HOUSE BILL REPORT
SB 6364
This analysis was prepared by non-partisan legislative staff for the use of legislative members in
their deliberations. This analysis is not a part of the legislation nor does it constitute a
statement of legislative intent.
As Reported by House Committee On:
Health Care & Wellness
Title: An act relating to long-term care insurance.
Brief Description: Establishing standards for long-term care insurance.
Sponsors: Senators Marr, Parlette, Franklin, Keiser, Murray, Weinstein, Hobbs, Prentice, Berkey, Pridemore, Haugen, Kilmer, Rasmussen, McCaslin and Shin.
Brief History:
Health Care & Wellness: 2/20/08, 2/25/08 [DPA].
Brief Summary of Bill (As Amended by House Committee) |
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HOUSE COMMITTEE ON HEALTH CARE & WELLNESS
Majority Report: Do pass as amended. Signed by 12 members: Representatives Cody, Chair; Morrell, Vice Chair; Hinkle, Ranking Minority Member; Alexander, Assistant Ranking Minority Member; Barlow, Condotta, DeBolt, Green, Moeller, Pedersen, Schual-Berke and Seaquist.
Staff: Dave Knutson (786-7146).
Background:
The National Association of Insurance Commissioners (NAIC) has developed national
uniform standards to facilitate interstate cooperation and commercial transactions that cross
state boundaries. The NAIC has worked closely with the National Conference of State
Legislatures, the National Conference of Insurance Legislators, and the National Association
of Attorneys General in the development and refinement of model legislation for a number of
insurance areas that may be filed through an interstate compact. Insurance carriers may file
products in one venue through the interstate compact and sell their products for life
insurance, annuities, disability income, and long-term care insurance products in all
participating compact states. The 2005 Washington Legislature directed the state to
participate in the interstate insurance product regulation compact.
Long-term care insurance is a relatively new insurance product compared to other insurance
products, such as life insurance. Washington first passed the Long-Term Care Insurance Act
in 1986. Since that time, policy standards have evolved and long-term care delivery
approaches have changed dramatically. The NAIC model long-term care act includes a
number of modifications dealing with rate stabilization and other consumer protections.
Summary of Amended Bill:
The NAIC model long-term care act is adopted for all long-term care insurance policies sold
in Washington on or after January 1, 2009. Standards governing policies sold prior to
January 2009 remain in place. The new policy definitions allow long-term care policies to
meet Internal Revenue Code requirements as tax qualified plans, including life insurance
contracts with long-term care insurance riders.
A stricter definition of pre-existing conditions is provided which limits the conditions to
those identified within the six months preceding the effective date of coverage. A policy may
not exclude coverage for a loss or confinement that is a result of a pre-existing condition,
unless the loss or confinement begins within the first six months of coverage. A policy may
not exclude, limit, or reduce coverage or benefits for specifically named or described
pre-existing diseases or conditions beyond the waiting period.
An individual purchasing a long-term care policy may return the policy for any reason within
30 days and receive a full premium refund. An outline of coverage must be available for a
prospective applicant at the time of initial solicitation. The Office of the Insurance
Commissioner (OIC) must prescribe a standardized outline of coverage that must be provided
to each applicant.
Monthly reports must be generated for those using a long-term care benefit funded through a
life insurance policy, by acceleration of the death benefit, which details the amount of benefit
paid out and remaining.
The OIC must develop minimum standards for inflation protection features. All policies
offered must include an offer of a nonforfeiture benefit, which allows the purchaser to retain
some benefits in the event they discontinue premium payments. The OIC must adopt rules
specifying the type or types of nonforfeiture benefits to be offered.
Insurance producers, brokers, and agents must complete a one-time training to sell long-term
care policies offered under this new chapter. Each carrier or issuer of policies must develop
and use suitability standards to determine whether the purchase of long-term care coverage is
appropriate for the applicant.
Amended Bill Compared to Original Bill:
References to the Long-term Care Partnership are updated. Training requirements for agents
selling long-term care insurance policies are updated to ensure all agents will receive training
prior to selling policies to the public.
Appropriation: None.
Fiscal Note: Not requested.
Effective Date of Amended Bill: The bill takes effect January 1, 2009.
Staff Summary of Public Testimony:
(In support) Implementing the model legislation proposed by the NAIC will help insurance
companies sell uniform and consistent policies nationwide.
(Opposed) None.
Persons Testifying: Mel Sorensen, American Council of Life Insurers, America's Health Insurance Plans, Washington Association of Health Underwriters, and the National Association of Insurance and Financial Advisors.