HF 571

as introduced - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating the sale of certain 
  1.3             qualified long-term care insurance policies; amending 
  1.4             Minnesota Statutes 1996, sections 61A.072, 
  1.5             subdivisions 1 and 4; 62A.011, subdivision 3; 62A.31, 
  1.6             subdivision 6; 62A.48, by adding a subdivision; 
  1.7             62A.50, by adding a subdivision; and 62L.02, 
  1.8             subdivision 15; proposing coding for new law as 
  1.9             Minnesota Statutes, chapter 62S. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11                             ARTICLE 1 
  1.12             QUALIFIED LONG-TERM CARE INSURANCE POLICY 
  1.13     Section 1.  [62S.01] [DEFINITIONS.] 
  1.14     Subdivision 1.  [APPLICATION.] The definitions in this 
  1.15  section apply to this chapter. 
  1.16     Subd. 2.  [ACTIVITIES OF DAILY LIVING.] "Activities of 
  1.17  daily living" means eating, toileting, transferring, bathing, 
  1.18  dressing, and continence. 
  1.19     Subd. 3.  [ACUTE CONDITION.] "Acute condition" means that 
  1.20  the individual is medically unstable and requires frequent 
  1.21  monitoring by medical professionals, such as physicians and 
  1.22  registered nurses, in order to maintain the individual's health 
  1.23  status. 
  1.24     Subd. 4.  [ADULT DAY CARE.] "Adult day care" means a 
  1.25  program for six or more individuals of social and health-related 
  1.26  services provided during the day in a community group setting 
  1.27  for the purpose of supporting frail, impaired elderly, or other 
  2.1   disabled adults who can benefit from care in a group setting 
  2.2   outside the home. 
  2.3      Subd. 5.  [APPLICANT.] "Applicant" means: 
  2.4      (1) in the case of an individual long-term care insurance 
  2.5   policy, the person who seeks to contract for benefits; or 
  2.6      (2) in the case of a group long-term care insurance policy, 
  2.7   the proposed certificate holder. 
  2.8      Subd. 6.  [CERTIFICATE.] "Certificate" means a certificate 
  2.9   issued under a group long-term care insurance policy delivered 
  2.10  or issued for delivery in this state. 
  2.11     Subd. 7.  [CHRONICALLY ILL INDIVIDUAL.] "Chronically ill 
  2.12  individual" means an individual who has been certified by a 
  2.13  licensed health care practitioner, within the preceding 12-month 
  2.14  period, as either: 
  2.15     (1) being unable to perform, without substantial assistance 
  2.16  from another individual, at least two activities of daily living 
  2.17  for a period of at least 90 days due to a loss of functional 
  2.18  capacity; 
  2.19     (2) having a disability similar to the level of disability 
  2.20  described in clause (1); or 
  2.21     (3) requiring substantial supervision to protect the 
  2.22  individual from threats to health and safety due to severe 
  2.23  cognitive impairment. 
  2.24     Subd. 8.  [COMMISSIONER.] "Commissioner" means the 
  2.25  commissioner of commerce. 
  2.26     Subd. 9.  [GROUP LONG-TERM CARE INSURANCE.] "Group 
  2.27  long-term care insurance" means a long-term care insurance 
  2.28  policy delivered or issued for delivery in this state and issued 
  2.29  to: 
  2.30     (1) one or more employers or labor organizations, or to a 
  2.31  trust or to the trustees of a fund established by one or more 
  2.32  employers or labor organizations, or a combination, for 
  2.33  employees or former employees, or a combination, or for members 
  2.34  or former members, or a combination, of the labor organizations; 
  2.35     (2) a professional, trade, or occupational association for 
  2.36  its members or former or retired members, or combination, if the 
  3.1   association: 
  3.2      (i) is composed of individuals, all of whom are or were 
  3.3   actively engaged in the same profession, trade, or occupation; 
  3.4   and 
  3.5      (ii) has been maintained in good faith for purposes other 
  3.6   than obtaining insurance; 
  3.7      (3) an association or a trust or the trustee of a fund 
  3.8   established, created, or maintained for the benefit of members 
  3.9   of one or more associations.  Before advertising, marketing, or 
  3.10  offering the policy within this state, the association or the 
  3.11  insurer of the association must file evidence with the 
  3.12  commissioner that the association has at the outset a minimum of 
  3.13  100 persons and has been organized and maintained in good faith 
  3.14  for purposes other than that of obtaining insurance; has been in 
  3.15  active existence for at least one year; and has a constitution 
  3.16  and bylaws that provide that: 
  3.17     (i) the association holds regular meetings not less than 
  3.18  annually to further purposes of the members; 
  3.19     (ii) except for credit unions, the association collects 
  3.20  dues or solicits contributions from members; and 
  3.21     (iii) the members have voting privileges and representation 
  3.22  on the governing board and committees. 
  3.23  Thirty days after the filing, the association is considered to 
  3.24  have satisfied the organizational requirements, unless the 
  3.25  commissioner makes a finding that the association does not 
  3.26  satisfy the organizational requirements; or 
  3.27     (4) a group other than as described in clauses (1) to (3), 
  3.28  subject to a finding by the commissioner that: 
  3.29     (i) the issuance of the group policy is not contrary to the 
  3.30  best interest of the public; 
  3.31     (ii) the issuance of the group policy would result in 
  3.32  economies of acquisition or administration; and 
  3.33     (iii) the benefits are reasonable in relation to the 
  3.34  premiums charged. 
  3.35     Subd. 10.  [GUARANTEED RENEWABLE.] "Guaranteed renewable" 
  3.36  means the insured has the right to continue the long-term care 
  4.1   insurance in force by the timely payment of premiums and the 
  4.2   insurer has no unilateral right to make any change in any 
  4.3   provision of the policy or rider while the insurance is in force 
  4.4   and cannot decline to renew, except that rates may be revised by 
  4.5   the insurer on a class basis. 
  4.6      Subd. 11.  [HOME HEALTH CARE SERVICES.] "Home health care 
  4.7   services" means medical and nonmedical services provided to ill, 
  4.8   disabled, or infirm persons in their residences.  The services 
  4.9   may include homemaker services, assistance with activities of 
  4.10  daily living, and respite care services. 
  4.11     Subd. 12.  [LONG-TERM CARE INSURANCE.] "Long-term care 
  4.12  insurance" means a qualified long-term care insurance policy or 
  4.13  rider advertised, marketed, offered, or designed to provide 
  4.14  coverage for not less than 12 consecutive months for each 
  4.15  covered person on an expense incurred, indemnity, prepaid, or 
  4.16  other basis for one or more necessary or medically necessary 
  4.17  diagnostic, preventive, therapeutic, rehabilitative, 
  4.18  maintenance, or personal care services, provided in a setting 
  4.19  other than an acute care unit of a hospital.  Long-term care 
  4.20  insurance includes: 
  4.21     (1) group and individual annuities and life insurance 
  4.22  policies or riders that provide directly or that supplement 
  4.23  long-term care insurance; and 
  4.24     (2) a policy or rider that provides for payment of benefits 
  4.25  based upon cognitive impairment or the loss of functional 
  4.26  capacity. 
  4.27  Long-term care insurance does not include an insurance policy 
  4.28  that is offered primarily to provide basic Medicare supplement 
  4.29  coverage, basic hospital expense coverage, basic 
  4.30  medical-surgical expense coverage, hospital confinement 
  4.31  indemnity coverage, major medical expense coverage, disability 
  4.32  income or related asset-protection coverage, accident only 
  4.33  coverage, specified disease or specified accident coverage, or 
  4.34  limited benefit health coverage.  With regard to life insurance, 
  4.35  long-term care insurance does not include life insurance 
  4.36  policies that accelerate the death benefit specifically for one 
  5.1   or more of the qualifying events of terminal illness, medical 
  5.2   conditions requiring extraordinary medical intervention, or 
  5.3   permanent institutional confinement, and that provide the option 
  5.4   of a lump-sum payment for those benefits and in which neither 
  5.5   the benefits nor the eligibility for the benefits is conditioned 
  5.6   upon the receipt of long-term care. 
  5.7      Subd. 13.  [MAINTENANCE OR PERSONAL CARE SERVICES.] 
  5.8   "Maintenance" or "personal care services" means any care the 
  5.9   primary purpose of which is the provision of needed assistance 
  5.10  with any of the disabilities as a result of which the individual 
  5.11  is a chronically ill individual, including the protection from 
  5.12  threats to health and safety due to severe cognitive impairment. 
  5.13     Subd. 14.  [MEDICARE.] "Medicare" means The Health 
  5.14  Insurance for the Aged Act, Title XVIII of the Social Security 
  5.15  Amendments of 1965, as amended, or Title I, Part I, of Public 
  5.16  Law Number 89-97, as Enacted by the Eighty-Ninth Congress of the 
  5.17  United States of America, as amended. 
  5.18     Subd. 15.  [MENTAL OR NERVOUS DISORDER.] "Mental or nervous 
  5.19  disorder" means a neurosis, psychoneurosis, psychopathy, 
  5.20  psychosis, or mental or emotional disease or disorder. 
  5.21     Subd. 16.  [NONCANCELABLE.] "Noncancelable" may be used 
  5.22  only when the insured has the right to continue the long-term 
  5.23  care insurance in force by the timely payment of premiums during 
  5.24  which period the insurer has no right to unilaterally make any 
  5.25  change in any provision of the insurance or in the premium rate. 
  5.26     Subd. 17.  [POLICY.] "Policy" means a policy, contract, 
  5.27  subscriber agreement, rider, or endorsement delivered or issued 
  5.28  for delivery in this state by an insurer; fraternal benefit 
  5.29  society; nonprofit health, hospital, or medical service 
  5.30  corporation; prepaid health plan; health maintenance 
  5.31  organization; or a similar organization. 
  5.32     Subd. 18.  [QUALIFIED LONG-TERM CARE INSURANCE POLICY.] 
  5.33  "Qualified long-term care insurance policy" means a policy that 
  5.34  meets the requirements of Section 7702(B) of the Internal 
  5.35  Revenue Code, as amended, and this chapter. 
  5.36     Subd. 19.  [QUALIFIED LONG-TERM CARE SERVICES.] "Qualified 
  6.1   long-term care services" means necessary diagnostic, preventive, 
  6.2   therapeutic, curing, treating, mitigating, and rehabilitative 
  6.3   services and maintenance or personal care services, which are: 
  6.4      (1) required by a chronically ill individual; and 
  6.5      (2) provided pursuant to a plan of care prescribed by a 
  6.6   licensed health care practitioner. 
  6.7      Sec. 2.  [62S.02] [QUALIFIED LONG-TERM CARE INSURANCE 
  6.8   POLICY.] 
  6.9      Subdivision 1.  [REQUIREMENTS.] A qualified long-term care 
  6.10  insurance policy may not be offered, issued, delivered, or 
  6.11  renewed in this state unless the policy satisfies the 
  6.12  requirements of this chapter.  A qualified long-term care 
  6.13  insurance policy must cover qualified long-term care services. 
  6.14     Subd. 2.  [NONFORFEITURE REQUIREMENT.] An insurer shall 
  6.15  offer a nonforfeiture provision available in the event of 
  6.16  default in the payment of any premiums.  The amount of the 
  6.17  benefit may be adjusted after being initially granted, if 
  6.18  necessary, to reflect changes in claims, persistency, and 
  6.19  interest as reflected in changes in rates for premium paying 
  6.20  contracts.  The nonforfeiture provision must provide at least 
  6.21  one of the following: 
  6.22     (1) reduced paid-up insurance; 
  6.23     (2) extended term insurance; or 
  6.24     (3) shortened benefit period. 
  6.25     Subd. 3.  [REFUND RESTRICTIONS.] A qualified long-term care 
  6.26  insurance policy shall not provide for a cash surrender value or 
  6.27  other money that can be paid, assigned, pledged as collateral 
  6.28  for a loan, or borrowed.  The aggregate premium paid under the 
  6.29  policy may be refunded in the event of death of the insured or a 
  6.30  complete surrender or cancellation of the policy. 
  6.31     Subd. 4.  [NONREIMBURSABLE EXPENSES.] A qualified long-term 
  6.32  care insurance policy shall not pay or reimburse expenses 
  6.33  incurred for services or items if the expenses are reimbursable 
  6.34  under Medicare or would be reimbursable if a deductible or 
  6.35  coinsurance amount was not applied.  This subdivision does not 
  6.36  apply to expenses which are reimbursable under Medicare only as 
  7.1   a secondary payor and does not prohibit the offering of a 
  7.2   qualified long-term care insurance policy on the basis that the 
  7.3   policy coordinates its benefits with those provided under 
  7.4   Medicare.  Payments may be made under a long-term care insurance 
  7.5   policy on a per diem or other periodic basis without regard to 
  7.6   the expenses incurred during the period to which the payments 
  7.7   relate. 
  7.8      Subd. 5.  [ACTIVITIES OF DAILY LIVING.] A qualified 
  7.9   long-term care insurance policy shall take into account at least 
  7.10  five of the activities of daily living in making the 
  7.11  determination of whether an individual is chronically ill. 
  7.12     Sec. 3.  [62S.03] [EXTRATERRITORIAL JURISDICTION.] 
  7.13     Group long-term care insurance coverage may not be offered 
  7.14  to a resident of this state under a group policy issued in 
  7.15  another state to a group described in section 62S.01, 
  7.16  subdivision 9, clause (4), unless this state or another state 
  7.17  having statutory and regulatory long-term care insurance 
  7.18  requirements substantially similar to those adopted in this 
  7.19  state has made a determination that the requirements have been 
  7.20  met. 
  7.21     Sec. 4.  [62S.04] [PROHIBITIONS.] 
  7.22     A long-term care insurance policy may not: 
  7.23     (1) be canceled, nonrenewed, or otherwise terminated on the 
  7.24  grounds of the age or the deterioration of the mental or 
  7.25  physical health of the insured individual or certificate holder; 
  7.26     (2) contain a provision establishing a new waiting period 
  7.27  in the event existing coverage is converted to or replaced by a 
  7.28  new or other form within the same company, except with respect 
  7.29  to an increase in benefits voluntarily selected by the insured 
  7.30  individual or group policyholder; or 
  7.31     (3) provide coverage for skilled nursing care only, or 
  7.32  provide significantly more coverage for skilled care in a 
  7.33  facility than coverage for lower levels of care in the same 
  7.34  facility. 
  7.35     Sec. 5.  [62S.05] [PREEXISTING CONDITION.] 
  7.36     Subdivision 1.  [AUTHORIZED DEFINITION.] A long-term care 
  8.1   insurance policy or certificate, other than a policy or 
  8.2   certificate issued to a group as defined in section 62S.01, 
  8.3   subdivision 9, clause (1), may not use a definition of 
  8.4   preexisting condition that is more restrictive than the 
  8.5   definition in this subdivision.  "Preexisting condition" means a 
  8.6   condition for which medical advice or treatment was recommended 
  8.7   by, or received from a provider of health care services, within 
  8.8   six months before the effective date of coverage of an insured 
  8.9   person. 
  8.10     Subd. 2.  [PROHIBITED EXCLUSION.] A long-term care 
  8.11  insurance policy or certificate, other than a policy or 
  8.12  certificate issued to a group as defined in section 62S.01, 
  8.13  subdivision 9, clause (1), may not exclude coverage for a loss 
  8.14  or confinement that is the result of a preexisting condition 
  8.15  unless the loss or confinement begins within six months 
  8.16  following the effective date of coverage of an insured person. 
  8.17     Subd. 3.  [UNDERWRITING STANDARDS.] The definition of 
  8.18  preexisting condition does not prohibit an insurer from using an 
  8.19  application form designed to elicit the complete health history 
  8.20  of an applicant and, on the basis of the answers on that 
  8.21  application, from underwriting according to that insurer's 
  8.22  established underwriting standards.  Unless otherwise provided 
  8.23  in the policy or certificate, a preexisting condition, 
  8.24  regardless of whether it is disclosed on the application, need 
  8.25  not be covered until the waiting period described in subdivision 
  8.26  2 expires.  A long-term care insurance policy or certificate may 
  8.27  not exclude or use waivers of any kind to exclude, limit, or 
  8.28  reduce coverage or benefits for specifically named or described 
  8.29  preexisting diseases or physical conditions beyond the waiting 
  8.30  period described in subdivision 2.  
  8.31     Sec. 6.  [62S.06] [PRIOR HOSPITALIZATION OR 
  8.32  INSTITUTIONALIZATION.] 
  8.33     Subdivision 1.  [PROHIBITED CONDITIONS.] A long-term care 
  8.34  insurance policy may not be delivered or issued for delivery in 
  8.35  this state if the policy conditions eligibility for any benefits:
  8.36     (1) on a prior hospitalization requirement; 
  9.1      (2) provided in an institutional care setting on the 
  9.2   receipt of a higher level of institutional care; or 
  9.3      (3) other than waiver of premium, postconfinement, 
  9.4   postacute care, or recuperative benefits on a prior 
  9.5   institutionalization requirement. 
  9.6      Subd. 2.  [BENEFIT LABELING.] A long-term care insurance 
  9.7   policy containing postconfinement, postacute care, or 
  9.8   recuperative benefits must clearly label in a separate paragraph 
  9.9   of the policy or certificate entitled "limitations or conditions 
  9.10  on eligibility for benefits" the limitations or conditions, 
  9.11  including any required number of days of confinement. 
  9.12     Subd. 3.  [BENEFIT CONDITIONS.] (a) A long-term care 
  9.13  insurance policy or rider that conditions eligibility of 
  9.14  noninstitutional benefits on the prior receipt of institutional 
  9.15  care may not require a prior institutional stay of more than 30 
  9.16  days. 
  9.17     (b) A long-term care insurance policy or rider that 
  9.18  provides benefits only following institutionalization may not 
  9.19  condition the benefits upon admission to a facility for the same 
  9.20  or related conditions within a period of less than 30 days after 
  9.21  discharge from the institution. 
  9.22     Sec. 7.  [62S.07] [RIGHT TO RETURN; REFUND.] 
  9.23     Subdivision 1.  [RIGHT TO RETURN.] A long-term care 
  9.24  insurance applicant may return the policy or certificate within 
  9.25  30 days of its delivery and is entitled to a refund of the 
  9.26  premium if, after examination of the policy or certificate, the 
  9.27  applicant is not satisfied for any reason.  Long-term care 
  9.28  insurance policies and certificates must include a notice 
  9.29  prominently printed on the first page or attached to the first 
  9.30  page stating in substance that the applicant may return the 
  9.31  policy or certificate within 30 days of its delivery and have 
  9.32  the premium refunded if for any reason, after examination of the 
  9.33  policy or certificate, other than a certificate issued under a 
  9.34  policy issued to a group as defined in section 62S.01, 
  9.35  subdivision 9, clause (1), the applicant is not satisfied. 
  9.36     Subd. 2.  [REFUND.] If an application for a qualified 
 10.1   long-term care insurance policy is denied, the issuer shall 
 10.2   refund to the applicant any premium and fees submitted by the 
 10.3   applicant within 30 days of the denial. 
 10.4      Sec. 8.  [62S.08] [COVERAGE OUTLINE.] 
 10.5      Subdivision 1.  [DELIVERY.] An outline of coverage must be 
 10.6   delivered to a prospective applicant for long-term care 
 10.7   insurance at the time of initial solicitation through means that 
 10.8   prominently direct the attention of the recipient to the 
 10.9   document and its purpose.  In the case of agent solicitations, 
 10.10  an agent must deliver the outline of coverage before the 
 10.11  presentation of an application or enrollment form.  In the case 
 10.12  of direct response solicitations, the outline of coverage must 
 10.13  be presented in conjunction with an application or enrollment 
 10.14  form. 
 10.15     Subd. 2.  [REQUIREMENTS.] The outline of coverage must be a 
 10.16  freestanding document, using no smaller than ten-point type, and 
 10.17  may not contain material of an advertising nature.  Text which 
 10.18  is capitalized or underscored in the standard format outline of 
 10.19  coverage may be emphasized by other means which provide 
 10.20  prominence equivalent to the capitalization or underscoring. 
 10.21     Subd. 3.  [MANDATORY FORMAT.] The following standard format 
 10.22  outline of coverage must be used, unless otherwise specifically 
 10.23  indicated: 
 10.24                           COMPANY NAME 
 10.25                     ADDRESS - CITY AND STATE 
 10.26                         TELEPHONE NUMBER 
 10.27                     LONG-TERM CARE INSURANCE 
 10.28                       OUTLINE OF COVERAGE 
 10.29  Policy Number or Group Master Policy and Certificate Number 
 10.30     (Except for policies or certificates which are guaranteed 
 10.31  issue, the following caution statement, or language 
 10.32  substantially similar, must appear as follows in the outline of 
 10.33  coverage.) 
 10.34     CAUTION:  The issuance of this long-term care insurance 
 10.35  (policy) (certificate) is based upon your responses to the 
 10.36  questions on your application.  A copy of your (application) 
 11.1   (enrollment form) (is enclosed) (was retained by you when you 
 11.2   applied).  If your answers are incorrect or untrue, the company 
 11.3   has the right to deny benefits or rescind your policy.  The best 
 11.4   time to clear up any questions is now, before a claim arises.  
 11.5   If, for any reason, any of your answers are incorrect, contact 
 11.6   the company at this address:  (insert address). 
 11.7      (1) This policy is (an individual policy of insurance) (a 
 11.8   group policy) which was issued in the (indicate jurisdiction in 
 11.9   which group policy was issued). 
 11.10     (2) PURPOSE OF OUTLINE OF COVERAGE.  This outline of 
 11.11  coverage provides a very brief description of the important 
 11.12  features of the policy.  You should compare this outline of 
 11.13  coverage to outlines of coverage for other policies available to 
 11.14  you.  This is not an insurance contract, but only a summary of 
 11.15  coverage.  Only the individual or group policy contains 
 11.16  governing contractual provisions.  This means that the policy or 
 11.17  group policy sets forth in detail the rights and obligations of 
 11.18  both you and the insurance company.  Therefore, if you purchase 
 11.19  this coverage, or any other coverage, it is important that you 
 11.20  READ YOUR POLICY (OR CERTIFICATE) CAREFULLY. 
 11.21     (3) THIS PLAN IS INTENDED TO BE A QUALIFIED LONG-TERM CARE 
 11.22  INSURANCE CONTRACT AS DEFINED UNDER SECTION 7702(B)(b) OF THE 
 11.23  INTERNAL REVENUE CODE OF 1986. 
 11.24     (4) TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE 
 11.25  RETURNED AND PREMIUM REFUNDED. 
 11.26     (a) (Provide a brief description of the right to return -- 
 11.27  "free look" provision of the policy.) 
 11.28     (b) (Include a statement that the policy either does or 
 11.29  does not contain provisions providing for a refund or partial 
 11.30  refund of premium upon the death of an insured or surrender of 
 11.31  the policy or certificate.  If the policy contains such 
 11.32  provisions, include a description of them.) 
 11.33     (5) THIS IS NOT MEDICARE SUPPLEMENT COVERAGE.  If you are 
 11.34  eligible for Medicare, review the Medicare Supplement Buyer's 
 11.35  Guide available from the insurance company. 
 11.36     (a) (For agents) neither (insert company name) nor its 
 12.1   agents represent Medicare, the federal government, or any state 
 12.2   government. 
 12.3      (b) (For direct response) (insert company name) is not 
 12.4   representing Medicare, the federal government, or any state 
 12.5   government. 
 12.6      (6) LONG-TERM CARE COVERAGE.  Policies of this category are 
 12.7   designed to provide coverage for one or more necessary or 
 12.8   medically necessary diagnostic, preventive, therapeutic, 
 12.9   rehabilitative, maintenance, or personal care services, provided 
 12.10  in a setting other than an acute care unit of a hospital, such 
 12.11  as in a nursing home, in the community, or in the home. 
 12.12     This policy provides coverage in the form of a fixed dollar 
 12.13  indemnity benefit for covered long-term care expenses, subject 
 12.14  to policy (limitations), (waiting periods), and (coinsurance) 
 12.15  requirements.  (Modify this paragraph if the policy is not an 
 12.16  indemnity policy.) 
 12.17     (7) BENEFITS PROVIDED BY THIS POLICY. 
 12.18     (a) (Covered services, related deductible(s), waiting 
 12.19  periods, elimination periods, and benefit maximums.) 
 12.20     (b) (Institutional benefits, by skill level.) 
 12.21     (c) (Noninstitutional benefits, by skill level.) 
 12.22     (Any benefit screens must be explained in this section.  If 
 12.23  these screens differ for different benefits, explanation of the 
 12.24  screen should accompany each benefit description.  If an 
 12.25  attending physician or other specified person must certify a 
 12.26  certain level of functional dependency in order to be eligible 
 12.27  for benefits, this too must be specified.  If activities of 
 12.28  daily living (ADLs) are used to measure an insured's need for 
 12.29  long-term care, then these qualifying criteria or screens must 
 12.30  be explained.) 
 12.31     (8) LIMITATIONS AND EXCLUSIONS: 
 12.32     Describe: 
 12.33     (a) preexisting conditions; 
 12.34     (b) noneligible facilities/provider; 
 12.35     (c) noneligible levels of care (e.g., unlicensed providers, 
 12.36  care or treatment provided by a family member, etc.); 
 13.1      (d) exclusions/exceptions; and 
 13.2      (e) limitations. 
 13.3      (This section should provide a brief specific description 
 13.4   of any policy provisions which limit, exclude, restrict, reduce, 
 13.5   delay, or in any other manner operate to qualify payment of the 
 13.6   benefits described in paragraph (6).) 
 13.7      THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH 
 13.8   YOUR LONG-TERM CARE NEEDS. 
 13.9      (9) RELATIONSHIP OF COST OF CARE AND BENEFITS.  Because the 
 13.10  costs of long-term care services will likely increase over time, 
 13.11  you should consider whether and how the benefits of this plan 
 13.12  may be adjusted.  As applicable, indicate the following: 
 13.13     (a) that the benefit level will not increase over time; 
 13.14     (b) any automatic benefit adjustment provisions; 
 13.15     (c) whether the insured will be guaranteed the option to 
 13.16  buy additional benefits and the basis upon which benefits will 
 13.17  be increased over time if not by a specified amount or 
 13.18  percentage; 
 13.19     (d) if there is such a guarantee, include whether 
 13.20  additional underwriting or health screening will be required, 
 13.21  the frequency and amounts of the upgrade options, and any 
 13.22  significant restrictions or limitations; and 
 13.23     (e) whether there will be any additional premium charge 
 13.24  imposed and how that is to be calculated. 
 13.25     (10) ALZHEIMER'S DISEASE AND OTHER ORGANIC BRAIN DISORDERS. 
 13.26  (State that the policy provides coverage for insureds clinically 
 13.27  diagnosed as having Alzheimer's disease or related degenerative 
 13.28  and dementing illnesses.  Specifically, describe each benefit 
 13.29  screen or other policy provision which provides preconditions to 
 13.30  the availability of policy benefits for such an insured.) 
 13.31     (11) PREMIUM. 
 13.32     (a) State the total annual premium for the policy. 
 13.33     (b) If the premium varies with an applicant's choice among 
 13.34  benefit options, indicate the portion of annual premium which 
 13.35  corresponds to each benefit option. 
 13.36     (12) ADDITIONAL FEATURES. 
 14.1      (a) Indicate if medical underwriting is used. 
 14.2      (b) Describe other important features. 
 14.3      Sec. 9.  [62S.09] [CERTIFICATE REQUIREMENTS.] 
 14.4      Subdivision 1.  [CONTENT.] A certificate issued under a 
 14.5   group long-term care insurance policy delivered or issued for 
 14.6   delivery in this state must include: 
 14.7      (1) a description of the principal benefits and coverage 
 14.8   provided in the policy; 
 14.9      (2) a statement of the exclusions, reductions, and 
 14.10  limitations contained in the policy; and 
 14.11     (3) a statement that the group master policy determines 
 14.12  governing contractual provisions. 
 14.13     Subd. 2.  [DELIVERY.] The issuer of a qualified long-term 
 14.14  care insurance policy shall deliver to the applicant, 
 14.15  policyholder, or certificate holder the contract or certificate 
 14.16  no later than 30 days after the date of approval. 
 14.17     Sec. 10.  [62S.10] [POLICY SUMMARY.] 
 14.18     Subdivision 1.  [DELIVERY.] At the time of policy delivery, 
 14.19  a policy summary must be delivered for an individual life 
 14.20  insurance policy that provides long-term care benefits within 
 14.21  the policy or by rider.  In the case of direct response 
 14.22  solicitations, the insurer must deliver the policy summary upon 
 14.23  the applicant's request, but regardless of request, must make 
 14.24  the delivery no later than at the time of policy delivery. 
 14.25     Subd. 2.  [CONTENTS.] The summary must include the 
 14.26  following information: 
 14.27     (1) an explanation of how the long-term care benefit 
 14.28  interacts with other components of the policy, including 
 14.29  deductions from death benefits; 
 14.30     (2) an illustration of the amount of benefits, the length 
 14.31  of benefits, and the guaranteed lifetime benefits, if any, for 
 14.32  each covered person; and 
 14.33     (3) any exclusions, reductions, and limitations on benefits 
 14.34  of long-term care. 
 14.35     Subd. 3.  [ADDITIONAL INFORMATION REQUIRED.] If applicable 
 14.36  to the policy type, the summary must include the following 
 15.1   information: 
 15.2      (1) a disclosure of the effects of exercising other rights 
 15.3   under the policy; 
 15.4      (2) a disclosure of guarantees related to long-term care 
 15.5   costs of insurance charges; and 
 15.6      (3) current and projected maximum lifetime benefits. 
 15.7      Sec. 11.  [62S.11] [MONTHLY REPORT.] 
 15.8      Subdivision 1.  [REQUIRED REPORT.] Any time a long-term 
 15.9   care benefit, funded through a life insurance vehicle by the 
 15.10  acceleration of the death benefit, is in benefit payment status, 
 15.11  a monthly report must be provided to the policyholder. 
 15.12     Subd. 2.  [CONTENTS.] The report must include the following 
 15.13  information: 
 15.14     (1) long-term care benefits paid out during the month; 
 15.15     (2) an explanation of changes in the policy, such as death 
 15.16  benefits or cash values, due to long-term care benefits being 
 15.17  paid out; and 
 15.18     (3) the amount of long-term care benefits existing or 
 15.19  remaining. 
 15.20     Sec. 12.  [62S.12] [CLAIM DENIAL.] 
 15.21     If a claim under a qualified long-term care insurance 
 15.22  contract is denied, the issuer shall provide a written 
 15.23  explanation of the reasons for the denial and make available all 
 15.24  information directly related to the denial within 60 days of the 
 15.25  date of a written request by the policyholder or certificate 
 15.26  holder, or a representative of the policyholder or certificate 
 15.27  holder. 
 15.28     Sec. 13.  [62S.13] [INCONTESTABILITY PERIOD.] 
 15.29     Subdivision 1.  [RESCISSION BEFORE SIX MONTHS.] For a 
 15.30  policy or certificate that has been in force for less than six 
 15.31  months, an insurer may rescind a long-term care insurance policy 
 15.32  or certificate or deny an otherwise valid long-term care 
 15.33  insurance claim upon a showing of misrepresentation that is 
 15.34  material to acceptance for coverage. 
 15.35     Subd. 2.  [RESCISSION AFTER SIX MONTHS.] For a policy or 
 15.36  certificate that has been in force for at least six months, but 
 16.1   less than two years, an insurer may rescind a long-term care 
 16.2   insurance policy or certificate or deny an otherwise valid 
 16.3   long-term care insurance claim upon a showing of 
 16.4   misrepresentation that is both material to the acceptance for 
 16.5   coverage and that pertains to the condition for which benefits 
 16.6   are sought. 
 16.7      Subd. 3.  [CONTESTED POLICY AFTER TWO YEARS.] After a 
 16.8   policy or certificate has been in force for two years, it is not 
 16.9   contestable upon the grounds of misrepresentation alone.  The 
 16.10  policy or certificate may be contested only upon a showing that 
 16.11  the insured knowingly and intentionally misrepresented relevant 
 16.12  facts relating to the insured's health. 
 16.13     Subd. 4.  [FIELD ISSUE PROHIBITION.] A long-term care 
 16.14  insurance policy or certificate may not be field issued based on 
 16.15  medical or health status.  For purposes of this section, "field 
 16.16  issued" means a policy or certificate issued by an agent or a 
 16.17  third-party administrator under the underwriting authority 
 16.18  granted to the agent or third-party administrator by an insurer. 
 16.19     Subd. 5.  [BENEFIT PAYMENTS NOT RECOVERABLE.] If an insurer 
 16.20  has paid benefits under the long-term care insurance policy or 
 16.21  certificate, the benefit payments may not be recovered by the 
 16.22  insurer in the event that the policy or certificate is rescinded.
 16.23     Sec. 14.  [62S.14] [RENEWABILITY.] 
 16.24     Subdivision 1.  [GUARANTEED RENEWABLE.] A qualified 
 16.25  long-term care insurance policy must be guaranteed renewable. 
 16.26     Subd. 2.  [TERMS.] The terms "guaranteed renewable" and 
 16.27  "noncancelable" may not be used in an individual long-term care 
 16.28  insurance policy without further explanatory language that 
 16.29  complies with the disclosure requirements of section 62S.20. 
 16.30     Subd. 3.  [AUTHORIZED RENEWAL PROVISIONS.] A policy issued 
 16.31  to an individual may not contain renewal provisions other than 
 16.32  guaranteed renewable or noncancelable. 
 16.33     Sec. 15.  [62S.15] [AUTHORIZED LIMITATIONS AND EXCLUSIONS.] 
 16.34     No policy may be delivered or issued for delivery in this 
 16.35  state as long-term care insurance if the policy limits or 
 16.36  excludes coverage by type of illness, treatment, medical 
 17.1   condition, or accident, except as follows: 
 17.2      (1) preexisting conditions or diseases; 
 17.3      (2) mental or nervous disorders; except that the exclusion 
 17.4   or limitation of benefits on the basis of Alzheimer's disease is 
 17.5   prohibited; 
 17.6      (3) alcoholism and drug addiction; 
 17.7      (4) illness, treatment, or medical condition arising out of 
 17.8   war or act of war; participation in a felony, riot, or 
 17.9   insurrection; service in the armed forces or auxiliary units; 
 17.10  suicide, attempted suicide, or intentionally self-inflicted 
 17.11  injury; or nonfare-paying aviation; and 
 17.12     (5) treatment provided in a government facility unless 
 17.13  otherwise required by law, services for which benefits are 
 17.14  available under Medicare or other government program except 
 17.15  Medicaid, state or federal workers' compensation, employer's 
 17.16  liability or occupational disease law, motor vehicle no-fault 
 17.17  law; services provided by a member of the covered person's 
 17.18  immediate family; and services for which no charge is normally 
 17.19  made in the absence of insurance. 
 17.20  This subdivision does not prohibit exclusions and limitations by 
 17.21  type of provider or territorial limitations. 
 17.22     Sec. 16.  [62S.16] [EXTENSION OF BENEFITS.] 
 17.23     Termination of long-term care insurance must be without 
 17.24  prejudice to any benefits payable for institutionalization if 
 17.25  the institutionalization began while the long-term care 
 17.26  insurance was in force and continues without interruption after 
 17.27  termination.  The extension of benefits beyond the period the 
 17.28  long-term care insurance was in force may be limited to the 
 17.29  duration of the benefit period or to payment of the maximum 
 17.30  benefits and may be subject to a policy waiting period, and all 
 17.31  other applicable provisions of the policy. 
 17.32     Sec. 17.  [62S.17] [CONTINUATION OR CONVERSION.] 
 17.33     Subdivision 1.  [REQUIREMENT.] Group long-term care 
 17.34  insurance shall provide covered individuals with a basis for 
 17.35  continuation or conversion of coverage. 
 17.36     Subd. 2.  [BASIS FOR CONTINUATION OF COVERAGE.] A basis for 
 18.1   continuation of coverage policy provision must maintain coverage 
 18.2   under the existing group policy when the coverage would 
 18.3   otherwise terminate and is subject only to the continued timely 
 18.4   payment of premium when due.  Group policies which restrict 
 18.5   provision of benefits and services to, or contain incentives to 
 18.6   use certain providers or facilities, may provide continuation 
 18.7   benefits which are substantially equivalent to the benefits of 
 18.8   the existing group policy.  The commissioner shall make a 
 18.9   determination as to the substantial equivalency of benefits and 
 18.10  shall take into consideration the differences between managed 
 18.11  care and nonmanaged care plans, including provider system 
 18.12  arrangements, service availability, benefit levels, and 
 18.13  administrative complexity. 
 18.14     Subd. 3.  [BASIS FOR CONVERSION OF COVERAGE.] A basis for 
 18.15  conversion of coverage policy provision must provide that an 
 18.16  individual whose coverage under the group policy would otherwise 
 18.17  terminate or has been terminated for any reason, including 
 18.18  discontinuance of the group policy in its entirety or with 
 18.19  respect to an insured class, and who has been continuously 
 18.20  insured under the group policy and any group policy which it 
 18.21  replaced, for at least six months immediately prior to 
 18.22  termination, is entitled to the issuance of a converted policy 
 18.23  by the insurer under whose group policy the insured is covered, 
 18.24  without evidence of insurability. 
 18.25     Subd. 4.  [CONVERTED INDIVIDUAL POLICY.] A converted 
 18.26  individual policy of long-term care insurance must provide 
 18.27  benefits identical to or benefits determined by the commissioner 
 18.28  to be substantially equivalent to or in excess of those provided 
 18.29  under the group policy from which conversion is made.  Where the 
 18.30  group policy from which conversion is made restricts provision 
 18.31  of benefits and services to, or contains incentives to use 
 18.32  certain providers or facilities, the commissioner, in making a 
 18.33  determination as to the substantial equivalency of benefits, 
 18.34  shall take into consideration the differences between managed 
 18.35  care and nonmanaged care plans, including provider system 
 18.36  arrangements, service availability, benefit levels, and 
 19.1   administrative complexity. 
 19.2      Subd. 5.  [CONVERTED POLICY APPLICATION.] Written 
 19.3   application for the converted policy must be made and the first 
 19.4   premium due, if any, must be paid as directed by the insurer not 
 19.5   later than 31 days after termination of coverage under the group 
 19.6   policy.  The converted policy must be issued effective on the 
 19.7   day following the termination of coverage under the group 
 19.8   policy, and is renewable annually. 
 19.9      Subd. 6.  [CONVERTED POLICY PREMIUM CALCULATION.] Unless 
 19.10  the group policy from which conversion is made replaced previous 
 19.11  group coverage, the premium for the converted policy is 
 19.12  calculated on the basis of the insured's age at inception of 
 19.13  coverage under the group policy from which conversion is made.  
 19.14  Where the group policy from which conversion is made replaced 
 19.15  previous group coverage, the premium for the converted policy is 
 19.16  calculated on the basis of the insured's age at inception of 
 19.17  coverage under the group policy replaced. 
 19.18     Subd. 7.  [EXCEPTIONS.] Continuation of coverage or 
 19.19  issuance of a converted policy is mandatory, except under the 
 19.20  following conditions: 
 19.21     (1) termination of group coverage resulting from an 
 19.22  individual's failure to make a required payment of premium or 
 19.23  contribution when due; or 
 19.24     (2) replacement group coverage: 
 19.25     (i) is in place not later than 31 days after termination 
 19.26  and is effective on the day following the termination of 
 19.27  coverage; 
 19.28     (ii) provides benefits identical to or benefits determined 
 19.29  by the commissioner to be substantially equivalent to or in 
 19.30  excess of those provided by the terminating coverage; and 
 19.31     (iii) premium is calculated in a manner consistent with the 
 19.32  requirements of subdivision 6. 
 19.33     Subd. 8.  [REDUCTION IN BENEFITS.] Notwithstanding any 
 19.34  other provision of this section, a converted policy issued to an 
 19.35  individual who at the time of conversion is covered by another 
 19.36  long-term care insurance policy which provides benefits on the 
 20.1   basis of incurred expenses, may contain a provision which 
 20.2   results in a reduction of benefits payable if the benefits 
 20.3   provided under the additional coverage, together with the full 
 20.4   benefits provided by the converted policy, would result in 
 20.5   payment of more than 100 percent of incurred expenses.  This 
 20.6   provision may only be included in the converted policy if the 
 20.7   converted policy also provides for a premium decrease or refund 
 20.8   which reflects the reduction in benefits payable. 
 20.9      Subd. 9.  [BENEFIT LIMIT.] A converted policy may provide 
 20.10  that the benefits payable under the converted policy, together 
 20.11  with the benefits payable under the group policy from which 
 20.12  conversion is made, shall not exceed those that would have been 
 20.13  payable had the individual's coverage under the group policy 
 20.14  remained in effect. 
 20.15     Subd. 10.  [ELIGIBILITY.] Notwithstanding any other 
 20.16  provision of this section, an insured individual whose 
 20.17  eligibility for group long-term care coverage is based upon the 
 20.18  insured individual's relationship to another person, is entitled 
 20.19  to continuation of coverage under the group policy upon 
 20.20  termination of the qualifying relationship by death or 
 20.21  dissolution of marriage. 
 20.22     Subd. 11.  [MANAGED CARE PLAN.] For the purposes of this 
 20.23  section, a "managed care plan" is a health care or assisted 
 20.24  living arrangement designed to coordinate patient care or 
 20.25  control costs through utilization review, case management, or 
 20.26  use of specific provider networks. 
 20.27     Sec. 18.  [62S.18] [DISCONTINUANCE AND REPLACEMENT.] 
 20.28     Subdivision 1.  [REQUIRED COVERAGE.] If a group long-term 
 20.29  care policy is replaced by another group long-term care policy 
 20.30  issued to the same policyholder, the succeeding insurer shall 
 20.31  offer coverage to all persons covered under the previous group 
 20.32  policy on its date of termination.  Coverage provided or offered 
 20.33  to individuals by the insurer and premiums charged to persons 
 20.34  under the new group policy shall not result in any exclusion for 
 20.35  preexisting conditions that would have been covered under the 
 20.36  group policy being replaced and shall not vary or otherwise 
 21.1   depend on the individual's health or disability status, claim 
 21.2   experience, or use of long-term care services. 
 21.3      Subd. 2.  [PREMIUMS.] The premiums charged to an insured 
 21.4   for long-term care insurance replaced under subdivision 1 shall 
 21.5   not increase due to either the increasing age of the insured at 
 21.6   ages beyond 65 or the duration the insured has been covered 
 21.7   under this policy. 
 21.8      Sec. 19.  [62S.19] [UNINTENTIONAL LAPSE.] 
 21.9      Subdivision 1.  [NOTICE BEFORE LAPSE OR TERMINATION.] No 
 21.10  individual long-term care policy or certificate shall be issued 
 21.11  until the insurer has received from the applicant either a 
 21.12  written designation of at least one person, in addition to the 
 21.13  applicant, who is to receive notice of lapse or termination of 
 21.14  the policy or certificate for nonpayment of premium or a written 
 21.15  waiver dated and signed by the applicant electing not to 
 21.16  designate additional persons to receive notice.  The applicant 
 21.17  has the right to designate at least one person who is to receive 
 21.18  the notice of termination in addition to the insured.  
 21.19  Designation shall not constitute acceptance of any liability on 
 21.20  the third party for services provided to the insured.  The form 
 21.21  used for the written designation must provide space clearly 
 21.22  designated for listing at least one person.  The designation 
 21.23  shall include each person's full name and home address.  In the 
 21.24  case of an applicant who elects not to designate an additional 
 21.25  person, the waiver must state:  "Protection against unintended 
 21.26  lapse.  I understand that I have the right to designate at least 
 21.27  one person other than myself to receive notice of lapse or 
 21.28  termination of this long-term care insurance policy for 
 21.29  nonpayment of premium.  I understand that notice will not be 
 21.30  given until 30 days after a premium is due and unpaid.  I elect 
 21.31  NOT to designate any person to receive such notice." 
 21.32     The insurer shall notify the insured of the right to change 
 21.33  this written designation at least once every two years. 
 21.34     Subd. 2.  [PAYMENT PLAN PROVISIONS.] When the policyholder 
 21.35  or certificate holder pays the premium for a long-term care 
 21.36  insurance policy or certificate through a payroll or pension 
 22.1   deduction plan, the requirements specified under subdivision 1 
 22.2   are effective 60 days after the policyholder or certificate 
 22.3   holder is no longer on the payment plan.  The application or 
 22.4   enrollment form for the policies or certificates must clearly 
 22.5   indicate the payment plan selected by the applicant. 
 22.6      Subd. 3.  [NOTICE REQUIREMENTS.] No individual long-term 
 22.7   care policy or certificate shall lapse or be terminated for 
 22.8   nonpayment of premium unless the insurer, at least 30 days 
 22.9   before the effective date of the lapse or termination, has given 
 22.10  notice to the insured and to those persons designated under 
 22.11  subdivision 1, at the address provided by the insured for 
 22.12  purposes of receiving notice of lapse or termination.  Notice 
 22.13  must be given by first class United States mail, postage 
 22.14  prepaid, and notice may not be given until 30 days after a 
 22.15  premium is due and unpaid.  Notice is considered to have been 
 22.16  given as of five days after the date of mailing. 
 22.17     Subd. 4.  [REINSTATEMENT.] In addition to the requirement 
 22.18  in subdivision 1, a long-term care insurance policy or 
 22.19  certificate must include a provision which provides for 
 22.20  reinstatement of coverage, in the event of lapse, if the insurer 
 22.21  is provided proof of cognitive impairment or the loss of 
 22.22  functional capacity.  This option must be available to the 
 22.23  insured if requested within five months after termination and 
 22.24  must allow for the collection of past due premium, where 
 22.25  appropriate.  The standard of proof of cognitive impairment or 
 22.26  loss of functional capacity shall not be more stringent than the 
 22.27  benefit eligibility criteria on cognitive impairment or the loss 
 22.28  of functional capacity, if any, contained in the policy and 
 22.29  certificate. 
 22.30     Sec. 20.  [62S.20] [REQUIRED DISCLOSURE PROVISIONS.] 
 22.31     Subdivision 1.  [RENEWABILITY.] Individual long-term care 
 22.32  insurance policies must contain a renewability provision that is 
 22.33  appropriately captioned, appears on the first page of the 
 22.34  policy, and clearly states the duration, where limited, of 
 22.35  renewability and the duration of the term of coverage for which 
 22.36  the policy is issued and for which it may be renewed.  This 
 23.1   subdivision does not apply to policies which are part of or 
 23.2   combined with life insurance policies which do not contain a 
 23.3   renewability provision and under which the right to nonrenew is 
 23.4   reserved solely to the policyholder. 
 23.5      Subd. 2.  [RIDERS AND ENDORSEMENTS.] Except for riders or 
 23.6   endorsements by which the insurer effectuates a request made in 
 23.7   writing by the insured under an individual long-term care 
 23.8   insurance policy, all riders or endorsements added to an 
 23.9   individual long-term care insurance policy after date of issue 
 23.10  or at reinstatement or renewal which reduce or eliminate 
 23.11  benefits or coverage in the policy must require signed 
 23.12  acceptance by the individual insured.  After the date of policy 
 23.13  issue, a rider or endorsement which increases benefits or 
 23.14  coverage with a concomitant increase in premium during the 
 23.15  policy term must be agreed to, in writing, signed by the 
 23.16  insured, except if the increased benefits or coverage are 
 23.17  required by law. Where a separate additional premium is charged 
 23.18  for benefits provided in connection with riders or endorsements, 
 23.19  the premium charge must be specified in the policy, rider, or 
 23.20  endorsement. 
 23.21     Subd. 3.  [PAYMENT OF BENEFITS.] A long-term care insurance 
 23.22  policy which provides for the payment of benefits based on 
 23.23  standards described as "usual and customary," "reasonable and 
 23.24  customary," or similar words must include a definition and an 
 23.25  explanation of the terms in its accompanying outline of coverage.
 23.26     Subd. 4.  [LIMITATIONS.] If a long-term care insurance 
 23.27  policy or certificate contains any limitations with respect to 
 23.28  preexisting conditions, the limitations must appear as a 
 23.29  separate paragraph of the policy or certificate and must be 
 23.30  labeled as "preexisting condition limitations." 
 23.31     Subd. 5.  [OTHER LIMITATIONS OR CONDITIONS ON ELIGIBILITY 
 23.32  FOR BENEFITS.] A long-term care insurance policy or certificate 
 23.33  containing any limitations or conditions for eligibility other 
 23.34  than those prohibited in section 62S.06 shall provide a 
 23.35  description of the limitations or conditions, including any 
 23.36  required number of days of confinement, in a separate paragraph 
 24.1   of the policy or certificate and shall label the paragraph 
 24.2   "limitations or conditions on eligibility for benefits." 
 24.3      Subd. 6.  [QUALIFIED LONG-TERM CARE INSURANCE POLICY.] A 
 24.4   qualified long-term care insurance policy must include a 
 24.5   disclosure statement in the policy that the policy is intended 
 24.6   to be a qualified long-term care insurance policy. 
 24.7      Sec. 21.  [62S.21] [PROHIBITION AGAINST POSTCLAIMS 
 24.8   UNDERWRITING.] 
 24.9      Subdivision 1.  [HEALTH CONDITION.] All applications for 
 24.10  long-term care insurance policies or certificates, except those 
 24.11  which are guaranteed issue must contain clear and unambiguous 
 24.12  questions designed to ascertain the health condition of the 
 24.13  applicant. 
 24.14     Subd. 2.  [MEDICATION INFORMATION REQUIRED.] If an 
 24.15  application for long-term care insurance contains a question 
 24.16  which asks whether the applicant has had medication prescribed 
 24.17  by a physician, it must also ask the applicant to list the 
 24.18  medication that has been prescribed.  If the medications listed 
 24.19  in the application were known by the insurer, or should have 
 24.20  been known at the time of application, to be directly related to 
 24.21  a medical condition for which coverage would otherwise be 
 24.22  denied, then the policy or certificate shall not be rescinded 
 24.23  for that condition. 
 24.24     Subd. 3.  [LANGUAGE REQUIRED.] (a) The following language 
 24.25  must be set out conspicuously and in close conjunction with the 
 24.26  applicant's signature block on an application for a long-term 
 24.27  care insurance policy or certificate: 
 24.28     CAUTION:  If your answers on this application are incorrect 
 24.29  or untrue, (company) has the right to deny benefits or rescind 
 24.30  your policy. 
 24.31     (b) The following language, or language substantially 
 24.32  similar to the following, must be set out conspicuously on the 
 24.33  long-term care insurance policy or certificate at the time of 
 24.34  delivery: 
 24.35     CAUTION:  The issuance of this long-term care insurance 
 24.36  (policy) (certificate) is based upon your responses to the 
 25.1   questions on your application.  A copy of your (application) 
 25.2   (enrollment form) (is enclosed) (was retained by you when you 
 25.3   applied).  If your answers are incorrect or untrue, the company 
 25.4   has the right to deny benefits or rescind your policy.  The best 
 25.5   time to clear up any questions is now, before a claim arises.  
 25.6   If, for any reason, any of your answers are incorrect, contact 
 25.7   the company at this address:  (insert address). 
 25.8      Subd. 4.  [NECESSARY INFORMATION.] Before issuing a 
 25.9   long-term care policy or certificate to an applicant aged 80 or 
 25.10  older, the insurer shall obtain one of the following: 
 25.11     (1) a report of a physical examination; 
 25.12     (2) an assessment of functional capacity; 
 25.13     (3) an attending physician's statement; or 
 25.14     (4) copies of medical records. 
 25.15     Subd. 5.  [EXCEPTION.] Subdivisions 3 and 4 do not apply to 
 25.16  policies or certificates which are guaranteed issue. 
 25.17     Subd. 6.  [COPY REQUIREMENT.] A copy of the completed 
 25.18  application or enrollment form, whichever is applicable, must be 
 25.19  delivered to the insured no later than at the time of delivery 
 25.20  of the policy or certificate unless it was retained by the 
 25.21  applicant at the time of application. 
 25.22     Subd. 7.  [RECORDS.] An insurer or other entity selling or 
 25.23  issuing long-term care insurance benefits shall maintain a 
 25.24  record of all policy or certificate rescissions, both state and 
 25.25  countrywide, except those which the insured voluntarily 
 25.26  effectuated and shall annually furnish this information to the 
 25.27  commissioner. 
 25.28     Sec. 22.  [62S.22] [MINIMUM STANDARDS FOR HOME HEALTH AND 
 25.29  COMMUNITY CARE BENEFITS.] 
 25.30     Subdivision 1.  [PROHIBITED LIMITATIONS.] A long-term care 
 25.31  insurance policy or certificate shall not, if it provides 
 25.32  benefits for home health care or community care services, limit 
 25.33  or exclude benefits by: 
 25.34     (1) requiring that the insured would need care in a skilled 
 25.35  nursing facility if home health care services were not provided; 
 25.36     (2) requiring that the insured first or simultaneously 
 26.1   receive nursing or therapeutic services in a home, community, or 
 26.2   institutional setting before home health care services are 
 26.3   covered; 
 26.4      (3) limiting eligible services to services provided by a 
 26.5   registered nurse or licensed practical nurse; 
 26.6      (4) requiring that a nurse or therapist provide services 
 26.7   covered by the policy that can be provided by a home health aide 
 26.8   or other licensed or certified home care worker acting within 
 26.9   the scope of licensure or certification; 
 26.10     (5) excluding coverage for personal care services provided 
 26.11  by a home health aide; 
 26.12     (6) requiring that the provision of home health care 
 26.13  services be at a level of certification or licensure greater 
 26.14  than that required by the eligible service; 
 26.15     (7) requiring that the insured have an acute condition 
 26.16  before home health care services are covered; 
 26.17     (8) limiting benefits to services provided by 
 26.18  Medicare-certified agencies or providers; or 
 26.19     (9) excluding coverage for adult day care services. 
 26.20     Subd. 2.  [REQUIRED COVERAGE AMOUNT.] A long-term care 
 26.21  insurance policy or certificate, if it provides for home health 
 26.22  or community care services, must provide total home health or 
 26.23  community care coverage that is a dollar amount equivalent to at 
 26.24  least one-half of one year's coverage available for nursing home 
 26.25  benefits under the policy or certificate, at the time covered 
 26.26  home health or community care services are being received.  This 
 26.27  requirement does not apply to policies or certificates issued to 
 26.28  residents of continuing care retirement communities. 
 26.29     Subd. 3.  [APPLICATION OF HOME HEALTH CARE COVERAGE.] Home 
 26.30  health care coverage may be applied to the nonhome health care 
 26.31  benefits provided in the policy or certificate when determining 
 26.32  maximum coverage under the terms of the policy or certificate. 
 26.33     Sec. 23.  [62S.23] [REQUIREMENT TO OFFER INFLATION 
 26.34  PROTECTION.] 
 26.35     Subdivision 1.  [INFLATION PROTECTION FEATURE.] No insurer 
 26.36  may offer a long-term care insurance policy unless the insurer 
 27.1   also offers to the policyholder, in addition to any other 
 27.2   inflation protection, the option to purchase a policy that 
 27.3   provides for benefit levels to increase with benefit maximums or 
 27.4   reasonable durations which are meaningful to account for 
 27.5   reasonably anticipated increases in the costs of long-term care 
 27.6   services covered by the policy.  In addition to other options 
 27.7   that may be offered, insurers must offer to each policyholder, 
 27.8   at the time of purchase, the option to purchase a policy with an 
 27.9   inflation protection feature no less favorable than one of the 
 27.10  following: 
 27.11     (1) increases benefit levels annually in a manner so that 
 27.12  the increases are compounded annually at a rate not less than 
 27.13  five percent; 
 27.14     (2) guarantees the insured individual the right to 
 27.15  periodically increase benefit levels without providing evidence 
 27.16  of insurability or health status so long as the option for the 
 27.17  previous period has not been declined.  The amount of the 
 27.18  additional benefit shall be no less than the difference between 
 27.19  the existing policy benefit and that benefit compounded annually 
 27.20  at a rate of at least five percent for the period beginning with 
 27.21  the purchase of the existing benefit and extending until the 
 27.22  year in which the offer is made; or 
 27.23     (3) covers a specified percentage of actual or reasonable 
 27.24  charges and does not include a maximum specified indemnity 
 27.25  amount or limit. 
 27.26     Subd. 2.  [GROUP OFFER.] Except as otherwise provided in 
 27.27  this subdivision, if the policy is issued to a group, the 
 27.28  required offer in subdivision 1 must be made to the group 
 27.29  policyholder.  If the policy is issued to a group as defined in 
 27.30  section 62S.01, subdivision 9, clause (4), other than to a 
 27.31  continuing care retirement community, the offering must be made 
 27.32  to each proposed certificate holder. 
 27.33     Subd. 3.  [REQUIRED INFORMATION.] Insurers shall include 
 27.34  the following information in or with the outline of coverage: 
 27.35     (1) a graphic comparison of the benefit levels of a policy 
 27.36  that increases benefits over the policy period with a policy 
 28.1   that does not increase benefits.  The graphic comparison must 
 28.2   show benefit levels over at least a 20-year period; and 
 28.3      (2) any expected premium increases or additional premiums 
 28.4   to pay for automatic or optional benefit increases. 
 28.5   An insurer may use a reasonable, hypothetical, or a graphic 
 28.6   demonstration for the purposes of this disclosure. 
 28.7      Subd. 4.  [BENEFIT CONTINUED.] Inflation protection benefit 
 28.8   increases under a policy which contains this benefit shall 
 28.9   continue without regard to an insured's age, claim status or 
 28.10  claim history, or the length of time the person has been insured 
 28.11  under the policy. 
 28.12     Subd. 5.  [AUTOMATIC BENEFIT INCREASES.] An offer of 
 28.13  inflation protection which provides for automatic benefit 
 28.14  increases must include an offer of a premium which the insurer 
 28.15  expects to remain constant.  The offer must disclose in a 
 28.16  conspicuous manner that the premium may change in the future 
 28.17  unless the premium is guaranteed to remain constant. 
 28.18     Subd. 6.  [REJECTION.] Inflation protection as provided in 
 28.19  subdivision 1, clause (1), must be included in a long-term care 
 28.20  insurance policy unless an insurer obtains a rejection of 
 28.21  inflation protection signed by the policyholder as required in 
 28.22  this section.  The rejection may be either in the application or 
 28.23  on a separate form. 
 28.24     The rejection shall be considered a part of the application 
 28.25  and shall state: 
 28.26     I have reviewed the outline of coverage and the graphs that 
 28.27  compare the benefits and premiums of this policy with and 
 28.28  without inflation protections.  Specifically, I have reviewed 
 28.29  plans ......., and I reject inflation protection. 
 28.30     Subd. 7.  [EXCEPTION.] This section does not apply to life 
 28.31  insurance policies or riders containing accelerated long-term 
 28.32  care benefits. 
 28.33     Sec. 24.  [62S.24] [REQUIREMENTS FOR APPLICATION FORMS AND 
 28.34  REPLACEMENT COVERAGE.] 
 28.35     Subdivision 1.  [REQUIRED QUESTIONS.] An application form 
 28.36  must include the following questions designed to elicit 
 29.1   information as to whether, as of the date of the application, 
 29.2   the applicant has another long-term care insurance policy or 
 29.3   certificate in force or whether a long-term care policy or 
 29.4   certificate is intended to replace any other long-term care 
 29.5   policy or certificate presently in force.  A supplementary 
 29.6   application or other form to be signed by the applicant and 
 29.7   agent, except where the coverage is sold without an agent, 
 29.8   containing the following questions may be used.  If a 
 29.9   replacement policy is issued to a group as defined under section 
 29.10  62S.01, subdivision 9, clause (1), the following questions may 
 29.11  be modified only to the extent necessary to elicit information 
 29.12  about long-term care insurance policies other than the group 
 29.13  policy being replaced; provided, however, that the certificate 
 29.14  holder has been notified of the replacement: 
 29.15     (1) do you have another long-term care insurance policy or 
 29.16  certificate in force?; 
 29.17     (2) did you have another long-term care insurance policy or 
 29.18  certificate in force during the last 12 months?; 
 29.19     (i) if so, with which company?; and 
 29.20     (ii) if that policy lapsed, when did it lapse?; and 
 29.21     (3) are you covered by Medicaid?  
 29.22     Subd. 2.  [SOLICITATIONS OTHER THAN DIRECT RESPONSE.] After 
 29.23  determining that a sale will involve replacement, an insurer, 
 29.24  other than an insurer using direct response solicitation methods 
 29.25  or its agent, shall furnish the applicant, before issuance or 
 29.26  delivery of the individual long-term care insurance policy, a 
 29.27  notice regarding replacement of accident and sickness or 
 29.28  long-term care coverage.  One copy of the notice must be 
 29.29  retained by the applicant and an additional copy signed by the 
 29.30  applicant must be retained by the insurer.  The required notice 
 29.31  must be provided in the following manner: 
 29.32           NOTICE TO APPLICANT REGARDING REPLACEMENT OF 
 29.33   INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE
 29.34              (Insurance company's name and address) 
 29.35   SAVE THIS NOTICE!  IT MAY BE IMPORTANT TO YOU IN THE FUTURE. 
 29.36     According to (your application) (information you have 
 30.1   furnished), you intend to lapse or otherwise terminate existing 
 30.2   long-term care insurance and replace it with an individual 
 30.3   long-term care insurance policy to be issued by (company name) 
 30.4   insurance company.  Your new policy provides 30 days within 
 30.5   which you may decide, without cost, whether you desire to keep 
 30.6   the policy.  For your own information and protection, you should 
 30.7   be aware of and seriously consider certain factors which may 
 30.8   affect the insurance protection available to you under the new 
 30.9   policy. 
 30.10     You should review this new coverage carefully, comparing it 
 30.11  with all long-term care insurance coverage you now have, and 
 30.12  terminate your present policy only if, after due consideration, 
 30.13  you find that purchase of this long-term care coverage is a wise 
 30.14  decision. 
 30.15                 STATEMENT TO APPLICANT BY AGENT 
 30.16                (BROKER OR OTHER REPRESENTATIVE): 
 30.17              (Use additional sheets, as necessary.) 
 30.18     I have reviewed your current insurance coverage.  I believe 
 30.19  the replacement of insurance involved in this transaction 
 30.20  materially improves your position.  My conclusion has taken into 
 30.21  account the following considerations, which I call to your 
 30.22  attention: 
 30.23     (a) Health conditions which you presently have (preexisting 
 30.24  conditions) may not be immediately or fully covered under the 
 30.25  new policy.  This could result in denial or delay in payment of 
 30.26  benefits under the new policy, whereas a similar claim might 
 30.27  have been payable under your present policy. 
 30.28     (b) State law provides that your replacement policy or 
 30.29  certificate may not contain new preexisting conditions or 
 30.30  probationary periods.  The insurer will waive any time periods 
 30.31  applicable to preexisting conditions or probationary periods in 
 30.32  the new policy (or coverage) for similar benefits to the extent 
 30.33  such time was spent (depleted) under the original policy. 
 30.34     (c) If you are replacing existing long-term care insurance 
 30.35  coverage, you may wish to secure the advice of your present 
 30.36  insurer or its agent regarding the proposed replacement of your 
 31.1   present policy.  This is not only your right, but it is also in 
 31.2   your best interest to make sure you understand all the relevant 
 31.3   factors involved in replacing your present coverage. 
 31.4      (d) If, after due consideration, you still wish to 
 31.5   terminate your present policy and replace it with new coverage, 
 31.6   be certain to truthfully and completely answer all questions on 
 31.7   the application concerning your medical health history.  Failure 
 31.8   to include all material medical information on an application 
 31.9   may provide a basis for the company to deny any future claims 
 31.10  and to refund your premium as though your policy had never been 
 31.11  in force.  After the application has been completed and before 
 31.12  you sign it, reread it carefully to be certain that all 
 31.13  information has been properly recorded. 
 31.14     .......................................................... 
 31.15     (Signature of Agent, Broker, or Other Representative) 
 31.16     (Typed Name and Address of Agency or Broker) 
 31.17     The above "Notice to Applicant" was delivered to me on: 
 31.18     
 31.19                                ................................. 
 31.20                                                           (Date) 
 31.21                                ................................. 
 31.22                                          (Applicant's Signature) 
 31.23     Subd. 3.  [DIRECT RESPONSE SOLICITATIONS.] Insurers using 
 31.24  direct response solicitation methods shall deliver a notice 
 31.25  regarding replacement of long-term care coverage to the 
 31.26  applicant upon issuance of the policy.  The required notice must 
 31.27  be provided in the following manner: 
 31.28           NOTICE TO APPLICANT REGARDING REPLACEMENT OF 
 31.29                     LONG-TERM CARE INSURANCE 
 31.30              (Insurance company's name and address) 
 31.31   SAVE THIS NOTICE!  IT MAY BE IMPORTANT TO YOU IN THE FUTURE. 
 31.32     According to (your application) (information you have 
 31.33  furnished), you intend to lapse or otherwise terminate existing 
 31.34  long-term care insurance and replace it with the long-term care 
 31.35  insurance policy delivered herewith issued by (company name) 
 31.36  insurance company. 
 32.1      Your new policy provides 30 days within which you may 
 32.2   decide, without cost, whether you desire to keep the policy.  
 32.3   For your own information and protection, you should be aware of 
 32.4   and seriously consider certain factors which may affect the 
 32.5   insurance protection available to you under the new policy. 
 32.6      You should review this new coverage carefully, comparing it 
 32.7   with all long-term care insurance coverage you now have, and 
 32.8   terminate your present policy only if, after due consideration, 
 32.9   you find that purchase of this long-term care coverage is a wise 
 32.10  decision. 
 32.11     (a) Health conditions which you presently have (preexisting 
 32.12  conditions) may not be immediately or fully covered under the 
 32.13  new policy.  This could result in denial or delay in payment of 
 32.14  benefits under the new policy, whereas a similar claim might 
 32.15  have been payable under your present policy. 
 32.16     (b) State law provides that your replacement policy or 
 32.17  certificate may not contain new preexisting conditions or 
 32.18  probationary periods.  Your insurer will waive any time periods 
 32.19  applicable to preexisting conditions or probationary periods in 
 32.20  the new policy (or coverage) for similar benefits to the extent 
 32.21  such time was spent (depleted) under the original policy. 
 32.22     (c) If you are replacing existing long-term care insurance 
 32.23  coverage, you may wish to secure the advice of your present 
 32.24  insurer or its agent regarding the proposed replacement of your 
 32.25  present policy.  This is not only your right, but it is also in 
 32.26  your best interest to make sure you understand all the relevant 
 32.27  factors involved in replacing your present coverage. 
 32.28     (d) (To be included only if the application is attached to 
 32.29  the policy.) 
 32.30     If, after due consideration, you still wish to terminate 
 32.31  your present policy and replace it with new coverage, read the 
 32.32  copy of the application attached to your new policy and be sure 
 32.33  that all questions are answered fully and correctly.  Omissions 
 32.34  or misstatements in the application could cause an otherwise 
 32.35  valid claim to be denied.  Carefully check the application and 
 32.36  write to (company name and address) within 30 days if any 
 33.1   information is not correct and complete, or if any past medical 
 33.2   history has been left out of the application. 
 33.3                                  ................................ 
 33.4                                                  (Company Name)   
 33.5      Subd. 4.  [REPLACEMENT NOTIFICATION.] Where replacement is 
 33.6   intended, the replacing insurer shall notify, in writing, the 
 33.7   existing insurer of the proposed replacement.  The existing 
 33.8   policy must be identified by the insurer, name of the insured, 
 33.9   and policy number or address including zip code.  The notice 
 33.10  must be made within five working days from the date the 
 33.11  application is received by the insurer or the date the policy is 
 33.12  issued, whichever is sooner. 
 33.13     Subd. 5.  [WAIVER OF PREEXISTING CONDITION AND PROBATIONARY 
 33.14  PERIODS.] If a long-term care insurance policy or certificate 
 33.15  replaces another long-term care policy or certificate, the 
 33.16  replacing insurer shall waive any time periods applicable to 
 33.17  preexisting conditions and probationary periods in the new 
 33.18  long-term care policy for similar benefits to the extent that 
 33.19  similar exclusions have been satisfied under the original policy.
 33.20     Sec. 25.  [62S.25] [REPORTING REQUIREMENTS.] 
 33.21     Subdivision 1.  [INSURER RECORDS.] Each insurer shall 
 33.22  maintain records for each agent of that agent's amount of 
 33.23  replacement sales as a percent of the agent's total annual sales 
 33.24  and the amount of lapses of long-term care insurance policies 
 33.25  sold by the agent as a percent of the agent's total annual sales.
 33.26     Subd. 2.  [REQUIRED INFORMATION ON AGENTS.] Each insurer 
 33.27  shall report annually by June 30 the ten percent of its agents 
 33.28  with the greatest percentages of lapses and replacements as 
 33.29  measured under subdivision 1. 
 33.30     Subd. 3.  [INTENT.] Reported replacement and lapse rates do 
 33.31  not alone constitute a violation of insurance laws or 
 33.32  necessarily imply wrongdoing.  The reports are for the purpose 
 33.33  of reviewing more closely agent activities regarding the sale of 
 33.34  long-term care insurance. 
 33.35     Subd. 4.  [LAPSED POLICIES.] Each insurer shall report 
 33.36  annually by June 30 the number of lapsed long-term care 
 34.1   insurance policies as a percent of its total annual sales and as 
 34.2   a percent of its total number of long-term care insurance 
 34.3   policies in force as of the end of the preceding calendar year. 
 34.4      Subd. 5.  [REPLACEMENT POLICIES.] Each insurer shall report 
 34.5   annually by June 30 the number of replacement long-term care 
 34.6   insurance policies sold as a percent of its total annual sales 
 34.7   and as a percent of its total number of long-term care insurance 
 34.8   policies in force as of the preceding calendar year. 
 34.9      Subd. 6.  [CLAIMS DENIED.] Each insurer shall report 
 34.10  annually by June 30 the number of claims denied during the 
 34.11  reporting period for each class of business, expressed as a 
 34.12  percentage of claims denied, other than claims denied for 
 34.13  failure to meet the waiting period or because of any applicable 
 34.14  preexisting condition. 
 34.15     Sec. 26.  [62S.26] [LOSS RATIO.] 
 34.16     The minimum loss ratio must be at least 60 percent, 
 34.17  calculated in a manner which provides for adequate reserving of 
 34.18  the long-term care insurance risk.  In evaluating the expected 
 34.19  loss ratio, the commissioner shall give consideration to all 
 34.20  relevant factors, including: 
 34.21     (1) statistical credibility of incurred claims experience 
 34.22  and earned premiums; 
 34.23     (2) the period for which rates are computed to provide 
 34.24  coverage; 
 34.25     (3) experienced and projected trends; 
 34.26     (4) concentration of experience within early policy 
 34.27  duration; 
 34.28     (5) expected claim fluctuation; 
 34.29     (6) experience refunds, adjustments, or dividends; 
 34.30     (7) renewability features; 
 34.31     (8) all appropriate expense factors; 
 34.32     (9) interest; 
 34.33     (10) experimental nature of the coverage; 
 34.34     (11) policy reserves; 
 34.35     (12) mix of business by risk classification; and 
 34.36     (13) product features such as long elimination periods, 
 35.1   high deductibles, and high maximum limits. 
 35.2      Sec. 27.  [62S.27] [FILING REQUIREMENT.] 
 35.3      Before an insurer or similar organization offers group 
 35.4   long-term care insurance to a resident of this state under 
 35.5   section 62S.03, it must file with the commissioner evidence that 
 35.6   the group policy or certificate has been approved by a state 
 35.7   having statutory or regulatory long-term care insurance 
 35.8   requirements substantially similar to those adopted in this 
 35.9   state. 
 35.10     Sec. 28.  [62S.28] [FILING REQUIREMENTS FOR ADVERTISING.] 
 35.11     Subdivision 1.  [ADVERTISEMENT COPY.] An insurer or other 
 35.12  entity providing long-term care insurance or benefits in this 
 35.13  state shall provide a copy of any long-term care insurance 
 35.14  advertisement intended for use in this state whether through 
 35.15  written, radio, or television medium to the commissioner for 
 35.16  review or approval by the commissioner.  All advertisements must 
 35.17  be retained by the insurer or other entity for at least three 
 35.18  years from the date the advertisement was first used. 
 35.19     Subd. 2.  [EXEMPTION.] The commissioner may exempt from 
 35.20  these requirements any advertising form or material when, in the 
 35.21  commissioner's opinion, this requirement may not be reasonably 
 35.22  applied. 
 35.23     Sec. 29.  [62S.29] [STANDARDS FOR MARKETING.] 
 35.24     Subdivision 1.  [REQUIREMENTS.] An insurer or other entity 
 35.25  marketing long-term care insurance coverage in this state, 
 35.26  directly or through its producers, shall: 
 35.27     (1) establish marketing procedures to assure that a 
 35.28  comparison of policies by its agents or other producers are fair 
 35.29  and accurate; 
 35.30     (2) establish marketing procedures to assure excessive 
 35.31  insurance is not sold or issued; 
 35.32     (3) display prominently by type, stamp, or other 
 35.33  appropriate means, on the first page of the outline of coverage 
 35.34  and policy, the following: 
 35.35     "Notice to buyer:  This policy may not cover all of the 
 35.36  costs associated with long-term care incurred by the buyer 
 36.1   during the period of coverage.  The buyer is advised to review 
 36.2   carefully all policy limitations."; 
 36.3      (4) inquire and otherwise make every reasonable effort to 
 36.4   identify whether a prospective applicant or enrollee for 
 36.5   long-term care insurance already has long-term care insurance 
 36.6   and the types and amounts of the insurance; 
 36.7      (5) establish auditable procedures for verifying compliance 
 36.8   with this subdivision; and 
 36.9      (6) if applicable, provide written notice to the 
 36.10  prospective policyholder and certificate holder, at 
 36.11  solicitation, that a senior insurance counseling program 
 36.12  approved by the commissioner is available and the name, address, 
 36.13  and telephone number of the program. 
 36.14     Subd. 2.  [PROHIBITIONS.] In addition to the practices 
 36.15  prohibited in chapter 72A, the following acts and practices are 
 36.16  prohibited: 
 36.17     (1) knowingly making any misleading representation or 
 36.18  incomplete or fraudulent comparison of any insurance policies or 
 36.19  insurers for the purpose of inducing, or tending to induce, any 
 36.20  person to lapse, forfeit, surrender, terminate, retain, pledge, 
 36.21  assign, borrow on, or convert any insurance policy or to take 
 36.22  out a policy of insurance with another insurer; 
 36.23     (2) employing a method of marketing having the effect of or 
 36.24  tending to induce the purchase of insurance through force, 
 36.25  fright, threat, whether explicit or implied, or undue pressure 
 36.26  to purchase or recommend the purchase of insurance; 
 36.27     (3) making use directly or indirectly of a method of 
 36.28  marketing which fails to disclose in a conspicuous manner that a 
 36.29  purpose of the method of marketing is solicitation of insurance 
 36.30  and that contact will be made by an insurance agent or insurance 
 36.31  company; and 
 36.32     (4) misrepresenting a material fact in selling or offering 
 36.33  to sell a policy. 
 36.34     Subd. 3.  [FILING OF MATERIAL.] The insurer shall file with 
 36.35  the commissioner the following material: 
 36.36     (1) the policy and certificate; 
 37.1      (2) a corresponding outline of coverage; and 
 37.2      (3) all advertisements requested by the commissioner. 
 37.3      Subd. 4.  [ASSOCIATION DISCLOSURE REQUIREMENTS.] An 
 37.4   association shall disclose in a long-term care insurance 
 37.5   solicitation: 
 37.6      (1) the specific nature and amount of the compensation 
 37.7   arrangements, including all fees, commissions, administrative 
 37.8   fees, and other forms of financial support, that the association 
 37.9   receives from endorsement or sale of the policy or certificate 
 37.10  to its members; and 
 37.11     (2) a brief description of the process under which the 
 37.12  policies and the insurer issuing the policies were selected. 
 37.13     Subd. 5.  [ADDITIONAL DISCLOSURE REQUIREMENTS.] If the 
 37.14  association and the insurer have interlocking directorates or 
 37.15  trustee arrangements, the association shall disclose this fact 
 37.16  to its members. 
 37.17     Subd. 6.  [POLICY REVIEW AND APPROVAL.] The board of 
 37.18  directors of associations selling or endorsing long-term care 
 37.19  insurance policies or certificates shall review and approve the 
 37.20  insurance policies as well as the compensation arrangements made 
 37.21  with the insurer. 
 37.22     Subd. 7.  [INFORMATION REQUIRED.] No group long-term care 
 37.23  insurance policy or certificate may be issued to an association 
 37.24  unless the insurer files with the commissioner the information 
 37.25  required in this section. 
 37.26     Subd. 8.  [INSURER CERTIFICATION.] The insurer shall not 
 37.27  issue a long-term care policy or certificate to an association 
 37.28  or continue to market a policy or certificate unless the insurer 
 37.29  certifies annually that the association has complied with the 
 37.30  requirements specified in this section. 
 37.31     Sec. 30.  [62S.30] [APPROPRIATENESS OF RECOMMENDED 
 37.32  PURCHASE.] 
 37.33     In recommending the purchase or replacement of a long-term 
 37.34  care insurance policy or certificate, an agent shall comply with 
 37.35  section 60K.14, subdivision 4. 
 37.36     Sec. 31.  [62S.31] [REQUIREMENT TO DELIVER SHOPPER'S 
 38.1   GUIDE.] 
 38.2      Subdivision 1.  [SHOPPER'S GUIDE.] A long-term care 
 38.3   insurance shopper's guide in the format developed by the 
 38.4   national association of insurance commissioners, or a guide 
 38.5   developed or approved by the commissioner, shall be provided to 
 38.6   all prospective applicants of a long-term care insurance policy 
 38.7   or certificate: 
 38.8      (1) in the case of agent solicitations, an agent must 
 38.9   deliver the shopper's guide before the presentation of an 
 38.10  application or enrollment form; and 
 38.11     (2) in the case of direct response solicitations, the 
 38.12  shopper's guide must be presented in conjunction with an 
 38.13  application or enrollment form. 
 38.14     Subd. 2.  [EXCEPTION.] Subdivision 1 does not apply to life 
 38.15  insurance policies or riders containing accelerated long-term 
 38.16  care benefits.  The policy summary required under section 62S.10 
 38.17  must be furnished with a life insurance policy or rider 
 38.18  containing accelerated long-term care benefits. 
 38.19     Sec. 32.  [62S.32] [APPLICATION.] 
 38.20     Subdivision 1.  [MEDICARE SUPPLEMENT INSURANCE POLICY.] 
 38.21  Medicare supplement insurance policy laws do not apply to 
 38.22  long-term care insurance. 
 38.23     Subd. 2.  [QUALIFIED LONG-TERM CARE INSURANCE POLICY.] This 
 38.24  chapter applies to long-term care insurance marketed as a 
 38.25  qualified long-term care policy.  This chapter does not apply to 
 38.26  long-term care insurance governed by sections 62A.46 to 62A.56. 
 38.27     Sec. 33.  [62S.33] [PENALTIES.] 
 38.28     In addition to any other penalties provided by the laws of 
 38.29  this state, an insurer or agent found to have violated any 
 38.30  requirement of this state relating to the regulation of 
 38.31  long-term care insurance or the marketing of the insurance is 
 38.32  subject to a fine of up to three times the amount of any 
 38.33  commissions paid for each policy involved in the violation or up 
 38.34  to $10,000, whichever is greater. 
 38.35     Sec. 34.  [EFFECTIVE DATE.] 
 38.36     Sections 1 to 33 are effective the day following final 
 39.1   enactment. 
 39.2                              ARTICLE 2
 39.3                           CROSS-REFERENCES
 39.4      Section 1.  Minnesota Statutes 1996, section 61A.072, 
 39.5   subdivision 1, is amended to read: 
 39.6      Subdivision 1.  [DISCLOSURE.] A life insurance contract or 
 39.7   supplemental contract that contains a provision to permit the 
 39.8   accelerated payment of benefits as authorized under section 
 39.9   60A.06, subdivision 1, clause (4), must contain the following 
 39.10  disclosure:  "This is a life insurance policy which pays 
 39.11  accelerated death benefits at your option under conditions 
 39.12  specified in the policy.  This policy is not a long-term care 
 39.13  policy meeting the requirements of sections 62A.46 to 62A.56 or 
 39.14  chapter 62S."  
 39.15     Sec. 2.  Minnesota Statutes 1996, section 61A.072, 
 39.16  subdivision 4, is amended to read: 
 39.17     Subd. 4.  [LONG-TERM CARE EXPENSES.] If the right to 
 39.18  receive accelerated benefits is contingent upon the insured 
 39.19  receiving long-term care services, the contract or supplemental 
 39.20  contract shall include the following provisions:  
 39.21     (1) the minimum accelerated benefit shall be $1,200 per 
 39.22  month if the insured is receiving nursing facility services and 
 39.23  $750 per month if the insured is receiving home services with a 
 39.24  minimum lifetime benefit limit of $50,000; 
 39.25     (2) coverage is effective immediately and benefits shall 
 39.26  commence with the receipt of services as defined in section 
 39.27  62A.46, subdivision 3, 4, or 5, or 62S.01, subdivision 19, but 
 39.28  may include a waiting period of not more than 90 days, provided 
 39.29  that no more than one waiting period may be required per benefit 
 39.30  period as defined in section 62A.46, subdivision 11; 
 39.31     (3) premium shall be waived during any period in which 
 39.32  benefits are being paid to the insured during confinement to a 
 39.33  nursing home facility; 
 39.34     (4) coverage may not be canceled or renewal refused except 
 39.35  on the grounds of nonpayment of premium; 
 39.36     (5) coverage must include preexisting conditions during the 
 40.1   first six months of coverage if the insured was not diagnosed or 
 40.2   treated for the particular condition during the 90 days 
 40.3   immediately preceding the effective date of coverage; 
 40.4      (6) coverage must include mental or nervous disorders which 
 40.5   have a demonstrable organic cause such as Alzheimer's and 
 40.6   related dementias; 
 40.7      (7) no prior hospitalization requirement shall be allowed 
 40.8   unless a similar requirement is allowed by section 62A.48, 
 40.9   subdivision 1, or 62S.06; and 
 40.10     (8) the contract shall include a cancellation provision 
 40.11  that meets the requirements of section 62A.50, subdivision 2, or 
 40.12  62S.07. 
 40.13     Sec. 3.  Minnesota Statutes 1996, section 62A.011, 
 40.14  subdivision 3, is amended to read: 
 40.15     Subd. 3.  [HEALTH PLAN.] "Health plan" means a policy or 
 40.16  certificate of accident and sickness insurance as defined in 
 40.17  section 62A.01 offered by an insurance company licensed under 
 40.18  chapter 60A; a subscriber contract or certificate offered by a 
 40.19  nonprofit health service plan corporation operating under 
 40.20  chapter 62C; a health maintenance contract or certificate 
 40.21  offered by a health maintenance organization operating under 
 40.22  chapter 62D; a health benefit certificate offered by a fraternal 
 40.23  benefit society operating under chapter 64B; or health coverage 
 40.24  offered by a joint self-insurance employee health plan operating 
 40.25  under chapter 62H.  Health plan means individual and group 
 40.26  coverage, unless otherwise specified.  Health plan does not 
 40.27  include coverage that is: 
 40.28     (1) limited to disability or income protection coverage; 
 40.29     (2) automobile medical payment coverage; 
 40.30     (3) supplemental to liability insurance; 
 40.31     (4) designed solely to provide payments on a per diem, 
 40.32  fixed indemnity, or non-expense-incurred basis; 
 40.33     (5) credit accident and health insurance as defined in 
 40.34  section 62B.02; 
 40.35     (6) designed solely to provide dental or vision care; 
 40.36     (7) blanket accident and sickness insurance as defined in 
 41.1   section 62A.11; 
 41.2      (8) accident-only coverage; 
 41.3      (9) a long-term care policy as defined in section 62A.46 or 
 41.4   62S.01; 
 41.5      (10) issued as a supplement to Medicare, as defined in 
 41.6   sections 62A.31 to 62A.44, or policies, contracts, or 
 41.7   certificates that supplement Medicare issued by health 
 41.8   maintenance organizations or those policies, contracts, or 
 41.9   certificates governed by section 1833 or 1876 of the federal 
 41.10  Social Security Act, United States Code, title 42, section 1395, 
 41.11  et seq., as amended; 
 41.12     (11) workers' compensation insurance; or 
 41.13     (12) issued solely as a companion to a health maintenance 
 41.14  contract as described in section 62D.12, subdivision 1a, so long 
 41.15  as the health maintenance contract meets the definition of a 
 41.16  health plan. 
 41.17     Sec. 4.  Minnesota Statutes 1996, section 62A.31, 
 41.18  subdivision 6, is amended to read: 
 41.19     Subd. 6.  [APPLICATION TO CERTAIN POLICIES.] The 
 41.20  requirements of sections 62A.31 to 62A.44 shall not apply to 
 41.21  disability income protection insurance policies, long-term care 
 41.22  policies issued pursuant to sections 62A.46 to 62A.56 or chapter 
 41.23  62S, or group policies of accident and health insurance which do 
 41.24  not purport to supplement Medicare issued to any of the 
 41.25  following groups:  
 41.26     (a) A policy issued to an employer or employers or to the 
 41.27  trustee of a fund established by an employer where only 
 41.28  employees or retirees, and dependents of employees or retirees, 
 41.29  are eligible for coverage.  
 41.30     (b) A policy issued to a labor union or similar employee 
 41.31  organization.  
 41.32     (c) A policy issued to an association, a trust or the 
 41.33  trustee of a fund established, created or maintained for the 
 41.34  benefit of members of one or more associations.  The association 
 41.35  or associations shall have at the outset a minimum of 100 
 41.36  persons; shall have been organized and maintained in good faith 
 42.1   for purposes other than that of obtaining insurance; shall have 
 42.2   a constitution and bylaws which provide that (1) the association 
 42.3   or associations hold regular meetings not less frequently than 
 42.4   annually to further purposes of the members, (2) except for 
 42.5   credit unions, the association or associations collect dues or 
 42.6   solicit contributions from members, (3) the members have voting 
 42.7   privileges and representation on the governing board and 
 42.8   committees, and (4) the members are not, within the first 30 
 42.9   days of membership, directly solicited, offered, or sold a 
 42.10  long-term care policy or Medicare supplement policy if the 
 42.11  policy is available as an association benefit.  This clause does 
 42.12  not prohibit direct solicitations, offers, or sales made 
 42.13  exclusively by mail. 
 42.14     An association may apply to the commissioner for a waiver 
 42.15  of the 30-day waiting period as to that association.  The 
 42.16  commissioner may grant the waiver upon a finding of all of the 
 42.17  following:  (1) that the association is in full compliance with 
 42.18  this section; (2) that sanctions have not been imposed against 
 42.19  the association as a result of significant disciplinary action 
 42.20  by the department of commerce; and (3) that at least 90 percent 
 42.21  of the association's income comes from dues, contributions, or 
 42.22  sources other than income from the sale of insurance. 
 42.23     Sec. 5.  Minnesota Statutes 1996, section 62A.48, is 
 42.24  amended by adding a subdivision to read: 
 42.25     Subd. 9.  [QUALIFIED LONG-TERM CARE.] Sections 62A.46 to 
 42.26  62A.56 do not apply to policies marketed as qualified long-term 
 42.27  care insurance policies under chapter 62S. 
 42.28     Sec. 6.  Minnesota Statutes 1996, section 62A.50, is 
 42.29  amended by adding a subdivision to read: 
 42.30     Subd. 4.  [POLICIES OTHER THAN QUALIFIED LONG-TERM CARE 
 42.31  INSURANCE POLICIES.] A policy that is not intended to be a 
 42.32  qualified long-term care insurance policy as defined under 
 42.33  section 62S.01, subdivision 18, must include a disclosure 
 42.34  statement in the policy and in the outline of coverage that the 
 42.35  policy is not intended to be a qualified long-term care 
 42.36  insurance policy.  The disclosure must be prominently displayed 
 43.1   and read as follows:  This long-term care insurance policy 
 43.2   (certificate) is not intended to be a qualified long-term care 
 43.3   insurance contract as defined under section 7702 (B)(b) of the 
 43.4   Internal Revenue Code of 1986.  You should consult with your 
 43.5   attorney, accountant, or tax advisor regarding the tax 
 43.6   implications of purchasing long-term care insurance. 
 43.7      Sec. 7.  Minnesota Statutes 1996, section 62L.02, 
 43.8   subdivision 15, is amended to read: 
 43.9      Subd. 15.  [HEALTH BENEFIT PLAN.] "Health benefit plan" 
 43.10  means a policy, contract, or certificate offered, sold, issued, 
 43.11  or renewed by a health carrier to a small employer for the 
 43.12  coverage of medical and hospital benefits.  Health benefit plan 
 43.13  includes a small employer plan.  Health benefit plan does not 
 43.14  include coverage that is: 
 43.15     (1) limited to disability or income protection coverage; 
 43.16     (2) automobile medical payment coverage; 
 43.17     (3) supplemental to liability insurance; 
 43.18     (4) designed solely to provide payments on a per diem, 
 43.19  fixed indemnity, or non-expense-incurred basis; 
 43.20     (5) credit accident and health insurance as defined in 
 43.21  section 62B.02; 
 43.22     (6) designed solely to provide dental or vision care; 
 43.23     (7) blanket accident and sickness insurance as defined in 
 43.24  section 62A.11; 
 43.25     (8) accident-only coverage; 
 43.26     (9) a long-term care policy as defined in section 62A.46 or 
 43.27  a qualified long-term care insurance policy as defined in 
 43.28  section 62S.01; 
 43.29     (10) issued as a supplement to Medicare, as defined in 
 43.30  sections 62A.31 to 62A.44, or policies, contracts, or 
 43.31  certificates that supplement Medicare issued by health 
 43.32  maintenance organizations or those policies, contracts, or 
 43.33  certificates governed by section 1833 or 1876 of the federal 
 43.34  Social Security Act, United States Code, title 42, section 1395, 
 43.35  et seq., as amended; 
 43.36     (11) workers' compensation insurance; or 
 44.1      (12) issued solely as a companion to a health maintenance 
 44.2   contract as described in section 62D.12, subdivision 1a, so long 
 44.3   as the health maintenance contract meets the definition of a 
 44.4   health benefit plan. 
 44.5      For the purpose of this chapter, a health benefit plan 
 44.6   issued to eligible employees of a small employer who meets the 
 44.7   participation requirements of section 62L.03, subdivision 3, is 
 44.8   considered to have been issued to a small employer.  A health 
 44.9   benefit plan issued on behalf of a health carrier is considered 
 44.10  to be issued by the health carrier. 
 44.11     Sec. 8.  [EFFECTIVE DATE.] 
 44.12     Sections 1 to 5 and 7 are effective the day following final 
 44.13  enactment.  Section 6 is effective for policies sold on or after 
 44.14  August 1, 1997.