Current through February, 2024
Section 1 Purpose
The purpose of this regulation is to implement Title 8,
Chapter 154, to promote the public interest, to promote the availability of
long-term care insurance coverage, to protect applicants for long-term care
insurance from unfair or deceptive sales or enrollment practices, to facilitate
public understanding and comparison of long-term care insurance coverage, to
facilitate flexibility and innovation in the development of long-term care
insurance and to support consumers of long-term care insurance in attaining and
maintaining their highest level of functioning in the most independent and
least restrictive setting.
Section
2 Authority
This regulation is issued pursuant to the authority vested in
the Commissioner under Title 8, Chapters 1, 101, 107, 129, 131 and 154 and
other applicable law.
Section
3 Applicability and Scope
Except as otherwise specifically provided, this regulation
applies to any insurance policy or rider advertised, marketed, offered or
designed to provide coverage for long-term care services, including qualified
long-term care policies, long-term care partnership policies and life insurance
policies that accelerate benefits to pay for long-term care, delivered, issued
for delivery, or renewed in this state, by insurers, fraternal benefit
societies, hospital and medical service corporations, prepaid health plans,
health maintenance organizations and all similar organizations. Certain
provisions of this regulation apply only to qualified long-term care insurance
contracts or long-term care partnership policies as noted.
Section 4 Definitions
For the purpose of this regulation, the terms "long-term care
insurance," "group long-term care insurance," "Commissioner," "applicant,"
"policy" and "certificate" shall have the meanings set forth in
8 V.S.A. §
8082.
The term "qualified long-term care insurance" shall have the meaning set forth
in Section 7702B of the Internal Revenue Code of 1986 as amended. In addition,
the following definitions apply.
A.
"Benefit trigger" means a contractual provision in a policy of long-term care
insurance conditioning the payment of benefits on a determination of the
insured's ability to perform activities of daily living, or on a cognitive
impairment. For purposes of a qualified long-term care insurance contract,
"Benefit trigger" shall include a determination by a licensed health care
practitioner that an insured is a chronically ill individual.
B. "Compound annual inflation protection"
means automatic annual compounded inflation increases at a rate not less than
three percent (3%); or automatic annual compounded inflation increases at a
rate based on changes in the consumer price index. "Consumer price index" means
consumer price index for all urban consumers, U.S. city average, all items, as
determined by the Bureau of Labor Statistics of the United States Department of
Labor
C. "Department" shall refer
to the Vermont Department of Banking, Insurance, Securities and Health Care
Administration.
D.
(1) "Exceptional increase" means only those
increases filed by an insurer as exceptional for which the Commissioner
determines the need for the premium rate increase is justified:
(a) Due to changes in laws or regulations
applicable to long-term care coverage in this state; or
(b) Due to increased and unexpected
utilization that affects the majority of insurers of similar
products.
(2) Except as
provided in Section 20, Exceptional increases are subject to the same
requirements as other premium rate schedule increases.
(3) As with other filings, the Commissioner
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.
(4) The Commissioner, in
determining that the necessary basis for an Exceptional increase exists, shall
also determine any potential offsets to higher claims costs.
E. "Incidental," as used in
Section 20J, means that the value of the long-term care benefits provided is
less than ten percent (10%) 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.
F. "Qualified actuary" means
a member in good standing of the American Academy of Actuaries.
G. "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
8 V.S.A. §
8082(4)(A) 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.
H. "Simple inflation protection" means an
automatic inflation feature that provides annual simple inflation increases
(not compounded) at a rate not less than three percent (3%), or at a rate based
on changes in the consumer price index. "Consumer price index" means consumer
price index for all urban consumers, U.S. city average, all items, as
determined by the Bureau of Labor Statistics of the United States Department of
Labor.
I. "Some level of inflation
protection" means an inflation feature that meets the definition of Simple
inflation protection or compound inflation protection as defined in this
Section.
J. "Qualified state
long-term care insurance partnership policy" or "Partnership policy " means an
insurance policy that meets the following requirements:
(1) The policy covers an insured who was a
resident of Vermont (or a Partnership State ) when coverage first became
effective under the policy.
(2) The
policy is a qualified long-term care insurance contract as defined in Section
7702B(b) of the Internal Revenue Code of 1986, as amended, and was issued no
earlier than the effective date of Vermont's plan amendment required by section
6021 of the Deficit Reduction Act of 2005 (
Pub.L.
109-171 ).
(3) The policy meets all of the applicable
requirements of the National Association of Insurance Commissioners long-term
care insurance model act and model regulation as those requirements are set
forth in Section 1917(b)(5)(A) of the Social Security Act (
42 USC Section
1396 p(b)(5)(A) ).
(4) The policy provides the level of
inflation protection set forth in Section 36 of this Regulation.
Section 5 Policy
Definitions
No long-term care insurance policy delivered, issued for
delivery, or renewed in this state shall use the terms or concepts set forth
below, unless the terms are defined in the policy and the definitions satisfy
the following minimum requirements:
A.
"Activities of daily living" means at least bathing, continence, dressing,
eating, toileting and transferring.
B. "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.
C. "Adult day care services" means medical or
nonmedical care on a less than 24-hour basis provided in a licensed facility
outside the residence, for persons in need of personal services, supervision,
protection, or assistance in sustaining daily needs, including eating, bathing,
dressing, ambulating, transferring, toileting, and taking
medications..
D. "Assisted Living
Residence" means a licensed program or facility that combines housing, health
and supportive services to support resident independence and aging in
place.
E. "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.
F. "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.
G. "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).
H. "Dressing" means putting
on and taking off all items of clothing, including items such as any necessary
braces, fasteners, or artificial limbs.
I. "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.
J.
"Elimination period" means the specified number of days of out of pocket
expenses paid by the insured for long-term care services after the insurance
benefits are triggered, but before the benefits are paid under the
policy.
K. "Hands-on assistance"
means physical assistance (minimal, moderate or maximal) without which the
individual would not be able to perform one or more activities of daily
living.
L. "Home health care
services" means skilled nursing or other professional services in the
residence, including, but not limited to, part-time and intermittent skilled
nursing services, home health aid services, physical therapy, occupational
therapy, or speech therapy and audiology services, and medical social services
by a social worker.
M. "Long-term
care services" means necessary or medically necessary diagnostic, preventive,
therapeutic, rehabilitative, maintenance, or personal care services provided in
a covered setting.
N. "Medicare"
shall be defined as "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.
O. "Mental health condition" means any
condition or disorder involving mental illness or alcohol or substance abuse
that falls under any of the diagnostic categories listed in the mental
disorders section of the international classification of disease, as
periodically revised.
P. "Nursing
facility care" means care and services provided in a nursing home licensed
pursuant to Title 33 V.S.A., Chapter 71.
Q. "Residential care" means care rendered in
a facility licensed as a residential care home pursuant to Title 33 V.S.A.,
Chapter 71.
R. "Personal care"
means skilled nursing or other professional services to aid with the activities
of daily living and cognitive impairments, including the instrumental
activities of daily living, under a plan of care developed by a licensed or
certified professional such as a physician, nurse or social worker.
"Instrumental activities of daily living" include using the telephone, managing
medications, moving about outside, shopping for essentials, preparing meals,
laundry, and light housekeeping.
S.
"Pre-existing condition" means a condition for which medical advice or
treatment was recommended by or received from a provider of health care
services within six months preceding the effective date of coverage of an
insured person.
T. "Toileting"
means getting to and from the toilet, getting on and off the toilet, and
performing associated personal hygiene.
U. "Transferring" means moving into or out of
a bed, chair or wheelchair.
Section
6 Policy Practices and Provisions
A. 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 this regulation.
(1) A policy issued to an individual shall
not contain renewal provisions other than "guaranteed renewable" or
"noncancellable."
(2) 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. The term "class basis" shall be defined in the policy.
(3) 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.
(4) The term
"level premium," "fixed premium" and similar words may only be used when the
insurer does not have the right to change the premium.
(5) In addition to the other requirements of
this subsection, 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.
B. Limitations and Exclusions. No policy may
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:
(1) Pre-existing conditions or diseases,
provided that the exclusion complies with
8 V.S.A. §
8086 and the definition is no more
restrictive than the following: "Preexisting condition" means a condition for
which medical advice or treatment was recommended by or received from a
provider of health care services within six months preceding the effective date
of coverage of an insured person.
(2) Illness, treatment or medical condition
arising out of:
(a) War or act of war
(whether declared or undeclared);
(b) Participation in a felony, riot or
insurrection;
(c) Service in the
armed forces or units auxiliary thereto.
(d) The insured's attempted suicide (while
sane), or intentionally self-inflicted injury (while sane); or
(e) Aviation (this exclusion applies only to
non-fare-paying passengers).
(3) Treatment provided in a government
facility (unless otherwise required by law), services for which benefits are
payable 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 except as required by Section
6(H)(3),
and services for which no charge is normally made in the absence of
insurance.
(4) Expenses for
services or items paid under another long-term care insurance or health
insurance policy;
(5) 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.
(6)
(a)
This subsection is not intended to prohibit, exclude, or limit by type of
provider. However, no long-term care issuer may deny a claim because services
are provided in a state other than the state of policy issued under the
following conditions:
(i) When the state
other than 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 regulation; or
(ii) When the state other than the state of
policy issue licenses, certifies or registers the provider under another
name.
(b) For purposes of
this paragraph, "state of policy issue" means the state in which the individual
policy or certificate was originally issued.
(7) This subsection is not intended to
prohibit territorial limitations.
C. Extension of Benefits. Termination of
long-term care insurance shall be without prejudice to any benefits payable for
institutionalization if such institutionalization began while the long-term
care insurance was in force and continues without interruption after
termination. Such extension of benefit 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.
D. Continuation or Conversion.
(1) Group long-term care insurance issued or
renewed on or after the effective date of this regulation shall provide covered
individuals with a basis for continuation or conversion of coverage.
(2) For the purposes of this section, "a
basis for continuation of coverage" means a policy provision which maintains
coverage under the existing group policy when such coverage would otherwise
terminate and which is subject only to the continued timely payment of premium
when due. Group policies which restrict provision of benefits and services to,
or contain incentives to use certain providers and/or facilities, may provide
continuation benefits that are substantially equivalent to the benefits of the
existing group policy. The Commissioner 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.
(3) For the purposes of this section, "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.
(4) For the purposes of this section,
"converted policy" means an individual policy of long-term care insurance
providing benefits identical to or benefits determined by the Commissioner to
be substantially equivalent to or in excess of those provided under the group
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 and/or facilities, the Commissioner, 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.
(5) 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-one (31) 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.
(6) 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.
(7) Continuation of
coverage or issuance of a converted policy shall be mandatory, except where:
(a) Termination of group coverage resulted
from an individual's failure to make any required payment of premium or
contribution when due; or
(b) The
terminating coverage is replaced not later than thirty-one (31) days after
termination, by group coverage effective on the day following the termination
of coverage:
(i) Providing benefits identical
to or benefits determined by the Commissioner to be substantially equivalent to
or in excess of those provided by the terminating coverage; and
(ii) The premium for which is calculated in a
manner consistent with the requirements of Paragraph (6) of this
section.
(8)
Notwithstanding any other provision of this section, 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
100 percent of incurred expenses. Such 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.
(9) 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.
(10) Notwithstanding any other provision of
this section, 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 or civil
union.
(11) For the purposes of
this section, 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.
E.
Discontinuance and Replacement
If a group long-term care policy is replaced by another group
long-term care policy purchased by 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:
(1) Shall not result in an
exclusion for pre-existing conditions that would have been covered under the
group policy being replaced; and
(2) Shall not vary or otherwise depend on the
individual's health or disability status, claim experience or use of long-term
care services.
F.
(1) The premium charged to an insured shall
not increase due to either:
(a) The
increasing age of the insured at ages beyond sixty-five (65); or
(b) The duration the insured has been covered
under the policy.
(2) The
purchase of additional coverage shall not be considered a premium rate
increase, but for purposes of the calculation required under Section 27, the
portion of the premium attributable to the additional coverage shall be added
to and considered part of the initial annual premium.
(3) A reduction in benefits shall not be
considered a premium change, but for purpose of the calculation required under
Section 27, the initial annual premium shall be based on the reduced
benefits.
G. Electronic
Enrollment for Group Policies
(1) In the case
of group long-term care insurance as defined in
8 V.S.A.§
8082(4)(A), any requirement
that a signature of an insured be obtained by a producer or insurer shall be
deemed satisfied if:
(a) The group
policyholder or the insurer obtains the policyholder's consent by telephonic or
electronic enrollment. A verification of enrollment information shall be
provided to the enrollee;
(b) The
telephonic or electronic enrollment provides necessary and reasonable
safeguards to assure the accuracy, retention and prompt retrieval of
records;
(c) The telephonic or
electronic enrollment provides necessary and reasonable safeguards to ensure
that the confidentiality of individually identifiable information and
privileged information as defined by state and federal law is maintained;
and
(d) In the case of telephonic
enrollment, the carrier records the entire telephone call and retains a copy of
this recording.
(2) The
insurer shall make available, upon request of the Commissioner, records that
will demonstrate the insurer's ability to confirm enrollment and coverage
amounts.
H. Required
Coverage
(1) No policy may provide coverage
for Nursing facility care only or provide significantly more coverage for
skilled care.
(2) Policies shall
not define an eligible provider or facility in a manner that is more
restrictive than that used to license that provider or facility by the state
where the service is provided.
(3)
Family Caregivers
(a) Policies must cover
services delivered by a member of the individual's family if:
(1) the family member is a regular employee
of an organization which is providing the services;
(2) the organization receives the payment for
the services; and
(3) the family
member receives no compensation other than the normal compensation for
employees in his or her job category.
(b) Insurers selling long-term care insurance
in Vermont shall offer an optional insurance rider that covers Long-term care
services provided by a family member licensed to provide the necessary or
medically necessary services.
(4) Every long-term care policy or
certificate shall provide at least the following:
(a) Home health care services;
(b) Personal care;
(c) Adult day care services; and
(d) Hospice services.
(5) For the purposes of this section, policy
definitions of these benefits may be no more restrictive than the following:
(a) "Home health care" is skilled nursing or
other professional services in the residence, including, but not limited to,
part-time and intermittent skilled nursing services, home health aid services,
physical therapy, occupational therapy, or speech therapy and audiology
services, and medical social services by a social worker.
(b) "Personal care" means skilled nursing or
other professional services to aid with the activities of daily living and
cognitive impairments, including the instrumental activities of daily living,
under a plan of care developed by a licensed or certified professional such as
a physician, nurse or social worker. "Instrumental activities of daily living"
include using the telephone, managing medications, moving about outside,
shopping for essentials, preparing meals, laundry, and light
housekeeping.
(c) "Adult day care"
is medical or nonmedical care on a less than 24-hour basis provided in a
licensed facility outside the residence, for persons in need of personal
services, supervision, protection, or assistance in sustaining daily needs,
including eating, bathing, dressing, ambulating, transferring, toileting, and
taking medications.
(d) "Hospice
services" are services that are designed to provide palliative care, alleviate
the physical, emotional, social, and spiritual discomforts of an individual who
is experiencing the last phases of life due to the existence of a terminal
disease.
(6) Nothing in
this subsection shall be interpreted to prohibit insurers from offering
additional long-term care services.
I. Elimination Periods:
(1) The definition of "elimination period"
may be no more restrictive than the definition set forth in Section
5 of this
Regulation;
(2) The elimination
period may not exceed 100 days for any covered benefit; and
(3) Policies may not require a deductible or
elimination period to be satisfied between levels of care and/or benefit types
(any waiver of a deductible or elimination period for a particular benefit
shall be deemed to be a waiver of the deductible or elimination period for all
benefits). This requirement does not prohibit an insurer from offering a
zero-day elimination period for one or more levels of care.
J. No long-term care insurance
policy may:
(1) Require payment of premiums
more frequently than monthly;
(2)
Impose a preexisting condition exclusion inconsistent with the requirements of
8 V.S.A. §
8086;
(3) Deny benefits or coverage on the basis
that the need for long-term care services arises from a mental health
condition, including Alzheimer's disease, dementia and other related
disorders;
(4) Deny benefits or
rescind a policy upon a showing of fraud or misrepresentation except as
provided otherwise by
8 V.S.A. §
8094; or
(5) Provide benefits for less than 365
benefit days or provide a minimum daily benefit of less than $ 75. The minimum
daily benefit amount may be adjusted to reflect, at the Commissioner's
discretion, appropriate inflation factors. Insurers may issue a policy with a
daily benefit of less than $ 75 only if the combined total of the new coverage
and any existing long-term care coverage for daily benefits equals or exceeds $
75.
K. Required Benefit
Configurations.
(1) Insurers selling
long-term care insurance in Vermont shall provide a price quote and offer all
Vermont applicants the opportunity to elect the following benefit
configurations:
(a) A policy that includes a
90 or 100-day elimination period, a 5-year benefit period and a $ 200 maximum
daily benefit;
(b) A policy that
includes a 90 or 100-day elimination period, a 3-year benefit period and a $
150 maximum daily benefit; and
(c)
A policy that includes a 90 or 100-day elimination period, a $ 100 maximum
daily benefit and a 2-year benefit period.
(2) Insurers shall provide price quotes for
the benefit configurations described in subsection K(1) of this section that
include price variations for the following benefit options:
(a) Compound inflation protection at a rate
of 5%;
(b) Simple inflation
protection at a rate of 5%;
(c) No
inflation protection.
(3)
Insurers shall submit the annual premium for a currently marketed long-term
care policy required by subsections (K)(1) and (K)(2) of this section. Insurers
shall complete Appendix M and submit this form to the Department annually on or
before June 30 [th ]. In addition, insurers shall notify the Department of any
changes to the information submitted in Appendix M.
(4) The Commissioner may waive one or more
requirements of this section for good cause, or approve alternative benefit
configurations so long as the alternative benefit configuration meets the
intent of this subsection and the benefit configuration is filed with and
approved by the Commissioner.
(5)
Where the policy is issued to a group, the required offer shall be made to the
group policyholder.
(6) This offer
shall not be required of life or annuity policies containing long-term care
benefits.
(7) Nothing shall
prohibit the insurer from offering additional options provided that the insurer
provides a price quote for each of the required benefit configurations. Any
modifications to these benefit configurations shall be priced and quoted
separately.
L. Right to
Return
Individual long-term care insurance policyholders and persons
insured under a long-term care insurance policy issued pursuant to a direct
response solicitation shall have the right to return the policy within 30 days
of its delivery and to have the premium refunded if, after examination of the
policy, the policyholder is not satisfied for any reason. Insurers shall
prominently print a notice on the first page of these policies stating in
substance that the policyholder shall have the right to return the policy
within 30 days of its delivery and to have the premium refunded if, after
examination of the policy, the policyholder is not satisfied for any
reason.
M. Denial of claims:
If a claim under a long-term care insurance contract is denied, the issuer
shall, within 60 days of the date of a written request by the policyholder or
certificate holder, or a representative thereof:
(1) Provide a written explanation of the
reasons for the denial;
(2)
Describe any additional material or information necessary for the member to
perfect the request and an explanation of why such material or information is
necessary;
(3) Explain the
insured's right to internal appeal, the time limits applicable to such
procedures, and the right to submit new or additional information relating to
the claim;
(4) If the insurer
relied upon an internal rule, guideline, protocol, or other similar criterion,
state the specific rule, guideline, protocol, or other similar criterion and
provide a copy upon request;
(5)
Provide an explanation of the scientific or clinical judgment or other reason
for the determination, if applicable; and
(6) Make available all information directly
related to the denial.
Section 7 Unintentional Lapse
Each insurer offering long-term care insurance shall, as a
protection against unintentional lapse, comply with the following:
A.
(1)
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.
(a) Designation shall not constitute
acceptance of any liability on the third party for services provided to the
insured.
(b) 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.
(c) 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 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."
(d) The insurer shall
notify the insured of the right to change this written designation, no less
often than once every two (2) years.
(2) 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 subsection A(1) 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.
(3) 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 subsection A(1), at the
address provided by the insured for the 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. The notice shall state that the insured has
the right to reduce the maximum benefit or reduce the daily, weekly or monthly
benefit amount, consistent with Section 27 of this Regulation.
B. Reinstatement. In addition to
the requirement in subsection A, 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 (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.
Section 8 Required Disclosure Provisions
A. Renewability. Individual long-term care
insurance policies shall contain a renewability provision.
(1) Such provision shall be appropriately
captioned, shall appear on the first page of the policy, and shall clearly
state the coverage is guaranteed renewable or noncancellable. This provision
shall not apply to long-term care policies which are part of, or combined with,
life insurance policies which do not contain a renewability provision and under
which the right to nonrenew is reserved solely to the policyholder.
(2) A long-term care 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.
B. 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 which 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 and 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, such premium charge shall be set forth in the policy, rider or
endorsement.
C. Payment of
Benefits. A long-term care insurance policy which 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 such terms
and an explanation of such terms in its accompanying outline of
coverage.
D. Facilities Coverage. A
long-term care insurance policy that provides for the payment of benefits for
services received in specific types of facilities, such as assisted living
residences, shall set forth a clear description of the types of facilities
wherein such payment of benefits is provided and any limitations or conditions
for eligibility of coverage.
E.
Pre-existing Condition Limitations. If a long-term care insurance policy or
certificate contains any limitations with respect to pre-existing conditions,
such limitations shall appear as a separate paragraph of the policy or
certificate and shall be labeled as "Pre-existing Condition Limitations." Any
pre-existing condition limitation must comply with
8 V.S.A. §
8086 or other applicable law.
F. 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 subsection shall not apply to
qualified long-term care insurance contracts.
G. 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.
H. 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
8 V.S.A. §
8085 shall set forth a description of such
limitations or conditions, including satisfaction of the elimination period, in
a separate paragraph of the policy or certificate and shall label such
paragraph "Limitations or Conditions on Eligibility for Benefits."
I. A qualified long-term care insurance
contract shall include a disclosure statement in the policy and in the outline
of coverage as contained in Section 32E(3) 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.
Section 9 Required Disclosure of Rating
Practices to Consumers
A. This section shall
apply as follows:
(1) Except as provided in
Paragraph (2), this section applies to any long-term care policy or certificate
issued in this state on or after January 1, 2010.
(2) For certificates issued on or after the
effective date of this amended regulation under a group long-term care
insurance policy as defined in
8 V.S.A §
8082(4)(A), which policy was
in force at the time this amended regulation became effective, the provisions
of this section shall apply on the policy anniversary following January 1,
2010.
B. 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 subsection
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 section to the
applicant no later than at the time of delivery of the policy or certificate.
(1) A statement in a conspicuous manner that
the policy may be subject to rate increases in the future;
(2) An explanation of potential future
premium rate revisions, and the policy-holder's or certificateholder's option
in the event of a premium rate revision;
(3) The premium rate or rate schedules
applicable to the applicant that will be in effect until a request is made for
an increase and the Department approves the proposed rate increase;
(4) A general explanation for applying
premium rate or rate schedule adjustments that shall include:
(a) A description of when premium rate or
rate schedule adjustments will be effective (e.g., next anniversary date, next
billing date, etc.); and
(b) The
right to a revised premium rate or rate schedule as provided in subsection(B
)(2), above, if the premium rate or rate schedule is changed;
(5)
(a) Information regarding each premium rate
increase on this policy form or Similar policy forms over the past ten (10)
years for this state or any other state that, at a minimum, identifies:
(i) The policy forms for which premium rates
have been increased;
(ii) The
calendar years when the form was available for purchase; and
(iii) The amount or percent 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.
(b) The insurer may, in a fair manner,
provide additional explanatory information related to the rate
increases.
(c) Upon approval of the
Commissioner, an insurer may waive the disclosure requirements for 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.
(d) 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 section 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 Subparagraph (a) of this
paragraph.
(e) If the acquiring
insurer in Subparagraph (d) above files for a subsequent rate increase, even
within the twenty-four-month period, on the same policy form acquired from
nonaffiliated insurers or block of policy forms acquired from nonaffiliated
insurers referenced in Subparagraph (d), the acquiring insurer shall make all
disclosures required by Paragraph (5), including disclosure of the earlier rate
increase referenced in Subparagraph (d).
C. 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
subsection (1) and (5) B(1) and (5) . 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.
D. An insurer shall
use the forms in Appendices B and F to comply with the requirements of
subsections A and B of this section.
E. An insurer shall provide notice of an
upcoming premium rate schedule increase to all policyholders or
certificateholders, if applicable, at least forty-five (45) days prior to the
implementation of the premium rate schedule increase by the insurer. The notice
shall include the information required by subsection B when the rate increase
is implemented.
Section
10 Initial Filing Requirements
A.
This section applies to any long-term care policy issued in this state on or
after January 1, 2010.
B. Pursuant
to
8 V.S.A. §
4062, no policy form shall be sold or
marketed in this state prior to approval by the C ommissioner. Product forms,
including but not limited to policy forms, member handbooks, certificates,
endorsements, riders, and applications, shall not be approved if the forms
contain any provision which is unjust, unfair, inequitable, misleading, or
contrary to the law of this state.
C. Pursuant to
8 V.S.A. §
4062, insurers shall file premium rates for
approval by the Commissioner prior to implementation. No rate shall be approved
if it is excessive, inadequate or unfairly discriminatory. An insurer shall
provide the information listed in this subsection to the Commissioner:
(1) A copy of the disclosure documents
required in Section 9; and
(2) An
actuarial certification consisting of at least the following:
(a) 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;
(b) A statement that
the policy design and coverage provided have been reviewed and taken into
consideration;
(c) A statement that
the underwriting and claims adjudication processes have been reviewed and taken
into consideration;
(d) A complete
description of the basis for contract reserves that are anticipated to be held
under the form, to include:
(i) Sufficient
detail or sample calculations provided so as to have a complete depiction of
the reserve amounts to be held;
(ii) A statement that the assumptions used
for reserves contain reasonable margins for adverse experience;
(iii) A statement that the net valuation
premium for renewal years does not increase (except for attained-age rating
where permitted); and
(iv) 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 Commissioner may
request a demonstration under Subsection C based on a standard age
distribution; and
(e)
(i) 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
(ii) A comparison of the premium schedules
for Similar policy forms that are currently available from the insurer with an
explanation of the differences.
D. The Commissioner may request an actuarial
demonstration that benefits are reasonable in relation to premiums and any
other information he or she deems necessary for review of the rates. 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.
Section 11 Requirements for Applications,
Underwriting and Prohibition Against PostClaims Underwriting
A. Requirements for applications and health
questions:
1. All applications for long-term
care insurance except that which is guaranteed issue, shall contain clear,
unambiguous, short, simple questions designed to ascertain the health condition
of the applicant.
2. Questions
Concerning Medications:
(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 such
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
warning shall be printed conspicuously and in close conjunction with the
applicant's signature block:
"Caution: If your answers on this application are misstated
or untrue, the insurer may have the right to deny benefits or rescind your
coverage."
(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 misstated 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
(80) 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.
B.
Contestability Periods
1. For a policy or
certificate that has been in force for less than six months, an insurer may
rescind a long-term care insurance policy or certificate or deny an otherwise
valid long-term care insurance claim upon a showing of misrepresentation that
is material to the acceptance for coverage.
2. For a policy or certificate that has been
in force for at least six months but less than two years, an insurer may
rescind a long-term care insurance policy or certificate or deny an otherwise
valid long-term care insurance claim upon a showing of misrepresentation that
is both material to the acceptance for coverage and which pertains to the
condition for which benefits are sought.
3. After a policy or certificate has been in
force for two years, it is not contestable upon the grounds of
misrepresentation alone, but may be contested only upon a showing that the
insured knowingly and intentionally misrepresented relevant facts relating to
the insured's health that are both material to the acceptance for coverage and
which pertain to the condition for which benefits are sought.
4. If an insurer has paid benefits under the
long-term care insurance policy or certificate, the benefit payments may not be
recovered by the insurer in the event that the policy or certificate is
rescinded.
5. In the event of the
death of the insured, this section shall not apply to the remaining death
benefit of a life insurance policy that accelerates benefits for long-term
care. In this situation, the remaining death benefits under these policies
shall be governed by sections
3731
and
4065
of Title 8.
C.
Underwriting procedures must comply with applicable sections of Chapter 129 of
Title 8.
D. Prohibition Against
Post-Claims Underwriting:
1. An insurer may
not place an elimination rider, deny a claim or rescind coverage for an
otherwise valid long-term care claim except as provided in Subsection B of this
section.
2. 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 Commissioner in the format prescribed by the
National Association of Insurance Commissioners in Appendix A.
Section 12 Minimum
Standards for Home Health Care and Community Care Benefits in LongTerm Care
Insurance Policies
A. A long-term care
insurance policy or certificate shall not limit or exclude benefits for home
health care services or community services. In addition, a long-term care
policy or certificate shall not limit or exclude benefits for home health care
or community services:
(1) By requiring that
the insured/claimant would need skilled care in a skilled nursing facility if
home health care services were not provided;
(2) By requiring that the insured/claimant
first or simultaneously receive nursing and/or therapeutic services in a home,
or community or institutional setting before home health care services are
covered;
(3) By limiting eligible
services to services provided by registered nurses or licensed practical
nurses;
(4) 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;
(5) By excluding coverage for personal care
services provided by a home health aide;
(6) 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;
(7) By requiring that the insured/claimant
have an acute condition before home health care services are covered;
(8) By limiting benefits to services provided
by Medicare-certified agencies or providers;
(9) By excluding coverage for adult day care
services; or
(10) By requiring
prior confinement in any type of medical or health facility.
B. A long-term care insurance
policy or certificate shall provide total home health or community care
coverage equal to the coverage available for nursing home benefits under the
policy or certificate. This requirement shall not apply to policies or
certificates issued to residents of continuing care retirement
communities.
C. Home health care
coverage may be applied to the non-home health care benefits provided in the
policy or certificate when determining maximum coverage under the terms of the
policy or certificate.
Section
13 Requirement to Offer Inflation Protection
A. 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 inflation protection that increases benefit levels
annually in a manner so that the increases are compounded annually at a rate no
less than five percent (5%). A policyholder must affirmatively decline this
offer in writing before an insurer can offer a policy that does not include 5%
compound inflation. Insurers may also offer the option to purchase a policy
that:
(1) 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 percent (5%) for the period beginning with
the purchase of the existing benefit and extending until the year in which the
offer is made; or
(2) Covers a
specified percentage of actual or reasonable charges and does not include a
maximum specified indemnity amount or limit.
B. Where the policy is issued to a group, the
required offer in Subsection A shall be made to the group policyholder; except,
if the policy is issued to a group defined in
8 V.S.A. §
8082(4)(D), other than to a
continuing care retirement community, the offering shall be made to each
proposed certificateholder.
C. The
offer in Subsection A shall not be required for life insurance policies or
riders containing accelerated long-term care benefits.
D. Insurers shall include the following
information in or with the outline of coverage:
(1) 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 (20) year period; and
(2) A hypothetical or graphic demonstration
of any expected premium increases or additional premiums to pay for automatic
or optional benefit increases. If premium increases or additional premiums will
be based on the attained age of the applicant at the time of the increase, the
insurer shall also disclose the magnitude of the potential premiums the
applicant would need to pay at ages 75 and 85 for benefit increases.
E. Inflation protection benefit
increases under a policy that 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.
F. 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.
G.
(1)
Inflation protection as provided in subsection A(1) of this section 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 subsection. The rejection may be either in the application or in a
separate form.
(2) 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 5% compound inflation protection. Specifically,
I have reviewed this feature, and I reject 5% compound inflation protection. I
understand that I may elect other inflation protection options if
available."
Section
14 Requirements for Application Forms and Replacement Coverage
A. 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 producer, except where the
coverage is sold without a producer, containing such questions may be used.
With regard to a replacement policy issued to a group defined in
8 V.S.A.§
8082(4)(A), 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.
(1) Do you have another
long-term care insurance policy or certificate in force (including a health
care service contract or a health maintenance organization contract)?
(2) Did you have another long-term care
insurance policy or certificate in force during the last twelve (12) months?
(a) If so, with which company?
(b) If that policy lapsed, when did it
lapse?
(3) Are you
covered by Medicaid? Note: Medicaid is not the same as Medicare. You are
covered by Medicaid if you receive Supplemental Security Income (SSI) or if you
have applied and been found eligible by the appropriate state agency.
(4) Do you intend to replace any of your
medical or health insurance coverage with this policy or certificate?
B. Producers shall list on the
application (or other form referred to in Section 14(A) above) any other health
insurance policies they have sold to the applicant, including policies still in
force and policies sold within the past five (5) years which are no longer in
force.
C. 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 producer, 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 such 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 in the
following manner:
NOTICE TO APPLICANT REGARDING REPLACEMENT OF INDIVIDUAL
ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE
Insurance company's name and address
SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE
FUTURE.
According to your application information you have furnished
, you intend to let lapse or otherwise terminate existing accident and sickness
or long-term care insurance and replace it with an individual long-term care
insurance policy to be issued by company name . Your new policy provides thirty
(30) days within which you may decide, without cost, whether you desire to keep
the policy. For your own information and protection, you should be aware of and
seriously consider certain factors which may affect the insurance protection
available to you under the new policy.
You should review this new coverage carefully, comparing it
with all accident and sickness or long-term care insurance coverage you now
have, and terminate your present policy only if, after due consideration, you
find that purchase of this long-term care coverage is a wise decision.
STATEMENT TO APPLICANT BY AGENT BROKER OR OTHER
REPRESENTATIVE :
I have reviewed your current medical or health insurance
coverage. I believe the replacement of insurance involved in this transaction
materially improves your position. My conclusion has taken into account the
following considerations, which I call to your attention:
1. Health conditions which you may presently
have (preexisting conditions) may not be immediately or fully covered under the
new policy. This could result in denial or delay in payment of benefits under
the new policy, whereas a similar claim might have been payable under your
present policy.
2. State law
provides that your replacement policy or certificate may not contain new
preexisting conditions, waiting periods, elimination periods or probationary
periods. The insurer will waive any time periods applicable to preexisting
conditions, waiting periods, elimination periods, or probationary periods in
the new policy or coverage for similar benefits to the extent such time was
spent (depleted) under the original policy.
3. If you are replacing existing long-term
care insurance coverage you may wish to secure the advice of your present
insurer, its agent or producer, a family member or other advisor regarding the
proposed replacement of your present policy. This is not only your right, but
it is also in your best interest to make sure you understand all the relevant
factors involved in replacing your present coverage.
4. If, after due consideration, you still
wish to terminate your present policy and replace it with new coverage, be
certain to truthfully and completely answer all questions on the application
concerning your medical health history. Failure to include all material medical
information on the application may provide a basis for the company to deny any
future claims and to refund your premium as though your policy has never been
in force. After the application has been completed and before you sign it,
reread it carefully to be certain that all information has been properly
recorded.
_____________________________________________
(Signature of Agent, Broker or Other Representative)
Typed Name and Address of Agent or Broker
The above "Notice to Applicant" was delivered to me
on:
______________________________
(Date)
______________________________
(Applicant's Signature)
D. 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 in
the following manner:
NOTICE TO APPLICANT REGARDING REPLACEMENT ACCIDENT AND
SICKNESS OR LONG-TERM CARE INSURANCE
Insurance company's name and address
SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE
FUTURE.
According to your application information you have furnished
, you intend to let lapse or otherwise terminate existing accident and sickness
or long-term care insurance and replace it with the long-term care insurance
policy delivered herewith issued by company name . Your new policy provides
thirty (30) days within which you may decide, without cost, whether you desire
to keep the policy. For your own information and protection, you should be
aware of and seriously consider certain factors which may affect the insurance
protection available to you under the new policy.
You should review this new coverage carefully, comparing it
with all accident and sickness or long-term care insurance coverage you now
have, and terminate your present policy only if, after due consideration, you
find that purchase of this long-term care coverage is a wise decision.
1. Health conditions which you may presently
have (preexisting conditions), may not be immediately or fully covered under
the new policy. This could result in denial or delay in payment of benefits
under the new policy, whereas a similar claim might have been payable under
your present policy.
2. State law
provides that your replacement policy or certificate may not contain new
preexisting conditions, waiting periods, elimination periods or probationary
periods. Your insurer will waive any time periods applicable to preexisting
conditions, waiting periods, elimination periods, or probationary periods in
the new policy or coverage for similar benefits to the extent such time was
spent or depleted under the original policy.
3. If you are replacing existing long-term
care insurance coverage, you may wish to secure the advice of your present
insurer, its producer or agent, a family member, or other advisor regarding the
proposed replacement of your present policy. This is not only your right, but
it is also in your best interest to make sure you understand all the relevant
factors involved in replacing your present coverage.
4. To be included only if the application is
attached to the policy. If after due consideration, you still wish to terminate
your present policy and replace it with new coverage, read the copy of the
application attached to your new policy and be sure that all questions are
answered fully and correctly. Omissions or misstatements in the application
could cause an otherwise valid claim to be denied. Carefully check the
application and write to company name and address within thirty (30) days if
any information is not correct and complete, or if any past medical history has
been left out of the application.
______________________________
(Company Name)
E. 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 (5) working days from the date the application is
received by the insurer or the date the policy is issued, whichever is
sooner.
F. Life insurance policies
that accelerate benefits for long-term care shall comply with this section 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 Regulation 1-2001-03. 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.
Section 15 Reporting Requirements
A. Every insurer shall maintain records for
each producer of that producer's amount of replacement sales as a percent of
the producer's total annual long-term care insurance policy sales. Each insurer
shall also maintain record for each producer of that producer's amount of
lapses of long-term care insurance policies sold by the producer as a percent
of the producer's total sales of long-term care insurance policies.
B. Every insurer shall report annually by
June 30 the top ten percent (10%) of its producers with the greatest
percentages of lapses and replacements as measured by subsection 15(A) above.
(Appendix G)
C. 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 producer activities regarding the sale of long-term care
insurance.
D. Every insurer shall
report annually by June 30 the number of lapsed policies as a percent of its
total annual sales and as a percent of its total number of policies in force as
of the end of the preceding calendar year. (Appendix G)
E. Every insurer shall report annually by
June 30 the number of replacement policies sold as a percent of its total
annual long-term care insurance policy sales and as a percent of its total
number of policies in force as of the preceding calendar year. (Appendix
G)
F. Every insurer shall report
annually by June 30, for qualified long-term care insurance contracts and
non-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)
G. Every insurer shall
report annually by June 30, for qualified long-term care insurance contracts
and non-qualified long-term care insurance contracts, the number of claims
denied or not paid because the insured did not meet the benefit trigger under
the policy.
H. Every insurer shall
report annually by June 30 the number of policies returned within the 30-day
free look period.
I. Every insurer
shall report annually by June 30 the number of internal appeals requested and
the outcome of each internal appeal.
J. Every insurer shall report annually by
June 30 the number of independent reviews requested and the outcome of each
independent review.
K. Every
insurer shall report annually by June 30 the number of policy or certificate
rescissions, both state and countrywide. (Appendix A)
L. For purposes of this section:
(1) "Policy" means only long-term care
insurance;
(2) Subject to Paragraph
(3), "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;
(3) "Denied" means the insurer refuses to pay
a claim for any reason other than for claims not paid for failure to satisfy
the elimination period or because of an applicable preexisting condition;
and
(4) "Report" means on a
statewide basis unless specified to the contrary.
M. Reports required under this section shall
be filed with the Commissioner.
Section 16 Licensing
A producer is not authorized to sell, solicit or negotiate
with respect to long-term care insurance except as authorized under Title 8,
Chapter 131.
Section 17
Discretionary Powers of Commissioner
A. The
Commissioner 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
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.
B. Consistent with the standards and
procedures established in subdivision A, the Commissioner may issue a temporary
order modifying or suspending a specific provision or provisions of this
regulation provided that the Commissioner provides notice of the temporary
order and holds an administrative hearing within 20 days of the date that the
Commissioner issues the temporary order.
Section 18 Reserve Standards
A. When long-term care benefits are provided
through the acceleration of benefits under group or individual life policies or
riders to such policies, policy reserve for such benefits shall be determined
in accordance in accordance Vermont's standard valuation law, Title 8,
Subchapter 4,
8 V.S.A. §
3781,
et seq. Claim reserves must also be established in the case when such policy or
rider is in claim status.
Reserves for policies and riders subject to this subsection
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 subsection, 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:
(1) Definition of insured events;
(2) Covered long-term care
facilities;
(3) Existence of home
convalescence care coverage;
(4)
Definition of facilities;
(5)
Existence or absence of barriers to eligibility;
(6) Premium waiver provision;
(7) Renewability;
(8) Ability to raise premiums;
(9) Marketing methods;
(10) Underwriting procedures;
(11) Claims adjustment procedures;
(12) Waiting periods;
(13) Maximum benefits;
(14) Availability of eligible
facilities;
(15) Margins in claim
costs;
(16) Optional nature of
benefits;
(17) Delay in
eligibility;
(18) Inflation
protection provisions; and
(19)
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.
B. When long-term care benefits are provided
other than as in subsection A, reserves shall be as directed by the
Commissioner.
Section 19
Loss Ratios
A. This section shall apply to
all long-term care insurance policies or certificates, except where application
conflicts with specific portions of Sections 10 (initial filing requirements)
and 20 (premium rate schedule increases).
B. Benefits under individual long-term care
insurance policies shall be deemed reasonable in relation to premiums provided
the expected loss ratio is at least sixty percent, and benefits under group
long-term policies shall be deemed reasonable in relation to premiums provided
the expected loss ratio is at least seventy percent. In evaluating the expected
loss ratio, due consideration shall be given to all relevant factors,
including:
(1) Statistical credibility of
incurred claims experience and earned premiums;
(2) The period for which rates are computed
to provide coverage;
(3)
Experienced and projected trends;
(4) Concentration of experience within early
policy duration;
(5) Expected claim
fluctuation;
(6) Experience
refunds, adjustments or dividends;
(7) Renewability features;
(8) All appropriate expense
factors;
(9) Interest;
(10) Experimental nature of the
coverage;
(11) Policy
reserves;
(12) Mix of business by
risk classification; and
(13)
Product features such as long elimination periods, high deductibles and high
maximum limits.
C.
Subsection B 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:
(1) 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;
(2) The
portion of the policy that provides life insurance benefits meets the
nonforfeiture requirements of the Standard Nonforfeiture Law for Life
Insurance, Title 8, Chapter 103, and any other applicable provisions of Vermont
law;
(3) The policy meets the
disclosure requirements of
8
V.S.A. §§
8091 and
8092,
and this regulation;
(4) Any policy
illustration that meets the applicable requirements of Vermont Insurance
Regulation 98-1 Life Insurance Illustrations and any later amendments;
and
(5) An actuarial memorandum
prepared and signed by an actuary who is a member in good standing of the
American Academy of Actuaries is filed with the Department that includes:
(a) A description of the basis on which the
long-term care rates were determined;
(b) A description of the basis for the
reserves;
(c) A summary of the type
of policy, benefits, renewability, general marketing method, and limits on ages
of issuance;
(d) A description and
a table of each actuarial assumption used. For expenses, an insurer must
include percent of premium dollars per policy and dollars per unit of benefits,
if any;
(e) A description and a
table of the anticipated policy reserves and additional reserves to be held in
each future year for active lives;
(f) The estimated average annual premium per
policy and the average issue age;
(g) 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
(h) 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.
Section
20 Premium Rate Schedule Increases
A. This section shall apply as follows:
(1) Except as provided in Paragraph (2), this
section applies to any long-term care policy or certificate issued in this
state on or after July 1, 2010.
(2)
For certificates issued on or after the effective date of this amended
regulation under a group long-term care insurance policy as defined in
8 V.S.A. §
8082(4)(A), which policy was
in force at the time this amended regulation became effective, the provisions
of this section shall apply on the policy anniversary following January 1,
2011.
B. An insurer shall
request approval of a premium rate schedule increase, including an Exceptional
increase, as required by
8 V.S.A. §
4062, at least 60 days prior to the
anticipated notice to the policyholders. Such rate request filing shall
include:
(1) Information required by Section
9;
(2) Certification by a Qualified
actuary that:
(a) 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;
(b) The premium rate filing is in compliance
with the provisions of this section;
(3) An actuarial memorandum justifying the
rate schedule change request that includes:
(a) 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;
(i)
Annual values for the five (5) years preceding and the three (3) years
following the valuation date shall be provided separately;
(ii) The projections shall include the
development of the lifetime loss ratio, unless the rate increase is an
Exceptional increase;
(iii) The
projections shall demonstrate compliance with subsection C; and
(iv) 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 set forth in Section
4(D)
of this Regulation; and
(II) In the
event the Commissioner determines as provided in Section
4(D)(4)
that offsets may exist, the insurer shall use appropriate net projected
experience;
(b)
Disclosure of how reserves have been incorporated in this rate increase
whenever the rate increase will trigger contingent benefit upon
lapse;
(c) 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;
(d) A statement that policy design,
underwriting and claims adjudication practices have been taken into
consideration; and
(e) 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;
(4) 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 Commissioner; and
(5) Any other information deemed necessary
for review and approval of the premium rate schedule increase by the
Commissioner.
C. All
premium rate schedule increases shall be determined in accordance with the
following requirements:
(1) Exceptional
increases shall provide that seventy percent (70%) of the present value of
projected additional premiums from the Exceptional increase will be returned to
policyholders in benefits;
(2)
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:
(a) The accumulated value of the
initial earned premium times fifty-eight percent (58%);
(b) Eighty-five percent (85%) of the
accumulated value of prior premium rate schedule increases on an earned
basis;
(c) The present value of
future projected initial earned premiums times fifty-eight percent (58%);
and
(d) Eighty-five percent (85%)
of the present value of future projected premiums not in Subparagraph (c) on an
earned basis;
(3) In the
event that a policy form has both exceptional and other increases, the values
in Paragraph (2)(b) and (2)(d) will also include seventy percent (70%) for
exceptional rate increase amounts; and
(4) All present and accumulated values used
to determine rate increases shall use the maximum valuation interest rate for
contract reserves permitted by law in the valuation of whole life insurance
issued on the same date as the contract at issue. The actuary shall disclose as
part of the actuarial memorandum the use of any appropriate averages.
D. For each rate increase that is
implemented, the insurer shall file for approval by the Commissioner updated
projections, as defined in subsection B(3)(a), annually for the next three (3)
years and include a comparison of actual results to projected values. The
Commissioner may extend the period to greater than three (3) years if actual
results are not consistent with projected values from prior projections. For
group insurance policies that meet the conditions in Subsection K, the
projections required by this subsection shall be provided to the policyholder
in lieu of filing with the Commissioner.
E. If any premium rate in the revised premium
rate schedule is greater than 200 percent of the comparable rate in the initial
premium schedule, lifetime projections, as defined in Subsection (B)(3)(a),
shall be filed for approval by the Commissioner every five (5) years following
the end of the required period in Subsection D. For group insurance policies
that meet the conditions in Subsection K, the projections required by this
subsection shall be provided to the policyholder in lieu of filing with the
Commissioner.
F.
(1) If the Commissioner 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 subsection C, the Commissioner may require the insurer to
implement any of the following:
(a) Premium
rate schedule adjustments; or
(b)
Other measures to reduce the difference between the projected and actual
experience.
(2) In
determining whether the actual experience adequately matches the projected
experience, consideration should be given to Subsection (B)(3)(e), if
appropriate.
G. 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:
(1) A plan, subject to Commissioner 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 Commissioner may impose the condition in subsection H of this
section; and
(2) The original
anticipated lifetime loss ratio, and the premium rate schedule increase that
would have been calculated according to subsection C had the greater of the
original anticipated lifetime loss ratio or fifty-eight percent (58%) been used
in the calculations described in Subsection (C)(2)(a) and (c).
H.
(1) For a rate increase filing that meets the
following criteria, the Commissioner shall review, for all policies included in
the filing, the projected lapse rates and past lapse rates during the twelve
(12) months following each increase to determine if significant adverse lapse
rates have occurred or is anticipated:
(a)
The rate increase is not the first rate increase requested for the specific
policy form or forms;
(b) The rate
increase is not an Exceptional increase; and
(c) The majority of the policies or
certificates to which the increase is applicable are eligible for the
contingent benefit upon lapse.
(2) In the event the Commissioner determines
significant adverse lapse rates 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 Commissioner
may determine that a rate spiral exists. Following the determination that a
rate spiral exists, the Commissioner 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.
(a) The offer shall:
(i) Be subject to the approval of the
Commissioner;
(ii) Be based on
actuarially sound principles, but not be based on attained age; and
(iii) Provide that maximum benefits under any
new policy accepted by an insured shall be reduced by comparable benefits
already paid under the existing policy.
(b) 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:
(i) The maximum rate increase determined
based on the combined experience; and
(ii) The maximum rate increase determined
based only on the experience of the insureds to which the form was originally
issued plus ten percent (10%).
I. If the Commissioner determines that the
insurer has exhibited a persistent practice of filing inadequate initial
premium rates for long-term care insurance, the Commissioner may, in addition
to the provisions of subsection H of this section and any other provisions of
Vermont law, prohibit the insurer from either of the following:
(1) Filing and marketing comparable coverage
for a period of up to five (5) years; or
(2) Offering all other similar coverages and
limiting marketing of new applications to the products subject to recent
premium rate schedule increases.
J. Subsections A through I shall not apply to
policies for which the long-term care benefits provided by the policy are
Incidental, as defined in Section
4(E),
if the policy complies with all of the following provisions:
(1) 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;
(2) 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:
(a)
8 V.S.A. §§
3741 -
3749;
(b)
8
V.S.A. §
3750; and
(c)
8 V.S.A. §
3859 and related Vermont law.
(3) The policy meets the
disclosure requirements of 8 V.S.A. Chapter 154 and this Rule.
(4) The portion of the policy that provides
insurance benefits other than long-term care coverage meets the requirements as
applicable in the following:
(a) Policy
illustrations as required by Vermont Insurance Regulation 98-1 Life Insurance
Illustrations and later amendments;
(b) Disclosure requirements in
8 V.S.A. §
3856 and other applicable laws.
(5) An actuarial memorandum is
filed with the Commissioner that includes:
(a) A description of the basis on which the
long-term care rates were determined;
(b) A description of the basis for the
reserves;
(c) A summary of the type
of policy, benefits, renewability, general marketing method, and limits on ages
of issuance;
(d) A description and
a table of each actuarial assumption used. For expenses, an insurer must
include percent of premium dollars per policy and dollars per unit of benefits,
if any;
(e) A description and a
table of the anticipated policy reserves and additional reserves to be held in
each future year for active lives;
(f) The estimated average annual premium per
policy and the average issue age;
(g) 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
(h) 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.
K.
Subsections F and H shall not apply to group insurance policies as defined in
8 V.S.A. §
8082(4)(A) where:
(1) The policies insure 250 or more persons
and the policyholder has 5,000 or more eligible employees of a single employer;
or
(2) The policyholder, and not
the certificateholders, pays a material portion of the premium, which shall not
be less than twenty percent (20%) of the total premium for the group in the
calendar year prior to the year a rate increase is filed.
Section 21 Filing Requirements
A. Pursuant to
8 V.S.A. §
4062, insurers shall file all forms and rates
for approval by the Commissioner prior to use of the form or rate. No form or
rate shall be approved if it contains any provision which is unjust, unfair,
inequitable, misleading, or contrary to the law of this state.
B. Forms, as used in this Rule, shall include
the following: all product forms, including but not limited to, policy forms,
member handbooks, certificates, endorsements, riders, and
applications.
Section 22
Filing Requirements for Advertising
A. Every
insurer or other entity providing long-term care insurance or benefits in
Vermont shall file a copy of any long-term care insurance advertisement
intended for use in Vermont whether through written, radio, television,
internet, electronic, or other medium to the Commissioner for review and
approval. In addition, all advertisements shall be retained by the insurer or
other entity for at least three years from the date the advertisement was first
used.
B. The Commissioner may
exempt from these requirements any advertising form or material when, in the
Commissioner's opinion, this requirement may not be reasonably
applied.
Section 23
Standards for Marketing
A. Every insurer or
other entity marketing long-term care insurance coverage in Vermont, directly
or through its agents or producers, shall:
(1) Establish marketing procedures and
training requirements to ensure that any marketing activities, including
comparison of policies by its agents or producers, will be fair, accurate and
understandable;
(2) Establish
marketing procedures and training requirements to ensure policies sold are
suitable and that excessive insurance is not sold or issued;
(3) 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."
(4) Provide
copies of the disclosure forms required in Section 9(D) (Appendices B and F) to
the applicant.
(5) 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.
(i) An agent or producer who
initiates an application shall submit to the insurer, with or as part of the
application, a statement signed by both the applicant and the agent or producer
as to whether the applicant has existing policies or contracts. If the answer
is "no," the agent or producer's duties with respect to replacement are
complete.
(ii) If the applicant
answered "yes" to the question regarding existing coverage referred to in
Subsection A, the agent or producer shall present and read to the applicant,
not later than at the time of taking the application, the following notice
regarding replacements: "A replacement occurs when a new policy or contract is
purchased and, in connection with the sale, you discontinue making premium
payments on the existing policy or contract. Make sure you know the facts and
carefully consider whether a replacement is in your best interests. Contact
your existing company or its agent or producer for information about the old
policy or contract. Ask for and retain all sales material used by the agent or
producer in the sales presentation. Be sure that you are making an informed
decision."
(iii) In connection with
a replacement transaction the agent or producer shall leave with the applicant
at the time an application for a new policy or contract is completed the
original or a copy of all sales material. With respect to electronically
presented sales material, it shall be provided to the policy or contract owner
in printed form no later than at the time of policy or contract
delivery.
(iv) In connection with a
replacement transaction the agent or producer shall submit to the insurer to
which an application for a policy or contract is presented, a copy of each
document required by this Section, a statement identifying any preprinted or
electronically presented company approved sales materials used, and copies of
any individualized sales materials, including any illustrations related to the
specific policy or contract purchased.
(v) In connection with a replacement
transaction, the insurer shall notify any other existing insurer that may be
affected by the proposed replacement within five (5) business days of receipt
of a completed application indicating replacement or when the replacement is
identified if not indicated on the application, and mail a copy of the
available illustration or policy summary for the proposed policy or available
disclosure document for the proposed contract within five (5) business days of
a request from an existing insurer.
(6) Establish auditable procedures for
verifying compliance with this section.
(7) 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 Commissioner, the insurer and agent or
producer 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.
(8) Use the terms "noncancellable" or "level
premium" only when the policy or certificate conforms to Section
6(A)(3)
and Section
6(A)(4)
of this regulation.
(9) Provide an
explanation of contingent benefit upon lapse rights provided for in Section
28(C)(2).
B. In addition
to the practices prohibited in Title 8, Chapter 129, and other applicable
Vermont law, the following acts and practices are prohibited:
(1) 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
forfeit, surrender, let lapse, terminate, retain, pledge, assign, borrow on, or
convert any insurance policy or to take out a policy of insurance with another
insurer.
(2) 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.
(3) 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 producer or insurance company.
(4) Misrepresentation. Misrepresenting a
material fact in selling or offering to sell a long-term care insurance
policy.
(5) Replacement of
Long-Term Care Insurance Benefits Unnecessarily. No insurer, broker, agent,
producer or other person shall cause a policyholder to replace a long-term care
insurance policy unnecessarily. Nothing in this section shall be construed to
allow an insurer, broker, agent, producer or other person to cause a
policyholder to replace a long-term care insurance policy that will result in a
decrease in benefits and an increase in premium.
C.
(1) With
respect to the obligations set forth in this subsection, the primary
responsibility of an association or trust, as defined by
8 V.S.A. §
8082(4), 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. Such groups shall provide objective information regarding long-term
care insurance policies or certificates endorsed or sold by such groups to
ensure that members receive a balanced and complete explanation of the features
in the policies or certificates that are being endorsed or sold.
(2) The insurer shall file for approval with
the Commissioner, in accordance with
8 V.S.A. §
4062 and any other applicable law, the
following material:
(a) The policy and
certificate,
(b) A corresponding
outline of coverage, and
(c) All
advertisements.
(3) The
association or trust shall disclose in any long-term care insurance
solicitation:
(a) The specific nature and
amount of the compensation arrangements (including all fees, commissions,
administrative fees and other forms of financial support) that the association
or trust receives from endorsement or sale of the policy or certificate to its
members; and
(b) A brief
description of the process under which the policies and the insurer issuing the
policies were selected.
(4) If the association or trust and the
insurer have interlocking directorates or trustee arrangements, this fact shall
be disclosed to its members.
(5)
The board of directors (or other responsible party if no board of directors
exists) of any group under
8 V.S.A. §§
8082(4)(B) or
(C) selling or endorsing long-term policies
or certificates shall review and approve the insurance policies as well as the
compensation arrangements made with the insurer.
(6) The association or trust shall also:
(a) At the time of the group'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
examinations thereafter in the event of material changes;
(b) Actively monitor the marketing efforts of
the insurer and its agents or producers; and
(c) Review and approve all marketing
materials and other insurance communications used to promote sales or sent to
members regarding the policies or certificates.
(7) No group long-term care insurance policy
or certificate may be issued to an association unless the insurer files with
the Department the information required in this subsection.
(8) 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
section.
(9) Nothing in this
subsection should be construed to mean that other applicable long-term care
laws and regulation do not apply to policies issued through associations or
trusts.
D. Failure to
comply with the filing and certification requirements of this section
constitutes an unfair trade practice in violation of Title 8, Chapter
129.
Section 24
Suitability
A. This section shall not apply to
life insurance policies that accelerate benefits for long-term care.
B. Every insurer or other entity marketing
long-term care insurance (the "issuer") shall:
(1) 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;
(2) Train its agents or producers in the use
of its suitability standards; and
(3) Maintain a copy of its suitability
standards and make them available for inspection upon request by the
Commissioner.
C.
(1) To determine whether the applicant meets
the standards developed by the issuer, the agent or producer and issuer shall
develop procedures that take the following into consideration:
(a) The ability to pay for the proposed
coverage and other pertinent financial information related to the purchase of
the coverage, including but not limited to the applicant's age, income, assets,
expenses and financial eligibility for Medicaid;
(b) 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, including but not limited to asset protection;
and
(c) 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.
(2) The
issuer, and where a agent or producer is involved, the agent or producer shall
obtain the information set out in Paragraph (1) above, and shall present 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, in not less
than twelve (12) 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 Commissioner for approval.
Issuers must refile the personal worksheet with the Commissioner for approval
if the issuer changes the personal worksheet.
(3) 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 coverage to employees and their
spouses.
(4) The sale or
dissemination outside the insurer or agency by the issuer or its agent or
producer of information obtained through the personal worksheet in Appendix B
is prohibited.
D. The
issuer, and where an agent or producer is involved, the agent or producer,
shall use the suitability standards it has developed pursuant to this section
in determining whether issuing long-term care insurance coverage to an
applicant is appropriate. The issuer shall file a copy of the suitability
standards with the Department on or before June 30, 2010. Thereafter, the
issuer shall file the standards annually only if the issuer revises the
suitability standards.
E. At the
same time as the personal worksheet is provided to the applicant, the insurer
and where an agent or producer is involved, the agent or producer, shall
provide the disclosure form entitled "Things You Should Know Before You Buy
Long-Term Care Insurance." The form shall be in the format contained in
Appendix C, in readable font that is not less than twelve (12) point
type.
F.
(1) The issuer, and where an agent or
producer is involved, the agent or producer, shall not issue a long-term care
insurance policy to a consumer unless the policy is suitable based on the
suitability information provided by the applicant at the time of
sale.
(2) If the issuer determines
that the applicant does not meet its financial suitability standards, or if the
applicant has declined to provide financial information requested in the
personal worksheet, the issuer may reject the application. In the alternative,
the issuer shall send the applicant a letter similar to Appendix D. 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 and retained by the issuer.
G. The issuer shall report
annually, by June 30, to the Commissioner the total number of applications
received from Vermont residents, 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.
Section 25 Prohibition Against Pre-existing
Conditions, Elimination Periods and Probationary Periods in Replacement
Policies or Certificates
A. 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, elimination periods and probationary periods in the new
long-term care policy for similar benefits to the extent that similar
exclusions and elimination periods have been satisfied under the original
policy or certificate.
Section
26 Availability of New Services or Providers
A. A n insurer shall notify policyholders of
the availability of a new long-term policy series that provides coverage for
new long-term care services or providers that are material in nature and not
previously available through the insurer to the general public. The notice
shall be provided within twelve (12) months of the date that the new policy
series is made available for sale in this state.
B. Notwithstanding subsection A above,
notification is not required for any policy issued prior to the effective date
of this section or to any policyholder or certificateholder who is currently
eligible for benefits, within an elimination period or on a claim, or who
previously had been in claim status, or who would not be eligible to apply for
coverage due to issue age limitation 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.
C. The insurer shall
make the new coverage available in one of the following ways:
(1) By adding a rider to the existing policy
and charging a separate premium for the new rider based on the insured's
attained age;
(2) 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;
(3) 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
(4) By an alternative program developed by
the insurer that meets the intent of this section if the program is filed with
and approved by the Commissioner.
D. 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 subsection, "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 new 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.
E. Policies issued
pursuant to this section shall be considered exchanges and not replacements.
These exchanges shall not be subject to Sections 14 and 24, and the reporting
requirements of Section 15A to E of this Regulation.
F. Where the policy is offered through an
employer, labor organization, professional, trade or occupational association,
the required notification in subsection A above shall be made to the offering
entity. However, if the policy is issued to a group defined in
8 V.S.A. §
4079(4), the notification
shall be made to each certificateholder.
G. Nothing in this section 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.
H.
This section does not apply to life insurance policies or riders containing
accelerated long-term care benefits.
Section 27 Right to Reduce Coverage and Lower
Premiums
A.
(1) 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 the following ways:
(a) Reducing
the maximum benefit; and
(b)
Reducing the daily, weekly or monthly benefit amount.
(2) The insurer may also offer other
reduction options that are consistent with the policy or certificate design or
the insurer's administrative processes.
(3) Upon a showing that the insurer is unable
to offer one or more methods to reduce coverage pursuant to Section 27.A(1),
the Department may, in its discretion, waive the requirement that the insurer
offer the option to reduce coverage by maximum benefit and by reducing the
daily, weekly or monthly benefit amount.
B. 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.
C. 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.
D.
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.
E. 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 Section 7(A)(3) of this regulation.
F. This section does not apply to life
insurance policies or riders containing accelerated long-term care
benefits.
G. The requirement of
this section shall apply to any long-term care policy issued in this state on
or after the January 1, 2010.
Section
28 Nonforfeiture Benefit Requirement
A. This section does not apply to life
insurance policies or riders containing accelerated long-term care benefits. A
long-term care insurance policy may not be delivered or issued for delivery in
Vermont unless the policyholder has been offered the option of purchasing a
policy or certificate including a nonforfeiture benefit. If a nonforfeiture
benefit is declined, the insurer shall provide a contingent benefit upon lapse.
To comply with these requirements:
(1)
Nonforfeiture benefits offered 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 D; and
(2) The offer shall be in writing. If the
nonforfeiture benefit is described in the Outline of Coverage or other
materials given to the prospective policyholder this shall be
sufficient.
B. If the
offer of a nonforfeiture benefit required by
8 V.S.A. §
8095 is rejected, the insurer shall provide
the contingent benefit upon lapse described in this section.
C.
(1) 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.
(2) 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 below 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 thirty (30) days prior to the due date
of the premium reflecting the rate increase.
Triggers for a Substantial Premium
Increase |
Issue Age Initial Premium
|
Percent Increase Over
|
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%
|
(3)
On or before the effective date of a substantial premium increase as defined in
Paragraph (2) above, the insurer shall:
(a)
Provide a written offer to reduce policy benefits provided by the current
coverage without the requirement of additional underwriting so that required
premium payments are not increased;
(b) Provide a written offer to convert the
coverage to a paid-up status with a shortened benefit period in accordance with
the terms of subsection D. This option may be elected at any time during the
120-day period referenced in subsection (C)(2); and
(c) Notify the policyholder in writing that a
default or lapse at any time during the 120-day period referenced in subsection
(C)(2) shall be deemed to be the election of the offer to convert in
Subparagraph (b) above.
D. Benefits continued as nonforfeiture
benefits, including contingent benefits upon lapse, are described in this
subsection:
(1) For purposes of this
subsection, attained age rating is defined as a schedule of premiums starting
from the issue date which increases age at least one percent per year prior to
age fifty (50), and at least three percent (3%) per year beyond age fifty
(50).
(2) 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
Paragraph (3).
(3) 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
thirty (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 E.
(4)
(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 (3) years as well as thereafter.
(b) Notwithstanding Subparagraph (a), 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.
(5)
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.
E. 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.
F. There shall be no difference in the
minimum nonforfeiture benefits as required under this section for group and
individual policies.
G. The
requirements set forth in this section shall become effective twelve (12)
months after adoption of this provision and shall apply as follows:
(1) Except as provided in Paragraph (2), the
provisions of this section apply to any long-term care policy issued in this
state on or after the effective date of this amended regulation.
(2) For certificates issued on or after the
effective date of this section, under a group long-term care insurance policy
as defined in
8 V.S.A. §
8082(4)(A), which policy was
in force at the time this amended regulation became effective, the provisions
of this section shall not apply.
H. 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 19 treating the
policy as a whole.
I. To determine
whether contingent nonforfeiture upon lapse provisions are triggered under
subsection (C)(2), 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.
J. A nonforfeiture benefit
for qualified long-term care insurance contracts that are level premium
contracts shall be offered that meets the following requirements:
(1) The nonforfeiture provision shall be
appropriately captioned;
(2) 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
(3) The
nonforfeiture provision shall provide at least one of the following:
(a) Reduced paid-up insurance;
(b) Shortened benefit period; or
(c) Other similar offerings approved by the
Commissioner.
Section 29 Standards for Benefit Triggers
A. 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 or 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 two (2) of the activities
of daily living or the presence of cognitive impairment.
B.
(1)
Activities of daily living shall include at least the following as defined in
Section
5 of this
regulation:
(a) Bathing;
(b) Continence;
(c) Dressing;
(d) Eating;
(e) Toileting; and
(f) Transferring.
(2) Insurers may use activities of daily
living in addition to those contained in Paragraph (1) to trigger covered
benefits as long as they are clearly defined in the policy.
C. An insurer may use additional
provisions for the determination of when benefits are payable under a policy or
certificate. However the provisions shall not be more restrictive, and shall
not be in lieu of, the requirements contained in subsections A and B.
D. For purposes of this section the
determination of a deficiency shall not be more restrictive than:
(1) Requiring the hands-on assistance of
another person to perform the prescribed activities of daily living;
or
(2) 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.
E. Assessments of activities of
daily living and cognitive impairment shall be performed by licensed or
certified professionals, such as physicians, nurses or social
workers.
F. A long-term care
insurance policy shall include a clear description of the process for appealing
and resolving disputes with respect to benefit determinations. These standards
shall be consistent with Section 31.
Section 30 Additional Standards for Benefit
Triggers for Qualified LongTerm Care Insurance Contracts
A. For purposes of this section, the
following definitions apply:
(1) "Qualified
long-term care services" means services that meet the requirements of Section
7702(c)(1) of the Internal Revenue C ode 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.
(2)
(a)
"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:
(i) Being unable to perform (without
substantial assistance from another individual) at least two (2) activities of
daily living for a period of at least ninety (90) days due to a loss of
functional capacity; or
(ii)
Requiring substantial supervision to protect the individual from threats to
health and safety due to severe cognitive impairment.
(b) 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.
(3) "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.
(4) "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).
B. 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.
C. 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 (90) days due to a loss of functional
capacity or to severe cognitive impairment.
D. Certifications regarding activities of
daily living and cognitive impairment required pursuant to subsection C 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.
E. Certifications required pursuant to
subsection C may be performed by a licensed health care professional at the
direction of the insurer 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 (90) 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.
F. Qualified
long-term care insurance contracts shall include a clear description of the
process for appealing and resolving disputes with respect to benefit
determinations. These standards shall be consistent with Section 31.
Section 31 Appealing an Insurer's
Determination That the Benefit Trigger Is Not Met
A. If an insurer determines that the B enefit
trigger of a long-term care insurance policy has not been met, it shall provide
a clear, written notice to the insured of all of the following:
(1) The specific reason that the insurer
determined that the insured's Benefit trigger has not been met.
(2) A description of any additional material
or information necessary for the member to perfect the request and an
explanation of why such material or information is necessary;
(3) The insured's right to internal appeal in
accordance with Subsections B and C, the time limits applicable to such
procedures, and the right to submit new or additional information relating to
the Benefit trigger denial with the appeal request.
(4) The insured's right, after exhaustion of
the insurer's internal appeal process, to have the Benefit trigger
determination reviewed under the independent review process in accordance with
Subsection C, and the affect of such an election.
(5) If an internal rule, guideline, protocol,
or other similar criterion was relied upon in making the adverse benefit
determination, either the specific rule, guideline, protocol, or other similar
criterion; or a statement that such a rule, guideline, protocol, or other
similar criterion was relied upon in making the adverse benefit determination
and that a copy of such rule, guideline, protocol, or other criterion will be
provided free of charge to the member upon request.
(6) An explanation of the scientific or
clinical judgment or other reason for the determination, if
applicable.
B. Internal
Appeal. The internal appeal procedures shall provide at least the following:
(1) An insured may request an appeal of the
insurer's determination that the Benefit trigger was not met, by sending a
written request to the insurer, along with any additional supporting
information, within one-hundred and eighty (180) calendar days after the
insured receives the insurer's benefit determination notice.
(2) The internal appeal shall provide the
insured with the opportunity to submit written comments, documents, records,
and other information relating to the internal appeal.
(3) The internal appeal shall provide, free
of charge, reasonable access to, and copies of, all documents, records, and
other information relevant to the member's internal appeal.
(4) The internal appeal shall provide for a
review that takes into account all comments, documents, records and other
information submitted by the member relating to the internal appeal, without
regard to whether such information was submitted or considered in the initial
benefit determination.
(5) The
internal appeal shall provide for a review that does not afford deference to
the initial adverse benefit determination and ensures that the person or
persons reviewing the grievance on behalf of insurer shall not have been
involved with the adverse benefit determination or other issue that is the
subject of the internal appeal, nor shall such person or persons be the
subordinate(s) of any individual who was involved with the initial
determination or other issue that is the subject of the grievance.
(6) The internal appeal shall consider any
information provided by the insured's treating providers.
(7) The internal appeal rights shall not
exceed two levels of internal appeals, and the second level shall be voluntary.
The insurer shall waive any right to assert that a member has failed to exhaust
administrative remedies because the member did not elect to submit a grievance
to the voluntary second level of grievances.
(8) The internal appeal shall provide members
for whom English is not a primary language with information in their primary
language, if requested, about how to file an internal appeal and how to
participate in the internal appeal process. This information may be provided
telephonically or in written form.
C. The internal appeal shall be completed and
written notice of the internal appeal decision shall be sent to the insured
within thirty (30) calendar days of the insurer's receipt of all necessary
information upon which a final determination can be made.
(1) If the determination that the Benefit
trigger was not met is upheld upon internal appeal, the notice of the internal
appeal decision shall describe any additional internal appeal rights offered by
the insurer.
(2) If the
determination that the Benefit trigger was not met is upheld after the internal
appeal process has been exhausted, and new or additional information has not
been provided to the insurer for consideration, the insurer shall provide a
written description of the insured's right to request an independent review of
the benefit determination as described in Subsection D.
(3) If the determination that the Benefit
trigger was not met is upheld after the internal appeal process has been
exhausted, the insurer shall provide the following information in the written
notice of the internal appeal decision:
(a)
the titles and credentials of the reviewer(s) responsible for the internal
appeal decision;
(b) the
reviewer(s) decision, drafted in sufficient detail for the insured to
understand the review(s) decision; and
(c) reference to evidence or documentation
that the reviewer(s) considered, including any internal rule, guideline,
protocol or other criterion that the reviewer(s) relied upon.
D. Independent Review of
Benefit Trigger Determination.
(1) Request.
(a) An insured who is not satisfied with the
insurer's Benefit trigger determination may request an independent review of
the determination. A written request for an independent review shall be made by
the insured or insured's representative to the insurer within ninety (90)
calendar days after the insurer's written notice of the final internal appeal
decision is received by the insured.
(b) The insured may request the opportunity
for the insured or his or her representative to participate in person or by
telephone.
(2)
Independent Review Process.
(a) The insurer
shall refer the appeal on a rotating basis to the next independent review
organization on the Department's list of contracted independent review
organizations. If the organization has a conflict of interest, then the insurer
shall assign the appeal to the next independent review organization on the
Department's list of independent review organizations without a
conflict.
(b) The insurer shall
acknowledge the insured's request for independent review in writing, to the
insured and to the Commissioner, within fifteen (15) business days of receipt
of the request. Such acknowledgment shall include:
(1) a copy of the insured's request for an
internal appeal;
(2) a copy of the
insurer's determination on internal appeal;
(3) a copy of the insured's request for an
independent review; and
(4) the
name of the independent review organization selected to review the insured's
request for independent review. The Department may request additional
information and documentation about the internal appeal or the independent
review at any time.
(c)
If the insured or the insured's representative requested the opportunity to
participate in person or by telephone, the independent review organization
shall meet by teleconference with the insured, his or her treating provider,
and a clinical representative of the health insurer, to review and discuss the
evidence in the appeal.
(d) The
insured may submit new or additional information not previously provided to the
insurer. When submitting new information, the insured may request that the
health insurer reconsider the decision being appealed based on the additional
information being provided. In addition, if the independent review organization
to whom the appeal is assigned determines at any time that information it has
received as part of the appeal was not available or not made available to the
health insurer during its internal review process, the independent review
organization shall request the health insurer to reconsider the decision based
on the new information. Any such request shall stay the review by the
independent review organization for no more than fifteen (15) days.
(e) The independent review organization shall
provide the insurer and insured written notice of its decision regarding the
insurer's determination within thirty (30) calendar days from the date the
insurer received the request for an independent review of the benefit trigger
determination. If the independent review organization overturns the insurer's
decision, it shall:
(i) Establish the date
that the Benefit trigger was deemed to have been met;
(ii) Establish the specific period of time
under review for which the insurer declined eligibility but during which the
independent review organization deemed the Benefit trigger to have been
met.
(iii) For qualified long-term
care insurance contracts, the independent review organization shall make a
determination that the insured is a chronically ill individual.
(f) The decision of the
independent review organization with respect to whether the insured met the
Benefit trigger will be final and binding on the insurer.
(g) Nothing in this section shall restrict
the insured's right to submit a new claim after the independent review
decision, should the independent review organization uphold the insurer's
decision, if the insured's condition changes.
(h) At any time before or after the request
for independent review has been received and referred to the independent review
organization, the insured may submit new or additional information not
previously provided to the insurer but pertinent to the Benefit trigger denial.
The insurer shall consider such information and affirm or overturn its Benefit
trigger determination. If the insurer affirms its Benefit trigger
determination, the insurer shall promptly provide such new or additional
information to the independent review organization for its review. If the
insurer overturns its Benefit trigger determination:
(i) The insurer shall provide notice to the
independent review organization, the insured and the Department of its
decision; and
(ii) The independent
review process shall immediately cease.
E. Qualifications of an
Independent Review Organization. The Department shall from time to time enter
into contracts with as many independent review organizations as it deems
necessary to conduct the review provided for in this regulation. The contracts
shall set forth all terms that the Department deems necessary to ensure a full,
fair and timely review of appeals. Selection of the independent review
organizations shall include review of proposals with regard to at least the
following:
(1) Proposed scope of
services;
(2) Fee structure and
total estimated costs of reviews;
(3) Number and qualifications of reviewers,
who shall include licensed health care professionals in appropriate disciplines
and specialties for determining functional or cognitive impairment (e.g.
physical therapy, occupational therapy, neurology, physical medicine and
rehabilitation);
(4)
Accreditation;
(5) Procedures to
ensure the confidentiality of the appeals, including identifiable health care
information used in reviewing the appeals;
(6) Procedures to ensure the neutrality of
reviewers;
(7) Administrative and
operational policies and procedures; and
(8) Procedures to ensure that no conflict of
interest exists among the organization and its reviewers and the health insurer
or insured whose case is under review.
F. Applicability. The requirements of this
section apply to Benefit trigger determinations on or after January 1, 2010.
However, it shall not apply to long-term care insurance claims made under a
group long-term care insurance policy that insures a plan governed by the
Employee Retirement Income Security Act of 1974, as amended.
Section 32 Standard Format Outline
of Coverage
This section of the regulation implements, interprets and
makes specific the provisions of
8 V.S.A. §
8090 in prescribing a standard format and the
content of an outline of coverage.
A.
The outline of coverage shall be a free-standing document, and shall use a
readable font that is no smaller than twelve point type.
B. The outline of coverage shall contain no
material of an advertising nature.
C. Text which is capitalized or underscored
in the standard format outline of coverage may be emphasized by other means
which provide prominence equivalent to such capitalization or
underscoring.
D. Use of the text
and sequence of text of the standard format outline of coverage is mandatory,
unless otherwise specifically indicated.
E. The format for the outline of coverage
must be:
COMPANY NAME
ADDRESS - CITY & STATE
TELEPHONE NUMBER
LONG-TERM CARE INSURANCE
OUTLINE OF COVERAGE
Policy Number or Group Master Policy & Certificate
Number
Except for policies or certificates which are guaranteed
issue, the following caution statement, or language substantially similar, must
appear as follows in the outline of coverage.
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
1. This policy is an
individual policy of insurance ( a group policy which was issued in indicate
jurisdiction in which group policy was issued ).
2. PURPOSE OF OUTLINE OF COVERAGE. This
outline of coverage provides a very brief description of the important features
of the policy. You should compare this outline of coverage to outlines of
coverage for other policies available to you. This is not an insurance
contract, but only a summary of coverage. Only the individual or group policy
contains governing contractual provisions. This means that the policy or group
policy sets forth in detail the rights and obligations of both you and the
insurance company. Therefore, if you purchase this coverage, or any other
coverage, it is important that you READ YOUR POLICY (OR CERTIFICATE)
CAREFULLY!
3. PREMIUM.
(a) State the total annual premium for the
policy;
(b) State the total monthly
premium for the policy;
(c) If the
premium varies with an applicant's choice among benefit options, indicate the
portion of annual premium which corresponds to each benefit option.
4. LIMITATIONS AND EXCLUSIONS.
Describe:
(a)
Preexisting conditions;
(b)
Non-eligible facilities/providers;
(c) Non-eligible levels of care (e.g.,
unlicensed providers, care or treatment provided by a family member,
etc.);
(d)
Exclusions/exceptions;
(e)
Limitations.
This section should provide a brief specific description of
any policy provisions which limit, exclude, restrict, reduce, or delay, or in
any other manner operate to qualify payment of the benefits described in (6)
above.
THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH
YOUR LONG-TERM CARE NEEDS. IF THE POLICY DOES NOT COVER ALL NECESSARY EXPENSES,
YOU WILL HAVE TO PAY EXPENSES THAT ARE NOT COVERED.
5. FEDERAL TAX CONSEQUENCES.
This POLICY CERTIFICATE is intended to be a federally
tax-qualified long-term care insurance contract under Section 7702B(b) of the
Internal Revenue Code of 1986, as amended.
OR
Federal Tax Implications of this POLICY CERTIFICATE . This
POLICY CERTIFICATE is not intended to be a federally tax-qualified long-term
care insurance contract under Section 7702B(b) of the Internal Revenue Code of
1986 as amended. Benefits received under the POLICY CERTIFICATE may be taxable
as income.
6. TERMS UNDER
WHICH THE POLICY OR CERTIFICATE MAY BE CONTINUED IN FORCE OR DISCONTINUED.
(a) For long-term care health insurance
policies or certificates, describe one of the following permissible policy
renewability provisions:
(1) Policies and
certificates that are guaranteed renewable shall contain the following
statement: RENEWABILITY: THIS POLICY CERTIFICATE IS GUARANTEED RENEWABLE. This
means you have the right, subject to the terms of your policy, certificate to
continue this policy as long as you pay your premiums on time. Company Name
cannot change any of the terms of your policy on its own, except that, in the
future, IT MAY INCREASE THE PREMIUM YOU PAY.
(2) Policies and certificates that are
noncancellable shall contain the following statement: RENEWABILITY: THIS POLICY
CERTIFICATE IS NONCANCELLABLE. This means that you have the right, subject to
the terms of your policy, to continue this policy as long as you pay your
premiums on time. Company Name cannot change any of the terms of your policy on
its own and cannot change the premium you currently pay. However, if your
policy contains an inflation protection feature where you choose to increase
your benefits, Company Name may increase your premium at that time for those
additional benefits.
(b)
For group coverage, specifically describe continuation/conversion provisions
applicable to the certificate and group policy;
(c) Describe waiver of premium provisions or
state that there are not such provisions.
7. TERMS UNDER WHICH THE COMPANY MAY CHANGE
PREMIUMS.
In bold type larger than the maximum type required to be
used for the other provisions of the outline of coverage, state whether or not
the company has a right to change the premium, and if a right exists, describe
clearly and concisely each circumstance under which the premium may
change.
8. TERMS UNDER WHICH
THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.
(a) Provide a brief description of the right
to return - "free look" provision of the policy.
(b) Include a statement that the policy
either does or does not contain provisions providing for a refund or partial
refund of premium upon the death of an insured or surrender of the policy or
certificate. If the policy contains such provisions, include a description of
them.
9. THIS IS NOT
MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare, review the
Medicare Supplement Buyer's Guide available from the insurance company.
(a) For agents Neither insert company name
nor its agents represent Medicare, the federal government or any state
government.
(b) For direct response
insurance company name is not representing Medicare, the federal government or
any state government.
10.
LONG-TERM CARE COVERAGE. Policies of this category are designed to provide
coverage for one or more necessary or medically NECESSARY diagnostic,
preventive, therapeutic, rehabilitative, maintenance, or personal care
services, provided in a covered setting, such as in a nursing home, in the
community or in the home.
This policy provides coverage in the form of a fixed dollar
indemnity benefit for covered long-term care expenses, subject to policy
limitations waiting periods and coinsurance requirements. Modify this paragraph
if the policy is not an indemnity policy.
11. BENEFITS PROVIDED BY THIS POLICY.
(a) Covered services, related deductible(s),
waiting periods, elimination periods and benefit maximums.
(b) Institutional benefits, by skill
level.
(c) Non-institutional
benefits, by skill level.
(d)
Eligibility for Payment of Benefits
Activities of daily living, cognitive impairment or the
existence of mental health condition shall be used to measure an insured's need
for long-term care and must be defined and described as part of the outline of
coverage.
Any additional Benefit triggers must also be explained. If
these triggers differ for different benefits, explanation of the trigger should
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 must be specified.
12. RELATIONSHIP OF COSTS OF CARE
AND BENEFITS. Because the costs of long-term care services will likely increase
over time, you should consider whether and how the benefits of this plan may be
adjusted. As applicable, indicate the following:
(a) That the benefit level will not increase
over time;
(b) Any automatic
benefit adjustment provisions;
(c)
Whether the insured will be guaranteed the option to buy additional benefits
and the basis upon which benefits will be increased over time if not by a
specified amount or percentage;
(d)
If there is such a guarantee, include whether additional underwriting or health
screening will be required, the frequency and amounts of the upgrade options,
and any significant restrictions or limitations; and
(e) Describe whether there will be any
additional premium charge imposed, and how that is to be calculated.
YOU SHOULD CAREFULLY DETERMINE WHETHER PURCHASING COMPOUND
INFLATION PROTECTION IS AN APPROPRIATE CHOICE FOR YOUR BENEFIT NEEDS.
13. ALZHEIMER'S DISEASE
AND MENTAL HEALTH CONDITIONS.
State that the policy provides coverage for insureds having
Alzheimer's disease and related diseases or mental health conditions.
Specifically describe each benefit screen or other policy provision which
provides preconditions to the availability of policy benefits for such an
insured.
14. ADDITIONAL
FEATURES.
(a) Indicate if medical
underwriting is used;
(b) Describe
other important features.
15. IF YOU HAVE GENERAL QUESTIONS REGARDING
LONG-TERM CARE INSURANCE, CONTACT THE STATE HEALTH INSURANCE ASSISTANCE PROGRAM
(SHIP) AT 1-800-642-5119 OR THE VERMONT DEPARTMENT OF BANKING, INSURANCE,
SECURITIES AND HEALTH CARE ADMINISTRATION (BISHCA) AT 1-800-631-7788. CONTACT
THE INSURANCE COMPANY IF YOU HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM
CARE INSURANCE POLICY OR CERTIFICATE.
Section 33 Requirement to Deliver Shopper's
Guide
A. A long-term care insurance shopper's
guide approved by the Commissioner shall be provided to all prospective
applicants of a long-term care insurance policy or certificate.
(1) In the case of agent solicitations, an
agent must deliver the shopper's guide prior to the presentation of an
application or enrollment form.
(2)
In the case of direct response solicitations, the shopper's guide must be
presented in conjunction with any application or enrollment form.
B. 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 by
8
V.S.A. §
8091.
Section 34 Producer Requirements
A. An individual may not sell, solicit or
negotiate long-term care insurance unless the individual is licensed as an
insurance agent or producer for accident and health or sickness or life and has
completed the training requirements set forth in subsection B. For resident
licensees, this training can count towards the twenty-four (24) hours of
continuing education required in
8 V.S.A. §
4800a and any regulation promulgated
thereunder if the training satisfies all requirements for continuing education,
including course approval and provider registration. The training requirements
of Subsection B must be approved for continuing education under
8 V.S.A. §
4800a.
B. Training Requirements.
(1) An agent or producer selling, soliciting
or negotiating the sale of any long-term care insurance policy must complete
one, eight (8) hour course specific to long-term care, not less than two hours
of which shall contain Vermont-specific information including Vermont Medicaid
information. The Vermont-specific information can be part of an eight-hour
course or may be provided as a separate course. The initial training
requirement shall apply as follows:
(a)
Insurance agents or producers licensed to sell long-term care insurance
policies after March 31, 2010 must complete the one-time eight-hour training
before the agent or producer may sell, solicit or negotiate the sale of any
long-term care insurance policy.
(b) Insurance agents or producers licensed to
sell long-term care insurance policies on or before March 31, 2010 must
complete the one-time eight-hour training or before March 31, 2011.
(2) An agent or producer selling,
soliciting or negotiating the sale of any long-term care insurance policy must
also complete no less than four (4) hours of ongoing training every 24 months
ending March 31st of odd-numbered calendar years. The Commissioner may, at his
or her discretion, require agents and producers licensed to sell long-term care
insurance to complete additional ongoing training if the Commissioner
determines that such training is needed due to significant changes in the
long-term care statute or the Medicaid program.
(3) The training required under Subsections
(B)(1) and (B)(2) shall consist of topics related to long-term care insurance,
long-term care services and, if applicable, qualified state long-term care
insurance Partnership programs, including, but not limited to:
a. State and federal regulations and
requirements and the relationship between qualified state long-term care
insurance Partnership programs and other public and private coverage of
long-term care services, including Medicaid;
b. Available long-term care services and
providers;
c. Changes or
improvements in long-term care services or providers;
d. Alternatives to the purchase of private
long-term care insurance;
e. The
effect of inflation on benefits and the importance of inflation protection;
and
f. Consumer suitability
standards and guidelines.
(4) The training required by this section
shall not include training that is insurer or company product specific or that
includes any sales or marketing information, materials, or training, other than
those required by state or federal law.
C. Insurer's Obligations.
(1) Insurers subject to this Regulation shall
obtain verification that an agent or producer receives training required by
this Regulation before an agent or producer is permitted to sell, solicit or
negotiate the insurer's long-term care insurance products, maintain records
subject to the state's record retention requirements, and make that
verification available to the Commissioner upon request.
(2) Each insurer subject to this Regulation
shall maintain the training records that demonstrate that agents and producers
have received the training contained in subsection (B)(1) and (B)(2). These
records shall be maintained in accordance with the state's record retention
requirements and shall be made available to the Department upon
request.
D. Satisfaction
of the training requirements in any state shall be deemed to satisfy the
training requirements in Vermont, except for the Vermont-specific training
required as set forth in Subsection (B)(1) of this Section.
E. Agent and Producer Compensation
Requirements.
(1) Agents and producers must
obtain a prior written agreement with an applicant, policyholder or other
member of the public concerning fees or charges made by that agent or producer
directly to the applicant, policyholder or other member of the public for that
agent or producer procuring, servicing, or providing advice on insurance
contracts.
(2) Commissions, expense
allowances, bonuses, fees or any other compensation received directly by agents
or producers from any legal entity engaged in the insurance business is exempt
from this requirement.
Section 35 LongTerm Care Partnership Policies
A. Applicability. In accordance with Section
6021 of the Deficit Reduction Act of 2005 (
Pub.L.
109-171 ) and in addition to the requirements of
Chapter 154 of Title 8 and other applicable laws, the provisions of this
section shall apply to long-term care insurance that is intended to qualify
under Vermont's long-term care partnership program as a Partnership
policy.
B. Policy Certification.
(1) A Partnership policy shall not be issued
or issued for delivery in Vermont unless filed with and approved by the
Department. Any policy submitted for certification as a Partnership policy
shall be accompanied by a Partnership Certification Form (Appendix
J).
(2) Insurers requesting to make
use of a previously approved policy form as a Partnership policy shall submit
to the Department a Partnership Certification Form signed by an officer of the
company. A Partnership Certification Form shall be required for each policy
form submitted for partnership qualification (Appendix J).
C. Notice Requirements.
(1) An insurer or its agent, soliciting or
offering to sell a policy that is intended to qualify as a Partnership policy,
shall provide to each prospective applicant a Partnership Program Notice
(Appendix H), outlining the requirements and benefits of a Partnership policy.
A similar notice may be used for this purpose if filed and approved by the
Department. The Partnership Program Notice shall be provided with the required
Outline of Coverage.
(2) A
Partnership policy issued or issued for delivery in Vermont shall be
accompanied by a Partnership Disclosure Notice (Appendix I) explaining the
benefits associated with a Partnership policy and indicating that at the time
issued, the policy is intended to be a Qualified state long-term care insurance
partnership policy. A similar notice may be used if filed and approved by the
Department. The Partnership Disclosure Notice shall also include a statement
indicating that by purchasing this Partnership policy, the insured does not
automatically qualify for Medicaid.
(3) Insurers issuing a Partnership policy
shall provide a Policyholder Long-Term Care Partnership Program Status Form
(Appendix K) upon request of the policyholder or the policyholder's
representative. A similar notice may be used if filed and approved by the
Department.
D. Inflation
Protection. A Partnership policy must provide at least the following levels of
inflation protection:
(1) If a policy is sold
to a person who is less than sixty-one (61) years of age as of the date of
purchase of the policy, the policy must provide automatic annual compounded
inflation increases at a rate not less than three percent (3%); or provide
automatic annual compounded inflation increases at a rate based on changes in
the consumer price index. "Consumer price index" means consumer price index for
all urban consumers, U.S. city average, all items, as determined by the Bureau
of Labor Statistics of the United States Department of Labor.
(2) If a policy is sold to a person who is at
least sixty-one (61) years of age but less than seventy-six (76) years of age
as of the date of purchase of the policy, the policy must provide Some level of
inflation protection. "Some level of inflation protection" means an inflation
feature that meets the requirements of Subsection(D)(1) or "Simple inflation
protection" as defined by Section
4(H)
of this Regulation.
(3) If a policy
is sold to a person aged seventy-six (76) or older, the policy may, but is not
required to, provide Some level of inflation protection.
(4) The Department may also approve an
alternative inflation method (including an alternative index) so long as such
method is submitted to the Department with an explanation and demonstration as
to how the alternative method 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. No alternative method may be used until the Department
has approved such method.
(5)
Inflation protection benefit increases 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.
E. Exchange.
(1) A policy received in an exchange after
the effective date of Vermont 's long-term care partnership program is treated
as newly issued and thus is eligible for Partnership policy status. For
purposes of applying the Medicaid rules relating to Vermont 's long-term care
partnership program, the addition of a rider, endorsement, or change in
schedule page for a policy may be treated as giving rise to an
exchange.
(2) An insurer shall
offer, on a one time basis, in writing, to all existing policyholders that were
issued long-term care coverage of the type certified by the insurer on or after
February 8, 2006, the option to exchange their existing long-term care coverage
for coverage that is intended to qualify under Vermont 's long-term care
partnership program. The mandatory offer of an exchange shall only apply to
products issued by the insurer that are comparable to the type of policy form
(e.g. group policies, individual policies, etc.) and on the policy series that
the company has certified as partnership qualified. The following rules shall
apply to the offer to exchange:
(a) Insurers
must send policyholders the written offer of exchange within eighteen months of
the date that an insurer begins to advertise, market, offer, sell or issue
policies that qualify under Vermont 's long-term care partnership program. The
written offer of exchange used for this purpose shall be accompanied by The
Long-Term Care Partnership Exchange Notification Form (Appendix L). An
alternative form may be used for this purpose if filed and approved by the
Department. The offer of exchange shall also be accompanied by Partnership
Program Notice (Appendix H).
(b)
The offer shall be made on a nondiscriminatory basis without regard to the age
or health status of the insured. However, the insurer may underwrite if the
policy is amended to provide additional benefits or inflation
protection.
(c) If there is no
change in coverage material to the risk, the policy shall be calculated on the
basis of the insured's age at inception of coverage under the existing policy.
Any portion of the policy that was issued prior to the exchange date shall be
priced based on the policyholder's age when the policy was originally issued.
Any portion of the policy that is added as a result of the exchange may be
priced based on the policyholder's age at the time of the exchange.
(d) The offer shall remain open for a minimum
of forty-five (45) days from the date of mailing by the insurer.
(e) If there is no change in coverage
material to the risk, policies exchanged under this provision shall not be
subject to any medical underwriting or approval process.
(f) Any addition to a policy as a result of
any exchange shall be subject to the right to return set forth in
8 V.S.A. §
8089 and all applicable regulations.
(i) In the event of an exchange, the insured
shall not lose any rights, benefits or built-up value that has accrued under
the original policy with respect to the benefits provided under the original
policy, including, but not limited to, rights established because of the lapse
of time related to pre-existing condition exclusions, elimination periods, or
incontestability clauses.
(j)
Notwithstanding subsection E(2), an insurer is not required to offer an
exchange to an individual who is eligible for benefits or within an elimination
period, or who has been in claim status.
(3) For those insureds with long-term care
policies issued before February 8, 2006, an insurer may offer any insured an
option to exchange an existing policy for a policy that qualifies as a
Partnership policy under Vermont 's long-term care partnership program. The
requirements set forth in subsection (E)(2) shall apply to any such
exchange.
F. Policy
amendments. Any amendment to the policy that alters the status of a Partnership
policy so that it no longer meets the applicable partnership standards must
affirmatively disclose that fact and include an amended schedule page that
removes the references to the long-term care partnership program.
G. Reporting Requirements.
(1) Each insurer issuing a Partnership policy
shall provide regular reports to the United States Secretary of Health and
Human Services in accordance with regulations of the Secretary that include
notification of the date benefits were paid, the amount paid, the date the
policy terminates, and such other information as the Secretary determines may
be appropriate to the administration of partnerships. Upon request from the
Department, insurers shall provide a copy of these reports to the
Department.
(2) In addition to the
reporting requirements set forth in Subsection (G)(1), each insurer issuing a
Partnership policy shall provide annual reports to the Department on or before
June 30 that include the following information for the prior calendar year:
(a) the total number of certified policies
the insurer has issued or issued for delivery in Vermont ;
(b) the total number of lives covered by
Partnership policies certified in Vermont;
(c) the total number of claims reported under
Partnership policies certified in Vermont;
(d) the total number of claims paid under
Partnership policies certified in Vermont;
(e) the total number of lapsed Partnership
policies certified in Vermont;
(f)
the total number of Partnership policies certified in Vermont that were
terminated due to benefit exhaustion; and
(g) the total amount of premium collected and
attributable to Partnership policies certified in Vermont.
Section 36 Penalties
A. No policy may be advertised, marketed or
offered as long-term care insurance unless it complies with the provisions of 8
V.S.A. Chapters 129 and 154 and this regulation.
B. In addition to any other remedy or
sanction provided by law, after notice and opportunity for hearing the
Commissioner may assess an administrative penalty in an amount not to exceed $
10,000.00 for each violation against any person who violates any provision of 8
V.S.A. Chapter 154 or this regulation.
C. A person who violates a provision of 8
V.S.A. Chapter 154 or this regulation shall be fined not more than $ 10,000.00,
or imprisoned for not more than six months, or both.
D. The Department, or the Attorney General at
the request of the Department, may bring an action to enforce the provisions of
this chapter in the superior court.
Section 37 Severability
The provisions of this Regulation are severable. If any
provision of this Regulation is invalid, or if any application thereof to any
person or circumstance is invalid, the invalidity shall not affect other
provisions or applications which can be given effect without the invalid
provision or application.
Section
38 Effective Date; Repeal
Sections
1
through 34 and sections 36 through 37 of this regulation shall become effective
on April 1, 2010. Section 35 of this regulation shall become effective upon the
effective date of Vermont 's state plan amendment required by section 6021 of
the Deficit Reduction Act of 2005 (
Pub.L.
109-171 ). BISHCA Regulation 91-1 shall be
repealed at midnight on March 31, 2010.
Appendix A Rescission Reporting Form for Long-Term Care
Policies for the State of Vermont for the Reporting Year 20
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to view image
Appendix B Long-Term Care Insurance Personal Worksheet
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Appendix C Things You Should Know Before You Buy Long-Term
Care Insurance
Long-Term Care Insurance
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--
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A long-term care insurance policy may not pay all
necessary expenses for your care in a nursing home, care at home or other
community settings. If the policy does not cover all necessary expenses, you
will have to pay expenses that are not covered. Since policies can vary in
coverage, you should read this policy and make sure you understand what it
covers before you buy it.
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|
--
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[You should not buy this insurance
policy unless you can afford to pay the premiums every year.] [Remember that
the company can increase premiums in the future.]
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Drafting Note: For single premium
policies, delete this bullet; for noncancellable policies, delete the second
sentence only.
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--
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The personal worksheet includes questions designed to
help you and the company determine whether this policy is suitable for your
needs.
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Medicare
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--
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Medicare does not pay for most long-term
care.
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Medicaid
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--
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Medicaid will generally pay for long-term care if you
have very little income and few assets. You should not buy this
policy if you are now eligible for Medicaid.
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--
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Many people become eligible for Medicaid after they
have used up their own financial resources by paying for long-term care
services.
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--
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When Medicaid pays your spouse's nursing home bills,
you are allowed to keep your house and furniture, a living allowance, and some
of your joint assets.
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--
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Your choice of long-term care services may be limited
if you are receiving Medicaid. To learn more about Medicaid, contact your local
or state Medicaid agency.
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Shopper's Guide
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--
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Make sure the insurance company or agent gives you a
copy of a book called the National Association of Insurance Commissioners'
"Shopper's Guide to Long-Term Care Insurance." Read it carefully. If you have
decided to apply for long-term care insurance, you have the right to return the
policy within 30 days and get back any premium you have paid if you are
dissatisfied for any reason or choose not to purchase the policy. The Vermont
Department of Banking, Insurance, Securities and Health Care Administration
(BISHCA) also publishes a consumers' publication about long-term care
insurance. You can request a copy of this publication by calling 1-800-631-7788
or on BISHCA's website: http://www.bishca.state.vt.us/
HcaDiv/consumerpubs_healthcare/index_con sumerpubs.html.
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Counseling
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--
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Free counseling and additional information about
long-term care insurance are available through your state's insurance
counseling program. Contact the State Health Insurance Assistance Program
(SHIP) at 1-800-642-5119 or the Vermont Department of Banking, Insurance,
Securities and Health Care Administration (BISHCA) at 1-800-631-7788 for more
information about the senior health insurance counseling program in your
state.
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Facilities
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--
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Some long-term care insurance contracts provide for
benefit payments in certain facilities only if they are licensed or certified,
such as in assisted living centers. However, not all states regulate these
facilities in the same way. Also, many people move into a different state from
where they purchased their long-term care insurance policy. Read the policy
carefully to determine what types of facilities qualify for benefit payments,
and to determine that payment for a covered service will be made if you move to
a state that has a different licensing scheme for facilities than the one in
which you purchased the policy.
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Appendix D Long-Term Care Insurance Suitability Letter
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here to view image
Appendix E Claims Denial Reporting Form Long-Term Care
Insurance for the State of Vermont for the Reporting Year of
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here to view image
Appendix F Instructions
This form provides information to the applicant regarding
premium rate schedules, rate schedule adjustments, potential rate revisions,
and policyholder options in the event of a rate increase. Use of this form is
mandated by Section 9.
Insurers shall provide all of the following information to
the applicant:
Long-Term Care Insurance Potential Rate Increase Disclosure
Form
1. Premium Rate Premium Rate
Schedules : Premium rate Premium rate schedules that is are applicable to you
and that will be in effect until a request is made and an increase approved by
the Vermont Department of Banking, Insurance, Securities and Health Care
Administration is are on the application $______ )
2. The premium premium rate schedule for this
policy will be shown on the schedule page of will be attached to your
policy.
3. Rate Schedule
Adjustments:
The company will provide a description of when premium rate
or rate schedule adjustments will be effective (e.g., next anniversary date,
next billing date, etc.) (fill in the blank): ______________________.
4. Potential Rate Revisions:
This policy is Guaranteed Renewable. This means that the
rates for this product may be increased in the future. Your rates can NOT be
increased due to your increasing age or declining health, but your rates may go
up based on the experience of all policyholders with a policy similar to
yours.
If you receive a premium rate or premium rate schedule
increase in the future, you will be notified of the new premium amount and you
will be able to exercise at least one of the following options:
[bullet] Pay the increased premium and continue your policy
in force as is.
[bullet] Reduce your policy benefits to a level such that
your premiums will not increase. (Subject to state law minimum
standards.)
[bullet] Exercise your nonforfeiture option if purchased.
(This option is available for purchase for an additional premium.)
[bullet] Exercise your contingent nonforfeiture rights. [* ]
(This option is available if you do not purchase a separate nonforfeiture
option.)
[* ]Contingent Nonforfeiture
If the premium rate for your policy goes up in the future and
you didn't buy a nonforfeiture option, you may be eligible for contingent
nonforfeiture. Here's how to tell if you are eligible:
You will keep some long-term care insurance coverage,
if:
-- Your premium after the increase exceeds your original
premium by the percentage shown (or more) in the following table; and
-- You lapse (not pay more premiums) within 120 days of the
increase.
The amount of coverage (i.e., new lifetime maximum benefit
amount) you will keep will equal the total amount of premiums you've paid since
your policy was first issued. If you have already received benefits under the
policy, so that the remaining maximum benefit amount is less than the total
amount of premiums you've paid, the amount of coverage will be that remaining
amount.
Except for this reduced lifetime maximum benefit amount, all
other policy benefits will remain at the levels attained at the time of the
lapse and will not increase thereafter.
Should you choose this Contingent Nonforfeiture option, your
policy, with this reduced maximum benefit amount, will be considered "paid-up"
with no further premiums due.
Example:
-- You bought the policy at age 65 and paid the $ 1,000
annual premium for 10 years, so you have paid a total of $ 10,000 in
premium.
-- In the eleventh year, you receive a rate increase of 50%,
or $ 500 for a new annual premium of $ 1,500, and you decide to lapse the
policy (not pay any more premiums).
-- Your "paid-up" policy benefits are $ 10,000 (provided you
have a least $ 10,000 of benefits remaining under your policy.)
Contingent Nonforfeiture Cumulative Premium
Increase over Initial Premium That qualifies for Contingent
Nonforfeiture
|
(Percentage increase is cumulative from date of
original issue. It does NOT represent a one-time increase.)
|
Issue Age
|
Percent Increase Over Initial
Premium
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29 and under
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200%
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30-34
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190%
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35-39
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170%
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40-44
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150%
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45-49
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130%
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50-54
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110%
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55-59
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90%
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60
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70%
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61
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66%
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62
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62%
|
63
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58%
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64
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54%
|
65
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50%
|
66
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48%
|
67
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46%
|
68
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44%
|
69
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42%
|
70
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40%
|
71
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38%
|
72
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36%
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73
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34%
|
74
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32%
|
75
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30%
|
76
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28%
|
77
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26%
|
78
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24%
|
79
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22%
|
80
|
20%
|
81
|
19%
|
82
|
18%
|
83
|
17%
|
84
|
16%
|
85
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15%
|
86
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14%
|
87
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13%
|
88
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12%
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89
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11%
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90 and over
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10%
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Appendix G Long-Term Care Insurance Replacement and Lapse
Reporting Form
For the State of _______________
For the Reporting Year of__________
Company Name: ____________________
Company Address: ____________________
Company Person: ____________________
Instructions
The purpose of this form is to report on a statewide basis
information regarding long-term care insurance policy replacements and lapses.
Specifically, every insurer shall maintain records for each agent on that
agent's amount of long-term care insurance replacement sales as a percent of
the agent's total annual sales and the amount of lapses of long-term care
insurance policies sold by the agent as a percent of the agent's total annual
sales. The tables below should be used to report the ten percent (10%) of the
insurer's agents with the greatest percentages of replacement and
lapses.
Listing of the 10% of Producers with the Greatest Percentage
of Replacements
Producer's name
|
Number of Policies Sold by This Producer
|
Number of Policies Replaced by This Producer
|
Number of Replacements As % of Number Sold By This
Producer
|
Listing of the 10% of Agents with the Greatest Percentage of
Lapses
Producer's name
|
Number of Policies Sold by This Producer
|
Number of Policies Lapsed by This Producer
|
Number of Lapses As % of Number Sold By This
Producer
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Company Tools
Percentage of Replacement Policies Sold to Total Annual Sales
_____%
Percentage of Replacement Policies Sold to Policies In Force
(as of the end of the preceding calendar year) _____%
Percentages of Lapsed Policies to Total Annual Sales
_____%
Percentages of Lapsed Policies to Policies In Force (as of
the end of the preceding calendar year) _____%
Appendix H Partnership Program Notice
This Notice explains how the Vermont Long-Term Care
Partnership Program works and provides important consumer information regarding
the policies that are certified as Partnership Policies.
What is the Vermont Long-Term Care Partnership
Program?
Some long-term care insurance policies sold in Vermont may
qualify for the Vermont Long-Term Care Partnership Program (the Partnership
Program). The Partnership Program is a partnership between state government and
private insurance companies to assist individuals in planning their long-term
care needs. Insurance companies voluntarily agree to participate in the
Partnership Program by offering long-term care insurance coverage that meets
certain State and Federal requirements. Long-term care insurance policies that
qualify as Partnership Policies may protect the policyholder's assets through a
feature known as "Asset Disregard" under Vermont 's Medicaid program.
How Could the Partnership Program Help Protect Assets?
Long-term care insurance helps individuals prepare for future
long-term care needs. Qualified Partnership Policies provide an additional
level of protection. In particular, such policies may permit individuals to
protect resources under Vermont 's Medicaid Program if assistance is ever
needed under that program and the individual would be otherwise eligible for
the Vermont Medicaid Program.
In addition, if these specific protected resources are still
in existence when the individual dies and they are part of the decedent's
probate estate, they will not be recoverable under state law. The resource,
eligibility and estate recovery provisions of the Vermont Medicaid Program
permit the disregard of an amount of assets which is equal to the amount of
insurance benefits you have received from your qualified Partnership Policy.
For example, if you receive $ 200,000 of insurance benefits from your qualified
Partnership Policy, you would be able to retain $ 200,000 of resources and
still be eligible for long-term care services provided under the Medicaid
Program. This disregard is above and beyond the resources normally permitted to
be retained by an individual and still qualify for Medicaid. (Note: special
rules may apply to persons whose home equity exceeds $ 500,000.) This
protection of assets applies to individuals in need of long-term care services
both in the community or residing in a long-term care facility.
It is important to understand that all other Medicaid
eligibility criteria will apply at the time you apply for Medicaid. The
purchase of a Partnership Policy does not automatically qualify you for
Medicaid. In addition, please note that Medicaid eligibility requirements may
change over time.
Asset Disregard is not available under a long-term care
insurance policy that is not a Partnership Policy. Therefore, you should
consider if Asset Disregard is important to you, and whether a Partnership
Policy meets your needs.
What are the Requirements for a Partnership Policy?
In order for a policy to qualify as a Partnership Policy, it
must, among other requirements:
-- be issued to an individual after insert effective date of
Vermont 's long-term care partnership program ;
-- cover an individual who was an Vermont resident when
coverage first becomes effective under the policy;
-- be a tax-qualified policy under Section 7702(B)(b) of the
Internal Revenue Code of 1986;
-- meet consumer protection standards required by federal
legislation; and
-- meet the following inflation protection
requirements:
o For ages 60 or younger, the policy must provide Compound
annual inflation protection
o For ages 61 to 65, the policy must provide some level of
inflation protection
o For ages 76 and older, the policy does not have to provide
inflation protection.
If you apply and are approved for long-term care insurance
coverage, carrier name will provide you with written documentation as to
whether or not your policy qualifies as a Partnership Policy.
What Could Disqualify a Policy as a Partnership
Policy?
If you make certain types of changes to a Partnership Policy,
such changes could affect whether or not the policy continues to qualify as a
Partnership Policy. If you purchase a Partnership Policy and later decide to
make any changes, you should first consult with carrier name to determine the
effect of a proposed change. In addition, if you move to a state that does not
maintain a Partnership Program or does not recognize your policy as a
Partnership Policy, you would not receive beneficial treatment of your policy
under the Medicaid program of that state. The information contained in this
disclosure is based on current Vermont and Federal laws. These laws may be
subject to change. Any change in law could reduce or eliminate the beneficial
treatment of your policy under Vermont 's Medicaid program.
Additional Consumer Protections.
In addition to providing asset protection, a qualified
Partnership Policy has other important features. Partnership Policies must be
qualified long-term care insurance contracts under Federal tax law. As such the
insurance benefits you receive from the policy generally will be subject to
beneficial income tax treatment. (Please note that a policy can be a tax
qualified long-term care insurance contract under Federal tax law, with the
same beneficial income tax treatment, even if it is not a Partnership Policy.)
In addition, if you were under age 76 when you purchased your qualified
Partnership Policy, it must provide inflation protection to help protect
against potential future increases in the cost of long-term care. (Purchasers
over the age of 76 must be offered the option of purchasing a policy with
inflation protection).
Additional Information. If you have questions regarding the
insurance policy please contact insert name of carrier. If you have questions
regarding current laws governing Medicaid eligibility, you should contact the
Vermont Health Access Member Services at 1-800-250-8427.
Drafting Note: This form is intended for use with individual
long-term care insurance. The insurer may modify these forms for use with group
long-term care insurance without filing with the Department so long as no
substantive revisions are made. For example, the term "policy" may be replaced
with "certificate" or "coverage," and the term "policyholder" may be replaced
with "certificateholder."
Appendix I Partnership Status Disclosure Notice
Important Information Regarding Your Policy's
Long-Term Care Partnership Status |
This disclosure notice is issued in conjunction with your
long-term care policy:
Some long-term care insurance policies sold in Vermont
qualify for the Vermont Long-Term Care Partnership Program. Insurance companies
voluntarily agree to participate in the Partnership Program by offering
long-term care insurance coverage that meets certain State and Federal
requirements. Long-term care insurance policies that qualify as Partnership
Policies may be entitled to special treatment, and in particular an "Asset
Disregard," under Vermont 's Medicaid program.
Asset Disregard. Asset disregard means that an amount of the
policyholder's assets equal to the amount of long-term care insurance benefits
received under a qualified Partnership Policy will be disregarded for the
purpose of determining the insured's eligibility for Medicaid. This generally
allows a person to keep assets equal to the insurance benefits received under a
qualified Partnership Policy without affecting the person's eligibility for
Medicaid. In addition, if these specific protected resources are still in
existence when the individual dies and they are part of the decedent's probate
estate, they will not be recoverable under state law.
The resource, eligibility and estate recovery provisions of
the Vermont Medicaid Program permit the disregard of an amount of assets which
is equal to the amount of insurance benefits you have received from your
qualified Partnership Policy. For example, if you receive $ 200,000 of
insurance benefits from your qualified Partnership Policy, you would be able to
retain $ 200,000 of resources and still be eligible for long-term care services
provided under the Medicaid Program. This disregard is above and beyond the
resources normally permitted to be retained by an individual and still qualify
for Medicaid. (Note: special rules may apply to persons whose home equity
exceeds $ 500,000.) This protection of assets applies to individuals in need of
long-term care services both in the community or residing in a long-term care
facility.
It is important to understand that all other Medicaid
eligibility criteria will apply at the time you apply for Medicaid. The
purchase of a Partnership Policy does not automatically qualify you for
Medicaid. In addition, please note that Medicaid eligibility requirements may
change over time.
Partnership Policy Status. Your long-term care insurance
policy is intended to qualify as a Partnership Policy under the Vermont
Long-Term Care Partnership Program as of your Policy's effective date.
What Could Disqualify Your Policy as a Partnership Policy. If
you make any changes to your policy, such changes could affect whether your
policy continues to be a Partnership Policy. Before you make any changes, you
should consult with insert name of carrier to determine the effect of a
proposed change. In addition, if you move to a State that does not maintain a
Partnership Program or does not recognize your policy as a Partnership Policy,
you would not receive beneficial treatment of your policy under the Medicaid
program of that State. The information contained in this Notice is based on
current State and Federal laws. These laws may be subject to change. Any change
in law could reduce or eliminate the beneficial treatment of your policy under
Vermont 's Medicaid program.
Additional Information. If you have questions regarding your
insurance policy please contact insert name of carrier. If you have questions
regarding current laws governing Medicaid eligibility, you should contact the
Vermont Health Access Member Services at 1-800-250-8427.
Drafting Note: This form is intended for use with individual
long-term care insurance. The insurer may modify these forms for use with group
long-term care insurance without filing with the Department so long as no
substantive revisions are made. For example, the term "policy" may be replaced
with "certificate" or "coverage," and the term "policyholder" may be replaced
with "certificateholder."
Appendix J Issuer Certification Form
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here to view image
Click
here to view image
Click
here to view image
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here to view image
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here to view image
Appendix K Policyholder Long-Term Care Partnership Program
Status Form
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here to view image
Click
here to view image
Appendix L The Long-Term Care Partnership Exchange
Notification Form
Date: _______________________
Company name: _______________________
Address: _______________________
Contact information: _______________________
Company identifiers: _______________________
Insured's name: _______________________
Address: _______________________
Policy number: _______________________
Policy issue date: _______________________
Our company participates in Vermont 's Long-Term Care
Partnership Program by offering long-term care insurance policies that meet
certain state and federal requirements. Under the Partnership Program, policies
that meet these requirements may allow you to protect a portion of your assets
from Medicaid's "spend down" requirements if you should ever need to apply for
Medicaid benefits to pay for long-term care expenses in the future.
Partnership policies may allow you to keep a dollar of your
own assets for every dollar of benefits paid by the policy for long-term care
services should you need to apply for Medicaid. The Partnership Program Notice
provides additional information about the Vermont Long-Term Care Partnership
Program and how the Partnership Program could help you to protect certain
assets.
Although we sell long-term care insurance policies that
qualify as Partnership Policies, the policy you currently have with us does not
qualify for the Partnership Program. Therefore, we are notifying you that you
may be able to exchange your current long-term care policy for a new policy
that qualifies under the partnership program.
However, before you consider exchanging your current
long-term care policy for a policy that qualifies under the partnership
program, there are several things you should know. You may be required to
update your policy by adding benefits if your current policy does not include
required inflation protection. Also, you may be required to add benefits or
consumer protections that were not required when your policy was issued.
You should very carefully consider any change in benefits
because the changes may increase your premium. Also, if you change your policy,
you may be required to answer health questions that will determine whether we
will issue you a new policy (medical underwriting).
In addition, if you move to a state that does not maintain a
partnership program or does not recognize your policy as a Partnership Policy,
you would not receive the asset protection under the Medicaid laws of that
state.
If you have questions regarding your insurance policy please
contact insert name of carrier. If you have questions regarding current laws
governing Medicaid eligibility, you should contact the Vermont Health Access
Member Services at 1-800-250-8427.
Drafting Note: This form is intended for use with individual
long-term care insurance. The insurer may modify these forms for use with group
long-term care insurance without filing with the Department so long as no
substantive revisions are made. For example, the term "policy" may be replaced
with "certificate" or "coverage," and the term "policyholder" may be replaced
with "certificateholder."
Appendix M Long-Term Care Insurance Premium Rate Disclosure
for Required Benefit Configurations
Company Name:
Company Address
Company NAIC Number:
Line of Business: Individual __ Group ___
Instructions
The purpose of this form is to provide consumers with
estimates of the cost of sample long-term care plans that are required by
Section (6)(K) of this Regulation. Premium rates disclosed on this form will be
posted on the Department's website. Insurers must complete and submit this form
annually on or before June 30 [th ]. The Department will not approve policy
and/or rate filings unless this form has been submitted to the
Department.
Please provide for the annual premium for each currently
marketed long-term care policy required by Section
6(K).
In addition to the benefit parameters described below, assume that the policy
does not include a non-forfeiture option, any optional riders, and annual
standard rates (excluding all discounts such as preferred or marital). The
insurer is responsible for notifying the Department of any changes that will
impact the information submitted herein.
Benefit Configurations
Benefit Configuration I: $ 200 Daily Benefit; 90 or 100-Day
Elimination Period; 5-Year Benefit Period
|
With 5% compound inflation protection
|
With 5% Simple inflation protection
|
With no inflation protection or GPO at issue
|
Policy Form Number
|
Age 45
|
|
|
|
|
Age 50
|
|
|
|
|
Age 55
|
|
|
|
|
Age 60
|
|
|
|
|
Age 65
|
|
|
|
|
Age 70
|
|
|
|
|
Age 75
|
|
|
|
|
Benefit Configuration II: $ 150 Daily Benefit; 90 or 100-Day
Elimination Period; 3-Year Benefit Period
|
With 5% compound inflation protection
|
With 5% Simple inflation protection
|
With no inflation protection or GPO at issue
|
Policy Form Number
|
Age 45
|
|
|
|
|
Age 50
|
|
|
|
|
Age 55
|
|
|
|
|
Age 60
|
|
|
|
|
Age 65
|
|
|
|
|
Age 70
|
|
|
|
|
Age 75
|
|
|
|
|
Benefit Configuration III: $ 100 Daily Benefit; 90 or 100-Day
Elimination Period; 2-Year Benefit Period
|
With 5% compound inflation protection
|
With 5% Simple inflation protection
|
With no inflation protection or GPO at issue
|
Policy Form Number
|
Age 45
|
|
|
|
|
Age 50
|
|
|
|
|
Age 55
|
|
|
|
|
Age 60
|
|
|
|
|
Age 65
|
|
|
|
|
Age 70
|
|
|
|
|
Age 75
|
|
|
|
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