Senior Insurance Training Services facilitated the following question and answer session with Brenda Bufford, Chief of the California Partnership for Long-Term Care regarding the most recent rate increase requests from insurance carriers affecting current California Partnership policyholders.
I think losing Partnership status should be the absolute last option.
We would like for the loss of Partnership status to be the last option for everyone who has to be faced with a premium rate increase.
So, what is the daily dollar amount that a person can reduce to without losing their Partnership status?
Is it based on the minimum dollar amount in the year they bought their policy, or the minimum daily amount at the time of the rate increase?
The current Minimum Daily Benefit takes precedence.
Can they reduce to $100 daily before 2019?
No. Even after 2019, there would need to be some policy changes and possibly a rider developed to allow the $100 daily benefit as the Minimum Daily Benefit is part of a specific policy design.
Can an insurance company have an internal policy regarding reduction of benefits that is NOT also a policy of the Partnership?
Not usually. In reviewing the latest Rate Increase documents from some insurers, the reduction in the Minimum Daily Benefit is an option.
How does a decision made in Connecticut that allowed the retroactive cut in inflation protection have anything to do with the California Partnership?
It does not. I was informing everyone what transpired in another Partnership state. SB 1046 does not allow such to happen. Even prior to this bill, we did not allow the insurer to reduce the accrued benefit value.
What is the policy of our Partnership program on that issue?
We do not allow the insurer to reduce the accrued benefit value.
Since SB 1046 doesn’t take effect until January 1, 2019, it doesn’t seem to have anything to do with the decisions that policyholders are forced to make before that date.
You are correct.
What is the policy of the Partnership program in regard to for instance, changing a 5% compounded inflation protection to a 5% simple for a policyholder who is 69 or older at the time of the rate increase notice?
We have no objection to the change; however, the person would need to be 70 or older according to regulations.
If a company cannot offer a 3% inflation protection until they have actually filed a rider and premiums for a 3% inflation protection, can they file today, or not until 2019?
They can and we wish they would file today – as soon as possible!
Can they carve out inflation protection option at 3% from a non-Partnership offering and create a Partnership rider for approval?
Yes, they can and we wish they would. We are thinking of the best way to engage the insurers and inform them of what they can do if they would like to take advantage of the new policy design.
Can they file just the paperwork for the 3% IP rider or do they have to file a completely new policy and other supporting documents with that option?
According to Department of Insurance, the insurer can file and have approved a 3% Rider and the accompanying rates. The insurer can also file a completely new policy with the 3% IP factor along with the appropriate filing documents.
If a person reduces the lifetime maximum benefit this year, what is the lowest dollar amount for that reduction that will maintain Partnership status?
If I understand the question correctly, the answer is $220 is the Minimum Daily benefit, thus $80,300.
What is the lowest daily benefit amount a person can have in 2018 as the result of a rate increase and still maintain their Partnership status?
What is the longest elimination period a person can choose and still maintain their Partnership status in 2018?
What kind of training assistance is the Partnership staff giving agents and brokers to help them assist policyholders? Are agents and brokers being trained or otherwise notified of the importance of maintaining Partnership status?
If the agent calls us, we answer their questions and at times, if they do not understand, we tell them to have their clients call us. Since we only have three staff members including myself, we are no longer in a position to hold agent training, support or seminars.
Are agents and brokers being told about inflation protection changes that begin in 2019 to help them formulate a strategy to help with decisions about rate increases?
We will get the word out as best we can to the agents. However, since we only have three staff members including myself, we are no longer in a position to create and support the Agent Newsletter or the Email blast.
Is it possible for the Partnership to have companies delay decisions to reduce premiums until 2019, just a couple of months away, to help policyholders make better decisions about changes that reduce their premium?
We can certainly make the request.
Thank you, Brenda, for that informative “Q & A!”
Senior Insurance Training Services has developed the following chart to help you understand the options to lower premium and reduce coverage or elect to increase coverage:
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