Print Friendly HOUSE BILL NO. 14 – Long term care insurance
HOUSE BILL NO. 14
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H0014........................................................by MR. SPEAKER
Requested by Department of Insurance
INSURANCE - Repeals and adds to existing law to enact the Long-term Care
01/11 House intro - 1st rdg - to printing
01/11 Rpt prt - to Bus
02/10 Rpt out - rec d/p - to 2nd rdg
02/11 2nd rdg - to 3rd rdg
02/15 3rd rdg - PASSED - 62-0-7
AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
Bruneel, Callister, Campbell, Clark, Crow, Cuddy, Deal, Denney,
Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hammond,
Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Jones, Judd,
Kellogg, Kempton, Kunz, Lake, Limbaugh, Linford, Loertscher, McKague,
Meyer, Montgomery, Mortensen, Moyle, Pomeroy, Reynolds, Ridinger,
Ringo, Robison, Schaefer, Sellman, Smith, Stevenson, Stoicheff,
Stone, (Taylor)Taylor, Tilman, Tippets, Trail, Watson, Wheeler,
Williams, Wood, Zimmermann, Mr Speaker
NAYS -- None
Absent and excused -- Chase, Hadley, Kendell, Mader, Marley,
Dist. 15, Seat A, Vacant
Floor Sponsor - Watson
Title apvd - to Senate
02/16 Senate intro - 1st rdg - to Com/HuRes
03/05 Rpt out - rec d/p - to 2nd rdg
03/08 2nd rdg - to 3rd rdg
03/10 3rd rdg - PASSED - 34-0-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Noh,
Richardson, Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner,
Stennett, Thorne, Twiggs, Wheeler, Whitworth
Absent and excused--Parry
Floor Sponsor - Ipsen
Title apvd - to House
03/11 To enrol
03/12 Rpt enrol - Sp signed
03/15 Pres signed
03/16 To Governor
03/18 Governor signed
Session Law Chapter 98
|||| LEGISLATURE OF THE STATE OF IDAHO ||||
Fifty-fifth Legislature First Regular Session - 1999
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 14
BY MR. SPEAKER
Requested by: Department of Insurance
1 AN ACT
2 RELATING TO LONG-TERM CARE INSURANCE; REPEALING CHAPTER 46, TITLE 41, IDAHO
3 CODE; AMENDING TITLE 41, IDAHO CODE, BY THE ADDITION OF A NEW CHAPTER 46,
4 TITLE 41, IDAHO CODE, TO PROVIDE THE PURPOSE OF THE LONG-TERM CARE INSUR-
5 ANCE ACT, TO PROVIDE THE SCOPE OF THE ACT, TO PROVIDE DEFINITIONS, TO PRO-
6 VIDE FOR EXTRATERRITORIAL JURISDICTION FOR GROUP LONG-TERM CARE INSURANCE,
7 TO PROVIDE DISCLOSURE AND PERFORMANCE STANDARDS FOR LONG-TERM CARE INSUR-
8 ANCE, TO PROVIDE FOR INCONTESTABILITY, TO PROVIDE FOR NONFORFEITURE BENE-
9 FITS, TO PROVIDE AUTHORITY TO PROMULGATE RULES, TO PROVIDE FOR ADMINIS-
10 TRATIVE PROCEDURES, TO PROVIDE FOR SEVERABILITY AND TO PROVIDE PENALTIES;
11 DECLARING AN EMERGENCY AND PROVIDING FOR RETROACTIVE APPLICATION.
12 Be It Enacted by the Legislature of the State of Idaho:
13 SECTION 1. That Chapter 46, Title 41, Idaho Code, be, and the same is
14 hereby repealed.
15 SECTION 2. That Title 41, Idaho Code, be, and the same is hereby amended
16 by the addition thereto of a NEW CHAPTER , to be known and desig-
17 nated as Chapter 46, Title 41, Idaho Code, and to read as follows:
18 CHAPTER 46
19 LONG-TERM CARE INSURANCE ACT
20 41-4601. PURPOSE. The purpose of this chapter is to promote the public
21 interest, to promote the availability of long-term care insurance policies, to
22 protect applicants for long-term care insurance, as defined, from unfair or
23 deceptive sales or enrollment practices, to establish standards for long-term
24 care insurance, to facilitate public understanding and comparison of long-term
25 care insurance policies, and to facilitate flexibility and innovation in the
26 development of long-term care insurance coverage.
27 41-4602. SCOPE. The requirements of this chapter shall apply to policies
28 delivered or issued for delivery in this state on or after the effective date
29 of this chapter. This chapter is not intended to supersede the obligations of
30 entities subject to this chapter to comply with the substance of other appli-
31 cable insurance laws insofar as they do not conflict with this chapter, except
32 that laws and regulations designed and intended to apply to medicare supple-
33 ment insurance policies shall not be applied to long-term care insurance.
34 41-4603. DEFINITIONS. Unless the context requires otherwise, the defini-
35 tions in this section apply throughout this chapter.
36 (1) "Applicant" means:
37 (a) In the case of an individual long-term care insurance policy, the
38 person who seeks to contract for benefits; and
39 (b) In the case of a group long-term care insurance policy, the proposed
1 certificate holder.
2 (2) "Certificate" means, for the purposes of this chapter, any certifi-
3 cate issued under a group long-term care insurance policy, which policy has
4 been delivered or issued for delivery in this state.
5 (3) "Director" means the director of the department of insurance of this
7 (4) "Group long-term care insurance" means a long-term care insurance
8 policy which is delivered or issued for delivery in this state and issued to:
9 (a) One (1) or more employers or labor organizations, or to a trust or to
10 the trustees of a fund established by one (1) or more employers or labor
11 organizations, or a combination thereof, for employees or former employees
12 or a combination thereof, or for members or former members or a combina-
13 tion thereof, of the labor organizations; or
14 (b) Any professional, trade or occupational association for its members
15 or former or retired members, or combination thereof, if such association:
16 (i) Is composed of individuals all of whom are or were actively
17 engaged in the same profession, trade or occupation; and
18 (ii) Has been maintained in good faith for purposes other than
19 obtaining insurance; or
20 (c) An association or a trust or the trustee(s) of a fund established,
21 created or maintained for the benefit of members of one (1) or more asso-
22 ciations. Prior to advertising, marketing or offering such policy within
23 this state, the association or associations, or the insurer of the associ-
24 ation or associations, shall file evidence with the director that the
25 association or associations have at the outset a minimum of one hundred
26 (100) persons and have been organized and maintained in good faith for
27 purposes other than that of obtaining insurance; have been in active exis-
28 tence for at least one (1) year; and have a constitution and bylaws which
29 provide that:
30 (i) The association or associations hold regular meetings not less
31 than annually to further purposes of the members;
32 (ii) Except for credit unions, the association or associations col-
33 lect dues or solicit contributions from members; and
34 (iii) The members have voting privileges and representation on the
35 governing board and committees.
36 Sixty (60) days after such filing the association or associations will be
37 deemed to satisfy such organizational requirements, unless the director
38 makes a finding that the association or associations do not satisfy those
39 organizational requirements.
40 (d) A group other than as described in paragraphs (a), (b) and (c) of
41 this subsection, subject to a finding by the director that:
42 (i) The issuance of the group policy is not contrary to the best
43 interest of the public;
44 (ii) The issuance of the group policy would result in economies of
45 acquisition or administration; and
46 (iii) The benefits are reasonable in relation to the premiums
48 (5) "Long-term care insurance" means any insurance policy or rider adver-
49 tised, marketed, offered or designed to provide coverage for not less than
50 twelve (12) consecutive months for each covered person on an expense incurred,
51 indemnity, prepaid or other basis; for one (1) or more necessary or medically
52 necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance or
53 personal care services, provided in a setting other than an acute care unit of
54 a hospital. Such term includes group and individual annuities and life insur-
55 ance policies or riders which provide directly or which supplement long-term
1 care insurance. Such term also includes a policy or rider which provides for
2 payment of benefits based upon cognitive impairment or the loss of functional
3 capacity. The term shall also include qualified long-term care insurance con-
4 tracts. Long-term care insurance may be issued by insurers, fraternal benefit
5 societies, managed care organizations, or any similar organization to the
6 extent they are otherwise authorized to issue life or health insurance. Long-
7 term care insurance shall not include any insurance policy which is offered
8 primarily to provide basic medicare supplement coverage, basic hospital
9 expense coverage, basic medical-surgical expense coverage, hospital confine-
10 ment indemnity coverage, major medical expense coverage, disability income or
11 related asset-protection coverage, accident only coverage, specified disease
12 or specified accident coverage, or limited benefit health coverage. With
13 regard to life insurance, this term does not include life insurance policies
14 which accelerate the death benefit specifically for one (1) or more of the
15 qualifying events of terminal illness, medical conditions requiring extraordi-
16 nary medical intervention, or permanent institutional confinement, and which
17 provide the option of a lump-sum payment for those benefits and in which nei-
18 ther the benefits nor the eligibility for the benefits is conditioned upon the
19 receipt of long-term care. Notwithstanding any other provision contained
20 herein, any product advertised, marketed or offered as long-term care insur-
21 ance shall be subject to the provisions of this chapter.
22 (6) "Policy" means, for the purposes of this chapter, any policy, con-
23 tract, enrolled member agreement, rider or endorsement delivered or issued for
24 delivery in this state by an insurer, fraternal benefit society, managed care
25 organization, or any similar organization.
26 41-4604. EXTRATERRITORIAL JURISDICTION -- GROUP LONG-TERM CARE INSURANCE.
27 No group long-term care insurance coverage may be offered to a resident of
28 this state under a group policy issued in another state to a group described
29 in section 41-4603(4)(d), Idaho Code, unless this state or another state hav-
30 ing statutory and regulatory long-term care insurance requirements substan-
31 tially similar to those adopted in this state has made a determination that
32 such requirements have been met.
33 41-4605. DISCLOSURE AND PERFORMANCE STANDARDS FOR LONG-TERM CARE INSUR-
34 ANCE. (1) The director may adopt rules that include standards for full and
35 fair disclosure setting forth the manner, content and required disclosures for
36 the sale of long-term care insurance policies, terms of renewability, initial
37 and subsequent conditions of eligibility, nonduplication of coverage provi-
38 sions, coverage of dependents, preexisting conditions, termination of insur-
39 ance, continuation or conversion, probationary periods, limitations, excep-
40 tions, reductions, elimination periods, requirements for replacement, recur-
41 rent conditions and definitions of terms.
42 (2) No long-term care insurance policy may:
43 (a) Be cancelled, nonrenewed or otherwise terminated on the grounds of
44 the age or the deterioration of the mental or physical health of the
45 insured individual or certificate holder; or
46 (b) Contain a provision establishing a new waiting period in the event
47 existing coverage is converted to or replaced by a new or other form
48 within the same company, except with respect to an increase in benefits
49 voluntarily selected by the insured individual or group policyholder; or
50 (c) Provide coverage for skilled nursing care only or provide signifi-
51 cantly more coverage for skilled care in a facility than coverage for
52 lower levels of care.
53 (3) Preexisting condition:
1 (a) No long-term care insurance policy or certificate other than a policy
2 or certificate thereunder issued to a group as defined in section
3 41-4603(4)(a), Idaho Code, shall use a definition of "preexisting condi-
4 tion" which is more restrictive than the following: preexisting condition
5 means a condition for which medical advice or treatment was recommended
6 by, or received from a provider of health care services, within six (6)
7 months preceding the effective date of coverage of an insured person.
8 (b) No long-term care insurance policy or certificate other than a pol-
9 icy or certificate thereunder issued to a group as defined in section
10 41-4603(4)(a), Idaho Code, may exclude coverage for a loss or confinement
11 which is the result of a preexisting condition unless such loss or con-
12 finement begins within six (6) months following the effective date of cov-
13 erage of an insured person.
14 (c) The director may extend the limitation periods set forth in para-
15 graphs (a) and (b) of this subsection as to specific age group categories
16 in specific policy forms upon findings that the extension is in the best
17 interest of the public.
18 (d) The definition of "preexisting condition" does not prohibit an
19 insurer from using an application form designed to elicit the complete
20 health history of an applicant, and, on the basis of the answers on that
21 application, from underwriting in accordance with that insurer's estab-
22 lished underwriting standards. Unless otherwise provided in the policy or
23 certificate, a preexisting condition, regardless of whether it is dis-
24 closed on the application, need not be covered until the waiting period
25 described in subsection (3)(b) of this section expires. No long-term care
26 insurance policy or certificate may exclude or use waivers or riders of
27 any kind to exclude, limit or reduce coverage or benefits for specifically
28 named or described preexisting diseases or physical conditions beyond the
29 waiting period described in subsection (3)(b) of this section.
30 (4) Prior hospitalization/institutionalization:
31 (a) No long-term care insurance policy may be delivered or issued for
32 delivery in this state if such policy:
33 (i) Conditions eligibility for any benefits on a prior hospitaliza-
34 tion requirement;
35 (ii) Conditions eligibility for benefits provided in an institu-
36 tional care setting on the receipt of a higher level of institutional
37 care; or
38 (iii) Conditions eligibility for any benefits other than waiver of
39 premium, postconfinement, postacute care or recuperative benefits on
40 a prior institutionalization requirement.
41 (b) (i) A long-term care insurance policy containing postconfinement,
42 postacute care or recuperative benefits shall clearly label in a sep-
43 arate paragraph of the policy or certificate entitled "limitations or
44 conditions on eligibility for benefits" such limitations or condi-
45 tions, including any required number of days of confinement.
46 (ii) A long-term care insurance policy or rider which conditions
47 eligibility for noninstitutional benefits on the prior receipt of
48 institutional care shall not require a prior institutional stay of
49 more than thirty (30) days.
50 (iii) A long-term care insurance policy or rider containing a benefit
51 advertised, marketed, or offered as a home health care or home care
52 benefit may not condition receipt of benefits on a prior institution-
53 alization requirement.
54 (5) The director may adopt rules establishing loss ratio standards for
55 long-term care insurance policies provided that a specific reference to long-
1 term care insurance policies is contained in the rule.
2 (6) Right to return -- Free look: Long-term care insurance applicants
3 shall have the right to return the policy or certificate within thirty (30)
4 days of its delivery and to have the premium refunded if, after examination of
5 the policy or certificate, the applicant is not satisfied for any reason.
6 Long-term care insurance policies and certificates shall have a notice promi-
7 nently printed on the first page or attached thereto stating in substance that
8 the applicant shall have the right to return the policy or certificate within
9 thirty (30) days of its delivery and to have the premium refunded if, after
10 examination of the policy or certificate, other than a certificate issued pur-
11 suant to a policy issued to a group defined in section 41-4603(4)(a), Idaho
12 Code, the applicant is not satisfied for any reason.
13 (7) (a) An outline of coverage shall be delivered to a prospective
14 applicant for long-term care insurance at the time of initial solicita-
15 tion through means which prominently direct the attention of the recipient
16 to the document and its purpose.
17 (i) The director shall prescribe a standard format, including
18 style, arrangement and overall appearance, and the content of an out-
19 line of coverage.
20 (ii) In the case of agent solicitations, an agent must deliver the
21 outline of coverage prior to the presentation of an application or
22 enrollment form.
23 (iii) In the case of direct response solicitations, the outline of
24 coverage must be presented in conjunction with any application or
25 enrollment form.
26 (iv) In the case of a policy issued to a group defined in section
27 41-4603(4)(a), Idaho Code, an outline of coverage shall not be
28 required to be delivered, provided that the information described in
29 paragraphs (b)(i) through (b)(vi) of this subsection is contained in
30 other materials relating to enrollment. Upon request, these other
31 materials shall be made available to the director.
32 (b) The outline of coverage shall include:
33 (i) A description of the principal benefits and coverage provided
34 in the policy;
35 (ii) A statement of the principal exclusions, reductions and limita-
36 tions contained in the policy;
37 (iii) A statement of the terms under which the policy or certificate,
38 or both, may be continued in force or discontinued, including any
39 reservation in the policy of a right to change premium. Continuation
40 or conversion provisions of group coverage shall be specifically
42 (iv) A statement that the outline of coverage is a summary only, not
43 a contract of insurance, and that the policy or group master policy
44 contains governing contractual provisions;
45 (v) A description of the terms under which the policy or certifi-
46 cate may be returned and premium refunded; and
47 (vi) A brief description of the relationship of cost of care and
49 (8) A certificate issued pursuant to a group long-term care insurance
50 policy which policy is delivered or issued for delivery in this state shall
52 (a) A description of the principal benefits and coverage provided in the
54 (b) A statement of the principal exclusions, reductions and limitations
55 contained in the policy; and
1 (c) A statement that the group master policy determines governing con-
2 tractual provisions.
3 (9) At the time of policy delivery, a policy summary shall be delivered
4 for an individual life insurance policy which provides long-term care benefits
5 within the policy or by rider. In the case of direct response solicitations,
6 the insurer shall deliver the policy summary upon the applicant's request, but
7 regardless of request shall make such delivery no later than at the time of
8 policy delivery. In addition to complying with all applicable requirements,
9 the summary shall also include:
10 (a) An explanation of how the long-term care benefit interacts with other
11 components of the policy, including deductions from death benefits;
12 (b) An illustration of the amount of benefits, the length of benefits,
13 and the guaranteed lifetime benefits if any, for each covered person;
14 (c) Any exclusions, reductions and limitations on benefits for long-term
16 (d) A statement that any long-term care inflation protection option as
17 defined by the long-term care insurance rule is not available under this
19 (e) If applicable to the policy type, the summary shall also include:
20 (i) A disclosure of the effects of exercising other rights under
21 the policy;
22 (ii) A disclosure of guarantees related to long-term care costs of
23 insurance charges;
24 (iii) Current and projected maximum lifetime benefits.
25 (10) Any time a long-term care benefit, funded through a life insurance
26 vehicle by the acceleration of the death benefit, is in benefit payment sta-
27 tus, a monthly report shall be provided to the policyholder. Such report
28 shall include:
29 (a) Any long-term care benefits paid out during the month;
30 (b) An explanation of any changes in the policy, e.g. death benefits or
31 cash values, due to long-term care benefits being paid out; and
32 (c) The amount of long-term care benefits existing or remaining.
33 (11) Any policy or rider advertised, marketed or offered as long-term care
34 or nursing home insurance shall comply with the provisions of this chapter.
35 41-4606. INCONTESTABILITY PERIOD. (1) For a policy or certificate that
36 has been in force for less than six (6) months an insurer may rescind a long-
37 term care insurance policy or certificate or deny an otherwise valid long-term
38 care insurance claim upon a showing of misrepresentation that is material to
39 the acceptance for coverage.
40 (2) For a policy or certificate that has been in force for at least six
41 (6) months but less than two (2) years an insurer may rescind a long-term care
42 insurance policy or certificate or deny an otherwise valid long-term care
43 insurance claim upon a showing of misrepresentation that is both material to
44 the acceptance for coverage and which pertains to the condition for which ben-
45 efits are sought.
46 (3) After a policy or certificate has been in force for two (2) years it
47 is not contestable upon the grounds of misrepresentation alone; such policy or
48 certificate may be contested only upon a showing that the insured knowingly
49 and intentionally misrepresented relevant facts relating to the insured's
51 (4) (a) No long-term care insurance policy or certificate may be field
52 issued based on medical or health status.
53 (b) For purposes of this section, "field issued" means a policy or cer-
54 tificate issued by an agent or a third party administrator pursuant to the
1 underwriting authority granted to the agent or third party administrator
2 by an insurer.
3 (5) If an insurer has paid benefits under the long-term care insurance
4 policy or certificate, the benefit payments may not be recovered by the
5 insurer in the event that the policy or certificate is rescinded.
6 (6) In the event of the death of the insured, this section shall not
7 apply to the remaining death benefit of a life insurance policy that
8 accelerates benefits for long-term care. In this situation, the remaining
9 death benefits under these policies shall be governed by section 41-1905,
10 Idaho Code, as it pertains to incontestability. In all other situations, this
11 section shall apply to life insurance policies that accelerate benefits for
12 long-term care.
13 41-4607. NONFORFEITURE BENEFITS. (1) Except as provided in subsection (2)
14 of this section, a long-term care insurance policy may not be delivered or
15 issued for delivery in this state unless the policyholder or certificate
16 holder has been offered the option of purchasing a policy or certificate
17 including a nonforfeiture benefit. The offer of a nonforfeiture benefit may be
18 in the form of a rider that is attached to the policy. In the event the poli-
19 cyholder or certificate holder declines the nonforfeiture benefit, the insurer
20 shall provide a contingent benefit upon lapse that shall be available for a
21 specified period of time following a substantial increase in premium rates.
22 (2) When a group long-term care insurance policy is issued, the offer
23 required in subsection (1) of this section shall be made to the group policy-
24 holder. However, if the policy is issued as group long-term care insurance as
25 defined in section 41-4603(4)(d), Idaho Code, other than to a continuing care
26 retirement community or other similar entity, the offering shall be made to
27 each proposed certificate holder.
28 (3) The director shall promulgate rules specifying the type or types of
29 nonforfeiture benefits to be offered as part of long-term care insurance poli-
30 cies and certificates, the standards for nonforfeiture benefits, and the rules
31 regarding a contingent benefit upon lapse, including a determination of the
32 specified period of time during which a contingent benefit upon lapse will be
33 available and the substantial premium rate increase that triggers a contin-
34 gent benefit upon lapse as described in subsection (1) of this section.
35 41-4608. AUTHORITY TO PROMULGATE RULES. The director shall issue reason-
36 able rules to promote premium adequacy and to protect the policyholder in the
37 event of substantial rate increases, and to establish minimum standards for
38 marketing practices, agent compensation, agent testing, penalties and report-
39 ing practices for long-term care insurance.
40 41-4609. ADMINISTRATIVE PROCEDURES. Rules adopted for the implementation
41 and administration of this chapter shall be in accordance with the provisions
42 of chapter 52, title 67, Idaho Code.
43 41-4610. SEVERABILITY. If any provision of this chapter or the applica-
44 tion thereof to any person or circumstance is for any reason held to be
45 invalid, the remainder of the chapter and the application of such provision to
46 other persons or circumstances shall not be affected thereby.
47 41-4611. PENALTIES. In addition to any other penalties provided by the
48 laws of this state, any insurer and any agent found to have violated any
49 requirement of this state relating to the regulation of long-term care insur-
50 ance or the marketing of such insurance shall be subject to a fine of up to
1 three (3) times the amount of any commissions paid for each policy involved in
2 the violation or up to ten thousand dollars ($10,000), whichever is greater.
3 SECTION 3. An emergency existing therefor, which emergency is hereby
4 declared to exist, this act shall be in full force and effect on and after its
5 passage and approval, and retroactively to January 1, 1999.
STATEMENT OF PURPOSE
This legislation repeals the existing Chapter 46, Title 41, Idaho
Code, and replaces it with a new Chapter 46, setting forth
requirements for long term care insurance issued in Idaho. The new
act is based on model legislation developed by the National
Association of Insurance Commissioners.
Name: Joan Krosch
Agency: Department of Insurance
Statement of Purpose/Fiscal Impact H 1