Office of the Revisor of Statutes
Minnesota Session Laws - 1997, Regular Session
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.
Official Publication of the State of Minnesota
Revisor of Statutes