Legislation to provide new protections for long-term care insurance policyholders has been signed into law today by Florida’s Gov. Jeb Bush. The measure prevents insurers from contesting policies years after selling them, stops practices that result in rapidly escalating premiums for aging policyholders and establishes options for policyholders presently stuck in closed blocks of business.
The bill containing the new protections was championed in this year’s Legislature by Sens. Mike Fasano and Durell Peadon, Jr., and by Reps. John Legg and Frank Farkas. The Florida Office of Insurance Regulation has logged hundreds of consumer complaints regarding long-term care insurance and held a public hearing last October to develop legislative recommendations to improve the regulation of long-term care policies.
“Finally Floridians will have the confidence that after years and even decades of paying for long-term care insurance it will be there when they need it,” McCarty said, “and policyholders will no longer get trapped in predatory pricing spirals that force them to drop their coverage, often when they need it most.”
The new law contains many provisions to protect long-term care policyholders in Florida including:
No longer allowing long-term care policies to be contested after a period of two years. Consumers had lodged complaints regarding companies accepting premiums for years and then contesting the policies when a claim or claims were filed. This new provision is similar to the contestability period in life insurance policies.
Preventing a carrier from creating a premium rate death spiral by closing one block of business and opening another with an affiliated carrier. Closing blocks of business stops newer, younger policyholders from enrolling and leaves primarily aging policyholders who generally require more services and therefore have to shoulder higher premiums.
Limiting the amount of premium that can be charged to existing policyholders to the amount that can be charged to new policyholders.
Providing new benefit options to existing policyholders if they are faced with a significant rate increase. The policyholder now can choose to continue the present policy, accept a modified benefit plan at the existing premium or accept a paid-up policy equal to the sum of all the premiums paid during the life of the policy.
Long-term care policies cover a broad range of supportive medical, personal and social services required by people who are unable to meet their basic living needs for an extended period of time. It is estimated that by the year 2020, 12 million older Americans will need long-term care.
Source: Florida Department of Insurance