State moves to cap long-term care insurance premium rate

HB 2333 reforms will protect seniors from skyrocketing annual rates

[February 22, 2013]  CHICAGO -- Illinois Department of Insurance Director Andrew Boron announced on Wednesday an effort by the department to protect long-term care policyholders. The Department of Insurance, with help from state Rep. Robyn Gabel, 18th District, Evanston, has proposed House Bill 2333, which calls for a 15 percent annual cap on the premium rate for a policyholder's long-term care insurance.

Long-term care refers to the services and supports provided to people who need assistance with basic activities, such as bathing and dressing, because of chronic physical illness or disabling conditions such as dementia.

To offset the high costs associated with long-term care, many people purchased insurance coverage. These policies were originally sold as having "level" premiums that would not increase based on age or health situation. Now, the policyholders who have been paying for a decade or more are shocked to receive notice that their monthly premium has skyrocketed -- as much as 200 percent.

"State regulators have no discretion to limit premium increases if the rate filing meets standards, so we set out to change the law to further protect consumers. This proposal would impose a 15 percent cap on rate increases on all existing and future long-term care premiums, regardless of age or benefit configuration," said Boron. "And I want to thank Rep. Gabel for her support of our effort to change the law."

"Insurance companies did not break the law when they decided to raise rates, but it seems unconscionable to charge such exorbitant amounts of consumers who are often retirees living on a fixed income. Policyholders say they had only two devastating choices -- either find a way to pay up now or face the possibility of not having long-term coverage when you need it. House Bill 2333 will help prevent this type of devastation," said Gabel.

Long-term care services and support are provided in a variety of settings -- in homes, in community settings such as adult day centers, and in institutional settings such as nursing homes and assisted living facilities. It is estimated that almost 10 million people in the United States need long-term care services and supports, and about 6 million of them are age 65 and older.

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The mission of the Illinois Department of Insurance is to protect consumers by providing assistance and information, by efficiently regulating the insurance industry's market behavior and financial solvency, and by fostering a competitive insurance marketplace. The department assists consumers with all insurance complaints, including health, auto, life and homeowner. Consumers who have questions or concerns about their insurance may contact the department's Consumer Division at http://insurance.illinois.gov/ or call 866-445-5364.

[Text from Illinois Department of Insurance file received from the Illinois Office of Communication and Information]