Texas Administrative Code
Title 28 - INSURANCE
Part 1 - TEXAS DEPARTMENT OF INSURANCE
Chapter 3 - LIFE, ACCIDENT, AND HEALTH INSURANCE AND ANNUITIES
Subchapter Y - STANDARDS FOR LONG-TERM CARE INSURANCE, NON-PARTNERSHIP AND PARTNERSHIP LONG-TERM CARE INSURANCE COVERAGE UNDER INDIVIDUAL AND GROUP POLICIES AND ANNUITY CONTRACTS, AND LIFE INSURANCE POLICIES THAT PROVIDE LONG-TERM CARE BENEFITS WITHIN THE POLICY
Division 4 - PARTNERSHIP LONG-TERM CARE INSURANCE ONLY
Section 3.3872 - Inflation Protection Requirements for Long-Term Care Partnership Policies and Certificates
Universal Citation: 28 TX Admin Code § 3.3872
Current through Reg. 50, No. 13; March 28, 2025
(a) Pursuant to §1917(b)(1)(C)(iii)(IV) of the Social Security Act (42 U.S.C. §1396p(b)(1)(C)(iii)(IV)), an insurer shall not issue a policy or certificate marketed or represented to qualify as an approved long-term care partnership policy unless the policy or certificate complies with the following inflation protection requirements:
(1) For a person who is less than 61 years of
age, as of the date of purchase, the policy or certificate must provide
compound annual inflation protection from the date of purchase until the person
attains 61 years of age.
(A) At the time of
purchase, insurers must offer to each applicant the option to purchase compound
annual inflation protection that automatically increases each year on a
compounded basis at a rate of not less than 5.0 percent annually throughout the
interval of coverage. The inflation protection is required to automatically
increase benefits each year on a compounded basis.
(B) If the applicant declines the offer of
inflation protection specified in subparagraph (A) of this paragraph, then the
insurer must offer and the applicant must purchase and retain compound annual
inflation protection until the insured attains age 61 or goes on claim status,
whichever comes first. The inflation protection is required to automatically
increase benefits each year on a compounded basis at a rate that the insured
elects which may be in a range of from one percent to four percent or tied to
the Consumer Price Index for All Urban Consumers (CPI-U).
(C) A person who is less than 61 years of age
that has purchased a long-term care partnership policy or certificate with the
required compound inflation protection specified in this paragraph may upon
attaining 61 years of age choose to amend the compound inflation protection
provision in the policy or certificate in accordance with the requirements
specified in paragraph (2) of this subsection.
(2) For a person who is at least 61 years of
age but less than 76 years of age, the policy or certificate must provide an
acceptable level of inflation protection until the person attains 76 of years
age. Acceptable inflation protection includes the following:
(A) Regardless of the insured's health
status, the insurer must offer and the insured must purchase and retain
inflation protection until the insured attains age 76 or goes on claim status,
whichever comes first.
(B)
Acceptable coverage includes automatic annual inflation protection, either
simple or compound, paid with either level or stepped premium.
(C) Inflation protection as required by this
paragraph may be in a range of from one percent to five percent or tied to the
Consumer Price Index for All Urban Consumers (CPI-U).
(D) A person who is less than 76 years of age
that has purchased a long-term care partnership policy or certificate with the
required inflation protection specified in this paragraph may upon attaining 76
years of age choose to amend the inflation protection provision in the policy
or certificate in accordance with the requirements specified in paragraph (3)
of this subsection.
(3)
For any person who has attained the age of 76, inflation protection may be
provided but is not required. However, the long-term care inflation protection
option specified in §
3.3820 of this subchapter
(relating to Requirement To Offer Inflation Protection) must be offered to any
applicant for a partnership policy who has attained the age of 76.
(4) An option to purchase inflation
protection at a future time does not constitute compliance with the inflation
protection requirements set forth in paragraphs (1) and (2) of this
subsection.
(b) The inflation protection provisions in this section are not available under these policies:
(1) riders for group and individual
annuities and life insurance policies that provide long-term care
insurance;
(2) life insurance
policies:
(A) that accelerate the death
benefit for one or more of the qualifying events of terminal illness, medical
conditions requiring extraordinary medical intervention or permanent
institutional confinement; and
(B)
that provide the option of a lump-sum payment for those benefits; and
(C) where neither the benefits nor the
eligibility for the benefits is conditioned upon the receipt of long-term
care.
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