Consumers Use Up Washington State's Private LTCI Capacity

[Northeast Agent]

Consumers Use Up Washington State's Private LTCI Capacity | ThinkAdvisor

When lawmakers and regulators are designing other efforts to combine private insurance with public program benefits, the WA Care Funds story may highlight the need for analysts to assess the risk of new programs sending private insurers too many customers, as well as the risk that the new programs will take away the private insurers’ customers.

 

[marindependent]

It is very telling.

 

[Aaron_4SIGHT]

The reason the LTCi carriers stopped selling in Washington State is that the bill had a loophole where people could get a lifetime exemption from the tax if they had an LTCi policy purchased before November 1, 2021. They didn't have to keep the policy or re-apply for an exemption ever again.

People by the thousands were buying super cheap policies with plans to cancel them as soon as they got their lifetime exemption. Carriers saw the risk of a tidal wave of cancellations happening after they went through the underwriting process and paid out first year commissions, so they just stopped sales.

On the plus side, everyone in Washington State is now aware of the need for long term care planning AND is being made aware that what the state offers is nowhere near enough to protect them.

 

[ltcadviser]

The reason the LTCi carriers stopped selling in Washington State is that the bill had a loophole where people could get a lifetime exemption from the tax if they had an LTCi policy purchased before November 1, 2021. They didn't have to keep the policy or re-apply for an exemption ever again.

People by the thousands were buying super cheap policies with plans to cancel them as soon as they got their lifetime exemption. Carriers saw the risk of a tidal wave of cancellations happening after they went through the underwriting process and paid out first year commissions, so they just stopped sales.

On the plus side, everyone in Washington State is now aware of the need for long term care planning AND is being made aware that what the state offers is nowhere near enough to protect them.

Additionally the underwriters lacked the resources to process the business, much of which was lacking in quality. The bottleneck created wasn't worth it whatsoever.

 

[Tothetop]

On the plus side, everyone in Washington State is now aware of the need for long term care planning AND is being made aware that what the state offers is nowhere near enough to protect them.

I think the point you made about future cancellations actually highlights the opposite of what you said here.

I still don't believe folks saw the need to plan for LTC or the inadequacy of the Washington state plan after this experience.

Many folks, even those who admittedly were considering to a degree LTCi before the tax, were more concerned about pinching pennies and avoiding that tax.

Quite frankly, folks were always looking and continue to look for LTCi everyday - even before this "tax experiment." However, the most reliable products right now are just too expensive.

Unless a carrier comes up with another product or product change soon to address this problem, the LTCi market will continue to die a very slow death.