California Broker March 2018

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here has been significant progress in reviving the California Partnership for Long-Term Care. The Partnership is still in an intensive care mode, its sales are non-existent, and it’s barely on life support. But changes are likely to occur which could bring the plan out of intensive care and into a period of increasing rehabilitation. As you may recall, SB 1384 was passed in September 2016. It allowed for inflation options in Partnership policies besides 5 percent compound. It also required the formation of a task force of interested stakeholders to advise and assist in implementing reforms to the Partnership. The task force is composed of some 15 members of various state depart-


ments and a dozen outside consultants. This group has now met five times. Its purpose is to mitigate the coming future tsunami to Medi-Cal long-term care expenses when the baby boomers reach their eighties and need long-term care. Its main objective is to create new and innovative Partnership policies that would be affordable to the middle class. This meant coming up with a structure of a policy which would meet this objective. A subgroup was formed to recommend a structure which would be presented to the task force, and this was done at its last meeting on February 6. There are two major impediments to creating an affordable Partnership policy: - -

1. The heretofore compulsory 5 percent compound inflation rider; 2. The requirement that the minimum facility benefit be 70 percent of the average nursing home cost in California, now $ 310/day (70 percent of which is $ 217/day). A subgroup of the task force came up with a recommendation which addresses these two impediments. First, it recommended a 3 percent compound inflation rider, in compliance with SB 1384, which all by itself cuts the premium by about half. Second, it recommended that the 70 percent of the average nursing home cost factor be removed entirely. The subgroup recognized that future nursing home claims will probably be less than 10 percent of all long-term MARCH 2018

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