(1) Each insurer
offering long-term care insurance shall, as a protection against unintentional
lapse, comply with the following:
(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 (1) 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 (1) 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 (1) 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 (1) person other than myself to receive notice of lapse
or termination of this long-term care insurance policy for nonpayment of
premium. I understand that notice will not be given until thirty (30) days
after 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 (2) years.
(b) When the policyholder or certificate
holder pays the premium for a long-term care insurance policy or certificate
through a payroll or pension deduction plan, the requirements contained in
Paragraph (1) of this rule need not be met until sixty (60) days after the
policyholder or certificate holder 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 (30)
days before the effective date of the lapse or termination, has given notice to
the insured and to those persons designated pursuant to paragraph (1)(a) above,
at the address provided by the insured for purposes of receiving notice of
lapse or termination. Notice shall be given by first class United States mail,
postage prepaid; and notice may not be given until thirty (30) days after a
premium is due and unpaid. Notice shall be deemed to have been given as of five
(5) days after the date of mailing.
(2) Reinstatement. In addition to the
requirement in Paragraph (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 certificate holder was cognitively impaired or had a loss of
functional capacity before the grace period contained in the policy expired.
This option shall be available to the insured if requested within five (5)
months after termination and shall allow for the collection of past due
premium, where appropriate. The standard of proof of cognitive impairment or
loss of functional capacity shall not be more stringent than the benefit
eligibility criteria on cognitive impairment or the loss of functional capacity
contained in the policy and certificate.
