Current through all regulations passed and filed through March 18, 2024
(A) Purpose
The purpose of this rule is to
implement sections 3923.41 to
3923.49 of the Revised Code to
promote the public interest, to promote the availability of long-term care
insurance coverage, to protect applicants for long-term care insurance, as
defined, from unfair or deceptive sales or enrollment practices, to facilitate
public understanding and comparison of long-term care insurance coverages, and
to facilitate flexibility and innovation in the development of long-term care
insurance.
(B)
Authority
This regulation is promulgated pursuant
to the authority vested in the superintendent under sections
3901.041,
3923.44 and
3923.47 of the Revised
Code.
(C)
Applicability
Except as otherwise specifically
provided, this rule applies to all long-term care insurance policies, including
qualified long-term care contracts and life insurance policies that accelerate
benefits for long-term care delivered or issued for delivery in this state on
or after the effective date by insurers; fraternal benefit societies; nonprofit
health, hospital and medical service corporations; prepaid health plans; health
maintenance organizations and all similar organizations.
Additionally, this rule is intended to apply to policies having
indemnity benefits that are triggered by activities of daily living and sold as
disability income insurance, if:
(1)
The benefits of the disability income policy are dependent upon or vary in
amount based on the receipt of long-term care services;
(2) The disability income policy is
advertised, marketed or offered as insurance for long-term care services;
or
(3) Benefits under the policy may
commence after the policyholder has reached social security's normal retirement
age unless benefits are designed to replace lost income or pay for specific
expenses other than long-term care services.
(D) Definitions
For the purpose of this rule, the terms
"long-term care insurance," "group long-term care insurance," "applicant,"
"policy" and "certificate" shall have the meanings set forth in section
3923.41 of the Revised Code. In
addition, the following definitions apply.
(1) "Association" shall mean any
professional, trade, or occupational association for its members or former or
retired members, or combination thereof, if such 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.
(2)
"Exceptional
increase" means:
(a)
Only those increases filed by an insurer as
exceptional for which the superintendent determines the need for the premium
rate increase is justified:
(i) Due to changes
in laws or regulations applicable to long-term care coverage in this state;
or
(ii) Due to increased and
unexpected utilization that affects the majority of insurers of similar
products.
(b) Except as
provided in paragraph (T) of this rule, exceptional increases are subject to
the same requirements as other premium rate schedule increases.
(c) The superintendent may request a review
by an independent actuary or a professional actuarial body of the basis for a
request that an increase be considered an exceptional increase.
(d) The superintendent, in determining that
the necessary basis for an exceptional increase exists, shall also determine
any potential offsets to higher claims costs.
(3) "Incidental," as used in paragraph
(T)(10) of this rule, means that the value of the long-term care benefits
provided is less than ten per cent of the total value of the benefits provided
over the life of the policy. These values shall be measured as of the date of
issue.
(4) "Qualified actuary" means
a member in good standing of the American academy of actuaries.
(5) "Similar policy forms" means all of the
long-term care insurance policies and certificates issued by an insurer in the
same long-term care benefit classification as the policy form being considered.
Certificates of groups that meet the definition in section
3923.41 of the Revised Code are
not considered similar to certificates or policies otherwise issued as
long-term care insurance, but are similar to other comparable certificates with
the same long-term care benefit classifications. For purposes of determining
similar policy forms, long-term care benefit classifications are defined as
follows: institutional long-term care benefits only, non-institutional
long-term care benefits only, or comprehensive long-term care
benefits.
(E) Policy
definitions
No long-term care insurance policy
delivered or issued for delivery in this state shall use the terms set forth
below, unless the terms are defined in the policy and the definitions satisfy
the following requirements:
(1)
"Activities of daily living" means at least bathing, continence, dressing,
eating, toileting and transferring.
(2) "Acute condition" means that the
individual is medically unstable. Such an individual requires frequent
monitoring by medical professionals, such as physicians and registered nurses,
in order to maintain his or her health status.
(3) "Adult day care" means a program for six
or more individuals, of social and health-related services provided during the
day in a community group setting for the purpose of supporting frail, impaired
elderly or other disabled adults who can benefit from care in a group setting
outside the home.
(4) "Bathing"
means washing oneself by sponge bath; or in either a tub or shower, including
the task of getting into or out of the tub or shower.
(5) "Cognitive impairment" means a deficiency
in a person's short or long-term memory, orientation as to person, place and
time, deductive or abstract reasoning, or judgment as it relates to safety
awareness.
(6) "Continence" means
the ability to maintain control of bowel and bladder function; or, when unable
to maintain control of bowel or bladder function, the ability to perform
associated personal hygiene (including caring for catheter or colostomy bag).
(7) "Dressing" means putting on
and taking off all items of clothing and any necessary braces, fasteners or
artificial limbs.
(8) "Eating" means
feeding oneself by getting food into the body from a receptacle (such as a
plate, cup or table) or by a feeding tube or intravenously.
(9) "Hands-on assistance" means physical
assistance (minimal, moderate or maximal) without which the individual would
not be able to perform the activity of daily living.
(10) "Home health care services" means
medical and nonmedical services provided to ill, disabled or infirm persons in
their residences. Such services may include homemaker services, assistance with
activities of daily living and respite care services.
(11) "Medicare" means "The Health Insurance
for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then
Constituted or Later Amended," or "Title I, Part I of Public Law 89-97, as
Enacted by the Eighty-Ninth Congress of the United States of America and
popularly known as the Health Insurance for the Aged Act, as then constituted
and any later amendments or substitutes thereof," or words of similar import.
(12) "Mental or nervous disorder"
shall not be defined to include more than neurosis, psychoneurosis,
psychopathy, psychosis, or mental or emotional disease or disorder.
(13) "Personal care" means the provision of
hands-on services to assist an individual with activities of daily
living.
(14) "Skilled nursing care,"
"personal care," "home care," "specialized care," "assisted living care" and
other services shall be defined in relation to the level of skill required, the
nature of the care and the setting in which care must be delivered.
(15) "Toileting" means getting to and from
the toilet, getting on and off the toilet, and performing associated personal
hygiene.
(16) "Transferring" means
moving into or out of a bed, chair or wheelchair.
(17) All providers of services, including but
not limited to "skilled nursing facility," "extended care facility,"
"convalescent nursing home," "personal care facility," "specialized care
providers," "assisted living facility" and "home care agency" shall be defined
in relation to the services and facilities required to be available and the
licensure, certification, registration or degree status of those providing or
supervising the services. When the definition requires that the provider be
appropriately licensed, certified or registered, it shall also state what
requirements a provider must meet in lieu of licensure, certification or
registration when the state in which the service is to be furnished does not
require a provider of these services to be licensed, certified or registered,
or when the state licenses, certifies or registers the provider of services
under another name.
(F)
Policy practices and provisions
(1)
Renewability. The terms "guaranteed renewable" and "noncancellable" shall not
be used in any individual long-term care insurance policy without further
explanatory language in accordance with the disclosure requirements of
paragraph (I) of this rule.
(a) A policy
issued to an individual shall not contain renewal provisions other than
"guaranteed renewable" or "noncancellable."
(b) The term "guaranteed renewable" may be
used only when the insured has the right to continue the long-term care
insurance in force by the timely payment of premiums and when the insurer has
no unilateral right to make any change in any provision of the policy or rider
while the insurance is in force, and cannot decline to renew, except that rates
may be revised by the insurer on a class basis.
(c) The term "noncancellable" may be used
only when the insured has the right to continue the long-term care insurance in
force by the timely payment of premiums during which period the insurer has no
right to unilaterally make any change in any provision of the insurance or in
the premium rate.
(d) The term
"level premium" may only be used when the insurer does not have the right to
change the premium.
(e) In addition
to the other requirements of this paragraph, a qualified long-term care
insurance contract shall be guaranteed renewable, within the meaning of
section 7702B(b)(1)(C) of the Internal Revenue
Code of 1986, as amended.
(2) Limitations and exclusions. A policy may
not be delivered or issued for delivery in this state as long-term care
insurance if the policy limits or excludes coverage by type of illness,
treatment, medical condition or accident, except as follows:
(a) Preexisting conditions or
diseases;
(b) Mental or nervous
disorders; however, this shall not permit exclusion or limitation of benefits
on the basis of alzheimer's disease;
(c) Alcoholism and drug addiction;
(d) Illness, treatment or medical condition
arising out of:
(i) War or act of war (whether
declared or undeclared);
(ii)
Participation in a felony, riot or insurrection;
(iii) Service in the armed forces or units
auxiliary thereto;
(iv) Suicide
(sane or insane), attempted suicide or intentionally self-inflicted injury;
or
(v) Aviation (this exclusion
applies only to non-fare-paying passengers).
(e) Treatment provided in a government
facility (unless otherwise required by law), services for which benefits are
available under medicare or other governmental program (except medicaid), any
state or federal workers' compensation, employer's liability or occupational
disease law, or any motor vehicle no-fault law, services provided by a member
of the covered person's immediate family and services for which no charge is
normally made in the absence of insurance;
(f) Expenses for services or items available
or paid under another long-term care insurance or health insurance
policy;
(g) In the case of a
qualified long-term care insurance contract, expenses for services or items to
the extent that the expenses are reimbursable under Title XVIII of the Social
Security Act or would be so reimbursable but for the application of a
deductible or coinsurance amount.
(h)
(i)
This
paragraph is not intended to prohibit exclusions and
limitations by type of provider. However, no long term care issuer may deny a
claim because services are provided in a state other then the state of policy
issue under the following conditions:
(a) When
the state other then the state of policy issue does not have the provider
licensing, certification or registration required in the policy, but where the
provider satisfies the policy requirements outlined for providers in lieu of
licensure, certification or registration; or
(b) When the state other than the state of
policy issue licenses, certifies or registers the provider under another
name.
(ii) For purposes of
this paragraph, "state of policy issue" means the state in which the individual
policy or certificate was originally issued.
(i) This
paragraph is not intended to prohibit territorial
limitations.
(3) Extension
of benefits. Termination of long-term care insurance shall be without prejudice
to any benefits payable for institutionalization if the institutionalization
began while the long-term care insurance was in force and continues without
interruption after termination. The extension of benefits beyond the period the
long-term care insurance was in force may be limited to the duration of the
benefit period, if any, or to payment of the maximum benefits and may be
subject to any policy waiting period, and all other applicable provisions of
the policy.
(4) Continuation or
conversion
(a) Group long-term care insurance
issued in this state on or after the effective date of this paragraph shall
provide covered individuals with a basis for continuation or conversion of
coverage.
(b) For the purposes of
this paragraph, a "basis for continuation of coverage" means a policy provision
that maintains coverage under the existing group policy when the coverage would
otherwise terminate and which is subject only to the continued timely payment
of premium when due. Group policies that restrict provision of benefits and
services to, or contain incentives to use certain providers or facilities may
provide continuation benefits that are substantially equivalent to the benefits
of the existing group policy. The superintendent shall make a determination as
to the substantial equivalency of benefits, and in doing so, shall take into
consideration the differences between managed care and non-managed care plans,
including, but not limited to, provider system arrangements, service
availability, benefit levels and administrative complexity.
(c) For the purposes of this paragraph, a
"basis for conversion of coverage" means a policy provision that an individual
whose coverage under the group policy would otherwise terminate or has been
terminated for any reason, including discontinuance of the group policy in its
entirety or with respect to an insured class, and who has been continuously
insured under the group policy (and any group policy which it replaced), for at
least six months immediately prior to termination, shall be entitled to the
issuance of a converted policy by the insurer under whose group policy he or
she is covered, without evidence of insurability.
(d) For the purposes of this paragraph,
"converted policy" means an individual policy of long-term care insurance
providing benefits identical to or benefits determined by the superintendent to
be substantially equivalent to or in excess of those provided under the group
policy from which conversion is made. Where the group policy from which
conversion is made restricts provision of benefits and services to, or contains
incentives to use certain providers or facilities, the superintendent, in
making a determination as to the substantial equivalency of benefits, shall
take into consideration the differences between managed care and non-managed
care plans, including, but not limited to, provider system arrangements,
service availability, benefit levels and administrative complexity.
(e) Written application for the converted
policy shall be made and the first premium due, if any, shall be paid as
directed by the insurer not later than thirty days after termination of
coverage under the group policy. The converted policy shall be issued effective
on the day following the termination of coverage under the group policy, and
shall be renewable annually.
(f)
Unless the group policy from which conversion is made replaced previous group
coverage, the premium for the converted policy shall be calculated on the basis
of the insured's age at inception of coverage under the group policy from which
conversion is made. Where the group policy from which conversion is made
replaced previous group coverage, the premium for the converted policy shall be
calculated on the basis of the insured's age at inception of coverage under the
group policy replaced.
(g)
Continuation of coverage or issuance of a converted policy shall be mandatory,
except where:
(i) Termination of group
coverage resulted from an individual's failure to make any required payment of
premium or contribution when due; or
(ii) The termination coverage is replaced not
later than thirty-one days after termination, by group coverage effective on
the day following the termination of coverage:
(a) Providing benefits identical to or
benefits determined by the superintendent to be substantially equivalent to or
in excess of those provided by the terminating coverage; and
(b) The premium for which is calculated in a
manner consistent with the requirements of paragraph (F)(4)(f) of this
rule.
(h)
Notwithstanding any other provisions of this paragraph, a converted policy
issued to an individual who at the time of conversion is covered by another
long-term care insurance policy that provides benefits on the basis of incurred
expenses, may contain a provision that results in a reduction of benefits
payable if the benefits provided under the additional coverage, together with
the full benefits provided by the converted policy, would result in payment of
more than one hundred per cent of incurred expenses. The provision shall only
be included in the converted policy if the converted policy also provides for a
premium decrease or refund which reflects the reduction in benefits
payable.
(i) The converted policy
may provide that the benefits payable under the converted policy, together with
the benefits payable under the group policy from which conversion is made,
shall not exceed those that would have been payable had the individual's
coverage under the group policy remained in force and effect.
(j) Notwithstanding any provision of this
paragraph, an insured individual whose eligibility for group long-term care
coverage is based upon his or her relationship to another person shall be
entitled to continuation of coverage under the group policy upon termination of
the qualifying relationship by death or dissolution of marriage.
(k) For the purposes of this paragraph a
"managed-care plan" is a health care or assisted living arrangement designed to
coordinate patient care or control costs through utilization review, case
management or use of specific provider networks.
(5) Discontinuance and replacement
If a group long-term care policy is replaced by another group
long-term care policy issued to the same policyholder, the succeeding insurer
shall offer coverage to all persons covered under the previous group policy on
its date of termination. Coverage provided or offered to individuals by the
insurer and premiums charged to persons under the new group policy:
(a) Shall not result in an exclusion for
preexisting conditions that would have been covered under the group policy
being replaced; and
(b) Shall not
vary or otherwise depend on the individual's health or disability status, claim
experience or use of long-term care services.
(6)
(a) The
premium charged to an insured shall not increase due to either:
(i) The increasing age of the insured at ages
beyond sixty-five; or
(ii) The
duration the insured has been covered under the policy.
(b) The purchase of additional coverage shall
not be considered a premium rate increase, but for purposes of the calculation
required under paragraph (AA) of this rule, the portion of the premium
attributable to the additional coverage shall be added to and considered part
of the initial annual premium.
(c)
A reduction in benefits shall not be considered a premium change, but for
purpose of the calculation required under paragraph (AA) of this rule, the
initial annual premium shall be based on the reduced
benefits.
(7) Electronic
enrollment for group polices
(a) In the case
of a group defined in division (D) of section
3923.41 of the Revised Code, any
requirement that a signature of an insured be obtained by an agent or insurer
shall be deemed satisfied if:
(i) The consent
is obtained by telephonic or electronic enrollment by the group policyholder or
insurer. A verification of enrollment information shall be provided to the
enrollee;
(ii) The telephonic or
electronic enrollment provides necessary and reasonable safeguards to assure
the accuracy, retention and prompt retrieval of records; and
(iii) The telephonic or electronic enrollment
provides necessary and reasonable safeguards to assure that the confidentiality
of individually identifiable information and "privileged information" as
defined by division (U) of section
3904.01 of the Revised Code, is
maintained.
(b) The
insurer shall make available, upon request of the superintendent, records that
will demonstrate the insurer's ability to confirm enrollment and coverage
amounts.
(G)
Unintentional lapse
Each insurer offering long-term care
insurance shall, as a protection against unintentional lapse, comply with the
following:
(1)
(a) Notice before lapse or termination. 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 non-payment of premium. I understand that notice will not
be given until thirty 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.
(b) When the policyholder or
certificateholder pays premium for a long-term care insurance policy or
certificate through a payroll or pension deduction plan, the requirements
contained in paragraph (G)(1)(a) of this rule need not be met until sixty 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.
(c) Lapse or termination for nonpayment of
premium. No individual long-term care policy or certificate shall lapse or be
terminated for nonpayment of premium unless the insurer, at least thirty days
before the effective date of the lapse or termination, has given notice to the
insured and to those persons designated pursuant to paragraph (G)(1)(a) of this
rule, at the address provided by the insured for purposes of receiving notice
of lapse or termination. Notice shall be given by first class United Sates
mail, postage prepaid; and notice may not be given until thirty 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.
(2) Reinstatement. In addition to the
requirement in paragraph (G)(1) of this rule, 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 certificateholder 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 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.
(H) Required disclosure provisions
(1) Renewability. Individual long-term care
insurance policies shall contain a renewability provision.
(a) The provision shall be appropriately
captioned, shall appear on the first page of the policy, and shall clearly
state that the coverage is guaranteed renewable or noncancellable. This
provision shall not apply to policies that do not contain a renewability
provision, and under which the right to nonrenew is reserved solely to the
policyholder.
(b) A long-term care
insurance policy or certificate, other than one where the insurer does not have
the right to change the premium, shall include a statement that premium rates
may change.
(2) Riders and
endorsements. Except for riders or endorsements by which the insurer
effectuates a request made in writing by the insured under an individual
long-term care insurance policy, all riders or endorsements added to an
individual long-term care insurance policy after date of issue or at
reinstatement or renewal that reduce or eliminate benefits or coverage in the
policy shall require signed acceptance by the individual insured. After the
date of policy issue, any rider or endorsement which increases benefits or
coverage with a concomitant increase in premium during the policy term must be
agreed to in writing signed by the insured, except if the increased benefits or
coverage are required by law. Where a separate additional premium is charged
for benefits provided in connection with riders or endorsements, the premium
charge shall be set forth in the policy, rider or endorsement.
(3) Payment of benefits. A long-term care
insurance policy that provides for the payment of benefits based on standards
described as "usual and customary," "reasonable and customary" or words of
similar import shall include a definition of these terms and an explanation of
the terms in its accompanying outline of coverage.
(4) Limitations. If a long-term care
insurance policy or certificate contains any limitations with respect to
preexisting conditions, the limitations shall appear as a separate paragraph of
the policy or certificate and shall be labeled as "Preexisting Condition
Limitations."
(5) Other limitations
or conditions on eligibility for benefits. A long-term care insurance policy or
certificate containing any limitations or conditions for eligibility other than
those prohibited in divisions (E)(2) and (F) of section
3923.44 of the Revised Code
shall set forth a description of the limitations or conditions, including any
required number of days of confinement, in a separate paragraph of the policy
or certificate and shall label such paragraph "Limitations or Conditions on
Eligibility for Benefits."
(6)
Disclosure of tax consequences. With regard to life insurance policies that
provide an accelerated benefit for long-term care, a disclosure statement is
required at the time of application for the policy or rider and at the time the
accelerated benefit payment request is submitted that receipt of these
accelerated benefits may be taxable, and that assistance should be sought from
a personal tax advisor. The disclosure statement shall be prominently displayed
on the first page of the policy or rider and any other related documents. This
paragraph shall not apply to qualified long-term care
insurance contracts.
(7) Benefit
triggers. Activities of daily living and cognitive impairment shall be used to
measure an insured's need for long term care and shall be described in the
policy or certificate in a separate paragraph and shall be labeled "Eligibility
for the Payment of Benefits." Any additional benefit triggers shall also be
explained in this section. If these triggers differ for different benefits,
explanation of the trigger shall accompany each benefit description. If an
attending physician or other specified person must certify a certain level of
functional dependency in order to be eligible for benefits, this too shall be
specified.
(8) A qualified long-term
care insurance contract shall include a disclosure statement in the policy and
in the outline of coverage as contained in paragraph (DD)(5) of this rule that
the policy is intended to be a qualified long-term care insurance contract
under
section 7702B(b) of the Internal Revenue Code of 1986,
as amended.
(9) A nonqualified
long-term care insurance contract shall include a disclosure statement in the
policy and in the outline of coverage as contained in paragraph (DD)(5) of this
rule that the policy is not intended to be a qualified long-term care insurance
contract.
(I) Required
disclosure of rating practices to consumers
(1) This paragraph shall apply as follows:
(a) Except as provided in paragraph (I)(1)(b)
of this rule, this paragraph applies to any long-term care policy or
certificate issued in this state on or after one hundred eighty days after the
effective date of this rule.
(b) For
certificates issued on or after the effective date of this amended rule under a
group long-term care insurance policy as defined in division (D) of section
3923.41 of the Revised Code,
which policy was in force at the time this amended rule became effective, the
provisions of this paragraph shall apply on the policy anniversary following
three hundred sixty-five days after the effective date of this
rule.
(2) Other than
policies for which no applicable premium rate or rate schedule increases can be
made, insurers shall provide all of the information listed in this
paragraph to the applicant at the time of application
or enrollment, unless the method of application does not allow for delivery at
that time. In such a case, an insurer shall provide all of the information
listed in this paragraph to the applicant no later than at the time of delivery
of the policy or certificate.
(a) A statement
that the policy may be subject to rate increases in the future;
(b) An explanation of potential future
premium rate revisions, and the policyholder's or certificateholder's option in
the event of a premium rate revision;
(c) The premium rate or rate schedules
applicable to the applicant that will be in effect until a request is made for
an increase;
(d) A general
explanation for applying premium rate or rate schedule adjustments that shall
include:
(i) A description of when premium
rate or rate schedule adjustments will be effective (e.g., next anniversary
date, next billing date, etc.); and
(ii) The right to a revised premium rate or
rate schedule as provided in paragraph (I)(2) of this rule if the premium rate
or rate schedule is changed;
(e)
(i)
Information regarding each premium rate increase on this policy form or similar
policy forms over the past ten years for this state or any other state that, at
a minimum identifies:
(a) The policy forms for
which premium rates have been increased;
(b) The calendar years when the form was
available for purchase; and
(c) The
amount or per cent of each increase. The percentage may be expressed as a
percentage of the premium rate prior to the increase, and may also be expressed
as minimum and maximum percentages if the rate increase is variable by rating
characteristics.
(ii) The
insurer may, in a fair manner, provide additional explanatory information
related to the rate increases.
(iii)
An insurer shall have the right to exclude from the disclosure premium rate
increases that only apply to blocks of business acquired from other
nonaffiliated insurers or the long-term care policies acquired from other
nonaffiliated insurers when those increases occurred prior to the
acquisition.
(iv) If an acquiring
insurer files for a rate increase on a long-term care policy form acquired from
nonaffiliated insurers or a block of policy forms acquired from nonaffiliated
insurers on or before the later of the effective date of this paragraph or the
end of a twenty-four-month period following the acquisition of the block or
policies, the acquiring insurer may exclude that rate increase from the
disclosure. However, the nonaffiliated selling company shall include the
disclosure of that rate increase in accordance with paragraph (I)(2)(e)(i) of
this rule.
(v) If the acquiring
insurer in paragraph (I)(2)(e)(iv) of this rule files for a subsequent rate
increase, even within the twenty-four-month period, on the same policy form
acquired from nonaffiliated insurers or block policy forms acquired from
nonaffiliated insurers referenced in paragraph (I)(2)(e)(iv) of this rule, the
acquiring insurer shall make all disclosures required by paragraph (I)(2) of
this rule, including disclosure of the earlier rate increase referenced in
paragraph (I)(2)(e)(iv) of this rule.
(3) An applicant shall sign an
acknowledgement at the time of application, unless the method of application
does not allow for signature at that time, that the insurer made the disclosure
required under paragraphs (I)(2)(a) and (I)(2)(e) of this rule. If due to the
method of application the applicant cannot sign an acknowledgement at the time
of application, the applicant shall sign no later than at the time of delivery
of the policy or certificate.
(4) An
insurer shall use the forms in appendices B and F to this rule to comply with
the requirements of paragraphs (I)(1) and (I)(2) of this rule.
(5) An insurer shall provide notice of an
upcoming premium rate schedule increase to all policyholders or certificate
holders, if applicable, at least forty-five days prior to the implementation of
the premium rate schedule increase by the insurer. The notice shall include the
information required by paragraph (I)(2) of this rule when the rate increase is
implemented.
(J) Initial
filing requirements
(1) This paragraph
applies to any long-term care policy issued in this state on or after one
hundred eighty days after the effective date of this rule.
(2) An insurer shall provide the information
listed in this
paragraph to the superintendent thirty days prior
to making a long-term care insurance form available for sale.
(a) A copy of the disclosure documents
required in paragraph (I) of this rule; and
(b) An actuarial certification consisting of
at least the following:
(i) A statement that
the initial premium rate schedule is sufficient to cover anticipated costs
under moderately adverse experience and that the premium rate schedule is
reasonably expected to be sustainable over the life of the form with no future
premium increases anticipated;
(ii)
A statement that the policy design and coverage provided have been reviewed and
taken into consideration;
(iii) A
statement that the underwriting and claims adjudication processes have been
reviewed and taken into consideration;
(iv) A complete description of the basis for
contract reserves that are anticipated to be held under the form, to include:
(a) Sufficient detail or sample calculations
provided so as to have a complete depiction of the reserve amounts to be
held;
(b) A statement that the
assumptions used for reserves contain reasonable margins for adverse
experience;
(c) A statement that the
net valuation premium for renewal years does not increase (except for
attained-age rating where permitted); and
(d) A statement that the difference between
the gross premium and the net valuation premium for renewal years is sufficient
to cover expected renewal expenses; or if such a statement cannot be made, a
complete description of the situations where this does not occur;
(i) An aggregate distribution of anticipated
issues may be used as long as the underlying gross premiums maintain a
reasonably consistent relationship;
(ii) If the gross premiums for certain age
groups appear to be inconsistent with this requirement, the superintendent may
request a demonstration under paragraph (J)(3) of this rule based on a standard
age distribution; and
(v)
(a) A
statement that the premium rate schedule is not less than the premium rate
schedule for existing similar policy forms also available from the insurer
except for reasonable differences attributable to benefits; or
(b) A comparison of the premium schedules for
similar policy forms that are currently available from the insurer with an
explanation of the differences.
(3)
(a) The
superintendent may request an actuarial demonstration that benefits are
reasonable in relation to premiums. The actuarial demonstration shall include
either premium and claim experience on similar policy forms, adjusted for any
premium or benefit differences, relevant and credible data from other studies,
or both.
(b) In the event the
superintendent asks for additional information under this provision, the period
in paragraph (J)(2) of this rule does not include the period during which the
insurer is preparing the requested information.
(K) Prohibition against post-claims
underwriting
(1) All applications for
long-term care insurance policies or certificates except those that are
guaranteed issue shall contain clear and unambiguous questions designed to
ascertain the health condition of the applicant.
(2)
(a) If
an application for long-term care insurance contains a question that asks
whether the applicant has had medication prescribed by a physician, it must
also ask the applicant to list the medication that has been
prescribed.
(b) If the medications
listed in the application were known by the insurer, or should have been known
at the time of application, to be directly related to a medical condition for
which coverage would otherwise be denied, then the policy or certificate shall
not be rescinded for that condition.
(3) Except for policies or certificates which
are guaranteed issue:
(a) The following
language shall be set out conspicuously and in close conjunction with the
applicant's signature block on an application for a long-term care insurance
policy or certificate:
Caution: If your answers on this application are incorrect or
untrue, [company] has the right to deny benefits or rescind your policy.
(b) The following language, or
language substantially similar to the following, shall be set out conspicuously
on the long-term care insurance policy or certificate at the time of delivery:
Caution: The issuance of this long-term care insurance [policy]
[certificate] is based upon your responses to the questions on your
application. A copy of your [application][enrollment form][is enclosed] [was
retained by you when you applied]. If your answers are incorrect or untrue, the
company has the right to deny benefits or rescind your policy. The best time to
clear up any questions is now, before a claim arises! If, for any reason, any
of your answers are incorrect, contact the company at this address: [insert
address]
(c) Prior to
issuance of a long-term care policy or certificate to an applicant age eighty
or older, the insurer shall obtain one of the following:
(i) A report of a physical
examination;
(ii) An assessment of
functional capacity;
(iii) An
attending physician's statement; or
(iv) Copies of medical
records.
(4) A
copy of the completed application or enrollment form (whichever is applicable)
shall be delivered to the insured no later than at the time of delivery of the
policy or certificate unless it was retained by the applicant at the time of
application.
(5) Every insurer or
other entity selling or issuing long-term care insurance benefits shall
maintain a record of all policy or certificate rescissions, both state and
countrywide, except those that the insured voluntarily effectuated and shall
annually furnish this information to the superintendent in the format
prescribed by the national association of insurance commissioners in appendix A
to this rule.
(L) Minimum
standards for home health and community care benefits in long-term care
insurance policies
(1) A long-term care
insurance policy or certificate shall not, if it provides benefits for home
health care or community care services, limit or exclude benefits:
(a) By requiring that the insured or claimant
would need care in a skilled nursing facility if home health care services were
not provided;
(b) By requiring that
the insured or claimant first or simultaneously receive nursing or therapeutic
services, or both, in a home, community or institutional setting before home
health care services are covered;
(c) By limiting eligible services to services
provided by registered nurses or licensed practical nurses;
(d) By requiring that a nurse or therapist
provide services covered by the policy that can be provided by a home health
aide, or other licensed or certified home care worker acting within the scope
of his or her licensure or certification;
(e) By excluding coverage for personal care
services provided by a home health aide;
(f) By requiring that the provision of home
health care services be at a level of certification or licensure greater than
that required by the eligible service;
(g) By requiring that the insured or claimant
have an acute condition before home health care services are covered;
(h) By limiting benefits to services provided
by medicare-certified agencies or providers; or
(i) By excluding coverage for adult day care
services.
(2) A long-term
care insurance policy or certificate, if it provides for home health or
community care services, shall provide total home health or community care
coverage that is a dollar amount equivalent to at least one-half of one year's
coverage available for nursing home benefits under the policy or certificate,
at the time covered home health or community care services are being received.
This requirement shall not apply to policies or certificates issued to
residents of continuing care retirement communities.
(3) Home health care coverage may be applied
to the nonhome health care benefits provided in the policy or certificate when
determining maximum coverage under the terms of the policy or
certificate.
(M)
Requirement to offer inflation protection
(1)
No insurer may offer a long-term care insurance policy unless the insurer also
offers to the policyholder in addition to any other inflation protection the
option to purchase a policy that provides for benefit levels to increase with
benefit maximums or reasonable durations which are meaningful to account for
reasonably anticipated increases in the costs of long-term care services
covered by the policy. Insurers must offer to each policyholder, at the time of
purchase, the option to purchase a policy with an inflation protection feature
no less favorable than one of the following:
(a) Increases benefit levels annually in a
manner so that the increases are compounded annually at a rate not less than
five per cent;
(b) Guarantees the
insured individual the right to periodically increase benefit levels without
providing evidence of insurability or health status so long as the option for
the previous period has not been declined. The amount of the additional benefit
shall be no less than the difference between the existing policy benefit and
that benefit compounded annually at a rate of at least five per cent for the
period beginning with the purchase of the existing benefit and extending until
the year in which the offer is made; or
(c) Covers a specified percentage of actual
or reasonable charges and does not include a maximum specified indemnity amount
or limit.
(2) Where the
policy is issued to a group, the required offer in paragraph (M)(1) of this
rule shall be made to the group policyholder; except, if the policy is issued
to a group defined in division (D) of section
3923.41 of the Revised Code
other than an employer, labor organization or trust established by one or more
employers or labor organizations or a combination thereof, or an association
group, and the group is not a continuing care retirement community, the
offering shall be made to each proposed certificateholder.
(3) The offer in paragraph (M)(1) of this
rule shall not be required of life insurance policies or riders containing
accelerated long-term care benefits.
(4)
(a)
Insurers shall include the following information in or with the outline of
coverage:
(i) A graphic comparison of the
benefit levels of a policy that increases benefits over the policy period with
a policy that does not increase benefits. The graphic comparison shall show
benefit levels over at least a twenty-year period.
(ii) Any expected premium increases or
additional premiums to pay for automatic or optional benefit
increases.
(b) An insurer
may use a reasonable hypothetical, or a graphic demonstration, for the purposes
of this disclosure.
(5)
Inflation protection benefit increases under a policy which contains these
benefits shall continue without regard to an insured's age, claim status or
claim history, or the length of time the person has been insured under the
policy.
(6) An offer of inflation
protection that provides for automatic benefit increases shall include an offer
of a premium which the insurer expects to remain constant. The offer shall
disclose in a conspicuous manner that the premium may change in the future
unless the premium is guaranteed to remain constant.
(7)
(a)
Inflation protection as provided in paragraph (M)(1)(a) of this rule shall be
included in a long-term care insurance policy unless an insurer obtains a
rejection of inflation protection signed by the policyholder as required in
this paragraph. The rejection may be either in the
application or a on a separate form.
(b) The rejection shall be considered a part
of the application and shall state:
I have reviewed the outline of coverage and the graphs that
compare the benefits and premiums of this policy with and without inflation
protection. Specifically, I have reviewed plans ______, and I reject inflation
protection.
(N) Requirements for application forms and
replacement coverage
(1) Application forms
shall include the following questions designed to elicit information as to
whether, as of the date of the application, the applicant has another long-term
care insurance policy or certificate in force or whether a long-term care
policy or certificate is intended to replace any other accident and sickness or
long-term care policy or certificate presently in force. A supplementary
application or other form to be signed by the applicant and agent, except where
the coverage is sold without an agent, containing the questions may be used.
With regard to a replacement policy issued to a group defined by division (D)
of section 3923.41 of the Revised Code, the
following questions may be modified only to the extent necessary to elicit
information about health or long-term care insurance policies other than the
group policy being replaced, provided that the certificateholder has been
notified of the replacement.
(a) Do you have
another long-term care insurance policy or certificate in force (including
health care service contract, health maintenance organization
contract)?
(b) Did you have another
long-term care insurance policy or certificate in force during the last twelve
months?
(i) If so, with which
company?
(ii) If that policy
lapsed, when did it lapse?
(c) Are you covered by medicaid?
(d) Do you intend to replace any of your
medical or health insurance coverage with this policy
[certificate]?
(2) Agents
shall list any other health insurance policies they have sold to the applicant.
(a) List policies sold that are still in
force.
(b) List policies sold in the
past five years that are no longer in force.
(3) Solicitations other than direct response.
Upon determining that a sale will involve replacement, an insurer; other than
an insurer using direct response solicitation methods, or its agent; shall
furnish the applicant, prior to issuance or delivery of the individual
long-term care insurance policy, a notice regarding replacement of accident and
sickness or long-term care coverage. One copy of the notice shall be retained
by the applicant and an additional copy signed by the applicant shall be
retained by the insurer. The required notice shall be provided as shown in
appendix I to this rule.
(4) Direct
response solicitations. Insurers using direct response solicitation methods
shall deliver a notice regarding replacement of accident and sickness or
long-term care coverage to the applicant upon issuance of the policy. The
required notice shall be provided as shown in appendix I to this
rule.
(5) Where replacement is
intended, the replacing insurer shall notify, in writing, the existing insurer
of the proposed replacement. The existing policy shall be identified by the
insurer, name of the insured and policy number or address including zip code.
Notice shall be made within five working days from the date the application is
received by the insurer or the date the policy is issued, whichever is
sooner.
(6) Life insurance policies
that accelerate benefits for long-term care shall comply with this paragraph if
the policy being replaced is a long-term care insurance policy. If the policy
being replaced is a life insurance policy, the insurer shall comply with the
replacement requirements of rule
3901-6-05
of the Administrative Code. If a life insurance policy that accelerates
benefits for long-term care is replaced by another such policy, the replacing
insurer shall comply with both the long-term care and the life insurance
replacement requirements.
(O) Reporting requirements
(1) Every insurer shall maintain records for
each agent of that agent's amount of replacement sales as a per cent of the
agent's total annual sales and the amount of lapses of long-term care insurance
policies sold by the agent as a per cent of the agent's total annual
sales.
(2) Every insurer shall
report annually by June thirtieth the ten per cent of its agents with the
greatest percentages of lapses and replacements as measured by paragraph (O)(1)
of this rule (appendix G to this rule).
(3) Reported replacement and lapse rates do
not alone constitute a violation of insurance laws or necessarily imply
wrongdoing. The reports are for the purpose of reviewing more closely agent
activities regarding the sale of long-term care insurance.
(4) Every insurer shall report annually by
June thirtieth the number of lapsed policies as a per cent of its total annual
sales and as a per cent of its total number of policies in force as of the end
of the preceding calendar year (appendix G to this rule).
(5) Every insurer shall report annually by
June thirtieth the number of replacement policies sold as a per cent of its
total annual sales and as a per cent of its total number of policies in force
as of the preceding calendar year (appendix G to this rule).
(6) Every insurer shall report annually by
June thirtieth, for qualified long-term care insurance contracts, the number of
claims denied for each class of business, expressed as a percentage of claims
denied (appendix E to this rule).
(7) For purposes of this paragraph:
(a) "Policy" means only long-term care
insurance;
(b) Subject to paragraph
(O)(7)(c) of this rule, "claim" means a request for payment of benefits under
an in force policy regardless of whether the benefit claimed is covered under
the policy or any terms or conditions of the policy have been met;
(c) "Denied" means the insurer refused to pay
a claim for any reason other than for claims not paid for failure to meet the
waiting period or because of an applicable preexisting condition; and
(d) "Report" means on a statewide
basis.
(8) Reports
required under this paragraph shall be filed with the
superintendent.
(P)
Licensing
A producer is not authorized to sell,
solicit or negotiate with respect to long-term care insurance except as
authorized by Chapter 3905. of the Revised Code.
(Q) Discretionary powers of
superintendent
The superintendent may upon written
request and after an administrative hearing, issue an order to modify or
suspend a specific provision or provisions of this regulation with respect to a
specific long-term care insurance policy or certificate upon a written finding
that:
(1) The modification or
suspension would be in the best interest of the insureds;
(2) The purposes to be achieved could not be
effectively or efficiently achieved without the modification or suspension;
and
(3)
(a) The modification or suspension is
necessary to the development of an innovative and reasonable approach for
insuring long-term care; or
(b) The
policy or certificate is to be issued to residents of a life care or continuing
care retirement community or some other residential community for the elderly
and the modification or suspension is reasonably related to the special needs
or nature of such a community; or
(c) The modification or suspension is
necessary to permit long-term care insurance to be sold as part of, or in
conjunction with, another insurance product.
(R) Reserve standards
(1) When long-term care benefits are provided
through the acceleration of benefits under group or individual life policies or
riders to such policies, policy reserves for the benefits shall be determined
in accordance with division (D)(7) of section
3903.72 of the Revised Code.
Claim reserves shall also be established in the case when the policy or rider
is in claim status.
Reserves for policies and riders subject to this paragraph
should be based on the multiple decrement model utilizing all relevant
decrements except for voluntary termination rates. Single decrement
approximations are acceptable if the calculation produces essentially similar
reserves, if the reserve is clearly more conservative, or if the reserve is
immaterial. The calculations may take into account the reduction in life
insurance benefits due to the payment of long-term care benefits. However, in
no event shall the reserves for the long-term care benefit and the life
insurance benefit be less than the reserves for the life insurance benefit
assuming no long-term care benefit.
In the development and calculation of reserves for policies and
riders subject to this paragraph, due regard shall be given to the applicable
policy provisions, marketing methods, administrative procedures and all other
considerations which have an impact on projected claim costs, including, but
not limited to, the following;
(a)
Definition of insured events;
(b)
Covered long-term care facilities;
(c) Existence of home convalescence care
coverage;
(d) Definition of
facilities;
(e) Existence or absence
of barriers to eligibility;
(f)
Premium waiver provision;
(g)
Renewability;
(h) Ability to raise
premiums;
(i) Marketing
method;
(j) Underwriting
procedures;
(k) Claims adjustment
procedures;
(l) Waiting
period;
(m) Maximum
benefit;
(n) Availability of
eligible facilities;
(o) Margins in
claim costs;
(p) Optional nature of
benefit;
(q) Delay in eligibility
for benefit;
(r) Inflation
protection provisions; and
(s)
Guaranteed insurability option.
Any applicable valuation morbidity table shall be certified as
appropriate as a statutory valuation table by a member of the american academy
of actuaries.
(2)
When long-term care benefits are provided other than as in paragraph (R)(1) of
this rule, reserves shall be determined in accordance with rule
3901-3-13
of the Administrative Code.
(S) Loss ratio
(1) This paragraph shall apply to all
long-term care insurance policies or certificates except those covered under
paragraphs (J) and (T) of this rule.
(2) Benefits under long-term care insurance
policies shall be deemed reasonable in relation to premiums provided the
expected loss ratio is at least sixty per cent, calculated in a manner which
provides for adequate reserving of the long-term care insurance risk. In
evaluating the expected loss ratio, due consideration shall be given to all
relevant factors, including:
(a) Statistical
credibility of incurred claims experience and earned premiums;
(b) The period for which rates are computed
to provide coverage;
(c) Experienced
and projected trends;
(d)
Concentration of experience within early policy duration;
(e) Expected claim fluctuation;
(f) Experience refunds, adjustments or
dividends;
(g) Renewability
features;
(h) All appropriate
expense factors;
(i)
Interest;
(j) Experimental nature of
the coverage;
(k) Policy
reserves;
(l) Mix of business by
risk classification; and
(m) Product
features such as long elimination periods, high deductibles and high maximum
limits.
(3) Paragraph
(S)(2) of this rule shall not apply to life insurance policies that accelerate
benefits for long-term care. A life insurance policy that funds long-term care
benefits entirely by accelerating the death benefit is considered to provide
reasonable benefits in relation to premiums paid, if the policy complies with
all of the following provisions:
(a) The
interest credited internally to determine cash value accumulations, including
long-term care, if any, are guaranteed not to be less than the minimum
guaranteed interest rate for cash value accumulations without long-term care
set forth in the policy;
(b) The
portion of the policy that provides life insurance benefits meets the
nonforfeiture requirements of sections
3915.071 and
3915.072 of the Revised
Code;
(c) The policy meets the
disclosure requirements of divisions (K), (L), and (M) of section
3923.44 of the Revised
Code.
(d) Any policy illustration
that meets the applicable requirements of the rule
3901-6-04
of the Administrative Code; and
(e)
An actuarial memorandum is filed with the insurance department that includes:
(i) A description of the basis on which the
long-term care rates were determined;
(ii) A description of the basis for the
reserves;
(iii) A summary of the
type of policy, benefits, renewability, general marketing method, and limits on
ages of issuance;
(iv) A description
and a table of each actuarial assumption used. For expenses, an insurer must
include per cent of premium dollars per policy and dollars per unit of
benefits, if any;
(v) A description
and a table of the anticipated policy reserves and additional reserves to be
held in each future year for active lives;
(vi) The estimated average annual premium per
policy and the average issue age;
(vii) A statement as to whether underwriting
is performed at the time of application. The statement shall indicate whether
underwriting is used and, if used, the statement shall include a description of
the type or types of underwriting used, such as medical underwriting or
functional assessment underwriting. Concerning a group policy, the statement
shall indicate whether the enrollee or any dependent will be underwritten and
when underwriting occurs; and
(viii)
A description of the effect of the long-term care policy provision on the
required premiums, nonforfeiture values and reserves on the underlying life
insurance policy, both for active lives and those in long-term care claim
status.
(T) Premium rate schedule increases
(1) This paragraph shall apply as follows:
(a) Except as provided in paragraph (T)(1)(b)
of this rule, this paragraph applies to any long-term care policy or
certificate issued in this state on or after one hundred eighty days after the
effective date of this rule.
(b) For
certificates issued on or after the effective date of this amended rule under a
group long-term care insurance policy as defined in division (D) of section
3923.41 of the Revised Code,
which policy was in force at the time this amended rule became effective, the
provisions of this paragraph shall apply on the policy anniversary following
three hundred sixty-five days after the effective date of this
rule.
(2) An insurer shall
provide notice of a pending premium rate schedule increase for a group
long-term care policy, including an exceptional increase, to the superintendent
at least thirty days prior to the notice to the policyholders. An insurer shall
request approval of a pending premium rate schedule increase for an individual
long-term care policy, including an exceptional increase, from the
superintendent at least thirty days prior to the notice to the policyholders.
The notice or request for approval shall include:
(a) Information required by paragraph (I) of
this rule;
(b) Certification by a
qualified actuary that:
(i) If the requested
premium rate schedule increase is implemented and the underlying assumptions,
which reflect moderately adverse conditions, are realized, no further premium
rate schedule increases are anticipated;
(ii) The premium rate filing is in compliance
with the provisions of this paragraph;
(c) An actuarial memorandum justifying the
rate schedule change request that includes:
(i) Lifetime projections of earned premiums
and incurred claims based on the filed premium rate schedule increase; and the
method and assumptions used in determining the projected values, including
reflection of any assumptions that deviate from those used for pricing other
forms currently available for sale;
(a) Annual
values for the five years preceding and the three years following the valuation
date shall be provided separately;
(b) The projections shall include the
development of the lifetime loss ratio, unless the rate increase is an
exceptional increase;
(c) The
projections shall demonstrate compliance with paragraph (T)(3) of this rule;
and
(d) For exceptional increases,
(i) The projected experience should be
limited to the increases in claims expenses attributable to the approved
reasons for the exceptional increase; and
(ii) In the event the superintendent
determines as provided in paragraph (D)(2)(d) of this rule that offsets may
exist, the insurer shall use appropriate net projected experience;
(ii) Disclosure of how
reserves have been incorporated in this rate increase whenever the rate
increase will trigger contingent benefit upon lapse;
(iii) Disclosure of the analysis performed to
determine why a rate adjustment is necessary, which pricing assumptions were
not realized and why, and what other actions taken by the company have been
relied on by the actuary;
(iv) A
statement that policy design, underwriting and claims adjudication practices
have been taken into consideration; and
(v) In the event that it is necessary to
maintain consistent premium rates for new certificates and certificates
receiving a rate increase, the insurer will need to file composite rates
reflecting projections of new certificates;
(d) A statement that renewal premium rate
schedules are not greater than new business premium rate schedules except for
differences attributable to benefits, unless sufficient justification is
provided to the superintendent; and
(e) Sufficient information for review and
approval of the premium rate schedule increase by the
superintendent.
(3) All
premium rate schedule increases shall be determined in accordance with the
following requirements:
(a) Exceptional
increases shall provide that seventy per cent of the present value of projected
additional premiums from the exceptional increase will be returned to
policyholders in benefits;
(b)
Premium rate schedule increases shall be calculated such that the sum of the
accumulated value of incurred claims, without the inclusion of active life
reserves, and the present value of future projected incurred claims, without
the inclusion of active life reserves, will not be less than the sum of the
following:
(i) The accumulated value of the
initial earned premium times fifty-eight per cent;
(ii) Eighty-five per cent of the accumulated
value of prior premium rate schedule increases on an earned basis;
(iii) The present value of future projected
initial earned premiums times fifty-eight per cent; and
(iv) Eighty-five per cent of the present
value of future projected premiums not in paragraph (T)(3)(c) of this rule on
an earned basis;
(c) In
the event that a policy form has both exceptional and other increases, the
values in paragraphs (T)(3)(b)(ii) and (T)(3)(b)(iv) of this rule will also
include seventy per cent for exceptional rate increase amounts; and
(d) All present and accumulated values used
to determine rate increases shall use the maximum valuation interest rate for
contract reserves as specified in rule
3901-3-13
of the Administrative Code. The actuary shall disclose as part of the actuarial
memorandum the use of any appropriate averages.
(4) For each rate increase that is
implemented, the insurer shall file with the superintendent updated
projections, as defined in paragraph (T)(2)(c)(i) of this rule, annually for
the next three years and include a comparison of actual results to projected
values. The superintendent may extend the period to greater than three years if
actual results are not consistent with projected values from prior projections.
For group insurance policies that meet the conditions in paragraph (T)(11) of
this rule, the projections required by this paragraph shall be provided to the
policyholder in lieu of filing with the superintendent.
(5) If any premium rate in the revised
premium rate schedule is greater than two hundred per cent of the comparable
rate in the initial premium schedule, lifetime projections, as defined in
paragraph (T)(2)(c)(i) of this rule, shall be filed with the superintendent
every five years following the end of the required period in paragraph (T)(4)
of this rule. For group insurance policies that meet the conditions in
paragraph (T)(11) of this rule, the projections required by this paragraph
shall be provided to the policyholder in lieu of filing with the
superintendent.
(6)
(a) If the superintendent has determined that
the actual experience following a rate increase does not adequately match the
projected experience and that the current projections under moderately adverse
conditions demonstrate that incurred claims will not exceed proportions of
premiums specified in paragraph (T)(3) of this rule, the superintendent may
require the insurer to implement any of the following:
(i) Premium rate schedule adjustments;
or
(ii) Other measures to reduce the
difference between the projected and actual experience.
(b) In determining whether the actual
experience adequately matches the projected experience, consideration should be
given to paragraph (T)(2)(c)(v) of this rule, if
applicable.
(7) If the
majority of the policies or certificates to which the increase is applicable
are eligible for the contingent benefit upon lapse, the insurer shall file:
(a) A plan, subject to superintendent
approval, for improved administration or claims processing designed to
eliminate the potential for further deterioration of the policy form requiring
further premium rate schedule increases, or both, or to demonstrate that
appropriate administration and claims processing have been implemented or are
in effect; otherwise the superintendent may impose the condition in paragraph
(T)(8) of this rule; and
(b) The
original anticipated lifetime loss ratio, and the premium rate schedule
increase that would have been calculated according to paragraph (T)(3) of this
rule had the greater of the original anticipated lifetime loss ratio or
fifty-eight per cent been used in the calculations described in paragraphs
(T)(3)(a) and (T)(3)(c) of this rule.
(8)
(a) For
a rate increase filing that meets the following criteria, the superintendent
shall review, for all policies included in the filing, the projected lapse
rates and past lapse rates during the twelve months following each increase to
determine if significant adverse lapsation has occurred or is anticipated:
(i) The rate increase is not the first rate
increase requested for the specific policy form or forms;
(ii) The rate increase is not an exceptional
increase; and
(iii) The majority of
the policies or certificates to which the increase is applicable are eligible
for the contingent benefit upon lapse.
(b) In the event significant adverse
lapsation has occurred, is anticipated in the filing or is evidenced in the
actual results as presented in the updated projections provided by the insurer
following the requested rate increase, the superintendent may determine that a
rate spiral exists. Following the determination that a rate spiral exists, the
superintendent may require the insurer to offer, without underwriting, to all
in force insureds subject to the rate increase the option to replace existing
coverage with one or more reasonably comparable products being offered by the
insurer or its affiliates.
(i) The offer
shall:
(a) Be subject to the approval of the
superintendent;
(b) Be based on
actuarially sound principles, but not be based on attained age; and
(c) Provide that maximum benefits under any
new policy accepted by an insured shall be reduced by comparable benefits
already paid under the existing policy.
(ii) The insurer shall maintain the
experience of all the replacement insureds separate from the experience of
insureds originally issued the policy forms. In the event of a request for a
rate increase on the policy form, the rate increase shall be limited to the
lesser of:
(a) The maximum rate increase
determined based on the combined experience; and
(b) The maximum rate increase determined
based only on the experience of the insureds originally issued the form plus
ten per cent.
(9) If the superintendent determines that the
insurer has exhibited a persistent practice of filing inadequate initial
premium rates for long-term care insurance, the superintendent may, in addition
to the provisions of paragraph (T)(8) of this rule, prohibit the insurer from
either of the following:
(a) Filing and
marketing comparable coverage for a period of up to five years; or
(b) Offering all other similar coverages and
limiting marketing of new applications to the products subject to recent
premium rate schedule increases.
(10) Paragraphs (T)(1) to (T)(9) of this rule
shall not apply to policies for which the long-term care benefits provided by
the policy are incidental, as defined in paragraph (D)(3) of this rule, if the
policy complies with all of the following provisions:
(a) The interest credited internally to
determine cash value accumulations, including long-term care, if any, are
guaranteed not to be less than the minimum guaranteed interest rate for cash
value accumulations without long-term care set forth in the policy;
(b) The portion of the policy that provides
insurance benefits other than long-term care coverage meets the nonforfeiture
requirements as applicable in any of the following:
(i) Sections
3915.071 and
3915.072 of the Revised Code,
and
(ii) Section
3915.073 of the Revised
Code;
(c) The policy
meets the disclosure requirements of divisions (K), (L), and (M) of section
3923.44 of the Revised
Code;
(d) The portion of the policy
that provides insurance benefits other than long-term care coverage meets the
requirements as applicable in the following:
(i) Policy illustrations as required by rule
3901-6-04
of the Administrative Code;
(e) An actuarial memorandum is filed with the
insurance department that includes:
(i) A
description of the basis on which the long-term care rates were
determined;
(ii) A description of
the basis for the reserves;
(iii) A
summary of the type of policy, benefits, renewability, general marketing
method, and limits on ages of issuance;
(iv) A description and a table of each
actuarial assumption used. For expenses, an insurer must include per cent of
premium dollars per policy and dollars per unit of benefits, if any;
(v) A description and a table of the
anticipated policy reserves and additional reserves to be held in each future
year for active lives;
(vi) The
estimated average annual premium per policy and the average issue
age;
(vii) A statement as to whether
underwriting is performed at the time of application. The statement shall
indicate whether underwriting is used and, if used, the statement shall include
a description of the type or types of underwriting used, such as medical
underwriting or functional assessment underwriting. Concerning a group policy,
the statement shall indicate whether the enrollee or any dependent will be
underwritten and when underwriting occurs; and
(viii) A description of the effect of the
long-term care policy provision on the required premiums, nonforfeiture values
and reserves on the underlying insurance policy, both for active lives and
those in long-term care claim status.
(11) Paragraphs (T)(6) and (T)(8) of this
rule shall not apply to group insurance policies as defined in division (D) of
section 3923.41 of the Revised Code,
which are issued to an employer, labor organization or trust established by one
or more employers or labor organizations or a combination thereof where:
(a) The policies insure two hundred fifty or
more persons and the policyholder has five thousand or more eligible employees
of a single employer; or
(b) The
policyholder, and not the certificate holders, pays a material portion of the
premium, which shall not be less than twenty per cent of the total premium for
the group in the calendar year prior to the year a rate increase is
filed.
(U)
Filing requirements for advertising
(1) Every
insurer, health care service plan or other entity providing long-term care
insurance or benefits in this state shall provide a copy of any long-term care
insurance advertisement intended for use in this state whether through written,
radio or television medium to the superintendent of insurance of this state for
review or approval by the superintendent to the extent it may be required under
state law. In addition, all advertisements shall be retained by the insurer,
health care service plan or other entity for at least three years from the date
the advertisement was first used.
(2) The superintendent may exempt from these
requirements any advertising form or material when, in the superintendent's
opinion, this requirement may not be reasonably applied.
(V) Standards for marketing
(1) Every insurer, health care service plan
or other entity marketing long-term care insurance coverage in this state,
directly or through its producers, shall:
(a)
Establish marketing procedures and agent training requirements to assure that:
(i) Any marketing activities, including any
comparison of policies, by its agents or other producers will be fair and
accurate; and
(ii) Excessive
insurance is not sold or issued.
(b) 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 review carefully all policy
limitations."
(c) Provide
copies of the disclosure forms required in paragraph (I)(3) of this rule
(appendices B and F to this rule) to the applicant.
(d) Inquire and otherwise make every
reasonable effort to identify whether a prospective applicant or enrollee for
long-term care insurance already has accident and sickness or long-term care
insurance and the types and amounts of any such insurance, except that in the
case of qualified long-term care insurance contracts, an inquiry into whether a
prospective applicant or enrollee for long-term care insurance has accident and
sickness insurance is not required.
(e) Every insurer or entity marketing
long-term care insurance shall establish auditable procedures for verifying
compliance with this paragraph (V)(1) of this rule.
(f) 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 superintendent, 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.
(g)
For long-term care health insurance policies and certificates, use the terms
"noncancellable" or "level premium" only when the policy or certificate
conforms to paragraph (F)(1)(c) of this rule.
(h) Provide an explanation of contingent
benefit upon lapse provided for in paragraph (AA)(4)(c) of this rule and, if
applicable, the additional contingent benefit upon lapse provided to policies
with fixed or limited premium paying periods in paragraph (AA)(4)(d) of this
rule.
(2) In addition to
the practices prohibited in sections
3901.20 and
3901.21 of the Revised Code, the
following acts and practices are prohibited:
(a) 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.
(b) 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.
(c) 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 agent or insurance company.
(d) Misrepresentation. Misrepresenting a
material fact in selling or offering to sell a long-term care insurance
policy.
(3)
(a) With respect to the obligations set forth
in this paragraph, the primary responsibility of an association, as defined in
paragraph (D)(1) of this rule, when endorsing or selling long-term care
insurance shall be to educate its members concerning long-term care issues 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 such associations to ensure that members of
such associations receive a balanced and complete explanation of the features
in the policies or certificates that are being endorsed or sold.
(b) The insurer shall file with the insurance
department the following material:
(i) The
policy and certificate,
(ii) A
corresponding outline of coverage, and
(iii) All advertisements requested by the
insurance department.
(c)
The association shall disclose in any long-term care insurance solicitation:
(i) 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
(ii) A brief description of the process under
which the policies and the insurer issuing the policies were
selected.
(d) If the
association and the insurer have interlocking directorates or trustee
arrangements, the association shall disclose that fact to its
members.
(e) 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.
(f) The association shall also:
(i) 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 its benefits, features, and rates and update the
examination thereafter in the event of material change;
(ii) Actively monitor the marketing efforts
of the insurer and its agents; and
(iii) Review and approve all marketing
materials or other insurance communications used to promote sales or sent to
members regarding the policies or certificates.
(iv) Paragraphs (V)(3)(f)(i) to
(V)(3)(f)(iii) of this rule shall not apply to qualified long-term care
insurance contracts.
(g)
No group long-term care insurance policy or certificate may be issued to an
association unless the insurer files with the state insurance department the
information required in this paragraph.
(h) The insurer shall not issue a long-term
care policy or certificate to an association or continue to market such a
policy or certificate unless the insurer certifies annually that the
association has complied with the requirements set forth in this
paragraph.
(i) Failure to comply
with the filing and certification requirements of this paragraph constitutes an
unfair trade practice.
(W) Suitability
(1) This paragraph shall not apply to life
insurance policies that accelerate benefits for long-term care.
(2) Every insurer, health care service plan
or other entity marketing long-term care insurance (the "issuer") shall:
(a) Develop and use suitability standards to
determine whether the purchase or replacement of long-term care insurance is
appropriate for the needs of the applicant;
(b) Train its agents in the use of its
suitability standards; and
(c)
Maintain a copy of its suitability standards and make them available for
inspection upon request by the superintendent.
(3)
(a) To
determine whether the applicant meets the standards developed by the issuer,
the agent and issuer shall develop procedures that take the following into
consideration:
(i) The ability to pay for the
proposed coverage and other pertinent financial information related to the
purchase of the coverage;
(ii) The
applicant's goals or needs with respect to long-term care and the advantages
and disadvantages of insurance to meet these goals or needs; and
(iii) The values, benefits and costs of the
applicant's existing insurance, if any, when compared to the values, benefits
and costs of the recommended purchase or replacement.
(b) The issuer, and where an agent is
involved, the agent shall make reasonable efforts to obtain the information set
out in paragraph (W)(3)(a) of this rule. The efforts shall include presentation
to the applicant, at or prior to application, the "Long-Term Care Insurance
Personal Worksheet." The personal worksheet used by the issuer shall contain,
at a minimum, the information in the format contained in appendix B to this
rule, in not less than twelve point type. The issuer may request the applicant
to provide additional information to comply with its suitability standards. A
copy of the issuer's personal worksheet shall be filed with the
superintendent.
(c) A completed
personal worksheet shall be returned to the issuer prior to the issuer's
consideration of the applicant for coverage, except the personal worksheet need
not be returned for sales of employer group long-term care insurance to
employees and their spouses.
(d) The
sale or dissemination outside the company or agency by the issuer or agent of
information obtained through the personal worksheet in appendix B to this rule
is prohibited.
(4) The
issuer shall use the suitability standards it has developed pursuant to this
paragraph in determining whether issuing long-term care insurance coverage to
an applicant is appropriate.
(5)
Agents shall use the suitability standards developed by the issuer in marketing
long-term care insurance.
(6) At the
same time as the personal worksheet is provided to the applicant, the
disclosure form entitled "Things You Should Know Before You Buy Long-Term Care
Insurance" shall be provided. The form shall be in the format contained in
appendix C to this rule, in not less than twelve point type.
(7) If the issuer determines that the
applicant does not meet its financial suitability standards, or if the
applicant has declined to provide the information, the issuer may reject the
application. In the alternative, the issuer shall send the applicant a letter
similar to appendix D to this rule. However, if the applicant has declined to
provide financial information, the issuer may use some other method to verify
the applicant's intent. Either the applicant's returned letter or a record of
the alternative method of verification shall be made part of the applicant's
file.
(8) The issuer shall report
annually to the superintendent the total number of applications received from
residents of this state, the number of those who declined to provide
information on the personal worksheet, the number of applicants who did not
meet the suitability standards and the number of those who chose to confirm
after receiving a suitability letter.
(X) Prohibition against preexisting
conditions and probationary periods in replacement policies or
certificates
If a long-term care insurance policy or
certificate replaces another long-term care policy or certificate, the
replacing insurer shall waive any time periods applicable to preexisting
conditions and probationary periods in the new long-term care policy for
similar benefits to the extent that similar exclusions have been satisfied
under the original policy.
(Y) Availability of new services or providers
(1) An insurer shall notify policyholders of
the availability of a new long-term care policy series that providers coverage
of new long-term care services or providers material in nature and not
previously available through the insurer to the general public. The notice
shall be provided within three hundred sixty-five days of the date the new
policy series is made available for sale in this state.
(2) Notwithstanding paragraph (Y)(1) of this
rule, notification is not required for any policy issued prior to the effective
date of this rule or to any policyholder or certificateholder who is currently
eligible for benefits, within an elimination period or on a claim, or who
previously has been in claim status, or who would not be eligible to apply for
coverage due to issue age limitations under the new policy. The insurer may
require that policyholders meet all eligibility requirements, including
underwriting and payment of the required premium to add such new services or
providers.
(3) The insurer shall
make the new coverage available in one of the following ways:
(a) By adding a rider to the existing policy
and charging a separate premium for the new rider based on the insured's
attained age;
(b) By exchanging the
existing policy or certificate for one with an issue age based on the present
age of the insured and recognizing past insured status by granting premium
credits toward the premiums for the new policy or certificate. The premium
credits shall be based on premiums paid or reserves held for the prior policy
or certificate;
(c) By exchanging
the existing policy or certificate for a new policy or certificate in which
consideration for past insured status shall be recognized by setting the
premium for the new policy or certificate at the issue age of the policy or
certificate being exchanged. The cost for the new policy or certificate may
recognize the difference in reserves between the new policy or certificate and
the original policy or certificate; or
(d) By an alternative program developed by
the insurer that meets the intent of paragraph (Y) of this rule if the program
is filed with and approved by the superintendent.
(4) An insurer is not required to notify
policyholders of a new proprietary policy series created and filed for use in a
limited distribution channel. For purposes of this paragraph, "limited distribution channel" means
through a discrete entity, such as a financial institution or brokerage, for
which specialized products are available that are not available for sale to the
general public. Policyholders that purchased such a proprietary policy shall be
notified when a new long-term care policy series that provides coverage for new
long-term care services or providers material in nature is made available to
that limited distribution channel.
(5) Policies issued pursuant to this
paragraph shall be considered exchanges and not replacements. These exchanges
shall not be subject to paragraphs (N) and (W) of this rule, and the reporting
requirements of paragraphs (O)(1) to (O)(5) of this rule.
(6) Where the policy is offered through an
employer, labor organization, professional, trade or occupational association,
the required notification in paragraph (Y)(1) of this rule shall be made to the
offering entity. However, if the policy is issued to a group defined in
division (D)(4) of section
3923.41 of the Revised Code, the
notification shall be made to each certificateholder.
(7) Nothing in this paragraph shall prohibit
an insurer from offering any policy, rider, certificate or coverage change to
any policyholder or certificateholder. However, upon request any policyholder
may apply for currently available coverage that includes the new services or
providers. The insurer may require that policyholders meet all eligibility
requirements, including underwriting and payment of the required premium to add
such new services or providers.
(8)
Paragraph (Y) of this rule does not apply to life insurance policies or riders
containing accelerated long-term care benefits.
(9) Paragraph (Y) of this rule shall become
effective on or after three hundred sixty-five days after the effective date of
this rule.
(Z) Right to
reduce coverage and lower premiums
(1)
(a) Every long-term care insurance policy and
certificate shall include a provision that allows the policyholder or
certificateholder to reduce coverage and lower the policy or certificate
premium in at least one of the following ways;
(i) Reducing the maximum benefit;
or
(ii) Reducing the daily, weekly
or monthly benefit amount.
(b) The insurer may also offer other
reduction options that are consistent with the policy or certificate design or
the carrier's administrative processes. An example of a policy design would be
a partnership policy which maintains its partnership status by containing
certain features as required by state or federal law.
(2) The provision shall include a description
of the ways in which coverage may be reduced and the process for requesting and
implementing a reduction in coverage.
(3) The age to determine the premium for the
reduced coverage shall be based on the age used to determine the premiums for
the coverage currently in force.
(4)
The insurer may limit any reduction in coverage to plans or options available
for that policy form and to those for which benefits will be available after
consideration of claims paid or payable.
(5) If a policy or certificate is about to
lapse, the insurer shall provide a written reminder to the policyholder or
certificateholder of his or her right to reduce coverage and premiums in the
notice required by paragraph (G)(1)(c) of this rule.
(6) Paragraph (Z) of this rule does not apply
to life insurance policies or riders containing accelerated long-term care
benefits.
(7) The requirements of
paragraph (Z) of this rule shall apply to any long-term care policy issued in
this state on or after three hundred sixty-five days after the effective date
of this rule.
(AA)
Nonforfeiture benefit requirement
(1) This
paragraph does not apply to life insurance policies or riders containing
accelerated long-term care benefits.
(2) A nonforfeiture benefit shall be offered
that complies with the following:
(a) A
policy or certificate offered with nonforfeiture benefits shall have coverage
elements, eligibility, benefit triggers and benefit length that are the same as
coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit
included in the offer shall be the benefit described in paragraph (AA)(5) of
this rule; and
(b) The offer shall
be in writing if the nonforfeiture benefit is not otherwise described in the
outline of coverage or other materials given to the prospective
policyholder.
(3) If the
offer is rejected, the insurer shall provide the contingent benefit upon lapse
described in this paragraph. Even if this offer is accepted for a policy with a
fixed or limited premium paying period, the contingent benefit upon lapse in
paragraph (AA)(4)(d) of this rule shall still apply.
(4)
(a)
After rejection of the offer, for individual and group policies without
nonforfeiture benefits issued after the effective date of this paragraph, the
insurer shall provide a contingent benefit upon lapse.
(b) In the event a group policyholder elects
to make the nonforfeiture benefit an option to the certificateholder, a
certificate shall provide either the nonforfeiture benefit or the contingent
benefit upon lapse.
(c) A
contingent benefit upon lapse shall be triggered every time an insurer
increases the premium rates to a level which results in a cumulative increase
of the annual premium equal to or exceeding the percentage of the insured's
initial annual premium set forth below stated on the insured's issue age, and
the policy or certificate lapses within one hundred twenty days of the due date
of the premium so increased. Unless otherwise required, policyholders shall be
notified at least thirty days prior to the due date of the premium reflecting
the rate increase.
Triggers for a substantial premium increase
|
Per cent increase over initial premium
|
Issue age
|
29 and under
|
200%
|
30-34
|
190%
|
35-39
|
170%
|
40-44
|
150%
|
45-49
|
130%
|
50-54
|
110%
|
55-59
|
90%
|
60
|
70%
|
61
|
66%
|
62
|
62%
|
63
|
58%
|
64
|
54%
|
65
|
50%
|
66
|
48%
|
67
|
46%
|
68
|
44%
|
69
|
42%
|
70
|
40%
|
71
|
38%
|
72
|
36%
|
73
|
34%
|
74
|
32%
|
75
|
30%
|
76
|
28%
|
77
|
26%
|
78
|
24%
|
79
|
22%
|
80
|
20%
|
81
|
19%
|
82
|
18%
|
83
|
17%
|
84
|
16%
|
85
|
15%
|
86
|
14%
|
87
|
13%
|
88
|
12%
|
89
|
11%
|
90 and over
|
10%
|
(d) A
contingent benefit upon lapse shall also be triggered for policies with a fixed
or limited premium paying period every time an insurer increases the premium
rates to a level that results in a cumulative increase of the annual premium
equal to or exceeding the percentage of the insured's initial annual premium
set forth below based on the insured's issue age, the policy or certificate
lapses within one hundred twenty days of the due date of the premium so
increased, and the ratio in paragraph (AA)(4)(f)(ii) of this rule is forty per
cent or more. Unless otherwise required, policyholders shall be notified at
least thirty days prior to the due date of the premium reflecting the rate
increase.
Triggers for a Substantial Premium Increase
Issue Age
|
Per cent Increase Over Initial Premium
|
Under 65
|
50%
|
65-80
|
30%
|
Over 80
|
10%
|
This provision shall be in addition to the contingent benefit
provided by paragraph (AA)(4)(c) of this rule and where both are triggered, the
benefit provided shall be at the option of the insured.
(e) On or before the effective date of a
substantial premium increase as defined in paragraph (AA)(4)(c) of this rule,
the insurer shall:
(i) Offer to reduce policy
benefits provided by the current coverage without the requirement of additional
underwriting so that required premium payments are not increased;
(ii) Offer to convert the coverage to a
paid-up status with a shortened benefit period in accordance with the terms of
paragraph (AA)(5) of this rule. This option may be elected at any time during
the one hundred twenty-day period referenced in paragraph (AA)(4)(c) of this
rule; and
(iii) Notify the
policyholder or certificateholder that a default or lapse at any time during
the one hundred twenty-day period referenced in paragraph (AA)(4)(c) of this
rule shall be deemed to be the election of the offer to convert in paragraph
(AA)(4)(e)(ii) of this rule unless the automatic option in paragraph
(AA)(4)(f)(iii) of this rule applies.
(f) On or before the effective date of a
substantial premium increase as defined in paragraph (AA)(4)(d) of this rule,
the insurer shall:
(i) Offer to reduce policy
benefits provided by the current coverage without the requirement of additional
underwriting so that required premium payments are not increased;
(ii) Offer to convert the coverage to a
paid-up status where the amount payable for each benefit is ninety per cent of
the amount payable in effect immediately prior to lapse times the ratio of the
number of completed months of paid premiums divided by the number of months in
the premium paying period. This option may be elected at any time during the
one hundred twenty-day period referenced in paragraph (AA)(4)(d) of this rule;
and
(iii) Notify the policyholder or
certificateholder that a default or lapse at any time during the one hundred
twenty-day period referenced in paragraph (AA)(4)(d) of this rule shall be
deemed to be the election of the offer to convert in paragraph (AA)(4)(f)(ii)
of this rule if the ratio is forty per cent or
more.
(5)
Benefits continued as nonforfeiture benefits, including contingent benefits
upon lapse in accordance with paragraph (AA)(4)(c) but not paragraph (AA)(4)(d)
of this rule, are described in this paragraph:
(a) For
purposes of paragraph (AA)(5)(a) of this rule, attained age rating is defined
as a schedule of premiums starting from the issue date which increases with age
at least one per cent per year prior to age fifty, and at least three per cent
per year beyond age fifty.
(b) For
purposes of this paragraph, the nonforfeiture benefit shall be of a
shortened benefit period providing paid-up long-term care insurance coverage
after lapse. The same benefits (amounts and frequency in effect at the time of
lapse but not increased thereafter) will be payable for a qualifying claim, but
the lifetime maximum dollars or days of benefits shall be determined as
specified in paragraph (AA)(5)(c) of this rule.
(c) The standard nonforfeiture credit will be
equal to one hundred per cent of the sum of all premiums paid, including the
premiums paid prior to any changes in benefits. The insurer may offer
additional shortened benefit period options, as long as the benefits for each
duration equal or exceed the standard nonforfeiture credit for that duration.
However, the minimum nonforfeiture credit shall not be less than thirty times
the daily nursing home benefit at the time of lapse. In either event, the
calculation of the nonforfeiture credit is subject to the limitation of
paragraph (AA) (6) of this rule.
(d)
(i) The nonforfeiture benefit shall begin not
later than the end of the third year following the policy or certificate issue
date. The contingent benefit upon lapse shall be effective during the first
three years as well as thereafter.
(ii) Notwithstanding paragraph (AA)(5)(d)(i)
of this rule, for a policy or certificate with attained age rating, the
nonforfeiture benefit shall begin on the earlier of:
(a) The end of the tenth year following the
policy or certificate issue date; or
(b) The end of the second year following the
date the policy or certificate is no longer subject to attained age
rating.
(e)
Nonforfeiture credits may be used for all care and services qualifying for
benefits under the terms of the policy or certificate, up to the limits
specified in the policy or certificate.
(6) All benefits paid by the insurer while
the policy or certificate is in premium paying status and in the paid up status
will not exceed the maximum benefits which would be payable if the policy or
certificate had remained in premium paying status.
(7) There shall be no difference in the
minimum nonforfeiture benefits as required under this paragraph for group and
individual policies.
(8) The
requirements set forth in this paragraph shall become effective three hundred
sixty-five days after the effective date of this provision and shall apply as
follows:
(a) Except as provided in paragraphs
(AA)(8)(b) and (AA)(8)(c) of this rule, the provisions of paragraph (AA) of
this rule apply to any long-term care policy issued in this state on or after
the effective date of this rule.
(b)
For certificates issued on or after the effective date of paragraph (AA) of
this rule, under a group long-term care insurance policy as defined in division
(D) of section 3923.41 of the Revised Code,
which policy was in force at the time this amended rule becomes effective, the
provisions of paragraph (AA) of this rule shall not apply.
(c) The last sentence in paragraph (AA)(3)
and paragraphs (AA)(4)(d) and (AA)(4)(f) of this rule shall apply to any
long-term care insurance policy or certificate issued in this state after one
hundred eighty days after the effective date of this rule adopting those
provisions, except new certificates on a group policy as defined in division
(D)(1) of section 3923.41 of the Revised Code,
three hundred sixty-five days after the effective date of this rule adopting
those provisions.
(9)
Premiums charged for a policy or certificate containing nonforfeiture benefits
or a contingent benefit upon lapse shall be subject to the loss ratio
requirements of paragraph (S) or
(T) of this rule, whichever is applicable, treating the policy as a
whole.
(10) To determine whether
contingent nonforfeiture upon lapse provisions are triggered under paragraph
(AA)(4)(c) or (AA)(4)(d) of this rule, a replacing insurer that purchased or
otherwise assumed a block or blocks of long-term care insurance policies from
another insurer shall calculate the percentage increase based on the initial
annual premium paid by the insured when the policy was first purchased from the
original insurer.
(11) A
nonforfeiture benefit for qualified long-term care insurance contracts that are
level premium contracts shall be offered that meets the following requirements:
(a) The nonforfeiture provision shall be
appropriately captioned;
(b) The
nonforfeiture provision shall provide a benefit available in the event of a
default in the payment of any premiums and shall state that the amount of the
benefit may be adjusted subsequent to being initially granted only as necessary
to reflect changes in claims, persistency and interest as reflected in changes
in rates for premium paying contracts approved by the superintendent for the
same contract form; and
(c) The
nonforfeiture provision shall provide at least one of the following:
(i) Reduced paid-up insurance;
(ii) Extended term insurance;
(iii) Shortened benefit period; or
(iv) Other similar offerings approved by the
superintendent.
(BB) Standards for benefit triggers
(1) A long-term care insurance policy shall
condition the payment of benefits on a determination of the insured's ability
to perform activities of daily living and on cognitive impairment. Eligibility
for the payment of benefits shall not be more restrictive than requiring either
a deficiency in the ability to perform not more than three of the activities of
daily living or the presence of cognitive impairment.
(2)
(a)
Activities of daily living shall include at least the following as defined in
paragraph (E) of this rule and in the policy:
(i) Bathing;
(ii) Continence;
(iii) Dressing;
(iv) Eating;
(v) Toileting; and
(vi) Transferring;
(b) Insurers may use activities of daily
living to trigger covered benefits in addition to those contained in paragraph
(BB)(2)(a) of this rule as long as they are defined in the
policy.
(3) An insurer may
use additional provisions for the determination of when benefits are payable
under a policy or certificate; however the provisions shall not restrict, and
are not in lieu of, the requirements contained in paragraphs (BB) (1) and
(BB)(2) of this rule.
(4) For
purposes of this paragraph the determination of a deficiency shall not be more
restrictive than:
(a) Requiring the hands-on
assistance of another person to perform the prescribed activities of daily
living; or
(b) If the deficiency is
due to the presence of a cognitive impairment, supervision or verbal cueing by
another person is needed in order to protect the insured or
others.
(5) Assessments of
activities of daily living and cognitive impairment shall be performed by
licensed or certified professionals, such as physicians, nurses or social
workers.
(6) Long-term care
insurance policies shall include a clear description of the process for
appealing and resolving benefit determinations.
(7) The requirements set forth in this
paragraph shall be effective three hundred sixty-five days after the effective
date of this provision and shall apply as follows:
(a) Except as provided in paragraph
(BB)(7)(b) of this rule, the provisions of this paragraph apply to a long-term
care policy issued in this state on or after the effective date of this amended
rule.
(b) For certificates issued on
or after the effective date of paragraph (BB)(7) of this rule, under a group
long-term care insurance policy as defined in division (D) of section
3923.41 of the Revised Code that
was in force at the time this amended rule became effective, the provisions of
this paragraph shall not apply.
(CC) Additional standards for benefit
triggers for qualified long-term care insurance contracts.
(1) For purposes of this paragraph the
following definitions apply:
(a) "Qualified
long-term care services" means services that meet the requirements of
section 7702B(c)(1) of the Internal Revenue Code of
1986, as amended, as follows: necessary diagnostic, preventive, therapeutic,
curative, treatment, mitigation and rehabilitative services, and maintenance or
personal care services which are required by a chronically ill individual, and
are provided pursuant to a plan of care prescribed by a licensed health care
practitioner.
(b)
(i) "Chronically ill individual" has the
meaning prescribed for this term by
section 7702B(c)(2) of the Internal Revenue Code
of 1986, as amended. Under this provision, a chronically ill individual means
any individual who has been certified by a licensed health care practitioner
as:
(a) Being unable to perform (without
substantial assistance from another individual) at least two activities of
daily living for a period of at least ninety days due to a loss of functional
capacity; or
(b) Requiring
substantial supervision to protect the individual from threats to health and
safety due to severe cognitive impairment.
(ii) The term "chronically ill individual"
shall not include an individual otherwise meeting these requirements unless
within the preceding twelve-month period a licensed health care practitioner
has certified that the individual meets these requirements.
(c) "Licensed health care practitioner" means
a physician, as defined in section 1861(r)(1) of the Social Security Act, a
registered professional nurse, licensed social worker or other individual who
meets requirements prescribed by the secretary of the treasury.
(d) "Maintenance or personal care services"
means any care the primary purpose of which is the provision of needed
assistance with any of the disabilities as a result of which the individual is
a chronically ill individual (including the protection from threats to health
and safety due to severe cognitive impairment).
(2) A qualified long-term care insurance
contract shall pay only for qualified long-term care services received by a
chronically ill individual provided pursuant to a plan of care prescribed by a
licensed health care practitioner.
(3) A qualified long-term care insurance
contract shall condition the payment of benefits on a determination of the
insured's inability to perform activities of daily living for an expected
period of at least ninety days due to a loss of functional capacity or to
severe cognitive impairment.
(4)
Certifications regarding activities of daily living and cognitive impairment
required pursuant to paragraph (CC)(3) of this rule shall be performed by the
following licensed or certified professionals: physicians, registered
professional nurses, licensed social workers, or other individuals who meet
requirements prescribed by the secretary of the treasury.
(5) Certifications required pursuant to
paragraph (CC)(3) of this rule may be performed by a licensed health care
professional at the direction of the carrier as is reasonably necessary with
respect to a specific claim, except that when a licensed health care
practitioner has certified that an insured is unable to perform activities of
daily living for an expected period of at least ninety days due to a loss of
functional capacity and the insured is in claim status, the certification may
not be rescinded and additional certifications may not be performed until after
the expiration of the ninety-day period.
(6) Qualified long-term care insurance
contracts shall include a clear description of the process for appealing and
resolving disputes with respect to benefit determinations.
(DD) Standard format outline of
coverage
This paragraph of the rule implements,
interprets and makes specific, the provisions of division (I) of section
3923.44 of the Revised Code in
prescribing a standard format and the content of an outline of
coverage.
(1) The outline of
coverage shall be a free-standing document, using no smaller than twelve-point
type.
(2) The outline of coverage
shall contain no material of an advertising nature.
(3) Text that is capitalized or underscored
in the standard format outline of coverage may be emphasized by other means
that provide prominence equivalent to the capitalization or
underscoring.
(4) Use of the text
and sequence of text of the standard format outline of coverage is mandatory,
unless otherwise specifically indicated.
(5) Format for outline of coverage is shown
in appendix H to this rule.
(EE) Requirement to deliver shopper's guide
(1) A long-term care insurance shopper's
guide in the format developed by the national association of insurance
commissioners, or a guide developed or approved by the superintendent, shall be
provided to all prospective applicants of a long-term care insurance policy or
certificate.
(a) In the case of agent
solicitations, an agent must deliver the shopper's guide prior to the
presentation of an application or enrollment form.
(b) In the case of direct response
solicitations, the shopper's guide must be presented in conjunction with any
application or enrollment form.
(2) Life insurance policies or riders
containing accelerated long-term care benefits are not required to furnish the
above-reference guide, but shall furnish the policy summary required under
division (K) of section
3923.44 of the Revised
Code.
(FF)
Penalties
In addition to any other penalties
provided by the laws of this state any insurer and any agent found to have
violated any requirement of this state relating to the regulation of long-term
care insurance or the marketing of such insurance shall be subject to a fine of
up to three times the amount of any commissions paid for each policy involved
in the violation or up to ten thousand dollars, whichever is
greater.
(GG)
Severability
If any paragraph, term or provision of
this rule is adjudged invalid for any reason, the judgment shall not affect,
impair or invalidate any other paragraph, term or provision of this rule, but
the remaining paragraphs, terms and provisions shall be and continue in full
force and effect.
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