Current through Register Vol. 63, No. 9, September 1, 2024
(1) This rule does not apply to life
insurance policies or riders containing accelerated long-term care benefits.
(2) To comply with the requirement
to offer a nonforfeiture benefit pursuant to the provisions of ORS
743.664:
(a) A long-term care policy, certificate or
rider offered with nonforfeiture benefits must 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 must be the benefit described in section (6) of this rule.
(b) The offer must 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 required to be
made under ORS 743.664 is rejected, the insurer
shall provide the contingent benefit upon lapse described in this rule. Even if
this offer is accepted for a policy with a fixed or limited premium paying
period, the contingent benefit on lapse in section (4)(d) of this rule shall
still apply.
(4)
(a) After rejection of an offer required
under section ORS 743.664, for an individual or
group policy without nonforfeiture benefits issued after the effective date of
this section, 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
certificate holder, a certificate shall provide either the nonforfeiture
benefit or the contingent benefit upon lapse.
(c) The contingent benefit on lapse shall be
triggered 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 in this
subsection based on the insured's issue age, and the policy or certificate
lapses within 120 days of the due date of the premium so increased. Unless
otherwise required, a policyholder shall be notified at least 30 days prior to
the due date of the premium reflecting the rate increase. [Table not included.
See ED. NOTE.]
(d) A contingent
benefit on 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 in
this paragraph based on the insured's issue age, the policy or certificate
lapses within 120 days of the due date of the premium so increased, and the
ratio in subsection (e)(B) of this section is 40 percent or more. Unless
otherwise required, policyholders shall be notified at least 30 days prior to
the due date of the premium reflecting the rate increase. This provision is in
addition to the contingent benefit provided by subsection (c) of this section,
and when both are triggered, the benefit provider shall be at the option of the
insured. [Table not included. See ED. NOTE.]
(e) On or before the effective date of a
substantial premium increase as defined in subsection (c) of this section, the
insurer shall:
(A) Offer to reduce policy
benefits provided by the current coverage consistent with the requirements of
OAR 836-052-0740 so that the
required premium payments are not increased.
(B) Offer to convert the coverage to a
paid-up status with a shortened benefit period in accordance with the
provisions of section (6) of this rule. This option may be elected at any time
during the 120-day period referenced in subsection (c) of this section; and
(C) Notify the policyholder or
certificate holder that a default or lapse at any time during the 120-day
period referenced in subsection (c) of this section shall be deemed to be the
election of the offer to convert in paragraph (B) of this subsection unless the
automatic option in subsection (f)(C) applies.
(f) On or before the effective date of a
substantial premium increase as defined in subsection (d) of this section, the
insurer shall:
(A) Offer to reduce policy
benefits provided by the current coverage consistent with the requirements of
OAR 836-052-0740 so that required
premium payments are not increased;
(B) Offer to convert the coverage to a paid
up status when the amount payable for each benefit is 90 percent 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
120-day period referenced in subsection (d) of this section; and
(C) Notify the policyholder or certificate
holder that a default or lapse at any time during the 120-day period referenced
in subsection (d) of this section shall be deemed to be the election of the
offer to convert in paragraph (B) of this subsection if the ration is 40
percent or more.
(5) For any long-term care policy issued in
this state on or after January 1, 2016:
(a)
In the event the policy or certificate was issued at least 20 years prior to
the effective date of the increase, a value of zero percent shall be used in
place of all values in the table referenced in OAR
836-052-0746(4)(d).
(b) Values above 100 percent in
the table referenced in OAR
836-052-0746(4)(d)
shall be reduced to 100 percent.
(6) Benefits that must be continued as
nonforfeiture benefits, including contingent benefits upon lapse in accordance
with section (4)(c) of this rule but not section (4)(d) of this rule, are
described in this section as follows:
(a) For
purposes of this section, attained age rating is defined as a schedule of
premiums starting from the issue date that increases age at least one percent
per year prior to age 50, and at least three percent per year beyond age 50.
(b) For purposes of this section,
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) must be payable for a qualifying claim, but the lifetime maximum
dollars or days of benefits shall be determined as specified in subsection (c)
of this section.
(c) The standard
nonforfeiture credit must be equal to 100% 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 30
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 section
(7) of this rule.
(d)
(A) 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.
(B) Notwithstanding paragraph (a) of this
subsection, for a policy or certificate with attained age rating, the
nonforfeiture benefit shall begin on the earlier of:
(i) The end of the tenth year following the
policy or certificate issue date; or
(ii) 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.
(7) All benefits paid by the insurer while
the policy or certificate is in premium paying status and in the paid up status
may not exceed the maximum benefits that would be payable if the policy or
certificate had remained in premium paying status.
(8) There shall be no difference in the
minimum nonforfeiture benefits as required under this rule for group and
individual long term care insurance policies.
(9) The requirements set forth in this rule
become effective March 1, 2006, after adoption of this provision and shall
apply as follows:
(a) Except as provided in
paragraphs (b) and (c) of this subsection, the provisions of this rule apply to
any long-term care policy issued in this state on or after March 1, 2005.
(b) For certificates issued on or
after March 1, 2006 under a group long-term care insurance policy as defined in
ORS 743.652(3)(a),
which policy was in force March 1, 2005, the provisions of this rule do not
apply.
(c) The last sentence in
section (3) and section (4)(d) and (f) of this rule apply to any long term care
insurance policy or certificate issued in this state after May 31, 2008, except
new certificates on a group policy as defined in ORS
743.652(3)(a)
after December 1, 2008.
(10) Premiums charged for a policy or
certificate containing nonforfeiture benefits or a contingent benefit on lapse
shall be subject to the loss ratio requirements of OAR
836-052-0666,
836-052-0676, or
836-052-0680, whichever is
applicable, treating the policy as a whole.
(11) To determine whether contingent
nonforfeiture upon lapse provisions are triggered under section (4)(c) or (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.
(12) 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 Director for the same
contract form; and
(c) The
nonforfeiture provision shall provide at least one of the following:
(A) Reduced paid-up insurance;
(B) Extended term insurance;
(C) Shortened benefit period; or
(D) Other similar offerings approved by the
Director.
Tables referenced are available from the
agency.
Stat. Auth.: ORS
731.244,
742.023,
743.013,
743.655,
743.656 &
746.240
Stats. Implemented: ORS
731.244,
742.003,
742.005,
742.009,
743.010(3),
743.013(3),
743.650,
743.653,
743.655,
743.656 &
746.240
