The California Legislature passed AB 999, which modifies the rate development process for long-term care insurance (LTC) premiums. California Health Underwriters (CAHU) originally opposed AB 999 because of a provision that would have created a five-year ban on increasing that rates on long-term care insurance policies sold before 2002. Another provision would have implemented a 10-year ban on increasing rates for rate-stabilized LTCi policies. CAHU was successful in removing both bans from AB 999 and is now neutral on the bill as amended. The following are some of the bill’s provisions:
• Premium rate schedules for individual and group LTC insurance policies must be approved by the Insurance Commissioner.
• For each policy, LTC insurance carriers must post, on their Websites, a specimen individual policy form or group master policy and a certificate form.
• The annual consumer rate guide must outline coverage for each product listed in the rate guide.
• For any filing made after January 1, 2013, the insurer must reduce the premiums so that the current lifetime expected loss ratio is equal to or greater than the highest filed loss ratio.
• A condition of approval for proposed rate increases is the contingent benefit on lapse, unless it threatens the insurer’s financial condition. If the insurer increases the premium above a defined threshold, the insured can convert the coverage to paid-up coverage with a new maximum lifetime benefit.
