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Title 38 - Insurance
LONG TERM CARE INSURANCE ACT
The purpose of this chapter is to promote the public interest, to promote the availability of long term care insurance policies, to protect applicants for long term care insurance as defined from unfair or deceptive sales or enrollment practices, to establish standards for long term care insurance, to facilitate public understanding and comparison of long term care insurance policies, and to facilitate flexibility and innovation in the development of long term care insurance coverage.
Chapter not to supersede other insurance laws; exceptions; applications.
This chapter is not intended to supersede the obligations of entities subject to this chapter to comply with the substance of other applicable insurance laws insofar as they do not conflict with this chapter, except that laws and regulations designed and intended to apply to medicare supplement insurance policies must not be applied to long term care insurance.
This chapter may be known and cited as the "Long Term Care Insurance Act".
Unless the context requires otherwise, as used in this chapter:
(1) "Long term care insurance" means an insurance policy or a rider advertised, marketed, offered, or designed to provide benefits for not less than twelve consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. The term includes group and individual annuities and life insurance policies or riders which provide directly or which supplement long term care insurance. It also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long term care insurance may be issued by insurers, fraternal benefit societies, nonprofit health, hospital, and medical service corporations, prepaid health plans, health maintenance organizations, or a similar organization to the extent they otherwise are authorized to issue life or health insurance. Long term care insurance does not include an insurance policy offered primarily to provide basic medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage.
(2) "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.
(3) "Certificate" means any certificate issued under a group long term care insurance policy, which policy has been delivered or issued for delivery in this State.
(4) "Director" means the person who is appointed by the Governor upon the advice and consent of the Senate and who is responsible for the operation and management of the Department of Insurance, including all of its divisions. The director may appoint or designate the person or persons who shall serve at the pleasure of the director to carry out the objectives or duties of the department as provided by law. Furthermore, the director may bestow upon his designee or deputy director any duty or function required of him by law in managing or supervising the insurance department.
(5) "Group long term care insurance" means a long term care insurance policy which is delivered or issued for delivery in this State and issued to:
(a) one or more employers or labor organizations, or to a trust or to the trustees of a fund established by one or more employers or labor organizations or a combination thereof, for employees or former employees or a combination thereof, or for members or former members or a combination thereof of the labor organizations; or
(b) any professional, trade, or occupational association for its members or former or retired members or combination thereof if such association:
(i) is composed of individuals all of whom are or were actively engaged in the same profession, trade, or occupation; and
(ii) has been maintained in good faith for purposes other than obtaining insurance; or
(c) an association or to a trust or to the trustee of a fund established, created, or maintained for the benefit of members of one or more associations. Prior to advertising, marketing, or offering the policy within this State, the association or the insurer of the association shall file evidence with the department that the association has at the outset a minimum of one hundred persons and has been organized and maintained in good faith for purposes other than that of obtaining insurance, has been in active existence for at least one year, and has a constitution and bylaws which provide that the association holds regular meetings not less than annually to further the purposes of its members, except for credit unions, the association collects dues or solicits contributions from members, and the members have voting privileges and representation on the governing board and committees. Ninety days after the filing, the association is considered to have satisfied the organizational requirements unless the director or his designee makes a finding that the association does not satisfy those organizational requirements.
(d) a group other than as described in items (5)(a), (5)(b), and (5)(c), subject to a finding by the director or his designee that the issuance of the group policy is not contrary to the best interest of the public, the issuance of the group policy would result in economies of acquisition or administration, and the benefits are reasonable in relation to the premiums charged.
(6) "Policy" means any policy, contract, subscriber agreement, rider, or endorsement delivered or issued for delivery in this State by an insurer, fraternal benefit society, nonprofit health, hospital, or medical service corporation, prepaid health plan, health maintenance organization, or any similar organization.
Group long term care insurance policy must meet requirements of chapter to be offered in state.
No group long term care insurance coverage may be offered to a resident of this State under a group policy issued in another state to a group described in Section 38-72-40(5)(d) unless this State or another state having statutory and regulatory long term care insurance requirements substantially similar to those adopted in this State has made a determination that the requirements have been met.
General assembly to approve regulations; terms and conditions applicable to long term care insurance policy and group policy; advertising restrictions.
(A) The director or his designee shall submit to the General Assembly for approval regulations to carry out the purposes of this chapter.
(B) No long term care insurance policy may:
(1) for individual policies, be canceled, nonrenewed, or otherwise terminated except for nonpayment of the premium;
(2) contain a provision establishing a new waiting period if existing coverage is converted to or replaced by a new or other form within the same company, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder;
(3) contain a provision requiring eligibility for or receipt of benefits under Medicare or Medicaid as a condition for payment of benefits under the policy; or
(4) contain coverage for skilled nursing care only or contain coverage that provides significantly more skilled care in a facility than coverage for lower levels of care in a facility.
(C) The following applies to preexisting conditions:
(1) No long term care insurance policy or certificate, other than a policy or certificate issued to a group as defined in Section 38-72-40(5)(a), may use a definition of "preexisting condition" which 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 months preceding the effective date of coverage of an insured person.
(2) No long term care insurance policy or certificate, other than a policy or certificate issued to a group as defined in Section 38-72-40(5)(a), may exclude coverage for a loss or confinement which is the result of a preexisting condition unless loss or confinement begins within six months following the effective date of coverage of an insured person.
(3) The director or his designee may extend the limitation periods set forth in items (1) and (2) of this subsection as to specific age group categories in specific policy forms upon findings that the extension is in the best interest of the public.
(4) 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 and, on the basis of the answers on that application, from underwriting in accordance with that insurer's established underwriting standards.
(D)(1) No long term care insurance policy may be delivered or issued for delivery in this State if the policy conditions eligibility for benefits:
(a) on a prior hospitalization requirement;
(b) provided in an institutional care setting on the receipt of a higher level of institutional care; or
(c) other than waiver of premium, post-confinement, post-acute care, or recuperative benefits on a prior institutionalization requirement.
(2)(a) A long term care insurance policy containing post-confinement, post-acute care, or recuperative benefits clearly must label in a separate paragraph of the policy or certificate entitled "Limitations or Conditions on Eligibility for Benefits" limitations or conditions, including the required number of days of confinement.
(b) A long term care insurance policy or rider which conditions eligibility of post-confinement, post-acute care, or recuperative benefits on the prior receipt of institutional care may not require a prior institutional stay of more than thirty days.
(E) The following applies to the right of the policyholder to return the policy:
Long term care insurance applicants have the right to return the policy or certificate within thirty 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. Long term care insurance policies and certificates must have a notice prominently printed on the first page or attached to it stating in substance that the applicant has the right to return the policy or certificate within thirty days of its delivery and to have the premium refunded if, after examination of the policy or certificate, other than a certificate issued pursuant to a policy issued to a group as defined in Section 38-72-40(5)(a), the applicant is not satisfied for any reason.
(F)(1) An outline of coverage must be delivered to a prospective applicant for long term care insurance at the time of initial solicitation through means which prominently direct the attention of the recipient to the document and its purpose.
(a) The director or his designee shall prescribe a standard format, including style, arrangement, and overall appearance, and the content of an outline of coverage.
(b) For agent solicitations, an agent shall deliver the outline of coverage before the presentation of an application or enrollment form.
(c) For direct response solicitations, the outline of coverage must be presented in conjunction with an application or enrollment form.
(2) The outline of coverage must include a:
(a) description of the principal benefits and coverage provided in the policy;
(b) statement of the principal exclusions, reductions, and limitations contained in the policy;
(c) statement of the terms under which the policy or certificate, or both, may be continued in force or discontinued, including a reservation in the policy of a right to change the premium. Continuation or conversion provisions of group coverage must be described specifically.
(d) 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;
(e) description of the terms under which the policy or certificate may be returned and premium refunded;
(f) brief description of the relationship of cost of care and benefits.
(G) A certificate issued pursuant to a group long term care insurance policy delivered or issued for delivery in this State must include a:
(1) description of the principal benefits and coverage provided in the policy;
(2) statement of the principal exclusions, reductions, and limitations contained in the policy; and
(3) statement that the group master policy determines governing contractual provisions.
(H) At the time of policy delivery, a policy summary must be delivered for an individual life insurance policy which provides long term care benefits within the policy or by rider. For direct response solicitations, the insurer shall deliver the policy summary upon the applicant's request but, regardless of a request, shall make the delivery no later than at the time of policy delivery. In addition to complying with all applicable requirements, the summary also must include:
(1) explanation of how the long term care benefit interacts with other components of the policy, including deductions from death benefits;
(2) illustration of the amount of benefits, the length of benefits, and the guaranteed lifetime benefits, if any, for each covered person;
(3) exclusions, reductions, and limitations on benefits of long term care;
(4) if applicable to the policy type:
(a) disclosure of the effects of exercising other rights under the policy;
(b) disclosure of guarantees related to long term care costs of insurance charges;
(c) current and projected maximum lifetime benefits.
(I) When 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 must be provided to the policyholder. The report must include:
(1) long term care benefits paid out during the month;
(2) explanation of changes in the policy, such as death benefits or cash values, due to long term care benefits being paid out;
(3) amount of long term care benefits existing or remaining.
(J) A policy or rider advertised, marketed, or offered as long term care or nursing home insurance must comply with the provisions of this chapter.
(K) All insurers issuing long-term care insurance policies must offer, at time of application, an optional benefit which provides that when an insured meets the requirements under the policy that care in a nursing home or community residential care facility is necessary, the insured shall have the option of receiving necessary care in the home or community, with daily benefits at the same level that would have been paid for care in a nursing home or community residential care facility. This optional coverage may be provided by rider to the policy or included as part of the policy.
Notwithstanding the foregoing, insurers issuing long-term care insurance policies may offer a home health care benefit which would provide benefits when care in the home only is necessary. This home health care benefit may provide lesser benefits than that provided by the policy for care in a nursing home or community residential care facility and may be provided either by rider to the policy or included as part of the policy.
Regulations adopted pursuant to this chapter must be in accordance with the provisions of Chapter 23, Title 1 of the 1976 Code.
Application of chapter.
The requirements of this chapter apply to policies delivered or issued for delivery in this State on or after its effective date.
Penalties for violation of chapter.
Any insurer violating any provision of this chapter is subject to the penalties provided for in Sections 38-5-120 and 38-5-130 of the 1976 Code.
Long term care premiums excluded in determining contribution to cost of Medicaid services.
Any premiums paid for long term care insurance must be excluded in determining the amount an individual must contribute towards the cost of any Medicaid services he receives.