Excessive Increases for Long-Term Care Insurance?

Have You Had Excessive Premium Increases For Your Long-Term Care Insurance?

MISSOURI LEGISLATION SEEKS TO REGULATE PREMIUM INCREASES BY CAROL KINDINGER

or many middle-class

FAmericans, long-term care insurance (LTCI) is a critical part of planning a safer, more secure financial future. LTCI helps protect the assets they have worked to accumulate over a lifetime. Hopefully, by purchasing LTCI, it would keep them from becoming a burden to their children or society. Unfortunately, in most recent years, consumers are finding the costs of LTCI premiums rapidly and exorbitantly escalating to levels that result in many policyholders having to cancel their policies after paying premiums for decades and having reached an age where they need the coverage.

UNJUSTIFIED RATE HIKES

While insurance premiums typically increase over time, today’s LTCI premium increases are unrealistic and more frequent. Insurance providers claim the increases are justified because the actuarial forecasts were inaccurately calculated decades ago. In other words, the consequences for internal mistakes are passed on to policyholders. It is reported rate increases are exceeding 60% to 90% in one year, depending on the carrier. What’s equally concerning is that Missouri and Alaska are the only two states that do not regulate LTCI premium increases. The Missouri Department of Commerce and Insurance reviews insurers’ requests for premium increases but does not offer actual approval or rejection of the increases for LTCI. In essence, Missouri policyholders have been subsidizing policyholders in other states when premium rate increases were not approved in those states.

SENATOR BILL EIGEL INTRODUCES LEGISLATION

On a positive note, in 2021, Senator Bill Eigel realized the immediate need for legislation that would protect Missourians from being forced to pay astronomical LTCI premiums or lose the coverage they were relying on for their golden years. He introduced Senate Bill 288 that would have capped rate increases for LTCI policies at the lesser of the consumer price index or five percent, measured annually. This legislation was bundled into House Bill 604 and was signed into law. Unfortunately, the provisions of Senate Bill 288 were radically revised during this legislative process, leaving the ability of insurance companies to raise premiums virtually intact. Insurance companies were allowed to increase rates by amounts they determined were actuarially justified. The only true advantage provided by the bill that was ultimately signed into law allows a resident to deduct from their Missouri taxable income an amount equal to 100% of premium payments (less any reimbursed amounts). Thankfully, Senator Eigel (Bill.Eigel@ senate.mo.gov / 573.751.1141) realized the need to introduce the legislation again in hopes to accomplish what is needed to protect our residents. This new Senate Bill 912 again calls for capping rate increases for long-term care insurance policies at the lesser of the consumer price index or five percent, measured annually. “I am glad to sponsor legislation, SB 912, which will protect Missourians from unjustified rate increases to their long term care insurance premiums. We need to address the premium increases which are being placed on the backs of aging Missourians; a negative impact due to other states regulating long term care insurance premium increases,” said Senator Eigel.

HOLDING INSURANCE PROVIDERS ACCOUNTABLE

If folks are forced to give up their LTCI policies for economic reasons, then wouldn’t that leave the burden on our state budget to care for these people when their resources are exhausted? Insurance providers and their underwriters should be held accountable for their projections and actuarial accounting. They should not be permitted to put an extraordinary burden on policyholders to bail them out of their errors, oversights or obligations. While nursing home facilities and in-home care costs vary from state to state, insurance companies’ projections should have accounted for those differences. Bipartisan support will be required for this legislation to become law. You are encouraged to contact your state senator and representative to ask for their support for Senate Bill 912. Also, you may contact the Chairpersons for both the Senate and House of Representatives asking for their support:

Senator Paul Wieland

Insurance & Banking Committee, Chairman Paul.Wieland@senate.mo.gov 573-751-1492

Representative John Wiemann

Insurance Committee, Chairman John.Wiemann@house.mo.gov 573-751-2176