Senate Health Care Committee Approves Legislation Protecting Seniors
Contact: Beth Scott
Tallahassee- The Senate Health Care Committee unanimously approved a bill Tuesday that protects against large rate increases and assures availability and affordability for senior citizens who purchase long-term care insurance.
If it becomes law, SB 2290, sponsored by state Sen. Mike Fasano, R-New Port Richey, and its companion, HB 1349, by state Rep. Frank Farkas, R-St. Petersburg, will no longer allow insurers to deny claims by policyholders after the policies have been in effect for more than two years, except for non-payment of premium.
Long-term care policies, generally held by senior citizens, are typically sold many years before any claims against them are filed.
Many seniors who file claims are mentally impaired and unable to remember information they provided when policies were purchased and are not always able to defend themselves against fraud allegations.
Companies will still be able to uncover any erroneous statements during the application and underwriting process and up to two-years after issuance of the policy; however, they will not be able to do their underwriting at the time of claim.
The incontestability provision mirrors life insurance policies, which also have a two-year window for examination of information provided by policyholders and have been part of Florida's law since the 1950s.
The bill also protects seniors from excessive rates by not allowing charges to current policyholders that are higher than rates for a new policy with identical coverage. This provision keeps insurers from skyrocketing premium increases when policyholders die and the pool of insureds gets smaller.
This is called "closed block" coverage and has resulted in filed rate increases of more than 200 percent annually for some unsuspecting policyholders who are forced to either cancel their policies because of the extra cost or pay the higher cost when they are on fixed incomes.