As 2010 continues, more change will be coming to the long-term care field. While health care reform focuses primarily on medical care and health insurance, it will have a significant impact on our industry. In this article, we offer an overview of the component of reform that will have the greatest effect on those selling long-term care insurance — the CLASS Act, which will establish a federally sponsored LTCI program.
We would also like to remind agents that after they have completed their initial LTCI training, in most states they must take ongoing training every two years. AHIP's course has been approved by states as meeting this requirement, and it is available on our website (www.ltcpartnershipsonline.com) and in a classroom setting (contact Scott Rice at [email protected]).
Finally, as always we provide updated information on the LTCI training requirements in all 50 states. We call attention to recent developments in Iowa, Louisiana, Maine, and New Hampshire.
Health care reform and long-term care — the CLASS Act
After nearly a year of debate, the House of Representatives and the Senate have passed health care reform bills. While changes will no doubt be made during the final stages of the legislative process, the main outlines of the sections affecting long-term care have become clear. We offer here a broad summary of the provision that will have the greatest impact on LTCI producers — the CLASS Act. (But we emphasize that this is only an overview — the information is not comprehensive and is still tentative pending final enactment of a bill.)
The CLASS Act (Community Living Assistance, Services, and Supports Act, part of both the Senate and House bills) will establish a new federally sponsored long-term care insurance program in 2011. Participation will be voluntary, and premiums will be charged. Benefits will be relatively small and are designed to help pay for limited home care services, not extensive home health care or nursing home care.
The CLASS program will be funded entirely with the premiums paid by those who choose to enroll, not tax dollars. It is best thought of not as a government benefit program (like Medicare), but rather as government-administered insurance.
Enrollment
The CLASS program will be available to actively-at-work people (not retirees, disabled persons, or anyone else not working a minimal number of hours) who choose to enroll and pay the premium. Coverage will be administered by the federal government, but it will be offered through employers that choose to participate. It will also be offered directly by the government to those whose employers do not participate or (in the House bill) who are self-employed.
There is no underwriting, and all actively-at-work persons who apply will be accepted. But there is a five-year vesting period — no benefits are paid during the first five years of enrollment. (This is designed to prevent people from enrolling only when they begin to need long-term care or have reason to believe they will need it soon.) If a person leaves the program and later reenrolls, if she had been enrolled for two years or more, this time counts in her five-year vesting period. But if she was enrolled for less than two years, she must start again from zero.
Benefits
Benefit triggers will be similar to those of a private-sector LTCI policy — the inability to perform activities of daily living (ADLs) or a severe cognitive impairment. Benefits will continue as long as the insured meets a benefit trigger. This differs from most LTCI policies, which pay benefits only until a lifetime maximum amount is reached.
The benefit will be at least $50 per day, and there may be a $75 daily benefit for those with a greater degree of impairment. As noted, the benefit is intended to pay for some assistance with ADLs, transportation, and other home and community-based services. The benefit amount is not sufficient to cover extensive home health care or facility care (although it could be used to pay for a portion of such expenses).
Premiums
Participants will be charged premiums, which will fully fund the program. The U.S. Department of Health and Human Services will be responsible for designing a benefit package and setting premiums that will make the program actuarially sound and ensure a 75-year solvency.
The premium amount will be based on the insured's age when she enrolls. Estimates vary, but a recent one projects $123 per month for a 50-year-old, with older insureds paying more and younger people less. Premium rates may be increased if necessary to maintain the solvency of the program.
Training Deadlines
A reminder of some upcoming deadlines:
March 31, 2010–Vermont (new agents only)
July 1, 2010–Kansas, West Virginia*, and Wyoming
* Asterisk indicates that the deadline is for existing LTCI agents; new agents in these states have to complete the initial training before selling policies. For details see state reports below.
State Reports
Note: California, Connecticut, Indiana, and New York have had long-term care partnership programs in operation for several years and are often referred to as the "original partnership" states. These programs are in many ways different from the new partnerships currently being established in other states in response to the federal Deficit Reduction Act (DRA) of 2005. Their training requirements do not follow the NAIC model created to implement the DRA and adopted by most new partnership states. Therefore, agents who take training based on the NAIC model will not meet the requirements of the four original states, and those who take partnership training in one of the original states will not meet the requirements of the new states. (However, a few new partnership states may accept the training of an original partnership state — when in doubt, check with the new state.)
Check with your carrier!
We would like to remind agents that some states do not review and approve courses as meeting their LTCI/LTC partnership training requirements. In these states, it is up to the carrier to decide whether a course fulfills the state requirements. And in all states, carriers must track agents' completion of the required training. So in seeking to meet state training requirements, agents should always check with the carrier or carriers they represent.
Alabama. All LTCI agents must complete an eight-hour initial training course. The course must be based on the NAIC model (no state-specific content required) and approved by the state for long-term care CE credits. Courses approved for general CE do not fulfill this requirement, even if they address long-term care and have "long-term care" in the title. (AHIP's course is approved for LTC and fulfills the requirement.) Agents already licensed for LTCI before March 1, 2009, had until Dec. 31, 2009, to complete the initial training; as of Jan. 1, 2010, all agents must complete the initial training before selling LTCI.
Agents are also required to complete four hours of ongoing training for every 24-month license renewal period beginning in 2010. This means that during the first renewal period an agent may have to take both the initial and the ongoing training (12 hours total). For example: Beth renewed her license in May (her birth month) of 2008 and must renew it again in May 2010. She had to complete the initial training by Dec. 31, 2009, and she must complete the ongoing training by May 2010, for a total of 12 hours this renewal period. But when she renews in May 2012, she will have to take only a four-hour ongoing course.
Alaska. No action to establish an LTC partnership has been reported. To sell LTCI, an agent must be licensed to sell health insurance — there are no training requirements specific to LTCI.
Arizona. All LTCI producers must complete eight hours of initial training based on the NAIC model before selling LTCI. Producers must also complete four hours of ongoing training during each 24-month period beginning July 1, 2009, after the 24-month period in which they completed the initial training.
Arkansas. All LTCI agents must complete eight hours of initial training before selling LTCI. The content of this training is based on the NAIC model plus a state-issued supplement on the Arkansas partnership and Medicaid programs. Agents must also complete four hours of ongoing training during every 24-month license renewal period after the period in which they completed the initial training.
California is one of the original partnership states (see note above). Before selling partnership policies, agents must complete eight hours of general long-term care training and eight hours of training specific to the California LTC partnership. The partnership-specific training must be received in a classroom setting. In addition, eight hours of ongoing classroom partnership training must be taken during every two-year license approval period.
Colorado. All resident LTCI agents must complete 16 hours of initial training before selling LTCI. This training must include the topics of the NAIC model plus substantial additional content, as stipulated by the state. Eight hours must cover long-term care and long-term care insurance and can be classroom, self-study, or Internet-based; the other eight hours must focus on partnership and must be classroom training. Agents must also complete five hours of ongoing training (classroom only), including state-specific content, during every 24-month CE period after the period in which they completed the initial training.
Nonresident agents can sell LTCI (including partnership policies) in Colorado without fulfilling the above requirements (for both initial and ongoing training) if all of the following conditions are met:
* Their home state has an LTC partnership.
* They meet their home state's training requirements for partnership policies (even if the state requires less than 16 hours or its rules otherwise differ from Colorado's).
* They hold a Colorado nonresident license for life insurance or accident and health insurance.
If a nonresident agent's home state does not have a partnership, the agent must fulfill Colorado's requirements, even if she meets the home state's requirements for nonpartnership LTCI. If the home state has a partnership but the agent meets the training requirements only for nonpartnership LTCI policies, she must fulfill Colorado's requirements.
Connecticut is one of the original partnership states (see note above). To sell partnership policies, an agent must complete first a prerequisite online course approved by the partnership program and then four hours of classroom instruction conducted by partnership program staff.
Delaware. No action to establish an LTC partnership has been reported. To sell LTCI, an agent must meet the training requirements for a health insurance license and also, every two years, complete a three-hour course in LTCI approved by the state.
District of Columbia. No action to establish an LTC partnership or new LTCI training requirements has been reported. Currently there are no training requirements specific to LTCI–an agent must simply be licensed to sell life and health insurance.
Florida. Agents must complete eight hours of initial training based on the NAIC model before selling LTCI policies. LTCI agents must also complete four hours of ongoing training every 24 months, beginning on the date they completed the initial training.
Georgia. Agents intending to sell partnership policies (not all LTCI agents) must complete initial training before selling. The initial training consists of the NAIC model plus two hours of state-specific content, for a total of eight hours. Georgia resident agents who have already taken the training required to sell partnership policies in another state may receive up to six hours credit for that training and need to take only the two hours of Georgia-specific training. Nonresident agents who are qualified to sell partnership policies in their home state need to take only the Georgia-specific training.
Agents selling partnership policies must also take four hours of ongoing training during every two-year license renewal period, which runs from Jan. 1 to Jan. 1. The first ongoing training must be completed by the second Jan. 1 after completion of the initial training. To give some examples: Mary completed the initial training on Oct. 14, 2008; she had until Jan.1, 2010, to complete the first ongoing training. Bob completes the initial training on Feb. 6, 2009; he has until Jan. 1, 2011.
Hawaii. In 2007, the legislature passed a bill requiring all LTCI producers to complete eight hours of training based on the NAIC model. But this requirement will not go into effect until the state's partnership program is established, and it is unclear when that might happen — a partnership bill failed to pass in the 2008 and 2009 legislative sessions but may be reintroduced in 2010. The bottom line for producers: There are no partnership training requirements in effect at this time; there will be no such requirements until the partnership is established; and when that occurs, producers will have one year from that date to complete the training.
Idaho. All LTCI agents must complete eight hours of initial training based on the NAIC model before selling LTCI products. They must also take four hours of ongoing training during every 24-month license renewal period after the period in which they completed the initial training.
Illinois. All LTCI agents must complete course 25008. To be approved by the state as 25008, a course must cover the NAIC content and provide at least eight hours of instruction. (AHIP's NAIC Model Course is approved.) Agents must also complete four CE credits in long-term care during each 24-month license renewal period after the period in which they completed the initial training.
Indiana is one of the original partnership states (see note above). To sell LTCI, agents must take eight hours of initial training and five hours of ongoing training every two years. To sell partnership policies, agents must also take seven hours of partnership training (classroom only). Agents licensed in another state are exempt from the general LTCI requirement, but to sell partnership policies they must receive the seven hours of Indiana partnership training.
Iowa. Under a new rule, as of Jan. 1, 2010, all agents must complete eight hours of initial training in LTCI, LTC partnerships, and Medicaid before selling LTCI. They must also take four hours of ongoing training during each three-year CE term. Previously the state required only four hours of initial training, and agents who completed this in 2008 or 2009 can fulfill the new requirement by taking an additional four hours. Training must generally be taken in a classroom setting, but some self-study and online courses have been approved.
Kansas. Effective July 1, 2010, agents selling partnership policies (not all LTCI agents) must complete four hours of initial training. Partnership agents must also take one hour of ongoing training during every two-year license renewal period after the period in which they completed the initial training. In both cases, courses must be certified for partnership training by the Commissioner of Insurance.
