SF 465

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