LONG-TERM CARE INSURANCE ACT
In this chapter:
I. "Applicant" means:
(a) In the case of an individual long-term care insurance policy, the person who seeks to contract for benefits; and
(b) In the case of a group long-term care insurance policy or certificate, the proposed certificate holder.
II. "Certificate" means any certificate issued under a group long-term care insurance policy, which policy has been delivered or issued for delivery in this or any other state.
III. "Commissioner" means the insurance commissioner of this state.
IV. "Group long-term care insurance" means a long-term care insurance policy or certificate that is delivered or issued for delivery in this state and issued to:
(a) One or more employers or labor organizations, as to a trust or to the trustees of a fund established by one or more employers or labor organizations, or a combination thereof, for employees or former employees or a combination thereof or for members or former members or a combination thereof, of the labor organizations, or
(b) Any professional, trade or occupational association for its members or former or retired members, or combination thereof, if the association:
(1) Is composed of individuals all of whom are or were actively engaged in the same profession, trade, or occupation; and
(2) Has been maintained in good faith for purposes other than obtaining insurance; or
(c)(1) An association or a trust or the trustees of a fund established, created or maintained for the benefit of members of one or more associations. Prior to advertising, marketing or offering the policy within this state, the association or associations, or the insurer of the association or associations, shall file evidence with the commissioner that the association or associations have at the outset a minimum of 100 persons, have been organized and maintained in good faith for purposes other than that of obtaining insurance, have been in active existence for at least one year, and have a constitution and bylaws that provide that:
(A) The association or associations hold regular meetings not less than annually to further purposes of the members;
(B) Except for credit unions, the association or associations collect dues or solicit contributions from members; and
(C) The members have voting privileges and representation on the governing board and committees.
(2) Thirty days after the filing, the association or associations shall be deemed to satisfy the organization requirements, unless the commissioner makes a finding that the association or associations do not satisfy those organizational requirements.
(d) A group, other than as described in (c)(1) subject to a finding by the commissioner that:
(1) The issuance of the group policy is not contrary to the best interest of the public;
(2) The issuance of the group policy would result in economies of acquisition or administration; or
(3) The benefits are reasonable in relation to the premiums charged.
V. "Long-term care insurance" means any insurance policy, group insurance certificate or rider advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense-incurred, indemnity, prepaid, or other basis, 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. The term includes group and individual annuities and life insurance policies, certificates, or riders that provide directly or supplement long-term care insurance. The term also includes a policy or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. The term shall also include qualified long-term care insurance contracts. Long-term care insurance may be issued by insurers; fraternal benefit societies; nonprofit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations, or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long-term care insurance shall not include any insurance policy that is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset-protection coverage, accident only coverage, or specified disease or specified accident coverage. With regard to life insurance, this term does not include life insurance policies that accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention or permanent institutional confinement, and that provide the option of a lump-sum payment for those benefits and where neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long-term care. Notwithstanding any other provision of this chapter, any product advertised, marketed, or offered as long-term care insurance shall be subject to the provisions of this chapter.
VI. "Loss ratio standards" means the minimum anticipated loss ratio permitted for a long-term care insurance policy or certificate. The anticipated loss ratio is that which is expected to be incurred over the lifetime of the policy or, at the option of the insurer, 20 years, whichever is shorter. Such a loss ratio shall be based on a typical distribution of business anticipated to be sold in a period of 12 months and followed to its conclusion. The loss ratio shall be calculated as the ratio of the present value of all expected future benefits, excluding dividends, to the present value of all expected future premiums.
VII. "Policy" means any policy, contract, subscriber agreement, rider, amendment or endorsement delivered or issued for delivery in this state or any other state by an insurer; fraternal benefit society; nonprofit health, hospital, or medical service corporation; prepaid health plan; health maintenance organization or any similar organization.
VIII. "Qualified long-term care insurance contract" or "federally tax-qualified long-term care insurance contract" means:
(a) An individual or group insurance contract that meets the requirements of Section 7702B(b) of the Internal Revenue Code of 1986, as amended, as follows:
(1) The only insurance protection provided under the contract is coverage of qualified long-term care services. A contract shall not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate;
(2) The contract does not pay or reimburse expenses incurred for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act, as amended, or would be so reimbursable but for the application of a deductible or coinsurance amount. The requirements of this subparagraph do not apply to expenses that are reimbursable under Title XVIII of the Society Security Act only as a secondary payor. A contract shall not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expense incurred during the period to which the payments relate;
(3) The contract is guaranteed renewable, within the meaning of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended;
(4) The contract does not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed except as provided in subparagraph (e);
(5) All refunds of premiums, and all policyholder dividends or similar amounts, under the contract are to be applied as a reduction in future premiums or to increase future benefits, except that a refund on the event of death of the insured or a complete surrender or cancellation of the contract cannot exceed the aggregate premiums paid under the contract; and
(6) The contract meets the consumer protection provisions set forth in Section 7702B(g) of the Internal Revenue Code of 1986, as amended.
(b) The portion of a life insurance contract that provides long-term care insurance coverage by rider or as part of the contract and that satisfies the requirements of Sections 7702B(b) and (e) of the Internal Revenue Code of 1986, as amended.
Source. 2003, 180:1, eff. Aug. 23, 2003.