Long-Term Care Insurance:

State Regulatory Requirements Provide Inconsistent Consumer Protection

HRD-89-67: Published: Apr 24, 1989. Publicly Released: May 24, 1989.

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Pursuant to a congressional request, GAO assessed state regulation of long-term health care insurance, intended to help defray nursing home costs not paid by Medicare or Medicaid, focusing on state: (1) legislation establishing standards for long-term health insurance policies; and (2) procedures for enforcing the standards.

GAO found that: (1) no federal legislation regulates the growth or coverage and duration of long-term health insurance, although some policies are quite restrictive; and (2) the National Association of Insurance Commissioners (NAIC) adopted a model long-term care insurance act and regulation for states to use in developing their own standards. GAO also found that state approaches to regulating long-term care insurance varied widely, with: (1) 43 states allowing insurers to require that beneficiaries receive successively higher levels of care before approving entry into nursing homes; (2) 27 states allowing insurers to exclude coverage for persons with Alzheimer's disease; (3) 31 states approving policies limiting coverage to skilled nursing care only; (4) 36 states allowing insurers to use policy renewal provisions that were unfavorable to consumers; (5) 30 percent of states identifying, and 20 percent acting upon, such abuses as policy coverage misrepresentation, failure to pay claims, and false or deceptive advertising or sales practices; (6) 33 states adopting minimum loss-ratio standards for individual policies, with most using the NAIC standard of 60 percent; and (7) most states not compiling data on complaints, abuses, or loss ratios to routinely monitor insurers.

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