CHA Advocates for Moratorium on Long Term Care Insurance Premium Increases

January 31, 2017



Thomas M. Middleton, Chair
John C. Astle, Vice-Chair
Senate Finance Committee
Miller Senate Building
11 Bladen Street
Annapolis, MD 21401


SB 176 Support



Dear Chairman Middleton, Vice Chair Astle, and members of the Senate Finance Committee:


We are writing in support SB 176.  California Health Advocates is a private non-profit supporting our state’s Health Insurance Counseling and Advocacy Program (HICAP) that is part of the federally funded state network of these programs along with the Maryland SHIP.  I provide technical assistance, training, and materials on long term care insurance to our members.  I have testified on long term care insurance before our state legislature and in Congress on behalf of consumers for thirty years. I am a long time appointed consumer representative to the National Association of Insurance Commissioner’s (NAIC) consumer participation program, and I frequently testify and comment on behalf of consumers during the proceedings of the NAIC Senior Issue Task Force (SITF) and other NAIC Committees and subgroups.  I have actively promoted consumer protections for long term care insurance in state and federal law and in the NAIC Model Act and Regulation for these products.


I have three decades of first-hand knowledge about the effect of these premium increases on policyholders, and with helping people hang on to coverage through those increases.  We believe that companies should bear the burden of decisions they’ve made about the products they’ve sold, not policyholders.  While we support a moratorium on premium increases, we believe that when and if a premium increase is granted no amount of a premium increase should apply to any of the company’s administrative costs and no amount of a premium increase should apply to any method of agent compensation.


We believe that any company that requests a cumulative increase greater than 50% of the original premium should be required to pool all of their existing long term care policy forms issued, bought, or assumed by a company for the purpose of calculating a premium increase.  Any resulting cumulative increase greater than 50% should only be granted when solvency of a company is in question.


Consumers have no expertise to verify assumptions made by actuaries that result in the premium they’ve agreed to pay.  Nor are they a party to the pricing or business goals of companies. Policyholders don’t participate in the profitability of an insurance product, they only rely on the benefits they’ve been sold.  And, policyholders certainly won’t participate in any excess profit a company makes now or in the future.


Policyholders have done what the federal and state governments have asked, and the industry has promoted, by taking responsibility to pay for their own care.  They should not be faced with losing both the premiums they’ve invested and the benefits they bought.  The burden of mistaken assumptions and experience should not be borne solely by policyholders who placed their trust in a company by buying their coverage.


Higher premium payments displace resources policyholders need to meet other daily needs and may push some people into dropping their coverage, and who may later require help from Maryland’s Medicaid program due to the absence of those lost benefits. Others may already have downgraded their benefits to reduce a previous rate increase, leaving little room for further downgrades and making retention of their policy all but impossible.  As part of any future premium increase the state should recognize the value of helping policyholders retain some amount of the benefits they purchased to pay for their future care.  We recommend certain protections that should be part of any premium increase granted in the future.


  • Policyholders who have previously downgraded their daily benefit amount to an amount less than 70% of the current cost of nursing home care, or reduced their duration of coverage to 2 years, should be exempt from any further increases.
    • Maryland should consider providing asset protection in this situation if one of these policyholders later qualifies for Medicaid.
  • Policyholders age 80 or older should be exempt from any increases, regardless of the duration of their coverage.
  • Policyholders who have had their policies for 10 or more years should have the option of choosing a paid-up benefits equal to the premiums they’ve previously paid.
    • The amount of any benefits subsequently paid under their paid-up policy should qualify as protected assets under the state Medicaid program if in the future that policyholder becomes eligible for Medicaid benefits


When policyholders are faced with a premium increase they may simply drop their coverage without realizing that they have options or without understanding those options.  Every policyholder who is subject to a premium increase should be referred to the Maryland SHIP for assistance with making appropriate decisions about their coverage in regard to their age, benefits, financial situation and any options they have for making changes to their coverage to retain some amount of coverage.


Maryland should consider granting asset protection to those who are forced to downgrade their benefits and later become eligible for Medicaid.  If having private long term care insurance really does save Medicaid dollars then states should encourage the retention of benefits equal to a person’s ability to fund those premiums by granting asset protection to benefits paid for their care.


Premium increases leave behind anguished policyholders struggling to pay their premiums.  The pain inflicted on people paying those increased costs is evident in testimony submitted at hearings held by the Maryland insurance department.   We urge a favorable report for SB 176 and recommend additional protections for policyholders subject to those increased costs.


We thank you for the opportunity to comment on this important issue to people who have purchased long term care insurance and are now facing larger premiums than they ever imagined.





Bonnie Burns, Policy Specialist



CC:   Senator Roger Manno

Tatiana Fassieux, Board Chair, California Health Advocates


Karen Joy Fletcher

Our blogger Karen Joy Fletcher is CHA’s Communications Director. With a Masters in Public Health from UC Berkeley, she is the online “public face” of the organization, provides technical expertise, writing and research on Medicare and other health care issues. She is responsible for digital content creation, management of CHA’s editorial calendar, and managing all aspects of CHA’s social media presence. She loves being a “communicator” and enjoys networking and collaborating with the passionate people and agencies in the health advocacy field. See her current articles.