BILL REQ. #:  S-0671.1 

Read first time 01/30/13.   Referred to Committee on Health Care .

     AN ACT Relating to unintentional lapses of long-term care insurance policies; adding a new section to chapter 48.84 RCW; adding a new section to chapter 48.83 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that persons purchasing long-term care insurance typically pay premiums for many years before receiving coverage for benefits offered under the policy. It is the intent of the legislature to protect policyholders from unfair or deceptive billing practices that result in the unintentional lapse of coverage due to nonpayment. The legislature finds that many older policies do not provide adequate consumer protections and where possible consumer protections should be added to the contract terms retroactively as well as prospectively.

NEW SECTION.  Sec. 2   A new section is added to chapter 48.84 RCW to read as follows:
     The purpose of this section is to protect insureds from unintentional lapse by establishing standards for notification of a designee to receive notice of lapse for nonpayment of premium at least thirty days prior to the termination of coverage and to provide for a limited right to reinstatement of coverage unintentionally lapsed by a person with a cognitive impairment or loss of functional capacity, or due to lack of appropriate billing notification to the insured. These are minimum standards and do not prevent an insurer from including benefits more favorable to the insured. This section applies to every insurer providing long-term care coverage to a resident of this state, which coverage is renewed on or after January 1, 2011.
     (1) Every insurer shall permit an insured to designate at least one additional person to receive notice of lapse or termination for nonpayment of premium, if the premium is not paid on or before its due date. The designation shall include the designee's full name and home address.
     (a) The notice shall provide that the contract or certificate will not lapse until at least thirty days after the notice is mailed to the insured's designee.
     (b) Where a policyholder or certificate holder pays the premium through a payroll or pension deduction plan, the insurer shall permit the insured to designate a person to receive notice of lapse or termination for nonpayment of premium within sixty days after the insured is no longer on such a premium payment plan. The application or enrollment form for contracts or certificates where the premium will be paid through a payroll or pension deduction plan shall clearly indicate the payment plan selected by the applicant.
     (c) The insurer shall offer each insured in writing an opportunity to change the designee, or update the information concerning the designee, no less frequently than once in every twenty-four months.
     (2) Every insurer shall provide a limited right to reinstate coverage in the event of lapse or termination for nonpayment of premium, if the insurer is provided proof of the insured's cognitive impairment or loss of functional capacity, or if the lapse was due to lack of appropriate billing notification to the insured, and reinstatement is requested within the twelve months after the policy lapsed or terminated due to nonpayment of premium.
     (a) The standard of proof of cognitive impairment or loss of functional capacity shall be no more restrictive than the benefit eligibility criteria for cognitive impairment or loss of functional capacity contained in the contract or certificate.
     (b) Current good health of the insured shall not be required for reinstatement if the request otherwise meets the requirements of this section.
     (c) The insured may demonstrate the lack of appropriate billing notification when the insurer had prior knowledge of the insured's change of billing address and failed to change the billing address to reflect the new location, or the insurer should have reasonably known of the billing address change when claims have been made for care at the new residence.
     (3) An insurer shall permit an insured to waive his or her right to designate an additional person to receive notice of lapse or termination for nonpayment of premium.
     (a) The waiver shall be in writing, and shall be dated and signed by the applicant or insured.
     (b) No less frequently than once in every twenty-four months, the insured shall be permitted to revoke this waiver and to name a designee.
     (4) Designation by the insured to receive notice of lapse or termination for nonpayment of premium does not constitute acceptance of any liability on the part of the designee for services provided to the insured or applicant.

NEW SECTION.  Sec. 3   A new section is added to chapter 48.83 RCW to read as follows:
     The purpose of this section is to protect insureds from unintentional lapse by establishing standards for notification of a designee to receive notice of lapse for nonpayment of premium at least thirty days prior to the termination of coverage and to provide for a limited right to reinstatement of coverage unintentionally lapsed by a person with a cognitive impairment or loss of functional capacity, or due to lack of appropriate billing notification to the insured. These are minimum standards and do not prevent an insurer from including benefits more favorable to the insured. This section applies to every insurer providing long-term care coverage to a resident of this state, which coverage is issued for delivery or renewed on or after January 1, 2014.
     (1) Every insurer shall permit an insured to designate at least one additional person to receive notice of lapse or termination for nonpayment of premium, if the premium is not paid on or before its due date. The designation shall include the designee's full name and home address.
     (a) The notice shall provide that the contract or certificate will not lapse until at least thirty days after the notice is mailed to the insured's designee.
     (b) Where a policyholder or certificate holder pays the premium through a payroll or pension deduction plan, the insurer shall permit the insured to designate a person to receive notice of lapse or termination for nonpayment of premium within sixty days after the insured is no longer on such a premium payment plan. The application or enrollment form for contracts or certificates where the premium will be paid through a payroll or pension deduction plan shall clearly indicate the payment plan selected by the applicant.
     (c) The insurer shall offer each insured in writing an opportunity to change the designee, or update the information concerning the designee, no less frequently than once in every twenty-four months.
     (2) Every insurer shall provide a limited right to reinstate coverage in the event of lapse or termination for nonpayment of premium, if the insurer is provided proof of the insured's cognitive impairment or loss of functional capacity, or if the lapse was due to lack of appropriate billing notification to the insured, and reinstatement is requested within the twelve months after the policy lapsed or terminated due to nonpayment of premium.
     (a) The standard of proof of cognitive impairment or loss of functional capacity shall be no more restrictive than the benefit eligibility criteria for cognitive impairment or loss of functional capacity contained in the contract or certificate.
     (b) Current good health of the insured shall not be required for reinstatement if the request otherwise meets the requirements of this section.
     (c) The insured may demonstrate the lack of appropriate billing notification when the insurer had prior knowledge of the insured's change of billing address and failed to change the billing address to reflect the new location, or the insurer should have reasonably known of the billing address change when claims have been made for care at the new residence.
     (3) An insurer shall permit an insured to waive his or her right to designate an additional person to receive notice of lapse or termination for nonpayment of premium.
     (a) The waiver shall be in writing, and shall be dated and signed by the applicant or insured.
     (b) No less frequently than once in every twenty-four months, the insured shall be permitted to revoke this waiver and to name a designee.
     (4) Designation by the insured to receive notice of lapse or termination for nonpayment of premium does not constitute acceptance of any liability on the part of the designee for services provided to the insured or applicant.