Long Term Care Insurance Partnerships



November 28, 2005
The Honorable Charles Grassley
Chairman
Senate Finance Committee
Washington, DC 20510

Re: Long Term Care Insurance Partnerships

Dear Mr. Chairman:
Consumers Union, the independent, non-profit publisher of Consumer Reports, appreciates your inclusion of a number of Long Term Care Insurance consumer protections in section 6012 of the Budget Reconciliation bill. The Senate bill, with its call for further work on consumer protections, is far superior to HR 4241’s section 3133, which has minimal consumer protections.
Ideally, we would like to see the immediate inclusion of provisions of the NAIC Model Law and Regulations that would regulate, to some degree, the amount of premium increases (model regulation section 20). Unexpected and dramatic increases in premiums have been a leading reason that so many Americans have let their LTCI policies lapse, often losing thousands and thousands of dollars of insurance premium investment.
We believe it can be a serious abuse of consumers to encourage LTC Partnership programs in the states without providing for immediate consumer protections and the development of stronger premium increase protections in the near future.
In another consumer area related to long-term care, the House legislation limits the amount of home equity one can have and still qualify for Medicaid LTC assistance and the House bill seems to encourage the use of reverse equity mortgages (Section 3114(a). Consumers Union’s 1999 investigation of REMs in California revealed some severe consumer abuses, where middlemen used fees and other charges to substantially destroy the homeowners’ available equity. We urge that the Conferees consider the addition of legislative language or report language calling on appropriate government agencies—perhaps HUD or one of the GSE mortgage entities—to ensure that objective, independent (no conflict-of-interest) counseling is available to consumers before they enter into REMs.
Again, thank you for your continuing concern about consumers, and we hope that the Senate position on these—and so many other issues–will prevail in the Conference Committee process.
Sincerely,
William Vaughan
Senior Policy Analyst
Washington Office