Cecily O'Connor
RedwoodAge.com

While some states have improved their oversight of long-term care insurance rates, the Government Accountability Office is warning consumers about premium hikes.  

A growing number of boomers will be shielded by new rate-setting standards. But, as of 2006, many consumers had policies that weren't protected, according to the GAO, which reviewed practices in 10 states using data from the National Association of Insurance Commissioners.

The association noted that six states - California, Florida, Illinois, Pennsylvania, Iowa and North Dakota - had adopted new rate-setting standards that were based on amendments to NAIC's long-term care insurance model regulation in 2000. While those standards, designed to ensure stable rates and increase consumer protections, are expected to be "effective" going forward, more time is needed to know how well they will work in stabilizing premium rates, according to the GAO report.

Nearly 16 percent of national policies in force at the end of 2006 were issued in states such as Texas, New York, Washington and Wisconsin that had not adopted the rate-setting standards, the report found.

Oversight of long-term care insurance is primarily the responsibility of states. However, over the past 12 years, there have been federal efforts to increase the use of this coverage while also ensuring that consumers purchasing policies are protected. Despite this oversight, concerns surfaced about both premium increases and denials of claims that may leave consumers without coverage when they begin needing care.

Growing Older
As the boomer generation ages, the demand for long-term care services, which includes nursing home care, is expected to increase and put a strain on state and federal resources. By 2020 there will be over 50 million Americans ages 65 and above. It's estimated that more than six in 10 Americans over 64 will need some form of long-term care to cope with chronic illnesses and mental or physical disabilities, either in a nursing facility and at home.

This help isn't cheap, but may be required for performing daily activities such as bathing, meal preparation or physical therapy. The average national cost in 2007 for a single year in a private nursing home room was $74,460, according to a recent survey by Genworth Financial.

The increased use of long-term care insurance offers one way for boomers to prepare for such needs. It also is a way to lower the share of care paid by state and federal governments. However, many boomers are lax in their efforts to learn about and plan for such coverage.

In commenting on a draft of the report, NAIC compiled comments from its member states who said that "the report was accurate, but seemed to critique certain aspects of state regulation, including differences among states, and make an argument for certain reforms."

The draft reported differences in states' oversight without making any conclusions or recommendations.