PROPOSED RULES
INSURANCE COMMISSIONER
Original Notice.
Preproposal statement of inquiry was filed as WSR 08-09-131.
Title of Rule and Other Identifying Information: Long-term care insurance.
Hearing Location(s): Insurance Commissioner's Office, Room TR 120, 5000 Capitol Boulevard, Tumwater, WA 98504-0255, on October 1, 2008, at 9:00 a.m.
Date of Intended Adoption: October 15, 2008.
Submit Written Comments to: Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, e-mail KacyS@oic.wa.gov, fax (360) 586-3109, by September 30, 2008.
Assistance for Persons with Disabilities: Contact Lorie Villaflores by September 30, 2008, TTY (360) 586-0241 or (360) 725-7087.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: These proposed rules are based on the NAIC long-term care model regulation; include provisions required by recent legislation; and would continue several Washington-specific requirements that are part of chapter 284-54 WAC (governing the sale, solicitation or negotiation of long-term care insurance until December 31, 2008). The proposed rules would establish standards for long-term care insurance and would:
| • | Establish loss ratio standards for long-term care insurance policies. |
| • | Prescribe a standard format including style, arrangement, overall appearance, and the content of an outline of coverage. |
| • | Establish minimum standards for inflation protection features. |
| • | Specify the type or types of nonforfeiture benefits to be offered as part of long-term care insurance policies and certificates, the standards for nonforfeiture benefits, and the rules regarding contingent benefit upon lapse, including a determination of the specified period of time during which a contingent benefit upon lapse will be available and the substantial premium rate increase that triggers a contingent benefit upon lapse. |
| • | Promote premium adequacy and to protect policyholders in the event of proposed substantial rate increases, and to establish minimum standards for producer education, marketing practices, producer compensation, producer testing, penalties, and reporting practices for long-term care insurance. |
| • | Establish standards to protect patient privacy rights, rights to receive confidential health care services, and standards for an issuer's timely review of a claim denial upon request of a covered person. |
| • | Establish standards for full and fair disclosure setting forth the manner, content, and required disclosures for the sale of long-term care insurance policies, terms of renewability, initial and subsequent conditions of eligibility, nonduplication of coverage provisions, coverage of dependents, preexisting conditions, termination of insurance, continuation or conversion, probationary periods, limitations, exceptions, reductions, elimination periods, requirements for replacement, recurrent conditions, and definitions of terms. |
| • | Provide details about the education and training required of long-term care insurance producers. |
| • | Continue the current rule that "mental and nervous disorders" is not a permitted exclusion. |
| • | Continue the current WA requirement that insurance producers must not complete the medical history portion of an application for long-term care insurance. |
| • | Continue the current WA requirement that long-term care insurers report Washington experience separately. |
| • | Provide that if there is a discrepancy in the way any terms or conditions of long-term care insurance are described or explained between the mater [master] policy and a certificate issued under that master policy, whichever explanation or description is more favorable to the insured will govern the transaction or claim. |
Reasons Supporting Proposal: These proposed rules implement recently enacted SHB 2666, codified in chapter 48.83 RCW, establishing standards for long-term care insurance sold, solicited, or negotiated on or after January 1, 2009.
Statutory Authority for Adoption: RCW 48.83.070, 48.83.110, 48.83.120, 48.83.130(1), 48.83.140 (4)(a), and 48.02.060.
Statute Being Implemented: Chapter 48.83 RCW.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Mike Kreidler, insurance commissioner, governmental.
Name of Agency Personnel Responsible for Drafting: Melodie Bankers, P.O. Box 40258, Olympia, WA 98504-0258, (360) 725-7039; Implementation: Beth Berendt, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7117; and Enforcement: Carol Sureau, P.O. Box 40255, Olympia, WA 98504-0255, (360) 725-7050.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The office of the insurance commissioner (OIC) maintains a list of companies that have approved long-term care insurance coverage in Washington state. Of the seventy-five companies on the most recent (April 2008) version of this list only thirty-three are currently marketing insurance coverage in this state. Of these thirty-three, only one was not either a subsidiary of a larger company or a significantly larger company than the statute's definition of a small business (fifty employees or less). The only insurer who met the definition of a small insurer did not report selling any long-term care insurance coverage in its most recent annual report (2007).
This analysis confirmed observations by OIC regulatory staff that the long-term care insurance market, due to the size and complexity of the product, does not have a functional small business component and, therefore, the proposed rules will not have a disproportionate cost impact on small businesses. As a result, no small business economic impact statement is required.
A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting Kacy Scott, P.O. Box 40258, Olympia, WA 98504-0258, phone (360) 725-7041, e-mail KacyS@oic.wa.gov, fax (360) 586-3109.
August 20, 2008
Mike Kreidler
Insurance Commissioner
OTS-1796.3
AMENDATORY SECTION(Amending Matter No. R 2004-04, filed
3/17/05, effective 4/17/05)
WAC 284-17-258
((What is the)) Long-term care (((LTC)
special)) education requirement((?)).
(1)(a) Resident and
nonresident agents engaged in the transaction of ((LTC))
long-term care insurance or long-term care partnership
(((LTCP))) insurance are required to take an approved six-hour
course on ((LTC)) long-term care or ((LTCP)) long-term care
partnership before soliciting, selling, or otherwise
transacting these types of insurance business as to such
products with consumers. The four-hour refresher ((LTC))
long-term care special education course must be taken every
two-year renewal period subsequent to the initial six-hour
course. The ((OIC)) commissioner prescribes the content of
the course. Each course must be approved by the ((OIC))
commissioner in advance.
(b) This requirement does not apply to licensees
receiving override commissions on ((LTC)) long-term care
transactions if the licensee has had no contact with the
consumer.
(2) This section is effective until December 31, 2008. Long-term care education requirements effective on and after January 1, 2009, are set forth in RCW 48.83.130 and WAC 284-17-264.
[Statutory Authority: RCW 48.02.060, 48.17.150, 48.17.563, 48.85.040. 05-07-091 (Matter No. R 2004-04), § 284-17-258, filed 3/17/05, effective 4/17/05.]
(2) The requirements for resident and nonresident long-term care insurance education beginning January 1, 2009, are set forth in RCW 48.83.130 and WAC 284-17-264.
[Statutory Authority: RCW 48.02.060, 48.17.150, 48.17.563, 48.85.040. 05-07-091 (Matter No. R 2004-04), § 284-17-260, filed 3/17/05, effective 4/17/05. Statutory Authority: RCW 48.01.030, 48.02.060(3), 48.14.010, 48.17.150(2), 48.17.160 (1)(5) and 48.17.500(3). 94-14-033 (Order R 94-14), § 284-17-260, filed 6/28/94, effective 7/29/94. Statutory Authority: RCW 48.02.060. 89-19-037 (Order R 89-10), § 284-17-260, filed 9/15/89, effective 10/16/89. Statutory Authority: RCW 48.17.150 as amended by 1979 ex.s. c 269 §§ 7,10. 80-04-042 (Order R 80-3), § 284-17-260, filed 3/20/80.]
(1) Each insurer that has ((approved LTC)) long-term care
policies approved for sale in this state must certify
((yearly)) annually that all ((agents)) of its insurance
producers engaged in the sale, solicitation or negotiation of
long-term care insurance coverage in this state have:
(a) Completed the ((LTC special education)) eight-hour,
one-time long-term care education and training course required
by RCW 48.83.130 (2)(a)(i) prior to selling, soliciting, or
negotiating the ((LTC product)) company's long-term care
insurance coverage in this state; or
(b) Completed the required long-term care continuing education requirement imposed by RCW 48.83.130 (2)(b).
((This)) (2) The certification ((is to)) must be
((delivered)) provided to the ((OIC yearly)) commissioner by
the insurer annually on or before March 31st. The
certification must be sent to the licensing and education
program manager in the commissioner's office. A form for this
purpose is available on the commissioner's web site:
www.insurance.wa.gov.
[Statutory Authority: RCW 48.02.060, 48.17.150, 48.17.563, 48.85.040. 05-07-091 (Matter No. R 2004-04), § 284-17-262, filed 3/17/05, effective 4/17/05.]
(1) Successful completion of approved training in this or any other state by a resident insurance producer, may be used to satisfy the long-term care training requirements of this state.
(2) Resident insurance producers that complete long-term care insurance courses approved in this state to fulfill the required long-term care training may count those course credits toward fulfillment of their Washington continuing education requirement.
(3) If an insurance producer wishes to apply course credits for the required long-term care training offered in another state and the course is not otherwise approved for continuing education credit in this state, the training may qualify for individual course credit subject to WAC 284-17-244.
[Statutory Authority: RCW 48.02.060, 48.17.150, 48.17.563, 48.85.040. 05-07-091 (Matter No. R 2004-04), § 284-17-264, filed 3/17/05, effective 4/17/05.]
OTS-1766.2
AMENDATORY SECTION(Amending Order R 87-7, filed 7/9/87)
WAC 284-54-010
Purpose and authority.
The purpose of
this chapter, is to effectuate chapter 48.84 RCW, the
Long-Term Care Insurance Act, by establishing minimum
standards and disclosure requirements to be met by insurers,
health care service contractors, health maintenance
organizations, and fraternal benefit societies with respect to
long-term care insurance and long-term care benefit policies
and contracts issued for delivery in this state before January
1, 2009.
[Statutory Authority: RCW 48.02.060(3), 48.30.010 and 48.84.910. 87-15-027 (Order R 87-7), § 284-54-010, filed 7/9/87.]
(2) Pursuant to RCW 48.84.020, this chapter shall not apply to Medicare supplement insurance; nor shall it apply to a contract between a continuing care retirement community and its residents.
(3) Long-term care contracts not meeting the requirements of this chapter, may not be issued or delivered in this state after December 31, 1987.
(4) This chapter is applicable only to long-term care policies, contracts, or certificates issued prior to January 1, 2009. Long-term care policies, contracts, or certificates issued on or after January 1, 2009, are governed by chapters 48.83 RCW and 284-83 WAC.
[Statutory Authority: RCW 48.02.060(3), 48.30.010 and 48.84.910. 87-15-027 (Order R 87-7), § 284-54-015, filed 7/9/87.]
OTS-1767.2
LONG-TERM CARE INSURANCE RULES
(2) Some sections of this chapter apply only to qualified long-term care insurance policies, as provided for by the Health Insurance Portability and Accountability Act of 1996 and by Section 7702B(b) of the Internal Revenue Code of 1986, as amended.
(3) This chapter applies to policies delivered or issued for delivery in this state having indemnity benefits that are triggered by activities of daily living and sold as disability income insurance, if:
(a) The benefits of the disability income policy are dependent upon or vary in amount based on the receipt of long-term care services;
(b) The disability income policy is advertised, marketed or offered as insurance for long-term care services; or
(c) Benefits under the policy commence after the policyholder has reached Social Security's normal retirement age, unless the benefits are designed to replace lost income or pay for specific expenses other than long-term care services.
[]
(1) "Certificate" has the meaning set forth in RCW 48.83.020(2).
(2) "Exceptional increase" means only those increases filed by the issuer as exceptional for which the commissioner determines the need for the premium rate increase is justified due to changes in laws or regulations applicable to long-term care coverage in this state; or due to increased and unexpected utilization that affects the majority of issuers of similar products. Except as provided in WAC 284-83-090, exceptional increases are subject to the same requirements as other premium rate schedule increases. The commissioner may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase. The commissioner, in determining that the necessary basis for an exceptional increase exists, must also determine any potential offsets to higher claims costs.
(3) "Incidental," as used in WAC 284-83-090, means a value of the long-term care benefits provided that is less than ten percent of the total value of the benefits provided over the life of the policy. These values must be measured as of the date of issue. In simple cases where the base policy and the long-term care benefits have separately identifiable premiums, the premiums can be directly compared. In other cases, annual cost of insurance charges might be available for comparison. Some cases may involve comparison of present value of benefits.
(4) "Group long-term care insurance" has the meaning set forth in RCW 48.83.020(6).
(5) "Guaranteed renewable" means that renewal of a long-term care insurance policy cannot be declined by the issuer for any reason except nonpayment of premiums, but the issuer can revise rates on a class basis.
(6) "Insured" means any beneficiary or owner of a long-term care policy regardless of the type of issuer.
(7) "Issuer" has the meaning set forth in RCW 48.83.020(4).
(8) "Noncancellable" means that renewal of a long-term care insurance policy cannot be declined and rates cannot be revised by the issuer.
(9) "Policy" has the meaning set forth in RCW 48.83.020(7), unless the context clearly indicates otherwise, and includes certificates issued under a group policy.
(10) "Qualified actuary" means a member in good standing of the American Academy of Actuaries.
(11) "Qualified long-term care insurance" has the meaning set forth in RCW 48.83.020(8).
(12) "Similar policy forms" means all of the long-term care insurance policies and certificates issued by the issuer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in RCW 48.83.020 (6)(a) are not considered similar to certificates or policies otherwise issued as long-term care insurance, but are similar to other comparable certificates with the same long-term care benefit classifications. For purposes of determining similar policy forms, long-term care benefit classifications are defined as follows: Institutional long-term care benefits only, noninstitutional long-term care benefits only, or comprehensive long-term care benefits.
[]
(1) "Activities of daily living" means at least bathing, continence, dressing, eating, toileting and transferring.
(2) "Acute condition" means that the individual is medically unstable. An individual with an acute condition requires frequent monitoring by medical professionals, such as physicians and registered nurses, in order to maintain his or her health status.
(3) "Adult day care" or "adult day health care" means a program of social or 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.
(4) "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.
(5) "Cognitive impairment" means a deficiency in a person's short or long-term memory; orientation as to person, place and time; deductive or abstract reasoning; or judgment as it relates to safety awareness.
(6) "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).
(7) "Dressing" means putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.
(8) "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.
(9) "Hands-on assistance" means physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activity of daily living.
(10) "Home health care services" means medical and nonmedical services, provided to ill, disabled or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily living and respite care services.
(11) "Managed-care plan" or "plan of care" means 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.
(12) "Medicare" means "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended," or "Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof," or words of similar import.
(13) "Personal care" means the provision of hands-on services to assist an individual with activities of daily living.
(14) "Skilled nursing care," "personal care," "home care," "specialized care," "assisted living care" and other services must be defined in relation to the level of skill required, the nature of the care and the setting in which care must be delivered.
(15) "Toileting" means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.
(16) "Transferring" means moving into or out of a bed, chair or wheelchair.
(17) "Skilled nursing facility," "nursing facility," "extended care facility," "convalescent nursing home," "personal care facility," "specialized care providers," "assisted living facility," "home care agency" and terms used to identify other providers of services must be defined in relation to the services and facilities required to be available and the licensure, certification, registration or degree status of those providing or supervising the services. When the definition requires that the provider be appropriately licensed, certified or registered, it must also state what requirements a provider must meet in lieu of licensure, certification or registration if the state in which the service is to be furnished does not require a provider of these services to be licensed, certified or registered, or if the state licenses, certifies or registers the provider of services under another name.
[]
(1) Renewability. The terms "guaranteed renewable" and "noncancellable" must not be used in any individual long-term care insurance policy or certificate without further explanatory language in accordance with the disclosure requirements of WAC 284-83-035.
(a) A policy or certificate issued to an individual must not contain renewal provisions other than "guaranteed renewable" or "noncancellable."
(b) The term "guaranteed renewable" may be used only if the insured has the right to continue the long-term care insurance in force by the timely payment of premiums, if the issuer has no unilateral right to make any change in any provision of the policy or rider while the insurance is in force, and the issuer cannot decline to renew, except that rates may be revised by the issuer on a class basis.
(c) The term "noncancellable" may be used only if the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the issuer has no right to unilaterally make any change in any provision of the insurance and has no right to unilaterally make any change in the premium rate.
(d) The term "level premium" may be used only if the issuer does not have the right to change the premium.
(e) In addition to the other requirements of this subsection, a qualified long-term care insurance policy or certificate must be guaranteed renewable, within the meaning of Section 7702B (b)(1)(C) of the Internal Revenue Code of 1986, as amended.
(2) Limitations and exclusions. A long-term care policy or certificate shall not be delivered or issued for delivery in this state as long-term care insurance if it limits or excludes coverage by type of illness, treatment, medical condition or accident, except for the following permitted exclusions:
(a) Preexisting conditions or diseases;
(b) Alcoholism and drug addiction;
(c) Illness, treatment or medical condition arising out of war or act of:
(i) War (whether declared or undeclared);
(ii) Participation in a felony, riot or insurrection;
(iii) Service in the armed forces or units auxiliary thereto;
(iv) Suicide (while sane or insane), attempted suicide, or intentionally self-inflicted injury; or
(v) Aviation (this exclusion applies only to nonfare-paying passengers);
(d) Treatment provided in a government facility (unless otherwise required by law), services for which benefits are available under Medicare or other governmental program (except Medicaid), any state or federal workers' compensation, employer's liability or occupational disease law, or any 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;
(e) Expenses for services or items available or paid under another long-term care insurance or health insurance policy;
(f) In the case of a qualified long-term care insurance policy only, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount;
(g) Issuers may not prohibit, exclude or limit services based on type of provider or limit a coverage if services are provided in a state other than the state where the policy was originally issued, except:
(i) When the state other than the state of policy issue does not have the provider licensing, certification, or registration required in the policy, unless the provider satisfies the policy requirements outlined for providers in lieu of licensure certificate or registration; or
(ii) When the state other than the state of policy issue licenses, certifies or registers the provider under another name.
(iii) Issuers may exclude or limit payment for services provided outside the United States or permit or limit benefit levels to reflect legitimate variations or differences in provider rates, but issuers must cover services that would be covered in the state of issue irrespective of any licensing, registration or certification requirements for providers in the other state. In other words, if the claim would be approved but for the licensing issue, the claim must be approved for payment.
(3) 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, if any, or to payment of the maximum benefits and may be subject to any policy waiting period, and all other applicable provisions of the policy.
(4) Continuation or conversion. Group long-term care insurance issued in this state on or after January 1, 2009, must provide covered individuals with a basis for continuation or conversion of coverage.
(a) For the purposes of this section, "a basis for continuation of coverage" means a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate and which is subject only to the continued timely payment of premium when due.
(i) Group policies that restrict provision of benefits and services to, or contain incentives to use certain providers or facilities, may provide continuation benefits that are substantially equivalent to the benefits of the existing group policy.
(ii) The commissioner will make a determination as to the substantial equivalency of benefits, and in doing so, will take into consideration the differences between managed care and nonmanaged care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity.
(b) For the purposes of this section, "a basis for conversion of coverage" means a policy provision 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 issuer under whose group policy he or she is covered, without evidence of insurability.
(c) For the purposes of this section, "converted policy" means an individual policy of long-term care insurance providing 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. If 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, will take into consideration the differences between managed care and nonmanaged care plans, including, but not limited to, provider system arrangements, service availability, benefit levels, and administrative complexity.
(d) Written application for the converted policy must be made and the first premium due, if any, must be paid as directed by the issuer not later than thirty-one 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 must be renewable annually.
(e) Except where the group policy from which conversion is made replaces previous group coverage, the premium for the converted policy must be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. If the group policy from which conversion is made replaces previous group coverage, the premium for the converted policy must be calculated on the basis of the insured's age at inception of coverage under the group policy replaced.
(f) Continuation of coverage or issuance of a converted policy is mandatory, except where:
(i) Termination of group coverage resulted from an individual's failure to make any required payment of premium or contribution when due; or
(ii) The terminating coverage is replaced not later than thirty-one days after termination by group coverage effective on the day following the termination of coverage and the replacement coverage 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 the premium is calculated in a manner consistent with the requirements of (e) of this subsection.
(g) 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 that provides benefits on the basis of incurred expenses, may contain a provision that 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 one hundred percent of incurred expenses. The 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.
(h) The 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, do not exceed those that would have been payable had the individual's coverage under the group policy remained in full force and effect.
(i) Notwithstanding any other provision of this section, the insured individual whose eligibility for group long-term care coverage is based upon his or her relationship to another person must be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage.
(5) Discontinuance and replacement. If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding issuer must offer coverage to all insured persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the issuer and premiums charged to persons under the new group policy:
(a) Must not result in an exclusion for preexisting conditions that would have been covered under the group policy being replaced; and
(b) Must not vary or otherwise depend on the individual's health or disability status, claim experience or use of long-term care services.
(6)(a) The premium charged to the insured must not increase due to either the increasing age of the insured at ages beyond sixty-five or the duration the insured has been covered under the policy.
(b) The purchase of additional coverage shall not be considered a premium rate increase; but for purposes of the calculation required under WAC 284-83-090, the portion of the premium attributable to the additional coverage must be added to and considered part of the initial annual premium.
(c) A reduction in benefits shall not be considered a premium change; but for purposes of the calculation required under WAC 284-83-090, the initial annual premium must be based on the reduced benefits.
(7) Electronic enrollment for group policies.
(a) In the case of a group, as defined in RCW 48.83.020 (6)(a), any requirement that a signature of the insured be obtained by an insurance producer or issuer will be deemed satisfied only if:
(i) The consent is obtained by telephonic or electronic enrollment by the group policyholder or issuer and verification of enrollment information is provided to the insured;
(ii) The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention and prompt retrieval of records; and
(iii) The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure that the confidentiality of individually identifiable information is maintained.
(b) Upon request of the commissioner, the issuer must make available records that demonstrate the issuer's ability to confirm enrollment and coverage amounts.
(8) Each long-term care policy delivered or issued for delivery to any person in this state must clearly indicate on its first page that it is a "long-term care insurance" policy.
[]
(1)(a) Notice before lapse or termination. No individual long-term care policy or certificate may be issued until the issuer 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.
(i) The applicant has the right to designate at least one person who is to receive the notice of termination, in addition to the insured.
(ii) Designation does not constitute acceptance of any liability on the third party for services provided to the insured.
(iii) The form used for the written designation must provide space clearly designated for listing at least one person.
(iv) The designation must include each person's full name and home address.
(v) If the applicant 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 thirty days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice."
(vi) No less frequently than once every two years the issuer must notify the insured of the right to change this written designation.
(b) When the policyholder or certificateholder pays premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in (a) of this subsection need not be met until sixty days after the policyholder or certificateholder is no longer on the payment plan. The application or enrollment form for such policies or certificates must clearly show the payment plan selected by the applicant.
(c) Lapse or termination for nonpayment of premium. No individual long-term care policy or certificate shall lapse or be terminated for nonpayment of premium unless the issuer, at least thirty days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated pursuant to (a) of this subsection, 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 thirty days after a premium is due and unpaid. Notice is deemed to have been given as of five days after the date of mailing.
(2) Reinstatement. In addition to the requirements in subsection (1) of this section, a long-term care insurance policy or certificate must include a provision that provides for reinstatement of coverage in the event of lapse if the issuer is provided proof that the policyholder or certificateholder was cognitively impaired or had a loss of functional capacity before the grace period contained in the policy expired.
(a) Reinstatement must be available to the insured if requested within five months after lapse and may allow for the collection of past due premium, where appropriate.
(b) The standard of proof of cognitive impairment or loss of functional capacity must not be more stringent than the benefit eligibility criteria for cognitive impairment or the loss of functional capacity contained in the policy or certificate.
[]
(a) The renewability provision must be appropriately captioned, must appear on the first page of the policy, and must clearly state that the coverage is guaranteed renewable or noncancellable. This provision does not apply to policies that do not contain a renewability provision, and under which the right to nonrenew is reserved solely to the policyholder, such as long-term care policies which are part of or combined with life insurance policies because life insurance policies generally do not contain renewability provisions.
(b) A long-term care insurance policy or certificate, other than one where the issuer does not have the right to change the premium, must include a statement that premium rates may change.
(2) Riders and endorsements.
(a) Except for riders or endorsements by which the issuer 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 the date of issue, or at reinstatement or renewal, that reduce or eliminate benefits or coverage in the policy must require signed acceptance by the individual insured.
(b) After the date of policy issue, any rider or endorsement that increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in a writing signed by the insured, except when the increase in benefits or coverage is required by law.
(c) If a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge must be set forth in the policy, rider or endorsement.
(3) Payment of benefits. A long-term care insurance policy that provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or words of similar import, must include a definition and explanation of the terms in its accompanying outline of coverage, as set forth in WAC 284-83-145.
(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."
(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 under chapter 48.83 RCW, must set forth 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 must label that paragraph "limitations or conditions on eligibility for benefits."
(6) Disclosure of tax consequences. At the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted, a life insurance policy or certificate that provides an accelerated benefit for long-term care must disclose that receipt of the accelerated benefits may be taxable and that assistance should be sought from a personal tax advisor. The disclosure statement must be prominently displayed on the first page of the policy, certificate or rider and any other related documents. This subsection does not apply to qualified long-term care insurance policies.
(7) Benefit triggers. Activities of daily living and cognitive impairment shall be used to measure the insured's need for long-term care and must be described in the policy or certificate in a separate paragraph labeled "eligibility for the payment of benefits." Any additional benefit triggers must be explained in the same section.
(a) If benefit triggers differ for different benefits, a clear explanation of the benefit trigger must accompany each benefit description.
(b) If an attending physician or other specified person is required to certify a certain level of functional dependency in order for the insured to be eligible for benefits, this must be specified.
(8) A qualified long-term care insurance policy must include a disclosure statement in the policy and in the outline of coverage, as set forth in WAC 284-83-145, that the policy is intended to be a qualified long-term care insurance policy under Section 7702B(b) of the Internal Revenue Code of 1986, as amended.
(9) A nonqualified long-term care insurance policy must include a disclosure statement in the policy and in the outline of coverage, as set forth in WAC 284-83-145, that the policy is not intended to be a qualified long-term care insurance policy.
[]
(b) Certificates issued on or after January 1, 2009, under a group long-term care insurance policy as defined in RCW 48.83.020 (6)(a), that were in force prior to January 1, 2009, the provisions of this section apply on the policy anniversary first following January 1, 2009.
(2) Except for policies for which no applicable premium rate or rate schedule increases can be made, the issuer must provide all of the information listed in this subsection to the applicant at the time of application or enrollment. If the method of application does not allow for delivery at that time, the issuer must provide all of the information listed in this section to the applicant no later than at the time of delivery of the policy or certificate. For example, a method of delivery that does not allow for all listed information to be provided at time of application or enrollment is an application by mail.
(a) A statement that the policy may be subject to rate increases in the future;
(b) An explanation of potential future premium rate revisions, and the policyholder's or certificateholder's option in the event of a premium rate revision;
(c) The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase;
(d) A general explanation for applying premium rate or rate schedule including:
(i) A description of when premium rate or rate schedule adjustments will be effective (for example, next anniversary date or next billing date); and
(ii) The right to a revised premium rate or rate schedule as provided for in (c) of this subsection if the premium rate or rate schedule is changed;
(e)(i) Information regarding each premium rate increase on this policy form or similar policy forms over the past ten years for this state or any other state that, at a minimum, identifies:
(A) The policy forms for which premium rates have been increased;
(B) The calendar years when the form was available for purchase; and
(C) The amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics.
(ii) The issuer, in a fair manner, may provide additional explanatory information related to the rate increases.
(iii) The issuer may exclude from the disclosure, premium rate increases that only apply to blocks of business acquired from other nonaffiliated issuers or the long-term care policies acquired from other nonaffiliated issuers when those increases occurred prior to the acquisition.
(iv) If the acquiring issuer files for a rate increase on a long-term care policy form acquired from a nonaffiliated issuer or a block of policy forms acquired from a nonaffiliated issuer on or before the later of January 1, 2009, or the end of a twenty-four-month period following the acquisition of the block or policies, the acquiring issuer may exclude that rate increase from the disclosure; however, the nonaffiliated selling issuer must include the disclosure of that rate increase in accordance with (e)(i) of this subsection.
(v) If the acquiring issuer in (e)(iv) of this subsection files for a subsequent rate increase at any time (including during the twenty-four-month period following the acquisition of the block or policies) on the same policy form acquired from a nonaffiliated issuer or block of policy forms acquired from a nonaffiliated issuer referenced in (e)(iv) of this subsection, the acquiring issuer must make all disclosures required by (e) of this subsection, including disclosure of the earlier rate increase.
(vi) If the policy is for employer-group coverage, the disclosures in this subsection need to be made only to the employer if the employer is paying the entire premium and no contributions or coverage elections are made by individual employees.
(3) The applicant must sign an acknowledgement at the time of application, unless the method of application does not allow for signature at that time, that the issuer made the disclosure required under subsection (2)(a) and (e) of this section. If due to the method of application the applicant cannot sign an acknowledgement at the time of application, the applicant must sign no later than at the time of delivery of the policy or certificate.
(4) The forms provided in WAC 284-83-170 and 284-83-190 must be used by the issuer to comply with the requirements of subsections (2) and (3) of this section.
(5) The issuer must provide notice of an upcoming premium rate schedule increase to all policyholders or certificateholders, as applicable, at least forty-five days prior to the implementation of any premium rate schedule increase by the issuer. The notice must include the information required by subsection (2) of this section when the rate increase is implemented.
[]
(1) A copy of each disclosure document required in WAC 284-83-035; and
(2) An actuarial certification consisting of at least the following:
(a) A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;
(b) A statement that the policy design and coverage provided have been reviewed and taken into consideration;
(c) A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;
(d) A complete description of the basis for policy reserves that are anticipated to be held under the form, including:
(i) Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held;
(ii) A statement that the assumptions used for reserves contain reasonable margins for adverse experience;
(iii) A statement that the net valuation premium for renewal years does not increase (except for attained-age rating, where permitted); and
(iv) A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or, if such a statement cannot be made, a complete description of the situations where this does not occur;
(A) An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship;
(B) If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration based on a standard age distribution; and
(e)(i) A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the issuer except for reasonable differences attributable to benefits; or
(ii) A comparison of the premium schedules for similar policy forms that are currently available from the issuer with an explanation of the differences.
(3)(a) The commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums. The actuarial demonstration must include:
(i) Premium and claim experience on similar policy forms, adjusted for any premium or benefit differences;
(ii) Relevant and credible data from other studies; or
(iii) Both (a)(i) and (ii) of this subsection.
(b) In the event the commissioner asks for additional information, the period in subsection (2) of this section does not include the period during which the issuer is preparing the requested information.
[]
(2)(a) If an application for long-term care insurance includes a question that asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the prescribed medications.
(b) If the medications listed in the application were known by the issuer, or should have been known by the issuer 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 cannot be rescinded based on that condition.
(3) Except for policies or certificates which are guaranteed issue:
(a) The following language must be set out conspicuously and in close conjunction with the applicant's signature block on the 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
every 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]"
(c) Prior to issuance of a long-term care policy or
certificate to an applicant age eighty or older, the issuer
must obtain one of the following:
(i) A report of a physical examination;
(ii) An assessment of functional capacity;
(iii) An attending physician's statement; or
(iv) Copies of the applicant's medical records.
(4) 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.
(5) Every issuer or other entity selling or issuing long-term care insurance benefits must maintain a record of all policy or certificate rescissions, both state and countrywide, except those that the insured voluntarily requested, and must annually furnish this information to the commissioner. The format is prescribed by the National Association Of Insurance Commissioners, and is set forth in WAC 284-83-165.
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-050
Minimum standards for home health and
community care benefits in long-term care insurance policies.
(1) If a long-term care insurance policy or certificate
provides benefits for home health care or community care
services, it must not limit or exclude benefits:
(a) By requiring that the insured or claimant would need care in a nursing facility if home health care services were not provided;
(b) By requiring that the insured or claimant first or simultaneously receive nursing or therapeutic services, or both, in a home, community, or institutional setting before home health care services are covered;
(c) By limiting eligible services to services provided by registered nurses or licensed practical nurses;
(d) By requiring that a nurse or therapist provide services covered under the policy that can be provided by a home health aide or other licensed or certified home care worker acting within the scope of his or her licensure or certification;
(e) By excluding coverage for personal care services provided by a home health aide;
(f) By 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;
(g) By requiring that the insured or claimant have an acute condition before home health care services are covered;
(h) By limiting benefits to services provided by Medicare-certified agencies or providers; or
(i) By excluding coverage for adult day care services.
(2) If a long-term care insurance policy or certificate provides for home health or community care services, it 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.
(3) 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.
(a) This permits the home health care benefits to be counted toward the maximum length of long-term care coverage under the policy.
(b) Home health care benefits must not be restricted to a period of time which would make the benefit illusory. For example, fewer than three hundred sixty-five benefit days and less than a twenty-five dollar daily maximum benefit are considered illusory home health care benefits.
[]
(a) Increases benefit levels annually in a manner so that the increases are compounded annually at a rate of not less than five percent.
(b) 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 must 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.
(c) Covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount or limit.
(2) If the policy is issued to a group, the required offer in subsection (1) of this section must be made to the group policyholder; however, if the policy is issued to a group defined in RCW 48.83.020 (6)(a), other than to a continuing care retirement community, the offering must be made to each proposed certificateholder.
(3) The offer in subsection (1) of this section is not required of life insurance policies or riders containing accelerated long-term care benefits.
(4)(a) Issuers must include the following information in or with the outline of coverage:
(i) 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 twenty-year period; and
(ii) Any expected premium increases or additional premiums to pay for automatic or optional benefit increases.
(b) The issuer may use a reasonable hypothetical or a graphic demonstration for the purposes of this disclosure. For example, meaningful benefit minimums or durations could be demonstrated by showing increases to attained age, for a period such as at least twenty years, for some multiple of the policy's maximum benefit, or throughout the period of coverage.
(5) Inflation protection benefit increases under a policy that includes these benefits must continue without regard to the insured's age, claim status or claim history, or the length of time the person has been insured under the policy.
(6) An offer of inflation protection that provides for automatic benefit increases must include an offer of a premium which the issuer expects to remain constant. Unless the premium is guaranteed to remain constant, the offer must disclose in a conspicuous manner that the premium may change in the future.
(7)(a) Inflation protection as provided in subsection (1)(a) of this section must be included in any long-term care insurance policy unless the issuer obtains a rejection of inflation protection signed by the policyholder. The rejection may be either part of the application or on a separate form.
(b) The rejection is considered a part of the application.
(c) The following language, or language substantially similar to the following, must be set out conspicuously on the rejection:
"I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this policy with and without inflation protection. Specifically, I have reviewed Plans ______, and I reject inflation protection."
[]
(a) A supplementary application or other form, signed by the applicant and insurance producer, except where the coverage is sold without an insurance producer, containing the questions may be used. With regard to a replacement policy issued to a group defined by RCW 48.83.020 (6)(a), the required questions may be modified only to the extent necessary to elicit information about health or long-term care insurance policies other than the group policy being replaced, provided that the certificateholder has been notified of the replacement.
(b) The following questions, or words substantially similar to the following, must be used:
(i) "Do you have another long-term care insurance policy or certificate in force (including health care service contract, health maintenance organization contract)?
(ii) Did you have another long-term care insurance policy or certificate in force during the last twelve months? If so, with which company? If that policy lapsed, when did it lapse?
(iii) Are you covered by Medicaid?
(iv) Do you intend to replace any of your medical or health insurance coverage with this policy [certificate]?"
(2) Insurance producers must list any other health insurance policies they have sold to the applicant that are still in force and any similar policies sold in the past five years that are no longer in force.
(3) Solicitations other than direct response. Upon determining that a sale will involve replacement, the issuer, other than an issuer using direct response solicitation methods, or its insurance producer, must furnish the applicant, prior to issuance or delivery of the individual long-term care insurance policy, a notice regarding replacement of health care or long-term care coverage. One copy of the notice must be retained by the applicant and an additional copy must be signed by the applicant and must be retained by the issuer. The notice set forth in WAC 284-83-063 must be used.
(4) Direct response solicitations. Issuers using direct response solicitation methods must deliver a notice regarding replacement of health or long-term care coverage to the applicant upon issuance of the policy. The required notice set forth in WAC 284-83-067 must be used.
(5) If replacement is intended, the replacing issuer must notify the existing issuer of the proposed replacement in writing. The existing policy must be identified by the issuer, including the name of the insured and policy number or address plus zip code. Notice must be made within five working days after the date the application is received by the issuer or the date the policy is issued, whichever is sooner.
(6) Life insurance policies that accelerate benefits for long-term care must comply with this section if the policy being replaced is a long-term care insurance policy.
(a) If the policy being replaced is a life insurance policy, the issuer must comply with the replacement requirements of WAC 284-23-400 through 284-23-485.
(b) If a life insurance policy that accelerates benefits for long-term care is replaced by another such policy, the replacing issuer must comply with both the long-term care and the life insurance replacement requirements.
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-063
Notice to applicant regarding replacement
of individual accident and sickness or long-term care
insurance marketed by an insurance producer.
The following
notice is required in WAC 284-83-060(3):
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-067
Notice to applicant regarding replacement
of direct-marketed individual accident and sickness or
long-term care insurance.
The following notice is required by
WAC 284-83-060(4):
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-070
Reporting requirements.
(1) Every issuer
must maintain records for each insurance producer of that
producer's amount of replacement sales as a percent of the
insurance producer's total annual sales and the amount of
lapses of long-term care insurance policies sold by the
insurance producer as a percent of the insurance producer's
total annual sales.
(2) Every issuer must report annually by June 30 the ten percent of its insurance producers with the highest percentages of lapses and replacements as measured by subsection (1) of this section on the form set forth in WAC 284-83-195.
(3) 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 insurance producer activities regarding the sale of long-term care insurance.
(4) Every issuer must report annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year on the form set forth in WAC 284-83-195.
(5) Every issuer must report annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year on the form set forth in WAC 284-83-195.
(6) Every issuer must report annually by June 30, for qualified long-term care insurance policies, the number of claims denied for each class of business, expressed as a percentage of claims denied on the form set forth in WAC 284-83-185.
(7) As used in this section:
(a) "Policy" refers only to long-term care insurance policies;
(b) "Claim" means a request for payment of benefits under an in-force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;
(c) "Denied" means that the issuer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition; and
(d) "Report" means on a statewide basis.
(8) Reports required under this section must be filed with the commissioner.
[]
(1) The modification or suspension would be in the best interest of the insureds;
(2) The purposes to be achieved could not be effectively or efficiently achieved without the modification or suspension; and
(3)(a) The modification or suspension is necessary to the development of an innovative and reasonable approach for insuring long-term care; or
(b) The policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the modification or suspension is reasonably related to the special needs or nature of such a community; or
(c) The modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product.
[]
(a) Definition of insured events;
(b) Covered long-term care facilities;
(c) Existence of home convalescence care coverage;
(d) Definition of facilities;
(e) Existence or absence of barriers to eligibility;
(f) Premium waiver provision;
(g) Renewability;
(h) Ability to raise premiums;
(i) Marketing method;
(j) Underwriting procedures;
(k) Claims adjustment procedures;
(l) Waiting period;
(m) Maximum benefit;
(n) Availability of eligible facilities;
(o) Margins in claim costs;
(p) Optional nature of benefit;
(q) Delay in eligibility for benefit;
(r) Inflation protection provisions; and
(s) Guaranteed insurability option.
(2) If long-term care benefits are provided other than as provided in subsection (1) of this section, reserves must be determined in accordance with the accounting practices and procedures manuals adopted by the National Association Of Insurance Commissioners, unless otherwise provided by law, as required by RCW 48.05.073.
(3) Any applicable valuation morbidity table must be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.
[]
(b) For certificates issued on or after January 1, 2009, under a group long-term care insurance policy as defined in RCW 48.83.020 (6)(a), which policy was in force before January 1, 2009, the provisions of this section apply on the first policy anniversary following January 1, 2009.
(2) The issuer must provide notice of a pending premium rate schedule increase, including an exceptional increase, to the commissioner at least thirty days prior to giving the notice to the policyholders and must include:
(a) Information required by WAC 284-83-035;
(b) Certification by a qualified actuary that:
(i) If the requested premium rate schedule increase is implemented and the underlying assumptions which reflect moderately adverse conditions are realized, no further premium rate schedule increases are anticipated;
(ii) The premium rate filing is in compliance with the provisions of this section;
(c) An actuarial memorandum justifying the rate schedule change request that includes:
(i) Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase, and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale.
(A) Annual values for the five years preceding and the three years following the valuation date must be provided separately.
(B) The projections must include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase.
(C) The projections must demonstrate compliance with subsection (3) of this section.
(D) For exceptional increases:
(I) The projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and
(II) In the event the commissioner determines that offsets may exist, the issuer must use appropriate net projected experience;
(ii) Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;
(iii) Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the issuer have been relied on by the actuary;
(iv) A statement that policy design, underwriting and claims adjudication practices have been taken into consideration; and
(v) Composite rates reflecting projections of new certificates, if it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase;
(d) A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the commissioner; and
(e) Sufficient information for review of the premium rate schedule increase by the commissioner.
(3) All premium rate schedule increases must be determined in accordance with the following requirements:
(a) Exceptional increases must provide that seventy percent of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;
(b) Premium rate schedule increases must be calculated so that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:
(i) The accumulated value of the initial earned premium times fifty-eight percent;
(ii) Eighty-five percent of the accumulated value of prior premium rate schedule increases on an earned basis;
(iii) The present value of future projected initial earned premiums times fifty-eight percent; and
(iv) Eighty-five percent of the present value of future projected premiums not in (b)(iii) of this subsection on an earned basis;
(c) In the event that a policy form has both exceptional and other increases, the values in (b)(ii) and (iv) of this subsection will also include seventy percent for exceptional rate increase amounts; and
(d) All present and accumulated values used to determine rate increases must use the maximum valuation interest rate for policy reserves as specified in the accounting practices and procedures manuals adopted by the National Association Of Insurance Commissioners, except as otherwise provided by RCW 48.05.073. The actuary must disclose as part of the actuarial memorandum the use of any appropriate averages.
(4) For each rate increase that is implemented, the issuer must file for review by the commissioner updated projections, as defined in subsection (2)(c)(i) of this section, annually for the next three years and include a comparison of actual results to projected values. The commissioner may extend the period to greater than three years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions set forth in subsection (11) of this section, the projections required by this subsection may be provided to the policyholder in lieu of filing with the commissioner.
(5) If any premium rate in the revised premium rate schedule is greater than two hundred percent of the comparable rate in the initial premium schedule, lifetime projections, as defined in subsection (2)(c)(i) of this section, must be filed for review by the commissioner every five years following the end of the required period in subsection (4) of this section. For group insurance policies that meet the conditions in subsection (11) of this section, the projections required by this subsection may be provided to the policyholder in lieu of filing with the commissioner.
(6)(a) If the commissioner determines that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in subsection (3) of this section, the commissioner may require the issuer to implement either premium rate schedule adjustments or other measures to reduce the difference between the projected and actual experience.
(b) In determining whether the actual experience adequately matches the projected experience, consideration should be given to subsection (2)(c)(v) of this section, as applicable.
(c) For purposes of this section:
(i) The term "adequately match the projected experience" requires more than a comparison between actual and projected incurred claims. Other assumptions should be taken into consideration, including lapse rates (including mortality), interest rates, margins for moderately adverse conditions, or any other assumptions used in the pricing of the product.
(ii) It is to be expected that the actual experience will not exactly match the issuer's projections. During the period that projections are monitored, the commissioner will determine whether there is an adequate match if the differences in earned premiums and incurred claims are not in the same direction (both actual values higher or lower than projections) or the difference as a percentage of the projected is not of the same order.
(7) If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the issuer must file:
(a) A plan, subject to commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form, requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the commissioner may impose the condition in subsection (8) of this section; and
(b) The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to subsection (8) of this section, had the greater of the original anticipated lifetime loss ratio or fifty-eight percent been used in the calculations described in subsection (3)(b)(i) and (iii) of this section.
(8)(a) For a rate increase filing that meets the following criteria for all policies included in the filing, the commissioner must review the projected lapse rates and past lapse rates during the twelve months following each increase to determine if significant adverse lapsation has occurred or is anticipated:
(i) The rate increase is not the first rate increase requested for the specific policy form or forms;
(ii) The rate increase is not an exceptional increase; and
(iii) The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse.
(b) If significant adverse lapsation has occurred, is anticipated in the filing, or is evidenced in the actual results as presented in the updated projections provided by the issuer following the requested rate increase, the commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the commissioner may require the issuer to offer all in-force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the issuer or its affiliates without underwriting.
(i) The offer shall:
(A) Be subject to the approval of the commissioner;
(B) Be based on actuarially sound principles, but not be based on attained age; and
(C) Provide that maximum benefits under any new policy accepted by the insured must be reduced by comparable benefits already paid under the existing policy.
(ii) The issuer must maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase will be limited to the lesser of:
(A) The maximum rate increase determined based on the combined experience; and
(B) The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent.
(9) If the commissioner determines that the issuer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, in addition to the provisions of subsection (8) of this section, the commissioner may prohibit the issuer from either of the following:
(a) Filing and marketing comparable coverage for a period of up to five years; or
(b) Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.
(10) Subsections (1) through (9) of this section do not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in WAC 284-83-010, if the policy complies with all of the following provisions:
(a) The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;
(b) The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements (as applicable) in any of the following:
(i) Chapter 48.76 RCW;
(ii) RCW 48.23.420 through 48.23.450; and
(iii) RCW 48.18A.050;
(c) The policy meets the disclosure requirements of RCW 48.83.070(2) and 48.83.080;
(d) The portion of the policy that provides insurance benefits other than long-term care coverage meets the applicable requirements in the following:
(i) Policy illustrations as required by chapter 48.23A RCW;
(ii) Disclosure requirements in WAC 284-23-300 through 284-23-370; and
(iii) Disclosure requirements in RCW 48.18A.030;
(e) An actuarial memorandum is filed with the insurance department that includes:
(i) A description of the basis on which the long-term care rates were determined;
(ii) A description of the basis for the reserves;
(iii) A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;
(iv) A description and a table of each actuarial assumption used. For expenses, the issuer must include percent of premium dollars per policy and dollars per unit of benefits, if any;
(v) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;
(vi) The estimated average annual premium per policy and the average issue age;
(vii) A statement as to whether underwriting is performed at the time of application. The statement must indicate whether underwriting is used and, if used, the statement must include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement must indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and
(viii) A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.
(11) Subsections (6) and (8) of this section do not apply to group insurance policies as defined in RCW 48.83.020 (6)(a), if:
(a) The policies insure two hundred fifty or more persons and the policyholder has five thousand or more eligible employees of a single employer; or
(b) The policyholder, and not the certificateholder, pays a material portion of the premium, which must not be less than twenty percent of the total premium for the group in the calendar year prior to the year a rate increase is filed.
[]
[]
(2) 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.
[]
(a) Establish marketing procedures and insurance producer training requirements to ensure that:
(i) Any marketing activities, including any comparison of policies, by its insurance producers, other representatives, or employees are fair and accurate; and
(ii) Excessive insurance is not sold or issued.
(b) Display prominently by type, stamp or other appropriate means, on the first page of the outline of coverage and policy the following notice:
"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."
(c) Provide copies of the disclosure forms required in
WAC 284-83-035(3), 284-83-170 and 284-83-190 to the applicant.
(d) Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has health or long-term care insurance and the types and amounts of any such insurance. For qualified long-term care insurance policies, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has health care coverage is not required.
(e) Every issuer or other entity marketing long-term care insurance must establish auditable procedures for verifying compliance with this subsection.
(f) If the state in which the policy or certificate is to be delivered or issued for delivery has a senior insurance counseling program approved by its commissioner, at time of solicitation for long-term care insurance the issuer must provide written notice to the prospective policyholder and certificateholder that the counseling program is available and provide its name, address and telephone number.
(g) For long-term care insurance policies, use the terms "noncancellable" or "level premium" only when the policy or certificate conforms to WAC 284-83-020 (1)(c).
(h) Provide an explanation of contingent benefit upon lapse provided for in WAC 284-83-130 (4)(c) and, if applicable, the additional contingent benefit upon lapse provided to policies with fixed or limited premium paying periods in WAC 284-83-130 (4)(d).
(2) In addition to the practices prohibited in chapters 48.30 RCW and 284-30 WAC, the following acts and practices are prohibited:
(a) Twisting, as defined in RCW 48.30.180.
(b) High pressure tactics. Employing any 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.
(c) Cold lead advertising. Making use directly or indirectly of any 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 producer or insurance company.
(d) Misrepresentation. Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.
(3)(a) With respect to the obligations set forth in this subsection, the primary responsibility of an association, as defined in RCW 48.83.020 (6)(b), when endorsing or selling long-term care insurance must be to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations must provide objective information regarding long-term care insurance policies or certificates endorsed or sold by the associations to ensure that members of the associations receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold.
(b) The issuer must file with the commissioner the following material:
(i) The policy and certificate;
(ii) A corresponding outline of coverage; and
(iii) All advertisements requested by the commissioner.
(c) The association must disclose in any long-term care insurance solicitation:
(i) 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
(ii) A brief description of the process under which the policies and the issuer issuing the policies were selected.
(d) If the association and the issuer have interlocking directorates or trustee arrangements, the association must disclose that fact to its members.
(e) The board of directors of associations selling or endorsing long-term care insurance policies or certificates must review and approve the insurance policies as well as the compensation arrangements made with the issuer.
(f) The association must also:
(i) At the time of the association's decision to endorse the selling of long-term care insurance policies or certificates, engage the services of a person with expertise in long-term care insurance not affiliated with the issuer to conduct an examination of the policies (including its benefits, features, and rates) and update the examination thereafter in the event of material change;
(ii) Actively monitor the marketing efforts of the issuer and its producers; and
(iii) Review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policies or certificates.
Subsections (3)(f)(i) through (f)(iii) of this section do not apply to qualified long-term care insurance policies.
(g) No group long-term care insurance policy or certificate may be issued to an association unless the issuer files with the commissioner the information required in this subsection.
(h) The issuer must not issue a long-term care policy or certificate to an association or continue to market such a policy or certificate unless the issuer certifies annually that the association has complied with the requirements set forth in this section.
(i) Failure to comply with the filing and certification requirements of this section constitutes an unfair trade practice.
[]
(2) Every issuer or other entity marketing long-term care insurance must:
(a) Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;
(b) Train its insurance producers in the use of its suitability standards; and
(c) Maintain a copy of its suitability standards and make it available for inspection upon request by the commissioner.
(3)(a) To determine whether the applicant meets the standards developed by the issuer, the insurance producer and the issuer must develop procedures that take the following into consideration:
(i) The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;
(ii) The applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and
(iii) The values, benefits and costs of the applicant's existing insurance, if any, when compared to the values, benefits and costs of the recommended purchase or replacement.
(b) The issuer, and if an insurance producer is involved, the insurance producer must make reasonable efforts to obtain the information set out in subsection (2)(a) of this section. The efforts must include presentation to the applicant, at or prior to application, the "long-term care insurance personal worksheet." The personal worksheet used by the issuer must contain, at a minimum, the information in the format set forth in WAC 284-83-170, in not less than twelve point type. The issuer may request the applicant to provide additional information to comply with its suitability standards. A copy of the form of the issuer's personal worksheet must be filed with the commissioner.
(c) Except for sales of employer-group long-term care insurance to employees and their spouses, a completed personal worksheet must be returned to the issuer prior to the issuer's consideration of the applicant for coverage.
(d) The sale, distribution, use or dissemination in any way by the issuer or insurance producer of information obtained through the personal worksheet is prohibited.
(4) The issuer must use the suitability standards it has developed pursuant to this section in determining whether issuing long-term care insurance coverage to the applicant is appropriate.
(5) Insurance producers must use the suitability standards developed by the issuer in all marketing or solicitation of long-term care insurance.
(6) At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled "things you should know before you buy long-term care insurance" must be provided. The form must be in the format set forth in WAC 284-83-175, in not less than twelve point type.
(7) If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer may send the applicant a letter similar to the form set forth in WAC 284-83-180. If the applicant declines to provide financial information, the issuer may use another method to verify the applicant's intent. The applicant's returned letter or a record of the alternative method of verification must be made part of the applicant's file.
(8) The issuer must report annually to the commissioner the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of applicants who chose to confirm after receiving a suitability letter.
[]
[]
(2) Notwithstanding subsection (1) of this section, notification is not required for any long-term care insurance policy issued prior to January 1, 2009, or to any policyholder or certificateholder who is currently eligible for benefits, within an elimination period or on a claim, previously had been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy series. The issuer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium in order to add the new services or providers.
(3) The issuer must make the new coverage available in one of the following ways:
(a) By adding a rider to the existing policy and charging a separate premium for the new rider based on the insured's attained age;
(b) By exchanging the existing policy or certificate for one with an issue age based on the attained age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate. The premium credits must be based on premiums paid or reserves held for the prior policy or certificate;
(c) By exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status is recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged. The cost for the new policy or certificate may recognize the difference in reserves between the new policy or certificate and the original policy or certificate; or
(d) By an alternative program developed by the issuer that meets the intent of this section if the program is filed with and approved by the commissioner.
(4) The issuer is not required to notify its policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this subsection, "limited distribution channel" means distribution through a discrete entity, such as a financial institution or brokerage, through which specialized products are made available that are not available for sale to the general public. Policyholders that purchase a new proprietary policy must be notified when a new long-term care policy series that provides coverage for new long-term care services or providers material in nature is made available to that limited distribution channel.
(5) Policies issued pursuant to this section will be considered exchanges and not replacements. These exchanges are not subject to WAC 284-83-060 and 284-83-110, and the reporting requirements of WAC 284-83-065 (1) through (5).
(6)(a) If the policy is offered through an employer, labor organization, professional, trade or occupational association, the required notification in subsection (1) of this section must be made to the offering entity.
(b) If the policy is issued to a group defined in RCW 48.83.020 (6)(d), the notification must be made to each certificateholder.
(7) Nothing in this section prohibits the issuer from offering any policy, rider, certificate or coverage change to any policyholder or certificateholder. Upon request, any policyholder may apply for currently available coverage that includes the new services or providers. The issuer may require the policyholder to meet all eligibility requirements, including underwriting and payment of the required premium to add new services or providers.
(8) This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.
[]
(i) Reducing the maximum benefit; or
(ii) Reducing the daily, weekly or monthly benefit amount.
(b) The issuer may also offer other reduction options that are consistent with the policy or certificate design or the issuer's administrative processes.
(2) The provision must include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage.
(3) The age to determine the premium for the reduced coverage must be based on the age used to determine the premiums for the coverage currently in force.
(4) The issuer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable.
(5) If a policy or certificate is about to lapse, the issuer must provide a written reminder to the policyholder or certificateholder of his or her right to reduce coverage and premiums in the notice required by WAC 284-83-025 (1)(c).
(6) Compliance with this section may be accomplished by policy replacement, exchange or by adding the required provision via amendment or endorsement to the policy.
(7) This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.
[]
(2) To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of RCW 48.83.120:
(a) A policy or certificate offered with nonforfeiture benefits must have coverage elements, eligibility, benefit triggers and benefit length that are the same as coverage issued by the issuer without nonforfeiture benefits. The nonforfeiture benefit included in the offer must be the benefit described in subsection (5) of this section; and
(b) The offer must be in writing if the nonforfeiture benefit is not otherwise described in the outline of coverage or other materials given to the prospective policyholder.
(3) If the offer required to be made under RCW 48.83.120 is rejected, the issuer must provide the contingent benefit upon lapse described in this section. The contingent benefit on lapse in subsection (4)(d) of this section applies even if this offer is accepted for a policy with a fixed or limited premium paying period.
(4)(a) After rejection of the offer required under RCW 48.83.120, for individual and group policies without nonforfeiture benefits issued after the effective date of this section, the issuer must provide a contingent benefit upon lapse.
(b) If a group policyholder elects to make the nonforfeiture benefit an option to the certificateholder, a certificate must provide either the nonforfeiture benefit or the contingent benefit upon lapse.
(c) A contingent benefit on lapse must be triggered every time the issuer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth in the following table based on the insured's issue age, and the policy or certificate lapses within one hundred twenty days after the due date of the premium so increased. Unless otherwise required, policyholders must be notified at least thirty days prior to the date the premium reflecting the rate increase is due.
| Triggers for a Substantial Premium Increase |
|
| Issue Age | Percent Increase Over Initial Premium |
| 29 and under | 200% |
| 30-34 | 190% |
| 35-39 | 170% |
| 40-44 | 150% |
| 45-49 | 130% |
| 50-54 | 110% |
| 55-59 | 90% |
| 60 | 70% |
| 61 | 66% |
| 62 | 62% |
| 63 | 58% |
| 64 | 54% |
| 65 | 50% |
| 66 | 48% |
| 67 | 46% |
| 68 | 44% |
| Triggers for a Substantial Premium Increase |
|
| Issue Age | Percent Increase Over Initial Premium |
| 69 | 42% |
| 70 | 40% |
| 71 | 38% |
| 72 | 36% |
| 73 | 34% |
| 74 | 32% |
| 75 | 30% |
| 76 | 28% |
| 77 | 26% |
| 78 | 24% |
| 79 | 22% |
| 80 | 20% |
| 81 | 19% |
| 82 | 18% |
| 83 | 17% |
| 84 | 16% |
| 85 | 15% |
| 86 | 14% |
| 87 | 13% |
| 88 | 12% |
| 89 | 11% |
| 90 and over | 10% |
(d) A contingent benefit on lapse must also be triggered for policies with a fixed or limited premium paying period every time the issuer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth in the following table based on the insured's issue age, the policy or certificate lapses within one hundred twenty days after the due date of the premium so increased, and the ratio in (f)(ii) of this subsection is forty percent or more. Unless otherwise required, policyholders must be notified at least thirty days prior to the date the premium reflecting the rate increase is due. This requirement is in addition to the contingent benefit provided by subsection (3) of this section and if both are triggered, the benefit provided must be at the option of the insured.
| Triggers for a Substantial Premium Increase |
|
| Issue Age | Percent Increase Over Initial Premium |
| Under 65 | 50% |
| 65-80 | 30% |
| Over 80 | 10% |
(i) Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;
(ii) Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of subsection (5) of this section. This option may be elected at any time during the one hundred twenty-day period provided for in (c) of this subsection; and
(iii) Notify the policyholder or certificateholder that a default or lapse at any time during the one hundred twenty-day period provided for in (c) of this subsection will be deemed to be the election of the offer to convert in (e)(ii) of this subsection unless the automatic option in (f)(iii) of this subsection applies.
(f) On or before the effective date of a substantial premium increase as defined in (d) of this subsection, the issuer must:
(i) Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;
(ii) Offer to convert the coverage to a paid-up status where the amount payable for each benefit is ninety percent of the amount payable in effect immediately prior to lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period. This option may be elected at any time during the one hundred twenty-day period provided for in (d) of this subsection; and
(iii) Notify the policyholder or certificateholder that a default or lapse at any time during the one hundred twenty-day period provided for in (d) of this subsection will be deemed to be the election of the offer to convert in (f)(ii) of this subsection if the ratio is forty percent or more.
(5) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with subsection (4)(c) but not (d) of this subsection, are described in this subsection:
(a) For purposes of this subsection, "attained age rating" is defined as a schedule of premiums starting from the issue date which increases age at least one percent per year prior to age fifty, and at least three percent per year beyond age fifty.
(b) For purposes of this subsection, the nonforfeiture benefit must be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits must be determined as specified in (c) of this subsection.
(c) The standard nonforfeiture credit will be equal to one hundred percent of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The issuer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration; however, the minimum nonforfeiture credit must not be less than thirty times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of subsection (6) of this section.
(d)(i) The nonforfeiture benefit must begin not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse must be effective during the first three years as well as thereafter.
(ii) Notwithstanding (d)(i) of this subsection, for a policy or certificate with attained age rating, the nonforfeiture benefit must begin on the earlier of:
(A) The end of the tenth year following the policy or certificate issue date; or
(B) The end of the second year following the date the policy or certificate is no longer subject to attained age rating.
(e) Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate.
(6) All benefits paid by the issuer while the policy or certificate is in premium-paying status or in paid-up status must not exceed the maximum benefits that would be payable if the policy or certificate had remained in premium-paying status.
(7) No difference in the minimum nonforfeiture benefits as required under this section for group and individual policies is permitted.
(8) The requirements set forth in this section must become effective twelve months after adoption of this provision and must apply as follows:
(a) Except as provided in (b) and (c) of this subsection, this section applies to any long-term care policy issued in this state on or after January 1, 2009.
(b) This section does not apply to certificates issued on or after the effective date of this section under a group long-term care insurance policy as defined in RCW 48.83.020 (6)(a), if policy was in force on January 1, 2009.
(c) The last sentence in subsection (3) of this section and subsection (4)(d) and (f) of this section apply to any long-term care insurance policy or certificate issued in this state six months after their adoption, except as to new certificates on a group policy as defined in RCW 48.83.020 (6)(a), those sentences apply to any long-term care insurance policy or certificate issued in this state one year after adoption.
(9) Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse is subject to the loss ratio requirements of WAC 284-83-085 or 284-83-090, whichever is applicable, treating the policy as a whole.
(10) To determine whether contingent nonforfeiture upon lapse provisions are triggered under subsection (4)(c) or (d) of this section, a replacing issuer that purchased or otherwise assumed a block or blocks of long-term care insurance policies from another issuer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original issuer.
(11) A nonforfeiture benefit for qualified long-term care insurance policies that are level premium policies must be offered and must meet the following requirements:
(a) The nonforfeiture provision must be appropriately captioned;
(b) The nonforfeiture provision must provide a benefit available in the event of a default in the payment of any premiums and must state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency and interest as reflected in changes in rates for premium paying policies approved by the commissioner for the same policy form; and
(c) The nonforfeiture provision must provide at least one of the following:
(i) Reduced paid-up insurance;
(ii) Extended term insurance;
(iii) Shortened benefit period; or
(iv) Other similar offerings approved by the commissioner.
[]
(2)(a) Activities of daily living must include at least the following, as defined in WAC 284-83-015, and must be defined in the policy:
(i) Bathing;
(ii) Continence;
(iii) Dressing;
(iv) Eating;
(v) Toileting; and
(vi) Transferring;
(b) Issuers may use activities of daily living to trigger covered benefits in addition to those contained in subsection (1)(a) of this section only if they are defined in the policy.
(3) The issuer may use additional provisions for the determination of when benefits are payable under a policy or certificate; however the provisions must not restrict, and must not be in lieu of, the requirements contained in subsections (1) and (2) of this section.
(4) For purposes of this section the determination of a deficiency must not be more restrictive than:
(a) Requiring the hands-on assistance of another person to perform the prescribed activities of daily living; or
(b) If the deficiency is due to the presence of a cognitive impairment, supervision or verbal cueing by another person is needed in order to protect the insured or others.
(5) Assessments of activities of daily living and cognitive impairment must be performed by licensed or certified professionals, such as physicians, nurses or social workers.
(6) Long-term care insurance policies must include a clear description of the process for appealing and resolving benefit determinations.
(7)(a) Except as provided in (b) of this subsection, the provisions of this section apply to a long-term care policy issued in this state on or after January 1, 2009.
(b) The provisions of this section do not apply to certificates issued on or after the effective date of this section under a group long-term care insurance policy as defined in RCW 48.83.020 (6)(a) that were in force on January 1, 2009.
[]
(a) "Qualified long-term care services" means services that meet the requirements of Section 7702 (c)(1) of the Internal Revenue Code of 1986, as amended, including: Necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation and rehabilitative services, and maintenance or personal care services which are required by a chronically ill individual, and are provided pursuant to a plan of care prescribed by a licensed health care practitioner.
(b)(i) "Chronically ill individual" has the meaning of Section 7702B (c)(2) of the Internal Revenue Code of 1986, as amended. Under this provision, a chronically ill individual means any individual who has been certified by a licensed health care practitioner as:
(A) Being unable to perform (without substantial assistance from another individual) at least two activities of daily living for a period of at least ninety days due to a loss of functional capacity; or
(B) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.
(ii) The term "chronically ill individual" does not include an individual otherwise meeting these requirements unless within the preceding twelve-month period a licensed health care practitioner certified that the individual meets these requirements.
(c) "Licensed health care practitioner" means a physician, as defined in Section 1861 (r)(1) of the Social Security Act, a registered professional nurse, licensed social worker or other individual who meets requirements prescribed by the federal Secretary of the Treasury.
(d) "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).
(2) A qualified long-term care insurance policy must pay only for qualified long-term care services received by a chronically ill individual provided pursuant to a plan of care prescribed by a licensed health care practitioner.
(3) A qualified long-term care insurance policy must condition the payment of benefits on a determination of the insured's inability to perform activities of daily living for an expected period of at least ninety days due to a loss of functional capacity or to severe cognitive impairment.
(4) Certifications regarding activities of daily living and cognitive impairment required pursuant to subsection (3) of this section must be performed by a licensed or certified physician, registered professional nurse, licensed social worker, or other individual who meet requirements prescribed by the federal Secretary of the Treasury.
(5) Certifications required pursuant to subsection (3) of this section may be performed by a licensed health care professional at the direction of the issuer as is reasonably necessary with respect to a specific claim; except that when a licensed health care practitioner has certified that the insured is unable to perform activities of daily living for an expected period of at least ninety days due to a loss of functional capacity and the insured is in claim status, the certification may not be rescinded and additional certifications may not be performed until after the expiration of the ninety-day period.
(6) Qualified long-term care insurance policies must include a clear description of the process for appealing and resolving disputes with respect to benefit determinations.
[]
(1) The outline of coverage must be a free-standing document, using no smaller than ten-point type.
(2) The outline of coverage must contain no material of an advertising nature.
(3) Text that is capitalized or underscored in the standard format outline of coverage may be emphasized by other means that provide prominence equivalent to the capitalization or underscoring.
(4) Use of the text and sequence of text of the standard format outline of coverage is mandatory, unless otherwise specifically indicated.
(5) The following format for outline of coverage must be used in this state:
[COMPANY NAME]
[ADDRESS - CITY & 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 policy, 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. FEDERAL TAX CONSEQUENCES.
This [POLICY] [CERTIFICATE] is intended to be a federally
tax-qualified long-term care insurance policy under Section
7702B(b) of the Internal Revenue Code of 1986, as amended.
OR
Federal Tax Implications of this [POLICY] [CERTIFICATE]. This
[POLICY] [CERTIFICATE] is not intended to be a federally
tax-qualified long-term care insurance policy under Section
7702B(b) of the Internal Revenue Code of 1986 as amended.
Benefits received under the [POLICY] [CERTIFICATE] may be
taxable as income.
4. TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE
CONTINUED IN FORCE OR DISCONTINUED.
(a) [For long-term care health insurance policies or
certificates describe one of the following permissible policy
renewability provisions:
(1) Policies and certificates that are guaranteed renewable
must contain the following statement:] RENEWABILITY: THIS
POLICY [CERTIFICATE] IS GUARANTEED RENEWABLE. This means you
have the right, subject to the terms of your policy
[certificate], to continue this policy as long as you pay your
premiums on time. [Company Name] cannot change any of the
terms of your policy on its own, except that, in the future,
IT MAY INCREASE THE PREMIUM YOU PAY.
(2) [Policies and certificates that are noncancellable must
contain the following statement:] RENEWABILITY: THIS POLICY
[CERTIFICATE] IS NONCANCELLABLE. This means that you have the
right, subject to the terms of your policy, to continue this
policy as long as you pay your premiums on time. [Company
Name] cannot change any of the terms of your policy on its own
and cannot change the premium you currently pay. However, if
your policy contains an inflation protection feature where you
choose to increase your benefits, [Company Name] may increase
your premium at that time for those additional benefits.
(b) [For group coverage, specifically describe
continuation/conversion provisions applicable to the
certificate and group policy;]
(c) [Describe waiver of premium provisions or state that there
are not such provisions.]
5. TERMS UNDER WHICH THE COMPANY MAY CHANGE PREMIUMS.
[In bold type larger than the maximum type required to be used
for the other provisions of the outline of coverage, state
whether or not the company has a right to change the premium,
and if a right exists, describe clearly and concisely each
circumstance under which the premium may change.]
6. 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.]
7. 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 insurance producers] neither [insert company name]
nor its [agents] [insurance producers] 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.
8. 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.]
9. BENEFITS PROVIDED BY THIS POLICY.
(a) [Covered services, related deductibles, waiting periods,
elimination periods and benefit maximums.]
(b) [Institutional benefits, by skill level.]
(c) [Noninstitutional benefits, by skill level.]
(d) Eligibility for Payment of Benefits
[Activities of daily living and cognitive impairment must be
used to measure an insured's need for long-term care and must
be defined and described as part of the outline of coverage.]
[Any additional benefit triggers must also be explained. If
these triggers differ for different benefits, explanation of
the triggers must 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.]
10. LIMITATIONS AND EXCLUSIONS.
[Describe:
(a) Preexisting conditions;
(b) Noneligible facilities and provider;
(c) Noneligible levels of care (e.g., unlicensed providers,
care or treatment provided by a family member, etc.);
(d) Exclusions and exceptions;
(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 Number 6 above.]
THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH
YOUR LONG-TERM CARE NEEDS.
11. 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;
(e) And finally, describe whether there will be any additional
premium charge imposed, and how that is to be calculated.]
12. ALZHEIMER'S DISEASE AND OTHER 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.]
13. 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.]
14. ADDITIONAL FEATURES.
[(a) Indicate if medical underwriting is used;
(b) Describe other important features.]
15. CONTACT THE STATE SENIOR HEALTH INSURANCE ASSISTANCE
PROGRAM IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE
INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE SPECIFIC
QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE POLICY OR
CERTIFICATE.
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-150
Requirement to deliver shopper's guide.
(1) 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, must be provided to all prospective applicants
of a long-term care insurance policy or certificate.
(a) In the case of solicitations by an insurance producer, the insurance producer must deliver the shopper's guide prior to the presentation of an application or enrollment form.
(b) In the case of direct response solicitations, the shopper's guide must be presented in conjunction with any application or enrollment form.
(2) Issuers or insurance producers of life insurance policies or riders containing accelerated long-term care benefits are not required to furnish the shopper's guide, but must furnish the policy summary required by RCW 48.83.070(2).
[]
(1) No insurance producer or other representative of the issuer may complete the medical history portion of any form or application, including electronic application, for the purchase of a long-term care policy.
(2) No issuer or insurance producer or other representative of the issuer may knowingly sell a long-term care policy to any person who is receiving Medicaid.
(3) No issuer or insurance producer or other representative of the issuer may use or engage in any unfair or deceptive act or practice in the advertising, sale or marketing of long-term care policies.
[]
(2) The commission or other compensation provided in subsequent (renewal) years must be the same as that provided in the second year or period and must be provided for a reasonable number of renewal years.
(3) An issuer or other entity must not provide compensation to its insurance producers or other representatives and an insurance producer or other representative must not receive compensation greater than the renewal compensation payable by the replacing issuer on renewal policies.
(4) For purposes of this section, "compensation" includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including but not limited to bonuses, gifts, prizes, awards and finders fees.
[]
| Policy Form # | Policy and Certificate # | Name of Insured | Date of Policy Issuance | Date/s Claim/s Submitted | Date of Rescission |
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-170
Form of personal worksheet.
The
following form of personal worksheet must be used by issuers
in the sale of long-term care insurance policies.
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-175
Disclosure form.
The following form of
disclosure must be used in this state.
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-180
Response letter.
The following form of
response letter must be used in this state.
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-185
Sample claims denial reporting form.
The
following form for reporting claims denials must be used in
this state.
| State Data | Nationwide Data1 | ||
| 1 | Total Number of Long-Term Care Claims Reported | ||
| 2 | Total Number of Long-Term Care Claims Denied/Not Paid | ||
| 3 | Number of Claims Not Paid Due to Preexisting Condition Exclusion | ||
| 4 | Number of Claims Not Paid Due to Waiting (Elimination) Period Not Met | ||
| 5 | Net Number of Long-Term Care Claims Denied for Reporting Purposes (Line 2 Minus Line 3 Minus Line 4) | ||
| 6 | Percentage of Long-Term Care Claims Denied of Those Reported (Line 5 Divided By Line 1) | ||
| 7 | Number of Long-Term Care Claim Denied Due to: | ||
| 8 | • Long-Term Care Services Not Covered Under the Policy2 | ||
| 9 | • Provider/Facility Not Qualified Under the Policy3 | ||
| 10 | • Benefit Eligibility Criteria Not Met4 | ||
| 11 | • Other |
| Footnotes: | |
| 1. | The nationwide data may be viewed as a more representative and credible indicator where the data for claims reported and denied for your state are small in number. |
| 2. | Example -- Home health care claim filed under a nursing home only policy. |
| 3. | Example -- A facility that does not meet the minimum level of care requirements or the licensing requirements as outlined in the policy. |
| 4. | Examples -- A benefit trigger not met, certification by a licensed health care practitioner not provided, no plan of care. |
[]
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-195
Form for reporting replacement and lapse
of long-term care insurance policies.
The following form must
be used in this state to report replacements and lapses of
long-term care insurance.
[]
Reviser's note: The brackets and enclosed material in the text of the above section occurred in the copy filed by the agency and appear in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 284-83-210
Definitions.
For purposes of WAC 284-83-210 through 284-83-250:
(1) "Actual loss ratio" means a retrospective calculation and calculated as the benefits incurred divided by the "premiums earned," both measured from the beginning of the calculating period to the date of the loss ratio calculations.
(2) "Benefits incurred" means the claims incurred plus any increase (or less any decrease) in the reserves.
(3) "Calculating period" means the time span over which the actuary expects the premium rates, whether level or increasing, to remain adequate in accordance with the actuary's best estimate of future experience and during which the actuary does not expect to request a rate increase.
(4) "Claims incurred" means:
(a) Claims paid during the accounting period; plus
(b) The change in the liability for claims which have been reported but not paid; plus
(c) The change in the liability for claims which have not been reported but which may reasonably be expected.
Claims incurred does not include expenses incurred in processing the claims, home office or field overhead, acquisition and selling costs, taxes or other expenses, contributions to surplus, or profit.
(5) "Expected loss ratio" means a prospective calculation calculated as the projected benefits incurred divided by the projected premiums earned and based on the actuary's best projections of the future experience within the calculating period.
(6) "Overall loss ratio" means the benefits incurred divided by the premiums earned over the entire calculating period; it may involve both retrospective and prospective data.
(7) "Premium" means all sums charged, received or deposited as consideration for a long-term care insurance policy and includes any assessment, membership, contract, survey, inspection, service, or similar fees or charges paid.
(8) "Premiums earned" means the premiums, less experience credits, refunds or dividends, applicable to an accounting period whether received before, during or after such period.
(9) "Reserves" includes:
(a) Active life disability reserves;
(b) Additional reserves whether for a specific liability purpose or not;
(c) Contingency reserves;
(d) Reserves for select morbidity experience; and
(e) Increased reserves which may be required by the commissioner.
[]
(a) The grouping must be satisfactory to the commissioner, who may rely on the judgment of the pricing actuary.
(b) Factors that must be considered include similar claims experience, types of benefits, reserves, margins for contingencies, expenses and profit, and equity between policyholders.
(c) A grouping must enhance statistical reliability and improve the likelihood of premium adequacy without introducing elements of discrimination in violation of RCW 48.18.480.
(d) A grouping is not required to include forms issued by health care service contractors or health maintenance organizations before January 1, 1988.
(2) Persons insured under similar policy forms must be grouped at the time of ratemaking in accord with RCW 48.18.480 because they are expected to have substantially like insuring, risk and exposure factors and expense elements.
(a) The morbidity and mortality experience of these insureds, as a group, will deteriorate over time.
(b) A form may not be withdrawn from its assigned grouping by reason only of the deteriorating health of the people insured thereunder, as provided for in RCW 48.83.170.
(3) One or more of the policy forms grouped for ratemaking purposes, by random chance, may experience significantly higher or more frequent claims than the other forms. A form may not deviate from the assigned grouping of policy forms for pricing purposes at the time of requesting a rate increase unless the actuary can justify to the satisfaction of the commissioner that a different grouping is more equitable because of some previously unrecognized and nonrandom distinction between forms or between groups of insureds.
(4) Successive generic policy forms and policy forms of similar benefits covering generations of policyholders must be combined in the calculation of premium rates and loss ratios.
[]
[]
(1) Benefits for individual long-term care insurance forms will be deemed reasonable in relation to the premiums if the overall loss ratio is at least sixty percent over a calculating period chosen by the issuer and satisfactory to the commissioner.
(2) Benefits for group long-term care insurance forms will be deemed reasonable in relation to the premiums if the overall loss ratio is at least seventy percent over a calculating period chosen by the issuer and satisfactory to the commissioner.
(3) The calculating period may vary with the benefit and renewal provisions. The issuer may be required to demonstrate the reasonableness of the calculating period chosen by the actuary responsible for the premium calculations. A brief explanation of the selected calculating period must accompany the filing.
(4) Policy forms, the benefits of which are particularly exposed to the effects of inflation and whose premium income may be particularly vulnerable to an eroding persistency and other similar forces, must use a relatively short calculating period reflecting the uncertainties of estimating the risks involved.
(a) Policy forms based on more dependable statistics may employ a longer calculating period.
(b) The calculating period may be the lifetime of the policy for guaranteed renewable and noncancellable policy forms if these forms provide benefits which are supported by reliable statistics and which are protected from inflationary or eroding forces by such factors as fixed dollar coverages, inside benefit limits, or the inherent nature of the benefits.
(c) The calculating period may be as short as one year for coverages that are based on statistics of minimal reliability or which are highly exposed to inflation.
(5) A request for a rate increase to be effective at the end of the calculating period must include a comparison of the actual to the expected loss ratios, must employ any accumulation of reserves in the determination of rates for the new calculating period, and must account for the maintenance of such reserves for future needs. The request for the rate increase must be further documented by the expected loss ratio for the new calculating period.
(6) A request for a rate increase submitted during the calculating period must include a comparison of the actual to the expected loss ratios, a demonstration of any contributions to and support from the reserves, and must account for the maintenance of such reserves for future needs. If the experience justifies a premium increase, it will be deemed that the calculating period has prematurely been brought to an end. The rate increase must further be documented by the expected loss ratio for the next calculating period.
(7) Issuers must review their experience periodically and file appropriate rate revisions in a timely manner to reduce the necessity of later filing of exceptionally large rate increases.
[]
[]
(1) Statistical credibility of premiums and benefits such as low exposure or low loss frequency;
(2) Past and projected trends relative to the kind of coverage, such as inflation in medical expenses, economic cycles affecting disability income experience, inflation in expense charges and others;
(3) The concentration of experience at early policy durations where select morbidity and preliminary term reserves are applicable and where loss ratios are expected to be substantially higher or lower than in later policy durations;
(4) The mix of business by risk classification;
(5) The expected lapses and antiselection at the time of rate increases.
[]
(2) A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:
(a) The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;
(b) The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of chapter 48.76 RCW;
(c) The policy meets the disclosure requirements of RCW 48.83.070(2) and 48.83.080;
(d) Any policy illustration that meets the applicable requirements of the chapter 48.23A RCW; and
(e) An actuarial memorandum is filed with the insurance department that includes:
(i) A description of the basis on which the long-term care rates were determined;
(ii) A description of the basis for the reserves;
(iii) A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;
(iv) A description and a table of each actuarial assumption used. For expenses, the issuer must include percent of premium dollars per policy and dollars per unit of benefits, if any;
(v) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;
(vi) The estimated average annual premium per policy and the average issue age;
(vii) A statement as to whether underwriting is performed at the time of application. The statement must indicate whether underwriting is used and, if used, the statement must include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement must indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and
(viii) A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.
[]
(1) To any person, health care provider or health care facility that the issuer reasonably believes is providing health care to the insured;
(2) To any other person who requires health care information to provide planning, quality assurance, peer review, or administrative, legal, financial, billing or actuarial services;
(3) To assist a health care provider or health care facility in the delivery of health care and the issuer reasonably believes that the recipient will not use or disclose the health care information for any purpose other than the delivery of health care and will take appropriate steps to protect the information;
(4) To a health care provider or health care facility reasonably believed to have previously provided health care to the insured to the extent necessary to provide health care services, unless the insured has instructed the health care provider or health care facility in writing not to make the disclosure.
[]
[]
(1) Issuers must have a fully operational, comprehensive claims denial review process.
(2) Issuers must implement procedures for registering and responding to oral and written requests for review of a claim denial in a timely and thorough manner.
(3) Issuers must provide written notice to the insured, to the insured's designated representative, and to the insured's provider of its decision to deny, modify, reduce, or terminate payment, coverage, authorization, or provision of health care services or benefits, including the admission to or continued stay in a health care facility or any other long-term care services or benefits.
(4) Issuers must process as an appeal an enrollee's written or oral request that the issuer reconsider its decision to deny, modify, reduce, or terminate payment, coverage, authorization, or provision of health care services or benefits, including the admission to, or continued stay in, a health care facility. The issuer must not require that the insured file a complaint prior to seeking appeal of any such decision.
(5) The issuer must:
(a) Provide written notice to the insured when the appeal is received;
(b) Assist the insured with the appeal process;
(c) Make its decision regarding the appeal within thirty days after the date the appeal is received, except when a determination is made that the issuer's action must be expedited;
(d) Cooperate with a representative authorized in writing by the insured;
(e) Consider all information submitted by the insured;
(f) Investigate and resolve the appeal; and
(g) Provide written notice of its resolution of the appeal to the insured and, with the permission of the insured, to the insured's providers, that:
(i) Explains the issuer's decision and the supporting coverage or clinical reasons for the decision; and
(ii) If applicable, explains any further appeal process, including, if applicable, information about how to exercise the insured's rights to a second opinion and how to continue receiving or reinstate services.
(6) An appeal must be expedited if the insured's provider or the insured's medical director reasonably determines that following the appeal process, response timelines could seriously jeopardize the insured's life, health, or ability to regain maximum function. The decision regarding an expedited appeal must be made within seventy-two hours after the time the appeal is received by the issuer.
(7) If the insured requests that the issuer reconsider its decision to modify, reduce, or terminate an otherwise covered health care service, and if the issuer's decision is based on the issuer's determination that the health service or level of health service is no longer covered, the issuer must continue to provide the health service until the appeal is resolved.
(8) Issuers must provide a clear explanation of their grievance processes and procedures at the time of application and upon request of the insured.
(9) Issuers must ensure that their grievance processes and procedures are accessible to insureds who are limited-English speakers, who have literacy problems, or who have physical or mental disabilities that impede their ability to file a grievance.
(10) Issuers must track each appeal until final resolution and, upon request, make available to the commissioner a log of all appeals and grievances.
(11) Issuers must establish a process to identify and track problems encountered by enrollees when filing claims denials and, where appropriate, to make reasonable modifications to their appeals and grievance processes and procedures.
[]
[]