The three Rs of long-term care and well-being insurance: regulation, discounts and RBO | Carlton Fields


Are you considering whether to include the offer of a wellness program as part of a long-term care insurance policy? Your homework should include reviewing what is happening at the legislative and regulatory and NAIC levels.

LTCI and RBO – Background

As state insurance regulators continue to analyze the health of the long-term care insurance (LTCI) market, recent discussions have focused on the inclusion of wellness programs in LTCI policies. Faced with solvency issues due to claim costs, inaccurate product pricing, low interest rates and longer life expectancies, LTCI insurers have introduced Reduced Benefit Options (RBOs) to avoid significant increases in premiums.

Long-term care insurers are also exploring possible ways to use technology to reduce the frequency and severity of LTCI claims and generally improve outcomes. Examples could include programs that aim to prevent falls; prevention and early diagnosis of cognitive disorders; and home modification to encourage aging in place.

What happened at the NAIC?

During the NAIC’s National Summer Meeting, the Long Term Care Insurance Reduced Benefit Options Subgroup discussed its LTCI Wellness Benefits initiative, which aims to identify and remove barriers to increased uptake of wellness programs. As part of this effort, the subgroup released its LTCI Wellness Program Issues Paper, with comments expected on September 5.

The subgroup identified barriers to increased adoption of new technologies, including data privacy, such as marketing and HIPAA concerns, providing policyholder data to wellness companies, and purchasing information specific to policyholders. He also noted obstacles that could prevent insurers from complying with the most recent version of the NAIC Unfair Marketing Practices Model (# 880). In addition, the subgroup discussed ways to prevent legal issues related to prejudice and unfair discrimination during the life cycle of a wellness program product.

Things to consider:

  • Stakeholders are expected to consider the comments on the RBO Working Group white paper due on September 5 and the subgroup’s next steps.
  • State regulators will determine whether they should directly approve LTCI wellness programs or evaluate wellness programs once they are implemented by insurers.
  • Insurers interested in starting a wellness program should consider holding pre-filing meetings with regulators. As a duty, insurers should be prepared to explain how innovation and technology help reduce future rate hikes.
  • Insurers should monitor the implementation of amended anti-remission laws and consider advocacy efforts in target states / jurisdictions to encourage legislatures to adopt recent remission exemptions to enable LTCI wellness programs.
  • Insurers should consider a comprehensive assessment of the rebate laws of all states and jurisdictions before starting a wellness program.


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