HF 3783

1st Unofficial Engrossment - 85th Legislature (2007 - 2008)

Posted on 12/15/2009 12:00 a.m.

1.1A bill for an act 1.2relating to commerce; regulating insurance fees, coverages, contracts, filings, 1.3and forms; regulating financial planners, motor vehicle retail installment sales, 1.4service contracts, real estate appraisers, subdivided lands, domestic mutual 1.5insurance companies, and collection agencies; merging certain joint underwriting 1.6associations; making technical and clarifying changes;amending Minnesota 1.7Statutes 2006, sections 53C.01, subdivision 2; 59B.01; 59B.02, subdivision 1.811, by adding a subdivision; 59B.05, subdivision 5; 60A.71, subdivision 7; 1.961A.57; 62A.149, subdivision 1; 62A.152, subdivision 2; 62A.44, by adding a 1.10subdivision; 62E.10, subdivision 2; 62F.02, by adding a subdivision; 62M.02, 1.11subdivision 21; 62Q.47; 62Q.64; 62S.01, by adding subdivisions; 62S.13, 1.12subdivision 4; 62S.15; 62S.18, subdivision 2; 62S.20, subdivision 6, by adding 1.13subdivisions; 62S.26, subdivision 2; 62S.266, subdivisions 4, 10; 62S.29, by 1.14adding subdivisions; 65A.37; 66A.02, subdivision 4; 66A.07, subdivision 2, by 1.15adding a subdivision; 66A.41, subdivision 1; 67A.31, subdivision 2; 72A.51, 1.16subdivision 2; 79A.06, subdivision 5; 79A.22, subdivisions 3, 4; 79A.23, 1.17subdivision 2; 82B.23, subdivision 1; 83.25, by adding a subdivision; Minnesota 1.18Statutes 2007 Supplement, sections 61A.257, subdivision 1; 62A.30, subdivision 1.192; 62S.23, subdivision 1; 72A.52, subdivision 1; proposing coding for new law 1.20in Minnesota Statutes, chapters 62S; 332; repealing Minnesota Statutes 2006, 1.21sections 62A.149, subdivision 2; 65B.29; Laws 2006, chapter 255, section 26. 1.22BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.23    Section 1. Minnesota Statutes 2006, section 53C.01, subdivision 2, is amended to read: 1.24    Subd. 2. Cash sale price. "Cash sale price" means the price at which the seller 1.25would in good faith sell to the buyer, and the buyer would in good faith buy from the seller, 1.26the motor vehicle which is the subject matter of the retail installment contract, if such sale 1.27were a sale for cash, instead of a retail installment sale. The cash sale price may include 1.28any taxes, charges for delivery, servicing, repairing, or improving the motor vehicle, 1.29including accessories and their installation, and any other charges agreed upon between 1.30the parties. The cash price may not include a documentary fee or document administration 1.31fee in excess of $50 new text begin $75 new text end for services actually rendered to, for, or on behalf of, the retail 2.1buyer in preparing, handling, and processing documents relating to the motor vehicle and 2.2the closing of the retail sale. "Documentary fee" and "document administration fee" do 2.3not include an optional electronic transfer fee as defined under subdivision 14. 2.4    Sec. 2. Minnesota Statutes 2006, section 59B.01, is amended to read: 2.559B.01 SCOPE AND PURPOSE. 2.6    (a) The purpose of this chapter is to create a legal framework within which service 2.7contracts may be sold in this state. 2.8    (b) The following are exempt from this chapter: 2.9    (1) warranties; 2.10    (2) maintenance agreements; 2.11    (3) warranties, service contracts, or maintenance agreements offered by public 2.12utilities, as defined in section 216B.02, subdivision 4, or an entity or operating unit owned 2.13by or under common control with a public utility; 2.14    (4) service contracts sold or offered for sale to persons other than consumers; 2.15    (5) service contracts on tangible property where the tangible property for which the 2.16service contract is sold has a purchase price of $250 or less, exclusive of sales tax; 2.17    (6) motor vehicle service contracts as defined in section 65B.29, subdivision 1, 2.18paragraph (1); 2.19    (7) new text begin (6) new text end service contracts for home security equipment installed by a licensed 2.20technology systems contractor; and 2.21    (8) new text begin (7) new text end motor club membership contracts that typically provide roadside assistance 2.22services to motorists stranded for reasons that include, but are not limited to, mechanical 2.23breakdown or adverse road conditions. 2.24    (c) The types of agreements referred to in paragraph (b) are not subject to chapters 2.2560A to 79A, except as otherwise specifically provided by law. 2.26     new text begin (d) Service contracts issued by motor vehicle manufacturers covering private new text end 2.27 new text begin passenger automobiles are only subject to sections 59B.03, subdivision 5, 59B.05, and new text end 2.28 new text begin 59B.07. new text end 2.29    Sec. 3. Minnesota Statutes 2006, section 59B.02, is amended by adding a subdivision 2.30to read: 2.31     new text begin Subd. 5a. new text end new text begin Motor vehicle manufacturer. new text end new text begin "Motor vehicle manufacturer" means new text end 2.32 new text begin a person that: new text end 2.33     new text begin (1) manufactures or produces motor vehicles and sells motor vehicles under its new text end 2.34 new text begin own name or label; new text end 3.1     new text begin (2) is a wholly owned subsidiary of the person that manufactures or produces motor new text end 3.2 new text begin vehicles; new text end 3.3     new text begin (3) is a corporation which owns 100 percent of the person that manufactures or new text end 3.4 new text begin produces motor vehicles; new text end 3.5     new text begin (4) does not manufacture or produce motor vehicles, but sells motor vehicles under new text end 3.6 new text begin the trade name or label of another person that manufactures or produces motor vehicles; new text end 3.7     new text begin (5) manufactures or produces motor vehicles and sells the motor vehicles under the new text end 3.8 new text begin trade name or label of another person that manufactures or produces motor vehicles; or new text end 3.9     new text begin (6) does not manufacture or produce motor vehicles but, pursuant to a written new text end 3.10 new text begin contract, licenses the use of its trade name or label to another person that manufactures new text end 3.11 new text begin or produces motor vehicles and that sells motor vehicles under the licensor's trade name new text end 3.12 new text begin or label. new text end 3.13    Sec. 4. Minnesota Statutes 2006, section 59B.02, subdivision 11, is amended to read: 3.14    Subd. 11. Service contract. "Service contract" means a contract or agreement for a 3.15separately stated consideration for a specific duration to perform the repair, replacement, 3.16or maintenance of property or indemnification for repair, replacement, or maintenance, for 3.17the operational or structural failure due to a defect in materials, workmanship, or normal 3.18wear and tear, with or without additional provisions for incidental payment of indemnity 3.19under limited circumstances new text begin , including without limitation, towing, rental, emergency new text end 3.20 new text begin road service, and road hazard protection new text end . Service contracts may provide for the repair, 3.21replacement, or maintenance of property for damage resulting from power surges and 3.22accidental damage from handling. 3.23    Sec. 5. Minnesota Statutes 2006, section 59B.05, subdivision 5, is amended to read: 3.24    Subd. 5. Coverages, limitations, and exclusions. No particular causes of loss or 3.25property are required to be covered, but service contracts must specify the merchandise 3.26and services to be provided and, with equal prominence, any limitations, exceptions, or 3.27exclusions including, but not limited to, any damage or breakdown not covered by the 3.28service contract. new text begin Service contracts may cover damage resulting from rust, corrosion, or new text end 3.29 new text begin damage caused by a noncovered part or system. new text end 3.30    Sec. 6. Minnesota Statutes 2006, section 60A.71, subdivision 7, is amended to read: 3.31    Subd. 7. new text begin Duration; new text end fees. new text begin (a) new text end Each applicant for a reinsurance intermediary license 3.32shall pay to the commissioner a fee of $200 for an initial two-year license and a fee of 4.1$150 for each renewal. Applications shall be submitted on forms prescribed by the 4.2commissioner. 4.3     new text begin (b) Initial licenses issued under this chapter are valid for a period not to exceed 24 new text end 4.4 new text begin months and expire on October 31 of the renewal year assigned by the commissioner. Each new text end 4.5 new text begin renewal reinsurance intermediary license is valid for a period of 24 months. Licensees new text end 4.6 new text begin who submit renewal applications postmarked or delivered on or before October 15 of the new text end 4.7 new text begin renewal year may continue to transact business whether or not the renewal license has been new text end 4.8 new text begin received by November 1. Licensees who submit applications postmarked or delivered new text end 4.9 new text begin after October 15 of the renewal year must not transact business after the expiration date new text end 4.10 new text begin of the license until the renewal license has been received. new text end 4.11     new text begin (c) All fees are nonreturnable, except that an overpayment of any fee may be new text end 4.12 new text begin refunded upon proper application. new text end 4.13    Sec. 7. Minnesota Statutes 2007 Supplement, section 61A.257, subdivision 1, is 4.14amended to read: 4.15    Subdivision 1. Definitions. (a) For the purposes of this section only, the following 4.16terms have the meanings given them. 4.17    (b) "2001 CSO Mortality Table" means that mortality table, consisting of separate 4.18rates of mortality for male and female lives, developed by the American Academy of 4.19Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the 4.20Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and 4.21adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in 4.22the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO 4.23Preferred Class Structure Mortality Table defined in paragraph (c). Unless the context 4.24indicates otherwise, the "2001 CSO Mortality Table" includes both the ultimate form of 4.25that table and the select and ultimate form of that table and includes both the smoker and 4.26nonsmoker mortality tables and the composite mortality tables. It also includes both the 4.27age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables 4.28in the 2001 CSO Mortality Table include the following: 4.29    (1) "2001 CSO Mortality Table (F)" means that mortality table consisting of the rates 4.30of mortality for female lives from the 2001 CSO Mortality Table; 4.31    (2) "2001 CSO Mortality Table (M)" means that mortality table consisting of the 4.32rates of mortality for male lives from the 2001 CSO Mortality Table; 4.33    (3) "composite mortality tables" means mortality tables with rates of mortality that 4.34do not distinguish between smokers and nonsmokers; and 5.1    (4) "smoker and nonsmoker mortality tables" means mortality tables with separate 5.2rates of mortality for smokers and nonsmokers. 5.3    (c) "2001 CSO Preferred Class Structure Mortality Table" means mortality tables 5.4with separate rates of mortality for new text begin the new text end super preferred Nonsmokers new text begin nonsmoker new text end , preferred 5.5Nonsmokers new text begin nonsmoker new text end , residual standard Nonsmokers new text begin nonsmoker new text end , preferred Smokers new text begin new text end 5.6 new text begin smoker new text end , and residual standard smoker splits of the 2001 CSO Nonsmoker and Smoker 5.7 new text begin Mortality new text end Tables as adopted by the NAIC at the September 2006 national meeting and 5.8published in the NAIC Proceedings (3rd Quarter 2006). Unless the context indicates 5.9otherwise, the "2001 CSO Preferred Class Structure Mortality Table" includes both the 5.10ultimate form of that table and the select and ultimate form of that table, the smoker and 5.11nonsmoker mortality tables, both the male and female mortality tables and the gender 5.12composite mortality tables, and both the age-nearest-birthday and age-last-birthday bases 5.13of the mortality table. 5.14    (d) "Statistical agent" means an entity with proven systems for protecting the 5.15confidentiality of individual insured and insurer information; demonstrated resources 5.16for and history of ongoing electronic communications and data transfer ensuring data 5.17integrity with insurers, which are its members or subscribers; and a history of and means 5.18for aggregation of data and accurate promulgation of the experience modifications in a 5.19timely manner. 5.20    Sec. 8. Minnesota Statutes 2006, section 61A.57, is amended to read: 5.2161A.57 DUTIES OF INSURERS THAT USE AGENTS OR BROKERS. 5.22    Each insurer that uses an agent or broker in a life insurance or annuity sale shall: 5.23    (a) Require with or as part of each completed application for life insurance or 5.24annuity, a statement signed by the agent or broker as to whether the agent or broker knows 5.25replacement is or may be involved in the transaction. 5.26    (b) Where a replacement is involved: 5.27    (1) require from the agent or broker with the application for life insurance or 5.28annuity, a copy of the fully completed and signed replacement notice provided the 5.29applicant under section 61A.55. The existing life insurance or annuity must be identified 5.30by name of insurer, insured, and contract number. If a number has not been assigned by 5.31the existing insurer, alternative identification, such as an application or receipt number, 5.32must be listed; and 5.33    (2) send to each existing insurer a written communication advising of the 5.34replacement or proposed replacement and the identification information obtained under 5.35this section. This written communication must be made within five working days of the 6.1date that the application is received in the replacing insurer's home or regional office, or 6.2the date the proposed policy or contract is issued, whichever is sooner. 6.3    (c) The replacing insurer shall maintain evidence of the "notice regarding 6.4replacement" and a replacement register, cross-indexed, by replacing agent and existing 6.5insurer to be replaced. Evidence that all requirements were met shall be maintained for at 6.6least six years. 6.7    (d) The replacing insurer shall provide in its policy or contract, or in a separate 6.8written notice that is delivered with the policy or contract, that the applicant has a right 6.9to an unconditional refund of all premiums paid, which right may be exercised within a 6.10period of 20 new text begin 30 new text end days beginning from the date of delivery of the policy. 6.11 new text begin EFFECTIVE DATE. new text end new text begin This section is effective January 1, 2009. new text end 6.12    Sec. 9. Minnesota Statutes 2006, section 62A.149, subdivision 1, is amended to read: 6.13    Subdivision 1. Application. The provisions of this section apply to all group 6.14policies of accident and health insurance and group subscriber contracts offered by 6.15nonprofit health service plan corporations regulated under chapter 62C, and to a plan or 6.16policy that is individually underwritten or provided for a specific individual and family 6.17members as a nongroup policy unless the individual elects in writing to refuse benefits 6.18under this subdivision in exchange for an appropriate reduction in premiums or subscriber 6.19charges under the policy or plan, when the policies or subscriber contracts are issued or 6.20delivered in Minnesota or provide benefits to Minnesota residents enrolled thereunder. 6.21    This section does not apply to policies designed primarily to provide coverage 6.22payable on a per diem, fixed indemnity or nonexpense incurred basis or policies that 6.23provide accident only coverage. 6.24    Every insurance policy or subscriber contract included within the provisions of this 6.25subdivision, upon issuance or renewal, shall provide for payment of benefits new text begin coverage new text end 6.26 new text begin that complies with the requirements of section 62Q.47, paragraphs (b) and (c), new text end for the 6.27treatment of alcoholism, chemical dependency or drug addiction to any Minnesota resident 6.28entitled to coverage new text begin . new text end thereunder on the same basis as coverage for other benefits when 6.29treatment is rendered in 6.30    (1) a licensed hospital, 6.31    (2) a residential treatment program as licensed by the state of Minnesota pursuant 6.32to diagnosis or recommendation by a doctor of medicine, 6.33    (3) a nonresidential treatment program approved or licensed by the state of 6.34Minnesota. 7.1    Sec. 10. Minnesota Statutes 2006, section 62A.152, subdivision 2, is amended to read: 7.2    Subd. 2. Minimum benefits. (a) All group policies and all group subscriber 7.3contracts providing benefits for mental or nervous disorder treatments in a hospital shall 7.4also provide coverage on the same basis as coverage for other benefits for at least 80 7.5percent of the cost of the usual and customary charges of the first ten hours of treatment 7.6incurred over a 12-month benefit period, for mental or nervous disorder consultation, 7.7diagnosis and treatment services delivered while the insured person is not a bed patient 7.8in a hospital, and at least 75 percent of the cost of the usual and customary charges for 7.9any additional hours of treatment during the same 12-month benefit period for serious or 7.10persistent mental or nervous disorders, if the services are furnished by (1) a licensed or 7.11accredited hospital, (2) a community mental health center or mental health clinic approved 7.12or licensed by the commissioner of human services or other authorized state agency, or (3) 7.13a mental health professional, as defined in sections 245.462, subdivision 18, clauses (1) to 7.14(5); and 245.4871, subdivision 27, clauses (1) to (5). Prior authorization from an accident 7.15and health insurance company, or a nonprofit health service corporation, shall be required 7.16for an extension of coverage beyond ten hours of treatment. This prior authorization 7.17must be based upon the severity of the disorder, the patient's risk of deterioration without 7.18ongoing treatment and maintenance, degree of functional impairment, and a concise 7.19treatment plan. Authorization for extended treatment may be limited to a maximum of 30 7.20visit hours during any 12-month benefit period. 7.21    (b) For purposes of this section, covered treatment for a minor includes treatment for 7.22the family if family therapy is recommended by a provider listed in paragraph (a). For 7.23purposes of determining benefits under this section, "hours of treatment" means treatment 7.24rendered on an individual or single-family basis. If treatment is rendered on a group basis, 7.25the hours of covered group treatment must be provided at a ratio of no less than two group 7.26treatment sessions to one individual treatment hour. new text begin that complies with the requirements new text end 7.27 new text begin of section 62Q.47, paragraphs (b) and (c). new text end 7.28    Sec. 11. Minnesota Statutes 2007 Supplement, section 62A.30, subdivision 2, is 7.29amended to read: 7.30    Subd. 2. Required coverage. Every policy, plan, certificate, or contract referred to 7.31in subdivision 1 that provides coverage to a Minnesota resident must provide coverage 7.32for routine screening procedures for cancer new text begin and the office or facility visit new text end , including 7.33mammograms, surveillance tests for ovarian cancer for women who are at risk for ovarian 7.34cancer as defined in subdivision 3, pap smears, and colorectal screening tests for men 8.1and women, when ordered or provided by a physician in accordance with the standard 8.2practice of medicine. 8.3    Sec. 12. Minnesota Statutes 2006, section 62A.44, is amended by adding a subdivision 8.4to read: 8.5     new text begin Subd. 2a. new text end new text begin Electronic enrollment. new text end new text begin (a) For any Medicare supplement plan as defined new text end 8.6 new text begin in section 62A.3099, any requirement that a signature of an insured be obtained by new text end 8.7 new text begin an agent or insurer is satisfied if: new text end 8.8     new text begin (1) the consent is obtained by telephonic or electronic enrollment by the group new text end 8.9 new text begin policyholder or insured. A verification of the enrollment information must be provided to new text end 8.10 new text begin the applicant; new text end 8.11     new text begin (2) the telephonic or electronic enrollment provides necessary and reasonable new text end 8.12 new text begin safeguards to ensure the accuracy, retention, and prompt retrieval of records; and new text end 8.13     new text begin (3) the telephonic or electronic enrollment provides necessary and reasonable new text end 8.14 new text begin safeguards to ensure that the confidentiality of individual information and privileged new text end 8.15 new text begin information as defined in section 72A.491, subdivision 19, is maintained. new text end 8.16     new text begin (b) The insurer shall make available, upon request of the commissioner, records that new text end 8.17 new text begin will demonstrate the insurer's ability to confirm enrollment and coverage. new text end 8.18    Sec. 13. Minnesota Statutes 2006, section 62E.10, subdivision 2, is amended to read: 8.19    Subd. 2. Board of directors; organization. The board of directors of the 8.20association shall be made up of eleven members as follows: six directors selected by 8.21contributing members, subject to approval by the commissioner, one of which must be 8.22a health actuary; five public directors selected by the commissioner, at least two of 8.23whom must be plan enrollees, two of whom must be representatives of employers whose 8.24accident and health insurance premiums are part of the association's assessment base, new text begin are new text end 8.25 new text begin covered under an individual plan subject to assessment under section 62E.11 or group new text end 8.26 new text begin plan offered by an employer subject to assessment under section 62E.11, new text end and one of 8.27whom must be a licensed insurance agent. At least two of the public directors must reside 8.28outside of the seven county metropolitan area. In determining voting rights at members' 8.29meetings, each member shall be entitled to vote in person or proxy. The vote shall be 8.30a weighted vote based upon the member's cost of self-insurance, accident and health 8.31insurance premium, subscriber contract charges, health maintenance contract payment, or 8.32community integrated service network payment derived from or on behalf of Minnesota 8.33residents in the previous calendar year, as determined by the commissioner. In approving 8.34directors of the board, the commissioner shall consider, among other things, whether all 9.1types of members are fairly represented. Directors selected by contributing members 9.2may be reimbursed from the money of the association for expenses incurred by them as 9.3directors, but shall not otherwise be compensated by the association for their services. The 9.4costs of conducting meetings of the association and its board of directors shall be borne 9.5by members of the association. 9.6    Sec. 14. Minnesota Statutes 2006, section 62F.02, is amended by adding a subdivision 9.7to read: 9.8     new text begin Subd. 3. new text end new text begin Merger. new text end new text begin Effective January 1, 2008, the association is merged into the joint new text end 9.9 new text begin underwriting association under chapter 62I. new text end 9.10    Sec. 15. Minnesota Statutes 2006, section 62M.02, subdivision 21, is amended to read: 9.11    Subd. 21. Utilization review organization. "Utilization review organization" 9.12means an entity including but not limited to an insurance company licensed under chapter 9.1360A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 9.1462A.01 ; new text begin a prepaid limited health service organization issued a certificate of authority new text end 9.15 new text begin and operating under sections 62A.451 to 62A.4528; new text end a health service plan licensed under 9.16chapter 62C; a health maintenance organization licensed under chapter 62D; a community 9.17integrated service network licensed under chapter 62N; an accountable provider network 9.18operating under chapter 62T; a fraternal benefit society operating under chapter 64B; 9.19a joint self-insurance employee health plan operating under chapter 62H; a multiple 9.20employer welfare arrangement, as defined in section 3 of the Employee Retirement 9.21Income Security Act of 1974 (ERISA), United States Code, title 29, section 1103, as 9.22amended; a third party administrator licensed under section 60A.23, subdivision 8, which 9.23conducts utilization review and determines certification of an admission, extension of stay, 9.24or other health care services for a Minnesota resident; or any entity performing utilization 9.25review that is affiliated with, under contract with, or conducting utilization review on 9.26behalf of, a business entity in this state. Utilization review organization does not include 9.27a clinic or health care system acting pursuant to a written delegation agreement with an 9.28otherwise regulated utilization review organization that contracts with the clinic or health 9.29care system. The regulated utilization review organization is accountable for the delegated 9.30utilization review activities of the clinic or health care system. 9.31    Sec. 16. Minnesota Statutes 2006, section 62Q.47, is amended to read: 9.3262Q.47 new text begin ALCOHOLISM, new text end MENTAL HEALTH new text begin , new text end AND CHEMICAL 9.33DEPENDENCY SERVICES. 10.1    (a) All health plans, as defined in section 62Q.01, that provide coverage for 10.2 new text begin alcoholism, new text end mental health new text begin , new text end or chemical dependency services, must comply with the 10.3requirements of this section. 10.4    (b) Cost-sharing requirements and benefit or service limitations for outpatient 10.5mental health and outpatient chemical dependency new text begin and alcoholism new text end services, except for 10.6persons placed in chemical dependency services under Minnesota Rules, parts 9530.6600 10.7to 9530.6660, must not place a greater financial burden on the insured or enrollee, or be 10.8more restrictive than those requirements and limitations for outpatient medical services. 10.9    (c) Cost-sharing requirements and benefit or service limitations for inpatient hospital 10.10mental health and inpatient hospital and residential chemical dependency new text begin and alcoholism new text end 10.11services, except for persons placed in chemical dependency services under Minnesota 10.12Rules, parts 9530.6600 to 9530.6660, must not place a greater financial burden on the 10.13insured or enrollee, or be more restrictive than those requirements and limitations for 10.14inpatient hospital medical services. 10.15    Sec. 17. Minnesota Statutes 2006, section 62Q.64, is amended to read: 10.1662Q.64 DISCLOSURE OF EXECUTIVE COMPENSATION. 10.17    (a) Each health plan company doing business in this state new text begin whose annual Minnesota new text end 10.18 new text begin premiums exceed $10,000,000 based on the most recent assessment base of the Minnesota new text end 10.19 new text begin Comprehensive Health Association new text end shall annually file with the Consumer Advisory Board 10.20created in section new text begin either the commissioner of commerce or the commissioner new text end 10.21 new text begin of health, as appropriate new text end : 10.22    (1) a copy of the health plan company's form 990 filed with the federal Internal 10.23Revenue Service; or 10.24    (2) if the health plan company did not file a form 990 with the federal Internal 10.25Revenue Service, a list of the amount and recipients of the health plan company's five 10.26highest salaries, including all types of compensation, in excess of $50,000. 10.27    (b) A filing under this section is public data under section 13.03. 10.28    Sec. 18. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision 10.29to read: 10.30     new text begin Subd. 16a. new text end new text begin Hands-on assistance. new text end new text begin "Hands-on assistance" means minimal, moderate, new text end 10.31 new text begin or maximal physical assistance without which the individual would not be able to perform new text end 10.32 new text begin the activity of daily living. new text end 11.1    Sec. 19. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision 11.2to read: 11.3     new text begin Subd. 22a. new text end new text begin Personal care. new text end new text begin "Personal care" means the provision of hands-on services new text end 11.4 new text begin to assist an individual with activities of daily living. new text end 11.5    Sec. 20. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision 11.6to read: 11.7     new text begin Subd. 23b. new text end new text begin Providers of services. new text end new text begin All providers of services, including but not new text end 11.8 new text begin limited to "skilled nursing facility," "extended care facility," "convalescent nursing home," new text end 11.9 new text begin "personal care facility," "specialized care providers," "assisted living facility," and new text end 11.10 new text begin "home care agency" are defined in relation to the services and facilities required to be new text end 11.11 new text begin available and the licensure, certification, registration, or degree status of those providing new text end 11.12 new text begin or supervising the services. When the definition requires that the provider be appropriately new text end 11.13 new text begin licensed, certified, or registered, it must also state what requirements a provider must new text end 11.14 new text begin meet in lieu of licensure, certification, or registration when the state in which the service new text end 11.15 new text begin is to be furnished does not require a provider of these services to be licensed, certified, new text end 11.16 new text begin or registered, or when the state licenses, certifies, or registers the provider of services new text end 11.17 new text begin under another name. new text end 11.18    Sec. 21. Minnesota Statutes 2006, section 62S.01, is amended by adding a subdivision 11.19to read: 11.20     new text begin Subd. 25b. new text end new text begin Skilled nursing care, personal care, home care, specialized care, new text end 11.21 new text begin assisted living care, and other services. new text end new text begin "Skilled nursing care," "personal care," "home new text end 11.22 new text begin care," "specialized care," "assisted living care," and other services are defined in relation new text end 11.23 new text begin to the level of skill required, the nature of the care, and the setting in which care must new text end 11.24 new text begin be delivered. new text end 11.25    Sec. 22. Minnesota Statutes 2006, section 62S.13, subdivision 4, is amended to read: 11.26    Subd. 4. Field issue prohibition. A long-term care insurance policy or certificate 11.27may not be field issued based on medical or health status. For purposes of this section, 11.28"field issued" means a policy or certificate issued by an agent or a third-party administrator 11.29under the underwriting authority granted to the agent or third-party administrator by an 11.30insurer new text begin and using the insurer's underwriting guidelines new text end . 11.31    Sec. 23. Minnesota Statutes 2006, section 62S.15, is amended to read: 11.3262S.15 AUTHORIZED LIMITATIONS AND EXCLUSIONS. 12.1     new text begin (a) new text end No policy may be delivered or issued for delivery in this state as long-term care 12.2insurance if the policy limits or excludes coverage by type of illness, treatment, medical 12.3condition, or accident, except as follows: 12.4    (1) preexisting conditions or diseases; 12.5    (2) mental or nervous disorders; except that the exclusion or limitation of benefits on 12.6the basis of Alzheimer's disease is prohibited; 12.7    (3) alcoholism and drug addiction; 12.8    (4) illness, treatment, or medical condition arising out of war or act of war; 12.9participation in a felony, riot, or insurrection; service in the armed forces or auxiliary 12.10units; suicide, attempted suicide, or intentionally self-inflicted injury; or non-fare-paying 12.11aviation; 12.12    (5) treatment provided in a government facility unless otherwise required by 12.13law, services for which benefits are available under Medicare or other government 12.14program except Medicaid, state or federal workers' compensation, employer's liability 12.15or occupational disease law, motor vehicle no-fault law; services provided by a member 12.16of the covered person's immediate family; and services for which no charge is normally 12.17made in the absence of insurance; and 12.18    (6) expenses for services or items available or paid under another long-term care 12.19insurance or health insurance policy. new text begin ; and new text end 12.20     new text begin (7) in the case of a qualified long-term care insurance contract, expenses for services new text end 12.21 new text begin or items to the extent that the expenses are reimbursable under title XVIII of the Social new text end 12.22 new text begin Security Act or would be so reimbursable but for the application of a deductible or new text end 12.23 new text begin coinsurance amount. new text end 12.24     new text begin (b) new text end This subdivision does not prohibit exclusions and limitations by type of provider 12.25or territorial limitations. new text begin However, no long-term care issuer may deny a claim because new text end 12.26 new text begin services are provided in a state other than the state of policy issued under the following new text end 12.27 new text begin conditions: new text end 12.28     new text begin (1) when the state other than the state of policy issue does not have the provider new text end 12.29 new text begin licensing, certification, or registration required in the policy, but where the provider new text end 12.30 new text begin satisfies the policy requirements outlined for providers in lieu of licensure, certification, or new text end 12.31 new text begin registration; or new text end 12.32     new text begin (2) when the state other than the state of policy issue licenses, certifies, or registers new text end 12.33 new text begin the provider under another name. new text end 12.34     new text begin For purposes of this paragraph, "state of policy issue" means the state in which the new text end 12.35 new text begin individual policy or certificate was originally issued. new text end 13.1    Sec. 24. Minnesota Statutes 2006, section 62S.18, subdivision 2, is amended to read: 13.2    Subd. 2. Premiums. new text begin (a) new text end The premiums charged to an insured for long-term care 13.3insurance replaced under subdivision 1 shall not increase due to either the increasing 13.4age of the insured at ages beyond 65 or the duration the insured has been covered under 13.5this policy. 13.6     new text begin (b) The purchase of additional coverage must not be considered a premium rate new text end 13.7 new text begin increase, but for purposes of the calculation required under section 62S.291, the portion new text end 13.8 new text begin of the premium attributable to the additional coverage must be added to and considered new text end 13.9 new text begin part of the initial annual premium. new text end 13.10     new text begin (c) A reduction in benefits must not be considered a premium change, but for new text end 13.11 new text begin purpose of the calculation required under section 62S.291, the initial annual premium must new text end 13.12 new text begin be based on the reduced benefits. new text end 13.13    Sec. 25. new text begin [62S.181] ELECTRONIC ENROLLMENT FOR GROUP POLICIES. new text end 13.14     new text begin Subdivision 1. new text end new text begin Employers or labor unions. new text end new text begin In the case of a group defined in section new text end 13.15 new text begin 62S.01, subdivision 15, clause (1), any requirement that a signature of an insured be new text end 13.16 new text begin obtained by an agent or insurer is satisfied if: new text end 13.17     new text begin (1) the consent is obtained by telephonic or electronic enrollment by the group new text end 13.18 new text begin policyholder or insurer. A verification of enrollment information must be provided to the new text end 13.19 new text begin enrollee; new text end 13.20     new text begin (2) the telephonic or electronic enrollment provides necessary and reasonable new text end 13.21 new text begin safeguards to ensure the accuracy, retention, and prompt retrieval of records; and new text end 13.22     new text begin (3) the telephonic or electronic enrollment provides necessary and reasonable new text end 13.23 new text begin safeguards to ensure that the confidentiality of individually identifiable information and new text end 13.24 new text begin "privileged information" as defined by section 72A.491, subdivision 19, is maintained. new text end 13.25     new text begin Subd. 2. new text end new text begin Availability of insurer records. new text end new text begin The insurer shall make available, upon new text end 13.26 new text begin request of the commissioner, records that will demonstrate the insurer's ability to confirm new text end 13.27 new text begin enrollment and coverage amounts. new text end 13.28    Sec. 26. Minnesota Statutes 2006, section 62S.20, is amended by adding a subdivision 13.29to read: 13.30     new text begin Subd. 5a. new text end new text begin Disclosure of tax consequences. new text end new text begin With regard to life insurance policies new text end 13.31 new text begin that provide an accelerated benefit for long-term care, a disclosure statement is required new text end 13.32 new text begin at the time of application for the policy or rider and at the same time the accelerated new text end 13.33 new text begin benefit payment request is submitted that receipt of these accelerated benefits may be new text end 13.34 new text begin taxable, and that assistance should be sought from a personal tax advisor. The disclosure new text end 14.1 new text begin statement must be prominently displayed on the first page of the policy or rider and any new text end 14.2 new text begin other related documents. This subdivision does not apply to qualified long-term care new text end 14.3 new text begin insurance contracts. new text end 14.4    Sec. 27. Minnesota Statutes 2006, section 62S.20, is amended by adding a subdivision 14.5to read: 14.6     new text begin Subd. 5b. new text end new text begin Benefit triggers. new text end new text begin Activities of daily living and cognitive impairment new text end 14.7 new text begin must be used to measure an insured's need for long-term care and must be described new text end 14.8 new text begin in the policy or certificate in a separate paragraph and must be labeled "Eligibility for new text end 14.9 new text begin the Payment of Benefits." Any additional benefit triggers must also be explained in this new text end 14.10 new text begin section. If these triggers differ for different benefits, explanation of the trigger must new text end 14.11 new text begin accompany each benefit description. If an attending physician or other specified person new text end 14.12 new text begin must certify a certain level of functional dependency in order to be eligible for benefits, new text end 14.13 new text begin this too shall be specified. new text end 14.14    Sec. 28. Minnesota Statutes 2006, section 62S.20, subdivision 6, is amended to read: 14.15    Subd. 6. Qualified long-term care insurance policy. A qualified long-term care 14.16insurance policy must include a disclosure statement in the policy that the policy is 14.17intended to be a qualified long-term care insurance policy new text begin under section 7702B(b) of the new text end 14.18 new text begin Internal Revenue Code of 1986, as amended new text end . 14.19    Sec. 29. Minnesota Statutes 2007 Supplement, section 62S.23, subdivision 1, is 14.20amended to read: 14.21    Subdivision 1. Inflation protection feature. (a) No insurer may offer a long-term 14.22care insurance policy unless the insurer also offers to the policyholder, in addition to any 14.23other inflation protection, the option to purchase a policy that provides for benefit levels to 14.24increase with benefit maximums or reasonable durations which are meaningful to account 14.25for reasonably anticipated increases in the costs of long-term care services covered by 14.26the policy. In addition to other options that may be offered, insurers must offer to each 14.27policyholder, at the time of purchase, the option to purchase a policy with an inflation 14.28protection feature no less favorable than one of the following: 14.29    (1) increases benefit levels annually in a manner so that the increases are 14.30compounded annually at a rate not less than five percent; 14.31    (2) guarantees the insured individual the right to periodically increase benefit levels 14.32without providing evidence of insurability or health status so long as the option for the 14.33previous period has not been declined. The amount of the additional benefit shall be no 15.1less than the difference between the existing policy benefit and that benefit compounded 15.2annually at a rate of at least five percent for the period beginning with the purchase of the 15.3existing benefit and extending until the year in which the offer is made; or 15.4    (3) covers a specified percentage of actual or reasonable charges and does not 15.5include a maximum specified indemnity amount or limit. 15.6    (b) A long-term care partnership policy must provide the inflation protection 15.7described in this subdivision. If the policy is sold to an individual who: 15.8    (1) has not attained age 61 as of the date of purchase, the policy must provide 15.9compound annual inflation protection; 15.10    (2) has attained age 61, but has not attained age 76 as of such date, the policy must 15.11provide some level of inflation protection; and 15.12    (3) has attained the age of 76 as of such date, the policy may, but is not required to, 15.13provide some level of inflation protection. 15.14     new text begin Inflation protection for a long-term care partnership policy may not be less than new text end 15.15 new text begin three percent per year or a rate based on changes in the Consumer Price Index. The new text end 15.16 new text begin commissioner, however, may approve other types of inflation protection that comply with new text end 15.17 new text begin this section and further the goals of the partnership program. new text end 15.18    Sec. 30. new text begin [62S.251] RESERVE STANDARDS. new text end 15.19     new text begin Subdivision 1. new text end new text begin Benefits provided through acceleration of benefits under life new text end 15.20 new text begin policies. new text end new text begin When long-term care benefits are provided through the acceleration of benefits new text end 15.21 new text begin under group or individual life policies or riders to these policies, policy reserves for the new text end 15.22 new text begin benefits must be determined in accordance with section 61A.25. Claim reserves must also new text end 15.23 new text begin be established in the case when the policy or rider is in claim status. new text end 15.24     new text begin Reserves for policies and riders subject to this section must be based on the multiple new text end 15.25 new text begin decrement model utilizing all relevant decrements except for voluntary termination rates. new text end 15.26 new text begin Single decrement approximations are acceptable if the calculation produces essentially new text end 15.27 new text begin similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. new text end 15.28 new text begin The calculations may take into account the reduction in life insurance benefits due to new text end 15.29 new text begin the payment of long-term care benefits. However, in no event must the reserves for the new text end 15.30 new text begin long-term care benefit and the life insurance benefit be less than the reserves for the life new text end 15.31 new text begin insurance benefit assuming no long-term care benefit. new text end 15.32     new text begin In the development and calculation of reserves for policies and riders subject to this new text end 15.33 new text begin subdivision, due regard must be given to the applicable policy provisions, marketing new text end 15.34 new text begin methods, administrative procedures, and all other considerations which have an impact on new text end 15.35 new text begin projected claim costs, including, but not limited to, the following: new text end 16.1     new text begin (1) definition of insured events; new text end 16.2     new text begin (2) covered long-term care facilities; new text end 16.3     new text begin (3) existence of home convalescence care coverage; new text end 16.4     new text begin (4) definition of facilities; new text end 16.5     new text begin (5) existence or absence of barriers to eligibility; new text end 16.6     new text begin (6) premium waiver provision; new text end 16.7     new text begin (7) renewability; new text end 16.8     new text begin (8) ability to raise premiums; new text end 16.9     new text begin (9) marketing method; new text end 16.10     new text begin (10) underwriting procedures; new text end 16.11     new text begin (11) claims adjustment procedures; new text end 16.12     new text begin (12) waiting period; new text end 16.13     new text begin (13) maximum benefit; new text end 16.14     new text begin (14) availability of eligible facilities; new text end 16.15     new text begin (15) margins in claim costs; new text end 16.16     new text begin (16) optional nature of benefit; new text end 16.17     new text begin (17) delay in eligibility for benefit; new text end 16.18     new text begin (18) inflation protection provisions; and new text end 16.19     new text begin (19) guaranteed insurability option. new text end 16.20     new text begin Any applicable valuation morbidity table shall be certified as appropriate as a new text end 16.21 new text begin statutory valuation table by a member of the American Academy of Actuaries. new text end 16.22     new text begin Subd. 2. new text end new text begin Benefits provided otherwise. new text end new text begin When long-term care benefits are provided new text end 16.23 new text begin other than as in subdivision 1, reserves must be determined in accordance with sections new text end 16.24 new text begin 60A.76 to 60A.768. new text end 16.25    Sec. 31. Minnesota Statutes 2006, section 62S.26, subdivision 2, is amended to read: 16.26    Subd. 2. Life insurance policies. Subdivision 1 shall not apply to life insurance 16.27policies that accelerate benefits for long-term care. A life insurance policy that funds 16.28long-term care benefits entirely by accelerating the death benefit is considered to provide 16.29reasonable benefits in relation to premiums paid, if the policy complies with all of the 16.30following provisions: 16.31    (1) the interest credited internally to determine cash value accumulations, including 16.32long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest 16.33rate for cash value accumulations without long-term care set forth in the policy; 16.34    (2) the portion of the policy that provides life insurance benefits meets the 16.35nonforfeiture requirements of section 61A.24; 17.1    (3) the policy meets the disclosure requirements of sections 62S.09, 62S.10, and 17.262S.11 ; and 17.3     new text begin (4) any policy illustration that meets the applicable requirements of the NAIC Life new text end 17.4 new text begin Insurance Illustrations Model Regulation; and new text end 17.5    (4) new text begin (5) new text end an actuarial memorandum is filed with the commissioner that includes: 17.6    (i) a description of the basis on which the long-term care rates were determined; 17.7    (ii) a description of the basis for the reserves; 17.8    (iii) a summary of the type of policy, benefits, renewability, general marketing 17.9method, and limits on ages of issuance; 17.10    (iv) a description and a table of each actuarial assumption used. For expenses, 17.11an insurer must include percentage of premium dollars per policy and dollars per unit 17.12of benefits, if any; 17.13    (v) a description and a table of the anticipated policy reserves and additional reserves 17.14to be held in each future year for active lives; 17.15    (vi) the estimated average annual premium per policy and the average issue age; 17.16    (vii) a statement as to whether underwriting is performed at the time of application. 17.17The statement shall indicate whether underwriting is used and, if used, the statement 17.18shall include a description of the type or types of underwriting used, such as medical 17.19underwriting or functional assessment underwriting. Concerning a group policy, the 17.20statement shall indicate whether the enrollee or any dependent will be underwritten and 17.21when underwriting occurs; and 17.22    (viii) a description of the effect of the long-term care policy provision on the required 17.23premiums, nonforfeiture values, and reserves on the underlying life insurance policy, both 17.24for active lives and those in long-term care claim status. 17.25    Sec. 32. Minnesota Statutes 2006, section 62S.266, subdivision 4, is amended to read: 17.26    Subd. 4. Contingent benefit upon lapse. (a) After rejection of the offer required 17.27under subdivision 2, for individual and group policies without nonforfeiture benefits 17.28issued after July 1, 2001, the insurer shall provide a contingent benefit upon lapse. 17.29    (b) If a group policyholder elects to make the nonforfeiture benefit an option to 17.30the certificate holder, a certificate shall provide either the nonforfeiture benefit or the 17.31contingent benefit upon lapse. 17.32    (c) The contingent benefit on lapse must be triggered every time an insurer increases 17.33the premium rates to a level which results in a cumulative increase of the annual premium 17.34equal to or exceeding the percentage of the insured's initial annual premium based on 17.35the insured's issue age provided in this paragraph, and the policy or certificate lapses 18.1within 120 days of the due date of the premium increase. Unless otherwise required, 18.2policyholders shall be notified at least 30 days prior to the due date of the premium 18.3reflecting the rate increase. 18.4Triggers for a Substantial Premium Increase 18.5 18.6 Issue Age Percent Increase Over Initial Premium 18.7 29 and Under 200 18.8 30-34 190 18.9 35-39 170 18.10 40-44 150 18.11 45-49 130 18.12 50-54 110 18.13 55-59 90 18.14 60 70 18.15 61 66 18.16 62 62 18.17 63 58 18.18 64 54 18.19 65 50 18.20 66 48 18.21 67 46 18.22 68 44 18.23 69 42 18.24 70 40 18.25 71 38 18.26 72 36 18.27 73 34 18.28 74 32 18.29 75 30 18.30 76 28 18.31 77 26 18.32 78 24 18.33 79 22 18.34 80 20 18.35 81 19 18.36 82 18 18.37 83 17 18.38 84 16 18.39 85 15 18.40 86 14 18.41 87 13 18.42 88 12 19.1 89 11 19.2 90 and over 10 19.3    (d) new text begin A contingent benefit on lapse must also be triggered for policies with a fixed new text end 19.4 new text begin or limited premium paying period every time an insurer increases the premium rates to a new text end 19.5 new text begin level that results in a cumulative increase of the annual premium equal to or exceeding the new text end 19.6 new text begin percentage of the insured's initial annual premium set forth below based on the insured's new text end 19.7 new text begin issue age, the policy or certificate lapses within 120 days of the due date of the premium new text end 19.8 new text begin so increased, and the ratio in paragraph (e), clause (2), is 40 percent or more. Unless new text end 19.9 new text begin otherwise required, policyholders shall be notified at least 30 days prior to the due date of new text end 19.10 new text begin the premium reflecting the rate increase. new text end 19.11 new text begin Triggers for a Substantial Premium Increase new text end 19.12 new text begin Issue Age new text end new text begin Percent Increase Over Initial Premium new text end 19.13 new text begin Under 65 new text end new text begin 50% new text end 19.14 new text begin 65-80 new text end new text begin 30% new text end 19.15 new text begin Over 80 new text end new text begin 10% new text end 19.16     new text begin This provision shall be in addition to the contingent benefit provided by paragraph new text end 19.17 new text begin (c) and where both are triggered, the benefit provided must be at the option of the insured. new text end 19.18     new text begin (e) new text end On or before the effective date of a substantial premium increase as defined in 19.19paragraph (c), the insurer shall: 19.20    (1) offer to reduce policy benefits provided by the current coverage without the 19.21requirement of additional underwriting so that required premium payments are not 19.22increased; 19.23    (2) offer to convert the coverage to a paid-up status with a shortened benefit period 19.24according to the terms of subdivision 5. This option may be elected at any time during the 19.25120-day period referenced in paragraph (c); and 19.26    (3) notify the policyholder or certificate holder that a default or lapse at any time 19.27during the 120-day period referenced in paragraph (c) is deemed to be the election of 19.28the offer to convert in clause (2). 19.29     new text begin (f) On or before the effective date of a substantial premium increase as defined in new text end 19.30 new text begin paragraph (d), the insurer shall: new text end 19.31     new text begin (1) offer to reduce policy benefits provided by the current coverage without the new text end 19.32 new text begin requirement of additional underwriting so that required premium payments are not new text end 19.33 new text begin increased; new text end 19.34     new text begin (2) offer to convert the coverage to a paid-up status where the amount payable for new text end 19.35 new text begin each benefit is 90 percent of the amount payable in effect immediately prior to lapse times new text end 20.1 new text begin the ratio of the number of completed months of paid premiums divided by the number of new text end 20.2 new text begin months in the premium paying period. This option may be elected at any time during the new text end 20.3 new text begin 120-day period referenced in paragraph (d); and new text end 20.4     new text begin (3) notify the policyholder or certificate holder that a default or lapse at any time new text end 20.5 new text begin during the 120-day period referenced in paragraph (d) shall be deemed to be the election new text end 20.6 new text begin of the offer to convert in clause (2) if the ratio is 40 percent or more. new text end 20.7    Sec. 33. Minnesota Statutes 2006, section 62S.266, subdivision 10, is amended to read: 20.8    Subd. 10. Purchased blocks of business. To determine whether contingent 20.9nonforfeiture upon lapse provisions are triggered under subdivision 4, paragraph (c) new text begin or (d) new text end , 20.10a replacing insurer that purchased or otherwise assumed a block or blocks of long-term 20.11care insurance policies from another insurer shall calculate the percentage increase based 20.12on the initial annual premium paid by the insured when the policy was first purchased 20.13from the original insurer. 20.14    Sec. 34. new text begin [62S.267] STANDARDS FOR BENEFIT TRIGGERS. new text end 20.15     new text begin Subdivision 1. new text end new text begin Benefit payment determinations. new text end new text begin A long-term care insurance new text end 20.16 new text begin policy must condition the payment of benefits on a determination of the insured's ability new text end 20.17 new text begin to perform activities of daily living and on cognitive impairment. Eligibility for the new text end 20.18 new text begin payment of benefits must not be more restrictive than requiring either a deficiency in new text end 20.19 new text begin the ability to perform not more than two of the activities of daily living or the presence new text end 20.20 new text begin of cognitive impairment. new text end 20.21     new text begin Activities of daily living include at least the following as defined in section 62S.01 new text end 20.22 new text begin and in the policy: bathing, continence, dressing, eating, toileting, and transferring. new text end 20.23     new text begin Insurers may use activities of daily living to trigger covered benefits in addition to new text end 20.24 new text begin those contained in this subdivision as long as they are defined in the policy. new text end 20.25     new text begin Subd. 2. new text end new text begin Additional provisions for determining benefit payments. new text end new text begin An insurer new text end 20.26 new text begin may use additional provisions for the determination of when benefits are payable under a new text end 20.27 new text begin policy or certificate if the provisions do not restrict, and are not in lieu of, the requirements new text end 20.28 new text begin contained in subdivision 1. new text end 20.29     new text begin Subd. 3. new text end new text begin Deficiency determination. new text end new text begin For purposes of this section, the determination new text end 20.30 new text begin of a deficiency must not be more restrictive than requiring the hands-on assistance of new text end 20.31 new text begin another person to perform the prescribed activities of daily living, or of the deficiency is new text end 20.32 new text begin due to the presence of a cognitive impairment, supervision or verbal cueing by another new text end 20.33 new text begin person is needed in order to protect the insured or others. new text end 21.1     new text begin Subd. 4. new text end new text begin Assessments. new text end new text begin Assessments of activities if daily living and cognitive new text end 21.2 new text begin impairment must be performed by licensed or certified professionals, such as physicians, new text end 21.3 new text begin nurses, or social workers. new text end 21.4     new text begin Subd. 5. new text end new text begin Appeal process. new text end new text begin Long-term care insurance policies must include a clear new text end 21.5 new text begin description of the process for appealing and resolving benefit determinations. new text end 21.6 new text begin EFFECTIVE DATE. new text end new text begin This section is effective and applies to a long-term care new text end 21.7 new text begin policy issued in this state on or after the effective date of this section. This section does new text end 21.8 new text begin not apply to certificates issued on or after the effective date of this section, under a group new text end 21.9 new text begin long-term care insurance policy as defined in section 62S.01, subdivision 15, that was in new text end 21.10 new text begin force at the time this section became effective. new text end 21.11    Sec. 35. new text begin [62S.268] ADDITIONAL STANDARDS FOR BENEFIT TRIGGERS new text end 21.12 new text begin FOR QUALIFIED LONG-TERM CARE INSURANCE CONTRACTS. new text end 21.13     new text begin Subdivision 1. new text end new text begin Definitions. new text end new text begin For purposes of this section, the following terms have new text end 21.14 new text begin the meanings given them: new text end 21.15     new text begin (a) "Qualified long-term care services" means services that meet the requirements new text end 21.16 new text begin of section 7702(c)(1) of the Internal Revenue Code of 1986, as amended, as follows: new text end 21.17 new text begin necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation, and new text end 21.18 new text begin rehabilitative services, and maintenance or personal care services which are required by new text end 21.19 new text begin a chronically ill individual, and are provided pursuant to a plan of care prescribed by a new text end 21.20 new text begin licensed health care practitioner. new text end 21.21     new text begin (b) "Chronically ill individual" has the meaning prescribed for this term by section new text end 21.22 new text begin 7702B(c)(2) of the Internal Revenue Code of 1986, as amended. Under this provision, a new text end 21.23 new text begin chronically ill individual means any individual who has been certified by a licensed health new text end 21.24 new text begin care practitioner as being unable to perform, without substantial assistance from another new text end 21.25 new text begin individual, at least two activities of daily living for a period of at least 90 days due to a new text end 21.26 new text begin loss of functional capacity, or requiring substantial supervision to protect the individual new text end 21.27 new text begin from threats to health and safety due to severe cognitive impairment. new text end 21.28     new text begin The term "chronically ill individual" does not include an individual otherwise new text end 21.29 new text begin meeting these requirements unless within the preceding 12-month period a licensed health new text end 21.30 new text begin care practitioner has certified that the individual meets these requirements. new text end 21.31     new text begin (c) "Licensed health care practitioner" means a physician, as defined in section new text end 21.32 new text begin 1861(r)(1) of the Social Security Act, a registered professional nurse, licensed social new text end 21.33 new text begin worker, or other individual who meets requirements prescribed by the Secretary of the new text end 21.34 new text begin Treasury. new text end 22.1     new text begin (d) "Maintenance or personal care services" means any care the primary purpose new text end 22.2 new text begin of which is the provision of needed assistance with any of the disabilities as a result of new text end 22.3 new text begin which the individual is a chronically ill individual, including the protection from threats new text end 22.4 new text begin to health and safety due to severe cognitive impairment. new text end 22.5     new text begin Subd. 2. new text end new text begin Services. new text end new text begin A qualified long-term care insurance contract shall pay only for new text end 22.6 new text begin qualified long-term care services received by a chronically ill individual provided pursuant new text end 22.7 new text begin to a plan of care prescribed by a licensed health care practitioner. new text end 22.8     new text begin Subd. 3. new text end new text begin Payment of benefits. new text end new text begin A qualified long-term care insurance contract new text end 22.9 new text begin shall condition the payment of benefits on a determination of the insured's inability to new text end 22.10 new text begin perform activities of daily living for an expected period of at least 90 days due to a loss new text end 22.11 new text begin of functional capacity or to severe cognitive impairment. new text end 22.12     new text begin Subd. 4. new text end new text begin Certifications. new text end new text begin (a) Certifications regarding activities of daily living new text end 22.13 new text begin and cognitive impairment required pursuant to subdivision 3 shall be performed by the new text end 22.14 new text begin following licensed or certified professionals: physicians, registered professional nurses, new text end 22.15 new text begin licensed social workers, or other individuals who meet requirements prescribed by the new text end 22.16 new text begin Secretary of the Treasury. new text end 22.17     new text begin (b) Certifications required pursuant to subdivision 3 may be performed by a licensed new text end 22.18 new text begin health care professional at the direction of the carrier as is reasonably necessary with new text end 22.19 new text begin respect to a specific claim, except that when a licensed health care practitioner has certified new text end 22.20 new text begin that an insured is unable to perform activities of daily living for an expected period of at new text end 22.21 new text begin least 90 days due to a loss of functional capacity and the insured is in claim status, the new text end 22.22 new text begin certification may not be rescinded and additional certifications may not be performed until new text end 22.23 new text begin after the expiration of the 90-day period. new text end 22.24     new text begin Subd. 5. new text end new text begin Dispute resolution. new text end new text begin Qualified long-term care insurance contracts shall new text end 22.25 new text begin include a clear description of the process for appealing and resolving disputes with respect new text end 22.26 new text begin to benefit determinations. new text end 22.27    Sec. 36. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision 22.28to read: 22.29     new text begin Subd. 2a. new text end new text begin Associations to educate members. new text end new text begin With respect to the obligations set new text end 22.30 new text begin forth in this section, the primary responsibility of an association, as defined in section new text end 22.31 new text begin 62S.01, subdivision 15, clause (2), when endorsing or selling long-term care insurance is new text end 22.32 new text begin to educate its members concerning long-term care issues in general so that its members new text end 22.33 new text begin can make informed decisions. Associations shall provide objective information regarding new text end 22.34 new text begin long-term care insurance policies or certificates endorsed or sold by the associations to new text end 23.1 new text begin ensure that members of such associations receive a balanced and complete explanation of new text end 23.2 new text begin the features in the policies or certificates that are being endorsed or sold. new text end 23.3    Sec. 37. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision 23.4to read: 23.5     new text begin Subd. 6a. new text end new text begin Additional association duties. new text end new text begin An association shall also at the time of new text end 23.6 new text begin the association's decision to endorse, engage the services of a person with expertise in new text end 23.7 new text begin long-term care insurance not affiliated with the insurer to conduct an examination of the new text end 23.8 new text begin policies, including its benefits, features, and rates and update the examination thereafter in new text end 23.9 new text begin the event of material change; actively monitor the marketing efforts of the insurer and its new text end 23.10 new text begin agents; and review and approve all marketing materials or other insurance communications new text end 23.11 new text begin used to promote sales or sent to members regarding the policies or certificates. This new text end 23.12 new text begin subdivision does not apply to qualified long-term care insurance contracts. new text end 23.13    Sec. 38. Minnesota Statutes 2006, section 62S.29, is amended by adding a subdivision 23.14to read: 23.15     new text begin Subd. 9. new text end new text begin Unfair trade practices. new text end new text begin Failure to comply with the filing and certification new text end 23.16 new text begin requirements of this section constitutes an unfair trade practice in violation of sections new text end 23.17 new text begin 72A.17 to 72A.32. new text end 23.18    Sec. 39. new text begin [62S.291] AVAILABILITY OF NEW SERVICES OR PROVIDERS. new text end 23.19     new text begin Subdivision 1. new text end new text begin Requirement. new text end new text begin An insurer shall notify policyholders of the new text end 23.20 new text begin availability of a new long-term policy series that provides coverage for new long-term new text end 23.21 new text begin care services or providers material in nature and not previously available through the new text end 23.22 new text begin insurer to the general public. The notice must be provided within 12 months of the date new text end 23.23 new text begin that the new policy series is made available for sale in this state. new text end 23.24     new text begin Subd. 2. new text end new text begin Exception. new text end new text begin (a) Notwithstanding subdivision 1, notification is not required new text end 23.25 new text begin for any policy issued before the effective date of this section or to any policyholder or new text end 23.26 new text begin certificate holder who is currently eligible for benefits, within an elimination period or on new text end 23.27 new text begin a claim, or who previously had been in claim status, or who would not be eligible to apply new text end 23.28 new text begin for coverage due to issue age limitations under the new policy. The insurer may require new text end 23.29 new text begin that policyholders meet all eligibility requirements, including underwriting and payment new text end 23.30 new text begin of the required premium to add such new services or providers. new text end 23.31     new text begin (b) An insurer is not required to notify policyholders of a new proprietary policy new text end 23.32 new text begin series created and filed for use in a limited distribution channel. For purposes of this new text end 23.33 new text begin subdivision, "limited distribution channel" means through a discrete entity, such as a new text end 24.1 new text begin financial institution or brokerage, for which specialized products are available that are new text end 24.2 new text begin not available for sale to the general public. Policyholders that purchased such a new new text end 24.3 new text begin proprietary policy shall be notified when a new long-term care policy series that provides new text end 24.4 new text begin coverage for new long-term care services or providers material in nature is made available new text end 24.5 new text begin to that limited distribution channel. new text end 24.6     new text begin Subd. 3. new text end new text begin Compliance. new text end new text begin An insurer shall make the new coverage available in one of new text end 24.7 new text begin the following ways: new text end 24.8     new text begin (1) by adding a rider to the existing policy and charging a separate premium for the new text end 24.9 new text begin new rider based in the insured's attained age; new text end 24.10     new text begin (2) by exchanging the existing policy or certificate for one with an issue age based new text end 24.11 new text begin on the present age of the insured and recognizing past insured status by granting premium new text end 24.12 new text begin credits toward the premiums for the new policy or certificate. The premium credits must new text end 24.13 new text begin be based on premiums paid or reserves held for the prior policy or certificate; new text end 24.14     new text begin (3) by exchanging the existing policy or certificate for a new policy or certificate in new text end 24.15 new text begin which consideration for past insured status is recognized by setting the premium for the new text end 24.16 new text begin new policy or certificate at the issue age of the policy or certificate being exchanged. The new text end 24.17 new text begin cost for the new policy or certificate may recognize the difference in reserves between the new text end 24.18 new text begin new policy or certificate and the original policy or certificate; or new text end 24.19     new text begin (4) by an alternative program developed by the insurer that meets the intent of this new text end 24.20 new text begin section if the program is filed with and approved by the commissioner. new text end 24.21     new text begin Subd. 4. new text end new text begin Policies considered exchanges. new text end new text begin Policies issued pursuant to this section new text end 24.22 new text begin shall be considered exchanges and not replacements. These exchanges are not subject new text end 24.23 new text begin to sections 62S.24 and 62S.30, and the reporting requirements of section 62S.25, new text end 24.24 new text begin subdivisions 1 to 6. new text end 24.25     new text begin Subd. 5. new text end new text begin Notification to certain groups. new text end new text begin Where the policy is offered through new text end 24.26 new text begin an employer, labor organization, professional, trade, or occupational organization, the new text end 24.27 new text begin required notification in subdivision 1 must be made to the offering entity. However, if new text end 24.28 new text begin the policy is issued to a group defined in section 62S.01, subdivision 15, clause (4), the new text end 24.29 new text begin notification shall be made to each certificate holder. new text end 24.30     new text begin Subd. 6. new text end new text begin Effect on coverage offers and requests for coverage. new text end new text begin Nothing in this new text end 24.31 new text begin section prohibits an insurer from offering any policy, rider, certificate, or coverage change new text end 24.32 new text begin to any policyholder or certificate holder. However, upon request any policyholder may new text end 24.33 new text begin apply for currently available coverage that includes the new services or providers. new text end 24.34 new text begin The insurer may require that policyholders meet all eligibility requirements, including new text end 24.35 new text begin underwriting and payment of the required premium to add such new services or providers. new text end 25.1     new text begin Subd. 7. new text end new text begin Life policies or riders. new text end new text begin This section does not apply to life insurance new text end 25.2 new text begin policies or riders containing accelerated long-term care benefits. new text end 25.3    Sec. 40. new text begin [62S.292] RIGHT TO REDUCE COVERAGE AND LOWER new text end 25.4 new text begin PREMIUMS. new text end 25.5     new text begin Subdivision 1. new text end new text begin Required policy or certificate provision. new text end new text begin Every long-term care new text end 25.6 new text begin insurance policy and certificate shall include a provision that allows the policyholder or new text end 25.7 new text begin certificate holder to reduce coverage and lower the policy or certificate premium in at new text end 25.8 new text begin least one of the following ways: new text end 25.9     new text begin (1) reducing the maximum benefit; or new text end 25.10     new text begin (2) reducing the daily, weekly, or monthly benefit amount. new text end 25.11     new text begin The insurer may also offer other reduction options that are consistent with the policy new text end 25.12 new text begin or certificate design or the carrier's administrative processes. new text end 25.13     new text begin The provision shall include a description of the ways in which coverage may be new text end 25.14 new text begin reduced and the process for requesting and implementing a reduction in coverage. new text end 25.15     new text begin Subd. 2. new text end new text begin Age determination. new text end new text begin The age to determine the premium for the reduced new text end 25.16 new text begin coverage shall be based on the age used to determine the premiums for the coverage new text end 25.17 new text begin currently in force. new text end 25.18     new text begin Subd. 3. new text end new text begin Limitation. new text end new text begin The insurer may limit any reduction in coverage to plans or new text end 25.19 new text begin options available for that policy form and to those for which benefits will be available new text end 25.20 new text begin after consideration of claims paid or payable. new text end 25.21     new text begin Subd. 4. new text end new text begin Written reminder. new text end new text begin If a policy or certificate is about to lapse, the insurer new text end 25.22 new text begin shall provide a written reminder to the policyholder or certificate holder of his or her right new text end 25.23 new text begin to reduce coverage and premiums in the notice required by section 7A(3) of this regulation. new text end 25.24     new text begin Subd. 5. new text end new text begin Nonapplication. new text end new text begin This section does not apply to life insurance policies or new text end 25.25 new text begin riders containing accelerated long-term care benefits. new text end 25.26 new text begin EFFECTIVE DATE. new text end new text begin This section applies to any long-term care policy issued in new text end 25.27 new text begin this state on or after August 1, 2008. new text end 25.28    Sec. 41. Minnesota Statutes 2006, section 65A.37, is amended to read: 25.2965A.37 POLICY FORMS. 25.30    All policies must be on standard policy forms published by Insurance Services 25.31Office, issued for a term of one year, and approved by the commissioner. 25.32    Sec. 42. Minnesota Statutes 2006, section 66A.02, subdivision 4, is amended to read: 26.1    Subd. 4. Exceptions. The following provisions of chapter 302A do not apply 26.2to domestic mutual insurance companies: sections 302A.011, subdivisions 2, 6, 6a, 7, 26.310, 20, 21, 25, 26, 27, 28, 29, 31, 32, and 37 to 59; 302A.105; 302A.137; 302A.161, 26.4subdivision 19 ; 302A.201, subdivision 2; 302A.401 to 302A.429; 302A.433, subdivisions 26.51, paragraphs (a), (b), (c), and (e), and 2 ; 302A.437, subdivision 2; new text begin 302A.443; new text end 302A.445, 26.6subdivisions 3 to 6 ; 302A.449, subdivision 7; 302A.453 to 302A.457; 302A.461; 26.7302A.463 ; 302A.471 to 302A.473; 302A.553; 302A.601 to 302A.651; 302A.671 to 26.8302A.675 ; 302A.681 to 302A.691; and 302A.701 to 302A.791. Those clauses of section 26.9302A.111 that refer to any of the sections previously referenced in this subdivision do 26.10not apply to domestic mutual insurance companies. The following sections of chapter 26.11302A are modified in their application to domestic mutual insurance companies in the 26.12manner indicated: 26.13    (1) with regard to section 302A.133, the articles may be amended pursuant to section 26.14302A.171 by the incorporators or by the board before the issuance of any policies by 26.15the company; 26.16    (2) with regard to section 302A.135, subdivision 2, a resolution proposing an 26.17amendment to the certificate of authority must be filed with the corporate secretary no less 26.18than 30 days before the meeting to consider the proposed amendment; 26.19    (3) with regard to section 302A.161, subdivision 19 of that section does not apply, 26.20except this must not be construed to limit the power of a mutual insurance company 26.21from issuing securities other than stock; 26.22    (4) with regard to section 302A.201, the references in subdivision 1 of that section 26.23to "subdivision 2" and "section 302A.457" do not apply; 26.24    (5) with regard to section 302A.203, the board shall consist of no less than five 26.25directors; 26.26    (6) with regard to section 302A.215, subdivisions 2 and 3 of that section only apply 26.27if the corporation's certificate of incorporation provides cumulative voting; 26.28    (7) with regard to section 302A.433, subdivision 1 of that section, special meetings of 26.29the members may be called for any purpose or purposes at any time by a person or persons 26.30authorized in the articles or bylaws to call special meetings, and with regard to subdivision 26.313 of that section, special meetings must be held on the date and at the time and place fixed 26.32by a person or persons authorized by the articles or bylaws to call a meeting; and 26.33    (8) with regard to section 302A.435, if the company complies substantially and in 26.34good faith with the notice requirements of section 302A.435, the company's failure to give 26.35any member or members the required notice does not impair the validity of any action 26.36taken at the members' meeting. 27.1 new text begin EFFECTIVE DATE. new text end new text begin This section is effective January 1, 2008. new text end 27.2    Sec. 43. Minnesota Statutes 2006, section 66A.07, subdivision 2, is amended to read: 27.3    Subd. 2. Life insurance companies. (a) Unless otherwise approved by the 27.4commissioner of commerce, a domestic mutual life insurance company member is any 27.5person who is listed on the records of the company as the owner of an in-force policy, 27.6and each member is entitled to one vote regardless of the number of policies owned by 27.7the member or the amounts of coverage provided to the member. For purposes of this 27.8section, "policy" means a policy or contract of insurance, including an annuity contract 27.9issued by the company, but excluding individual noncontributory insurance policies for 27.10which the premiums are paid by a financial institution, association, employer, or other 27.11institutional entity. Except as otherwise provided in the company's certificate or bylaws, a 27.12person covered under a group policy is not a member by virtue of such coverage, except 27.13that a person insured under a group life insurance policy is a member if: (1) the person 27.14is insured under a group life policy under which cash value has accumulated and been 27.15 new text begin some cash value is new text end allocated to the insured persons new text begin person new text end ; and (2) the group policyholder 27.16makes no contribution to the premiums or deposits for the policy. 27.17    (b) Every member of a mutual life insurance company must be notified of its annual 27.18meetings by a written notice mailed to the member's address, or by an imprint on the front 27.19or back of the policy, premium notice, receipt, or certificate of renewal, substantially 27.20as follows: 27.21    "The policyowner is hereby notified that by virtue of his or her ownership of this 27.22policy, the policyowner is a member of the .......... Insurance Company, and that the annual 27.23meetings of said company are held at its home office on the .... day of .... in each year, 27.24at .... o'clock." 27.25    For mutual life insurance holding companies, the notice of the annual meeting may 27.26be modified to reflect that the policyowner, by virtue of his or her ownership of a policy 27.27issued by a subsidiary insurance company reorganized under section 66A.40, is a member 27.28of the mutual insurance holding company. Notice given in this manner is deemed to 27.29comply with the requirements of section 302A.435. 27.30    Sec. 44. Minnesota Statutes 2006, section 66A.07, is amended by adding a subdivision 27.31to read: 27.32     new text begin Subd. 5. new text end new text begin Quorum. new text end new text begin The number of members present in person or by proxy at a new text end 27.33 new text begin member meeting are a quorum for the transaction of business, unless a larger proportion new text end 27.34 new text begin or number is provided in the articles or bylaws. If a quorum is present when a duly called new text end 28.1 new text begin or held meeting is convened, the members present may continue to transact business until new text end 28.2 new text begin adjournment, even though the withdrawal of members originally present leaves less than new text end 28.3 new text begin the proportion or number otherwise required for a quorum. new text end 28.4 new text begin EFFECTIVE DATE. new text end new text begin This section is effective January 1, 2008. new text end 28.5    Sec. 45. Minnesota Statutes 2006, section 66A.41, subdivision 1, is amended to read: 28.6    Subdivision 1. Definitions. (a) For the purposes of this section, the terms in this 28.7subdivision have the meanings given them. 28.8    (b) "Converting mutual insurer" means a Minnesota domestic mutual insurance 28.9company seeking to reorganize according to this section. 28.10    (c) "Converting mutual holding company" means a Minnesota domestic mutual 28.11insurance holding company seeking to reorganize according to this section. 28.12    (d) "Converting mutual company" means a converting mutual insurer or a converting 28.13mutual holding company seeking to convert according to this section. 28.14    (e) "Reorganized company" means a converting mutual insurer or a converting 28.15mutual holding company, as the case may be, that has reorganized according to this section. 28.16    (f) "Eligible member" means: 28.17    (1) for converting mutual insurers, a policyholder whose policy is in force as of the 28.18record date. Unless otherwise provided in the plan, a person covered under a group policy 28.19is not an eligible member, except that a person insured under a group life insurance policy 28.20is an eligible member if, on the record date: 28.21    (i) the person is insured under a group life policy under which cash value has 28.22accumulated and been new text begin some cash value is new text end allocated to the insured persons new text begin person new text end ; and 28.23    (ii) the group policyholder makes no contribution to the premiums for the group 28.24policy; and 28.25    (2) for converting mutual holding companies, a person who is a member of the 28.26converting mutual holding company, as defined by the converting mutual holding 28.27company's articles of incorporation and bylaws, determined as of the record date. 28.28    (g) "Plan of conversion" or "plan" means a plan adopted by a converting mutual 28.29company's board of directors under this section. 28.30    (h) "Policy" means a policy or contract of insurance, including an annuity contract, 28.31issued by a converting mutual insurer or issued by a reorganized insurance company 28.32subsidiary of a mutual holding company, but excluding individual noncontributory 28.33insurance policies for which the premiums are paid by a financial institution, association, 28.34employer, or other institutional entity. 29.1    (i) "Active participating policy" means an individual policy of a converting mutual 29.2company or its subsidiary that: (1) is a participating policy; (2) is among a class of similar 29.3policies that have been credited with policy dividends at any time within the 12 months 29.4preceding the effective date of the conversion or that will, under the then current dividend 29.5scale, be credited with policy dividends if in force on a future policy anniversary; (3) gives 29.6rise to membership interests in the converting mutual company; and (4) is in force on the 29.7effective date or some other reasonable date identified in the plan. 29.8    (j) "Commissioner" means the commissioner of commerce. 29.9    (k) "Effective date of a conversion" means the date determined according to 29.10subdivision 6. 29.11    (l) "Record date" means the date that the converting mutual company's board 29.12of directors adopts a plan of conversion, unless another date is specified in the plan of 29.13conversion and approved by the commissioner. 29.14    (m) "Membership interests" means all rights as members of the converting 29.15mutual company, including, but not limited to, the rights to vote and to participate in 29.16any distributions of distributable net worth, whether or not incident to the company's 29.17liquidation. 29.18    (n) "Distributable net worth" means the value of the converting mutual company 29.19as of the record date of the conversion, or other date approved by the commissioner, 29.20determined as set forth in the plan and approved by the commissioner. The commissioner 29.21may approve a valuation method based on any of the following: (1) the surplus as regards 29.22policyholders of a converting mutual insurer determined according to statutory accounting 29.23principles, which may be adjusted to reflect the current market values of assets and 29.24liabilities, together with any other adjustments that are appropriate in the circumstances; 29.25(2) the net equity of a converting mutual holding company or a converting mutual insurer 29.26determined according to generally accepted accounting principles, which may be adjusted 29.27to reflect the current market values of assets and liabilities, together with any other 29.28adjustments that are appropriate in the circumstances; (3) the fair market value of the 29.29converting mutual company determined by an independent, qualified person; or (4) any 29.30other reasonable valuation method. 29.31    (o) "Permitted issuer" means: (1) a corporation organized and owned by the 29.32converting mutual company or by any other insurance company or insurance holding 29.33company for the purpose of purchasing and holding securities representing a majority of 29.34voting control of the reorganized company; (2) a stock insurance company owned by the 29.35converting mutual company or by any other insurance company or insurance holding 30.1company into which the converting mutual company will be merged; or (3) any other 30.2corporation approved by the commissioner. 30.3    Sec. 46. Minnesota Statutes 2006, section 67A.31, subdivision 2, is amended to read: 30.4    Subd. 2. Insurable property in cities. They may also insure churches and 30.5dwellings, together with the usual outbuildings and the usual contents of both those 30.6dwellings and churches and outbuildings, in any city except a city of the first or second 30.7class new text begin , or a city of the second class only with approval granted by the commissioner new text end . 30.8    Sec. 47. Minnesota Statutes 2006, section 72A.51, subdivision 2, is amended to read: 30.9    Subd. 2. Return of policy or contract; notice. Any individual person may cancel 30.10an individual policy of insurance against loss or damage by reason of the sickness of the 30.11assured or the assured's dependents, a nonprofit health service plan contract providing 30.12benefits for hospital, surgical and medical care, a health maintenance organization 30.13subscriber contract, or a policy of insurance authorized by section 60A.06, subdivision 1, 30.14clause (4), by returning the policy or contract and by giving written notice of cancellation 30.15any time before midnight of the tenth day following the date of purchase. Notice of 30.16cancellation may be given personally, new text begin or new text end by mail, or by telegram. The policy or contract 30.17may be returned personally or by mail. If by mail, the notice or return of the policy or 30.18contract is effective upon being postmarked, properly addressed and postage prepaid. 30.19 new text begin EFFECTIVE DATE. new text end new text begin This section is effective January 1, 2009. new text end 30.20    Sec. 48. Minnesota Statutes 2007 Supplement, section 72A.52, subdivision 1, is 30.21amended to read: 30.22    Subdivision 1. Contents. In addition to all other legal requirements a policy or 30.23contract of insurance described in section 72A.51 shall show the name and address of the 30.24insurer and the seller of the policy or contract and shall state new text begin include a notice new text end , clearly and 30.25conspicuously in boldface type of a minimum size of ten points, a right to cancel notice 30.26which shall include the following new text begin elements new text end : 30.27    (1) a minimum of ten days new text begin to cancel the policy new text end beginning on the date the policy 30.28is received by the owner; 30.29    (2) new text begin if the policy is a replacement policy, new text end a minimum of 30 days beginning on the 30.30date the policy is received by the owner if the policy is a replacement policy new text begin . Pursuant to new text end 30.31 new text begin section 61A.57, this requirement may also be provided in a separate written notice that new text end 30.32 new text begin is delivered with the policy or contract new text end ; 31.1    (3) a requirement for the return of the policy to the company or an agent of the 31.2company; 31.3    (4) a statement that the policy is considered void from the beginning and the parties 31.4shall be in the same position as if no policy had been issued; 31.5    (5) a new text begin for policies or contracts other than a variable annuity or a variable life policy, a new text end 31.6 new text begin statement that the insurer will new text end refund of all premiums paid, including any fees or charges, 31.7if the policy is returned; and 31.8    (6) a statement that notice given by mail and return of the policy or contract by mail 31.9are effective on being postmarked, properly addressed, and postage prepaid new text begin describing new text end 31.10 new text begin when the cancellation becomes effective new text end . 31.11     new text begin The insurer must return all payments made for this policy within ten days after it new text end 31.12 new text begin receives notice of cancellation and the returned policy. new text end For variable annuity contracts 31.13issued pursuant to sections 61A.13 to 61A.21, this notice shall be suitably modified so as 31.14to notify the purchaser that the purchaser is entitled to a refund of the amount calculated 31.15in accordance with the provisions of section 72A.51, subdivision 3. new text begin For variable life new text end 31.16 new text begin insurance policies, this notice must be suitably modified so as to notify the purchaser that new text end 31.17 new text begin the purchaser is entitled to a refund of: (i) the premiums paid; or (ii) the variable account new text end 31.18 new text begin value plus any amount deducted from the portion of the premium applied to the account. new text end 31.19 new text begin EFFECTIVE DATE. new text end new text begin This section is effective January 1, 2009. new text end 31.20    Sec. 49. Minnesota Statutes 2006, section 79A.06, subdivision 5, is amended to read: 31.21    Subd. 5. Private employers who have ceased to be self-insured. (a) Private 31.22employers who have ceased to be private self-insurers shall discharge their continuing 31.23obligations to secure the payment of compensation which is accrued during the period of 31.24self-insurance, for purposes of Laws 1988, chapter 674, sections 1 to 21, by compliance 31.25with all of the following obligations of current certificate holders: 31.26    (1) Filing reports with the commissioner to carry out the requirements of this chapter; 31.27    (2) Depositing and maintaining a security deposit for accrued liability for the 31.28payment of any compensation which may become due, pursuant to chapter 176. However, 31.29if a private employer who has ceased to be a private self-insurer purchases an insurance 31.30policy from an insurer authorized to transact workers' compensation insurance in this state 31.31which provides coverage of all claims for compensation arising out of injuries occurring 31.32during the entire period the employer was self-insured, whether or not reported during 31.33that period, the policy will: 31.34    (i) discharge the obligation of the employer to maintain a security deposit for the 31.35payment of the claims covered under the policy; 32.1    (ii) discharge any obligation which the self-insurers' security fund has or may have 32.2for payment of all claims for compensation arising out of injuries occurring during the 32.3period the employer was self-insured, whether or not reported during that period; and 32.4    (iii) discharge the obligations of the employer to pay any future assessments to 32.5the self-insurers' security fund. 32.6    A private employer who has ceased to be a private self-insurer may instead buy an 32.7insurance policy described above, except that it covers only a portion of the period of time 32.8during which the private employer was self-insured; purchase of such a policy discharges 32.9any obligation that the self-insurers' security fund has or may have for payment of all 32.10claims for compensation arising out of injuries occurring during the period for which the 32.11policy provides coverage, whether or not reported during that period. 32.12    A policy described in this clause may not be issued by an insurer unless it has 32.13previously been approved as to form and substance by the commissioner; and 32.14    (3) Paying within 30 days all assessments of which notice is sent by the security 32.15fund, for a period of seven years from the last day its certificate of self-insurance was in 32.16effect. Thereafter, the private employer who has ceased to be a private self-insurer may 32.17either: (i) continue to pay within 30 days all assessments of which notice is sent by the 32.18security fund until it has no incurred liabilities for the payment of compensation arising 32.19out of injuries during the period of self-insurance; or (ii) pay the security fund a cash 32.20payment equal to four percent of the net present value of all remaining incurred liabilities 32.21for the payment of compensation under sections 176.101 and 176.111 as certified by a 32.22member of the casualty actuarial society. Assessments shall be based on the benefits paid 32.23by the employer during the calendar year immediately preceding the calendar year in 32.24which the employer's right to self-insure is terminated or withdrawn. 32.25    (b) With respect to a self-insurer who terminates its self-insurance authority after 32.26April 1, 1998, that member shall obtain and file with the commissioner an actuarial 32.27opinion of its outstanding liabilities as determined by an associate or fellow of the 32.28Casualty Actuarial Society within 120 days of the date of its termination. If the actuarial 32.29opinion is not timely filed, the self-insurers' security fund may, at its discretion, engage 32.30the services of an actuary for this purpose. The expense of this actuarial opinion must 32.31be assessed against and be the obligation of the self-insurer. The commissioner may 32.32issue a certificate of default against the self-insurer for failure to pay this assessment 32.33to the self-insurers' security fund as provided by section 79A.04, subdivision 9. The 32.34opinion must separate liability for indemnity benefits from liability from medical benefits, 32.35and must discount each up to four percent per annum to net present value. Within 30 32.36days after notification of approval of the actuarial opinion by the commissioner, the 33.1member shall pay to the security fund an amount equal to 120 percent of that discounted 33.2outstanding indemnity liability, multiplied by the greater of the average annualized 33.3assessment rate since inception of the security fund or the annual rate at the time of the 33.4most recent assessment before termination. If the payment is not made within 30 days of 33.5the notification, interest on it at the rate prescribed by section 549.09 must be paid by the 33.6former member to the security fund until the principal amount is paid in full. 33.7    (c) A former member who terminated its self-insurance authority before April 1, 33.81998, who has paid assessments to the self-insurers' security fund for seven years, and 33.9whose annualized assessment is $500 new text begin $15,000 new text end or less, may buy out of its outstanding 33.10liabilities to the self-insurers' security fund by an amount calculated as follows: 1.35 33.11multiplied by the indemnity case reserves at the time of the calculation, multiplied by the 33.12then current self-insurers' security fund annualized assessment rate. 33.13    (d) A former member who terminated its self-insurance authority before April 1, 33.141998, and who is paying assessments within the first seven years after ceasing to be 33.15self-insured under paragraph (a), clause (3), may elect to buy out its outstanding liabilities 33.16to the self-insurers' security fund by obtaining and filing with the commissioner an 33.17actuarial opinion of its outstanding liabilities as determined by an associate or fellow of 33.18the Casualty Actuarial Society. The opinion must separate liability for indemnity benefits 33.19from liability for medical benefits, and must discount each up to four percent per annum to 33.20net present value. Within 30 days after notification of approval of the actuarial opinion 33.21by the commissioner, the member shall pay to the security fund an amount equal to 120 33.22percent of that discounted outstanding indemnity liability, multiplied by the greater of the 33.23average annualized assessment rate since inception of the security fund or the annual rate 33.24at the time of the most recent assessment. 33.25    (e) A former member who has paid the security fund according to paragraphs (b) to 33.26(d) and subsequently receives authority from the commissioner to again self-insure shall be 33.27assessed under section 79A.12, subdivision 2, only on indemnity benefits paid on injuries 33.28that occurred after the former member received authority to self-insure again; provided 33.29that the member furnishes verified data regarding those benefits to the security fund. 33.30    (f) In addition to proceedings to establish liabilities and penalties otherwise 33.31provided, a failure to comply may be the subject of a proceeding before the commissioner. 33.32An appeal from the commissioner's determination may be taken pursuant to the contested 33.33case procedures of chapter 14 within 30 days of the commissioner's written determination. 33.34    Any current or past member of the self-insurers' security fund is subject to service of 33.35process on any claim arising out of chapter 176 or this chapter in the manner provided by 33.36section 5.25, or as otherwise provided by law. The issuance of a certificate to self-insure 34.1to the private self-insured employer shall be deemed to be the agreement that any process 34.2which is served in accordance with this section shall be of the same legal force and effect 34.3as if served personally within this state. 34.4    Sec. 50. Minnesota Statutes 2006, section 79A.22, subdivision 3, is amended to read: 34.5    Subd. 3. New membership. The commercial self-insurance group shall file with 34.6the commissioner the name of any new employer that has been accepted in the group 34.7prior to the initiation date of membership new text begin within five business days of the initiation date new text end 34.8 new text begin of membership new text end along with the member's signed indemnity agreement and evidence the 34.9member has deposited sufficient premiums with the group as required by the commercial 34.10self-insurance group's bylaws or plan of operation. The security deposit of the group shall 34.11be increased quarterly to an amount equal to 50 percent of the new members' premiums 34.12for that quarter. If the total increase of new members' premiums for the first quarter is 34.13less than five percent of the total annual premium of the group, no quarterly increase 34.14is necessary until the cumulative quarterly increases for that calendar year exceed five 34.15percent of the total premium of the group. The commissioner may, at the commissioner's 34.16option, review the financial statement of any applicant whose premium equals 25 percent 34.17or more of the group's total premium. 34.18    Sec. 51. Minnesota Statutes 2006, section 79A.22, subdivision 4, is amended to read: 34.19    Subd. 4. Commercial self-insurance group common claims fund. (a) Each 34.20commercial self-insurance group shall establish a common claims fund. 34.21    (b) Each commercial self-insurance group shall, not less than ten days prior to the 34.22proposed effective date of the group, collect cash premiums from each member equal to 34.23not less than 20 percent of the member's annual workers' compensation premium to be 34.24paid into a common claims fund, maintained by the group in a designated depository. The 34.25remaining balance of the member's premium shall be paid to the group in a reasonable 34.26manner over the remainder of the year. Payments in subsequent years shall be made 34.27according to the business plan. 34.28    (c) Each commercial self-insurance group shall initiate proceedings against a 34.29member when that member becomes more than 15 new text begin 30 new text end days delinquent in any payment 34.30of premium to the fund. 34.31    (d) There shall be no commingling of any assets of the common claims fund with the 34.32assets of any individual member or with any other account of the service company or fiscal 34.33agent unrelated to the payment of workers' compensation liabilities incurred by the group. 35.1    Sec. 52. Minnesota Statutes 2006, section 79A.23, subdivision 2, is amended to read: 35.2    Subd. 2. Required reports from members to group. (a) Each member of the 35.3commercial self-insurance group shall, by September 15, submit to the group its most 35.4recent annual financial statement, together with other financial information the group may 35.5require. These financial statements submitted must not have a fiscal year end date older 35.6than January 15 of the group's calendar year end. Individual group members constituting 35.7at least 25 percent of the group's annual premium shall submit to the group reviewed or 35.8audited financial statements. The remaining members must submit compilation level 35.9statements. 35.10    (b) For groups that have been in existence for at least three years, individual group 35.11members may satisfy the requirements of paragraph (a) by submitting compiled, reviewed, 35.12or audited statements or the most recent federal income tax return filed by the member. 35.13     new text begin (c) Groups that have been in existence for at least five years may satisfy the new text end 35.14 new text begin requirement of paragraph (a) through submissions from members representing at least new text end 35.15 new text begin 50 percent of the group's total earned premium. Of those submissions, those from new text end 35.16 new text begin members representing at least 25 percent of the entire group's total earned premium must new text end 35.17 new text begin be audited or reviewed financial statements. The remainder of the submissions may be new text end 35.18 new text begin compiled, reviewed, or audited financial statements or the most recent tax return filed by new text end 35.19 new text begin the members. new text end 35.20    Sec. 53. Minnesota Statutes 2006, section 82B.23, subdivision 1, is amended to read: 35.21    Subdivision 1. Requirement. The commissioner shall certify and transmit to the 35.22appraisal subcommittee established pursuant to the Federal Institutions Reform, Recovery, 35.23and Enforcement Act of 1989, Public Law 100-73, the names of those licensees who 35.24have satisfied the requirements for certification new text begin and licensure new text end established by the appraisal 35.25subcommittee and to collect and transmit any required fees. 35.26    Sec. 54. Minnesota Statutes 2006, section 83.25, is amended by adding a subdivision 35.27to read: 35.28     new text begin Subd. 4. new text end new text begin Limited broker licensee. new text end new text begin An individual acting on behalf of a limited new text end 35.29 new text begin broker licensee issued a license under section 82.34, subdivision 13, is not required to be new text end 35.30 new text begin an officer of a corporation or a partner of a partnership if: new text end 35.31     new text begin (1) the individual is solely engaged in the business of selling a timeshare interest as new text end 35.32 new text begin defined in section 83.20, subdivision 13; new text end 35.33     new text begin (2) the individual is adequately supervised by the limited broker licensee; and new text end 36.1     new text begin (3) the limited broker licensee maintains a roster of individuals selling a timeshare new text end 36.2 new text begin interest including the date the individual started selling. This roster must be made new text end 36.3 new text begin available to the commissioner upon demand within three days of the request. new text end 36.4    Sec. 55. new text begin [332.345] SEGREGATED ACCOUNTS. new text end 36.5     new text begin A payment collected by a collector or collection agency on behalf of a customer new text end 36.6 new text begin shall be held by the collector or collection agency in a separate trust account clearly new text end 36.7 new text begin designated for customer funds. The account must be in a bank or other depository new text end 36.8 new text begin institution authorized or chartered under the laws of any state or of the United States. new text end 36.9    Sec. 56. new text begin REPEALER. new text end 36.10 new text begin (a) new text end new text begin Minnesota Statutes 2006, sections 62A.149, subdivision 2; and 65B.29, new text end new text begin are new text end 36.11 new text begin repealed. new text end 36.12 new text begin (b) new text end new text begin Laws 2006, chapter 255, section 26, new text end new text begin is repealed. new text end