managing your practice
TRAINING
Solving the LTCI Puzzle
If you sell long-term-care insurance, you must navigate
each state’s requirements for advisor education.
For the first time in a generation,
the average American consumer’s
basic assumptions about financial
models and outcomes have been turned
upside down. Humbled by the erosion
in the value of their 401(k) plans and
faced with uncertainty, they are looking
for trustworthy advice to guide them
safely to their retirement goals.
Responsible producers are careful
to address the potential risk of long-term-care expenses. One tool available
to advisors is the long-term-care insurance (LTCI) policy, a joint insurer-Medicaid initiative to encourage the
use of private insurance for LTC
expenses. But this opportunity comes
with a mandatory training requirement
that has raised the bar for producers
who want to offer this product.
Historic requirement
This historic pre-sales training requirement has its roots in the Deficit Reduction Act (DRA), signed into law in
mid-2006. Among other things, this
legislation required states wishing to
implement an LTCI partnership program
to require producer training.
Meanwhile, the National Association
of Insurance Commissioners (NAIC)
drafted an eight-hour training requirement for all long-term-care producers
for its Long-Term-Care Model Act,
implemented at the end of 2006. NAIC
added language to the training template
to make the requirement compatible with
the DRA.
Things developed quickly. By the end
of April 2009, 30 states had implemented mandatory training, and several
others were preparing to do so. As states
began implementing the training template from the Model Act, key differences
quickly emerged among their programs.
Some require resident
producers to take a course
in their resident state, while
others allow their producers to complete a course in any licensed state. For
example, Iowa introduced a four-hour
training requirement, while Colorado
required 16 hours.
These regulations have been communicated to the industry in different ways.
Some states added mandatory LTCI
training through the legislative process
or insurance department bulletins,
while others conducted a rule-making
process but never formally published
their requirements, relying, instead, on
department employees to notify insurers, training providers and producers.
But a larger issue trumped all the
others: Unlike other types of professional insurance education, insurance
carriers were made responsible for validating producer compliance with LTCI
mandatory training requirements—not
the state insurance department. So the
entire industry must look to LTCI carriers to decipher and communicate the
training requirements.
Cracking the code
How can you, as an advisor, comply
with LTCI training requirements to fulfill
your fiduciary responsibility to address
the financial risks your clients face?
It’s complex, but here are some tips for
doing so.
■
First, check with each carrier you
represent to determine the training
requirements in the states in which
you sell LTCI and whether specific
courses are required.
■
If you represent LTCI in more
than one state, study each state’s
requirements and develop a course-
| By Bill Wienhoff
selection strategy that works for
you. This isn’t as straightforward as
it sounds. For example, if an advisor
lives in Illinois and also serves clients
in Wisconsin, she must take an Illinois
course and an additional two-hour
Wisconsin course. She might be
tempted to take a Wisconsin course
and claim reciprocal credit in Illinois;
however, Illinois requires resident
producers to take an Illinois course,
so this strategy would require the producer to take two eight-hour courses.
■
If you are a multistate producer, you
must complete a course in a state with
an NAIC training requirement for
other states to offer reciprocal credit.
■
Make a training file for each state in
which you represent LTCI. Keep a list
of the state’s training requirements
and note any differences in interpretation between represented carriers.
Also, retain copies of course-com-pletion certificates that count for the
state, along with copies of applicable
Medicaid and partnership regulations
in the state.
■
Pay close attention to the date by
which you must complete a follow-up course to maintain your qualified
status. For multistate representatives,
this is the first date on which your
qualification status will expire in a
represented state.
Bill Wienhoff is president of ClearCert.com,
which helps LTCI carriers demystify mandatory producer-training responsibilities. Contact
him at bill.wienhoff@clearcert.com.
