Mutual of Omaha Announcement Regarding LTCi in WA

[Northeast Agent]

Effective immediately, Mutual of Omaha is suspending long-term care sales in the state of Washington.

Here's what you need to know:

• Applications submitted on or before the end of the day June 16, 2021, will be processed as normal.
• All pending in-house business will be processed as normal.
• Any applications received June 17, 2021, and after will not be accepted. No exceptions will be made.

As a leading long-term care insurance provider, Mutual of Omaha has a responsibility to their policyholders and distribution partners to ensure their product offerings are used as designed, offering security and peace of mind to their valued customers.

Mutual of Omaha anticipates resuming sales in Washington once again in November 2021. Thank you for your continued business, partnership and commitment to Mutual of Omaha.

 

[rousemark]

Why pull it for five months? Do they have something that does not jive with DOI rules and they are having to change it?

 

[Tothetop]

Why pull it for five months? Do they have something that does not jive with DOI rules and they are having to change it?

WA state has developed an LTC program (coverage) for its residents. The residents will pay into the program via a tax I believe beginning in Jan. 2022

You can avoid the "tax" by showing you have an LTC policy by November 2021.

My guess as to why MOO is doing this is to stop folks from purchasing a policy till November and then canceling. However, I am not certain. Its just a guess.

 

[ltcadviser]

Yes, companies were flooded with applications for $100.00 day, 2 yr benefit periods, $500 annual premiums from 31 year olds. Mostly everyone in WA is only applying to become exempt from the WA LTC payroll tax taking effect later this year. Waste of time and resources to sell policies that will lapse in 12 months. Insurance companies are wasting resources underwriting. Agents will be charged back. Thrivent also stopped accepting WA applications today.

 

[Tahoe Ray]

Yes, companies were flooded with applications for $100.00 day, 2 yr benefit periods, $500 annual premiums from 31 year olds. Mostly everyone in WA is only applying to become exempt from the WA LTC payroll tax taking effect later this year. Waste of time and resources to sell policies that will lapse in 12 months. Insurance companies are wasting resources underwriting. Agents will be charged back. Thrivent also stopped accepting WA applications today.

Jack...it's my understanding that we can sell 7702b term policies (like Hancock) that will allow these people to avoid the tax.

I have several WA clients where the premium for the term insurance will be less than the tax.

Do you believe this to be true?

 

[ltcadviser]

Jack...it's my understanding that we can sell 7702b term policies (like Hancock) that will allow these people to avoid the tax.

I have several WA clients where the premium for the term insurance will be less than the tax.

Do you believe this to be true?

Yes, it is true. You can sell LTC Riders on life insurance policies through Nationwide, John Hancock, Mass Mutual, et al for WA payroll tax exemption.

 

[scagnt83]

What level are you guys selling to conform to the exemption guidelines??

I know that currently there is no set level of benefits required. But there was talk of requiring "substantially similar" benefits to what the state provides. I know some CPAs are recommending clients get coverage that is "substantially similar" to ensure future compliance if/when things change.

So that would mean having a $100/d benefit for a minimum of 1 year for the current benefits.

But they have said the benefits will increase in the future. So are you guys building in inflation options? Or using a higher benefit amount initially?

 

[Northeast Agent]

Insurers Try to Avoid Collision With State LTCI Program | ThinkAdvisor

What You Need to Know

• Mutual of Omaha is suspending LTCI sales in the state.
• Thrivent is suspending sales through independent agents and outside advisors.
• National Guardian Life has set tough new minimum standards.

 

[Life Hawk]

Hmm... things to come. More and more of what we do will be relegated to the government and paid by tax payers. As was mentioned on another thread regarding healthcare, expect to see fraud and abuse.

 

[scagnt83]

No way this doesnt get struck down in the courts imo. They are discriminating against people who are uninsurable. Easily 20%-30% of the population would be ineligible for a LTCI policy due to health reasons. So there is no way for those people to avoid the tax. Perhaps they can show that they were declined. But as of now, on paper as the law stands, those people are screwed.