Up until the changes went into effect over the weekend, there had been a hole in Missouri law.
“A refund for what you don’t use? It sounds like a basic concept. But until now, this simple concept was not required by Missouri law,” Governor Nixon said.
At least not when it came to long-term care and Medigap insurance policies. Other types of policies were protected by law, but not those.
“Here’s how it will work. If a consumer pays a year’s worth of long-care premiums, then cancels after six months, that consumer will get a refund of six months worth of premiums. These premiums can easily be $150, $200 or more per month. So we’re talking about a significant amount of money in refunds,” Nixon said.
As spelled out in S.B. 583, that refund will have to be paid to the consumer within 20 days.
“This change gives seniors the flexibility to switch insurance policies as their needs change and not lose those payments they’ve made for future coverage,” Nixon said.
John Huff, the Director of the Department of Insurance says this will help seniors, but also a wider range of Missourians.
“Typically when you think of long-term care products, you’re thinking of seniors most likely over the age of 80 or 85. But long-term care products are products that are being sold to people in the ages of 40 to 50 as you prepare for the ‘silver tsunami,’ if you will, that’s coming,” Huff said.
The Department of Insurance will be responsible for enforcing the new law, and Huff says work starts this week.
“First, the department will review any new insurance policies offering long-term care and Medigap providers to make sure their cancellation policies comply with the new requirements on unearned premiums. All long-term care and Medigap insurers must file these standard policy terms with the Department and have our approval before selling them to consumers,” Huff said.
The law will affect future policies or ones renewed after January 1st.