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State Regulators Eye Long-Term Care Insurers' Wellness Programs

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What You Need to Know

  • The panel looking at LTCI wellness programs is the one that normally talks about reduced benefit option packages.
  • LTCI issuers offer the RBO packages in place of premium increases.
  • In a draft paper, the panel says some of the issues wellness programs raise relate to discrimination, consumer confusion and data privacy.

States insurance regulators are starting to think about the rules they should set when long-term care insurance (LTCI) providers add wellness programs for the insureds.

The Long-Term Care Insurance Reduced Benefit Options Subgroup, an arm of the National Association of Insurance Commissioners, has posted a draft LTCI Wellness Programs Issues discussion paper on its section of the NAIC’s website, under the Exposure Drafts tab.

Comments are due Sept. 5.

LTCG, a company that administers LTCI operations for many LTCI issuers, has been working with a startup, Assured Allies, to try to get more information about the insureds’ health and to try to take steps, such as providing hearing aids and preventing falls, to keep insureds from needing to use their LTCI benefits.

Most LTCI businesses are under severe pressure because of a combination of the effects of low interest rates on investment earnings and inaccurate assumptions the issuers made when they originally designed and priced the products. The issuers have responded by implementing large premium increases. The NAIC subgroup thinking about LTCI wellness programs focuses mainly on questions surrounding the reduced benefit options packages LTCI issuers often offer as an alternative to a large premium increase.

The subgroup says in the draft issues paper that LTCI wellness programs raise questions about fairness, discrimination, consumer confusion and data privacy.

The subgroup notes that setting up a wellness program may also be difficult and risky for the issuer.

“The cost of innovation efforts, with no guarantee of any returns, may dissuade some insurance companies from pursuing these programs,” the subgroup says. “Expenses are typically upfront and significant. The financial impact on claims is typically unknown and down the road.”

In a section on data privacy, the subgroup suggests that one question might be what kind of legal obligations an LTCI issuer might have if its wellness program discovers that an insured should no longer be driving.

Another issue the subgroup raises is whether insurers could sometimes ask for access to more information about a policyholder in lieu of increasing the policyholder’s LTCI premiums.

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