2020 -- S 2623

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LC004572

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2020

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A N   A C T

RELATING TO INSURANCE -- LONG-TERM CARE INSURANCE

     

     Introduced By: Senators Valverde, Coyne, Seveney, and DiPalma

     Date Introduced: February 27, 2020

     Referred To: Senate Health & Human Services

     (Dept. of Business Regulation)

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 27-34.2-6 of the General Laws in Chapter 27-34.2 entitled "Long

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Term Care Insurance" is hereby amended to read as follows:

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     27-34.2-6. Disclosure and performance standards for long-term care insurance.

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     (a) The director may adopt regulations that establish:

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     (1) Standards for full and fair disclosure setting forth the manner, content, and required

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disclosures for the sale of long term care insurance policies, terms of renewability, initial and

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subsequent conditions of eligibility, nonduplication of coverage provisions, coverage of

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dependents, preexisting conditions, termination of insurance, continuation or conversion,

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probationary periods, limitations, exceptions, reductions, elimination periods, requirements for

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replacement, recurrent conditions, and definitions of terms; and

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     (2) Reasonable rules and regulations that are necessary, proper, or advisable to the

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administration of this chapter including the procedure for the filing or submission of policies

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subject to this chapter. This provision may not abridge any other authority granted the director by

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law.

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     (b) No long term care insurance policy may:

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     (1) Be cancelled, nonrenewed, or terminated on the grounds of the age or the deterioration

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of the mental or physical health of the insured individual or certificate holder; or

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     (2) Contain a provision establishing a new waiting period in the event existing coverage is

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converted to or replaced by a new or other form within the same company, except with respect to

 

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an increase in benefits voluntarily selected by the insured individual or group policyholder; or

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     (3) Provide coverage for skilled nursing care only or provide more coverage for skilled

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care in a facility than coverage for lower levels of care.

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     (c) A long term care policy must provide:

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     (1) Home health care benefits that are at least fifty percent (50%) of those provided for care

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in a nursing facility. The evaluation of the amount of coverage shall be based on aggregate days of

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care covered for home health care when compared to days of care covered for nursing home care;

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and

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     (2) Home health care benefits which meet the National Association of Insurance

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Commissioners' minimum standards for home health care benefits in long term care insurance

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policies.

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     (d)(1) No long term care insurance policy or certificate other than a policy or certificate

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issued to a group as defined in § 27-34.2-4(4)(i) shall use a definition of "preexisting condition"

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which is more restrictive than the following: "preexisting condition" means a condition for which

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medical advice or treatment was recommended by, or received from a provider of health care

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services, within six (6) months preceding the effective date of coverage of an insured person;

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     (2) No long term care insurance policy or certificate other than a policy or certificate issued

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to a group as defined in § 27-34.2-4(4)(i) may exclude coverage for a loss or confinement which is

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the result of a preexisting condition, unless the loss or confinement begins within six (6) months

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following the effective date of coverage of an insured person;

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     (3) The director may extend the limitation periods set forth in subdivisions § 27-34.2-

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6(d)(1) and (d)(2) of this subsection as to specific age group categories in specific policy forms

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upon findings that the extension is in the best interest of the public;

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     (4) The definition of "preexisting condition" does not prohibit an insurer from using an

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application form designed to elicit the complete health history of an applicant, and, on the basis of

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the answers on that application, from underwriting in accordance with that insurer's established

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underwriting standards. Unless otherwise provided in the policy or certificate, a preexisting

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condition, regardless of whether it is disclosed on the application, need not be covered until the

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waiting period described in subdivision § 27-34.2-6(d)(2) of this subsection expires. No long term

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care insurance policy or certificate may exclude or use waivers or riders of any kind to exclude,

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limit or reduce coverage or benefits for specifically named or described preexisting diseases or

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physical conditions beyond the waiting period described in subdivision § 27-34.2-6(d)(2) of this

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subsection, unless the waiver or rider has been specifically approved by the director as set forth in

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§ 27-34.2-8. This shall not permit exclusion or limitation of benefits on the basis of Alzheimer's

 

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disease, other dementias, or organic brain disorders.

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     (e)(1) No long term care insurance policy may be delivered or issued for delivery in this

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state if the policy:

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     (i) Conditions eligibility for any benefits on a prior hospitalization or institutionalization

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requirement; or

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     (ii) Conditions eligibility for benefits provided in an institutional care setting on the receipt

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of a higher level of institutional care.

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     (iii) Conditions eligibility for any benefits other than waiver of premium, post-

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confinement, post-acute care or recuperative benefits on a prior institutionalization requirement.

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     (2)(i) A long-term care insurance policy containing post-confinement, post-acute care or

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recuperative benefits shall clearly label in a separate paragraph of the policy or certificate entitled

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"Limitations or Conditions on Eligibility for Benefits" such limitations or conditions, including any

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required number of days of confinement or rider shall not condition eligibility for non-institutional

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benefits on the prior or continuing receipt of skilled care services.

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     (ii) A long-term care insurance policy or rider that conditions eligibility of noninstitutional

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benefits on the prior receipt of institutional care shall not require a prior institutional stay of more

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than thirty (30) days.

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     (3) No long-term insurance policy or rider that provides benefits only following

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institutionalization shall condition such benefits upon admission to a facility for the same or related

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conditions within a period of less than thirty (30) days after discharge from the institution.

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     (f) The commissioner may adopt regulations establishing loss ratio standards for long term

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care insurance policies provided that a specific reference to long term care insurance policies is

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contained in the regulation.

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     (g) Right to return -- Free look. Long term care insurance applicants shall have the right to

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return the policy or certificate within thirty (30) days of its delivery and to have the premium

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refunded if, after examination of the policy or certificate, the applicant is not satisfied for any

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reason. Long term care insurance policies and certificates shall have a notice prominently printed

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on the first page or attached to the policy or certificate stating in substance that the applicant shall

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have the right to return the policy or certificate within thirty (30) days of its delivery and to have

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the premium refunded if, after examination of the policy or certificate other than a certificate issued

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pursuant to a policy issued to a group defined in § 27-34.2-4(4)(i), the applicant is not satisfied for

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any reason. This subsection shall also apply to denials of applications and any refund must be made

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within thirty (30) days of the return or denial.

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     (1) Long-term care insurance applicants shall have the right to return the policy, certificate

 

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or rider to the company or an agent/insurance producer of the company within thirty (30) days of

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its receipt and to have the premium refunded if, after examination of the policy, certificate or rider,

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the applicant is not satisfied for any reason.

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     (2) Long-term care insurance policies, certificates and riders shall have a notice

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prominently printed on the first page or attached thereto including specific instructions to

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accomplish a return. This requirement shall not apply to certificates issued pursuant to a policy

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issued to a group defined in § 27-34.2-4. The following free look statement or language

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substantially similar shall be included:

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     "You have thirty (30) days from the day you receive this policy, certificate or rider to

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review it and return it to the company if you decide not to keep it. You do not have to tell the

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company why you are returning it. If you decide not to keep it, simply return it to the company at

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its administration office. Or you may return it to the agent/insurance producer that you bought it

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from. You must return it within thirty (30) days of the day you first received it. The company will

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refund the full amount of any premium paid within thirty (30) days after it receives the returned

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policy, certificate or rider. The premium refund will be sent directly to the person who paid it. The

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policy, certificate or rider will be void as if it had never been issued."

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     (h)(1) An outline of coverage shall be delivered to a prospective applicant for long term

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care insurance at the time of initial solicitation through means which prominently direct the

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attention of the recipient to the document and its purpose;

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     (2) The commissioner shall prescribe a standard format, including style, arrangement, and

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overall appearance, and the content of an outline of coverage;

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     (3) In the case of insurance producer solicitations, an insurance producer must deliver the

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outline of coverage prior to the presentation of an application or enrollment form;

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     (4) In the case of direct response solicitations, the outline of coverage must be presented in

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conjunction with any application or enrollment form;

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     (5) In the case of a policy issued to a group defined in subdivision § 27-34.2-4(4)(i) of this

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act chapter, an outline of coverage shall not be required to be delivered, provided that the

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information described in subdivision §§ 27-34.2-6(6)(i) -- subdivision through 27-34.2-6(6)(vi) is

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contained in other materials relating to enrollment. Upon request, these other materials shall be

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made available to the commissioner.

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     (6) The outline of coverage shall include:

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     (i) A description of the principal benefits and coverage provided in the policy;

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     (ii) A description of the eligibility triggers for benefits and how those triggers are met;

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     (ii)(iii) A statement of the principal exclusions, reductions, and limitations contained in the

 

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policy;

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     (iii)(iv) A statement of the terms under which the policy or certificate, or both, may be

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continued in force or discontinued, including any reservation in the policy of a right to change

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premiums. Continuation or conversion provisions of group coverage shall be specifically described;

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     (iv)(v) A statement that the outline of coverage is only a summary, not a contract of

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insurance, and that the policy or group master policy contains governing contractual provisions;

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     (v)(vi) A description of the terms under which the policy or certificate may be returned and

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the premium refunded; and

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     (vi)(vii) A brief description of the relationship of cost of care and benefits.

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     (vii)(viii) A statement that discloses to the policyholder or certificate holder whether the

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policy is intended to be a federally tax-qualified long-term care insurance contract under §

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7702B(b) of the Internal Revenue Code of 1986, as amended, et seq.

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     (i) A certificate issued pursuant to a group long term care insurance policy which policy is

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delivered or issued for delivery in this state shall include:

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     (1) A description of the principal benefits and coverage provided in the policy;

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     (2) A statement of the principal exclusions, reductions, and limitations contained in the

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policy; and

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     (3) A statement that the group master policy determines governing contractual provisions.

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     (4)(j) If an application for a long-term care insurance contract or certificate is approved,

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the issuer shall deliver the contract or certificate of insurance to the applicant no later than thirty

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(30) days after the date of approval.

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     (j)(k) At the time of policy delivery, a policy summary shall be delivered for an individual

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life insurance or annuity policy which provides long term care benefits within the policy or by rider.

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In the case of direct response solicitations, the insurer shall deliver the policy summary upon the

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applicant's request, but regardless of request shall make the delivery no later than at the time of

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policy delivery. In addition to complying with all applicable requirements, the summary shall also

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include:

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     (1) An explanation of how the long term care benefit interacts with other components of

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the policy, including deductions from death benefits;

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     (2) An illustration of the amount of benefits, the length of benefits, and the guaranteed

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lifetime benefits, including a statement that any long-term care inflation projection option required

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by § 27-34.2-13, is not available under the policy for each covered person;

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     (3) Any exclusions, reductions, and limitations on benefits of long term care benefits; and

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     (4) A statement that any long-term care inflation protection option required by 230-RICR-

 

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20-35-1 is not available under this policy. If inflation protection was not required to be offered, or

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if inflation protection was required to be offered but was rejected, a statement that inflation

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protection is not available under this policy that proves long-term care benefits, and an explanation

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of other options available under the policy, if any, to increase the funds available to pay for the

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long-term care benefits.

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     (4)(5) If applicable to the policy type, the summary shall also include:

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     (i) A disclosure of the effects of exercising other rights under the policy;

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     (ii) A disclosure of guarantees related to long term care costs of insurance charges A

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disclosure of guarantees, fees or other costs related to long-term care costs of insurance charges in

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the base policy and any riders; and

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     (iii) Current and projected periodic and maximum lifetime benefits.; and

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     (5)(6) The provisions of the policy summary listed above may be incorporated into a basic

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illustration or into the life insurance policy summary which is required to be delivered in

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accordance with chapter 4 of this title and the rules and regulations promulgated under § 27-4-23.

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     (k)(l) Any time a long term benefit, funded through a life insurance vehicle by the

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acceleration of the death benefit, is in benefit payment status, a monthly report shall be provided to

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the policyholder. The report shall include:

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     (1) Any long term care benefits paid out during the month;

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     (2) Any costs or changes that apply or will apply to the policy or any riders;

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     (2)(3) An explanation of any changes in the policy, e.g. death benefits or cash values, due

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to long term care benefits being paid out; and

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     (3)(4) The amount of long term care benefits existing or remaining.

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     (l)(m) Any policy or rider advertised, marketed, or offered as long term care or nursing

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home insurance shall comply with the provisions of this chapter.

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     (m)(n) If a claim under a long-term care insurance contract is denied, the issuer shall, within

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sixty (60) days of the date of a written request by the policyholder or certificate holder, or a

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representative thereof:

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     (1) Provide a written explanation of the reasons for the denial; and

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     (2) Make available all information directly related to the denial.

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     (o) Any policy, certificate or rider advertised, marketed or offered as long-term care or

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nursing home insurance, as defined in § 27-34.2-4, shall comply with the provisions of this chapter.

 

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO INSURANCE -- LONG-TERM CARE INSURANCE

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     This act would update the long-term care insurance statute into conformance with the latest

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version of the National Association of Insurance Commissioners model.

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     This act would take effect upon passage.

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