DRA PARTNERSHIPS:
THREE PERSPECTIVES
WHAT YOU SEE DEPENDS ON WHERE YOU’RE
SITTING.
THE MODERATOR/EMCEE
Steve Serfass
DRINKER BIDDLE and REATH LLP
A STATE VIEW
Lynda Hermes
Texas Department of Insurance
Jimmy Perez
Texas Health and Human Services
Commission
A LOOK AHEAD
Aging population – Texans 65+ projected to increase from
2.3M in 2005 to 7.4M in 2040.
Demand for Services – In 2040, half of Texans aged 65+
expected to have some type of disability and would benefit
from LTC services.
Unsustainable Medicaid budget increases:
Medicaid pays for 67% of all Nursing Facility care
Texas LTC costs could nearly quadruple from $3.5B in
2005 to $12.5B by 2040.
LONG-TERM CARE (LTC)
BASICS
•
Definition, Texas Human Resources Code (§22.0011)
– “…the provision of personal care and assistance related to
health and social services, given episodically over a
sustained period, to assist individuals of all ages and their
families, to achieve the highest level of functioning possible,
and regardless of the setting in which the assistance is
given.”
•
Services
– May include personal assistance and skilled care that may
be provided in the person’s home, an adult day care center,
a nursing home, or an assisted living facility
WHO PAYS FOR LTC?
LTC PARTNERSHIP
•
Public-private partnership between state agencies and private
insurance providers to provide high-quality insurance options
and encourage purchase of LTC insurance
•
Encourages individual planning for LTC vs. reliance on Medicaid
•
Goal is to reduce Medicaid expenditures by delaying or
eliminating need to rely on Medicaid for LTC services
•
Consumer protections and benefits
– Dollar-for-dollar asset protection at Medicaid eligibility and
Estate Recovery
– Inflation protection
– Suitability
– Reciprocity
– Tax qualified
LTC PARTNERSHIP IN
TEXAS
•
Originally piloted in 4 states
•
Federal Deficit Reduction Act of 2005 (DRA) authorized all
states to establish partnership programs
•
Senate Bill 22 (80th Legislature, 2007) requires HHSC, TDI and
DADS to coordinate efforts to implement a Partnership in Texas
– Consistent with requirements in DRA
– Training requirements
– Adopt rules as necessary
– Implement awareness and education campaign
KEY FEATURES
• Asset /Resource Protection – (Dollar-for-dollar
model)
– At initial determination of Medicaid eligibility, asset /
resources protected up to the amount of benefits paid.
– At the time of Medicaid Estate Recovery (MERP), asset /
resources protected from MERP up to the amount of benefits
paid.
• Tax Eligible –
– Some or all of premiums tax-deductible.
KEY FEATURES (cont.)
• Inflation Protection
– Up to 5% compounded annually.
• Reciprocity
– Medicaid asset/resource protection recognized between
reciprocity states.
• Suitability
– Ensuring appropriateness of product for the individual.
TARGET POPULATION
• Texans aged 45 to 65 -- currently almost 3 million
Texans
• Individuals of moderate income
• Individuals who might otherwise rely on Medicaid to
meet LTC needs
• Individuals who have assets and want to protect
against ‘impoverishment’ before becoming Medicaideligible
QUALIFYING FOR MEDICAID
• Eligibility
– Financial
• A person who is 65 years or older, or a person who has a
disability, may receive Medicaid if he or she meets
income and resource (asset) limits set by the program
– Functional
• Long Term Care services target individuals whose health
problems may cause them to be functionally limited in
performing activities of daily living, require skilled nursing
care, or be at risk of nursing facility placement
• Individuals must have a medical need for services as
documented by a physician
PROGRAM UPDATE
•
Medicaid State Plan Amendment submitted and approved
•
Medicaid eligibility rules published in Texas Register April 18, 2008
•
Training for AAA Benefits Counselors, Medicaid Eligibility staff,
and Insurance Agents
•
Awarded Center for Health Care Strategies technical assistance
grant and accepted into RWJ Foundation Strategic
Communications Program
•
Established State Office with HHSC, Medicaid/CHIP Division
•
TDI Rules Adopted – Policies Certified
•
LTC awareness/education campaign and website
www.ownyourfuturetexas.org
TEXAS DEPARTMENT of
INSURANCE
Lynda Hermes
TEXAS DEPARTMENT of INSURANCE
Requirements to Sell Partnership Policies in Texas
–Certify policies sold comply with Partnership program
LHL570(LTC)
–Certify anyone who sells partnership policies has
completed training LHL571(LTC)/LHL572(LTC)
–Offer existing policyholders who were issued a LTC policy on
or after February 8, 2006, an option to exchange
TEXAS DEPARTMENT of INSURANCE
Requirements to Market Partnership Policies in Texas
–File all advertising materials 60 days prior to use
–Deliverables at time of Application:
Personal Worksheet LHL560(LTC)
Potential Rate Increase Disclosure Form LHL561(LTC)
Things You Should Know Before You Buy LHL567(LTC)
LTC Insurance Shopper’s Guide §3.3840 TAC
TEXAS DEPARTMENT of INSURANCE
Specific Advertising Disclosures
–Available Inflation Protection Options
Ability to amend IP provision based on age bracket
–Association Compensation Disclosures
Process used to select policy and insurer
–Contingent Nonforfeiture Benefits for Limited Pay Policies
TEXAS DEPARTMENT of INSURANCE
Reporting Requirements
–Policy Replacement or Lapse LHL562(LTC)
–Rescissions in Texas and nationwide LHL562(LTC)
–Claims Denied for each class LHL564(LTC)
–No. of non-partnership polices sold LHL565(LTC)
–Suitability data LHL566(LTC)
–Certification of association compliance LHL573(LTC)
–Annual rate filings §1651.053(c) TIC
TEXAS DEPARTMENT of INSURANCE
Partnership Status Disclosure Notice
–Explains the benefits of the partnership program
–Helpful in notifying family members or others who may be
administering the estate
–Estate recovery exemptions available
–Existing policy is exchanged
–Form LHL569(LTC)
AN INSURER VIEW
Gail Holubinka
MedAmerica Insurance Company
DRA PARTNERSHIPS
RISKS
AND
OPPORTUNITIES
RISK and OPPORTUNITY
PLUS +
• Increase in sales
• State sponsorship
• Public awareness
MINUS –
• De-standardization
• Multiple states – multiple demands
• Insurer/agent liability
RISK and OPPORTUNITY
CHALLENGES
RISK and OPPORTUNITY
COMMUNICATION
=
+
HUH?
RISK and OPPORTUNITY
EDUCATION
The State
The Insurer
The Agent
The Consumer
RISK and OPPORTUNITY
LIABILITY
The State
The Insurer
?
The Agent
The Consumer