Many in the industry are urging Florida Gov. Jeb Bush to veto a long term care insurance bill that recently received unanimous approval from the state's legislature.
The Florida House approved the bill, H.B. 947, 114-0 in late April, and the state Senate passed the bill 38-0 May 1.
One provision of the bill would limit rate increases on closed blocks of LTC insurance.
America's Health Insurance Plans, Washington, and the American Council of Life Insurers, Washington, have been critical of the bill.
"Limiting rate increases on closed blocks of long term care insurance does not allow other appropriate actuarially sound rating factors to be considered in rate adjustment filings," AHIP says in a statement.
Justified rate increases are necessary to assure carriers are able to pay policyholder claims, AHIP says.
"No policyholder likes rate increases, but in these limited number of cases they are necessary to ensure that actuarially inadequate rates are brought to levels that allow carriers to pay policyholder claims and stay solvent," AHIP argues. "This is why LTC rate increases already have been approved by the [Florida Office of Insurance Regulation] on some of these policy forms."
H.B. 947 also includes a provision that would require insurers to pay a contingent benefit. That provision is similar to a provision in the model LTC insurance regulation developed by the National Association of Insurance Commissioners, Kansas City, Mo., in 2000.
Under that provision, if a carrier imposed a rate increase on existing LTC policies, policyholders could choose between paying the increase, keeping the existing premium but with reduced benefits, or taking a paid-up policy that would cover any care, if a policyholder needed care, up to the value of the policyholder's accumulated premium payments.
AHIP opposes the contingent benefit and contends that the benefit would be retroactive.
"We support the application of the contingent nonforfeiture benefit on a prospective basis, which Florida already adopted the ability to do in 2003," AHIP says.
Mandating an LTC contingent benefit retroactively would impair contracts already signed, which AHIP says could be unconstitutional. Retroactive application also could cause carriers to raise rates, the association warns.
H.B. 947 would create a two-year incontestability period, under which insurers could not challenge a claim filed more than two years after a policy was first purchased, even if an insurer believed the application for the policy was fraudulent. Industry groups argue that the incontestability provision would essentially guarantee policies, thereby raising rates.
The bill also would establish an LTC partnership program in Florida, which would encourage state residents to buy a type of private LTC insurance that would allow program members who end up needing Medicaid nursing home benefits to keep many of their personal assets.
Insurance companies and groups have voiced strong support for the partnership program section of the bill. The partnership provision started out as the main part of H.B. 947. Provisions imposing stricter rules on LTC insurers were tacked on after the bill was introduced.
The feeling of some in the insurance industry is that Florida can set up a partnership program whether Bush signs H.B. 947 or not. The state's Agency for Health Care Administration could establish a partnership program just by issuing a state Medicaid plan amendment, says Bernard Barrie, president of Benefits Services International Inc., Sarasota, Fla.
Despite the unanimous vote, "maybe five House members and four senators knew what they passed," maintains Curt Leonard, senior director of Southeast state relations at the ACLI. "It had about seven minutes of debate in the House insurance committee and maybe five minutes in the Senate banking and insurance and the Senate health care committees."
