Weekly Tip: Substantive Amendments to the Long-Term Care Rate Filing Uniform Standards

Weekly Tips

Substantive Amendments to the Long-Term Care Rate Filing Uniform Standards


Last week, the Insurance Compact Office began a series of Weekly Tips detailing the amendments made to the individual Long-Term Care Insurance Uniform Standards. Digging in, here?s what you need to know about the substantive amendments made to the Rate Filing Standards for Individual Long-Term Care Insurance ? Issue Age Rate Schedules Only (Issue Age Rate Standards) and the Rate Filing Standards for Individual Long-Term Care Insurance ? Modified Rate Schedules (Modified Rate Standards). In this tip, we use short names for these standards and refer to them collectively as the rate standards.

Several of the changes made to both rate standards are based on recent amendments to the NAIC Long-Term Care Insurance Model Regulation (#641) regarding prospective rate increases for new policies and the adoption of a NAIC model bulletin to address rate increases on in-force LTC insurance policies. Other than the amendments applicable to annual/triennial rate certifications, the amendments apply only to LTC insurance products or rate schedules first filed on or after October 10, 2017.

Amendments Applicable to Initial Rate Submissions:

  1. The Issue Age Rate Standards will apply to LTC features that accelerate $1 of the base policy or contract benefits for $1 of LTC benefits (?$-for-$ products?). Previously these products were exempt from the rate standards. Now, specific requirements have been incorporated into the Issue Age Rate Standards and the Modified Rate Standards point back to the Issue Age Rate Standards.
  2. The actuarial requirements for initial LTC rates and certifications in Section 2 of both rate standards were amended to be more consistent with the amended NAIC Model Regulation.
  3. All deviations, not only significant deviations, in margins between ages, sexes, plans or states shall be clearly described in the actuarial memorandum. In addition, amendments require that, except for $-for-$ products, the actuarial memorandum shall contain a demonstration that the gross premiums include the minimum composite margin specified in ?2B(1)(d).

Amendments Applicable to Annual/Triennial Rate Certifications:

  1. The due date for annual actuarial certifications for approved initial LTC insurance rate schedules was moved to May 1, as was the due date for the triennial actuarial memorandum submission. These submissions will now be based on calendar year data.
  2. The actuarial certification requirements were amended to require detail or sample calculations of reserve amounts and include new language regarding the methodology of performing the net/gross ratios.

Amendments Applicable to Rate Increase Submissions:

  1. Requirements consistent with revisions to ?20B and C of the NAIC Model Regulation were added related to demonstrating that actual and projected costs exceed costs anticipated at the time of initial pricing under moderately adverse experience and that the composite margin is projected to be exhausted, as well as adding a new provision under ?4C(4) for requirements for all rate schedule increases applicable to policies issued under policy forms filed on or after December 26, 2017.

If you have any questions about this Weekly Tip, or the Insurance Compact, please contact the Insurance Compact Office at Comments@insurancecompact.org. Tune in next week for an overview of the clarification amendments that were made to the Long-Term Care Rate Filing Uniform Standards.