SF 997

2nd Engrossment - 89th Legislature (2015 - 2016) Posted on 05/21/2015 10:38am

A bill for an act
relating to insurance; regulating disability income coverage; reducing the
minimum permitted inflation protection for a long-term care insurance
partnership policy; continuing to permit other types of inflation protection for
long-term care policies; authorizing the commissioner of commerce to make
certain long-term care policy rate recommendations; amending Minnesota
Statutes 2014, sections 62S.23, subdivision 1; 62S.24, by adding a subdivision;
proposing coding for new law in Minnesota Statutes, chapter 62A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [62A.241] DISABILITY INCOME COVERAGE; PROHIBITED
PROVISION.
new text end

new text begin No policy, contract, certificate, or agreement offered or issued in this state providing
for disability income protection coverage may contain a provision purporting to reserve
discretion to the insurer to interpret the terms of the contract or provide a standard of
review that is inconsistent with the laws of this state, or less favorable to the enrollee when
a claim is denied than a preponderance of the evidence standard.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2016, and applies to
policies issued or renewed on or after that date.
new text end

Sec. 2.

Minnesota Statutes 2014, section 62S.23, subdivision 1, is amended to read:

Subdivision 1.

Inflation protection feature.

(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. In addition to other options that may be offered, 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 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;

(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 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) A long-term care partnership policy must provide the inflation protection
described in this subdivision. If the policy is sold to an individual who:

(1) has not attained age 61 as of the date of purchase, the policy must provide
compound annual inflation protection;

(2) has attained age 61, but has not attained age 76 as of such date, the policy must
provide some level of inflation protection; and

(3) has attained the age of 76 as of such date, the policy may, but is not required to,
provide some level of inflation protection.

Inflation protection for a long-term care partnership policy may not be less than
deleted text begin three deleted text end new text begin one new text end percent per year or a rate based on changes in the Consumer Price Index. The
commissioner, however, may approve other types of inflation protection that comply with
this section and further the goals of the partnership program.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2015, and applies to coverage
sold on or after that date.
new text end

Sec. 3.

Minnesota Statutes 2014, section 62S.24, is amended by adding a subdivision
to read:

new text begin Subd. 9. new text end

new text begin Certain pre-July 1, 2006 policies. new text end

new text begin (a) Notwithstanding section
256B.0571, subdivision 6, a long-term care insurance policy issued before July 1, 2006,
that otherwise meets all requirements for partnership policy status shall be qualified as a
partnership policy, provided that benefits have not yet been paid out on the policy.
new text end

new text begin (b) An insured may make written inquiry to the issuer of the long-term care
insurance policy as to whether the policy meets the requirements for partnership policy
status. The issuer of the policy must reply to the inquiry within 30 days, and if the policy
does so qualify, must add a rider, amendment, or disclosure statement to the policy as
documentation of the partnership policy status.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2015.
new text end

Sec. 4. new text begin RATE APPROVAL; RECOMMENDATIONS.
new text end

new text begin (a) The commissioner of commerce may make recommendations to the chairs and
ranking minority members of the house and senate committees having jurisdiction over
commerce for standards governing the approval of actuarially justified rate increases for
long-term care insurance policies issued prior to January 1, 2002. The recommendations
may include rate-increase mitigation options, including contingent nonforfeiture benefits
and optional benefit changes to protect policy holders that may receive rate increases.
new text end

new text begin (b) In developing these recommendations, the commissioner may consult with
the National Association of Insurance Commissioners, the Society of Actuaries and the
Academy of Actuaries, representatives of the long-term insurance industry, and the house
and senate committee chairs and ranking minority members for the committees having
jurisdiction over commerce. The commissioner may submit progress reports to the chairs
and ranking minority members of the house and senate committees having jurisdiction
over commerce on October 15, 2015, and February 1, 2016.
new text end