Chapter
239
2007 -- S 0638 SUBSTITUTE A
Enacted 07/03/07
A N A C T
RELATING
TO INSURANCE -- LONG-TERM CARE INSURANCE
Introduced
By: Senators Walaska, McCaffrey, Bates, Paiva-Weed, and Goodwin
Date
Introduced: February 15, 2007
It is enacted by the General Assembly as
follows:
SECTION 1.
Sections 27-34.2-1, 27-34.2-4, 27-34.2-6, 27-34.2-12, 27-34.2-14, 27-34.2-
16 and 27-34.2-19 of the General Laws in Chapter
27-34.2 entitled "Long-Term Care Insurance"
are hereby amended to read as follows:
27-34.2-1.
Purpose. -- 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.
27-34.2-4.
Definitions. -- Unless the context requires otherwise, the following
definitions
apply throughout the chapter:
(1)
"Applicant" means:
(i) In the case of
an individual long term care insurance policy, the person who seeks to
contract for benefits; and
(ii) In the case
of a group long term care insurance policy, the proposed certificate
holder;
(2)
"Certificate" means, for the purposes of this chapter, any
certificate issued under a
group long term care insurance policy, which
policy has been delivered or issued for delivery in
this state, except as provided for in section
27-34.2-5;
(3)
"Director" means the director of business regulation;
(4) "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:
(i) 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 of employers
and labor organizations, for employees or former
employees or a combination of employees and
former employees, or for members or former
members, or a combination of members and former
members, of the labor organizations; or
(ii) Any
professional, trade, or occupational association for its members or former or
retired members, or combination of members and
former members, if that association:
(A) Is composed
of individuals all of whom 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; or
(iii) An
association, a trust, or the trustee(s) of a fund established, created, or
maintained
for the benefit of members of one or more
associations. Prior to advertising, marketing, or
offering that policy within this state, the
association or associations, or the insurer of the
association or associations, shall file evidence
with the director that the association or
associations have at the outset a minimum of one
hundred (100) persons and have been organized
and maintained in good faith for purposes other
than that of obtaining insurance, have been in
active existence for at least one year, and have
a constitution and bylaws which provide that:
(A) The
association or associations hold regular meetings not less than annually to
further purposes of the members;
(B) Except for
credit unions, the association or associations collect dues or solicit
contributions from members; and
(C) The members
have voting privileges and representation on the governing board and
committees;
(iv) Sixty
(60) Thirty (30) days after that filing the association or
associations will be
deemed to satisfy those organizational
requirements, unless the director makes a finding that the
association or associations do not satisfy those
organizational requirements; or
(v) A group other
than as described in paragraphs (i), (ii) and (iii) of this subdivision,
subject to a finding by the director that:
(A) The issuance
of the group policy is not contrary to the best interest of the public;
(B) The issuance
of the group policy would result in economies of acquisition or
administration; and
(C) The benefits
are reasonable in relation to the premiums charged;
(5)
"Issuer" means any domestic or foreign insurance company as defined
in this title of
these general laws or any other entity legally
authorized to issue or deliver long term care
insurance contracts pursuant to the provisions
of this chapter.
(6) (i)
"Long term care insurance" means any insurance policy or rider
advertised,
marketed, offered, or designed to provide
coverage for not less than twelve (12) 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. This term includes group and
individual annuities and life insurance policies or riders
which provide directly or which supplement long
term care insurance. This term also includes a
policy or rider that 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 any similar
organization to the extent that they are authorized to
issue life or health insurance. Long term care
insurance shall not include any insurance policy
which was 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.
This list of excluded coverages is illustrative
and is not intended to be all inclusive;
(ii) With regard
to life insurance, this term does not include life insurance policies which
accelerate the death benefit specifically for
one or more of the qualifying events of terminal
illness, medical conditions requiring
extraordinary medical intervention, or permanent
institutional confinement, and which provide the
option of a lump sum payment for those benefits
and in which neither the benefits nor the
eligibility for the benefits is conditioned upon the receipt
of long term care. Notwithstanding any other
provision contained in this chapter, any product
advertised, marketed, or offered as long term
care insurance shall be subject to the provisions of
this chapter;
(7)
"Policy" means, for the purposes of this chapter, 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.
(8)(i)
"Qualified long-term care insurance contract" or "federally
tax-qualified long-term
care insurance contract" means an
individual or group insurance contract that meets the
requirements of section 7702B(b) of the Internal
Revenue Code of 1986, as amended, et seq., as
follows:
(A) The only
insurance protection provided under the contract is coverage of qualified
long-term care services. A contract shall not
fail to satisfy the requirements of this subparagraph
by reason of payments being made on a per diem
or other periodic basis without regard to the
expenses incurred during the period to which the
payments relate;
(B) The
contract does not pay or reimburse expenses incurred for services or items to
the
extent that the expenses are reimbursable under
Title XVIII of the Social Security Act
(Medicare), as amended, or would be so
reimbursable but for the application of a deductible or
coinsurance amount. The requirements of this
subparagraph do not apply to expenses that are
reimbursable under Title XVIII of the Social
Security Act only as a secondary payor. A contract
shall not fail to satisfy the requirements of
this subparagraph by reason of payments being made
on a per diem or other periodic basis without
regard to the expenses incurred during the period to
which the payments relate;
(C) The
contract is guaranteed renewable, within the meaning of section 7702B(b)(1)(C)
of the Internal Revenue Code of 1986, as
amended, et seq.;
(D) 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 27-
34.2-4(8)(i)(E);
(E) All refunds
of premiums, and all 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 on the event of death of
the insured or a complete surrender or cancellation of
the contract cannot exceed the aggregate
premiums paid under the contract; and
(F) The
contract meets the consumer protection provisions set forth in section 7702B(g)
of the Internal Revenue Code of 1986, as
amended, et seq.
(ii)_"Qualified
long-term care insurance contract" or "federally tax-qualified long
term
care insurance contract" also means the
portion of a life insurance contract that provides long-
term care insurance coverage by rider or as part
of the contract and that satisfied the requirements
of section 7702(B)(b) and (e) of the Internal
Revenue Code of 1986, as amended, et seq.
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. The evaluation of the amount of coverage
shall be based on aggregate days of care covered
for lower levels of care when compared to days
of care covered for skilled 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 section
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 section
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 (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. 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 (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 (2) of this subsection,
unless the waiver or rider has been specifically
approved by the director as set forth in section 27-
34.2-8. This shall not permit exclusion or
limitation of benefits on the basis of Alzheimer's
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:
(1)(i)
Conditions eligibility for any benefits on a prior hospitalization or
institutionalization requirement; or
(2)(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.
(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 section 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.
(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, an outline of coverage shall not be
required to be delivered, provided that the information
described in subdivision 27-34.2-6(6)(i) through
subdivision 27-34.2-6(6)(vi) is contained in
other materials relating to enrollment. Upon
request, these other materials shall be made available
to the commissioner.
(5) (6)
The outline of coverage shall include:
(i) A description
of the principal benefits and coverage provided in the policy;
(ii) A statement
of the principal exclusions, reductions, and limitations contained in the
policy;
(iii) 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) 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) A description
of the terms under which the policy or certificate may be returned and
the premium refunded; and
(vi) A brief
description of the relationship of cost of care and benefits.
(vii) 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,
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) 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) At the time
of policy delivery, a policy summary shall be delivered for an individual
life insurance 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, if any, including a
statement that any long-term care inflation projection option
required by section 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; and
(4) 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; and
(iii) Current and
projected maximum lifetime benefits.
(5) 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 27-4 and the rules and
regulations promulgated under section 27-4-23.
(k) 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) 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) The amount of
long term care benefits existing or remaining.
(l) 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) 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.
27-34.2-12.
Unintentional policy lapse. – (a) Each insurer offering long
term care
insurance shall, as a protection against
unintentional lapse comply with the following:
(1) (i) No
individual long term care policy or certificate shall be issued until the
insurer
has received from the applicant either: a
written designation of at least one person, in addition to
the applicant, who is to receive notice of lapse
or termination of the policy or certificate for
nonpayment of premium, or a written waiver dated
and signed by the applicant electing not to
designate additional persons to receive notice.
The applicant has the right to designate at least one
person who is to receive the notice of
termination, in addition to the insured. Designation shall
not constitute acceptance of any liability on
the third party for services provided to the insured.
The form used for the written designation must
provide space clearly designated for listing at
least one person. The designation shall include
each person's full name and home address. In the
case of an applicant who elects not to designate
an additional person, the waiver shall state:
"Protection against unintended lapse. I
understand that I have the right to designate at least one
person other than myself to receive notice of
lapse or termination of this long term care insurance
policy for nonpayment of premium. I understand
that notice will not be given until thirty (30)
days after premium is due and unpaid. I elect
NOT to designate any person to receive such
notice."
(ii) The insurer
shall notify the insured of the right to change this written designation, no
less than once every two (2) years;
(2) When the
policyholder or certificate holder pays a premium for a long term care
insurance policy or certificate through a
payroll or pension deduction plan, the requirements
continued in subsection (1)(i) need not be met
until sixty (60) days after the policyholder or
certificate holder is no longer on the payment
plan. The application or enrollment form for those
policies or certificates shall clearly indicate
the payment plan selected by the applicant;
(3) No individual
long term care policy or certificate shall lapse or be terminated for
nonpayment of premium unless the insurer, at
least thirty (30) days before the effective date of
the lapse or termination, has given notice to
the insured and to those persons designated pursuant
to subdivision (1) of this section at the
address provided by the insured for purposes of receiving
notice of lapse or termination. Notice shall be
given by first class United States mail, postage
prepaid; and notice may not be given until
thirty (30) days after a premium is due and unpaid.
Notice shall be deemed to have been given as of
five (5) days after the date of mailing.
(b)
Reinstatement. In addition to the requirement in subsection (a), a long-term
care
insurance policy or certificate shall include a
provision that provides for reinstatement of
coverage, in the event of lapse if the insurer
is provided proof that the policyholder or certificate
holder was cognitively impaired or had a loss of
functional capacity before the grace period
contained in the policy expired. This option
shall be available to the insured if requested within
five (5) months after termination and shall
allow for the collection of past due premium, where
appropriate. The standard of proof of cognitive
impairment or loss of functional capacity shall not
be more stringent than the benefit eligibility
criteria on cognitive impairment or the loss of
functional capacity contained in the policy and
certificate.
27-34.2-14.
Standards for marketing. -- (a) Every insurer, health care services
plan, or
other entity marketing long term care insurance
coverage in this state, directly or through its
producers, shall:
(1) Establish
marketing procedures to assure that any comparison of policies by its
agents or other insurance producers and agent
training requirements will be fair and accurate;
(2) Establish
marketing procedures to assure excessive insurance is not sold or issued;
(3) Display prominently
by type, stamp or other appropriate means, on the first page of
the outline of coverage and policy the
following:
"Notice to
buyer: This policy may not cover all of the costs associated with long term
care incurred by the buyer during the period of
coverage. The buyer is advised to carefully review
all policy limitations."
(4) Inquire and
make every reasonable effort to identify whether a prospective applicant
or enrollee for long term care insurance already
has long term care insurance and the types and
amounts of any insurance; and
(5) Every insurer
or entity marketing long term care insurance shall establish auditable
procedures for verifying compliance with this
subsection.
(6) If the
state in which the policy or certificate is to be delivered or issued for
delivery
has a senior insurance counseling program
approved by the commissioner, the insurer shall, at
solicitation, provide written notice to the
prospective policyholder and certificateholder that the
program is available and the name, address and
telephone number of the program.
(7) For
long-term care health insurance policies and certificates, use the terms
"noncancellable" or "level
premium" only when the policy or certificate conforms to section 6
A(3) of this regulation.
(8) Provide an
explanation of contingent benefit upon lapse and, if applicable, the
additional contingent benefit upon lapse
provided to policies with fixed or limited premium
paying periods.
(b) In addition
to the practices prohibited in chapter 29 of this title, the following acts
and practices are prohibited:
(1) Twisting. -
Knowingly making any misleading representation or incomplete or
fraudulent comparison of any insurance policies
or insurers for the purpose of inducing, or
tending to induce, any person to lapse, forfeit,
surrender, terminate, retain, pledge, assign, borrow
on or convert any insurance policy or to take
out a policy of insurance with another insurer;
(2) High pressure
tactics. - Employing any method of marketing having the effect of or
tending to induce the purchase of insurance
through force, fright, threat, whether explicit or
implied, or undue pressure to purchase or
recommend the purchase of insurance; and
(3) Cold lead
advertising. - Making use directly or indirectly of any method of marketing
which fails to disclose in a conspicuous manner
that a purpose of the method of marketing is
solicitation of insurance and that contact will
be made by an insurance producer or insurance
company.
(4)
Misrepresentation of a material fact when selling or offering to sell a
long-term care
insurance policy.
(c) With respect
to the obligations set forth in this section, the primary responsibility of
an association as described in section
27-34.2-4(4)(ii), when endorsing or selling long term care
insurance shall be to educate its members
concerning long term care issued in general so that its
members can make informed decisions.
Associations shall provide objective information
regarding long term care insurance policies or
certificates endorsed or sold by those associations
to ensure that members of the associations are
fully informed of the benefits and limitations in the
policies or certificates that are being endorsed
or sold.
(d) The insurer
shall file with the insurance department the following material:
(1) The policy
and certificate;
(2) A
corresponding outline of coverage; and
(3) All
advertisements requested by the insurance department.
(e) The
association shall disclose in any long term care insurance solicitation:
(1) The specific
nature and amount of the compensation arrangements, including all fees,
commissions, administrative fees and other forms
of financial support, that the association
receives from endorsement or sale of the policy
or certificate to its members; and
(2) A brief
description or outline of the process under which the policies and the insurer
issuing the policies were selected.
(f) If the
association and the insurer have interlocking directories or trustee
arrangements, the association shall disclose
that fact to its members.
(g) The board of
directors of associations selling or endorsing long term care insurance
policies or certificates shall review and
approve the insurance policies as well as the
compensation arrangements made with the insurer.
(h) The
association shall also:
(1) At the time
of the association's decision to endorse, engage the services of a person
with expertise in long term care insurance not
affiliated with the insurer to conduct an
examination of the policies, including benefits,
features, and rates and update the examination
thereafter in the event of material change. The
person may be a member of the staff of the
association;
(2) Actively
monitor the marketing efforts of the insurer and its insurance producers; and
(3) Review and
approve all marketing materials or other insurance communications used
to promote sales or sent to members regarding
the policies or certificates.
(4)
Subdivisions (h)(1), (h)(2) and (h)(3) shall not apply to qualified long-term
care
insurance contracts.
(i) No group long
term care insurance policy or certificate may be issued to an
association unless the insurer files with the
director the information required in this section.
(j) The insurer
shall not issue a long term care policy or certificate to an association or
continue to market the policy or certificate
unless the insurer certifies annually that the
association has complied with the requirements
set forth in this section.
27-34.2-16. Regulations.
– Authority to promulgate regulations. -- The director may
adopt reasonable rules and regulations for the
implementation of this chapter. The director shall
issue reasonable regulations to promote premium
adequacy and to protect the policymaker in the
event of substantial rate increases, and to
establish minimum standards for producer education,
marketing practices, producer compensation,
producer testing, penalties and reporting practices
for long-term care insurance.
27-34.2-19. Nonforfeiture
requirements. – Nonforfeiture benefits. -- (a) Any issuer
who offers for purchase a long term care
insurance contract shall include with the offer the option
for the purchaser to elect to purchase
nonforfeiture benefits. All offers shall meet the following
requirements:
(1) The
nonforfeiture provision shall be appropriately captioned.
(2) The
nonforfeiture provisions shall provide at least one of the following:
(i) Reduced
paid-up insurance;
(ii) Extended
term insurance;
(iii)
Shortened benefit period;
(iv) Other
similar offerings approved by the director.
(b) No
long-term care insurance contract may be issued or delivered in this state
until the
issuer has offered to the purchaser of the
contract the option to purchase nonforfeiture benefits.
The failure to offer nonforfeiture benefits shall
be considered a violation of this chapter and shall
subject the issuer to the enforcement remedies
and other penalties contained within the chapter.
(c) The
director shall promulgate rules and regulations as deemed necessary and
appropriate to govern the terms of this section.
(a)
Except as provided in subsection (b), a long-
term care insurance policy may not be delivered
or issued for delivery in this state unless the
policyholder or certificateholder has been
offered the option of purchasing a policy or certificate
including a nonforfeiture benefit. The offer of
a nonforfeiture benefit may be in the form of a
rider that is attached to the policy. In the
event the policyholder or certificateholder declines the
nonforfeiture benefit, the insurer shall provide
a contingent benefit upon lapse that shall be
available for a specified period of time
following a substantial increase in premium rates.
(b) When a
group long-term care insurance policy is issued, the offer required in
subsection (a) shall be made to the group
policyholder. However, if the policy is issued as group
long-term care insurance as defined in
subdivision 27-34.2-4(4)(v), other than to a continuing
care retirement community or other similar
entity, the offering shall be made to each proposed
certificateholder.
(c) The
commissioner shall promulgate regulations specifying the type or types of
nonforfeiture benefits to be offered as part of
long-term care insurance policies and certificates,
the standards for nonforfeiture benefits, and
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 as described in subsection 1.
SECTION 2. Chapter
27-34.2 of the General Laws entitled "Long-Term Care Insurance"
is hereby amended by adding thereto the
following sections:
27-34.2-7.1.
Incontestability period. – (a) For a policy or certificate that has
been in
force for less than six (6) months an insurer
may rescind a long-term care insurance policy or
certificate or deny an otherwise valid long-term
care insurance claim upon a showing of
misrepresentation that is material to the
acceptance for coverage.
(b) For a
policy or certificate that has been in force for at least six (6) months, but
less
than two (2) years, an insurer may rescind a
long-term care insurance policy or certificate or deny
an otherwise valid long-term care insurance
claim upon a showing of misrepresentation that is
both material to the acceptance for coverage and
which pertains to the condition for which
benefits are sought.
(c) After a
policy or certificate has been in force for two (2) years it is not contestable
upon the grounds of misrepresentation alone; the
policy or certificate may be contested only upon
a showing that the insured knowingly and
intentionally misrepresented relevant facts relating to
the insured's health.
(d) A long-term
care insurance policy or certificate may be field issued if the
compensation to the field issuer is not based on
the number of policies or certificates issued. For
the purposes of this section, "field
issued" means a policy or certificate issued by a producer or a
third-party administrator pursuant to the
underwriting authority granted to the producer or third-
party administrator by an insurer and using the
insurer's underwriting guidelines.
(e) 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 in the event that the policy or certificate
is rescinded.
(f) 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. In this
situation, the remaining death benefits under
these policies shall be governed by chapter 27-4. In
all other situations, this section shall apply
to life insurance policies that accelerate benefits for
long-term care.
27-34.2-21.
Producer training requirements. -- (a) On or after January 1, 2008,
an
individual may not sell, solicit or negotiate
long-term care insurance unless the individual is
licensed as an insurance producer for accident
and health or sickness or life and has completed a
one-time training course. The training shall
meet the requirements set forth in this section.
(b) An
individual already licensed and selling, soliciting or negotiating long-term
care
insurance on the effective date of this act may not
continue to sell, solicit or negotiate long-term
care insurance unless the individual has
completed a one-time training course as set forth in the
section, within one year from the effective date
of this act.
(c) In addition
to the one-time training course required in this section, an individual who
sells, solicits or negotiates long-term care insurance
shall complete ongoing training as set forth
in this section.
(d) The
training requirements of this section may be approved as continuing education
courses.
(e) The
one-time training required by this section shall be no less than eight (8)
hours and
the ongoing training required by this section
shall be no less than four (4) hours every twenty-four
(24) months.
(f) The
training required under paragraph (a) shall consist of topics related to
long-term
care insurance, long-term care services and, if
applicable, qualified state long-term care
insurance. Partnership programs, including, but
not limited to:
(1) State and
federal regulations and requirements and the relationship between qualified
state long-term care insurance partnership
programs and other public and private coverage of
long-term services, including Medicaid;
(2) Available
long-term care services and providers;
(3) Changes or
improvements in long-term care services or providers;
(4)
Alternatives to the purchase of private long-term care insurance;
(5) The effect
of inflation on benefits and the importance of inflation protection; and
(6) Consumer
suitability standards and guidelines.
(g) The
training required by this section shall not include training that is insurer or
company product specific or that includes any
sales or marketing information, materials, or
training, other than those required by state or
federal law.
(h) Insurers subject
to this act shall obtain verification that a producer receives training
required by this section before a producer is
permitted to sell, solicit or negotiate the insurer's
long-term care insurance products, maintain
records subject to the state's record retention
requirements, and make that verification
available to the commissioner upon request.
(i) Insurers
subject to this act shall maintain records with respect to the training of its
producers concerning the distribution of its
partnership policies that will allow the state insurance
department to provide assurance to the state
Medicaid agency that producers have received the
training contained in this section and that
producers have demonstrated an understanding of the
partnership policies and their relationship to
public and private coverage of long-term care,
including Medicaid, in this state. These records
shall be maintained in accordance with the state's
record retention requirements and shall be made
available to the commissioner upon request.
(j) The
satisfaction of these training requirements in any state shall be deemed to
satisfy
the training requirements in this state.
SECTION 3. Section
27-34.2-7 of the General Laws in Chapter 27-34.2 entitled "Long
Term Care Insurance" is hereby repealed.
27-34.2-7.
Policy provisions. -- (a) (1) No policy of long term care
insurance shall be
delivered or issued for delivery to any person
in this state unless:
(i) The entire
money and other considerations for the policy are expressed in it;
(ii) The time
at which the insurance takes effect and terminates is expressed in the
policy;
(iii) The
style, arrangement, and overall appearance of the policy give no undue
prominence to any portion of the text, and every
printed portion of the text of the policy and of
any endorsements or attached papers is plainly
printed in light faced type of a style in general use,
the size of which shall be uniform and not less
than ten (10) point with a lower case unspaced
alphabet length not less than one hundred and
twenty (120) point; the "text" includes all printed
matter except the name and address of the
insurer, name or title of the policy, the brief description
if any, and captions and sub-captions;
(iv) The
exceptions and reductions of indemnity are set forth in the policy or group
certificate and, except those which are set
forth in subsection (b) are printed, at the insurer's
option, either included with the benefit
provision to which they apply or under an appropriate
caption such as "exceptions" or
"exceptions and reductions"; provided, that if an exception or
reduction specifically applies only to a particular
benefit of the policy, a statement of the
exception or reduction shall be included with
the benefit provision to which it applies;
(v) Each form,
including riders and endorsements, shall be identified by a form number
in the lower left hand corner of the first page
of the form; and
(vi) It
contains no provision purporting to make any portion of the charter, rules,
constitution, or by-laws of the insurer a part
of the policy unless the portion is set forth in full in
the policy, except in the case of the
incorporation of, or reference to, a statement of rates or
classification of risks, or short rate table
filed with the director;
(2) If any
policy is issued by an insurer domiciled in this state for delivery to a person
residing in another state, and if the official
having responsibility for the administration of the
insurance laws of the other state has advised
the director that the policy is not subject to approval
or disapproval by the official, the director
may, by ruling, require that the policy meet the
standards set forth in subdivision (1) of this
subsection and in subsection (b) of this section.
(b) (1) Except
as provided in subdivision (3) of this subsection, each policy delivered or
issued for delivery to any person in this state
shall contain the provisions specified in this
subsection in the words in which the provisions
appear in this subsection; provided, that the
insurer may, at its option, substitute for one
or more of the provisions corresponding provisions of
different wording approved by the director which
are in each instance not less favorable in any
respect to the insured or the beneficiary. The
provisions shall be preceded individually by the
caption appearing in this subsection or, at the
option of the insurer, by any appropriate individual
or group captions or subcaptions that the
director may approve:
(i) A
provision as follows:
Entire
contract; changes. This policy, including the endorsements and the attached
papers, if any, constitutes the entire contract
of insurance. No change in this policy shall be valid
until approved by an executive officer of the
insurer and unless the approval is endorsed on this
policy or attached to it. No agent has authority
to change this policy or to waive any of its
provisions.
(ii) A
provision as follows:
Grace period.
A grace period of thirty-one (31) days will be granted for the payment of
each premium falling due after the first premium,
during which grace period the policy shall
continue in force.
(Each policy
in which the insurer reserves the right to refuse renewal on an individual
basis shall provide, in substance, in a
provision of the policy or in an endorsement on it or in a
rider attached to it, that subject to the right
to terminate the policy upon nonpayment of premium
when due, the right to refuse renewal shall not
be exercised before the renewal date occurring on,
or after and nearest, each anniversary, or in
the case of lapse and reinstatement, at the renewal
date occurring on, or after and nearest, each
anniversary of the last reinstatement, and that any
refusal of renewal shall be without prejudice to
any claim originating while the policy is in force);
(iii) A
provision as follows:
Reinstatement.
If any renewal premium is not paid within the time granted the insured
for payment, a subsequent acceptance of premium
by the insurer or by any agent duly authorized
by the insurer to accept the premium, without
requiring in connection with the premium an
application for reinstatement, shall reinstate
the policy; provided, that if the insurer of the agent
requires an application for reinstatement and
issues a conditional receipt for the premium
tendered, the policy will be reinstated upon
approval of the application by the insurer or, lacking
approval, upon the forty-fifth day following the
date of the conditional receipt unless the insurer
has previously notified the insured in writing
of its disapproval of the application. The reinstated
policy shall only cover claims arising more than
ten (10) days after that date. In all other respects
the insured and insurer shall have the same
rights under the reinstated policy as they had under
the policy immediately before the due date of
the defaulted premium, subject to any provisions
endorsed on the policy or attached to it in
connection with the reinstatement. Any premium
accepted in connection with a reinstatement
shall be applied to a period for which the premium
has not been previously paid, but not to any
period more than sixty (60) days prior to the date of
reinstatement.
(iv) A
provision as follows:
Notice of claim.
Written notice of a claim must be given to the insurer within twenty
(20) days after the occurrence or commencement
of any loss covered by the policy, or as soon
after this as is reasonably possible. Notice given
by or on behalf of the insured or the beneficiary
to the insurer, at (insert the location of any
office that the insurer may designate for the purpose),
or to any authorized agent of the insurer, with
information sufficient to identify the insured, shall
be deemed notice to the insurer.
(v) A
provision as follows:
Claim forms.
The insurer, upon receipt of a notice of claim, will furnish to the claimant
the forms that are usually furnished by it for
filing proof of loss. If the forms are not furnished
within fifteen (15) days after the giving of the
notice, the claimant shall be deemed to have
complied with the requirements of this policy as
to proof of loss upon submitting, within the time
fixed in the policy for filing proofs of loss,
written proof covering the occurrence, the character,
and the extent of the loss for which claim is
made.
(vi) A
provision as follows:
Proofs of
loss. Written proof of loss must be furnished to the insurer at its office in
case
of a claim for loss for which this policy
provides any periodic payment contingent upon
continuing loss within ninety (90) days after
the termination of the period for which the insurer is
liable, and in case of a claim for any other
loss, within ninety (90) days after the date of the loss.
Failure to furnish the proof within the time
required shall not invalidate nor reduce any claim if it
was not reasonably possible to give proof within
that time, provided the proof is furnished as
soon as reasonably possible and in no event,
except in the absence of legal capacity, later than
one year from the time proof is required.
(vii) A
provision as follows:
Time of
payment of claims. Indemnities payable under this policy for any loss, other
than loss for which this policy provides any
periodic payment, will be paid immediately upon
receipt of due written proof of the loss.
Subject to due written proof of loss, all accrued
indemnities for loss, for which this policy
provides periodic payment, will be paid ...(insert period
for payment which must not be less frequently
than monthly) and any balance remaining unpaid
upon the termination of liability will be paid
immediately upon receipt of due written proof.
(viii) A
provision as follows:
Payment of
claims. Indemnity for loss of life, if applicable, will be payable in
accordance with the beneficiary designation and
the provisions respecting the payment which
may be prescribed in this policy and effective at
the time of payment. If no designation or
provision is then effective, the indemnity shall
be payable to the estate of the insured. Any other
accrued indemnities unpaid at the insured's
death may, at the option of the insurer, be paid either
to the beneficiary or to the estate. All other
indemnities will be payable to the insured.
(ix) A
provision as follows:
Physical
examination and autopsy. The insurer at its own expense shall have the right
and opportunity to examine the person of the insured,
when and as often as it may reasonably
require during the pendency of a claim under the
policy, and to make an autopsy in the case of
death where it is not forbidden by law.
(x) A
provision as follows:
Legal actions.
No action at law or in equity shall be brought to recover on this policy
prior to the expiration of sixty (60) days after
written proof of loss has been furnished in
accordance with the requirements of this policy.
No action shall be brought after the expiration of
three (3) years after the time written proof of
loss is required to be furnished.
(2) Except as
provided in subdivision (3) of this subsection, no policy delivered or issued
for delivery to any person in this state shall
contain provisions respecting the matters set forth
below unless the provisions are in the words in
which the provisions appear in this subsection;
provided, that the insurer may, at its option,
use in lieu of any provision a corresponding
provision of different wording approved by the
director which is not less favorable in any respect
to the insured or the beneficiary. Any provision
contained in the policy shall be preceded
individually by the appropriate caption
appearing in this paragraph or, at the option of the insurer,
by any appropriate individual or group captions
or subcaptions as the director may approve:
(i) A
provision as follows:
Change of
occupation. If the insured is injured or contracts sickness after having
changed occupations to one classified by the
insurer as more hazardous than that stated in this
policy, or while doing, for compensation,
anything pertaining to an occupation classified as more
hazardous, the insurer will pay only that
portion of the indemnities provided in this policy as the
premium paid would have purchased at the rates
and within the limits fixed by the insurer for the
more hazardous occupation. If the insured
changes occupations to one classified by the insurer as
less hazardous than that stated in this policy, the
insurer, upon receipt of proof of the change of
occupation, will reduce the premium rate
accordingly, and will return the excess pro rata
unearned premium from the date of the change of
occupation or from the policy anniversary date
immediately preceding receipt of the proof,
whichever is the more recent. In applying this
provision, the classification of occupational
risk and the premium rates shall be such as have been
filed by the insurer prior to the occurrence of
the loss for which the insurer is liable or prior to the
date of proof of the change in occupation with
the state official having supervision of insurance in
the state where the insured resided at the time
this policy was issued; but if the filing was not
required, then the classification of
occupational risk and the premium rates shall be those last
made effective by the insurer in the state prior
to the occurrence of the loss or prior to the date of
proof of change in occupation.
(ii) A
provision as follows:
Misstatement
of age. If the age of the insured has been misstated, all amounts payable
under this policy shall be such as the premium
paid would have purchased at the correct age.
(iii) A
provision as follows:
Unpaid
premium. - Upon the payment of a claim under this policy, any premium then
due and unpaid or covered by any note or written
order may be deducted from the payment.
(iv) A
provision as follows:
Conformity
with state statutes. Any provision of this policy which, on its effective date,
is in conflict with the statutes of the state in
which the insured resides on that date is hereby
amended to conform to the minimum requirements
of the statutes.
(v) A
provision as follows:
Illegal
occupation. The insurer shall not be liable for any loss to which a
contributing
cause was the insured's commission of or attempt
to commit a felony or to which a contributing
cause was the insured's being engaged in an
illegal occupation.
(vi) A
provision as follows:
Intoxicants and
narcotics. The insurer shall not be liable for any loss sustained or
contracted in consequence of the insured's being
intoxicated or under the influence of any
narcotic unless administered on the advice of a
physician.
(3) If any provision
of this subsection is in whole or in part inapplicable to or
inconsistent with the coverage provided by a
particular form of policy, the insurer, with the
approval of the director, shall omit from the
policy any inapplicable provision or part of a
provision, and shall modify any inconsistent
provision or part of the provision in such manner as
to make the provision as contained in the policy
consistent with the coverage provided by the
policy;
(4) The
provisions which are the subject of subdivisions (1) and (2) of this
subsection, or
any corresponding provisions which are used in
lieu of the provisions in subdivisions (1) and (2)
of this subsection in accordance with this
section, shall be printed in the consecutive order of the
provisions in this section or, at the option of
the insurer, the provisions may appear as a unit in
any part of the policy, with other provisions to
which it may be logically related; provided the
resulting policy shall not be in whole or in
part unintelligible, uncertain, ambiguous, abstruse, or
likely to mislead a person to whom the policy is
offered, delivered, or issued;
(5) The word
"insured" as used in this chapter, shall not be construed as
preventing a
person other than the insured with a proper
insurable interest from making application for and
owning a policy covering the insured or from
being entitled under the policy to any indemnities,
benefits, and rights provided in the policy;
(6) Any policy
of a foreign or alien insurer, when delivered or issued for delivery to any
person in this state, may contain any provision
which is not less favorable to the insured or the
beneficiary than the provisions of this chapter
and which is prescribed or required by the law of
the state under which the insurer is organized;
(7) Any policy
of a domestic insurer may, when issued for delivery in any other state or
country, contain any provisions permitted or
required by the laws of the other state or country.
(c) (1) No
policy provision which is not subject to subsection (b) of this section shall
make a policy, or any portion of a policy, less
favorable in any respect to the insured or the
beneficiary than the provisions of the policy
which are subject to this section;
(2) A policy
delivered or issued for delivery to any person in this state in violation of
this
chapter shall be held valid but shall be
construed as provided in this chapter. When any provision
in a policy subject to this chapter is in conflict
with any provision of this chapter, the rights,
duties, and obligations of the insurer, the
insured and the beneficiary shall be governed by the
provisions in this chapter.
(d) (1) The
insured shall not be bound by any statement made in an application for a
policy unless a copy of the application is
attached to or endorsed on the policy when issued as a
part of the policy. If the policy delivered or
issued for delivery to any person in this state shall be
reinstated or renewed, and the insured or the
beneficiary or assignee of the policy shall make
written request to the insurer for a copy of the
application, if any, for the reinstatement or
renewal, the insurer shall within fifteen (15)
days after the receipt of the request at its home office
or any branch office of the insurer, deliver or
mail to the person making the request a copy of the
application. If this copy shall not be delivered
or mailed, the insurer shall be precluded from
introducing the application as evidence in any
action or proceeding based upon or involving the
policy or its reinstatement or renewal;
(2) No
alteration of any written application for the policy shall be made by any
person
other than the applicant without the applicant's
written consent, except that insertions may be
made by the insurer, for administrative purposes
only, in such manner as to indicate clearly that
the insertions are not to be ascribed to the
applicant;
(3) The falsity
of any statement in the application for any policy covered by this chapter
may not bar the right to recovery under the
policy unless the false statement materially affected
either the acceptance of the risk or the hazard
assumed by the insurer.
(e) The
acknowledgement by any insurer of the receipt of notice given under any policy
covered by this chapter, or the furnishing of
forms for filing proofs of loss, or the acceptance of
the proofs, or the investigation of any claim
under the policy, shall not operate as a waiver of any
of the rights of the insurer in defense of any
claim arising under the policy.
(f) (1) For a
policy or certificate that has been in force for less than six (6) months an
insurer may rescind a long term care insurance
policy or certificate or deny an otherwise valid
long term care insurance claim upon a showing of
misrepresentation that is material to the
acceptance for coverage.
(2) For a
policy or certificate that has been in force for at least six (6) months but
less
than two (2) years an insurer may rescind a long
term care insurance policy or certificate or deny
an otherwise valid long term care insurance
claim upon a showing of misrepresentation that is
both material to the acceptance for coverage and
which pertains to the condition for which
benefits are sought;
(3) After a
policy or certificate has been in force for two (2) years it is not contestable
upon the grounds of misrepresentation alone; the
policy or certificate may be contested only upon
a showing that the insured knowingly and
intentionally misrepresented relevant facts relating to
the insured's health;
(4) (i) No
long term care insurance policy or certificate may be field issued based on
medical or health status;
(ii) For the
purposes of this section, "field issued" means a policy or
certificate issued by
an agent or a third party administrator pursuant
to the underwriting authority granted to the agent
or third party administrator by an insurer;
(5) 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 in the event that the policy or certificate
is rescinded.
SECTION 4. Section
40-8-22 of the General Laws in Chapter 40-8 entitled "Medical
Assistance" is hereby amended to read as
follows:
40-8-22. Protection
of resources -- Long term care insurance. – Protection of
resources – Long-term care insurance partnership
program. --
(a) The department of human
services shall, from January 1, 1994 to
January 1, 1999, coordinate a pilot program entitled the
Rhode Island Partnership for Long Term Care
whereby private insurance and funds may be
utilized to finance long term care. The
department shall seek appropriate amendments to its state
plan for medical assistance under Title XIX, 42
U.S.C. section 1396 et seq., of the Social Security
Act (Medicaid), or waivers of state plan
requirements, to allow protection of resources and
income pursuant to this section. The protection
shall be provided, to the extent approved by the
federal Health Care Financing Administration
centers for Medicare and Medicaid services, for
any purchaser of a precertified long-term care policy
delivered, issued for delivery or renewal
renewed from January 1, 1994 to December 31,
1999, inclusive, or the termination of the
program, whichever is sooner, and shall last for the
life of the purchaser. Notwithstanding any
provision of the general laws, the resources of
such an individual, to the extent such resources are
equal to the amount of qualifying long-term care
insurance benefits payments provided pursuant
to a policy of long-term care issuance
precertified in accordance with department regulations and
chapter 34.2 of title 27, shall not be
considered by the department in a determination of: (1) his or
her eligibility for Medicaid; (2) the amount of
any Medicaid payment; or (3) in any subsequent
recovery by the state of a payment for medical
services. Such precertified policies shall be known
as "Medicaid qualifying long-term care partnership
policies".
(b) The
department shall count insurance benefit payments toward resource exclusion to
the extent such payments: (1) are for services
covered under the state plan for medical assistance
including nursing home care, or formal services
delivered to insureds in the community as part of
a care plan; (2) are for the lower of the actual
charge or the amount paid by the insurance
company; and (3) are for services provided after
the individual meets the coverage requirements
for long-term care benefits established by the
department for this program. The department shall
adopt rules and regulations to implement the
provisions of this section and relating to determining
eligibility of applicants for Medicaid and the
coverage requirements for long-term care benefits.
SECTION 5. This
act shall take effect upon passage.
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LC01773/SUB
A
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