Long-Term Care Insurance Reform Bill Will Place Limits on Rate Increases

We applaud California Insurance Commissioner Dave Jones’ leadership in sponsoring AB 999. This is a long-term care (LTC) insurance reform bill authored by Assembly Aging and Long-Term Care Committee Chair Mariko Yamada (D-Davis), which passed the California Legislature Aug. 31 and is now awaiting Gov. Jerry Brown’s signature. See “Insurance Commissioner Dave Jones Announces Legislature Passes Major Long-Term Care Insurance Reform Bill,” http://www.insurance.ca.gov/0400-news/0100-press-releases/2012/release114-12.cfm.

AB 999 will allow consumers to review language before purchasing a particular LTC policy, and will limit rate increases to once every five years for policies in place before 2000, and once every 10 years for policies signed after 2000. According to the California Department of Insurance, the legislation will also prevent insurers from passing poor investment returns through to taxpayers and eliminate the practice of insurers “cherry-picking” a small group of policies to justify large rate increases, among other strong consumer protections.

Passing reforms that will encourage consumers to purchase LTC insurance without fearing they won’t be able to pay the premiums after a few years because of cost increases is critically important. The value of LTC coverage should not be underestimated, since it will likely be the only safety net for many families who require in-home or residential care for members who suffer from conditions such as Alzheimer’s or Parkinson’s Disease. The more secure these families can be that the coverage will be there when they need it, the more likely they are to invest in LTC policies.

One drawback, however, if insurers are not able to raise rates as often as they would like could be the impetus to save money when the time comes to pay benefits. That could mean claims will be more closely scrutinized or even denied for ridiculous reasons. Consumers will need to be more vigilant than ever to read the policies, comply with terms and deadlines, and get help from reputable professionals when they need it.

For help with a long-term care insurance claim, call us at (800) 446-7529.

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