An Act Concerning Long-term Care Insurance Premium Rates.
Summary
SB 1278 makes two main changes related to long-term care insurance. First, it adds a Connecticut income tax subtraction for premiums paid in the taxable year for certain long-term care insurance policies, beginning with tax years starting on or after January 1, 2025. This would reduce taxable income for individuals who pay premiums on policies issued under the referenced long-term care insurance statutes.
Second, the bill tightens the rules for premium rate increases on long-term care policies. For any requested increase of 20% or more, insurers and related entities would have to phase the increase in over at least three years and could not file another increase during that chosen period. Before implementing any increase, they would also have to notify policyholders, offer options to reduce benefits or move to a minimum affordable benefit option, and give at least 30 days to respond. For increases above 10%, the insurer would also have to hold a public hearing with advance notice to policyholders.
Impact
The bill amends Connecticut General Statutes section 12-701(a)(20)(B) to create a new income tax subtraction for long-term care insurance premiums, affecting taxable years beginning on or after January 1, 2025. It also amends sections 38a-501 and 38a-528 to impose new procedural and consumer-protection requirements on long-term care insurance rate filings, including mandatory spreading of large increases, notice and election rights for policyholders, and public hearings for increases above 10%. The affected parties are insurers, fraternal benefit societies, hospital and medical service corporations, health care centers, and policyholders/certificate holders in long-term care insurance plans.
Sentiment
The available voting history shows strong and unanimous committee support, with 13-0 votes in both the Aging Committee and the Insurance Committee. That suggests the bill was viewed favorably as a consumer-protection measure and a targeted tax benefit for long-term care insurance purchasers. No committee transcript was provided, so there is no recorded floor or hearing debate to indicate broader opposition.
Contention
The bill’s main points of potential contention are the new regulatory limits on premium increases and the added administrative requirements for insurers. Insurers and related entities may view the three-year spread requirement, the prohibition on additional filings during that period, the mandatory benefit-reduction options, and the public hearing requirement as constraints on rate-setting flexibility. On the other hand, policyholders and consumer advocates would likely support these provisions because they are designed to soften large premium shocks and preserve coverage options. The tax subtraction for premiums is less contentious on its face, but it does reduce state taxable income and could have revenue implications.