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
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
An insurer may use a reasonable, hypothetical, or a graphic demonstration for the purposes of
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.
History: 1997 c 71 art 1 s 23