Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

                             CHAPTER 71-S.F.No. 465 
                  An act relating to insurance; regulating the sale of 
                  certain qualified long-term care insurance policies; 
                  amending Minnesota Statutes 1996, sections 61A.072, 
                  subdivisions 1 and 4; 62A.011, subdivision 3; 62A.31, 
                  subdivision 6; 62A.48, by adding a subdivision; 
                  62A.50, by adding a subdivision; and 62L.02, 
                  subdivision 15; proposing coding for new law as 
                  Minnesota Statutes, chapter 62S. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                   QUALIFIED LONG-TERM CARE INSURANCE POLICY 
           Section 1.  [62S.01] [DEFINITIONS.] 
           Subdivision 1.  [APPLICATION.] The definitions in this 
        section apply to this chapter. 
           Subd. 2.  [ACTIVITIES OF DAILY LIVING.] "Activities of 
        daily living" means eating, toileting, transferring, bathing, 
        dressing, and continence. 
           Subd. 3.  [ACUTE CONDITION.] "Acute condition" means that 
        the individual is medically unstable and requires frequent 
        monitoring by medical professionals, such as physicians and 
        registered nurses, in order to maintain the individual's health 
        status. 
           Subd. 4.  [ADULT DAY CARE.] "Adult day care" means a 
        program for six or more individuals of social and health-related 
        services provided during the day in a community group setting 
        for the purpose of supporting frail, impaired elderly, or other 
        disabled adults who can benefit from care in a group setting 
        outside the home. 
           Subd. 5.  [APPLICANT.] "Applicant" means: 
           (1) in the case of an individual long-term care insurance 
        policy, the person who seeks to contract for benefits; or 
           (2) in the case of a group long-term care insurance policy, 
        the proposed certificate holder. 
           Subd. 6.  [BATHING.] "Bathing" means washing oneself by 
        sponge bath; or in either a tub or shower, including the task of 
        getting into or out of the tub or shower. 
           Subd. 7.  [CERTIFICATE.] "Certificate" means a certificate 
        issued under a group long-term care insurance policy delivered 
        or issued for delivery in this state. 
           Subd. 8.  [CHRONICALLY ILL INDIVIDUAL.] "Chronically ill 
        individual" means an individual who has been certified by a 
        licensed health care practitioner, within the preceding 12-month 
        period, as either: 
           (1) being unable to perform, without substantial assistance 
        from another individual, at least two activities of daily living 
        for a period of at least 90 days due to a loss of functional 
        capacity; 
           (2) having a disability similar to the level of disability 
        described in clause (1); or 
           (3) requiring substantial supervision to protect the 
        individual from threats to health and safety due to severe 
        cognitive impairment. 
           Subd. 9.  [COGNITIVE IMPAIRMENT.] "Cognitive impairment" 
        means a deficiency in a person's short or long-term memory, 
        orientation as a person, place and time, deductive or abstract 
        reasoning, or judgment as it relates to safety awareness. 
           Subd. 10.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of commerce. 
           Subd. 11.  [CONTINENCE.] "Continence" means the ability to 
        maintain control of bowel and bladder function, or when unable 
        to maintain control of bowel or bladder function, the ability to 
        perform associated personal hygiene, including caring for 
        catheter or colostomy bag. 
           Subd. 12.  [DRESSING.] "Dressing" means putting on and 
        taking off all items of clothing and any necessary braces, 
        fasteners, or artificial limbs. 
           Subd. 13.  [EATING.] "Eating" means feeding oneself by 
        getting food into the body from a receptacle, such as a plate, 
        cup, or table, or by a feeding tube or intravenously. 
           Subd. 14.  [FUNCTIONAL CAPACITY.] "Functional capacity" 
        means requiring the substantial assistance of another person to 
        perform the prescribed activities of daily living. 
           Subd. 15.  [GROUP LONG-TERM CARE INSURANCE.] "Group 
        long-term care insurance" means a long-term care insurance 
        policy delivered or issued for delivery in this state and issued 
        to: 
           (1) one or more employers or labor organizations, or to a 
        trust or to the trustees of a fund established by one or more 
        employers or labor organizations, or a combination, for 
        employees or former employees, or a combination, or for members 
        or former members, or a combination, of the labor organizations; 
           (2) a professional, trade, or occupational association for 
        its members or former or retired members, or combination, if the 
        association: 
           (i) is composed of individuals, all of whom are or were 
        actively engaged in the same profession, trade, or occupation; 
        and 
           (ii) has been maintained in good faith for purposes other 
        than obtaining insurance; 
           (3) an association or a trust or the trustee of a fund 
        established, created, or maintained for the benefit of members 
        of one or more associations.  Before advertising, marketing, or 
        offering the policy within this state, the association or the 
        insurer of the association must file evidence with the 
        commissioner that the association has at the outset a minimum of 
        100 persons and has been organized and maintained in good faith 
        for purposes other than that of obtaining insurance; has been in 
        active existence for at least one year; and has a constitution 
        and bylaws that provide that: 
           (i) the association holds regular meetings not less than 
        annually to further purposes of the members; 
           (ii) except for credit unions, the association collects 
        dues or solicits contributions from members; and 
           (iii) the members have voting privileges and representation 
        on the governing board and committees. 
        Thirty days after the filing, the association is considered to 
        have satisfied the organizational requirements, unless the 
        commissioner makes a finding that the association does not 
        satisfy the organizational requirements; or 
           (4) a group other than as described in clauses (1) to (3), 
        subject to a finding by the commissioner that: 
           (i) the issuance of the group policy is not contrary to the 
        best interest of the public; 
           (ii) the issuance of the group policy would result in 
        economies of acquisition or administration; and 
           (iii) the benefits are reasonable in relation to the 
        premiums charged. 
           Subd. 16.  [GUARANTEED RENEWABLE.] "Guaranteed renewable" 
        means the insured has the right to continue the long-term care 
        insurance in force by the timely payment of premiums and the 
        insurer has no unilateral right to make any change in any 
        provision of the policy or rider while the insurance is in force 
        and cannot decline to renew, except that rates may be revised by 
        the insurer on a class basis. 
           Subd. 17.  [HOME HEALTH CARE SERVICES.] "Home health care 
        services" means medical and nonmedical services provided to ill, 
        disabled, or infirm persons in their residences.  The services 
        may include homemaker services, assistance with activities of 
        daily living, and respite care services. 
           Subd. 18.  [LONG-TERM CARE INSURANCE.] "Long-term care 
        insurance" means a qualified long-term care insurance policy or 
        rider advertised, marketed, offered, or designed to provide 
        coverage for not less than 12 consecutive months for each 
        covered person on an expense incurred, indemnity, prepaid, or 
        other basis for one or more necessary or medically necessary 
        diagnostic, preventive, therapeutic, rehabilitative, 
        maintenance, or personal care services, provided in a setting 
        other than an acute care unit of a hospital.  Long-term care 
        insurance includes: 
           (1) group and individual annuities and life insurance 
        policies or riders that provide directly or that supplement 
        long-term care insurance; and 
           (2) a policy or rider that provides for payment of benefits 
        based upon cognitive impairment or the loss of functional 
        capacity. 
        Long-term care insurance does not include an insurance policy 
        that is offered primarily to provide basic Medicare supplement 
        coverage, basic hospital expense coverage, basic 
        medical-surgical expense coverage, hospital confinement 
        indemnity coverage, major medical expense coverage, disability 
        income or related asset-protection coverage, accident only 
        coverage, specified disease or specified accident coverage, or 
        limited benefit health coverage.  With regard to life insurance, 
        long-term care insurance does not include life insurance 
        policies that accelerate the death benefit specifically for one 
        or more of the qualifying events of terminal illness, medical 
        conditions requiring extraordinary medical intervention, or 
        permanent institutional confinement, and that provide the option 
        of a lump-sum payment for those benefits and in which neither 
        the benefits nor the eligibility for the benefits is conditioned 
        upon the receipt of long-term care. 
           Subd. 19.  [MAINTENANCE OR PERSONAL CARE SERVICES.] 
        "Maintenance" or "personal care services" means any care the 
        primary purpose of which is the provision of needed assistance 
        with any of the disabilities as a result of which the individual 
        is a chronically ill individual, including the protection from 
        threats to health and safety due to severe cognitive impairment. 
           Subd. 20.  [MEDICARE.] "Medicare" means The Health 
        Insurance for the Aged Act, Title XVIII of the Social Security 
        Amendments of 1965, as amended, or Title I, Part I, of Public 
        Law Number 89-97, as Enacted by the Eighty-Ninth Congress of the 
        United States of America, as amended. 
           Subd. 21.  [MENTAL OR NERVOUS DISORDER.] "Mental or nervous 
        disorder" means a neurosis, psychoneurosis, psychopathy, 
        psychosis, or mental or emotional disease or disorder. 
           Subd. 22.  [NONCANCELABLE.] "Noncancelable" may be used 
        only when the insured has the right to continue the long-term 
        care insurance in force by the timely payment of premiums during 
        which period the insurer has no right to unilaterally make any 
        change in any provision of the insurance or in the premium rate. 
           Subd. 23.  [POLICY.] "Policy" means a policy, contract, 
        subscriber agreement, rider, or endorsement delivered or issued 
        for delivery in this state by an insurer; fraternal benefit 
        society; nonprofit health, hospital, or medical service 
        corporation; prepaid health plan; health maintenance 
        organization; or a similar organization. 
           Subd. 24.  [QUALIFIED LONG-TERM CARE INSURANCE POLICY.] 
        "Qualified long-term care insurance policy" means a policy that 
        meets the requirements of Section 7702(B) of the Internal 
        Revenue Code, as amended, and this chapter. 
           Subd. 25.  [QUALIFIED LONG-TERM CARE SERVICES.] "Qualified 
        long-term care services" means necessary diagnostic, preventive, 
        therapeutic, curing, treating, mitigating, and rehabilitative 
        services and maintenance or personal care services, which are: 
           (1) required by a chronically ill individual; and 
           (2) provided pursuant to a plan of care prescribed by a 
        licensed health care practitioner. 
           Subd. 26.  [TOILETING.] "Toileting" means getting to and 
        from the toilet, getting on and off the toilet, and performing 
        associated personal hygiene. 
           Subd. 27.  [TRANSFERRING.] "Transferring" means moving into 
        or out of a bed, chair, or wheelchair. 
           Sec. 2.  [62S.02] [QUALIFIED LONG-TERM CARE INSURANCE 
        POLICY.] 
           Subdivision 1.  [REQUIREMENTS.] A qualified long-term care 
        insurance policy may not be offered, issued, delivered, or 
        renewed in this state unless the policy satisfies the 
        requirements of this chapter.  A qualified long-term care 
        insurance policy must cover qualified long-term care services. 
           Subd. 2.  [NONFORFEITURE REQUIREMENT.] An insurer shall 
        offer a nonforfeiture provision available in the event of 
        default in the payment of any premiums.  The amount of the 
        benefit may be adjusted after being initially granted, if 
        necessary, to reflect changes in claims, persistency, and 
        interest as reflected in changes in rates for premium paying 
        contracts.  The nonforfeiture provision must provide at least 
        one of the following: 
           (1) reduced paid-up insurance; 
           (2) extended term insurance; or 
           (3) shortened benefit period. 
           Subd. 3.  [REFUND RESTRICTIONS.] A qualified long-term care 
        insurance policy shall not provide for a cash surrender value or 
        other money that can be paid, assigned, pledged as collateral 
        for a loan, or borrowed.  The aggregate premium paid under the 
        policy may be refunded in the event of death of the insured or a 
        complete surrender or cancellation of the policy. 
           Subd. 4.  [NONREIMBURSABLE EXPENSES.] A qualified long-term 
        care insurance policy shall not pay or reimburse expenses 
        incurred for services or items if the expenses are reimbursable 
        under Medicare or would be reimbursable if a deductible or 
        coinsurance amount was not applied.  This subdivision does not 
        apply to expenses which are reimbursable under Medicare only as 
        a secondary payor and does not prohibit the offering of a 
        qualified long-term care insurance policy on the basis that the 
        policy coordinates its benefits with those provided under 
        Medicare.  Notwithstanding this subdivision, payments may be 
        made under a long-term care insurance policy on a per diem or 
        other periodic basis without regard to the expenses incurred 
        during the period to which the payments relate. 
           Subd. 5.  [ACTIVITIES OF DAILY LIVING.] A qualified 
        long-term care insurance policy shall take into account at least 
        five of the activities of daily living in making the 
        determination of whether an individual is chronically ill.  
        Assessments of activities of daily living and cognitive 
        impairment must be performed by a licensed or certified 
        professional, such as a physician, nurse, or social worker. 
           Subd. 6.  [APPEALS PROCESS.] A qualified long-term care 
        insurance policy must include a clear description of the process 
        for appealing and resolving benefit determinations. 
           Sec. 3.  [62S.03] [EXTRATERRITORIAL JURISDICTION.] 
           Group long-term care insurance coverage may not be offered 
        to a resident of this state under a group policy issued in 
        another state to a group described in section 62S.01, 
        subdivision 15, clause (4), unless this state or another state 
        having statutory and regulatory long-term care insurance 
        requirements substantially similar to those adopted in this 
        state has made a determination that the requirements have been 
        met. 
           Sec. 4.  [62S.04] [PROHIBITIONS.] 
           A long-term care insurance policy may not: 
           (1) be canceled, nonrenewed, or otherwise terminated on the 
        grounds of the age or the deterioration of the mental or 
        physical health of the insured individual or certificate holder; 
           (2) contain a provision establishing a new waiting period 
        in the event existing coverage is converted to or replaced by a 
        new or other form within the same company, except with respect 
        to an increase in benefits voluntarily selected by the insured 
        individual or group policyholder; or 
           (3) provide coverage for skilled nursing care only, or 
        provide significantly more coverage for skilled care in a 
        facility than coverage for lower levels of care in the same 
        facility. 
           Sec. 5.  [62S.05] [PREEXISTING CONDITION.] 
           Subdivision 1.  [AUTHORIZED DEFINITION.] A long-term care 
        insurance policy or certificate, other than a policy or 
        certificate issued to a group as defined in section 62S.01, 
        subdivision 15, clause (1), may not use a definition of 
        preexisting condition that is more restrictive than the 
        definition in this subdivision.  "Preexisting condition" means a 
        condition for which medical advice or treatment was recommended 
        by, or received from a provider of health care services, within 
        six months before the effective date of coverage of an insured 
        person. 
           Subd. 2.  [PROHIBITED EXCLUSION.] A long-term care 
        insurance policy or certificate, other than a policy or 
        certificate issued to a group as defined in section 62S.01, 
        subdivision 15, clause (1), may not exclude coverage for a loss 
        or confinement that is the result of a preexisting condition 
        unless the loss or confinement begins within six months 
        following the effective date of coverage of an insured person. 
           Subd. 3.  [UNDERWRITING STANDARDS.] The definition of 
        preexisting condition does not prohibit an insurer from using an 
        application form designed to elicit the complete health history 
        of an applicant and, on the basis of the answers on that 
        application, from underwriting according to that insurer's 
        established underwriting standards.  Unless otherwise provided 
        in the policy or certificate, a preexisting condition, 
        regardless of whether it is disclosed on the application, need 
        not be covered until the waiting period described in subdivision 
        2 expires.  A long-term care insurance policy or certificate may 
        not exclude or use waivers of any kind to exclude, limit, or 
        reduce coverage or benefits for specifically named or described 
        preexisting diseases or physical conditions beyond the waiting 
        period described in subdivision 2.  
           Sec. 6.  [62S.06] [PRIOR HOSPITALIZATION OR 
        INSTITUTIONALIZATION.] 
           Subdivision 1.  [PROHIBITED CONDITIONS.] A long-term care 
        insurance policy may not be delivered or issued for delivery in 
        this state if the policy conditions eligibility for any benefits:
           (1) on a prior hospitalization requirement; 
           (2) provided in an institutional care setting on the 
        receipt of a higher level of institutional care; or 
           (3) other than waiver of premium, postconfinement, 
        postacute care, or recuperative benefits on a prior 
        institutionalization requirement. 
           Subd. 2.  [BENEFIT LABELING.] A long-term care insurance 
        policy containing postconfinement, postacute care, or 
        recuperative benefits must clearly label in a separate paragraph 
        of the policy or certificate entitled "limitations or conditions 
        on eligibility for benefits" the limitations or conditions, 
        including any required number of days of confinement. 
           Subd. 3.  [BENEFIT CONDITIONS.] (a) A long-term care 
        insurance policy or rider that conditions eligibility of 
        noninstitutional benefits on the prior receipt of institutional 
        care may not require a prior institutional stay of more than 30 
        days. 
           (b) A long-term care insurance policy or rider that 
        provides benefits only following institutionalization may not 
        condition the benefits upon admission to a facility for the same 
        or related conditions within a period of less than 30 days after 
        discharge from the institution. 
           Sec. 7.  [62S.07] [RIGHT TO RETURN; REFUND.] 
           Subdivision 1.  [RIGHT TO RETURN.] A long-term care 
        insurance applicant may return the policy or certificate within 
        30 days of its delivery and is entitled to a refund of the 
        premium if, after examination of the policy or certificate, the 
        applicant is not satisfied for any reason.  Long-term care 
        insurance policies and certificates must include a notice 
        prominently printed on the first page or attached to the first 
        page stating in substance that the applicant may return the 
        policy or certificate within 30 days of its delivery and have 
        the premium refunded if for any reason, after examination of the 
        policy or certificate, other than a certificate issued under a 
        policy issued to a group as defined in section 62S.01, 
        subdivision 15, clause (1), the applicant is not satisfied. 
           Subd. 2.  [REFUND.] If an application for a qualified 
        long-term care insurance policy is denied, the issuer shall 
        refund to the applicant any premium and fees submitted by the 
        applicant within 30 days of the denial. 
           Sec. 8.  [62S.08] [COVERAGE OUTLINE.] 
           Subdivision 1.  [DELIVERY.] An outline of coverage must be 
        delivered to a prospective applicant for long-term care 
        insurance at the time of initial solicitation through means that 
        prominently direct the attention of the recipient to the 
        document and its purpose.  In the case of agent solicitations, 
        an agent must deliver the outline of coverage before the 
        presentation of an application or enrollment form.  In the case 
        of direct response solicitations, the outline of coverage must 
        be presented in conjunction with an application or enrollment 
        form. 
           Subd. 2.  [REQUIREMENTS.] The outline of coverage must be a 
        freestanding document, using no smaller than ten-point type, and 
        may not contain material of an advertising nature.  Text which 
        is capitalized or underscored in the standard format outline of 
        coverage may be emphasized by other means which provide 
        prominence equivalent to the capitalization or underscoring. 
           Subd. 3.  [MANDATORY FORMAT.] The following standard format 
        outline of coverage must be used, unless otherwise specifically 
        indicated: 
                                 COMPANY NAME 
                           ADDRESS - CITY AND STATE 
                               TELEPHONE NUMBER 
                           LONG-TERM CARE INSURANCE 
                             OUTLINE OF COVERAGE 
        Policy Number or Group Master Policy and Certificate Number 
           (Except for policies or certificates which are guaranteed 
        issue, the following caution statement, or language 
        substantially similar, must appear as follows in the outline of 
        coverage.) 
           CAUTION:  The issuance of this long-term care insurance 
        (policy) (certificate) is based upon your responses to the 
        questions on your application.  A copy of your (application) 
        (enrollment form) (is enclosed) (was retained by you when you 
        applied).  If your answers are incorrect or untrue, the company 
        has the right to deny benefits or rescind your policy.  The best 
        time to clear up any questions is now, before a claim arises.  
        If, for any reason, any of your answers are incorrect, contact 
        the company at this address:  (insert address). 
           (1) This policy is (an individual policy of insurance) (a 
        group policy) which was issued in the (indicate jurisdiction in 
        which group policy was issued). 
           (2) PURPOSE OF OUTLINE OF COVERAGE.  This outline of 
        coverage provides a very brief description of the important 
        features of the policy.  You should compare this outline of 
        coverage to outlines of coverage for other policies available to 
        you.  This is not an insurance contract, but only a summary of 
        coverage.  Only the individual or group policy contains 
        governing contractual provisions.  This means that the policy or 
        group policy sets forth in detail the rights and obligations of 
        both you and the insurance company.  Therefore, if you purchase 
        this coverage, or any other coverage, it is important that you 
        READ YOUR POLICY (OR CERTIFICATE) CAREFULLY. 
           (3) THIS PLAN IS INTENDED TO BE A QUALIFIED LONG-TERM CARE 
        INSURANCE CONTRACT AS DEFINED UNDER SECTION 7702(B)(b) OF THE 
        INTERNAL REVENUE CODE OF 1986. 
           (4) TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE 
        RETURNED AND PREMIUM REFUNDED. 
           (a) (Provide a brief description of the right to return -- 
        "free look" provision of the policy.) 
           (b) (Include a statement that the policy either does or 
        does not contain provisions providing for a refund or partial 
        refund of premium upon the death of an insured or surrender of 
        the policy or certificate.  If the policy contains such 
        provisions, include a description of them.) 
           (5) THIS IS NOT MEDICARE SUPPLEMENT COVERAGE.  If you are 
        eligible for Medicare, review the Medicare Supplement Buyer's 
        Guide available from the insurance company. 
           (a) (For agents) neither (insert company name) nor its 
        agents represent Medicare, the federal government, or any state 
        government. 
           (b) (For direct response) (insert company name) is not 
        representing Medicare, the federal government, or any state 
        government. 
           (6) LONG-TERM CARE COVERAGE.  Policies of this category are 
        designed to provide coverage for one or more necessary or 
        medically necessary diagnostic, preventive, therapeutic, 
        rehabilitative, maintenance, or personal care services, provided 
        in a setting other than an acute care unit of a hospital, such 
        as in a nursing home, in the community, or in the home. 
           This policy provides coverage in the form of a fixed dollar 
        indemnity benefit for covered long-term care expenses, subject 
        to policy (limitations), (waiting periods), and (coinsurance) 
        requirements.  (Modify this paragraph if the policy is not an 
        indemnity policy.) 
           (7) BENEFITS PROVIDED BY THIS POLICY. 
           (a) (Covered services, related deductible(s), waiting 
        periods, elimination periods, and benefit maximums.) 
           (b) (Institutional benefits, by skill level.) 
           (c) (Noninstitutional benefits, by skill level.) 
           (Any benefit screens must be explained in this section.  If 
        these screens differ for different benefits, explanation of the 
        screen should accompany each benefit description.  If an 
        attending physician or other specified person must certify a 
        certain level of functional dependency in order to be eligible 
        for benefits, this too must be specified.  If activities of 
        daily living (ADLs) are used to measure an insured's need for 
        long-term care, then these qualifying criteria or screens must 
        be explained.) 
           (8) LIMITATIONS AND EXCLUSIONS: 
           Describe: 
           (a) preexisting conditions; 
           (b) noneligible facilities/provider; 
           (c) noneligible levels of care (e.g., unlicensed providers, 
        care or treatment provided by a family member, etc.); 
           (d) exclusions/exceptions; and 
           (e) limitations. 
           (This section should provide a brief specific description 
        of any policy provisions which limit, exclude, restrict, reduce, 
        delay, or in any other manner operate to qualify payment of the 
        benefits described in paragraph (6).) 
           THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH 
        YOUR LONG-TERM CARE NEEDS. 
           (9) RELATIONSHIP OF COST OF CARE AND BENEFITS.  Because the 
        costs of long-term care services will likely increase over time, 
        you should consider whether and how the benefits of this plan 
        may be adjusted.  As applicable, indicate the following: 
           (a) that the benefit level will not increase over time; 
           (b) any automatic benefit adjustment provisions; 
           (c) whether the insured will be guaranteed the option to 
        buy additional benefits and the basis upon which benefits will 
        be increased over time if not by a specified amount or 
        percentage; 
           (d) if there is such a guarantee, include whether 
        additional underwriting or health screening will be required, 
        the frequency and amounts of the upgrade options, and any 
        significant restrictions or limitations; and 
           (e) whether there will be any additional premium charge 
        imposed and how that is to be calculated. 
           (10) ALZHEIMER'S DISEASE AND OTHER ORGANIC BRAIN DISORDERS. 
        (State that the policy provides coverage for insureds clinically 
        diagnosed as having Alzheimer's disease or related degenerative 
        and dementing illnesses.  Specifically, describe each benefit 
        screen or other policy provision which provides preconditions to 
        the availability of policy benefits for such an insured.) 
           (11) PREMIUM. 
           (a) State the total annual premium for the policy. 
           (b) If the premium varies with an applicant's choice among 
        benefit options, indicate the portion of annual premium which 
        corresponds to each benefit option. 
           (12) ADDITIONAL FEATURES. 
           (a) Indicate if medical underwriting is used. 
           (b) Describe other important features. 
           Subd. 4.  [OUTLINE OF COVERAGE.] The outline of coverage 
        must include the inflation protection information required under 
        section 62S.23, subdivision 3, and the notice to buyer 
        requirements specified under section 62S.29, subdivision 1, 
        clause (3). 
           Sec. 9.  [62S.09] [CERTIFICATE REQUIREMENTS.] 
           Subdivision 1.  [CONTENT.] A certificate issued under a 
        group long-term care insurance policy delivered or issued for 
        delivery in this state must include: 
           (1) a description of the principal benefits and coverage 
        provided in the policy; 
           (2) a statement of the exclusions, reductions, and 
        limitations contained in the policy; and 
           (3) a statement that the group master policy determines 
        governing contractual provisions. 
           Subd. 2.  [DELIVERY.] The issuer of a qualified long-term 
        care insurance policy shall deliver to the applicant, 
        policyholder, or certificate holder the contract or certificate 
        no later than 30 days after the date of approval. 
           Sec. 10.  [62S.10] [POLICY SUMMARY.] 
           Subdivision 1.  [DELIVERY.] At the time of policy delivery, 
        a policy summary must be delivered for an individual life 
        insurance policy that provides long-term care benefits within 
        the policy or by rider.  In the case of direct response 
        solicitations, the insurer must deliver the policy summary upon 
        the applicant's request, but regardless of request, must make 
        the delivery no later than at the time of policy delivery. 
           Subd. 2.  [CONTENTS.] The summary must include the 
        following information: 
           (1) an explanation of how the long-term care benefit 
        interacts with other components of the policy, including 
        deductions from death benefits; 
           (2) an illustration of the amount of benefits, the length 
        of benefits, and the guaranteed lifetime benefits, if any, for 
        each covered person; and 
           (3) any exclusions, reductions, and limitations on benefits 
        of long-term care. 
           Subd. 3.  [ADDITIONAL INFORMATION REQUIRED.] If applicable 
        to the policy type, the summary must include the following 
        information: 
           (1) a disclosure of the effects of exercising other rights 
        under the policy; 
           (2) a disclosure of guarantees related to long-term care 
        costs of insurance charges; and 
           (3) current and projected maximum lifetime benefits. 
           Sec. 11.  [62S.11] [MONTHLY REPORT.] 
           Subdivision 1.  [REQUIRED REPORT.] Any time a long-term 
        care benefit, funded through a life insurance vehicle by the 
        acceleration of the death benefit, is in benefit payment status, 
        a monthly report must be provided to the policyholder. 
           Subd. 2.  [CONTENTS.] The report must include the following 
        information: 
           (1) long-term care benefits paid out during the month; 
           (2) an explanation of changes in the policy, such as death 
        benefits or cash values, due to long-term care benefits being 
        paid out; and 
           (3) the amount of long-term care benefits existing or 
        remaining. 
           Sec. 12.  [62S.12] [CLAIM DENIAL.] 
           If a claim under a qualified long-term care insurance 
        contract is denied, the issuer shall provide a written 
        explanation of the reasons for the denial and make available all 
        information directly related to the denial within 60 days of the 
        date of a written request by the policyholder or certificate 
        holder, or a representative of the policyholder or certificate 
        holder. 
           Sec. 13.  [62S.13] [INCONTESTABILITY PERIOD.] 
           Subdivision 1.  [RESCISSION BEFORE SIX MONTHS.] For a 
        policy or certificate that has been in force for less than six 
        months, an insurer may rescind a long-term care insurance policy 
        or certificate or deny an otherwise valid long-term care 
        insurance claim upon a showing of misrepresentation that is 
        material to acceptance for coverage. 
           Subd. 2.  [RESCISSION AFTER SIX MONTHS.] For a policy or 
        certificate that has been in force for at least six months, but 
        less than two years, an insurer may rescind a long-term care 
        insurance policy or certificate or deny an otherwise valid 
        long-term care insurance claim upon a showing of 
        misrepresentation that is both material to the acceptance for 
        coverage and that pertains to the condition for which benefits 
        are sought. 
           Subd. 3.  [CONTESTED POLICY AFTER TWO YEARS.] After a 
        policy or certificate has been in force for two years, it is not 
        contestable upon the grounds of misrepresentation alone.  The 
        policy or certificate may be contested only upon a showing that 
        the insured knowingly and intentionally misrepresented relevant 
        facts relating to the insured's health. 
           Subd. 4.  [FIELD ISSUE PROHIBITION.] A long-term care 
        insurance policy or certificate may not be field issued based on 
        medical or health status.  For purposes of this section, "field 
        issued" means a policy or certificate issued by an agent or a 
        third-party administrator under the underwriting authority 
        granted to the agent or third-party administrator by an insurer. 
           Subd. 5.  [BENEFIT PAYMENTS NOT RECOVERABLE.] If an insurer 
        has paid benefits under the long-term care insurance policy or 
        certificate, the benefit payments may not be recovered by the 
        insurer in the event that the policy or certificate is rescinded.
           Sec. 14.  [62S.14] [RENEWABILITY.] 
           Subdivision 1.  [GUARANTEED RENEWABLE.] A qualified 
        long-term care insurance policy must be guaranteed renewable. 
           Subd. 2.  [TERMS.] The terms "guaranteed renewable" and 
        "noncancelable" may not be used in an individual long-term care 
        insurance policy without further explanatory language that 
        complies with the disclosure requirements of section 62S.20. 
           Subd. 3.  [AUTHORIZED RENEWAL PROVISIONS.] A policy issued 
        to an individual may not contain renewal provisions other than 
        guaranteed renewable or noncancelable. 
           Sec. 15.  [62S.15] [AUTHORIZED LIMITATIONS AND EXCLUSIONS.] 
           No policy may be delivered or issued for delivery in this 
        state as long-term care insurance if the policy limits or 
        excludes coverage by type of illness, treatment, medical 
        condition, or accident, except as follows: 
           (1) preexisting conditions or diseases; 
           (2) mental or nervous disorders; except that the exclusion 
        or limitation of benefits on the basis of Alzheimer's disease is 
        prohibited; 
           (3) alcoholism and drug addiction; 
           (4) illness, treatment, or medical condition arising out of 
        war or act of war; participation in a felony, riot, or 
        insurrection; service in the armed forces or auxiliary units; 
        suicide, attempted suicide, or intentionally self-inflicted 
        injury; or nonfare-paying aviation; and 
           (5) treatment provided in a government facility unless 
        otherwise required by law, services for which benefits are 
        available under Medicare or other government program except 
        Medicaid, state or federal workers' compensation, employer's 
        liability or occupational disease law, motor vehicle no-fault 
        law; services provided by a member of the covered person's 
        immediate family; and services for which no charge is normally 
        made in the absence of insurance. 
        This subdivision does not prohibit exclusions and limitations by 
        type of provider or territorial limitations. 
           Sec. 16.  [62S.16] [EXTENSION OF BENEFITS.] 
           Termination of long-term care insurance must be without 
        prejudice to any benefits payable for institutionalization if 
        the institutionalization began while the long-term care 
        insurance was in force and continues without interruption after 
        termination.  The extension of benefits beyond the period the 
        long-term care insurance was in force may be limited to the 
        duration of the benefit period or to payment of the maximum 
        benefits and may be subject to a policy waiting period, and all 
        other applicable provisions of the policy. 
           Sec. 17.  [62S.17] [CONTINUATION OR CONVERSION.] 
           Subdivision 1.  [REQUIREMENT.] Group long-term care 
        insurance shall provide covered individuals with a basis for 
        continuation or conversion of coverage. 
           Subd. 2.  [BASIS FOR CONTINUATION OF COVERAGE.] A basis for 
        continuation of coverage policy provision must maintain coverage 
        under the existing group policy when the coverage would 
        otherwise terminate and is subject only to the continued timely 
        payment of premium when due.  Group policies which restrict 
        provision of benefits and services to, or contain incentives to 
        use certain providers or facilities, may provide continuation 
        benefits which are substantially equivalent to the benefits of 
        the existing group policy.  The commissioner shall make a 
        determination as to the substantial equivalency of benefits and 
        shall take into consideration the differences between managed 
        care and nonmanaged care plans, including provider system 
        arrangements, service availability, benefit levels, and 
        administrative complexity. 
           Subd. 3.  [BASIS FOR CONVERSION OF COVERAGE.] A basis for 
        conversion of coverage policy provision must provide that an 
        individual whose coverage under the group policy would otherwise 
        terminate or has been terminated for any reason, including 
        discontinuance of the group policy in its entirety or with 
        respect to an insured class, and who has been continuously 
        insured under the group policy and any group policy which it 
        replaced, for at least six months immediately prior to 
        termination, is entitled to the issuance of a converted policy 
        by the insurer under whose group policy the insured is covered, 
        without evidence of insurability. 
           Subd. 4.  [CONVERTED INDIVIDUAL POLICY.] A converted 
        individual policy of long-term care insurance must provide 
        benefits identical to or benefits determined by the commissioner 
        to be substantially equivalent to or in excess of those provided 
        under the group policy from which conversion is made.  Where the 
        group policy from which conversion is made restricts provision 
        of benefits and services to, or contains incentives to use 
        certain providers or facilities, the commissioner, in making a 
        determination as to the substantial equivalency of benefits, 
        shall take into consideration the differences between managed 
        care and nonmanaged care plans, including provider system 
        arrangements, service availability, benefit levels, and 
        administrative complexity. 
           Subd. 5.  [CONVERTED POLICY APPLICATION.] Written 
        application for the converted policy must be made and the first 
        premium due, if any, must be paid as directed by the insurer not 
        later than 31 days after termination of coverage under the group 
        policy.  The converted policy must be issued effective on the 
        day following the termination of coverage under the group 
        policy, and is renewable annually. 
           Subd. 6.  [CONVERTED POLICY PREMIUM CALCULATION.] Unless 
        the group policy from which conversion is made replaced previous 
        group coverage, the premium for the converted policy is 
        calculated on the basis of the insured's age at inception of 
        coverage under the group policy from which conversion is made.  
        Where the group policy from which conversion is made replaced 
        previous group coverage, the premium for the converted policy is 
        calculated on the basis of the insured's age at inception of 
        coverage under the group policy replaced. 
           Subd. 7.  [EXCEPTIONS.] Continuation of coverage or 
        issuance of a converted policy is mandatory, except under the 
        following conditions: 
           (1) termination of group coverage resulting from an 
        individual's failure to make a required payment of premium or 
        contribution when due; or 
           (2) replacement group coverage: 
           (i) is in place not later than 31 days after termination 
        and is effective on the day following the termination of 
        coverage; 
           (ii) provides benefits identical to or benefits determined 
        by the commissioner to be substantially equivalent to or in 
        excess of those provided by the terminating coverage; and 
           (iii) premium is calculated in a manner consistent with the 
        requirements of subdivision 6. 
           Subd. 8.  [REDUCTION IN BENEFITS.] Notwithstanding any 
        other provision of this section, a converted policy issued to an 
        individual who at the time of conversion is covered by another 
        long-term care insurance policy which provides benefits on the 
        basis of incurred expenses, may contain a provision which 
        results in a reduction of benefits payable if the benefits 
        provided under the additional coverage, together with the full 
        benefits provided by the converted policy, would result in 
        payment of more than 100 percent of incurred expenses.  This 
        provision may only be included in the converted policy if the 
        converted policy also provides for a premium decrease or refund 
        which reflects the reduction in benefits payable. 
           Subd. 9.  [BENEFIT LIMIT.] A converted policy may provide 
        that the benefits payable under the converted policy, together 
        with the benefits payable under the group policy from which 
        conversion is made, shall not exceed those that would have been 
        payable had the individual's coverage under the group policy 
        remained in effect. 
           Subd. 10.  [ELIGIBILITY.] Notwithstanding any other 
        provision of this section, an insured individual whose 
        eligibility for group long-term care coverage is based upon the 
        insured individual's relationship to another person, is entitled 
        to continuation of coverage under the group policy upon 
        termination of the qualifying relationship by death or 
        dissolution of marriage. 
           Subd. 11.  [MANAGED CARE PLAN.] For the purposes of this 
        section, a "managed care plan" is a health care or assisted 
        living arrangement designed to coordinate patient care or 
        control costs through utilization review, case management, or 
        use of specific provider networks. 
           Sec. 18.  [62S.18] [DISCONTINUANCE AND REPLACEMENT.] 
           Subdivision 1.  [REQUIRED COVERAGE.] If a group long-term 
        care policy is replaced by another group long-term care policy 
        issued to the same policyholder, the succeeding insurer shall 
        offer coverage to all persons covered under the previous group 
        policy on its date of termination.  Coverage provided or offered 
        to individuals by the insurer and premiums charged to persons 
        under the new group policy shall not result in any exclusion for 
        preexisting conditions that would have been covered under the 
        group policy being replaced and shall not vary or otherwise 
        depend on the individual's health or disability status, claim 
        experience, or use of long-term care services. 
           Subd. 2.  [PREMIUMS.] The premiums charged to an insured 
        for long-term care insurance replaced under subdivision 1 shall 
        not increase due to either the increasing age of the insured at 
        ages beyond 65 or the duration the insured has been covered 
        under this policy. 
           Sec. 19.  [62S.19] [UNINTENTIONAL LAPSE.] 
           Subdivision 1.  [NOTICE BEFORE LAPSE OR TERMINATION.] No 
        individual long-term care policy or certificate shall be issued 
        until the insurer has received from the applicant either a 
        written designation of at least one person, in addition to the 
        applicant, who is to receive notice of lapse or termination of 
        the policy or certificate for nonpayment of premium or a written 
        waiver dated and signed by the applicant electing not to 
        designate additional persons to receive notice.  The applicant 
        has the right to designate at least one person who is to receive 
        the notice of termination in addition to the insured.  
        Designation shall not constitute acceptance of any liability on 
        the third party for services provided to the insured.  The form 
        used for the written designation must provide space clearly 
        designated for listing at least one person.  The designation 
        shall include each person's full name and home address.  In the 
        case of an applicant who elects not to designate an additional 
        person, the waiver must state:  "Protection against unintended 
        lapse.  I understand that I have the right to designate at least 
        one person other than myself to receive notice of lapse or 
        termination of this long-term care insurance policy for 
        nonpayment of premium.  I understand that notice will not be 
        given until 30 days after a premium is due and unpaid.  I elect 
        NOT to designate any person to receive such notice." 
           The insurer shall notify the insured of the right to change 
        this written designation at least once every two years. 
           Subd. 2.  [PAYMENT PLAN PROVISIONS.] When the policyholder 
        or certificate holder pays the premium for a long-term care 
        insurance policy or certificate through a payroll or pension 
        deduction plan, the requirements specified under subdivision 1 
        are effective 60 days after the policyholder or certificate 
        holder is no longer on the payment plan.  The application or 
        enrollment form for the policies or certificates must clearly 
        indicate the payment plan selected by the applicant. 
           Subd. 3.  [NOTICE REQUIREMENTS.] No individual long-term 
        care policy or certificate shall lapse or be terminated for 
        nonpayment of premium unless the insurer, at least 30 days 
        before the effective date of the lapse or termination, has given 
        notice to the insured and to those persons designated under 
        subdivision 1, at the address provided by the insured for 
        purposes of receiving notice of lapse or termination.  Notice 
        must be given by first class United States mail, postage 
        prepaid, and notice may not be given until 30 days after a 
        premium is due and unpaid.  Notice is considered to have been 
        given as of five days after the date of mailing. 
           Subd. 4.  [REINSTATEMENT.] In addition to the requirement 
        in subdivision 1, a long-term care insurance policy or 
        certificate must include a provision which provides for 
        reinstatement of coverage, in the event of lapse, if the insurer 
        is provided proof of cognitive impairment or the loss of 
        functional capacity.  This option must be available to the 
        insured if requested within five months after termination and 
        must allow for the collection of past due premium, where 
        appropriate.  The standard of proof of cognitive impairment or 
        loss of functional capacity shall not be more stringent than the 
        benefit eligibility criteria on cognitive impairment or the loss 
        of functional capacity, if any, contained in the policy and 
        certificate. 
           Sec. 20.  [62S.20] [REQUIRED DISCLOSURE PROVISIONS.] 
           Subdivision 1.  [RENEWABILITY.] Individual long-term care 
        insurance policies must contain a renewability provision that is 
        appropriately captioned, appears on the first page of the 
        policy, and clearly states the duration, where limited, of 
        renewability and the duration of the term of coverage for which 
        the policy is issued and for which it may be renewed.  This 
        subdivision does not apply to policies which are part of or 
        combined with life insurance policies which do not contain a 
        renewability provision and under which the right to nonrenew is 
        reserved solely to the policyholder. 
           Subd. 2.  [RIDERS AND ENDORSEMENTS.] Except for riders or 
        endorsements by which the insurer effectuates a request made in 
        writing by the insured under an individual long-term care 
        insurance policy, all riders or endorsements added to an 
        individual long-term care insurance policy after date of issue 
        or at reinstatement or renewal which reduce or eliminate 
        benefits or coverage in the policy must require signed 
        acceptance by the individual insured.  After the date of policy 
        issue, a rider or endorsement which increases benefits or 
        coverage with a concomitant increase in premium during the 
        policy term must be agreed to, in writing, signed by the 
        insured, except if the increased benefits or coverage are 
        required by law. Where a separate additional premium is charged 
        for benefits provided in connection with riders or endorsements, 
        the premium charge must be specified in the policy, rider, or 
        endorsement. 
           Subd. 3.  [PAYMENT OF BENEFITS.] A long-term care insurance 
        policy which provides for the payment of benefits based on 
        standards described as "usual and customary," "reasonable and 
        customary," or similar words must include a definition and an 
        explanation of the terms in its accompanying outline of coverage.
           Subd. 4.  [LIMITATIONS.] If a long-term care insurance 
        policy or certificate contains any limitations with respect to 
        preexisting conditions, the limitations must appear as a 
        separate paragraph of the policy or certificate and must be 
        labeled as "preexisting condition limitations." 
           Subd. 5.  [OTHER LIMITATIONS OR CONDITIONS ON ELIGIBILITY 
        FOR BENEFITS.] A long-term care insurance policy or certificate 
        containing any limitations or conditions for eligibility other 
        than those prohibited in section 62S.06 shall provide a 
        description of the limitations or conditions, including any 
        required number of days of confinement, in a separate paragraph 
        of the policy or certificate and shall label the paragraph 
        "limitations or conditions on eligibility for benefits." 
           Subd. 6.  [QUALIFIED LONG-TERM CARE INSURANCE POLICY.] A 
        qualified long-term care insurance policy must include a 
        disclosure statement in the policy that the policy is intended 
        to be a qualified long-term care insurance policy. 
           Sec. 21.  [62S.21] [PROHIBITION AGAINST POSTCLAIMS 
        UNDERWRITING.] 
           Subdivision 1.  [HEALTH CONDITION.] All applications for 
        long-term care insurance policies or certificates, except those 
        which are guaranteed issue must contain clear and unambiguous 
        questions designed to ascertain the health condition of the 
        applicant. 
           Subd. 2.  [MEDICATION INFORMATION REQUIRED.] If an 
        application for long-term care insurance contains a question 
        which asks whether the applicant has had medication prescribed 
        by a physician, it must also ask the applicant to list the 
        medication that has been prescribed.  If the medications listed 
        in the application were known by the insurer, or should have 
        been known at the time of application, to be directly related to 
        a medical condition for which coverage would otherwise be 
        denied, then the policy or certificate shall not be rescinded 
        for that condition. 
           Subd. 3.  [LANGUAGE REQUIRED.] (a) The following language 
        must be set out conspicuously and in close conjunction with the 
        applicant's signature block on an application for a long-term 
        care insurance policy or certificate: 
           CAUTION:  If your answers on this application are incorrect 
        or untrue, (company) has the right to deny benefits or rescind 
        your policy. 
           (b) The following language, or language substantially 
        similar to the following, must be set out conspicuously on the 
        long-term care insurance policy or certificate at the time of 
        delivery: 
           CAUTION:  The issuance of this long-term care insurance 
        (policy) (certificate) is based upon your responses to the 
        questions on your application.  A copy of your (application) 
        (enrollment form) (is enclosed) (was retained by you when you 
        applied).  If your answers are incorrect or untrue, the company 
        has the right to deny benefits or rescind your policy.  The best 
        time to clear up any questions is now, before a claim arises.  
        If, for any reason, any of your answers are incorrect, contact 
        the company at this address:  (insert address). 
           Subd. 4.  [NECESSARY INFORMATION.] Before issuing a 
        long-term care policy or certificate to an applicant aged 80 or 
        older, the insurer shall obtain one of the following: 
           (1) a report of a physical examination; 
           (2) an assessment of functional capacity; 
           (3) an attending physician's statement; or 
           (4) copies of medical records. 
           Subd. 5.  [EXCEPTION.] Subdivisions 3 and 4 do not apply to 
        policies or certificates which are guaranteed issue. 
           Subd. 6.  [COPY REQUIREMENT.] A copy of the completed 
        application or enrollment form, whichever is applicable, must be 
        delivered to the insured no later than at the time of delivery 
        of the policy or certificate unless it was retained by the 
        applicant at the time of application. 
           Subd. 7.  [RECORDS.] An insurer or other entity selling or 
        issuing long-term care insurance benefits shall maintain a 
        record of all policy or certificate rescissions, both state and 
        countrywide, except those which the insured voluntarily 
        effectuated and shall annually furnish this information to the 
        commissioner. 
           Sec. 22.  [62S.22] [MINIMUM STANDARDS FOR HOME HEALTH AND 
        COMMUNITY CARE BENEFITS.] 
           Subdivision 1.  [PROHIBITED LIMITATIONS.] A long-term care 
        insurance policy or certificate shall not, if it provides 
        benefits for home health care or community care services, limit 
        or exclude benefits by: 
           (1) requiring that the insured would need care in a skilled 
        nursing facility if home health care services were not provided; 
           (2) requiring that the insured first or simultaneously 
        receive nursing or therapeutic services in a home, community, or 
        institutional setting before home health care services are 
        covered; 
           (3) limiting eligible services to services provided by a 
        registered nurse or licensed practical nurse; 
           (4) requiring that a nurse or therapist provide services 
        covered by the policy that can be provided by a home health aide 
        or other licensed or certified home care worker acting within 
        the scope of licensure or certification; 
           (5) excluding coverage for personal care services provided 
        by a home health aide; 
           (6) requiring that the provision of home health care 
        services be at a level of certification or licensure greater 
        than that required by the eligible service; 
           (7) requiring that the insured have an acute condition 
        before home health care services are covered; 
           (8) limiting benefits to services provided by 
        Medicare-certified agencies or providers; or 
           (9) excluding coverage for adult day care services. 
           Subd. 2.  [REQUIRED COVERAGE AMOUNT.] A long-term care 
        insurance policy or certificate, if it provides for home health 
        or community care services, must provide total home health or 
        community care coverage that is a dollar amount equivalent to at 
        least one-half of one year's coverage available for nursing home 
        benefits under the policy or certificate, at the time covered 
        home health or community care services are being received.  This 
        requirement does not apply to policies or certificates issued to 
        residents of continuing care retirement communities. 
           Subd. 3.  [APPLICATION OF HOME HEALTH CARE COVERAGE.] Home 
        health care coverage may be applied to the nonhome health care 
        benefits provided in the policy or certificate when determining 
        maximum coverage under the terms of the policy or certificate. 
           Sec. 23.  [62S.23] [REQUIREMENT TO OFFER INFLATION 
        PROTECTION.] 
           Subdivision 1.  [INFLATION PROTECTION FEATURE.] No insurer 
        may offer a long-term care insurance policy unless the insurer 
        also offers to the policyholder, in addition to any other 
        inflation protection, the option to purchase a policy that 
        provides for benefit levels to increase with benefit maximums or 
        reasonable durations which are meaningful to account for 
        reasonably anticipated increases in the costs of long-term care 
        services covered by the policy.  In addition to other options 
        that may be offered, insurers must offer to each policyholder, 
        at the time of purchase, the option to purchase a policy with an 
        inflation protection feature no less favorable than one of the 
        following: 
           (1) increases benefit levels annually in a manner so that 
        the increases are compounded annually at a rate not less than 
        five percent; 
           (2) guarantees the insured individual the right to 
        periodically increase benefit levels without providing evidence 
        of insurability or health status so long as the option for the 
        previous period has not been declined.  The amount of the 
        additional benefit shall be no less than the difference between 
        the existing policy benefit and that benefit compounded annually 
        at a rate of at least five percent for the period beginning with 
        the purchase of the existing benefit and extending until the 
        year in which the offer is made; or 
           (3) covers a specified percentage of actual or reasonable 
        charges and does not include a maximum specified indemnity 
        amount or limit. 
           Subd. 2.  [GROUP OFFER.] Except as otherwise provided in 
        this subdivision, if the policy is issued to a group, the 
        required offer in subdivision 1 must be made to the group 
        policyholder.  If the policy is issued to a group as defined in 
        section 62S.01, subdivision 15, clause (4), other than to a 
        continuing care retirement community, the offering must be made 
        to each proposed certificate holder. 
           Subd. 3.  [REQUIRED INFORMATION.] Insurers shall include 
        the following information in or with the outline of coverage: 
           (1) a graphic comparison of the benefit levels of a policy 
        that increases benefits over the policy period with a policy 
        that does not increase benefits.  The graphic comparison must 
        show benefit levels over at least a 20-year period; and 
           (2) any expected premium increases or additional premiums 
        to pay for automatic or optional benefit increases. 
        An insurer may use a reasonable, hypothetical, or a graphic 
        demonstration for the purposes of this disclosure. 
           Subd. 4.  [BENEFIT CONTINUED.] Inflation protection benefit 
        increases under a policy which contains this benefit shall 
        continue without regard to an insured's age, claim status or 
        claim history, or the length of time the person has been insured 
        under the policy. 
           Subd. 5.  [AUTOMATIC BENEFIT INCREASES.] An offer of 
        inflation protection which provides for automatic benefit 
        increases must include an offer of a premium which the insurer 
        expects to remain constant.  The offer must disclose in a 
        conspicuous manner that the premium may change in the future 
        unless the premium is guaranteed to remain constant. 
           Subd. 6.  [REJECTION.] Inflation protection as provided in 
        subdivision 1, clause (1), must be included in a long-term care 
        insurance policy unless an insurer obtains a rejection of 
        inflation protection signed by the policyholder as required in 
        this section.  The rejection may be either in the application or 
        on a separate form. 
           The rejection shall be considered a part of the application 
        and shall state: 
           I have reviewed the outline of coverage and the graphs that 
        compare the benefits and premiums of this policy with and 
        without inflation protections.  Specifically, I have reviewed 
        plans ......., and I reject inflation protection. 
           Subd. 7.  [EXCEPTION.] This section does not apply to life 
        insurance policies or riders containing accelerated long-term 
        care benefits. 
           Sec. 24.  [62S.24] [REQUIREMENTS FOR APPLICATION FORMS AND 
        REPLACEMENT COVERAGE.] 
           Subdivision 1.  [REQUIRED QUESTIONS.] An application form 
        must include the following questions designed to elicit 
        information as to whether, as of the date of the application, 
        the applicant has another long-term care insurance policy or 
        certificate in force or whether a long-term care policy or 
        certificate is intended to replace any other long-term care 
        policy or certificate presently in force.  A supplementary 
        application or other form to be signed by the applicant and 
        agent, except where the coverage is sold without an agent, 
        containing the following questions may be used.  If a 
        replacement policy is issued to a group as defined under section 
        62S.01, subdivision 15, clause (1), the following questions may 
        be modified only to the extent necessary to elicit information 
        about long-term care insurance policies other than the group 
        policy being replaced; provided, however, that the certificate 
        holder has been notified of the replacement: 
           (1) do you have another long-term care insurance policy or 
        certificate in force?; 
           (2) did you have another long-term care insurance policy or 
        certificate in force during the last 12 months?; 
           (i) if so, with which company?; and 
           (ii) if that policy lapsed, when did it lapse?; and 
           (3) are you covered by Medicaid?  
           Subd. 2.  [ADDITIONAL APPLICATION REQUIREMENTS.] An 
        application for a long-term care insurance policy or certificate 
        must meet the requirements specified under section 62S.21. 
           Subd. 3.  [SOLICITATIONS OTHER THAN DIRECT RESPONSE.] After 
        determining that a sale will involve replacement, an insurer, 
        other than an insurer using direct response solicitation methods 
        or its agent, shall furnish the applicant, before issuance or 
        delivery of the individual long-term care insurance policy, a 
        notice regarding replacement of accident and sickness or 
        long-term care coverage.  One copy of the notice must be 
        retained by the applicant and an additional copy signed by the 
        applicant must be retained by the insurer.  The required notice 
        must be provided in the following manner: 
                 NOTICE TO APPLICANT REGARDING REPLACEMENT OF 
         INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE
                    (Insurance company's name and address) 
         SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE. 
           According to (your application) (information you have 
        furnished), you intend to lapse or otherwise terminate existing 
        long-term care insurance and replace it with an individual 
        long-term care insurance policy to be issued by (company name) 
        insurance company.  Your new policy provides 30 days within 
        which you may decide, without cost, whether you desire to keep 
        the policy.  For your own information and protection, you should 
        be aware of and seriously consider certain factors which may 
        affect the insurance protection available to you under the new 
        policy. 
           You should review this new coverage carefully, comparing it 
        with all long-term care insurance coverage you now have, and 
        terminate your present policy only if, after due consideration, 
        you find that purchase of this long-term care coverage is a wise 
        decision. 
                       STATEMENT TO APPLICANT BY AGENT 
                      (BROKER OR OTHER REPRESENTATIVE): 
                    (Use additional sheets, as necessary.) 
           I have reviewed your current insurance coverage.  I believe 
        the replacement of insurance involved in this transaction 
        materially improves your position.  My conclusion has taken into 
        account the following considerations, which I call to your 
        attention: 
           (a) Health conditions which you presently have (preexisting 
        conditions) may not be immediately or fully covered under the 
        new policy.  This could result in denial or delay in payment of 
        benefits under the new policy, whereas a similar claim might 
        have been payable under your present policy. 
           (b) State law provides that your replacement policy or 
        certificate may not contain new preexisting conditions or 
        probationary periods.  The insurer will waive any time periods 
        applicable to preexisting conditions or probationary periods in 
        the new policy (or coverage) for similar benefits to the extent 
        such time was spent (depleted) under the original policy. 
           (c) If you are replacing existing long-term care insurance 
        coverage, you may wish to secure the advice of your present 
        insurer or its agent regarding the proposed replacement of your 
        present policy.  This is not only your right, but it is also in 
        your best interest to make sure you understand all the relevant 
        factors involved in replacing your present coverage. 
           (d) If, after due consideration, you still wish to 
        terminate your present policy and replace it with new coverage, 
        be certain to truthfully and completely answer all questions on 
        the application concerning your medical health history.  Failure 
        to include all material medical information on an application 
        may provide a basis for the company to deny any future claims 
        and to refund your premium as though your policy had never been 
        in force.  After the application has been completed and before 
        you sign it, reread it carefully to be certain that all 
        information has been properly recorded. 
           .......................................................... 
           (Signature of Agent, Broker, or Other Representative) 
           (Typed Name and Address of Agency or Broker) 
           The above "Notice to Applicant" was delivered to me on: 
           
                                      ................................. 
                                                                 (Date) 
                                      ................................. 
                                                (Applicant's Signature) 
           Subd. 4.  [DIRECT RESPONSE SOLICITATIONS.] Insurers using 
        direct response solicitation methods shall deliver a notice 
        regarding replacement of long-term care coverage to the 
        applicant upon issuance of the policy.  The required notice must 
        be provided in the following manner: 
                 NOTICE TO APPLICANT REGARDING REPLACEMENT OF 
                           LONG-TERM CARE INSURANCE 
                    (Insurance company's name and address) 
         SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE. 
           According to (your application) (information you have 
        furnished), you intend to lapse or otherwise terminate existing 
        long-term care insurance and replace it with the long-term care 
        insurance policy delivered herewith issued by (company name) 
        insurance company. 
           Your new policy provides 30 days within which you may 
        decide, without cost, whether you desire to keep the policy.  
        For your own information and protection, you should be aware of 
        and seriously consider certain factors which may affect the 
        insurance protection available to you under the new policy. 
           You should review this new coverage carefully, comparing it 
        with all long-term care insurance coverage you now have, and 
        terminate your present policy only if, after due consideration, 
        you find that purchase of this long-term care coverage is a wise 
        decision. 
           (a) Health conditions which you presently have (preexisting 
        conditions) may not be immediately or fully covered under the 
        new policy.  This could result in denial or delay in payment of 
        benefits under the new policy, whereas a similar claim might 
        have been payable under your present policy. 
           (b) State law provides that your replacement policy or 
        certificate may not contain new preexisting conditions or 
        probationary periods.  Your insurer will waive any time periods 
        applicable to preexisting conditions or probationary periods in 
        the new policy (or coverage) for similar benefits to the extent 
        such time was spent (depleted) under the original policy. 
           (c) If you are replacing existing long-term care insurance 
        coverage, you may wish to secure the advice of your present 
        insurer or its agent regarding the proposed replacement of your 
        present policy.  This is not only your right, but it is also in 
        your best interest to make sure you understand all the relevant 
        factors involved in replacing your present coverage. 
           (d) (To be included only if the application is attached to 
        the policy.) 
           If, after due consideration, you still wish to terminate 
        your present policy and replace it with new coverage, read the 
        copy of the application attached to your new policy and be sure 
        that all questions are answered fully and correctly.  Omissions 
        or misstatements in the application could cause an otherwise 
        valid claim to be denied.  Carefully check the application and 
        write to (company name and address) within 30 days if any 
        information is not correct and complete, or if any past medical 
        history has been left out of the application. 
                                       ................................ 
                                                       (Company Name)   
           Subd. 5.  [REPLACEMENT NOTIFICATION.] Where replacement is 
        intended, the replacing insurer shall notify, in writing, the 
        existing insurer of the proposed replacement.  The existing 
        policy must be identified by the insurer, name of the insured, 
        and policy number or address including zip code.  The notice 
        must be made within five working days from the date the 
        application is received by the insurer or the date the policy is 
        issued, whichever is sooner. 
           Subd. 6.  [WAIVER OF PREEXISTING CONDITION AND PROBATIONARY 
        PERIODS.] If a long-term care insurance policy or certificate 
        replaces another long-term care policy or certificate, the 
        replacing insurer shall waive any time periods applicable to 
        preexisting conditions and probationary periods in the new 
        long-term care policy for similar benefits to the extent that 
        similar exclusions have been satisfied under the original policy.
           Sec. 25.  [62S.25] [REPORTING REQUIREMENTS.] 
           Subdivision 1.  [INSURER RECORDS.] Each insurer shall 
        maintain records for each agent of that agent's amount of 
        replacement sales as a percent of the agent's total annual sales 
        and the amount of lapses of long-term care insurance policies 
        sold by the agent as a percent of the agent's total annual sales.
           Subd. 2.  [REQUIRED INFORMATION ON AGENTS.] Each insurer 
        shall report annually by June 30 the ten percent of its agents 
        with the greatest percentages of lapses and replacements as 
        measured under subdivision 1. 
           Subd. 3.  [INTENT.] Reported replacement and lapse rates do 
        not alone constitute a violation of insurance laws or 
        necessarily imply wrongdoing.  The reports are for the purpose 
        of reviewing more closely agent activities regarding the sale of 
        long-term care insurance. 
           Subd. 4.  [LAPSED POLICIES.] Each insurer shall report 
        annually by June 30 the number of lapsed long-term care 
        insurance policies as a percent of its total annual sales and as 
        a percent of its total number of long-term care insurance 
        policies in force as of the end of the preceding calendar year. 
           Subd. 5.  [REPLACEMENT POLICIES.] Each insurer shall report 
        annually by June 30 the number of replacement long-term care 
        insurance policies sold as a percent of its total annual sales 
        and as a percent of its total number of long-term care insurance 
        policies in force as of the preceding calendar year. 
           Subd. 6.  [CLAIMS DENIED.] Each insurer shall report 
        annually by June 30 the number of claims denied during the 
        reporting period for each class of business, expressed as a 
        percentage of claims denied, other than claims denied for 
        failure to meet the waiting period or because of any applicable 
        preexisting condition. 
           Sec. 26.  [62S.26] [LOSS RATIO.] 
           The minimum loss ratio must be at least 60 percent, 
        calculated in a manner which provides for adequate reserving of 
        the long-term care insurance risk.  In evaluating the expected 
        loss ratio, the commissioner shall give consideration to all 
        relevant factors, including: 
           (1) statistical credibility of incurred claims experience 
        and earned premiums; 
           (2) the period for which rates are computed to provide 
        coverage; 
           (3) experienced and projected trends; 
           (4) concentration of experience within early policy 
        duration; 
           (5) expected claim fluctuation; 
           (6) experience refunds, adjustments, or dividends; 
           (7) renewability features; 
           (8) all appropriate expense factors; 
           (9) interest; 
           (10) experimental nature of the coverage; 
           (11) policy reserves; 
           (12) mix of business by risk classification; and 
           (13) product features such as long elimination periods, 
        high deductibles, and high maximum limits. 
           Sec. 27.  [62S.27] [FILING REQUIREMENT.] 
           Before an insurer or similar organization offers group 
        long-term care insurance to a resident of this state under 
        section 62S.03, it must file with the commissioner evidence that 
        the group policy or certificate has been approved by a state 
        having statutory or regulatory long-term care insurance 
        requirements substantially similar to those adopted in this 
        state. 
           Sec. 28.  [62S.28] [FILING REQUIREMENTS FOR ADVERTISING.] 
           Subdivision 1.  [ADVERTISEMENT COPY.] An insurer or other 
        entity providing long-term care insurance or benefits in this 
        state shall provide a copy of any long-term care insurance 
        advertisement intended for use in this state whether through 
        written, radio, or television medium to the commissioner for 
        review or approval by the commissioner, to the extent it may be 
        required under state law.  All advertisements must be retained 
        by the insurer or other entity for at least three years from the 
        date the advertisement was first used. 
           Subd. 2.  [EXEMPTION.] The commissioner may exempt from 
        these requirements any advertising form or material when, in the 
        commissioner's opinion, this requirement may not be reasonably 
        applied. 
           Sec. 29.  [62S.29] [STANDARDS FOR MARKETING.] 
           Subdivision 1.  [REQUIREMENTS.] An insurer or other entity 
        marketing long-term care insurance coverage in this state, 
        directly or through its producers, shall: 
           (1) establish marketing procedures to assure that a 
        comparison of policies by its agents or other producers are fair 
        and accurate; 
           (2) establish marketing procedures to assure excessive 
        insurance is not sold or issued; 
           (3) display prominently by type, stamp, or other 
        appropriate means, on the first page of the outline of coverage 
        and policy, the following: 
           "Notice to buyer:  This policy may not cover all of the 
        costs associated with long-term care incurred by the buyer 
        during the period of coverage.  The buyer is advised to review 
        carefully all policy limitations."; 
           (4) inquire and otherwise make every reasonable effort to 
        identify whether a prospective applicant or enrollee for 
        long-term care insurance already has long-term care insurance 
        and the types and amounts of the insurance; 
           (5) establish auditable procedures for verifying compliance 
        with this subdivision; and 
           (6) if applicable, provide written notice to the 
        prospective policyholder and certificate holder, at 
        solicitation, that a senior insurance counseling program 
        approved by the commissioner is available and the name, address, 
        and telephone number of the program. 
           Subd. 2.  [PROHIBITIONS.] In addition to the practices 
        prohibited in chapter 72A, the following acts and practices are 
        prohibited: 
           (1) knowingly making any misleading representation or 
        incomplete or fraudulent comparison of any insurance policies or 
        insurers for the purpose of inducing, or tending to induce, any 
        person to lapse, forfeit, surrender, terminate, retain, pledge, 
        assign, borrow on, or convert any insurance policy or to take 
        out a policy of insurance with another insurer; 
           (2) employing a method of marketing having the effect of or 
        tending to induce the purchase of insurance through force, 
        fright, threat, whether explicit or implied, or undue pressure 
        to purchase or recommend the purchase of insurance; 
           (3) making use directly or indirectly of a method of 
        marketing which fails to disclose in a conspicuous manner that a 
        purpose of the method of marketing is solicitation of insurance 
        and that contact will be made by an insurance agent or insurance 
        company; and 
           (4) misrepresenting a material fact in selling or offering 
        to sell a policy. 
           Subd. 3.  [FILING OF MATERIAL.] The insurer shall file with 
        the commissioner the following material: 
           (1) the policy and certificate; 
           (2) a corresponding outline of coverage; and 
           (3) all advertisements requested by the commissioner. 
           Subd. 4.  [ASSOCIATION DISCLOSURE REQUIREMENTS.] An 
        association shall disclose in a long-term care insurance 
        solicitation: 
           (1) the specific nature and amount of the compensation 
        arrangements, including all fees, commissions, administrative 
        fees, and other forms of financial support, that the association 
        receives from endorsement or sale of the policy or certificate 
        to its members; and 
           (2) a brief description of the process under which the 
        policies and the insurer issuing the policies were selected. 
           Subd. 5.  [ADDITIONAL DISCLOSURE REQUIREMENTS.] If the 
        association and the insurer have interlocking directorates or 
        trustee arrangements, the association shall disclose this fact 
        to its members. 
           Subd. 6.  [POLICY REVIEW AND APPROVAL.] The board of 
        directors of associations selling or endorsing long-term care 
        insurance policies or certificates shall review and approve the 
        insurance policies as well as the compensation arrangements made 
        with the insurer. 
           Subd. 7.  [INFORMATION REQUIRED.] No group long-term care 
        insurance policy or certificate may be issued to an association 
        unless the insurer files with the commissioner the information 
        required in this section. 
           Subd. 8.  [INSURER CERTIFICATION.] The insurer shall not 
        issue a long-term care policy or certificate to an association 
        or continue to market a policy or certificate unless the insurer 
        certifies annually that the association has complied with the 
        requirements specified in this section. 
           Sec. 30.  [62S.30] [APPROPRIATENESS OF RECOMMENDED 
        PURCHASE.] 
           In recommending the purchase or replacement of a long-term 
        care insurance policy or certificate, an agent shall comply with 
        section 60K.14, subdivision 4. 
           Sec. 31.  [62S.31] [REQUIREMENT TO DELIVER SHOPPER'S 
        GUIDE.] 
           Subdivision 1.  [SHOPPER'S GUIDE.] A long-term care 
        insurance shopper's guide in the format developed by the 
        national association of insurance commissioners, or a guide 
        developed or approved by the commissioner, shall be provided to 
        all prospective applicants of a long-term care insurance policy 
        or certificate: 
           (1) in the case of agent solicitations, an agent must 
        deliver the shopper's guide before the presentation of an 
        application or enrollment form; and 
           (2) in the case of direct response solicitations, the 
        shopper's guide must be presented in conjunction with an 
        application or enrollment form. 
           Subd. 2.  [EXCEPTION.] Subdivision 1 does not apply to life 
        insurance policies or riders containing accelerated long-term 
        care benefits.  The policy summary required under section 62S.10 
        must be furnished with a life insurance policy or rider 
        containing accelerated long-term care benefits. 
           Sec. 32.  [62S.32] [APPLICATION.] 
           Subdivision 1.  [MEDICARE SUPPLEMENT INSURANCE POLICY.] 
        Medicare supplement insurance policy laws do not apply to 
        long-term care insurance. 
           Subd. 2.  [QUALIFIED LONG-TERM CARE INSURANCE POLICY.] This 
        chapter applies to long-term care insurance marketed as a 
        qualified long-term care policy.  This chapter does not apply to 
        long-term care insurance governed by sections 62A.46 to 62A.56. 
           Sec. 33.  [62S.33] [PENALTIES.] 
           In addition to any other penalties provided by the laws of 
        this state, an insurer or agent found to have violated any 
        requirement of this state relating to the regulation of 
        long-term care insurance or the marketing of the insurance is 
        subject to a fine of up to three times the amount of any 
        commissions paid for each policy involved in the violation or up 
        to $10,000, whichever is greater. 
           Sec. 34.  [EFFECTIVE DATE.] 
           Sections 1 to 33 are effective the day following final 
        enactment. 
                                   ARTICLE 2
                                CROSS-REFERENCES
           Section 1.  Minnesota Statutes 1996, section 61A.072, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DISCLOSURE.] A life insurance contract or 
        supplemental contract that contains a provision to permit the 
        accelerated payment of benefits as authorized under section 
        60A.06, subdivision 1, clause (4), must contain the following 
        disclosure:  "This is a life insurance policy which pays 
        accelerated death benefits at your option under conditions 
        specified in the policy.  This policy is not a long-term care 
        policy meeting the requirements of sections 62A.46 to 62A.56 or 
        chapter 62S."  
           Sec. 2.  Minnesota Statutes 1996, section 61A.072, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LONG-TERM CARE EXPENSES.] If the right to 
        receive accelerated benefits is contingent upon the insured 
        receiving long-term care services, the contract or supplemental 
        contract shall include the following provisions:  
           (1) the minimum accelerated benefit shall be $1,200 per 
        month if the insured is receiving nursing facility services and 
        $750 per month if the insured is receiving home services with a 
        minimum lifetime benefit limit of $50,000; 
           (2) coverage is effective immediately and benefits shall 
        commence with the receipt of services as defined in section 
        62A.46, subdivision 3, 4, or 5, or 62S.01, subdivision 25, but 
        may include a waiting period of not more than 90 days, provided 
        that no more than one waiting period may be required per benefit 
        period as defined in section 62A.46, subdivision 11; 
           (3) premium shall be waived during any period in which 
        benefits are being paid to the insured during confinement to a 
        nursing home facility; 
           (4) coverage may not be canceled or renewal refused except 
        on the grounds of nonpayment of premium; 
           (5) coverage must include preexisting conditions during the 
        first six months of coverage if the insured was not diagnosed or 
        treated for the particular condition during the 90 days 
        immediately preceding the effective date of coverage; 
           (6) coverage must include mental or nervous disorders which 
        have a demonstrable organic cause such as Alzheimer's and 
        related dementias; 
           (7) no prior hospitalization requirement shall be allowed 
        unless a similar requirement is allowed by section 62A.48, 
        subdivision 1, or 62S.06; and 
           (8) the contract shall include a cancellation provision 
        that meets the requirements of section 62A.50, subdivision 2, or 
        62S.07. 
           Sec. 3.  Minnesota Statutes 1996, section 62A.011, 
        subdivision 3, is amended to read: 
           Subd. 3.  [HEALTH PLAN.] "Health plan" means a policy or 
        certificate of accident and sickness insurance as defined in 
        section 62A.01 offered by an insurance company licensed under 
        chapter 60A; a subscriber contract or certificate offered by a 
        nonprofit health service plan corporation operating under 
        chapter 62C; a health maintenance contract or certificate 
        offered by a health maintenance organization operating under 
        chapter 62D; a health benefit certificate offered by a fraternal 
        benefit society operating under chapter 64B; or health coverage 
        offered by a joint self-insurance employee health plan operating 
        under chapter 62H.  Health plan means individual and group 
        coverage, unless otherwise specified.  Health plan does not 
        include coverage that is: 
           (1) limited to disability or income protection coverage; 
           (2) automobile medical payment coverage; 
           (3) supplemental to liability insurance; 
           (4) designed solely to provide payments on a per diem, 
        fixed indemnity, or non-expense-incurred basis; 
           (5) credit accident and health insurance as defined in 
        section 62B.02; 
           (6) designed solely to provide dental or vision care; 
           (7) blanket accident and sickness insurance as defined in 
        section 62A.11; 
           (8) accident-only coverage; 
           (9) a long-term care policy as defined in section 62A.46 or 
        62S.01; 
           (10) issued as a supplement to Medicare, as defined in 
        sections 62A.31 to 62A.44, or policies, contracts, or 
        certificates that supplement Medicare issued by health 
        maintenance organizations or those policies, contracts, or 
        certificates governed by section 1833 or 1876 of the federal 
        Social Security Act, United States Code, title 42, section 1395, 
        et seq., as amended; 
           (11) workers' compensation insurance; or 
           (12) issued solely as a companion to a health maintenance 
        contract as described in section 62D.12, subdivision 1a, so long 
        as the health maintenance contract meets the definition of a 
        health plan. 
           Sec. 4.  Minnesota Statutes 1996, section 62A.31, 
        subdivision 6, is amended to read: 
           Subd. 6.  [APPLICATION TO CERTAIN POLICIES.] The 
        requirements of sections 62A.31 to 62A.44 shall not apply to 
        disability income protection insurance policies, long-term care 
        policies issued pursuant to sections 62A.46 to 62A.56 or chapter 
        62S, or group policies of accident and health insurance which do 
        not purport to supplement Medicare issued to any of the 
        following groups:  
           (a) A policy issued to an employer or employers or to the 
        trustee of a fund established by an employer where only 
        employees or retirees, and dependents of employees or retirees, 
        are eligible for coverage.  
           (b) A policy issued to a labor union or similar employee 
        organization.  
           (c) A policy issued to an association, a trust or the 
        trustee of a fund established, created or maintained for the 
        benefit of members of one or more associations.  The association 
        or associations shall have at the outset a minimum of 100 
        persons; shall have been organized and maintained in good faith 
        for purposes other than that of obtaining insurance; shall have 
        a constitution and bylaws which provide that (1) the association 
        or associations hold regular meetings not less frequently than 
        annually to further purposes of the members, (2) except for 
        credit unions, the association or associations collect dues or 
        solicit contributions from members, (3) the members have voting 
        privileges and representation on the governing board and 
        committees, and (4) the members are not, within the first 30 
        days of membership, directly solicited, offered, or sold a 
        long-term care policy or Medicare supplement policy if the 
        policy is available as an association benefit.  This clause does 
        not prohibit direct solicitations, offers, or sales made 
        exclusively by mail. 
           An association may apply to the commissioner for a waiver 
        of the 30-day waiting period as to that association.  The 
        commissioner may grant the waiver upon a finding of all of the 
        following:  (1) that the association is in full compliance with 
        this section; (2) that sanctions have not been imposed against 
        the association as a result of significant disciplinary action 
        by the department of commerce; and (3) that at least 90 percent 
        of the association's income comes from dues, contributions, or 
        sources other than income from the sale of insurance. 
           Sec. 5.  Minnesota Statutes 1996, section 62A.48, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [QUALIFIED LONG-TERM CARE.] Sections 62A.46 to 
        62A.56 do not apply to policies marketed as qualified long-term 
        care insurance policies under chapter 62S. 
           Sec. 6.  Minnesota Statutes 1996, section 62A.50, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [POLICIES OTHER THAN QUALIFIED LONG-TERM CARE 
        INSURANCE POLICIES.] A policy that is not intended to be a 
        qualified long-term care insurance policy as defined under 
        section 62S.01, subdivision 24, must include a disclosure 
        statement in the policy and in the outline of coverage that the 
        policy is not intended to be a qualified long-term care 
        insurance policy.  The disclosure must be prominently displayed 
        and read as follows:  This long-term care insurance policy 
        (certificate) is not intended to be a qualified long-term care 
        insurance contract as defined under section 7702 (B)(b) of the 
        Internal Revenue Code of 1986.  You should consult with your 
        attorney, accountant, or tax advisor regarding the tax 
        implications of purchasing long-term care insurance. 
           Sec. 7.  Minnesota Statutes 1996, section 62L.02, 
        subdivision 15, is amended to read: 
           Subd. 15.  [HEALTH BENEFIT PLAN.] "Health benefit plan" 
        means a policy, contract, or certificate offered, sold, issued, 
        or renewed by a health carrier to a small employer for the 
        coverage of medical and hospital benefits.  Health benefit plan 
        includes a small employer plan.  Health benefit plan does not 
        include coverage that is: 
           (1) limited to disability or income protection coverage; 
           (2) automobile medical payment coverage; 
           (3) supplemental to liability insurance; 
           (4) designed solely to provide payments on a per diem, 
        fixed indemnity, or non-expense-incurred basis; 
           (5) credit accident and health insurance as defined in 
        section 62B.02; 
           (6) designed solely to provide dental or vision care; 
           (7) blanket accident and sickness insurance as defined in 
        section 62A.11; 
           (8) accident-only coverage; 
           (9) a long-term care policy as defined in section 62A.46 or 
        a qualified long-term care insurance policy as defined in 
        section 62S.01; 
           (10) issued as a supplement to Medicare, as defined in 
        sections 62A.31 to 62A.44, or policies, contracts, or 
        certificates that supplement Medicare issued by health 
        maintenance organizations or those policies, contracts, or 
        certificates governed by section 1833 or 1876 of the federal 
        Social Security Act, United States Code, title 42, section 1395, 
        et seq., as amended; 
           (11) workers' compensation insurance; or 
           (12) issued solely as a companion to a health maintenance 
        contract as described in section 62D.12, subdivision 1a, so long 
        as the health maintenance contract meets the definition of a 
        health benefit plan. 
           For the purpose of this chapter, a health benefit plan 
        issued to eligible employees of a small employer who meets the 
        participation requirements of section 62L.03, subdivision 3, is 
        considered to have been issued to a small employer.  A health 
        benefit plan issued on behalf of a health carrier is considered 
        to be issued by the health carrier. 
           Sec. 8.  [EFFECTIVE DATE.] 
           Sections 1 to 5 and 7 are effective the day following final 
        enactment.  Section 6 is effective for policies sold on or after 
        August 1, 1997. 
           Presented to the governor April 28, 1997 
           Signed by the governor April 29, 1997, 2:27 p.m.