This subchapter shall be known and may be cited as the “Long-Term Care Insurance Act of 2005”.
The purpose of this subchapter is to:
(1) Promote the public interest;
(2) Promote the availability of long-term care insurance policies;
(3) Protect applicants for long-term care insurance from unfair or deceptive sales or enrollment practices;
(4) Establish standards for long-term care insurance;
(5) Facilitate public understanding and comparison of long-term care insurance policies; and
(6) Facilitate flexibility and innovation in the development of long-term care insurance coverage.
(a) The requirements of this subchapter apply to policies delivered or issued for delivery in this state on or after August 12, 2005.
(b) Except as provided in subsection (c) of this section, this subchapter is not intended to supersede the obligations to comply with other applicable insurance laws that do not conflict with this subchapter.
(c) Laws and regulations designed and intended to apply to Medicare supplement insurance policies shall not be applied to long-term care insurance.
As used in this subchapter:
(1) “Applicant” means:
(A) In the case of an individual long-term care insurance policy, the person who seeks to contract for benefits; and
(B) In the case of a group long-term care insurance policy, the proposed certificate holder;
(2) “Association” means a professional, trade, or occupational association or associations, if the association:
(A) Is composed entirely of individuals that are or were actively engaged in the same profession, trade, or occupation; and
(B) Has been maintained in good faith for purposes other than obtaining insurance;
(3) “Certificate” means any certificate issued under a group long-term care insurance policy delivered or issued for delivery in this state;
(4) “Commissioner” means the Insurance Commissioner;
(5) “Federally tax-qualified long-term care insurance contract” means:
(A) An individual or group insurance contract that meets the following requirements of section 7702B(b) of the Internal Revenue Code of 1986:
(i)(a) The only insurance protection provided under the contract is coverage of qualified long-term care services.
(b) A contract satisfies the requirements of this subdivision (5)(A)(i) even though payments are made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate;
(ii)(a) The contract does not pay or reimburse expenses incurred for services or items to the extent that the expenses:
(1) Are reimbursable under Title XVIII of the Social Security Act; or
(2) Would be reimbursable but for the application of a deductible or coinsurance amount.
(b) The requirements of this subdivision (5)(A)(ii) do not apply to expenses that are reimbursable under Title XVIII of the Social Security Act only as a secondary payor.
(c) A contract satisfies the requirements of this subdivision (5)(A)(ii) even though payments are made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate;
(iii) The contract is guaranteed renewable under section 7702B(b)(1)(C) of the Internal Revenue Code of 1986;
(iv) The contract does not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed, except as provided in subdivision (5)(A)(v) of this section;
(v) All refunds of premiums, policyholder dividends, or similar amounts under the contract are to be applied as a reduction in future premiums or to increase future benefits, except that a refund in the event of the death of the insured or a complete surrender or cancellation of the contract cannot exceed the aggregate premiums paid under the contract; and
(vi) The contract meets the consumer protection provisions set forth in section 7702B(g) of the Internal Revenue Code of 1986; or
(B) The portion of a life insurance contract that provides long-term care insurance coverage by rider or as part of the contract and that satisfies the requirements of sections 7702B(b) and 7702B(e) of the Internal Revenue Code of 1986;
(6) “Group long-term care insurance” means a long-term care insurance policy that is delivered or issued for delivery in this state and issued for the benefit of its current, former, or retired employees or members to one (1) or more:
(A) Employers, labor organizations, associations, or a trust or to the trustees of a fund established by one (1) or more employers or labor organizations; or
(B) Any other group if the commissioner finds that the issuance of the group policy:
(i) Is not contrary to the best interest of the public;
(ii) Results in economies of acquisition or administration; and
(iii) Results in benefits that are reasonable in relation to the premiums charged;
(7)(A) “Long-term care insurance” means any insurance policy or rider advertised, marketed, offered, or designed to provide coverage for one (1) or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services:
(i) For not less than twelve (12) consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other basis; and
(ii) Provided in a setting other than an acute care unit of a hospital.
(B) “Long-term care insurance” includes, but is not limited to:
(i) Group and individual annuities and life insurance policies or riders that provide directly or supplement long-term care insurance;
(ii) A policy or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity; and
(iii) Qualified long-term care insurance contracts.
(C) Long-term care insurance may be issued by:
(i) Insurers;
(ii) Fraternal benefit societies;
(iii) Nonprofit health, hospital, and medical service corporations;
(iv) Prepaid health plans;
(v) Health maintenance organizations; or
(vi) Any similar organization to the extent that the organization is otherwise authorized to issue life or health insurance.
(D) “Long-term care insurance” shall not include any insurance policy that is offered primarily to provide:
(i) Basic Medicare supplement coverage;
(ii) Basic hospital expense coverage;
(iii) Basic medical-surgical expense coverage;
(iv) Hospital confinement indemnity coverage;
(v) Major medical expense coverage;
(vi) Disability income or related asset-protection coverage;
(vii) Accident-only coverage;
(viii) Specified disease or specified accident coverage; or
(ix) Limited benefit health coverage.
(E) “Long-term care insurance” does not include life insurance policies:
(i) That accelerate the death benefit specifically for:
(a) One (1) or more of the qualifying events of terminal illness; or
(b) Medical conditions requiring extraordinary medical intervention or permanent institutional confinement;
(ii) That provide the option of a lump-sum payment for those benefits; and
(iii) When neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long-term care.
(F) Notwithstanding any other provision of this subchapter, any product advertised, marketed, or offered as long-term care insurance is subject to the provisions of this subchapter;
(8) “Policy” means any policy, contract, subscriber agreement, rider, or endorsement delivered or issued for delivery in this state by:
(A) An insurer;
(B) A fraternal benefit society;
(C) A nonprofit health, hospital, medical service corporation, or hospital medical service corporation;
(D) A prepaid health plan;
(E) A health maintenance organization; or
(F) Any similar organization; and
(9) “Qualified long-term care insurance contract” means the same as “federally tax-qualified long-term care insurance contract”.
(a) Prior to advertising, marketing, or offering a policy within this state, an association or the insurer of the association shall file evidence with the Insurance Commissioner that the association has:
(1) A minimum of one hundred (100) persons;
(2) Been organized and maintained in good faith for purposes other than that of obtaining insurance;
(3) Been in active existence for at least one (1) year; and
(4) Had a constitution and bylaws providing that:
(A) The association holds regular meetings not less than annually to further purposes of the members;
(B) Except for credit unions, the association collects dues or solicits contributions from members; and
(C) The members have voting privileges and representation on the governing board and committees.
(b) Thirty (30) days after the filing, the association or associations will be deemed to satisfy the organizational requirements unless the commissioner makes a finding that the association or associations do not satisfy those organizational requirements.
No group long-term care insurance coverage may be offered to a resident of this state under a group policy issued in another state unless this state or another state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in this state determines that the definition of “group long-term care insurance” under § 23-97-304 has been met.
(a) The Insurance Commissioner may adopt regulations for long-term care insurance that include, but are not limited to, standards for full and fair disclosure addressing:
(1) The manner, content, and required disclosures for the sale of long-term care insurance policies;
(2) Terms of renewability;
(3) Initial and subsequent conditions of eligibility;
(4) Nonduplication of coverage provisions;
(5) Coverage of dependents;
(6) Preexisting conditions;
(7) Termination of insurance;
(8) Continuation or conversion of coverage;
(9) Probationary periods;
(10) Limitations, exceptions, reductions, and elimination periods;
(11) Requirements for replacement;
(12) Recurrent conditions; and
(13) Definitions of terms.
(b) No long-term care insurance policy shall:
(1) Be cancelled, not renewed, or otherwise terminated because of age or the deterioration of the mental or physical health of the insured individual or certificate holder;
(2) Contain a provision establishing a new waiting period in the event existing coverage is converted to or replaced by a new or other form of coverage within the same company, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder; or
(3) Provide coverage for skilled nursing care only or provide significantly more coverage for skilled care within a facility than coverage for lower levels of care.
(a) No long-term care insurance policy or certificate other than a policy or certificate issued to a group approved by the Insurance Commissioner under § 23-97-304(6)(B) shall:
(1) Use a definition of “preexisting condition” that is more restrictive than the following: “Preexisting condition” means a condition for which medical advice or treatment was recommended by or received from a provider of health care services within six (6) months preceding the effective date of coverage of an insured person; or
(2) Exclude coverage for a loss or confinement that is the result of a preexisting condition unless the loss or confinement begins within six (6) months following the effective date of coverage of an insured person.
(b) The commissioner may extend the limitation periods set forth in subsection (a) of this section for specific age group categories in specific policy forms upon finding that the extension is in the best interest of the public.
(c)(1) The definition of “preexisting condition” does not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant when underwriting in accordance with the insurer's established underwriting standards.
(2) Unless otherwise provided in the policy or certificate, a preexisting condition, regardless of whether it is disclosed on the application, need not be covered until the waiting period described in subdivision (a)(2) of this section expires.
(3) No long-term care insurance policy or certificate may exclude or use waivers or riders of any kind to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions beyond the waiting period described in subdivision (a)(2) of this section.
(a) No long-term care insurance policy shall be delivered or issued for delivery in this state if the policy:
(1) Conditions eligibility for any benefits on a prior hospitalization requirement;
(2) Conditions eligibility for any benefits provided in an institutional care setting on the receipt of a higher level of institutional care; or
(3) Conditions eligibility for any benefits other than waiver of premium, post-confinement, post-acute care, or recuperative benefits on a prior institutionalization requirement.
(b)(1) A long-term care insurance policy containing post-confinement, post-acute care, or recuperative benefits shall clearly label in a separate paragraph of the policy or certificate entitled “Limitations or Conditions on Eligibility for Benefits” the limitations or conditions, including any required number of days of confinement.
(2) A long-term care insurance policy or rider that conditions eligibility for noninstitutional benefits on the prior receipt of institutional care shall not require a prior institutional stay of more than thirty (30) days.
(c) No long-term care insurance policy or rider that provides benefits only following institutionalization shall condition such benefits upon admission to a facility for the same or related conditions within a period of less than thirty (30) days after discharge from the institution.
(a) The Insurance Commissioner may adopt rules establishing loss ratio standards for long-term care insurance policies.
(b) A specific reference to long-term care insurance policies shall be contained in the rules.
(a) Long-term care insurance applicants shall have the right to return the policy or certificate within thirty (30) days of its delivery and to have the premium refunded if after examination of the policy or certificate the applicant is not satisfied for any reason.
(b) Long-term care insurance policies and certificates shall contain a notice prominently printed on or attached to the first page stating in substance that the applicant shall have the right to return the policy or certificate within thirty (30) days of its delivery and to have the premium refunded if after examination of the policy or certificate the applicant is not satisfied for any reason.
(c) If an application is denied, the issuer shall refund to the applicant any premium and any other fee paid by the applicant to apply within thirty (30) days of the denial.
(a)(1) An outline of coverage shall be delivered to a prospective applicant for long-term care insurance at the time of initial solicitation through means that prominently direct the attention of the recipient to the outline of coverage and its purpose.
(2) The Insurance Commissioner shall prescribe a standard format for the outline, including style, arrangement, overall appearance, and content.
(3) In the case of agent solicitations, an agent shall deliver the outline of coverage prior to the presentation of an application or enrollment form.
(4) In the case of direct response solicitations, the outline of coverage shall be presented in conjunction with any application or enrollment form.
(5)(A) In the case of a policy issued to a group approved by the commissioner under § 23-97-304(6)(B), an outline of coverage shall not be required to be delivered if the information described in subsection (b) of this section is provided to applicants in other materials relating to enrollment.
(B) Materials relating to enrollment shall be made available to the commissioner upon request.
(b) The outline of coverage shall include:
(1) A description of the principal benefits and coverage provided in the policy;
(2) A statement of the principal exclusions, reductions, and limitations contained in the policy;
(3)(A) A statement of the terms under which the policy or certificate, or both, may be continued in force or discontinued, including any reservation in the policy of a right to change premium.
(B) Continuation or conversion provisions of group coverage shall be specifically described;
(4) A statement that the outline of coverage is a summary only, not a contract of insurance, and that the policy or group master policy contains governing contractual provisions;
(5) A description of the terms under which the policy or certificate may be returned and premium refunded;
(6) A brief description of the relationship between cost of care and benefits; and
(7) A statement that discloses to the policyholder or certificate holder whether the policy is intended to be a federally tax-qualified long-term care insurance contract under section 7702B(b) of the Internal Revenue Code of 1986.
A certificate issued for delivery in this state under a group long-term care insurance policy shall include:
(1) A description of the principal benefits and coverage provided in the policy;
(2) A statement of the principal exclusions, reductions, and limitations contained in the policy; and
(3) A statement that the group master policy determines governing contractual provisions.
(a) If an application for a long-term care insurance contract or certificate is approved, the issuer shall deliver the contract or certificate of insurance to the applicant no later than thirty (30) days after the date of approval.
(b)(1) At the time of the delivery of the policy, a policy summary shall be delivered for an individual life insurance policy that provides long-term care benefits within the policy or by rider.
(2) In the case of direct response solicitations, the insurer shall deliver the policy summary upon the applicant's request or at the time of policy delivery, whichever first occurs.
(3) The summary shall comply with all applicable requirements and include:
(A) An explanation of how the long-term care benefit interacts with other components of the policy, including deductions from death benefits;
(B) An illustration of the amount of benefits, the length of benefit, and the guaranteed lifetime benefits, if any, for each covered person;
(C) Any exclusions, reductions, and limitations on long-term care benefits; and
(D) A statement that any long-term care inflation protection option, if required by rules and regulations of the Insurance Commissioner, is not available under the policy.
(4) If applicable to the policy type, the summary shall also include:
(A) A disclosure of the effects of exercising other rights under the policy;
(B) A disclosure of guarantees related to long-term care costs of insurance charges; and
(C) Current and projected maximum lifetime benefits.
(a) Any time a long-term care benefit funded through a life insurance vehicle by the acceleration of the death benefit is in benefit payment status, a monthly report shall be provided to the policyholder.
(b) The report shall include:
(1) Any long-term care benefits paid out during the month;
(2) An explanation of any changes in the policy, including, but not limited to, death benefits or cash values, due to the payment of long-term care benefits; and
(3) The remaining amount of long-term care benefits.
If a claim under a long-term care insurance contract is denied, within sixty (60) days of the date of a written request by the policyholder or certificate holder or a representative of the policyholder or certificate holder, the issuer shall:
(1) Provide a written explanation of the reasons for the denial; and
(2) Make available all information directly related to the denial.
Any policy or rider advertised, marketed, or offered as long-term care or nursing home insurance shall comply with the provisions of this subchapter.
(a) An insurer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim if:
(1) The long-term care insurance policy or certificate has been in force for less than six (6) months and the insurer relied upon a material misrepresentation in providing coverage; or
(2) The long-term care insurance policy or certificate has been in force for at least six (6) months but less than two (2) years and the insurer relied upon a material misrepresentation in providing coverage that pertains to the condition for which benefits are sought.
(b) A policy or certificate that has been in force for two (2) years or more may be contested only by showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured's health.
(c)(1) No long-term care insurance policy or certificate may be field issued based on medical or health status.
(2) As used in this section, “field issued” means issued by an agent or a third-party administrator under the underwriting authority granted to the agent or third-party administrator by an insurer.
(d) If an insurer has paid benefits under the long-term care insurance policy or certificate, the benefit payments may not be recovered by the insurer if the policy or certificate is rescinded.
(e)(1) Except as provided in subdivision (e)(2) of this section, this section shall apply to all life insurance policies that accelerate benefits for long-term care.
(2)(A) In the event of the death of the insured, this section shall not apply to the remaining death benefit of a life insurance policy that accelerates benefits for long-term care.
(B) The remaining death benefit shall be governed by § 23-81-105.
(a)(1) Except as provided in subsection (b) of this section, a long-term care insurance policy may not be delivered or issued for delivery in this state unless the policyholder or certificate holder has been offered the option of purchasing a policy or certificate containing a nonforfeiture benefit.
(2) The offer of a nonforfeiture benefit may be in the form of a rider that is attached to the policy.
(3) If the policyholder or certificate holder declines the nonforfeiture benefit, then the insurer shall provide a contingent benefit upon lapse that shall be available for the period of time specified by the Insurance Commissioner following a substantial increase in premium rates.
(b)(1) When a group long-term care insurance policy is issued, the offer required in subsection (a) of this section shall be made to the group policyholder.
(2) However, if the policy is issued as group long-term care insurance as defined under § 23-97-304(6)(B), other than to a continuing care retirement community or similar entity, then the offering shall be made to each proposed certificate holder.
(c) The commissioner shall promulgate rules specifying:
(1) The type or types of nonforfeiture benefits to be offered as part of long-term care insurance policies and certificates;
(2) The standards for nonforfeiture benefits; and
(3) The rules regarding contingent benefit upon lapse, including a determination of the specified period of time during which a contingent benefit upon lapse will be available and the substantial premium rate increase that triggers a contingent benefit upon lapse under subsection (a) of this section.
The Insurance Commissioner shall issue rules for long-term care insurance to:
(1) Promote premium adequacy;
(2) Protect the policyholder in the event of substantial rate increases; and
(3) Establish minimum standards for:
(A) Marketing practices;
(B) Agent compensation;
(C) Agent testing;
(D) Penalties; and
(E) Reporting practices.
In addition to any other penalties provided by the laws of this state, any insurer or agent found to have violated any requirement of this state relating to the regulation of long-term care insurance or the marketing of long-term care insurance is subject to the greater of:
(1) A fine of up to three (3) times the amount of any commissions paid for each policy involved in the violation; or
(2) A fine of up to ten thousand dollars ($10,000).