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Bill Number: 3573 Ratification Number: 518 Act Number 466 Introducing Body: House Subject: To enact the Long Term Care Insurance Act
(A466, R518, H3573)
AN ACT TO ENACT THE LONG TERM CARE INSURANCE ACT, PROVIDE DEFINITIONS, PROVIDE REQUIREMENTS FOR THE ISSUANCE OF LONG TERM CARE INSURANCE POLICIES, REQUIRE THE INSURANCE COMMISSIONER TO SUBMIT REGULATIONS TO THE GENERAL ASSEMBLY FOR APPROVAL WHICH CARRY OUT THE PURPOSES OF THIS ACT, AND PROVIDE THAT ANY INSURER VIOLATING ANY PROVISION OF THIS ACT IS SUBJECT TO PENALTIES PROVIDED FOR IN SECTIONS 38-5-120 AND 38-5-130, CODE OF LAWS OF SOUTH CAROLINA, 1976.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. The purpose of this act 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.
Act not intended to supersede obligations
SECTION 2. This act is not intended to supersede the obligations of entities subJect to this act to comply with the substance of other applicable insurance laws insofar as they do not conflict with this act, except that laws and regulations designed and intended to apply to medicare supplement insurance policies may not be applied to long term care insurance. A policy which is not advertised, marketed, or offered as long term care insurance or nursing home insurance need not meet the requirements of this act.
Act may be cited
SECTION 3. This act may be known and cited as the "Long Term Care Insurance Act".
SECTION 4. Unless the context requires otherwise, as used in this act:
(1) "Long term care insurance" means any insurance policy or 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 policies or riders whether issued by insurers, fraternal benefit societies, nonprofit health, hospital, and medical service corporations, prepaid health plans, health maintenance organizations, or any similar organization. Long term care insurance does not include any 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 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) "Commissioner" means the Insurance Commissioner of this State.
(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 commissioner 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 commissioner 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 commissioner 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.
Requirements must be met
SECTION 5. 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 4(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.
Commissioner shall submit regulation to General Assembly for approval
SECTION 6. (A) The commissioner shall submit to the General Assembly for approval regulations to carry out the purposes of this act.
(B) No long term care insurance policy may:
(1) in the case of individual policies, be canceled, nonrenewed, or otherwise terminated except for nonpayment of the premium; or
(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 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;
(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 condition:
(1) No long term care insurance policy or certificate may use a definition of "preexisting condition" which is more restrictive than the following: "Preexisting condition" means the existence of symptoms which would cause an ordinarily prudent person to seek diagnosis, care or treatment, or a condition for which medical advice or treatment was recommended by, or received from a provider of health care services within twelve months preceding the effective date of coverage of an insured person.
(2) No long term care insurance policy or certificate may exclude coverage for a loss or confinement which is the result of a preexisting condition unless loss or confinement begins within twelve months following the effective date of coverage of an insured person.
(3) The commissioner may extend the limitation periods set forth in subsections 6(C)(1) and (2) 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) No long term care insurance policy which provides benefits only following institutionalization may condition the benefits upon admission to a facility for the same or related conditions within a period of less than thirty days after discharge from the institution.
(E) The following applies to the right of the policyholder to return the policy:
(1) Individual long term care insurance policyholders have the right to return the policy within ten days of its delivery and to have the premium refunded if, after examination of the policy, the policyholder is not satisfied for any reason. Individual long term care insurance policies must have a notice prominently printed on the first page of the policy or attached thereto stating in substance that the policyholder has the right to return the policy within ten days of its delivery and to have the premium refunded if, after examination of the policy, the policyholder is not satisfied for any reason.
(2) A person insured under a long term insurance policy issued pursuant to a direct response has the right to return the policy within thirty days of its delivery and to have the premium refunded if, after examination, the insured person is not satisfied for any reason. Long term care insurance policies issued pursuant to a direct response solicitation must have a notice prominently printed on the first page or attached thereto stating in substance that the insured person has the right to return the policy within thirty days of its delivery and to have the premium refunded, if after examination, the insured person is not satisfied for any reason.
(F) An outline of coverage must be delivered to an applicant for any individual long term care insurance policy no later than at the time of policy delivery for an individual policy. In the case of direct response solicitations, the insurer shall deliver the outline of coverage upon the applicant's request but regardless of request shall make the delivery no later than at the time of policy delivery. The outline of coverage must 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 statement of the renewal provisions, including any reservation in the policy of a right to change premiums; and
(4) a statement that the outline of coverage is a summary of the policy issued or applied for, and that the policy should be consulted to determine governing contractual provisions.
(G) A certificate issued pursuant to a group long term care insurance policy which policy is delivered or issued for delivery in this State must 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.
(H) No policy may be advertised, marketed, or offered as long term care or nursing home insurance unless it complies with the provisions of this act.
SECTION 7. Regulations adopted pursuant to this act must be in accordance with the provisions of Chapter 23, Title 1 of the 1976 Code.
Applicability of act
SECTION 8. The requirements of this act apply to policies delivered or issued for delivery in this State on or after its effective date.
SECTION 9. Any insurer violating any provision of this act is subject to the penalties provided for in Sections 38-5-120 and 38-5-130 of the 1976 Code.
Premiums must be excluded
SECTION 10. 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.
SECTION 11. This act takes effect upon approval by the Governor.