Editor’s note: For more coverage of the long-term care insurance industry, please click here.
Legislation that would provide protections for people who have purchased long-term care insurance policies and bring scrutiny to the state’s rate review process cleared the Insurance and Real Estate committee Tuesday with broad support.
“It’s a huge issue; so many people have been touched by it,” said Sen. Jorge Cabrera, D-Hamden, co-chair of the committee. “It’s a top priority not only for me, but also for a lot of people in the [state Capitol] building.”
The bill would cap annual rate increases for long-term care insurance plans at 10%, require the state’s insurance commissioner to undertake a review of the department’s rate filing process and issue a report to the Insurance Committee, establish a tax credit for policyholders equal to 20% of their annual premiums, and require the insurance department to explore an alternative coverage pool for policyholders.
Also under the proposal, rate increases would be capped at the most recent year average in the Consumer Price Index for people whose policies are 15 years or older.
The Insurance Committee’s bill is one of at least 16 proposals raised this year to reform long-term care insurance. Its passage follows a Connecticut Mirror investigation on long-term care coverage that found the annual cost of maintaining these policies has skyrocketed for many residents due to miscalculations by insurers on how long people would live, the price of care and how many would need it. Consumers face sizable rate increases, often exceeding 50% and, for a few dozen people, as high as 174%, according to a CT Mirror analysis.
The measure passed on Tuesday is a revised version of the bill originally introduced in the Insurance Committee. Members added the 10% limit on rate increases but dropped a requirement for public hearings after listening to resident feedback.
The proposal now heads to the Senate floor but will also likely need to be approved by the Finance, Revenue and Bonding Committee because of the tax credit component.
The Insurance Committee also voted to advance a second bill on long-term care coverage that was crafted by the Aging Committee. That measure would provide a tax deduction for people with LTCI policies and require public hearings for rate increase requests that exceed 10%.
“We’re passing a lot out of committee to give ourselves options,” said Rep. Kerry Wood, D-Rocky Hill, co-chair of the Insurance Committee. “We’re giving ourselves enough tools to figure out what the best path forward is.”
Government oversight bill
The legislature’s new Government Oversight Committee also recently introduced its own proposal on long-term care insurance. That bill would impose a range of accountability measures on sellers of these policies and offer consumer protections.
Under the measure, the state’s Office of Health Strategy would have to issue a report on current regulation of long-term care insurance and suggest areas for improvement. This could include revisions to Connecticut’s rate filing and approval process, lawmakers noted.
It would also require public hearings for rate increase requests that exceed 10%, notifications to prospective buyers about the risk of rate hikes, and caps on rate increases for certain long-term care insurance policies.
Additionally, the state’s Insurance Department would have to produce a study on an alternative pool for long-term care policyholders.
“It’s a high priority, we have to do it,” said Rep. Ron Napoli, D-Waterbury, who co-sponsored the bill with the Government Oversight Committee. “The fact that people’s premiums are increasing by over 50% is just outrageous. It shouldn’t be happening. It’s a high priority this year that we come up with something tangible to give ratepayers some relief.”
Nearly 100,000 people in Connecticut have long-term care insurance, coverage that, depending on the policy, supports skilled in-home care, rehabilitation therapy, assisted living, nursing home stays and respite care.
A CT Mirror review of rate hikes from January 2019 to October 2024 shows more than 17,000 people with long-term care policies have gotten hit with increases of 50% or more. Some of the biggest companies in the market, including Genworth Financial, Metropolitan Life Insurance Company and Transamerica Life Insurance Company, requested hikes for five years in a row beginning in 2019.
When providers seek premium increases, thousands of consumers can be impacted. In 2019, for example, Genworth Financial requested a 40% rate hike on more than 9,000 Connecticut policyholders. In 2021, Transamerica requested a 20% rate increase on 8,000 policies. The Insurance Department approved both requests with no changes.
In 2022, Genworth raised rates for more than 2,000 people by an average of 97%, with increases ranging from 79% to 173%, depending on the policy. The approved amounts were a slight reduction from the company’s original request.
As consumers are squeezed, grievances filed with the Connecticut Insurance Department have mounted. The office received more than 700 complaints in the last six years about long-term care insurance, mostly rising premiums.
So far, solutions have been elusive. Legislators introduced more than 50 bills from 2019 to 2024, with only a small number passing and offering limited relief. They blamed budget constraints and pushback from insurers, among other problems.
With a volley of legislation being considered this year, however, lawmakers have expressed optimism about adopting reform.
“You can tell when something becomes really important because you’re seeing various iterations of the same subject coming up in different committees,” Cabrera said. “That tells you, right there, that it’s top of mind for a lot of people.”