Senator Herb Kohl, (D-Wis.), chairman of the Senate Special Committee on Aging, plans to introduce long-term care legislation at a Washington hearing today that will force providers to a standardized method of handling claims and transferring policies between states, as well as to enhanced regulatory compliance around increasing premiums. Long-term care insurance should reflect standards set by the National Association of Insurance Commissioners, Kohl said before the hearing.
Bloomberg estimates that 12 million Americans will require such care by 2020. Pointing to recent losses reported by Genworth Financial Inc., Kohl said: “We need to boost consumer protections and ensure the solvency of these products in the long run, and even then long- term care insurance may not be right for everyone,” said Kohl. “Long-term care insurance should not be considered as a cure-all.”
Genworth points to peace of mind as a primary benefit to policyholders: “Long-term care insurance generally provides peace of mind to policyholders and their family in a time of shifting and uncertain economic burdens,” said Thomas Stinson, the president of insurance products for Genworth, based in Richmond, Virginia, in a prepared statement for his testimony at today’s hearing.
Genworth, one of the largest providers of long-term care insurance, had a first-quarter loss of $469 million compared with profit of $116 million a year earlier, reports Bloomberg.
Long-term care policies typically provide coverage to help pay for home-health aides or residence in a nursing home or assisted-living facility. Bloomberg reports figures from the Menlo Park, California-based Kaiser Family Foundation that state that insurers have sold about 10 million of the policies since 1987. Private insurance accounted for 9% of the almost $180 billion spent on long-term care services in 2006, said Kaiser, a nonprofit group focused on health-care policy.
States are encouraging residents to consider these programs, without weighing the plans’ consumer protections and companies’ financial solvency, said Kohl in his remarks. There were a total of 43 ratings downgrades to companies in the life/health insurance industry by AM Best Co. and the rating company downgraded its industry outlook to negative from stable in 2008.
A typical policy sold in 2008 cost $2,329 a year on average for a single 60-year-old person, according to Kaiser. If purchased at age 70, the same policy would cost $4,515 a year. Nursing home care averages $70,000 a year, assisted-living facilities average $35,000 a year and 24-hour home health service care averages $306,600 a year, Kaiser said.
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