2022 -- H 7778

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LC005378

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2022

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A N   A C T

RELATING TO INSURANCE -- LONG-TERM CARE INSURANCE

     Introduced By: Representatives Kennedy, Azzinaro, Edwards, Diaz, Phillips, Kazarian,
and Solomon

     Date Introduced: March 03, 2022

     Referred To: House Corporations

     (Dept. of Business Regulation)

It is enacted by the General Assembly as follows:

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

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

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

     (a) The director may adopt regulations that establish:

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

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

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

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

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

replacement, recurrent conditions, and definitions of terms; and

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

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

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

law.

     (b) No long term care insurance policy may:

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

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

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

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

     (c) A long term care policy must provide:

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

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

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

and

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

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

policies.

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

issued to a group as defined in § 27-34.2-4(4)(i) shall 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 (6) 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 § 27-34.2-4(4)(i) may exclude coverage for a loss or confinement which 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;

     (3) The director may extend the limitation periods set forth in subdivisions § 27-34.2-6(d)

(1) and (d)(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. 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 § 27-34.2-6(d)(2) of this subsection expires. 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 § 27-34.2-6(d)(2) of this

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

§ 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.

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

state if the policy:

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

requirement; or

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

of a higher level of institutional care.

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

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

     (2)(i) 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" such limitations or conditions, including any

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

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

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

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

than thirty (30) days.

     (3) No long-term 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.

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

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

contained in the regulation.

     (g) Right to return -- Free look. 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. Long term care insurance policies and certificates shall have a notice prominently printed

on the first page or attached to the policy or certificate 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 other than a certificate issued

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

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

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

     (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

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

the applicant is not satisfied for any reason.

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

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

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

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

substantially similar shall be included:

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

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

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

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

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

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

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

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

     (h)(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 which prominently direct the

attention of the recipient to the document and its purpose;

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

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

     (3) In the case of insurance producer solicitations, an insurance producer must 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 must be presented in

conjunction with any application or enrollment form;

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

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

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

6(6)(vi)(vii) is contained in other materials relating to enrollment. Upon request, these other

materials shall be made available to the commissioner.

     (6) The outline of coverage shall include:

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

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

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

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policy;

     (iii)(iv) 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

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

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

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

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

the premium refunded; and

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

     (vii)(viii) 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 §

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

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

delivered or issued for delivery in this state 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.

     (4)(j) 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.

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

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

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

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

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

include:

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

the policy, including deductions from death benefits;

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

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

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

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

     (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

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

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

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

long-term care benefits.

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

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

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

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

the base policy and any riders; and

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

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

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

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

     (k)(l) Any time a long term 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. The report shall include:

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

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

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

to long term care benefits being paid out; and

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

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

home insurance shall comply with the provisions of this chapter.

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

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

representative thereof:

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

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

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

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

     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

***

     This act would update the long-term care insurance statute so that it is in conformance with

the latest version of the National Association of Insurance Commissioners model.

     This act would take effect upon passage.

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LC005378

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