LONG-TERM CARE INSURANCE
Connecticut Bills Would Freeze LTC Rates, Require Hearings for Some Increases
HARTFORD, Conn. //BestWire// - Lawmakers in Connecticut are reviewing two pieces of legislation that would rewrite rules for long-term care insurance by freezing rates for four years, increasing disclosure requirements and instituting automatic hearings for rate requests beyond certain thresholds.
(Photo credit: Sean Pavone)Senate Bill 452 would freeze LTC rates for four years and require mandatory public hearings for any rate increase request exceeding 5%, according to the bill’s text. The bill would also grant a tax deduction for policyholders who see a more than 5% rate increase during the taxable year.
SB 452 would also create a task force to study the LTC insurance industry, including premium costs and alternative policy structures such as a state-funded insurance pool, the bill says. The task force would need to provide recommendations on improving affordability and coverage.
Senate Bill 1269, which was introduced more recently, would require the Connecticut Insurance Department to study and report on an alternative pool for long-term care policyholders who have maintained coverage for more than 20 years. The regulator would also be tasked with evaluating the LTC rate filing process, according to the bill’s text.
Further, SB 1269 would require carriers to provide written notice regarding potential future rate increases before the policy is sold. It also creates a tax credit for eligible LTC policy purchasers.
The bill clarifies that life insurers can issue annuities with LTC riders with approval from the insurance commissioner. These annuity contracts would need to include written disclosures detailing how these riders could affect benefits, including reductions in death benefits or surrender value. Disclosures would also have to include details on state and federal laws that could trigger benefits and any exclusions or limitations in the coverage.
Democrat Sen. Saud Anwar, who introduced SB 452, said his bill is the more comprehensive of the two, although SB 1269 is further along in the legislative process.
The most important move lawmakers can make is to put the rate moratorium in place, Anwar said.
“We need to pause everything that’s happening and how the insurance industry is abusing our seniors and the community who is on a fixed income,” Anwar said.
He said the moratorium would bring all stakeholders to the table, allowing for the creation of a model to address issues in the LTC line, which stretch well beyond Connecticut’s borders. The line has been hampered by underwriting missteps made in the 1990s and 2000s, growing medical costs, an aging population and longer lifespans, regulators nationwide said (BestWire, Oct. 8, 2024).
Holding public hearings on rate increases is the second vital factor, according to the senator, who said that carriers currently enjoy the ability to institute rate increases without having to go through any review process.
“It’s important to shine a light on that (rate setting) process,” Anwar said.
SB 1269 and its 10% threshold to trigger public hearings gives carriers too much room to increase rates without oversight, said Anwar, who has been pushing for these legislative changes for the past four to five years. During this time, he has seen quotes from constituents with rate increases ranging from 25% to 40%. While rates have been growing, benefit levels have been declining, he said.
“That’s scary when you see those numbers,” Anwar said. “If you look over many years, it has essentially doubled.”
Noting no one likes higher prices, whether it be for eggs or LTC coverage, it is understandable that lawmakers are attempting to limit rate increases for the line, said Jesse Slome, director of the American Association for Long-Term Care Insurance. However, he cautioned this legislation could reduce the number of carriers willing to write LTC insurance in Connecticut.
“The need won’t change, only the options available to aging Connecticut seniors and their families. And, ultimately, a greater dependence on programs paid for by Connecticut taxpayers,” Slome said in an emailed statement.
(By Steve Hallo, senior associate editor, BestWire: Steve.Hallo@ambest.com)