Short Duration Long-Term Care Policies (B) Subgroup

Attachment ? Senior Issues (B) Task Force 12/??/17 Date: 10/11/17

Short Duration Long-Term Care Policies (B) Subgroup Conference Call October 4, 2017

The Short Duration Long-Term Care Policies (B) Subgroup of the Senior Issues (B) Task Force met via conference call Oct. 4, 2017. The following Subgroup members participated: Mary Ellen Breault, Chair (CT); Tyler McKinney, Vice Chair (CA); John Reilley (FL); Rebecca Vaughan (IN); Craig VanAalst (KS); Stephanie McGaughey-Bowker (KY); Mary Mealer (MO); Laura Arp (NE); Terry Seaton (NM); Tracy Bixler (PA); Doug Danzeiser (TX); Jaakob Sundberg (UT); and Jennifer Stegall (WI). Also participating were: William Lacy (AR); Tolanda Coker (AZ); Jennifer Lindberg (IA); Kathy McGill (ID); Eric Anderson (IL); Fern Thomas (MD); Jan Ludwigson (MN); Annette James (NV); Martin Wojcik (NY); Andrew Dvorine (SC); Jeff Smith (SD); Michael Bryant and Scott Fitzpatrick (WA); and Dena Wildman (WV).

1. Adopted its Sept. 13 Minutes

Mr. Sundberg made a motion, seconded by Ms. Mealer, to adopt the Subgroup’s Sept. 13 minutes. The motion passed.

2. Reviewed Model #641

a. Section 6—Policy Practices and Provisions

Ms. Breault asked for comments to Section 6E and none were received. Ms. Breault asked if anyone could elaborate on Section 6F. Mr. Sundberg said he believes the intent is to encourage purchase of policies at age 45 and the premium structure could change until age 65. Bonnie Burns (California Health Advocates—CHA) said the intent of the section needs to be clarified. She believes the section should be to the “individual insured.” Mr. Sundberg pointed out there is no heading to Section 6F. Ms. Mealer asked if industry could provide some insight. Robert Glowacki (RPGLTC Services LLC) said the intent of this section was to restrict the use of attained age premium rates, which increase annually as the insured's age increases. The provision allows for policies to be written at an attained age basis until the age of 65 (during the insured’s working years) and then adjust to a level lifetime premium that is based on the insured’s age of 65. The Subgroup agreed to retain Section 6G.

b. Sections 7 through 12

The Subgroup agreed to retain Section 7 but remove the drafting note. On Section 8, the Subgroup agreed to remove the last sentence of Section 8A(1), the drafting note and Section 8F. The Subgroup agreed to retain Section 9 and in Section 10 agreed to remove one of the references to date in Section 10A, Section 10B(2)(d)(iii) and the drafting note. The Subgroup agreed to retain Section 11 and to remove the last sentence in the drafting note in Section 12.

c. Section 13—Requirement to Offer Inflation Protection

The Subgroup agreed to retain the required offer of inflation protection. Ms. Burns said that in Section 13B it would be harder for a decision to be made if it remained with the group policyholder and the language should be changed to certificate holder. Mr. McKinney and Susan Voss (American Enterprise Group—AEG) also agreed. Mr. Seaton disagreed and said that group arrangements could encourage formation of bogus groups. The Subgroup agreed to change “policyholder” to “certificate holder.” Mr. Sundberg raised the matter whether the 5% figure in Sections 13A(1) and (2) should be retained when studies and surveys show those services grow at less than 5%, usually 3% to 4%. Ms. Burns mentioned a recent study that put the figure just over 4%. Ms. Breault asked industry to provide some clarity and the Subgroup agreed to change 5% to 3% temporarily until more information is forthcoming. The Subgroup agreed to remove Section 13C.

d. Section 14—Requirements for Application Forms and Replacement Coverage

The Subgroup agreed to add “long-term care” to Section 14A, 14C, 14D and to the Notice To Applicant that immediately follows Section 14.

e. Section 15—Reporting Requirements

Ms. Mealer asked if reporting was necessary in regards to these short duration policies. Ms. Breault said the reports received are filed but really never looked at unless there is a need to go back based upon a complaint. Ms. Burns said the Subgroup should seriously think about the consequences of omitting this section and said useful information could be used by retaining reporting requirements. Mr. Reilly agreed. Ms. Voss asked what types of information they would want to know as far as reporting. Is it information such as churning? New sales? Ms. Breault asked regulators to review Section 15 and discuss whether to retain part of all of the section on the Subgroup’s next call.

f. Sections 16 through 18

The Subgroup agreed to retain Section 16 and Section 17. The Subgroup agreed to remove Section 18A but retain Section 18B. Ms. Breault said the Subgroup would stop work at this point and begin with Section 19 on its next call.

3. Discussed Any Other Matters

Ms. Breault spoke of the letter received from the AEG and its recovery care policies. She said if such policies were filed in Connecticut they would be deemed short-term care products. Mr. Sundberg agreed that would be the same in Utah. Ms. Mealer concurred for Missouri. Ms. Voss said she would provide her policy as an example for the Subgroup to examine. Ms. Breault said the Subgroup would review it and discuss on its next call.

Having no further business, the Short Duration Long-Term Care Policies (B) Subgroup adjourned.

G:\Health and Life\Long Term Care Insurance\Short Duration LTC Policies (B) Subgroup\Minutes 10-04-2017.docx