Long-term care insurance (LTCI) helps individuals cover the costs of extended care services—such as nursing homes, assisted living or in-home support—when they can no longer manage daily activities independently. But over the last 15 years, the LTCI market has faced challenges including premium increases, insurer exits, and uncertainty for some policyholders.
To address these issues, the National Association of Insurance Commissioners (NAIC) established the Multistate Actuarial LTCI Rate Review Team, which we will call the MSA Team. The task force’s goal was to create a unified framework for reviewing and approving LTCI rate increases across states, with the aim of increasing consistency and transparency across state reviews. This could ultimately result in greater fairness for both consumers and insurers.[1] This article is presented in an interview format to represent a written “conversation” that took place over email for several weeks, rather than an interpretation. We reviewed and revised the final version to improve the flow of the questions.
Kristi Bohn (KB): I am here with my friend and former colleague Fred Andersen, who is the chief life actuary of the Minnesota Department of Commerce, and the chair of several NAIC committees, such as the Experience Reporting Subgroup, the Valuation Analysis (E) Working Group and the Long-Term Care Actuarial (B) Working Group. Fred was one of the leaders of the MSA Team.
Fred, aside from products where the Interstate Compact[2] reviews are used, it is relatively rare for state rate regulators to come together to collaborate on reviews of rate increases from insurance companies. Most of the time, each state performs its own review and has slightly different statutes and historical practices and patterns in place that are reflected in the intermediary objections and final dispositions. But for long-term care (LTC), that seems to be a different situation going forward. Can you tell us about how this collaboration on long-term care insurance came about?
Fred Andersen (FA): Thanks, Kristi. When you and I joined the Minnesota department in 2014, we identified LTC rate increase filings as being a huge problem. Multiple insurance companies were experiencing financial problems due to their LTC blocks, and consumers were suffering through multiple waves of rate increases.
We spent a year learning about other states’ approaches to reviewing rate increases and developing our own methodology, learning lessons from others while also adapting the method to Minnesota statutes.
Our methodology resulted in what we thought was a necessary balance between consumer protection and preventing further financial distress for companies.
After applying our methodology for around a year, the NAIC LTC Actuarial Working Group[3] asked states to present their rate increase review methodologies in order to start steps toward developing more consistency between states’ methods.
Minnesota and Texas stepped up. This resulted in a multi-year study of each method, with input from regulators, industry members and consumer advocates. There seemed to be consensus that both the Minnesota and Texas methods were reasonable and resulted in logical results.
After advisement from actuaries, the NAIC started the Long-Term Care Task Force in 2019. This was a commissioner-level group that developed charges to directly and indirectly attempt to have more consistency in state rate increase approval amounts.
The direct charge was starting the MSA Team, which would review filings voluntarily provided to the MSA Team by companies and make nonbinding recommendations for states. The filings would be reviewed based on both the Minnesota and Texas approaches.
The indirect charge was for states to perhaps consider converging their methodologies to result in rate increases similar to those resulting from the Minnesota and Texas approaches.
These charges were a clear signal from commissioners that increased consistency on rate increase approval amounts was desired.
KB: Let’s talk about the competing themes you mentioned that exist in states’ statutes. That was not a small consideration, as not everything falls to an actuarial calculation, and some actuaries and some in industry pushed back on inclusion of those considerations. And most, if not all, states’ statutes listed these important ideas but gave little direction on their application. The idea of “equitable” readily comes to mind, but also that the product mustn’t be misleading or deceptive. You and I discussed these considerations at length a decade ago, and we discussed that these statutes cannot be ignored simply because they are more subjective. How were, and are, these difficult consumer-centric considerations taken into account now? Was the journey of applying these statutes controversial at the NAIC?
FA: The common wording in state statutes, that rates be fair, reasonable and not misleading, has been incorporated into the rate increase review discussions at the national level.
My finding over the years has been that almost every state incorporates these principles into their methodologies (as opposed to granting rate increases that would return blocks of business to their original lifetime loss ratios [LLR]). Also, almost every company acknowledges these principles when filing a rate increase request, that is, not attempting to have rates approved that would return the block to the original LLR.
With the MSA approach adopted as part of the revised NAIC MSA Framework[4] (and similar to the Minnesota approach that was previously part of the framework), these statutory principles are incorporated as part of the blended makeup/if-knew approach (reducing rate increases from the increases that would “make up” past losses to revert to the original LLR to the extent original policyholders no longer have their policies) and with the additional cost-sharing provision.
In reviews of Minnesota rate increase filings, we found that companies could not provide evidence that policyholders were provided a heads-up when sold the policy on the possibility of rates increasing by triple-digit percentages or more. The company either did or should have had more knowledge of the possibility of high cumulative rate increases at the time of sale.
With long-term care being a unique product in terms of impact on companies selling the product and consumers purchasing this product, the additional cost-sharing provision was seen as being a balanced way of acknowledging this fact that otherwise could have been seen as misleading. The balanced aspect results in lower rate increases for consumers but not to such an extent as substantial additional financial distress would be experienced by the companies.
During 2025 NAIC discussions, there was considerable discussion on the extent to which cost-sharing would be included in the MSA approach. There were differing views. Industry tended to argue that the NAIC should stick with a strictly actuarial approach. However, a vast majority of state regulators believed that additional cost-sharing was warranted.
KB: Part of the reason for the triple-digit potential for rate increases is the amount of time it took to realize the need for systemic rate increases. How does the MSA Framework consider timing when granting rate increases, and how will both industry and regulators ensure that more frequent pricing adequacy reviews take place going forward?
FA: There are industry and regulatory aspects to the rate increase timeliness issue.
One common obstacle to timeliness has been the lack of complete data. For instance, with the average issue age of stand-alone LTC policies being between 55 and 60, and typical claim ages being over 80, there was a span of 20 to 25 years where policies were in force but there wasn’t a lot of credible, relevant morbidity data.
Increased policy persistency and the impact on rates was acknowledged by some companies starting in the early 2000s but not by other companies until the early 2010s. The delay in requesting rate increases led to policyholders facing higher cumulative rate increases over time, but those policyholders paid lower rates for a longer period.
The companies that “waited” are subject to a higher cost-sharing burden through the formula in the MSA approach that increases cost-sharing for higher cumulative rate increases.
From a regulatory perspective, there has been a wide range in rate increase approvals, including timeliness of reviews and actions. The concept of MSA reviews was developed in large part to reduce timelines for nationwide reviews. The MSA Team continues to get the word out that a state should not need to perform its typical full review if the MSA Team has already performed a review.
In the past couple years, during the lengthy time it took to gain consensus on a revised MSA approach, including revised cost-sharing, it appeared that a lot of consensus among states developed. This provides me hope that more states will rely on the MSA recommendations and work product to streamline state approvals.
Shifting back to morbidity and the lack of fully credible data, the MSA approach contemplates that providing full or zero credit for rate increase requests based on partially credible data may harmfully lead to excessive rates or later rate shocks. Therefore, the approach essentially encourages companies and states to apply partial credit for partially credible data in rate increase filings as opposed to “waiting.” This is in line with the balanced approach.
The timely granting of appropriate rate increases was a charge of the NAIC LTC Task Force[5] since its inception in 2019 and continues to be a focal point of the NAIC as stated in the MSA Framework.
KB: How does the rate increase recommendation take higher ages into consideration?
FA: The recent adoption of higher cost-sharing burden for companies when there have been high cumulative rate increases was initially driven by concerns about policyholders aged 85 and above facing substantial rate increases. Through various NAIC groups, from commissioners to policy advisors to actuaries and other technical experts, there was nearly unanimous concern expressed among regulators about the extent of rate increases requested for the oldest LTCI policyholders.
In initially probing how to provide relief, some regulators expressed concern that providing an age-based rule could cause legal concerns. This concern wasn’t necessarily unanimous, but in attempting to develop consensus on addressing the issue, this issue threatened to derail the project.
Analysis was then performed and showed that those facing high past cumulative rate increases tended to be older policyholders. The Minnesota approach that was part of the previous MSA Framework contained increased cost-sharing burden when past cumulative rate increases were higher. Since this approach was already vetted by the NAIC, and cost-sharing factors could be adjusted to address the identified concern, the NAIC decided to address the rate increase issue for older policyholders by using the Minnesota approach’s chassis.
The NAIC adopted what is now called the MSA approach, which is the older Minnesota approach with increased cost-sharing factors for policyholders (mainly higher aged) that have faced high past cumulative rate increases.
As mentioned before, the direct impact of this adoption will be to the MSA Team’s nonbinding recommendations for states on multi-state filings.
Indirect impact is likely regarding states considering converging their methodologies to result in rate increases similar to those resulting from the MSA approach.
KB: One of the ways that insureds could avoid rate increases was to instead elect an alternative benefit buydown offered by the insurer. How are those alternative options considered under the revised review structure?
FA: Reduced benefit options (RBOs) in lieu of some or all of an LTCI rate increase have been offered by most companies for more than 10 years.
Since the NAIC LTC Task Force was formed in 2019, there have been several formal work products developed to offer companies and states guidance related to expectations on RBOs.
These work products were developed recognizing that most state statutes do not require RBOs, but most insurers offer RBOs. The goal was to attain more consistency in practices by companies and in state reviews of RBO-related offerings and correspondence.
Within the MSA Framework document are appendices containing these work products, which focus on principles, fairness and clarity of communication regarding companies’ offering of RBOs.
For MSA filings, the MSA Team will review RBOs for reasonableness of the value provided.
In addition, in 2025 an NAIC research project wrapped up, in part exploring the mindset for policyholders selecting or not selecting RBOs. A paper was published called Evaluating Preferences for Reduced Benefit Options in Long-Term Care Insurance.[6]
KB: I noticed that the amended MSA Framework describes continued support for the existing state independence from one another, from the MSA reports’ recommendation and from the Interstate Compact. I am guessing that there may be confusion at insurers on the Compact staff’s role in the process, given the use of their SERFF[7] submission process for administering these reviews, especially in light of the Compact’s high degree of LTCI actuarial expertise. I also noticed a repeated message on expectations for more state participation in the process going forward. Can you describe more about the current state of state participation in the MSA process and how you expect that may increase going forward? Can you also describe how closely participating states seem to be following the MSA Team’s rate increase and RBO recommendations?
FA: Regarding the Compact, for the MSA reviews, their staff only provides administrative assistance; for example, making it possible for a company to make a single filing that can be viewed by the MSA Team and other states. The MSA Team, comprised only of state actuaries, performs the reviews and develops the recommendations.
An important aspect regarding the development of recommendations is that, following the work of the MSA Team leading to a draft recommendation of a rate increase for a filing, there is a regulator-to-regulator webinar to present the findings and also receive comments from states. These webinars have been very well attended by states. This process allows all states to provide input into the MSA recommendation before it becomes final, noting that the recommendation must lie within the approach stated in the framework.
It is hoped that states participating in the process through the comment period will help states feel more comfortable approving rate increases based on the MSA recommendation. It’s also hoped that, given the great deal of active state contributions to the MSA approach and the revised cost-sharing factor approach, more states will be comfortable in following the recommendations.
During the processes associated with past MSA filings (prior to the recent revisions), the findings were that states tended to go along with the MSA recommendations when the cumulative rate increases for that block of business were moderate or small. And states tended to diverge when cumulative rate increases for that block were very high. The increased cost-sharing factors when there have been very high cumulative rate increases may lead to more states going along with the MSA recommendation.
KB: I also noticed that the amended MSA Framework describes an MSA Associate Program with many objectives, including building a framework for more state-employed actuaries to eventually meet the US qualification standards for long-term care insurance. Can you discuss the evolution of this program?
FA: A small percentage of actuaries have expertise in LTC, and this is true for regulatory actuaries too.
Especially with turnover over the past several years of some of the national LTC regulatory experts, it’s important to provide actuaries an opportunity to spend time learning or participating in some of the national LTC efforts.
The MSA Associate Program was formed with this in mind. The program is still in its beginning stages. There have been a couple of meetings to discuss various issues.
We’d like to ramp up activities in 2026 to share knowledge of LTC issues and to prepare regulatory actuaries for leadership positions in the future.
KB: Fred, I noticed that the MSA approach considers adverse investment expectations related to the decline in market interest rates. But how will possible increases to market interest rates, or material equity returns that exceed early or interim expectations, be taken into consideration?
FA: In the spirit of developing a balanced approach to rate increase approvals, we took the view that all significant relevant factors should be considered when analyzing an LTC block of business.
If knowing the information at the time of pricing that’s known now, a product should have been priced at $200 per month instead of $150, in my mind it doesn’t matter if the cause of underpricing was an adverse movement in expectations related to persistency, morbidity or interest rates.
In light of the Minnesota approach resulting in multiple layers of cost-sharing burden for the companies, it seemed fair that recognizing that interest rate (and investment return opportunity) decline should be considered in the methodology.
The consideration of interest rate movements in the MSA approach is based on a widely available market index as opposed to being based on a company’s actual investment performance. This prevents shifting good and bad assets or using losses from risky investments to justify higher LTC rates.
Since most LTC blocks with rate increase requests were sold prior to interest rates bottoming out, there is still likely a negative impact from interest rate movements on the performance of the block.
However, this impact is less significant than it was in the early 2020s. In today’s higher interest rate environment, and in the spirit of making the MSA approach as easy to use as possible, I think it’s okay to ignore the complicating interest rate movement aspect in many calculations.
KB: Can you tell us more about the COVID experience when it comes to long-term care insurance, and how the MSA Team has thus far adjusted for that atypical period along with the post-pandemic experience? Many of us know of people who passed away in long-term care facilities during the pandemic and know older people whose health has seemed negatively affected afterward. Ironically, I came across articles from long-term care insurers that suggested an opposite claim expectation caused by the pandemic from what I had expected, such as increased claims going forward as a possibility.[8] How is the MSA Team handling the COVID pandemic issue?
FA: We require the company to provide commentary on the short-term and expected long-term impact of COVID on the LTC block.
Our findings so far are that COVID resulted in lower claim costs for around a couple of years, but since LTC blocks typically last over 30 years, there was not a substantial impact on lifetime losses for the blocks. But that is still a topic of discussion with each filing.
We also require rate increase–related assumptions to not be more conservative than reserve adequacy assumptions. For LTC reserve adequacy filings, aka Actuarial Guideline 51, discussion is required regarding if changes to short-term or long-term projection assumptions (mortality, morbidity, etc.) have been made as a result of COVID.
The impact of COVID on LTC morbidity is an important issue that will continue to be studied. Notably it’s delayed the usability of older-age morbidity data to predict future experience.
KB: You mentioned earlier that the MSA recommendation must lie within the approach stated in the framework, but the framework itself allows for case-specific input and reasonable flexibility, as well as overall evolution. Aside from the pandemic and post-pandemic morbidity and mortality considerations just described, what top issues do you suspect will continue to evolve going forward?
FA: The four factors that significantly impact the gains and losses of an LTC block are lapses, active-life mortality, investment returns and morbidity.
Within morbidity are incidence rates, length of claim and benefit utilization. Benefit utilization is the ratio of the actual daily cost of care to the maximum daily cost covered by the policy.
Prior to around 10 years ago, lower lapses and lower active-life mortality were the main drivers of LTC losses, reserve and solvency concerns and rate increases. These factors play out in the early years of LTC blocks, during the period when premiums tend to be collected but most claims are down the road. Higher policy “persistency” (from lower lapses and lower mortality) leads to more policyholders than expected reaching the prime claim years. In many cases, three times more policyholders have their policies at these ages than were expected when pricing took place. Companies currently have a good handle on these easy-to-measure factors, and there’s little flexibility needed when analyzing these areas.
Morbidity, on the other hand, has been much more difficult to track and measure. Even without the complication of COVID, there was great uncertainty on how incidence rates would compare to pricing expectations for prime claims ages of 85 and above. There was just very little data for these ages (remember, a lot of these policies were purchased by those aged 55 to 60). And COVID delayed helpful data being produced.
The MSA Framework contains a statement, “In applying professional judgement (e.g., when considering the extent to which less-than-fully credible older-age morbidity should be projected to cause adverse experience), a balanced approach is applied as opposed to denying a rate increase, which could lead to a spike in the future, or approving the rate increase as if there was full credibility, which could lead to rates that could be too high.”[9]
This is typically the No. 1 area where judgment is applied by the MSA Team, in part because some companies will give themselves “full credit” for future expectations where there is uncertainty about future expectations.
Benefit utilization is another difficult area. Projections (a key part of rate increase analysis) rely on predictions of future cost-of-care inflation. Future cost-of-care inflation is a key component of future benefit utilization; for example, it determines whether daily cost of care will be 70% or 80% of the daily maximum benefit in the year 2035.
Present value of future claims is the numerator of the lifetime loss ratio metric, which tends to be a basis of a rate increase request. Therefore, any tweak to inflation assumptions could have a drastic impact on LLR and the resulting rate increase request. Judgment in this area will continue to evolve, with the MSA Team, like in other areas, taking a balanced approach.
KB: One of the objectives the commissioners set out for the MSA Team in 2019, which is reinforced in the December 2025 amendment,[10] was to reduce the degree of cross-state rate subsidization, where policyholders in states that allow higher rate increases subsidize policyholders in states that allowed no or lower rate increases. The MSA Team’s recommendation results in the same rate per unit in each state going forward, leading to higher percentage rate increases in states that approved lower rate increases in the past. While not restoring lifetime equity, this creates more equity going forward. I presume the catch-up increases could be quite high at times. Are you finding that states are being more creative in how rate increases are rolled out? For example, is it becoming more common for insurers and states to roll out gradual annual rate increases going forward, rather than one shock rate increase?
FA: The term “cross-state rate subsidization” has become commonly used and is mentioned in the MSA Framework. However, I’ll clarify that we would not approve rate increases higher than determined with our methodology due to other states approving lower or no rate increases. I prefer thinking of it simply as differences in rate increase approvals. As mentioned, desiring more consistency as opposed to continuing these state-by-state differences was a primary driver of the MSA effort.
And as you said, the realistic goal is improvement in this area and not perfection.
Each state has flexibility on whether and how to have companies phase in large rate increases. Typically, actuarial equivalence is desired between a one-time increase and a phased-in increase. It’s also very important that any phase-in be communicated up front to policyholders so they can make educated decisions on whether to take an RBO in lieu of paying the increased rates.
For instance, if the company and state had an understanding that 20% rate increases would likely be phased in or approved for the next few years, but the policyholder was only aware of the first 20%, that policyholder would be making an RBO decision based on incomplete information.
If a company has a solvency concern, consideration of a higher phase-in amount (over a “typical case” phase-in amount) may be warranted. The MSA Framework also contemplates waiving part or all of the additional cost-sharing if a company’s solvency position is dependent on a certain level of rate increase approval.
I believe it’s important for commissioners to have the flexibility to handle the various types of situations resulting from LTC distress. Having statutes that limit this flexibility could result in unintended consequences harming policyholders and the LTC market.
KB: Fred, the recent popularity of combination products, where long-term care needs trigger early payments from a life insurance product, has somewhat mitigated the number of seniors that will be affected down the road by the rate increase concerns that you and the NAIC are currently dealing with. This is mainly because life insurance products cannot make rate increase requests on in-force policies, but also because there is far less assumption risk when the payments are placed in combination (especially in whole life products, as we are all going to die eventually). That said, I see that a lot of recent combination products are designed to add much of this long-term care assumption risk back in, such as by allowing for higher long-term care payments than the life insurance face amount or by adding the ability of the policyholder to buy more benefit if they have triggered a long-term care payment. And I know you have long been an advocate for the availability of long-term care insurance in a standalone situation, since the premiums are typically far lower than with combination products. Do you have any words of wisdom to actuaries working on combination products?
FA: My only advice at this point is for actuaries pricing combination products to understand the history of standalone LTC, including any uncertainty about assumptions and the impact over a long-time horizon if those assumptions turn out to be wrong.
KB: Fred, you and others at the NAIC have spent an incredible amount of time and effort on the long-term care insurance rate topic. Are there any closing comments you would like to share on things you have learned over the years, both in terms of actuarial practice and in terms of the importance of the long-term care insurance product?
FA: One lesson is that when innovative product types are developed, it’s important for actuaries across product lines to come together to share their expertise when pricing the product. LTC has aspects of health (with a morbidity component) and aspects of life (with a long-term focus including substantial impact from policyholder behavior and investment returns). It’s possible that issues with LTC issued in the early 1990s started when these different areas of expertise were not integrated into the pricing and risk analysis process.
Along the same lines, it’s important for pricing and valuation actuaries to be on the same page as any type of innovation takes place that can impact insurers’ finances. Pricing and solvency are intertwined, and actuaries are equipped to anticipate issues before they occur.
KB: On behalf of the Society of Actuaries, thank you, Fred, for sharing your thoughts with us. And thank you for over a decade of thoughtful leadership and proactive collaboration on this important topic.
This article is provided for informational and educational purposes only. Neither the Society of Actuaries nor the respective authors’ employers make any endorsement, representation or guarantee with regard to any content, and disclaim any liability in connection with the use or misuse of any information provided herein. This article should not be construed as professional or financial advice. Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.
Kristi Bohn, FSA, MAAA, is senior vice president and chief actuary for US Group Reinsurance at RGA. Kristi can be reached at kristi.bohn@rgare.com.
Fred Andersen, FSA, MAAA, is chief life actuary at the Minnesota Department of Commerce. Fred can be reached at frederick.andersen@state.mn.us.
Endnotes
[1] National Association of Insurance Commissioners, “Long-Term Care Insurance Multistate Rate Review Framework,” NAIC, draft as of December 12, 2021, https://content.naic.org/sites/default/files/national_meeting/EX-Plenary_AvailableMaterials_0.pdf.
[2] Interstate Insurance Product Regulation Commission, https://www.insurancecompact.org/. The Insurance Compact (or the “Compact”) promotes efficiency in the way insurance products are filed, reviewed and approved, allowing consumers to have faster access to competitive insurance products. The Compact serves as a central point of electronic filing for certain insurance products, including life insurance, annuities, disability income and long-term care insurance, that are reviewed for compliance pursuant to comprehensive and detailed uniform product standards developed and adopted by member states.
[3] National Association of Insurance Commissioners, “Long-Term Care Actuarial (B) Working Group,” NAIC, n.d., https://content.naic.org/committees/b/long-term-care-actuarial-wg. This working group is charged with providing actuarial guidance on LTCI rate adequacy, rating practices and rate changes; advancing PBR-based reserving requirements for health insurance (VM-25); developing LTCI experience reporting standards (VM-50 and VM-51); monitoring and refining the MSA actuarial methodology; and evaluating the effectiveness of the MSA process, including state rate review actions.
[4] National Association of Insurance Commissioners, “Long-Term Care Insurance Multistate Rate Review Framework,” NAIC, December 2025, https://content.naic.org/sites/default/files/documents/ltci-msa-framework.pdf.
[5] ProgramBusiness, “NAIC Prioritizes Long-Term Care Insurance,” April 2019, https://programbusiness.com/news/naic-prioritizes-long-term-care-insurance/. The Long‑Term Care Insurance Task Force was charged with developing a consistent national approach for reviewing LTCI rate increases, with the explicit aim of having actuarially appropriate increases granted in a timely manner and eliminating cross‑state rate subsidization.
[6] NAIC Center for Insurance Policy and Research, “Reduced Benefit Options in Long-Term Care Insurance,” NAIC, updated May 21, 2025, https://content.naic.org/sites/default/files/cipr-report-ltci-rbos.pdf.
[7] SERFF stands for the System for Electronic Rate and Form Filing and is the NAIC-based platform used by insurers to submit rates and policy forms to state regulators for approval.
[8] Genworth, “Genworth’s 2021 Cost of Care Survey: Long-Term Care Costs Continue to Rise,” February 16, 2022, https://investor.genworth.com/news-events/press-releases/detail/64/genworths-2021-cost-of-care-survey-long-term-care-costs.
[9] NAIC, “Long-Term Care Insurance Multistate Rate Review Framework.”
[10] NAIC, “Long-Term Care Insurance Multistate Rate Review Framework,” 1, 11, 29.