Connecticut Legislature Proposes Financial Relief for Long-Term Care Insurance

The Connecticut state legislature's Aging Committee recently introduced a bill aimed at offering financial relief to long-term care insurance (LTCI) policyholders facing substantial premium hikes. This proposed legislation seeks to allow tax deductions for premiums, mandate public hearings for rate increases over 10%, and provide advanced notice of these hearings.

Policyholders might benefit from deductions that could lower their state tax obligations. A similar proposal was thwarted last year, facing opposition due to projected state revenue losses of nearly $20 million annually. Rep. Mitch Bolinsky underscored the importance of public dialogue, noting that the bill is a starting point likely to evolve with community feedback.

Public feedback has been mixed, with policyholder Judy Mandel voicing frustration over premium spikes that have skyrocketed nearly 400% since she purchased her policy. Other residents, including David Schwartzer, are calling for rate caps and greater financial transparency from insurance providers to combat these challenges.

Approximately 100,000 Connecticut residents currently hold LTCI policies, which cover services like skilled nursing care and assisted living. Investigations have highlighted rising policy costs, mainly due to insurers' past underwriting miscalculations. Notably, over 17,000 policyholders have faced rate increases of at least 50% between early 2019 and late 2024, with major carriers like Genworth Financial and Transamerica Life Insurance frequently securing approval for their requests.

Amelia Smith's personal account of a premium surge to $838.46 a month highlights affordability issues impacting everyday expenses. Conversely, Jan Kritzman argues that maintaining LTCI policies could alleviate state Medicaid costs, thus potentially mitigating revenue shortfalls from proposed tax deductions.

While the insurance industry has supported tax deductions, there is contention over the necessity for public hearings. Eric George of the Insurance Association of Connecticut cited logistical challenges and concerns over proprietary data exposure. Lawmakers, such as Rep. Anthony Nolan, stress the urgency for comprehensive solutions, emphasizing their commitment to protecting seniors while addressing escalating costs.

The ongoing legislative discussions highlight the broader challenge of equitably managing long-term care insurance in Connecticut amidst rising costs and demographic shifts. The outcome of these deliberations could significantly impact both policyholders and the state's approach to long-term care insurance regulation.