NAIC Long-Term Care Innovation Subgroup Public Hearing

Health Care   |   October 13, 2016
Download Download   
Share Share Page

At the NAIC Summer 2016 National Meeting, the Long-Term Care Innovation (B) Subgroup held a public hearing as part of an initiative to address the challenges facing the private LTC market. With baby boomers retiring at a rate of 10,000 per day, and under 10 percent having any form of LTC coverage, the subgroup seeks to develop actionable, realistic policy options to increase take-up rates for private LTC insurance and create a stronger market by examining potential product modifications, reduction of regulatory barriers, and appropriate incentives. An array of insurance industry participants, regulators, consumer representatives offered thoughtful comments, highlighted below.

Product innovations

  • Moving from today’s level premium construct to an annual re-rating approach, as level premiums have proven incompatible with insurers’ 30-plus year risk horizon on interest rate, lapse, morbidity, and mortality assumptions; alternatively, index premiums and benefits to reduce consumers’ inflation risk and insurers’ required reserves.
  • Combination products (such as LTC extension of benefit or accelerated death benefit riders) that reduce insurers’ overall risk volatility and provide flexibility to consumers;
  • "Lifestage" products that provide life insurance protection through a specified age, with pre-funded LTC benefits thereafter.
  • Simpler, lower cost, lower benefit products could be offered at a more attractive price point for consumers, and could also allow wider distribution through direct marketing or exchanges.
  • Very low cost, limited benefit "worksite" policies targeted to younger employees, with periodic windows to increase coverage amounts.

Regulatory innovations

  • Increase number of states that allow filings through IIPRC. Clearer regulatory guidelines for rate increases. Eliminate certain required product features, such as mandatory 5 percent inflation offer.
  • Re-engineer point-of-sale disclosure requirements.

Appropriate incentives

  • Permit payment of LTC premiums from retirement accounts with no early withdrawal penalties.
  • Eliminate 7.5 percent of AGI limitation on tax deductibility of premium payments.
  • Provide legal incentives to employers that sponsor retirement plans providing LTC insurance on an opt-out basis (such as fiduciary safe harbor).

The NAIC is devoting substantial resources toward this effort, which hopefully will benefit consumers and industry.

©2023 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Subscribe to Publications


The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.