The Challenging but Promising Environment for LTC Insurance Susan - PowerPoint PPT Presentation

The Challenging but Promising Environment for LTC Insurance Susan Coronel, America’s Health Insurance Plans

Agenda  NAIC LTCI Structure & Responsibilities  Interstate Compact  State Level – What We Need to Monitor & Address  Federal LTC Financing Policy Options

NAIC LTCI Related Committee Structure & Responsibilities LTC B/E Task Interstate Additional Groups to Force Compact D Committee Health Senior Issues Monitor Market Conduct Actuarial Task Task Force Force Speed to Market LTC Actuarial LTC WG Innovation WG SERFF Advisory Board LTC Pricing SubG LTC Valuation SubG

NAIC LTCI Related Committee Structure & Responsibilities  LTCi B/E Task Force charges include  coordinating all NAIC work related to LTCI  assessing financial solvency of LTCi carriers  evaluating financial reporting and actuarial valuation standards  looking at state rate increase activity to achieve greater predictability/transparency  coordinating state actions aimed at revising state guarantee fund laws  monitoring the development of regulatory policy of LTCi short duration LTCi  considering product innovations and the development of potential state/federal solutions for stabilization the LTCi market  LTCi B/E Task Force released results of the state reported carrier financial solvency status surveys on 9/6/17  Industry believes the results are actuarially flawed

NAIC LTCI Related Committees Structure & Responsibilities  NAIC Senior Issues considers LTCI related policy issues, regulatory standards and revisions to NAIC LTCi Models Latest changes to the LTC Models & Guidance Manual adopted in 2014- 2016 ▪ Currently considering new Models for short duration LTCI and updating LTCI Shoppers Guide ▪  LTC Actuarial, Pricing and Valuation Groups Asset Adequacy Testing of LTC Reserves ▪ Continued discussion on recoupment of past losses. Expect an LTC resource document but not a Model ▪ change Will monitor new asset adequacy over the next few years and review current LTC exhibits for current ▪ relevance  LTCI Innovation Private Market Options for Financing Long-Term Care Services adopted. The report is intended to provide ▪ regulators, policymakers, consumers and other stakeholders an overview of LTC financing mechanisms to consider in the private market 5

10 Recommendations of NAIC LTC Innovations Subgroup Permit retirement plan participants Allow products that combine LTC 1. 5. to make a distribution from 401(k), coverage with various insurance 403(b) or IRAs to purchase LTCI with products (including products that no early withdrawal tax “morph” into LTCI) Allow creation of LTC Savings Support innovation by improving 2. 6. Accounts, similar to HSAs and/or alignment between federal law and enhance use of HSAs for LTC NAIC models expenses and premiums Create a more appropriate regulatory 7. Remove the HIPAA requirement to environment for Group LTCI and 3. offer 5% compound inflation with worksite coverage LTCI and remove DRA requirement Establish more generous federal tax 8. to include inflation protection and incentives allow the States to determine the % of inflation protection Explore adding a home care benefit 9. to Medicare or Medicare Supplement Allow flexible premium structures 4. and/or Medicare Advantage plans and/or cash value beyond return of premium 10. Federal education campaign around retirement security and importance of planning for potential LTC needs

Interstate Compact Map & LTC WA ND MT MN VT ME WI SD OR ID MI WY NY NH IA NE MA PA IN OH IL RI NV CO UT CT KS WV MO KY NJ 39 - 38 Compact LTC CA VA DE States + PR OK TN NC MD AR AZ Non-Compact State NM SC AL MS GA 6 Compact State TX LA but Opt-Out for LTC (AZ, CT, HI, IN, MT & NJ) FL AK HI . Ed. 9/20/17

Interstate Compact • IIPRC just completed 5-year review cycle for LTCI • Revised standards went into effect on 10/17 • IIPRC just received and closed out its first rate increase filing • Expect carriers to file as their blocks age if experience warrants • Industry needs to encourage all remaining non Compact and opt-out states to join IIPRC for LTC in order promote speed to market

State Level – Key Issues to Monitor & Address  Legislative/regulatory initiatives  Legislative/ regulatory initiatives that will impede carriers’ ability that would take LTCI out of the to implement actuarially justified “excepted benefit” category and rate increases treat inappropriately as health  Appropriate actuarial standards of  Retroactive application of any review for LTCI, LTCI rate legislative/regulatory initiative increases and the marketplace that is harmful to LTCI generally  Impact of any legislative/  Legislative/regulatory initiatives regulatory initiative that may be that will expand and promote LTCI a barrier to combination as well as new and innovative products and other future solutions to the nation’s innovative LTCI products expanding LTC funding problem  State adoption of the current NAIC LTCi Models

Federal Policy Options to Strengthen the Financing of Long-Term Care

OVERVIEW  The aging of the baby-boom generation – the 78.2 million Americans – poses major challenges for policymakers.  Over half of all Americans turning age 65 today will need LTC at some point in their lives.  The Department of Health and Human Services estimates that individuals and their families pay for 52% of LTC expenditures out- of-pocket. Medicaid pays about 34% and other public programs (such as benefits for veterans) cover about 10%. Private LTC insurance covers less than 3% of expenditures.

K EY P OLICY P OINTS TO R EMEMBER LTC costs jeopardize Medicaid  LTCI saves Medicaid dollars  LTC services are expensive  Life expectancy is on the rise  LTCI helps millions of Americans and their families  manage future costs for their LTC needs LTCI is a viable alternative for many 

Crucial Question Facing Policymakers  With Medicare and Medicaid already burdened by high costs, it is clear that public programs intended to meet the needs of the elderly will be severely stressed in the years ahead.  A crucial question facing policymakers is how to create the right balance between public and private responsibilities – between the obligation of government to provide a safety net for those who need it, and the obligation of citizens to provide for themselves to the extent they are able to do so.

AHIP strongly encourages the Congress/ Administration to enact the following federal LTC enhancements 1. Allowing employers to offer LTC insurance through cafeteria plans and flexible spending arrangements. 2. Removing barriers that prevent retirement plans from investing directly in LTC insurance ( the within plan approach ). 3. Allowing individuals with existing Health Savings Accounts (HSAs) to make additional contribution to their HSA to pay for LTC insurance. 4. Establishing a federal education campaign program around retirement security and the importance for planning for LTC.