Insurance regulators in Washington state wish their colleagues would give up on trying to create a national framework for the products often known today as “short-term care insurance” (STCI).
Molly Nollette, a Washington state deputy insurance commissioner, makes the case against creating an STCI product framework in a letter sent to the Health Insurance and Managed Care Committee at the National Association of Insurance Commissioners (NAIC).
“The marketing of such a product would simply add to the confusion and distress that has plagued the long-term care market in general over the last few years,” Nollette writes in a letter on behalf of the Washington State Office of Insurance Commissioner.
The committee is preparing to consider proposals for a model STCI act and a model STCI regulation during a conference call meeting Tuesday.
What Is STCI?
“Long-term care insurance” (LTCI) covers home care, nursing home care, adult day care services and other forms of care for people who need supervision, or help with activities such as eating and bathing, for long periods of time.
An insurer that offers LTCI must predict how insureds who are young and healthy today will behave years in the future; how the premiums invested in bonds and other assets today will behave between now and the time an insured files a claim; how long an insured who files a claim will stay on claim; and how the assets backing the policy of an insured who is already getting LTCI benefits will behave while the insured is getting the benefits.
State insurance regulators have developed laws and regulations for LTCI based on the idea that predicting how insureds and investment markets will behave over many years of time is difficult.
Some insurers now offer products that cover home care, nursing home care, adult day care services and other forms of post-acute health care for relatively short periods of time.
The issuers give their products a variety of names. Some agents and brokers call the products STCI products.
Marketers see an STCI policy as a product that can help consumers pay for the recovery period after an acute health care incident, such as a heart attack, or a fall. Some marketers say STCI can also provide some relief for consumers who may end up needing long-term care services but who cannot afford, or qualify to buy, traditional LTCI.
Some STCI supporters have argued that the rules for STCI should be simpler than the rules for LTCI, because a short-term product is inherently simpler in many ways than a similar product with a longer benefit term.
What Is the NAIC Health Insurance and Managed Care Committee?
State insurance regulators are in charge of most insurance regulation efforts in the United States.
The NAIC helps state insurance regulators coordinate their efforts. State regulators work at the NAIC to develop “models,” or examples of how states should write their own insurance laws and regulations.
The Health Insurance and Managed Care Committee is one of the top panels at the NAIC. If committee members approve the STCI models Tuesday, the NAIC could put the models up for consideration by all voting NAIC members at an in-person NAIC meeting.
The NAIC plans to start its next four-day national meeting, in San Francisco, Nov. 15.
States can choose whether or not to use the models. If the NAIC adopts the STCI models, the impact of the models will depend on how many states use the models.
What’s in the NAIC’s STCI Model?
The Senior Issues Task Force, part of the NAIC’s Health Insurance and Managed Care Committee, has been working actively on developing STCI models since 2016. The task force approved the drafts now on the Health Insurance and Managed Care Committee conference call agenda in June.
In the models, the task force has recommended calling STCI “limited long-term care insurance.” Here are seven other model highlights.
1. Benefits term: Under the terms of the models, the maximum benefit period for limited LTCI would be 12 consecutive months, per person, whether the person was covered on an expense-incurred, indemnity, prepaid or other basis.