Committee advances long‑term care insurance language imposing 10% cap on annual increases; advocates warn of insolvency risk
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Summary
Lawmakers voted to move LCO 5684 (SB 12 69) and a companion bill on long‑term care premium hearings to the floor. The bill includes a 10% annual cap on premium increases and a 15‑year limit on increases unless tied to CPI; legislators voiced concerns about insurer solvency and guarantee‑fund exposure.
The Insurance and Real Estate Committees voted to advance language on long‑term care insurance—filed as SB 12 69 with LCO 5684—to the floors on Tuesday, approving provisions that would cap long‑term care premium increases and provide additional notice and hearing requirements.
Under the JFS language discussed in committee, premium increases would be limited to no more than 10% in a year. The bill also retains a provision that after a policyholder has held a long‑term care policy for 15 years, insurers could not raise premiums except when tied to the Consumer Price Index.
Senator Wong framed the measure as a “work in progress” informed by public testimony and multiple committee hearings. “This is one case of a bill where we can take all the information, the expertise, and input from all the shareholders and produce a bill that this committee of cognizance can move forward,” Wong said.
Several members voiced concern that a hard cap on rate increases could raise insolvency risk for insurers. Representative Pavlok D'Amato asked whether capped increases could force companies out of business if claims and costs rose faster than permitted premiums. The chair clarified that the event of insurer insolvency would trigger the state guarantee fund; committee members noted the guarantee fund typically provides reduced benefits and that insolvency costs are ultimately assessed across states and carriers.
Brett (committee participant) clarified that when an insurer becomes insolvent, the claims are subject to an assessment and the guaranty mechanism does not simply “pay the difference”; instead, insolvency often triggers a multi‑state assessment and potential downstream premium impacts.
Despite concerns, members including Representative Pavlok D'Amato and Senator Anwar said they would support advancing the bill out of committee to allow continued work and discussion. The motion to JFS LCO 5684 to the floor was moved by Senator Juan and seconded by Senator Cabrera; the clerk conducted a roll call and the committee approved the referral.
The debate emphasized balancing consumer protection from sharp premium spikes with preserving insurer solvency and the ultimate coverage value for policyholders. Committee members and staff signaled continued negotiation and data work as the bill proceeds to the full chamber.
