BILL NUMBER: S6674

SPONSOR: MAYER
 
TITLE OF BILL:  An act to amend the insurance law, in relation to
requiring long term care insurance carriers who propose to raise long
term care insurance premiums to obtain prior approval of the superinten-
dent of financial services

 
PURPOSE OR GENERAL IDEA OF BILL:

The purpose of this legislation is to establish a process and timeframe
for the Department of Financial Services to provide public notice and
notice to policy holders prior to approval of changes to long term care
(LTC) insurance premiums. In addition, the bill requires the Department
of Financial Services to approve such changes prior to implementation,
and to require consideration of the best interests of policy holders.
This bill addresses a serious problem that has occurred when long term
care insurance providers increase rates without any consumer notice or
opportunity to challenge, and when such increases are not in the best
interests of policy holders.

 
              

SUMMARY OF PROVISIONS:

Section 1 of the bill amends paragraph 3 of subsection (f) of section
1117 of the insurance law which relates to premium rates for long term
care plans.

Section 2 of the bill amends section 1117 of the insurance law by adding
a new subsection (h). The added subsection (h) requires an insurer
desiring to increase or decrease premiums for a long term care insurance
policy to submit a rate filing or application to the superintendent of
financial services and send written notice of the proposed rate adjust-
ment to each policy and certificate holder affected by the adjustment.
The superintendent is required to post a copy of the notice on the
department's website immediately. Within 30 days from the date that the
filing or application is submitted, those affected by the adjustment can
contact the department of financial services or the insurer to receive
additional information or may submit written comments. The superinten-
dent is required to establish a process to post all relevant written
comments received pertaining to rate filings or applications on the
department's website in a timely manner. The superintendent shall deter-
mine whether the filing or application will be approved as filed, or
modified or disapproved.  If the superintendent finds that the premiums
are unreasonable, excessive, inadequate, unfairly discriminatory, or
otherwise not in the best interests of policy holders and certificate
holders, the superintendent may modify or disapprove the filing or
application.  The superintendent's determination must be rendered in
writing between 30-60 days from the date the filing or application is
submitted and must be supported by sound actuarial assumptions and meth-
ods and include a statement regarding the best interests of policy hold-
ers and certificate holders. If the superintendent needs additional
information from the insurer in order to make a determination, the
superintendent is authorized to require the insurer to furnish such
information, and the 60 day timeframe will be tolled and will resume as
of the date the requested information is received. If the superintendent
does not render a decision within the time allotted under this section,
the filing or application will be deemed approved.  After an insurer's
filing or application is deemed approved, the insurer must provide at
least 60 days advance written notice of the premium rate adjustment to
each affected policy holder and certificate holder before such rate
adjustment is implemented.

Section 3 provides the effective date.

 
JUSTIFICATION:

Long term care insurance helps cover the cost of care and daily activ-
ities that people may need as they age. Medicare generally does not pay
for long term care, and therefore many people buy long term care insur-
ance to avoid paying for such expenses out of pocket later in life.

An article in the New York Times on August 23, 2019, "Your Long-Term
Care Insurance Rate Spiked. Now What?"
(https://www.nytimes.com/2019/08/23/yourmoney/long-term-care-insurance-
prices.html), is only one of the many exposures of the sharp rise in
premiums for long term care insurance over recent years. Many consumers
have seen their premiums increase at rates as high as 600. Under current
law, long term care insurance providers in New York State are not
required to receive prior approval from the state Department of Finan-
cial Services before increasing or decreasing premiums nor are insurers
required to notify policy holders of such rate changes. The rising
premiums and lack of notification are problematic for consumers, espe-
cially for those who purchased policies with the understanding that
their premiums would not change, as well as for those who did not
receive prior notice of the premium increases.

According to the National Association of Insurance Commissioners, over
half of the states in the country have laws or regulations which require
long term care insurance providers to submit notification or a request
for approval to the Director or Commissioner of their state's Insurance
Department of a proposed premium rate schedule increase or decrease.
Many of these states also require providers to notify policy holders of
such proposed rate changes. New York State is in the minority of states
nationwide without these consumer protection and prior approval
provisions.

This legislation will safeguard long term care insurance consumers from
being hit with unjustified and unexpected increased premiums by requir-
ing insurers to notify policy holders of any proposed premium increase,
requiring insurers to submit an application to DFS justifying the
proposed premium increase, requiring DFS approval of such applications
for premium increases prior to their implementation, and requiring DFS's
determination to include an analysis of whether the proposed premium
increases are in the best interests of policy holders.

 
PRIOR LEGISLATIVE HISTORY:

Similar to:

2019 - A2941 (D'Urso) / (no same as)
2017 - A2055 (Mayer) / S3389 (Valesky)
2016 - A 9683-B (Mayer) / S7065-B (Kreuger)

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.