In 2016, we saw the California Partnership drop to one company.
We saw the downgrading in ratings for the Nation’s largest LTC carrier by a rating company because it repositioned $1.3 billion from Capital/Surplus to its LTCI reserves due to an in depth claims study.
We saw legislative action in California to address the concerns of an imploding Partnership Program with the passing of SB 1384.
We also saw the passing of SB 1091 in an attempt to clarify the “Alternative Plan of Care” benefit in policies that offer it.
We saw the withdrawal from the individual market by one carrier but maintaining its presence in the multi life and the shortly after that, a complete withdrawal by the second largest carrier in the LTCI industry.
We saw a Presidential Election that surprised many and stunned others. Two key issues have been raised since that historical event.
- The inevitable repealing of the Affordable Care Act (ACA) and what that means to Covered California and to the expansion of Medi-Cal and
- The possible rationing of current California LTC services under the threat of potential “Medicaid Block Grants” from the new administration.
Both of these events will have a “huge” impact on Long-Term Care and its insurance in California for years to come!
Now comes 2017.
Based on the last two weeks of some intense conversations with the state’s leading consumer advocate and a key legislative liaison with indepth knowledge of the LTC Insurance legislative process and the workings of the DOI here in California, they think there is clearly an opportunity for change!
I’m going to frame this discussion into four (4) topics, (1) The California Partnership Product Expansion including carrier’s participation. (2) DHCS’s timely review and approval of Partnership regs and carrier approval. (3) The implementation of SB 84/CA DRA and reciprocity for Partnership. (4) California DOI timely review and approval of product/rates and marketing material.
(1) Partnership product expansion and carrier participation. SB 1384 was designed to allow Partnership products to include and offer additional inflation options other than 5% compounded. 2-3% compound inflation options can now be offered under certain product offerings under the California Partnership (assuming carriers will to do so!). Effective January 1, 2017, Carriers under the California LTCI Insurance Code can now offer one or all of the current product offerings:
Facility Care (NH & RCF/ALF only).
Home Care only.
Comprehensive (which combines 1&2) and new in 2017
Home, Community and RCF/ALF only care (No NH home coverage). Carriers can also offer “pools of money” approach, such as $75,000, $150,000 and $250,000 and upward type of product design offerings. Another key issue regarding the new provisions under Partnership products will be the lowering of the daily benefit minimums down to $150-$160 per day approach compared to the current 2017 of $210 (70% of the NH average private pay daily rate APPDR)
(2) “Timely Product Approval” (3-6 months max or less) factoring in carrier participation of products and marketing material requests including rate fillings, by the Partnership/DHCS.
(3) Implementation of the Deficit Reduction Act of 2006 (DRA) and enforcement of SB 84 (Ca Implementation of the Federal law). Invoking the 60 month look back, invoking the home equity requirement provision, invoking the inclusion of Annuity’s into the look-back provisions (making it harder to shift, shield and or transfer assets to avoid “spend down” and “penalty period”). To preserve (which will become more difficult to expand under block grants) Medi-cal dollars and or benefits under current LTC provisions which may be reduced in the future due to reduced/limited future funding from the feds. Also, allowing for the “reciprocity” for all California Partnership Policies in the state for existing as well as new & future policyholders.
(4) Finally, the “Timely Approval” of all LTCI policies/rates and marketing material by the California Department of Insurance by establishing a “simple product checklist”!
However, none of this will happen if the current Long-Term Care Insurance carriers approved in this state are not willing to “Participate” through one-on-one discussions (a simple private phone call with this state’s key legislative Consultant for the California State Senate Committee on Insurance) regarding their frustrations and concerns with the CA regulations and or timely approvals or whatever else that would prevent them from participating in the California Partnership!
All of these issues will be reviewed and monitored by the “task force” that was established by SB 1384 to expedite these steps over the course of the next two years.
These and other critical issues will be discussed over the course of the next couple of months in our upcoming articles as well as in all of our CTQ (LTCI 8hr) courses and webinar, including the California Partnership “certification” course.
January through April training calendars are now posting on the website and Private LTC/Partnership Training /CE courses hosted by Tom Orr are available.
For more information, visit our website or call Senior Insurance Training Services at 800.460.7487.