Downing Orders Long-Term Care Company to Cease Rate Hikes

csimt 2022, Insurance, NAIC, Press Release

Commissioner Downing Orders Senior Health Insurance Company to Cease Unapproved Premium Increases and Benefit Reductions

Downing Joins Suit Against Pennsylvania Court

Helena, Mont.- Commissioner of Securities and Insurance Troy Downing has ordered long-term care insurer, Senior Health Insurance Company of Pennsylvania (SHIP), to immediately stop forcing Montana policyholders to choose between exorbitant premium increases or severe benefit reductions.

Earlier this year, 141 Montana SHIP policyholders received “Coverage Election Packets,” requiring them to choose between reduced benefits or increased rate premiums. The average premium increase for Montana SHIP policyholders is 70%, while some face increases of nearly 600%. For example, a 77-year-old Montanan who has paid premiums for 21 years faces a 412% increase amounting to almost an $8,000 rise in annual premiums. The average Montana policyholder has paid premiums for 25 years and is 88 years old.

“These unapproved rate increases could force senior citizens to choose between the long-term care they rely on or their financial security.” Commissioner Downing continues, “In complete disregard for Montana law, SHIP placed their financial burdens on the backs of their customers by giving them an ultimatum ─ pay up or lose your benefits.” 

In violation of Montana law, SHIP issued election packages to customers that were not submitted, reviewed, or approved by the Office of the Commissioner of Securities and Insurance (CSI). Further, CSI alleges SHIP engaged in unfair and deceptive acts and practices intended to mislead policyholders and misrepresent the benefits, conditions, and terms of SHIP’s policies.

SHIP has been insolvent since 2019 with a reported deficit of approximately half a billion dollars. In January 2020, SHIP was placed into rehabilitation by the Pennsylvania Insurance Commissioner. Per the Rehabilitation Plan, approved by a Pennsylvania court, SHIP increased premiums and cut benefits in Montana without approval from CSI.

Joining nearly thirty states, Commissioner Troy Downing has asked the Pennsylvania Supreme Court to strike down SHIP’s rehabilitation plan arguing the plan circumvents and violates Montana law, threatens state sovereignty, and needlessly hurts policyholders.

“This is about protecting consumers and standing strong to maintain state sovereignty. The Pennsylvania court’s decision to allow an out-of-state company to circumvent Montana law threatens the foundation of state-based regulation and the Montana insurance market.” Commissioner Downing said, “The rehabilitation plan approved by the Pennsylvania court places the wants of this failing insurance company over the needs of senior citizens. By not allowing this company to fall into liquidation, policyholders are denied protections under Montana’s insurance guaranty association.” 

SHIP policyholders have until March 15, 2022, to choose between reduced coverage or higher premiums with an effective date of April 1. Policyholders who do not make an election will be imposed a choice by SHIP.

“The Pennsylvania Supreme Court will not decide this case until after March 15. I advise all SHIP customers to find an option that best fits their needs and return their election packet before the deadline. Please do not hesitate to contact our agency for assistance when making this decision.” Downing continues, “Rest assured, protecting Montanans is our prime directive.”

SHIP policyholders are encouraged to contact the CSI with questions regarding their coverage and file a complaint with our agency. Our team can be reached at 444-2040 or by going to CSIMT.gov.