As protection against unintentional lapse, each insurer
offering long-term care insurance shall comply with the following
requirements:
A.
Notice Before
Lapse or Termination Date
(1) No
individual 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 30 days after a premium is due and unpaid. I
elect NOT to designate a person to receive this notice." The insurer shall
notify the insured of the right to change this written designation, no less
often than once every two years.
(2) When the policyholder or
certificateholder pays the premium for a policy or certificate through a
payroll or pension deduction plan, the requirements of Paragraph (1) need not
be met until 60 days after the policyholder or certificateholder is no longer
on such a payment plan. The application or enrollment form for such policies or
certificates shall clearly indicate the payment plan selected by the
applicant.
(3) Lapse or termination
for nonpayment of premium. No individual policy or certificate shall lapse or
be terminated for nonpayment of premium unless the insurer, at least 30 days
before the effective date of the lapse or termination, has given notice to the
insured and to those persons designated pursuant to Section 7(A)(1), at the
address or addresses 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. Notice may not be given until 30 days after a premium is
due and unpaid. Notice shall be deemed to have been given as of five days after
the date of mailing.
B.
Reinstatement. In addition to the requirement in Section 7(A), a
policy or certificate shall include a provision for reinstatement of coverage
in the event of lapse if the insurer is provided proof that the policyholder or
certificateholder was cognitively impaired or had a loss of functional capacity
before the grace period contained in the policy expired. Such reinstatement
shall be available to the insured if requested within five 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.
