20 CSR 400-4.100
Long-Term Care Insurance
PURPOSE: This rule implements sections
376.1100–376.1130, RSMo, to promote the
public interest, to promote the availability of
long-term care insurance coverage, to protect
applicants for long-term care insurance, as
defined, from unfair or deceptive sales or
enrollment practices, to facilitate public
understanding and comparison of long-term
care insurance coverages, and to facilitate
flexibility and innovation in the development
of long-term care insurance.
(1) Applicability and Scope. This regulation
is based upon the Long-Term Care Insurance
Model Regulation adopted by the National
Association of Insurance Commissioners
(NAIC), Model #641, published October
2007 (“2007 LTC Model”).
(A) Except as otherwise specifically provided, this regulation applies to all long-term
care insurance policies, including qualified
long-term care contracts and life insurance
policies that accelerate benefits for long-term
care delivered or issued for delivery in this
state on or after January 1, 2004, by insurers,
fraternal benefit societies, nonprofit health,
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 as noted.
(B) Additionally, this regulation is intended to apply to policies having indemnity benefits that are triggered by activities of daily
living and sold as disability income insurance, if:
1. The benefits of the disability income
policy are dependent upon or vary in amount
based on the receipt of long-term care services;
2. The disability income policy is advertised, marketed or offered as insurance for
long-term care services; or
3. Benefits under the policy may commence after the policyholder has reached
Social Security’s normal retirement age
unless benefits are designed to replace lost
income or pay for specific expenses other
than long-term care services.
(2) Definitions. For the purpose of this regulation, the terms “long-term care insurance,” “qualified long-term care insurance,”
“group long-term care insurance,” “director,” “applicant,” “policy” and “certificate”
shall have the meanings set forth in section
376.1100.2, RSMo. In addition, the following definitions apply:
(A) “Exceptional increase.”
1. Exceptional increase means only
those increases filed by an insurer as exceptional for which the director 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 (18) of
this regulation, exceptional increases are subject to the same requirements as other premium rate schedule increases.
3. The director 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 director, in determining that the
necessary basis for an exceptional increase
exists, shall also determine any potential offsets to higher claims costs.
(B) “Incidental,” as used in subsection
(18)(J) of this regulation, 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.
(C) “Qualified actuary” means a member
in good standing of the American Academy of
Actuaries (AAA).
(D) “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 section
376.1100.2(4)(a), RSMo, 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. For purposes of determining similar
policy forms, long-term care benefit classifications are defined as follows:
1. Institutional long-term care benefits
only;
2. Non-institutional long-term care benefits only; or
3. Comprehensive long-term care benefits.
(3) Policy Definitions. No long-term care
insurance policy delivered or issued for delivery in this state shall use the terms set forth
below, unless the terms are defined in the policy and the definitions satisfy the following
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” means a program for
five (5) or more individuals, of social and
health-related services provided during the
day in a community group setting for the purpose of supporting frail, impaired elderly or
other disabled adults who can benefit from
care in a group setting outside the home.
(D) “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.
(E) “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.
(F) “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).
(G) “Dressing” means putting on and taking off all items of clothing and any necessary
braces, fasteners or artificial limbs.
(H) “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.
(I) “Hands-on assistance” means physical
assistance (minimal, moderate or maximal)
without which the individual would not be
able to perform the activity of daily living.
(J) “Home health care services” means
medical and nonmedical services, provided to
ill, disabled or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily
living and respite care services.
(K) “Medicare” means “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.
(L) “Mental or nervous disorder” shall not
be defined to include more than neurosis,
psychoneurosis, psychopathy, psychosis, or
mental or emotional disease or disorder.
(M) “Personal care” means the provision
of hands-on services to assist an individual
with activities of daily living.
(N) “Skilled nursing care,” “intermediate
care,” “personal care,” “home care” and
other services shall be defined in relation to
the level of skill required, the nature of the
care and the setting in which care must be
delivered.
(O) “Toileting” means getting to and from
the toilet, getting on and off the toilet, and
performing associated personal hygiene.
(P) “Transferring” means moving into or
out of a bed, chair or wheelchair.
(Q) All providers of services, including but
not limited to “skilled nursing facility,”
“extended care facility,” “intermediate care
facility,” “convalescent nursing home,” “personal care facility,” and “home care agency”
shall be defined in relation to the services and
facilities required to be available and the
licensure or degree status of those providing
or supervising the services. The definition
may require that the provider be appropriately licensed or certified.
(4) 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 section (7) 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.
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” 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 Internal Revenue
Code (IRC), section 7702B(b)(1)(C), as referenced herein.
(B) Limitations and Exclusions. A policy
may not 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. Preexisting conditions or diseases;
2. Mental or nervous disorders; however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer’s
disease;
3. Alcoholism and drug addiction;
4. 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. Suicide or attempted suicide while
sane or intentionally self-inflicted injury; or
E. Aviation (this exclusion applies
only to non-fare-paying passengers);
5. Treatment provided in a government
facility (unless otherwise required by law),
services to the extent that benefits are available under Title XVIII of the Social Security
Act (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 and services for which no charge is
normally made in the absence of insurance;
6. Expenses for services or items available or paid under another long-term care
insurance or health insurance policy;
7. 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 Medicare or would be so
reimbursable but for the application of a
deductible or coinsurance amount;
8. This subsection is not intended to
prohibit exclusions and limitations by type of
provider or territorial limitations. However,
no long-term care issuer may deny a claim
because services were provided in a state
other than the state of policy issue under the
following circumstances:
A. 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
registration; or
B. When the state other than the state
of policy issue licenses, certifies or registers
the provider under another name. For purposes of this paragraph, “state of policy
issue” means the state in which the individual policy or certificate was originally issued.
(C) Extension of Benefits. Termination of
long-term care insurance shall be without
prejudice to any benefits payable for institutionalization if the institutionalization began
while the long-term care insurance was in
force and continues without interruption after
termination. The extension of benefits 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 in this state on or after January 1,
2004 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 that maintains coverage
under the existing group policy when the coverage would otherwise terminate and which is
subject only to the continued timely payment
of premium when due. Group policies that
restrict provision of benefits and services to,
or contain incentives to use certain providers
or facilities, may provide continuation benefits that are substantially equivalent to the
benefits of the existing group policy. The
director 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 nonmanaged 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 (6) 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
director to be substantially equivalent to or in
excess of those provided under the group policy 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 or facilities, the director, 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 director 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 (4)(D)6. of this
rule.
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 one hundred percent
(100%) of incurred expenses. The 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.
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 issued to
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
preexisting 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) Premium.
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 (24) of this regulation,
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
(24) of this regulation, the initial annual premium shall be based on the reduced benefits.
(G) Electronic Enrollment for Group Policies.
1. In the case of a group defined in section 376.1100.2(4)(a), RSMo, any requirement that a signature of an insured be
obtained by a producer or insurer shall be
deemed satisfied if:
A. The consent is obtained by telephonic or electronic enrollment by the group
policyholder or insurer. 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; and
C. The telephonic or electronic
enrollment provides necessary and reasonable
safeguards to assure that the confidentiality
of personally identifiable financial information as defined by 20 CSR 100-6.100, is
maintained.
2. The insurer shall make available,
upon request of the director, records that will
demonstrate the insurer’s ability to confirm
enrollment and coverage amounts.
(5) Unintentional Lapse. Each insurer offering long-term care insurance shall, as a protection against unintentional lapse, comply
with the following:
(A) Notice Before Lapse or Termination.
1. No individual long-term care policy
or certificate shall be issued until the insurer
has received from the applicant either a written designation of at least one (1) person, in
addition to the applicant, who is to receive
notice of lapse or termination of the policy or
certificate for nonpayment of premium, or a
written waiver dated and signed by the applicant electing not to designate additional persons to receive notice. The applicant has the
right to designate at least one (1) person who
is to receive the notice of termination, in
addition to the insured. Designation shall not
constitute acceptance of any liability on the
third party for services provided to the
insured. The form used for the written designation must provide space clearly designated
for listing at least one (1) person. The designation shall include each person’s full name
and home address. In the case of an applicant
who elects not to designate an additional person, the waiver shall state:
“Protection against unintended lapse. I
understand that I have the right to designate
at least one (1) person other than myself to
receive notice of lapse or termination of this
long-term care insurance policy for nonpayment of premium. I understand that notice
will not be given until thirty (30) days after a
premium is due and unpaid. I elect NOT to
designate a person to receive this notice.”
2. The insurer shall notify the insured of
the right to change this written designation,
no less often than once every two (2) years.
3. 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 paragraph (5)(A)1. of this
rule need not be met until sixty (60) days
after the policyholder or certificateholder 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.
4. Lapse or termination for nonpayment
of premium. No individual long-term care
policy or certificate shall lapse or be terminated for nonpayment of premium unless the
insurer, at least thirty (30) days before the
effective date of the lapse or termination, has
given notice to the insured and to those persons
designated pursuant to paragraph (5)(A)1. of
this regulation, at the address provided by the
insured for purposes of receiving notice of
lapse or termination.
A. Notice shall be given by first class
United States mail, postage prepaid.
B. Notice may not be given until thirty (30) days after a premium is due and
unpaid.
C. Notice shall be deemed to have
been given as of five (5) days after the date of
mailing.
(B) Reinstatement. In addition to the
requirement in subsection (5)(A) of this rule,
a long-term care insurance policy or certificate shall include a provision that provides
for reinstatement of coverage, in the event of
lapse if the insurer is provided proof that the
policyholder or 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.
(6) Required Disclosure Provisions.
(A) Renewability. Individual long-term
care insurance policies shall contain a
renewability provision.
1. The provision shall be appropriately
captioned, shall appear on the first page of
the policy, and shall clearly state that the coverage is guaranteed renewable or noncancellable. This provision shall not apply to
policies that do not contain a renewability
provision, and under which the right to nonrenew is reserved solely to the policyholder,
including long-term care policies that are part
of or combined with life insurance policies,
since life insurance policies do not contain
renewability provisions.
2. A long-term care insurance 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 that 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 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, the premium
charge shall be set forth in the policy, rider or
endorsement.
(C) Payment of Benefits. A long-term care
insurance policy that 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 these terms and an
explanation of the terms in its accompanying
outline of coverage.
(D) Limitations. If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions,
the limitations shall appear as a separate
paragraph of the policy or certificate and
shall be labeled as “Preexisting Condition
Limitations.”
(E) 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 section 376.1109,
RSMo, shall set forth a description of the
limitations or conditions, including any
required number of days of confinement, in a
separate paragraph of the policy or certificate
and shall label such paragraph “Limitations
or Conditions on Eligibility for Benefits.”
(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 longterm 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) A qualified long-term care insurance
contract shall include a disclosure statement
in the policy and in the outline of coverage as
contained in the provision of paragraph
(29)(E)3. of this regulation, that the policy is
intended to be a qualified long-term care
insurance contract under IRC, section
7702B(b), as referenced herein.
(I) A nonqualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage as contained in the provisions of
paragraph (29)(E)3. of this regulation, that
the policy is not intended to be a qualified
long-term care insurance contract.
(7) Required Disclosure of Rating Practices
to Consumers.
(A) This section shall apply as follows:
1. Except as provided in paragraph
(7)(A)2., below, this section applies to any
long-term care policy or certificate issued in
this state six (6) months following the effective date of this regulation.
2. For certificates issued on or after the
effective date of this regulation under a group
long-term care insurance policy as defined in
section 376.1100.2(4)(a), RSMo, which policy was in force at the time this regulation
became effective, the provisions of this section shall apply on the policy anniversary following July 1 of the year following the year in
which this regulation becomes effective.
(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 (e.g.,
application made by mail). 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 that the policy may be
subject to rate increases in the future;
2. An explanation of potential future
premium rate revisions, and the policyholder’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;
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 paragraph
(7)(B)3. of this rule if the premium rate or
rate schedule is changed;
5. Information relating to premium rate
increases.
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 manner that
is not misleading to the applicant, provide
additional explanatory information related to
the rate increases.
C. An insurer shall have the right to
exclude from the disclosure 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 either
the effective date of this regulation or the end
of a twenty-four (24)-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 (7)(B)5.A. of this
rule.
E. If the acquiring insurer in the provisions of subparagraph (7)(B)5.D. of this
regulation, above, files for a subsequent rate
increase, even within the twenty-four (24)-
month period, on the same policy form
acquired from nonaffiliated insurers or block
of policy forms acquired from nonaffiliated
insurers referenced in provisions of subparagraph (7)(B)5.D. of this regulation, above,
the acquiring insurer shall make all disclosures required by paragraph (7)(B)5. above,
including disclosure of the earlier rate
increase referenced in the provisions of subparagraph (7)(B)5.D. of this regulation.
(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 paragraphs
(7)(B)1. and (7)(B)5. of this rule. 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 Long-Term
Care Personal Worksheet (Form LTC-B) and
the Potential Rate Increase Disclosure Form
(Form LTC-F) to comply with the requirements of subsections (7)(B) and (D) of this
rule.
(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 (7)(B) when the rate increase is
implemented.
(8) Initial Filing Requirements.
(A) This section applies to any long-term
care policy issued in this state six (6) months
following the effective date of this regulation.
(B) An insurer shall provide the information listed in this subsection to the director
thirty (30) days prior to making a long-term
care insurance form available for sale.
1. A copy of the disclosure documents
required in section (7) of this regulation; 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);
(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;
(V) When the difference between
the gross premium and the renewal net valuation premiums is not sufficient to cover
expected renewal expenses, the description
provided could demonstrate the type and level
of change in the reserve assumptions that
would be necessary for the difference to be
sufficient.
(a) An aggregate distribution of
anticipated issues may be used as long as the
underlying gross premiums maintain a reasonably consistent relationship;
(b) If the gross premiums for
certain age groups appear to be inconsistent
with this requirement, the director may
request a demonstration under subsection
(8)(C) of this regulation based on a standard
age distribution; and
E. Premium rate schedule.
(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. At a minimum, the insurer must provide that a broad
range of expected combinations in a manner
designed to provide a fair presentation for
review by the director.
(C) The director may request additional
information to be provided.
1. The director may request an actuarial
demonstration that benefits are reasonable in
relation to premiums. 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.
2. In the event the director asks for
additional information under this provision,
the period in subsection (8)(B) of this regulation does not include the period during which
the insurer is preparing the requested information.
(9) Prohibition Against Post-Claims Underwriting.
(A) All applications for long-term care
insurance policies or certificates except those
that are guaranteed issue shall contain clear
and unambiguous questions designed to
ascertain the health condition of the applicant.
(B) Medication.
1. 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.
2. If the medications listed in the 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.
(C) Except for policies or certificates that
are guaranteed issue:
1. The following language shall be set
out conspicuously and in close conjunction
with the applicant’s signature block on an
application for a long-term care insurance
policy or certificate:
“Caution: If your answers on this application
are incorrect or untrue, [company] has the
right to deny benefits or rescind your policy.”
2. 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 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]”
3. Prior to issuance of a long-term care
policy or certificate to an applicant age eighty
(80) or older, the insurer shall obtain one (1)
of the following:
A. A report of a physical examination;
B. An assessment of functional capacity;
C. An attending physician’s statement; or
D. Copies of medical records.
(D) 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.
(E) 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 insurance director on the
Rescission Reporting Form for Long-Term
Care Policies (Form LTC-A).
(10) Minimum standards for home health and
community care benefits in long-term care
insurance policies.
(A) A long-term care insurance policy or
certificate shall not, if it provides benefits for
home health care or community care services, limit or exclude benefits:
1. By requiring that the insured or
claimant would need care in a skilled nursing
facility if home health care services were not
provided;
2. By requiring that the insured or
claimant first or simultaneously receive nursing or therapeutic services, or both, in a
home, 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 or
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; or
9. By excluding coverage for adult day
care services.
(B) A long-term care insurance policy or
certificate, if it provides for home health or
community care services, shall provide total
home health or community care coverage that
is a dollar amount equivalent to at least onehalf (1/2) of one (1) year’s coverage available
for nursing home benefits under the policy or
certificate, at the time covered home health or
community care services are being received.
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. This subsection is not intended to restrict home health
care to a period of time which would make
the benefit illusory. Fewer than three hundred sixty-five (365) benefit days and less
than a twenty-five dollar ($25) daily maximum benefit constitute illusory home health
care benefits.
(11) 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 an inflation
protection feature no less favorable than one
(1) of the following:
1. Increases benefit levels annually in a
manner so that the increases are compounded
annually at a rate not less than five percent
(5%);
2. 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
3. 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 (11)(A) of
this rule, above, shall be made to the group
policyholder; except, if the policy is issued to
a group defined in section 376.1100.2(4)(a),
RSMo, other than to a continuing care retirement community, the offering shall be made
to each proposed certificateholder.
(C) The offer in subsection (11)(A) of this
rule, above, shall not be required of life
insurance policies or riders containing accelerated long-term care benefits.
(D) Information Required in or with the
Outline of Coverage.
1. Insurers shall include the following
information in or with the outline of coverage:
A. 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
B. Any expected premium increases
or additional premiums to pay for automatic
or optional benefit increases.
2. An insurer may use a reasonable
hypothetical, or a graphic demonstration, for
the purposes of this disclosure.
(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) Rejection of Inflation Protection.
1. Inflation protection as provided in
paragraph (11)(A)1. of this rule, above, 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.
2. The rejection may be either in the
application or on a separate form.
3. 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 inflation protection. Specifically, I have reviewed
Plans ______, and I reject inflation protection.”
(12) 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
the questions may be used. With regard to a
replacement policy issued to a group defined
by section 376.1100.2(4)(a), RSMo, 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 health care service contract, 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?”
4. “Do you intend to replace any of your
medical or health insurance coverage with
this policy [certificate]?”
(B) Producers shall list any other health
insurance policies they have sold to the applicant, including the following:
1. All policies sold that are still in force.
2. All policies sold in the past five (5)
years that 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.
1. One (1) copy of the notice shall be
retained by the applicant and an additional
copy signed by the applicant shall be retained
by the insurer.
2. The required notice shall be provided
in the manner set forth in the Notice to Applicant Regarding Replacement of Individual
Accident and Sickness or Long-Term Care
Insurance Form (Form LTC-1).
(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 manner set forth in the Notice to Applicant Regarding Replacement of Accident and
Sickness or Long-Term Care Insurance Form
(Form LTC-2).
(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 provided 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 20 CSR 400-5.400. 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.
(13) Reporting Requirements.
(A) For purposes of this section:
1. “Policy” means only long-term care
insurance;
2. Subject to subsection (13)(G), below,
“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 meet the waiting
period or because of an applicable preexisting
condition; and
4. “Report” means on a statewide basis.
(B) 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 sales and the amount of
lapses of long-term care insurance policies
sold by the producer as a percent of the producer’s total annual sales.
(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 ten percent (10%) of its producers
with the greatest percentages of lapses and
replacements as measured by subsection (A)
of this section, above. The required report is
the Replacement and Lapse Reporting Form
(Form LTC-G).
(E) Every insurer shall report annually by
June 30, by completing Form LTC-G, 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.
(F) Every insurer shall report annually by
June 30, by completing Form LTC-G, the
number of replacement policies sold as a percent of its total annual sales and as a percent
of its total number of policies in force as of
the preceding calendar year.
(G) Every insurer shall report annually by
June 30, for qualified long-term care insurance contracts, the number of claims denied
for each class of business, expressed as a percentage of claims denied. The required
report is the Claims Denial Reporting Form
(Form LTC-E).
(H) Reports required under this section
shall be filed with the director.
(14) Licensing. A producer is not authorized
to sell, solicit or negotiate with respect to
long-term care insurance except as authorized
by section 375.018, RSMo.
(15) Discretionary Powers of Director. The
director 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:
(A) The modification or suspension would
be in the best interest of the insureds;
(B) The purposes to be achieved could not
be effectively or efficiently achieved without
the modification or suspension; and
(C) One of the following:
1. The modification or suspension is
necessary to the development of an innovative
and reasonable approach for insuring longterm care;
2. 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
3. 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.
(16) 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 reserves for the
benefits shall be determined in accordance
with section 376.380, RSMo. Claim reserves
shall also be established in the case when the
policy or rider is in claim status.
(B) 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.
(C) 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 method;
10. Underwriting procedures;
11. Claims adjustment procedures;
12. Waiting period;
13. Maximum benefit;
14. Availability of eligible facilities;
15. Margins in claim costs;
16. Optional nature of benefit;
17. Delay in eligibility for benefit;
18. Inflation protection provisions; and
19. Guaranteed insurability option.
20. Any applicable valuation morbidity
table shall be certified as appropriate as a
statutory valuation table by a member of the
AAA.
(D) When long-term care benefits are provided other than as in subsections (A)
through (C) of this section, above, reserves
shall be determined in accordance with section 376.410, RSMo, and 20 CSR 2001.140.
(17) Loss Ratio.
(A) This section shall apply to all longterm care insurance policies or certificates
except those covered under sections (8) and
(18) of this regulation.
(B) Benefits under long-term care insurance policies shall be deemed reasonable in
relation to premiums provided the expected
loss ratio is at least sixty percent (60%), calculated in a manner that provides for adequate reserving of the long-term care insurance risk. 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) of this section, above,
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 section 376.670,
RSMo;
3. The policy meets the disclosure
requirements of section 376.1109, RSMo;
4. Any policy illustration that meets the
applicable
requirements
of
sections
375.1500–375.1527, RSMo; and
5. An actuarial memorandum 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 longterm care claim status.
(18) Premium Rate Schedule Increases.
(A) This section shall apply as follows:
1. Except as provided in paragraph
(18)(A)2., below, this section applies to any
long-term care policy or certificate issued in
this state six (6) months following the effective date of this regulation.
2. For certificates issued on or after the
effective date of this proposed rule under a
group long-term care insurance policy as
defined in section 376.1100.2(4)(a), RSMo,
which policy was in force at the time this proposed rule became effective, the provisions of
this section shall apply on the policy anniversary following twelve (12) months after the
effective date of this regulation.
(B) An insurer shall provide notice of a
pending premium rate schedule increase,
including an exceptional increase, to the
director at least thirty (30) days prior to the
notice to the policyholders and shall include:
1. Information required by section (7) of
this regulation, above;
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; and
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 (18)(C),
below; and
(IV) For exceptional increases:
(a) The projected experience
should be limited to the increases in claims
expenses attributable to the approved reasons
for the exceptional increase; and
(b) In the event the director
determines, as provided in the provisions of
paragraph (2)(A)4. of this regulation, 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 must also 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 director;
and
5. Sufficient information for review of
the premium rate schedule increase by the
director.
(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 fiftyeight percent (58%); and
D. Eighty-five percent (85%) of the
present value of future projected premiums
not in subparagraph (18)(C)2.C., above, on
an earned basis;
3. In the event that a policy form has
both exceptional and other increases, the values in the provisions of subparagraphs
(18)(C)2.B. and D., above, 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 as specified in 20 CSR 200-1.140.
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 review by
the director updated projections, as defined in
the provisions of subparagraph (18)(B)3.A.
of this rule, above, annually for the next three
(3) years and include a comparison of actual
results to projected values. The director 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) of this section, below,
the projections required by this subsection
shall be provided to the policyholder in lieu
of filing with the director.
(E) If any premium rate in the revised premium rate schedule is greater than two hundred percent (200%) of the comparable rate
in the initial premium schedule, lifetime
projections, as defined in the provisions of
subparagraph (18)(B)3.A., above, shall be
filed for review by the director every five (5)
years following the end of the required period in subsection (D) of this section, above.
For group insurance policies that meet the
conditions in subsection (K) of this section,
below, the projections required by this subsection shall be provided to the policyholder
in lieu of filing with the director.
(F) Director may request additional steps
be taken by the insurer.
1. If the director 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) of this section, above, the director
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
the provisions of subparagraph (18)(B)3.E. of
this regulation, if applicable.
(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 the following documents:
1. A plan, subject to the director’s
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 director may
impose the condition in subsection (H) of this
section, below; and
2. The original anticipated lifetime loss
ratio, and the premium rate schedule increase
that would have been calculated according to
subsection (C) of this section, above, had the
greater of the original anticipated lifetime
loss ratio or fifty-eight percent (58%) been
used in the calculations described in the provisions of subparagraphs (18)(C)2.A. and C.,
above.
(H) Significant Adverse Lapsation.
1. For a rate increase filing that meets
the following criteria, the director 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
lapsation has 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 significant adverse lapsation 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 director may determine that a
rate spiral exists. If it is determined that a
rate spiral exists, the director 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 (1) 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
director;
(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 originally issued the form plus
ten percent (10%).
(I) If the director determines that the insurer has exhibited a persistent practice of filing
inadequate initial premium rates for longterm care insurance, the director may, in
addition to the provisions of subsection (H) of
this section, above, 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) of this section shall not apply to policies for which the
long-term care benefits provided by the policy are incidental, as defined in subsection
(2)(B), above, 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. Section 376.669, RSMo;
B. Section 376.670, RSMo;
C. Section 376.671, RSMo;
3. The policy meets the disclosure
requirements of section 376.1109, RSMo;
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
sections 375.1500–375.1527, RSMo;
B. Disclosure requirements in 20 CSR
400-1.020; and
5. An actuarial memorandum 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 insurance policy,
both for active lives and those in long-term
care claim status.
(K) Subsections (F) and (H) of this section,
above, shall not apply to group insurance
policies
as
defined
in
section
376.1100.2(4)(a), RSMo, where:
1. The policies insure two hundred fifty
(250) or more persons and the policyholder
has five thousand (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.
(19) Filing Requirement. Prior to an insurer
or similar organization offering group longterm care insurance to a resident of this state
pursuant to section 376.1103, RSMo, it shall
file with the director evidence that the group
policy or certificate thereunder has been
approved by a state having statutory or regulatory long-term care insurance requirements
substantially similar to those adopted in this
state.
(20) Filing Requirements for Advertising.
(A) Every insurer, health care service plan,
or other entity providing long-term care
insurance or benefits in this state shall provide a copy of any long-term care insurance
advertisement intended for use in this state
whether through written, radio or television
medium to the director for review by the
director to the extent it may be required under
state law. In addition, all advertisements shall
be retained by the insurer, health care service
plan, or other entity for at least three (3)
years from the date the advertisement was
first used.
(B) The director may exempt from these
requirements any advertising form or material when, in the director’s opinion, that
requirement may not be reasonably applied.
(21) Standards for Marketing.
(A) Every insurer, health care service plan,
or other entity marketing long-term care
insurance coverage in this state, directly or
through its producers, shall:
1. Establish marketing procedures and
producer training requirements to assure that:
A. Any marketing activities, including any comparison of policies, by its producers will be fair and accurate; and
B. Excessive insurance is not sold or
issued.
2. 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.”
3. Provide copies of the disclosure forms
required in subsection (7)(C) of this regulation (Form LTC-B and Form LTC-F) to the
applicant.
4. Inquire and otherwise make every
reasonable effort to identify whether a
prospective applicant or enrollee for longterm care insurance already has accident and
sickness or long-term care insurance and the
types and amounts of any such insurance,
except that in the case of qualified long-term
care insurance contracts, an inquiry into
whether a prospective applicant or enrollee
for long-term care insurance has accident and
sickness insurance is not required.
5. Every insurer or entity marketing
long-term care insurance shall establish
auditable procedures for verifying compliance with subsection (A) of this section,
above.
6. If the state in which the policy or certificate is to be delivered or issued for delivery has a state senior health insurance assistance program approved by the director, the
insurer 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.
7. For long-term care health insurance
policies and certificates, use the terms “noncancellable” or “level premium” only when
the policy or certificate conforms to the provisions of (4)(A)3. of this regulation.
8. Provide an explanation of contingent
benefit upon lapse provided for in the provisions of paragraph (24)(D)3. and, if applicable, the additional contingent benefit upon
lapse provided to policies with fixed or limited premium paying periods in paragraph
(24)(D)4.
(B) In addition to the practices prohibited
in sections 376.930 to 376.948, RSMo, 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 lapse, forfeit, surrender, 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 producer or insurance company.
4. Misrepresentation. Misrepresenting
a material fact in selling or offering to sell a
long-term care insurance policy.
(C) Association Responsibility.
1. With respect to the obligations set
forth in this subsection, the primary responsibility of an association, as defined in section 376.1100.2(4)(b), RSMo, when endorsing or selling long-term care insurance shall
be to educate its members concerning longterm care issues in general so that its members can make informed decisions. Associations shall provide objective information
regarding long-term care insurance policies
or certificates endorsed or sold by such associations to ensure that members of such associations 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 with the department the following material:
A. The policy and certificate;
B. A corresponding outline of coverage; and
C. All advertisements requested by
the department.
3. The association shall disclose in any
long-term care insurance solicitation, the following information:
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 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 and the insurer have
interlocking directorates or trustee arrangements, the association shall disclose that fact
to its members.
5. The board of directors of associations
selling or endorsing long-term care insurance
policies or certificates shall review and
approve the insurance policies as well as the
compensation arrangements made with the
insurer.
6. The association shall also do the following:
A. At the time of the association’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
examination thereafter in the event of material change;
B. Actively monitor the marketing
efforts of the insurer and its producers;
C. Review and approve all marketing
materials or other insurance communications
used to promote sales or sent to members
regarding the policies or certificates;
D. The provisions of subparagraphs
(21)(C)6.A. through C. of this regulation
shall not apply to qualified long-term care
insurance contracts.
7. The materials specified for filing in
this section shall be filed in accordance with
this state’s filing due dates and procedures.
8. 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.
9. 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 subsection.
10. Knowingly failing to comply with
the filing and certification requirements of
this section constitutes an unfair trade practice in violation of section 375.936(5),
RSMo.
(22) Suitability.
(A) This section shall not apply to life
insurance policies that accelerate benefits for
long-term care.
(B) Every insurer, health care service plan
or other entity marketing long-term care
insurance (the “issuer”) shall do the following:
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 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 director.
(C) Requirement to Develop Procedures.
1. To determine whether the applicant
meets the standards developed by the issuer,
the 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;
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; 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 producer is
involved, the producer shall make reasonable
efforts to obtain the information set out in
paragraph (22)(C)1. above. The efforts shall
include presentation 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 Form LTC-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 director.
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 longterm care insurance to employees and their
spouses.
4. The sale or dissemination outside the
company or business entity by the issuer or
producer of information obtained through the
personal worksheet in Form LTC-B is prohibited.
(D) The issuer shall use the suitability
standards it has developed pursuant to this
section in determining whether issuing longterm care insurance coverage to an applicant
is appropriate.
(E) Producers shall use the suitability standards developed by the issuer in marketing
long-term care insurance.
(F) At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled “Things You Should Know
Before You Buy Long-Term Care Insurance”
(Form LTC-C) shall be provided. The form
shall be in the format as approved by the
director in Form LTC-C in not less than
twelve (12)-point type.
(G) If the issuer determines that the applicant does not meet its financial suitability
standards, or if the applicant has declined to
provide the information, the issuer may reject
the application. In the alternative, the issuer
shall send the applicant a letter similar to the
format outlined in the Long-Term Care Insurance Suitability Letter (Form LTC-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.
(H) The issuer shall report annually by
June 30 to the director the following information:
1. The total number of applications
received from residents of this state;
2. The number of those who declined to
provide information on the personal worksheet;
3. The number of applicants who did not
meet the suitability standards; and
4. The number of those who chose to
confirm after receiving a suitability letter.
(23) Prohibition against preexisting conditions and probationary periods in replacement policies or certificates. 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
and probationary periods in the new longterm care policy for similar benefits to the
extent that similar exclusions have been satisfied under the original policy.
(24) Nonforfeiture Benefit Requirement.
(A) This section does not apply to life
insurance policies or riders containing accelerated long-term care benefits.
(B) To comply with the requirement to
offer a nonforfeiture benefit pursuant to the
provisions of section 376.1127, RSMo:
1. A policy or certificate offered with
nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers and benefit
length that are the same as coverage to be
issued without nonforfeiture benefits. The
nonforfeiture benefit included in the offer
shall be the benefit described in subsection
(E) of this section, below; and
2. The offer shall be in writing if the
nonforfeiture benefit is not otherwise
described in the “Outline of Coverage” or
other materials given to the prospective policyholder.
(C) If the offer required to be made under
section 376.1127, RSMo, is rejected, the
insurer shall provide the contingent benefit
upon lapse described in this section.
(D) Actions Required after Rejection.
1. After rejection of the offer required
under section 376.1127, RSMo, for individual and group policies without nonforfeiture
benefits issued after the effective date of this
section, the insurer shall provide a contingent
benefit upon lapse.
2. 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.
3. 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 one
hundred-twenty (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
Percent Increase Over
Issue Age
Initial Premium
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%
Triggers for a Substantial Premium
Increase
Percent Increase Over
Issue Age
Initial Premium
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%
4. On or before the effective date of a
substantial premium increase as defined in
the provisions of (24)(D)3. of this regulation,
above, the insurer shall:
A. Offer to reduce policy benefits
provided by the current coverage without the
requirement of additional underwriting so
that required premium payments are not
increased. The insured’s right to reduce policy benefits in the event of the premium
increase does not affect any other right to
elect a reduction in benefits provided under
the policy;
B. Offer to convert the coverage to a
paid-up status with a shortened benefit period in accordance with the terms of subsection
(E) of this section, below. This option may be
elected at any time during the one hundred
twenty (120)-day period referenced in paragraph (24)(D)3. of this rule, above; and
C. Notify the policyholder or certificateholder that a default or lapse at any time
during the one hundred twenty (120)-day
period referenced in the paragraph (24)(D)3.
of this rule, above, shall be deemed to be the
election of the offer to convert as provided for
by the provisions of (24)(D)4.B. of this regulation, above.
(E) Benefits continued as nonforfeiture
benefits, including contingent benefits upon
lapse.
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 (1%)
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 the provisions of paragraph (24)(E)3.
of this rule, below.
3. The standard nonforfeiture credit will
be equal to one hundred percent (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 (F) of this section, below.
4. Timing of nonforfeiture benefit.
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 the provisions of
(24)(E)4.A., above, 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.
(F) 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.
(G) There shall be no difference in the
minimum nonforfeiture benefits as required
under this section for group and individual
policies.
(H) The requirements set forth in this section shall become effective twelve (12)
months after the effective date of this regulation and shall apply as follows:
1. Except as provided in the provisions
of paragraph (24)(H)2., below, the provisions
of this section apply to any long-term care
policy issued in this state on or after the
effective date of this proposed rule.
2. The provisions of this section shall
not apply to certificates issued on or after the
effective date of this regulation, under a
group long-term care insurance policy as
defined in section 376.1100.2(4)(a), RSMo,
which policy was in force at the time this regulation became effective.
(I) 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 (17) of
this regulation treating the policy as a whole.
(J) To determine whether contingent nonforfeiture upon lapse provisions are triggered
under paragraph (24)(D)3., of this rule,
above, a replacing insurer that purchased or
otherwise assumed a block or blocks of longterm 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.
(K) 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 director for the
same contract form; and
3. The nonforfeiture provision shall provide at least one (1) of the following:
A. Reduced paid-up insurance;
B. Extended term insurance;
C. Shortened benefit period; or
D. Other similar offerings approved
by the director.
(25) Availability of New Services or
Providers.
(A) An insurer shall notify policyholders
of the availability of a new long-term care
policy series, except for those stated in 20
CSR 400-4.110, that provides coverage for
new long-term care services or providers
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 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 limitations 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 (1) 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 of the new policy or certificate may recognize the difference in
reserves between the new policy or certificate
and the original policy or certificate; and
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 director.
(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 section (12) and the reporting
requirements of subsections (13)(A) 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
section 376.1100(4)(d), RSMo, 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.
(I) This section shall become effective on
or after the effective date of this regulation.
(26) Right to Reduce Coverage and Lower
Premium.
(A) 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.
1. The provision provides for the reduction in at least one (1) of the following ways:
A. Reducing the maximum benefit; or
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 carrier’s
administrative processes.
3. 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.
4. The age to determine the premium for
the reduced coverage shall be based on the
age used to determine premium for the coverage currently in force.
5. 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.
(B) 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 paragraph (5)(A)1. of this regulation.
(C) This section does not apply to life
insurance policies or riders containing accelerated long-term care benefits.
(D) The requirements of this section shall
apply to any long-term care policy issued in
this state on or after the effective date of this
regulation.
(27) 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 and 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 three (3) of the activities of daily living or the presence of cognitive impairment.
(B) Activities of Daily Living.
1. Activities of daily living shall include
at least the following as defined in section (3)
of this regulation and in the policy:
A. Bathing;
B. Continence;
C. Dressing;
D. Eating;
E. Toileting; and
F. Transferring;
2. Insurers may use activities of daily
living to trigger covered benefits in addition
to those contained in paragraph (27)(B)1., of
this rule, above, as long as they are 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 restrict, and
are not in lieu of, the requirements contained
in subsections (A) and (B) of this section,
above.
(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) Long-term care insurance policies shall
include a clear description of the process for
appealing and resolving benefit determinations.
(G) The requirements set forth in this section shall be effective one (1) year from the
date that this regulation becomes effective
and shall apply as follows:
1. Except as provided by paragraph
(27)(G)2., of this rule, below, the provisions
of this section apply to a long-term care policy issued in this state on or after the effective date of this regulation.
2. The provisions of this section shall
not apply to certificates issued on or after the
effective date of this regulation, under a
group long-term care insurance policy as
defined in section 376.1100.2(4)(a), RSMo,
that was in force at the time this regulation
became effective.
(28) Additional standards for benefit triggers
for qualified long-term 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
IRC, section 7702(c)(1) as referenced herein,
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. “Chronically ill individual.”
A. Chronically ill individual has the
meaning prescribed for this term by IRC, section 7702B(c)(2) as referenced herein. 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 (12)-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 United States
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 longterm 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) of this
section, above, 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
United States Secretary of the Treasury.
(E) Certifications required pursuant to subsection (C) of this section, above, may be
performed by a licensed health care professional at the direction of the carrier 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 (90)-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.
(29) Standard Format Outline of Coverage.
This section implements, interprets and
makes specific, the provisions of section
376.1115, RSMo, in prescribing a standard
format and the content of an outline of coverage.
(A) The outline of coverage shall be a freestanding document, using no smaller than ten
(10)-point type.
(B) The outline of coverage shall contain
no material of an advertising nature.
(C) Text that is capitalized or underscored
in the standard format outline of coverage
may be emphasized by other means that provide prominence equivalent to the 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
shall conform to the Outline of Coverage
form (Form LTC-3).
(30) Requirement to Deliver Shopper’s
Guide.
(A) A long-term care insurance shopper’s
guide in the format developed by the NAIC,
or a guide developed or approved by the
director, shall be provided to all prospective
applicants of a long-term care insurance policy or certificate.
1. In the case of producer solicitations,
a producer 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-referenced guide, but shall furnish the policy summary required under section 376.1115,
RSMo.
AUTHORITY: sections 374.045 and 536.016,
RSMo 2000 and sections 376.1109, 376.1127,
and 376.1130, RSMo Supp. 2006.* Original
rule filed Jan. 28, 1991, effective Sept. 30,
1991. Amended: Filed July 12, 2002, effective Jan. 30, 2003. Rescinded and readopted:
Filed March 17, 2003, effective Jan. 1, 2004.
Amended: Filed Nov. 15, 2007, effective July
30, 2008.
*Original authority: 374.045, RSMo 1967, amended
1993, 1995; 376.1109, RSMo 1990, amended 2002;
376.1127, RSMo 2002; 376.1130, RSMo 2002; and
536.016, RSMo 1997, amended 1999.