New legislation in California runs the risk of making the state inhospitable for new long-term care insurers predicts the director of the American Association for Long-Term Care Insurance (AALTCI).
The new law, AB 1104 allows the California insurance commissioner to charge a long-term care insurer a financial surveillance assessment of up to $1 million per year. The commissioner could use the money to pay costs associated with tracking long-term care insurers' finances.
"Nothing is more important than protecting consumers but every action has the potential for a equal or in some cases worse reaction," says AALTCI's Jesse Slome. "This I predict is just one of those instances. What new insurance company will want to begin offering long-term care insurance coverage in California knowing that on top of all the other costs, there's now the potential for an additional yearly $1 million charge?"
According to the law, the actual size of the assessment depends on how much the California Department of Insurance actually spends on analyzing LTCI issuers' financial reports. It would also require any issuer that's providing coverage for more than 10,000 people file detailed performance disclosure reports with the insurance commissioner every year.
The American Association for Long-Term Care Insurance there are currently 650,000 Californians who own either traditional long-term care insurance or a linked benefit LTC policy.
"Having private long-term care insurance available to Californians means fewer aging seniors will ultimately become dependent on MediCal which is taxpayer funded," Slome explains. MediCal already picks up the lion's share of nursing home costs for elderly Californians.
"California can't print money, so ultimately MediCal is paid for by taxpayers," Slome points out. "If you have fewer private options for those needing long-term care, it's logical to see that the end result will be more people turning to State-funded programs which means either less State dollars for programs like education or the need to eventually raise taxes. I understand the dilemma but I am not sure this was the ideal solution for the long-term future of Californians who pay taxes."
The American Association for Long-Term Care Insurance advocates for the importance of long-term care planning. The organization connects consumers with knowledgeable professionals who are independent advisors for no-cost, no-obligation long-term care insurance quotes and policy comparisons.
The American Association for Long-Term Care Insurance, the American Association for Medicare Supplement Insurance and the American Association for Critical Illness Insurance all advocate for the importance of planning and support insurance professionals nationwide. Jesse Slome, founder and executive director of the organizations, is a leading consumer advocate and author of numerous consumer and professional guides focused on retirement and insurance planning that have been published by governmental agencies and private organizations.