Current through Bulletin 2024-06, March 15, 2024
(1) To comply with the requirement to offer a
nonforfeiture benefit pursuant to the provisions of Section
31A-22-1412:
(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 Subsection R590-148-14(4); 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.
(2) If the offer required to be made under
Section
31A-22-1412
is rejected, the insurer shall provide the contingent benefit upon lapse
described in this section.
(3)
(a) After rejection of the offer required
under Section
31A-22-1412,
for individual and group policies without nonforfeiture benefits issued after
July 1, 2002, 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) The contingent benefit on 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 in Table III,
Triggers for a Substantial Premium Increase, 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, policyholders shall be
notified at least 30 days prior to the due date of the premium reflecting the
rate increase.
(d) On or before the
effective date of a substantial premium increase as defined in Subsection
R590-148-14(3)(c), 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 Subsection R590-148-14(4). This option may be
elected at any time during the 120-day period referenced in Subsection
R590-148-14(3)(c); and
(iii) notify
the policyholder or certificateholder that a default or lapse at any time
during the 120- day period referenced in Subsection R590-148-14(3)(c) shall be
deemed to be the election of the offer to convert in Subsection
R590-148-14(3)(d)(ii).
(4) Benefits continued as nonforfeiture
benefits, including contingent benefits upon lapse, are described in this
subsection:
(a) For purposes of this
subsection, attained age rating is defined as a schedule of premiums starting
from the issue date which increases with age at least 1% per year prior to age
50, and at least 3% per year beyond age 50.
(b) For purposes of this subsection, 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 Subsection
R590-148-14(4)(c).
(c) The standard
nonforfeiture credit will 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
Subsection R590-148-14(5).
(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 Subsection
R590-148-14(4)(d)(i), 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.
(5) 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.
(6) There shall be no difference in the
minimum nonforfeiture benefits as required under this section for group and
individual policies.
(7) The
requirements set forth in this section shall become effective January 1, 2003
and shall apply as follows:
(a) Except as
provided in Subsection R590-148-14(7)(b), the provisions of this section apply
to any long-term care policy issued in this state on or after July 1,
2002.
(b) For certificates issued
on or after July 1, 2002, under a group long-term care insurance policy, which
policy was in force at the time this rule became effective, the provisions of
this section shall not apply.
(8) 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 Section
R590-148-22 treating
the policy as a whole.
(9) To
determine whether contingent nonforfeiture upon lapse provisions are triggered
under Subsection R590-148-14(3)(c), 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.
(10) 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 commissioner 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
commissioner.
