaller-scale proposals that might be easier to implement.
The Kansas City, Missouri-based National Association of Insurance Commissioners, a group for state insurance regulators, started the group in response to the problems now crippling the U.S. long-term care insurance market just as many baby boomers are starting to think vague thoughts about long-term care planning.
What Your Peers Are Reading
The subgroup has been hearing from consumer group representatives, long-term care policy researchers and consultants, and even some insurance agents.
In July, the subgroup listened to presentations from Marie Roche and Alex Silva of John Hancock, which is a Boston-based unit of Manulife Financial Corp., and Debapriya Mitra and Patrick Redder of Genworth, which is based in Richmond, Virginia.
The insurer reps said their companies would like to see policymakers moving beyond the mindset of the 1980s and 1990s, when interest rates were much higher and actual LTCI experience was scarce. They said their companies also could use a law that would let 401(k) plan and individual retirement account holders use account funds to pay long-term care insurance premiums, and a new federal income tax break for people who buy private long-term care insurance policies.
Congress has been debating those kinds of proposals for many years. The debates typically grind to a halt because of Democrats’ concerns that the proposals would mainly help higher-income taxpayers who would find a way to pay for long-term care even if they had no private long-term care insurance
For a look at some of the insurers’ other, less gridlock-sensitive ideas, drawn from conference call slidedecks posted on the Long Term Care Innovation Subgroup’s section of the NAIC’s website, read on:
1. Make states’ long-term care insurance rules more uniform.
The Interstate Insurance Product Regulation Commission already offers a uniform set of long-term care insurance standards for member states.
National Guardian Life Insurance Co. of Madison, Wisconsin, recently used the compact standards to speed a new stand-alone long-term care product into the market in 28 states. The insurer became the first insurer to enter the U.S. market for stand-alone long-term care coverage in more than 10 years.
If the states that have avoided adopting the compact’s long-term care standards would do so, that would help all long-term care issuers, the insurer reps said.
Related: Nevada to use compact LTCI standards
Congress would probably have to help states harmonize tax and Partnership program rules. (Photo: Allison Bell/LHP)
2. Set the same standards for long-term care insurance policies that qualify for federal tax breaks and state Long-Term Care Partnership programs.
Congress lets consumers deduct some long-term care premiums for “tax-qualified” products from taxable income under some circumstances.
Congress has also enacted a law that lets states set up Long-Term Care Partnership programs, or programs that try to protect state Medicaid programs from nursing home bills. A state with a Partnership program encourages residents to buy private long-term care coverage by turning Medicaid into a nursing home bill backstop program, rather than the obvious source of nursing home bill help.
A Partnership program tells state residents that the Medicaid program will ease the benefits eligibility requirements for a holder of certain types of long-term care coverage if the holder ends up having to live in a nursing home for many years and exhausts the private long-term care benefits.
All policies eligible for the Partnership program must be tax-qualified, but not all tax-qualified policies are eligible for the Partnership program.
If states and Congress could make modest changes in the tax rules and the Partnership program rules, so that all tax-qualified long-term care products would be eligible for the Partnership program, that would help the issuers, the insurer reps said.
Insurers say long-term care training requirements hurt efforts to recruit producers. (Photo: Thinkstock)