Effective January 1, 2013, Massachusetts long-term care insurance (“LTCi”) policies must comply with Senate Bill 2359, legislation that establishes a new chapter 176S in the General Laws that sets forth statutory standards specifically for LTCi. Previously, LTCi statutory standards were set by reference to the accident and health provisions of Chapter 175 of the General Laws of the Commonwealth. Since 2005, Massachusetts LTCi providers have looked primarily to an insurance regulation, 211 CMR 65, for minimum standards for individual LTCi policies and minimum standards for disclosure, marketing and agent training for both individual LTCi policies and group LTCi policies that are not employment-based. Just as the regulation was based upon the National Association of Insurance Commissioners (NAIC) Long-Term Care Insurance Model Regulation, the new statute includes most of the major components of the NAIC Long-Term Care Insurance Model Act, with the addition of a process for public hearings for rate filings. The Commonwealth touts the bill as a landmark consumer protection bill, noting that “a policy may not be cancelled on the basis of age or deterioration of mental or physical health; a long-term care policy may not contain a provision containing a new preexisting condition limitation period when existing coverage is converted to a new one within the same insurance company; the policy may not provide coverage for skilled nursing care only; or provide significantly more coverage for skilled care than coverage for lower levels of care.”
SB 2359 was widely supported by both consumer groups and the LTCi industry. The AARP celebrated the enactment, declaring it the culmination of “a ten-year fight by AARP to subject long term care insurance to tough consumer protections and greater standardization.” The American Council of Life Insurers (ACLI), an insurance carrier lobbying and trade association, supported the bill. Representing LTCi distributors, the National Association of Insurance and Financial Advisors (NAIFA) strongly urged members to support the bill, noting that it:
- Establishes guidelines for LTCi consistent with those set forth in the NAIC Long-Term Care Insurance Model Act, as have over 40 other states.
- Provides expanded consumer protection through rate stabilization language.
- Amends the qualification of the LTCi coverage required for the Mass Health/Medicaid Lien Exemption from the time of entry into to a nursing home to the time the LTCi policy was purchased. By providing certainty of lien protection at the time coverage is determined, LTCi will now be used to pay for in-home care without threatening the lien exemption. By removing lien protection as a factor in deciding when to enter a nursing home, the bill encourages seniors to stay in their homes longer, thereby reducing overall dependency on Medicaid.
The Massachusetts Chapter of the National Academy of Elder Law Attorneys (NAELA) strongly supported the bill as well, stressing the importance of the lien protection changes.