Senior Issues (B) Task Force s1

Attachment ? Senior Issues (B) Task Force 8/??/16

Draft: 5/26/16

Long-Term Care Innovation (B) Subgroup Conference Call May 16, 2016

The Long-Term Care Innovation (B) Subgroup of the Senior Issues (B) Task Force met via conference call May 16, 2016. The following Subgroup members participated: Teresa Miller, Chair (PA); Mike Rothman, Vice Chair (MN); Mary Ellen Breault (CT); Rich Robleto (FL); Dean Cameron (ID); Marti Hooper (ME); Brendan Peppard (NJ); Matt Gendron (RI); Melissa Klemann (SD); and Molly Nollette (WA).

Also participating were: Mayumi Gabor and Jacob Lauten (AK); Steve Ostlund (AL); Perry Kupferman (CA); Teresa Winer (GA); Amy Beard (IN); Laura Bryan (LA); Feng Ji (MD); Mary Mealer (MO); Shawn Parks (MS); Steve Hess (MT); Nishit Goradia (ND); Rhonda Ahrens, J.P. Sabby, and Martin Swanson (NE); Terry Seaton (NM); Annette James and Mackay Moore (NV); Laura Miller (OH); Frank Stone (OK); Gayle Woods (OR); Andrew Dvorine (SC); Brian Hoffmeister (TN); Doug Danzeiser, Jan Graeber, and Dewayne Mathews (TX); Tomasz Serbinowski and Jaakob Sundberg (UT); Bob Grissom (VA); Diane Dambach and Linda Low (WI); and Dena Wildman (WV).

1. Heard presentations from Sally Leimbach and Carole Klawansky

Ms. Leimbach (Tribridge Partners, LLC) began by pointing out that agents and brokers are on the front lines for long-term care insurance. She said that, although the need for long-term care insurance has not changed, many other factors have changed. She stated that the private insurance market is necessary but cannot do it alone; a public component is needed as well. She also emphasized that long-term care is an insurable event.

Ms. Leimbach highlighted the viability of current insurance products and their appeal to a much larger group of consumers as well as what product changes would make long-term care insurance easier to sell and more attractive. She felt the fall in long- term care insurance sales is attributable to a variety of factors, such as: 1) the continued misperception that long-term care is covered by Medicare; 2) mixed or no signal from states and federal government about long-term care; 3) the recession; 4) rate increases; and 5) bad press.

Ms. Leimbach stated that education could make a difference. She pointed out that effective education on the importance of planning for long-term care and the use of long-term care insurance as a planning tool could be and probably would be beneficial to the future of long-term care. She emphasized that state long-term care insurance partnership plans can be beneficial and that both the states and the federal government must make clear that it is the citizens’ responsibility to plan for their long-term care, and it does not necessarily have to include insurance. As part of that messaging, she advocated the points highlighted in the Executive Summary prepared by the National Association of Health Underwriters (NAHU) on long- term care and for states to examine tax incentives as a tool to attract more people to long-term care.

Ms. Leimbach concluded by recommending that the NAIC take action by creating and making available to all public and private outlets one or a series of standardized and genetic educational presentations. Some suggestions she offered to be included could be: 1) having a plan for long-term care (for you, your family and perhaps others); 2) the reasons why; 3) options for planning; 4) considerations and steps to take; and 5) the results to expect with or without a plan.

Ms. Klawansky (Kay Associates) began her presentation by illustrating that the older policies, which were underpriced and frequently had 15% or higher rate increases, led to the negative perception of long-term care insurance in the marketplace. She highlighted two companies that had four rate increases in the span of four years and that the marketplace has shrunk from 100 carriers providing long-term care insurance to 6.

Ms. Klawansky also highlighted the importance of education. She said educating the public on the importance of planning for long-term care and having long-term care insurance would lessen the burden of Medicaid on the states. She felt there should be an emphasis on partnership plans and the need for passionate and knowledgeable professionals to work on the education of long-term care.

© 2016 National Association of Insurance Commissioners 1 Attachment ? Senior Issues (B) Task Force 8/??/16 Ms. Klawansky said it is important to know the marketplace before developing any educational materials. If states respond that they do not have the budget to educate then there seems to be little value in developing these tools. There must be commitments on all levels and from all parties for an educational campaign to be successful and what must be taken into account is that demographics have changed; people are marrying later, having kids later, and are more in tune to investment and economic volatility.

Ms. Klawansky stated the steps she believes are necessary to move forward: 1) address negative perceptions; 2) appropriately price current and new products; 3) allow for small yearly premium increases, say about 3%, and make long-term care insurance more in line with other insurances; 4) change the expectations; allow for a federal tax deduction up front (rather than above 7.5% of AGI) each year in force; 5) allow for state tax deductions each year policy in force; 6) allow for the ability to pay from 401K, IRA with no penalty; 7) shift the emphasis to care at home and not nursing homes; and 8) require mandatory continuing education (CE) requirements for CPAs, certified financial planners (CFPs) and all other licensed/certified planners.

Commissioner Miller asked if there were any comments or questions.

Director Cameron asked about pricing and whether pricing inhibits the purchasing of policies or developing long-term care plans. Director Cameron also asked whether Ms. Leimbach or Ms. Klawansky thought the issue of financial stability of carriers is another matter that concerns potential buyers of long-term care and perhaps adds to the reluctance of some to purchase policies.

Mr. Gendron asked Ms. Leimbach and Ms. Klawansky to elaborate on their suggestion that sellers of long-term care insurance should be specialized and that sellers of such insurance should be trained or have CE.

Mr. Goradia asked about affordability and what the speakers thought is the income threshold for affordability.

Ms. Gabor inquired about reaching out to younger people to encourage them to purchase long-term care insurance and said the moving variable of premiums may be an issue

Ms. Graeber asked Ms. Leimbach and Ms. Klawansky if they have seen a shift from stand-alone long-term care polices to hybrid and combo products.

Bonnie Burns (California Health Advocates—CHA) and Brenda J. Cude (University of Georgia) commented that there are agents and brokers not doing a good service to people and that educating the agents and brokers is important.

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

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