To read the provisions of the Pension Protection Act of 2006, go to this website http://www.dol.gov/ebsa/pdf/ppa2006.pdf.
Subtitle D addresses Health and Medical Benefits and sections 841-845 are particularly relevant to insurance. Modifications to laws should be read with a clear view to their intent. Health law modifications are moving towards privatization (we are empowered to expect nothing from the government we've paid into all our lives because THAT's capitalism). The red flags to watch for are the spin of how the Medicaid and Medicare systems will run dry if we don't do something (raiding those budgets for other governmental dollars needs clearly is not addressed) and how only loser, commie, moochers would accept participation in government health insurance.
What seems clear is that the law makes provision for the inclusion of long term care insurance riders to annuity contracts and life insurance policies. While the long term care insurance "option" will be considered a separate contract, it will be funded from the original annuity contract or life insurance policy. Participants will receive statements of the amounts they pay against the cash value of their annuities (reducing annuity cash value by cost of long term care) or against the cash surrender value of their life insurance contracts. While how this will flesh out is left to the accountants and tax guys, there are a few key issues for those of us regular citizens concerned about insurance.
It is not clear to me who chooses the long term care insurance policy "offered" for purchase as part of the annuity or life insurance products. By now all should know that there is a wide range of differentiation among long term care products. If companies are choosing the long term care option, insureds are again wrapping their future insurance coverage with companies. Companies have long proven that their wellness goals for employees are often not in line with individual concern for obtaining health care when needed.
What assurance do individuals who purchase these products have that the policy will not be subject to change regarding coverage, eligibility and any of the other provisions of the contract? One of the issues facing insureds is the fact that their contracts are modified: provisions from year to year and a revolving door of health care providers. Long term care purchased now may not have the provisions we need in the future.
While the Act provides that the long-term care contracts will be part of the annuity or life insurance contracts for purposes of funding and sale of the contract, the law does state that the long term care contract is a separate contract. This seems to leave the long-term care leg of the contract as an insurance contract which means what? That premiums must be paid for it to continue, that premium rates are subject to change? The "lock-in rate" of funding life insurance and annuities does not seem to apply to long-term care coverage.
Now for the "fun" part, predicting how I think these things will be sold. The obvious need being addressed will be fear, fear of not being able to afford nursing home care in our declining days. Next, a convenience pitch will also be made as money that you're taking out of your check anyway (for annuity and life insurance funding) is further diverted to fund this insurance, you'll be deducting the same amount. Finally, we'll be approached like we're morons as we're told that because the employer arranged for the long-term care provider we're getting a break in premium (moron because you shouldn' t have it both ways on the one hand marketing every man for himself insurance as the cheapest way to go except when it comes to policies employers want you to buy, then it's just good sense to assume that a group can negotiate a better rate than an individual). Thrown in with that will maybe be some opportunity to sign up without a physical exam and as we cleverly think our chubbiness, high blood pressure, high cholesterol are better kept out of the formula, we'll go for it. There might also be one of those pre-tax dollar sells.
Next time we'll consider what apparently isn't relevant to the Pension Protection Act of 2006, what does this insurance get us besides more insurance, with an eye towards citizen goal of being able to get medical care when necessary.
