Short Duration Long-Term Care Policies (B) Subgroup

Attachment ?

Senior Issues (B) Task Force

8/??/17

Draft: 5/26/17

Short Duration Long-Term Care Policies (B) Subgroup

Conference Call

May 10, 2017

The Short Duration Long-Term Care Policies (B) Subgroup of the Senior Issues (B) Task Force met via conference call May 10, 2017. The following Subgroup members participated: Mary Ellen Breault, Chair (MO); Tyler McKinney, Vice Chair (CA); John Reilly (FL); Rebecca Vaughan (IN); Craig Van Aalst (KS); Stephanie McGaughey-Bowker (KY); Mary Mealer (MO); Martin Swanson (NE); Jennifer Patterson (NH); Terry Seaton (NM); Frank Stone (OK); Tracy Bixler (PA); Doug Danzeiser (TX); Tomasz Serbinowski and Jaakob Sundberg (UT); and J.P. Wieske (WI). Also participating were: Sarah Bailey (AK); WilliamLacy (AR); Ann Lockett-Stephens (DE); Debra Peirce (GA); Kathleen Nakasone (HI); Kathy McGill (ID); Scott Brandt (IL); Fern Thomas (MD); Marti Hooper (ME); Kristi Bohn (MN); Gayle L. Woods (OR); Matt Gendron (RI); Brian Hoffmeister(TN); Bob Grissom (VA);and MichaelBryant (WA).

ReviewedSection 1 through Section 5 ofModel #640

Ms. Breault began by stating the format for moving forward in developing this new model. She said the Subgroup would begin with the Long-Term Care Insurance Model Act (#640) and go section-by-section and use that as a guide for the new model. She asked for comments about what to name this model. The Subgroup agreed to tentatively title the new model as the Short-Term Insurance Model Act.

The Subgroup agreed that Section 1, Section 2 and Section 3 could remain the same in the new model, with the only change being changing “long-term care”(LTC) to “short-term care.”

Ms. Breault asked for comments on Section 4A of Model #640. She began by asking about the duration and whether simply removing the word “not” from the sentence “for not less than 12 months” is sufficient or whether the duration be stated more narrowly. Mr. Sundberg said in Utah, he has seen some filed for 360 days. Bonnie Burns (California Health Advocates—CHA) said she believes less than 12 months would be fine. Ms. Mealer said that the description is on the length of the policy and not the payout period and that she is fine with just removing the word “not.” The Subgroup agreed.

Mr. Sundberg said the life insurance annuity language in Section 4A is not applicable to the short-term product. Ms. Mealer agreed and said that the qualified language also is not applicable. Mr. Wieske agreed with Ms. Mealer and pointed out that as the Subgroup gets deeper into the model, it may have to revisit the definitions so as not to complicate matters. Ms. Burns said her concerns with the definitions are that these products appear to cover like LTC but with a shorter period and with stricter standards to get the benefits. Ms. Breault said the consumer disclosure language will be very important and agreed that the Subgroup may need to revisit the section on definitions. Susan Voss (American Enterprise Group—AEG) said these products are not LTC products and that healthy disclosure language is important for the protection of consumers.

Mr. Danzeiser raised the question whether some of these short-term care products on the market have a life or annuity attached and, if not, would industry offer such a product. Ms. Voss said she believes that industry would prefer to see these short-term products as a stand-alone product. Mr. Sundberg pointed out that the model would be significantly shorter without incorporating life or annuity. Ms. Mealer said the life and annuity language should be put in the parking lot for now. She said these products are neither health nor LTC.

Mr. Serbinowski askedif there are currently on the market any life or annuity products that provide nursing home or home health care type benefits for less than 12 months.If there are any, he asked how they are regulated. He surmised that there would be little regulation because they would not be considered LTC and suggested that may be a question more suited for industry. Ms. Breault said she would solicit comments from industry on the matter.

The Subgroup agreed that Section 4B, Section 4C, Section 4D and Section 4E of Model #640 could be incorporated in the new model with only the change from “long-term” to short-term.” The Subgroup decided to table for the moment whether the language of Section 4F is needed in the new model. The Subgroup agreed that Section 4G is not needed in the new model. Mr. Danzeiser said an additional drafting note should be added to Section 5 for the new model. The Subgroup agreed to discuss this on its next call.

Ms. Breault said the Subgroup would address Section 6 on its next call and asked if there were any other issues to be raised. Mr. Sundberg raised an issue for the Subgroup to simply consider and not discuss at the moment. He said he believes these short-term care products are a good candidate to be non-cancellable. He said unlike LTC products, there would be no risk for tail exposure, and there would be no inclusion of rate increase language in the new model. He said if non-cancellable is not an option,then maybe incorporate inclusion of a cap rate. Mr. Reilly said a reasonable rate cap might be good and suggested the Subgroup seek industry feedback.

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 05-10-2017.docx