Qualified Long-Term Care Partnership Program

PURPOSE: This rule prescribes the additional requirements for Qualified Long-Term Care Partnership Plans. (1) Requirements. For the purposes of this section, “Qualified Long-Term Care Partnership coverage” shall mean any long-term care coverage that is intended to be marketed as part of a long-term care partnership program, as outlined in sections 208.690 to 208.698, known as the “Missouri Long-Term Care Partnership Program Act.” (A) Coverage Requirements. Coverage will be considered meeting the requirements of the Missouri Long-Term Care Partnership Program if the following requirements are met: 1. The insured was a resident of this state when coverage first became effective; 2. The coverage is a qualified long-term care insurance policy (as defined in section 7702B(b) of the Internal Revenue Code of 1986); 3. The coverage meets the requirements of the Deficit Reduction Act of 2005, except for Subchapter B, Section 6021(a)(1)(iii)(IV) as stated in section 208.696.1(2), RSMo; and 4. The coverage includes inflation protection no less favorable than the following: A. For a person who is less than sixty-one (61) years of age as of the date of purchase, the coverage provides compound annual inflation protection; and B. For a person who is at least sixtyone (61) years of age but less than seventy-six (76) years of age, the policy provides some level of inflation protection; and C. For any person who has attained the age of seventy-six (76), inflation protection may be provided but is not required. D. In order for coverage to meet the requirements of subparagraph (1)(A)4.A., if the required inflation protection offer of five percent (5%) compound annual inflation protection referenced in 20 CSR 400-4.100(11) is rejected, the inflation protection included shall: (I) Provide automatic annual compounded inflation increases at a rate not less than three percent (3%); or (II) Provide automatic annual compound inflation increases at a rate based on changes in the consumer price index. “Consumer price index” means consumer price index for all urban consumers, U.S. city average, all items, as determined by the Bureau of Labor Statistics of the United States Department of Labor; or (III) The director may approve an alternative inflation protection method so long as such method is submitted to the director with an explanation and demonstration as to how the alternative method provides for meaningful benefits which are in the best interest of the consumer and provides assurances that the policy or certificate will remain a partnership plan. (B) Offers of Exchange. In addition to complying with the requirements of 20 CSR 400-4.100(25), where applicable— 1. Within one hundred eighty (180) days of the date that an insurer begins to advertise, market, offer, sell or issue policies that qualify under the state long-term care partnership program, the insurer shall offer, on a one (1)- time basis, in writing, to all existing policyholders and certificateholders that were issued long-term care coverage by the insurer on or after February 8, 2006, the option to exchange their existing long-term care coverage for coverage that is intended to qualify under the Missouri Long-Term Care Partnership Program (Partnership Plan). The written offer of exchange shall include the LongTerm Care Partnership Program Exchange Notification letter (Form LTC-4); 2. An exchange occurs when an insurer offers a policyholder or certificateholder (hereinafter “insured”) the option to replace an existing long-term care insurance policy with a policy that qualifies as a Partnership Plan, and the insured accepts the offer to terminate the existing policy and accepts the new policy. In making an offer to exchange, an insurer shall comply with all of the following requirements: A. The offer shall be made on a nondiscriminatory basis without regard to the age or health status of the insured; B. The offer shall remain open for a minimum of one hundred eighty (180) days from the date of mailing by the insurer to the insured’s last known address; and C. At the time the offer is made, the insurer shall provide the insured a copy of Form LTC-4; 3. Notwithstanding paragraphs (1)(B)1. and 2., above: A. An offer to exchange may be deferred for any insured who is currently eligible for benefits under an existing policy or who is subject to an elimination period on a claim, but such deferral shall continue only as long as such eligibility or elimination period exists, or the insured is no longer in claims status; B. An offer to exchange does not have to be made if the insured would be required to purchase additional benefits to qualify for the state long-term care partnership program and the insured is not eligible to purchase the additional benefits under the insurer’s new business, long-term care, underwriting guidelines; 4. If the new policy has an actuarial value of benefits equal to or lesser than the actuarial value of benefits of the existing policy, then all of the following apply: A. The new policy shall not be underwritten; and B. The rate charged for the new policy shall be determined using the original issue age and risk class of the insured that was used to determine the rate of the existing policy; 5. If the new policy has an actuarial value of benefits exceeding the actuarial value of the benefits of the existing policy, then all of the following apply: A. The insurer shall apply its new business, long-term care, underwriting guidelines to the increased benefits only; and B. The rate charged for the new policy shall be determined using the method set forth in subparagraph (1)(B)4.B., above, for the existing benefits, increased by the rate for the increased benefits using the then current attained age and risk class of the insured for the increased benefits only; 6. The new policy offered in an exchange shall be on a form that is currently offered for sale by the insurer in the general market and the effective date of the Partnership Plan policy shall be the same as the new policy; 7. In the event of an exchange, the insured shall not lose any rights, benefits or built-up value that has accrued under the original policy with respect to the benefits provided under the original policy, including, but not limited to, rights established because of the lapse of time related to pre-existing condition exclusions, elimination periods, or incontestability clauses; 8. Insurers may complete an exchange by issuing a new policy with an effective date no earlier than the effective date of Missouri’s State Plan Amendment; 9. For those insureds with long-term care policies issued before February 8, 2006, any insurer may offer any insured an option to exchange an existing policy for a policy that qualifies as a Partnership Plan. The requirements set forth in paragraphs (1)(B)2. through 9. shall apply to any such exchange; and 10. Policies or certificates issued pursuant to this section shall be considered exchanges and not replacements. These exchanges shall not be subject to 20 CSR 400-4.100(12) and the reporting requirements of subsections (13)(B) through (F), in accordance with subsection (25)(E) of regulation (C) Filing Requirements. 1. Any policy that is intended to qualify as a Partnership Plan must be filed for approval with the director prior to use, and such filing shall include a separate partnership certification for each form, signed by an officer, which shall include: A. Certification that the form includes all consumer protection requirements set forth in section 1917(b)(5)A of the Social Security Act (42 U.S.C. 1396p(b)(5)(A)) and that it contains specified provisions of the Deficit Reduction Act of 2005 and the appropriate provisions included in this regulation and sections 376.1100 through 376.1130, RSMo; B. General information, including: (I) Name, address and telephone number of the issuer; (II) Policy form(s) covered by this certificate, including the form number and approval date; and (III) Specimen copies of each form if they have not been previously approved by the department; C. Identification and location in the form of each of the required provisions indicated in the Deficit Reduction Act of 2005 and this regulation; and D. A statement that the form complies with the partnership program inflation protection requirements of paragraph (1)(A)4. of this regulation. 2. Insurers intending to make use of a previously filed policy as a qualifying partnership policy shall submit to the director the Partnership Program Policy Certification Form (Form LTC-5) signed by an officer of the company with respect to each such policy form filed. For each policy form, the partnership program certification shall identify the policy by the original form number and approval date. 3. If an insurer intends to amend a previously approved policy with an endorsement or rider in order to bring the policy into compliance with the partnership program, the insurer shall file the endorsement or rider for approval by the director prior to use, and the filing shall include a partnership program certification signed by an officer of the company for each policy to be amended by the endorsement or rider, which shall include the original form number and filing date of the previously filed policy. 4. Insurers using Form LTC-4 do not have to file the form with the director before use. (D) Partnership Plan Disclosure Form. 1. For policies intended to qualify under the partnership program, the producer or insurer shall give the consumer a partnership disclosure notice using the Long-Term Care Partnership Program Disclosure Notice (Form LTC-6), either— A. Along with the outline of coverage required by regulation at the time of solicitation; B. In the case of a policy issued to a group where an outline of coverage is not delivered, along with the enrollment forms; or C. In the case of a life insurance policy that offers long-term care insurance as a term of the policy or in a rider, along with the policy summary at the time of solicitation. 2. A partnership policy or certificate issued or issued for delivery in Missouri shall be accompanied by a Long-Term Care Partnership Delivery Notice (Form LTC-7) explaining the benefits associated with a partnership policy and indicating that at the time issued, the policy is intended to be a qualified state long-term care insurance partnership policy. A similar notice may be used if filed and approved by the director. (E) Data Reporting. 1. Each insurer offering partnership program policies in this state shall make regular reports to the United States Secretary of Health and Human Services that include such information as required by law or as the secretary determines is appropriate for the administration of the partnership program. 2. If requested, the regular reports required by United States Secretary of Health and Human Services shall also be submitted to the director. AUTHORITY: sections 208.696, 376.1109, 376.1127, and 376.1130, RSMo Supp. 2007 and sections 374.045 and 536.016, RSMo 2000.* Original rule filed Nov. 15, 2007, effective July 30, 2008. *Original authority: 208.696, RSMo 2007; 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.