New Inflation Requirements for Pennsylvania Long Term Care Partnership Policies to Take Effect

September 16, 2016

Pennsylvania Insurance Commissioner Teresa Miller announced a change in guidance allowing greater flexibility in federally required inflation protection for long term care partnership policies. This flexibility means more consumer choice for Pennsylvanians and should allow insurers to mitigate or even eliminate premium increases for these policies.

“I believe this change will offer greater consumer choice while still making sure all long term care partnership policies provide needed protection for our citizens,” Commissioner Miller said in a statement announcing the change. “Insurers have supported this step as one way they could lower, and in some cases, even eliminate proposed premium increases for consumers.”

Long term care partnership policies allow the policyholder to preserve personal assets equal to the amount of insurance benefits paid from the policy, should the policyholder use all other personal assets, and become eligible for Pennsylvania’s Medical Assistance Long Term Care Program. Federal law requires long term care partnership policies to include inflation protection.

Currently, Pennsylvanians buying long term care partnership policies must have inflation protection increasing the coverage under the policy annually at a rate equal to the Consumer Price Index (CPI) or at a fixed rate of not less than three percent. The new standard will reduce the fixed rate to not less than one percent. Pennsylvania law still requires insurers to offer five percent compound annual inflation protection on all long term care policies.

Insurers will be able to offer this new inflation option for both new and existing partnership policies. The guidance will take effect when published in the Pennsylvania Bulletin September 16.

Source: Pennsylvania Insurance Department

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