Insurance industry players disagree about what regulators should call the product now (often) known as “short-term care insurance.”
Agents and brokers use the term to refer to products that cover nursing home care, home health care and other forms of non-acute health care for periods of less than 12 months.
Some insurers stick with that product name. Others call the product ”recovery care insurance” or “convalescent care insurance.”
State insurance regulators at the Senior Issues Task Force have dubbed the product “limited long-term care insurance” in drafts of a model law and a model regulation.
Now five commenters from insurance companies have weighed in on the models — and the insurance company reps all have different ideas about what the product name should be.
The Senior Issues Task Force is part of the National Association of Insurance Commissioners, a group for state insurance regulators. The task force is preparing to discuss the short-term care insurance model law and model regulation drafts June 7, during a conference call meeting.
NAIC model laws and model regulations have no direct effect on state insurance laws or regulations, but states often start with NAIC models when developing their own laws and regulations.
The Seniors Issue Task Force has already posted the model drafts on its section of the NAIC website, and asked for comments from members of the public. The task force recently prepared for the upcoming conference call by posting a digest of the public comments.
A representative from Reserve National Insurance welcomed use of the name “limited long-term care insurance”
“The stated intention is to establish standards for insurance products offered and marketed as a form of ‘long-term care insurance’ but for a coverage period of less than one year,” the Reserve National rep wrote, according to the comment digest. “The title of ‘limited long-term care insurance’ would appear consistent with that purpose.”
The four other insurance reps said using the name “limited long-term care insurance” could lead to customer and regulator confusion about the nature of the products.
A representative from Guarantee Trust Life said regulators should call the product something like “limited duration long-term care” insurance.
The name “limited long-term care” is unclear, the Guarantee Trust Life rep wrote.
Consumers or others might interpret “limited” in that context to “refer to the type of care, the dollar amounts available for care, or any number of the product’s features,” the Guarantee Trust Life rep wrote. ” The shorter benefit period of this product is one of its most significant differentiators and should be noted in any title referring to it.”
A Bankers Life rep suggested that any use of “ long-term care” in the product name could fool consumers into believing, mistakenly, that the products qualify for the tax breaks that the federal government provides for some purchasers of long-term care insurance.
“We believe retaining a name such as ‘short-term care insurance’ or another similar term lessens this confusion and aligns better with the way existing policies of this type are known today,” the Bankers Life rep wrote.
An Aetna rep argued that putting the term “long-term” in the name of a product with a duration of less than 12 months would be confusing.
“The new model design does not offer all of the benefits of long-term care,” the Aetna rep wrote.
Implying that the product is a kind of long-term care insurance “is a recipe for confusion that will create more complaints and less consumer satisfaction with the product,” the rep added. “One of the concerns that led to the work by the subgroup was agents selling products that were not long-term care but calling them ‘long-term care,’ or perhaps ‘poor person’s long-term care.’. Calling the products regulated by this new model a name that includes ‘long-term care’ will increase the likelihood that selling agents will call these plans ‘long-term care’ when they’re not.”
Susan Voss, a commenter with American Enterprise Group Inc., said calling short-term care insurance “limited long-term care insurance” could also cause confusion about the nature of stand-alone long-term care insurance, by implying that all stand-alone long-term care insurance policies provide unlimited benefits.
“Many long-term care policies only pay for five … years of coverage,” Voss wrote. “I’m not sure for some folks that would be considered ‘long.’”
Several commenters from insurers also talked about concerns about the possibility of adopting use of a product name that will blur the distinctions between a policy that covers non-acute care for a short period of time and short-term medical insurance.
The NAIC appoints people to represent consumers’ interests in NAIC proceedings.
The NAIC consumer reps wrote about another issue: training requirements. The agents who now sell long-term care insurance products have to get special training.
In the model law draft, regulators have proposed making requirements for special training for sellers of “limited long-term care insurance” optional.
The reps wrote that they believe that agents who sell any retirement products should have training.
Any agents who sell limited long-term care insurance without having gone through long-term care insurance training have an obvious need for training, the consumer reps wrote.
Susan Voss suggested that model law drafters should distinguish between the nature of short-term care insurance and long-term care insurance when they set any training requirements.
Long-term care insurance agents need training, for example, on state Long Term Care Partnership programs that provide special access to Medicaid nursing home benefits for participants who exhaust long-term care insurance benefits, Voss wrote.
Agents who sell short-term care insurance do not need to know much about those programs, because short-term care insurance policies do not give participants access to those programs, Voss wrote.
— Read also, on ThinkAdvisor:
- California Discretionary Clause Ban Applies to Health Plans, District Court Rules
- 9th Circuit Reinstates AARP Medigap Suit
- John McLaughlin’s Estate Gets an Annuity Decision