Recent state and federal training mandates for long term care insurance (LTCI) have created a perfect compliance storm for producers. Today, the industry is struggling to make sense of the LTCI training dilemma in order to continue making this product available to consumers who are largely unprotected against the risk of catastrophic long term care expenses.
Meet Josephine, an Iowa agent who is also licensed to represent long term care insurance (LTCI) in Kansas, Missouri, and Texas. She is planning to take an Iowa-approved course; both the training firm offering the course and one of her carriers assure her that the other three states would accept the course through reciprocity. Just to be on the safe side, she contacts a second carrier. Now, she’s told that, because the course is less than eight hours long, it would only be accepted in Iowa and Kansas — not in Missouri or Texas, which require a longer course.
Meanwhile, Fletcher, a Montana resident also licensed in Nebraska, completes an initial eight-hour course in his home state on March 1, 2008 — well before either state’s deadline. Montana doesn’t require Fletcher to complete a four-hour follow-up course until July 1, 2010. However, Nebraska requires him to do so within 24 months of the initial course, so he must take follow-up training no later than March 1, 2010 to maintain his qualified status in both states.
What’s going on here? State departments of insurance, training providers, and insurance carriers all seem to offer conflicting information about mandatory LTCI producer training. Producers selling LTCI in their resident state now have a new important deadline to put on their calendars, while those selling LTCI in multiple states wonder whether they must take eight-hour and four-hour courses in each state.
Differences in state training requirements
As of Jan. 1, 2009, 29 states had implemented some version of the NAIC long term care training requirements that apply to some or all of their LTCI producers. Several others have retained long term care training requirements that were previously in place, including the four original states that implemented programs in the 1980s — Indiana, California, New York, and Connecticut. However, states have not consistently implemented the NAIC template, leaving producers in the midst of a morass of confusing training requirements.
Here is just a sampling of some of the key differences:
- Initial training course lengths vary between four hours (Iowa) and 16 hours (Colorado).
- Twelve states added state-specific content to the NAIC outline. Of these, seven require resident producers to complete a course in their resident state, while the remaining five allow resident producers to claim reciprocal credit for a course taken in another state.
- Three states accepting the standard NAIC outline require resident producers to complete a course in their home state.
- Twenty states require producers to complete a follow-up course within 24 months of completing initial training. The remaining states established fixed deadlines or tied the deadline to their license renewal cycles.
Several states quickly revisited their original requirements and made changes: Ohio added state-specific content and a requirement that residents complete an Ohio course six months after announcing its program. Florida enacted — then retracted — a two-hour state-specific course requirement for producers who took a non-Florida course.
After announcing an eight-hour training requirement in January 2008, the Pennsylvania Department of Insurance decided in September 2008 that the requirement was not yet effective because the state legislature had yet to determine required course content.
LTCI carriers
Because LTCI carriers are accountable for producer training, they must determine the program parameters each time a state issues mandatory training requirements. General training requirements were enacted by law in most states, with insurance departments providing additional details as to course content and reciprocity standards. But while some states communicated their requirements through formal insurance bulletins or Web site content, others communicated some or all program details informally through email and telephone calls to industry stakeholders. In some cases, training providers received more complete information about mandatory training than carriers did. The carriers quickly discovered that there are a lot of gray areas in the training requirements.
Problems arise when different carriers come to different conclusions about a state’s requirements. For example, Carrier A decides that long term care training completed in a non-NAIC state is acceptable through reciprocity, while Carrier B decides that only NAIC course completions are valid. Producers can’t take the chance that a represented carrier won’t accept a training completion, because a submitted contract could be returned or held up until the producer completes a course that the carrier will accept. This outcome penalizes everyone, especially the consumer who wants and is willing to purchase the protection.
Preventing unintended consequences
Mandatory training is designed to ensure that producers can properly educate consumers about LTCI and partnership policies. However, it may seem as if producers themselves need training in order to figure out what the training requirements really are. Producers who can’t or don’t want to make the effort to solve the training puzzle may simply decide to stop writing LTCI altogether.
Thankfully, there is a solution to the conundrum of mandatory LTCI training. By following several commonsense guidelines, producers can ensure they take the right training and do not take more training than they need. So if you’re confused about training requirements, you’ll want to take the following steps.
- Take a course in your resident state if possible. This will qualify you to represent LTCI in the maximum number of states, and, of course, you may earn CE credit for your completion. If CE credits are optional, choose them — some carriers may require an official CE certificate instead of the “completion certificate” you will otherwise receive.
If your resident state has not yet enacted mandatory training requirements but you represent in a non-resident state that has, take a course in the non-resident state. There’s a good chance your completion will be accepted by your resident state if it does implement mandatory training in the future.
- If you are licensed in multiple states, find out in which states your course completion will qualify you to sell LTCI. Once again, remember that your carrier is the ultimate arbiter of whether a course taken in one state will qualify you to sell LTCI in another state, so always check and double check if necessary.
- Create a training file for every LTCI-licensed state in which you do business. Keep notes about each state’s requirements and place in each applicable folder a copy of the course completion certificate that qualifies you to sell LTCI. In other words, if you complete a course in your resident state of Missouri and you also sell LTCI in Illinois, Iowa, and Nebraska — states in which your carriers will accept your Missouri completion through reciprocity — place a copy of the completion certificate in your file on each of those states.
- Take a four-hour follow-up course before your qualified status expires in any licensed state. If you’re licensed in multiple states, remember that because the follow-up course deadlines differ between states, it’s possible that your qualified status will expire in one state before it expires in another. Review each state’s rules and determine the earliest expiration date; then, be sure you complete your follow-up course by this date.
As the industry continues to work through the various challenges presented by mandatory LTCI training, it’s important to remember the opportunity that these recent developments represent. Federal and state governments are leading the charge to convince consumers to rely upon private, not public, insurance against the risk of long term care expenses. Professional LTCI producers who meet the new training requirements, then, will be uniquely positioned to make the most of this opportunity as they help their clients address a critical financial risk.
Bill Wienhoff is the founder of the Compliance Certification Clearinghouse LLC, a clearinghouse of information related to mandatory LTCI training. He can be reached at info@clearcert.com.