Long-Term Care Insurance:

Risks to Consumers Should Be Reduced

HRD-92-14: Published: Dec 26, 1991. Publicly Released: Dec 26, 1991.

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Pursuant to a congressional request, GAO reviewed long-term care insurance policies, focusing on: (1) the extent to which state standards and long-term care insurance policies meet the National Association of Insurance Commissioners (NAIC) standards; (2) whether such standards and policies adequately address consumer protection issues; and (3) whether minimum federal standards are needed.

GAO found that: (1) although NAIC model standards for long-term insurance provide greater consumer protection, consumers are still vulnerable to considerable risks because many states have not adopted key NAIC standards and NAIC standards do not sufficiently address several consumer protection issues; (2) NAIC standards do not address definitions of covered services, eligibility criteria, or grievances; (3) NAIC standards do not protect consumers from inappropriate prices, unpredictable premium increases, limitation on policy upgrading, and incentives for insurance sales abuses; and (4) although insurers adopted NAIC standards more quickly than states, their policies often did not meet such recent NAIC standards as disclosure, inflation protection, and home health care.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: The Health Insurance Portability and Accountability Act, signed into law on August 21, 1996, provides tax breaks for long-term care insurance policies that meet minimum federal standards. Most of the standards set forth in the Act are based on those developed by the National Association of Insurance Commissioners (NAIC).

    Matter: If states do not wish to adopt NAIC standards, Congress may wish to consider enacting legislation that sets minimum federal standards for long-term care insurance.


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