TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.10 PURPOSE
Section 2012.10 Purpose
The purpose of this Part is to
implement Article XIXA of the Illinois Insurance Code, to promote the public
interest, to promote the availability of long-term care insurance coverage, to
protect applicants for long-term care insurance from unfair or deceptive sales
or enrollment practices, to facilitate public understanding and comparison of
long-term care insurance coverages and to facilitate flexibility and innovation
in the development of long-term care insurance.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
 | TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.20 APPLICABILITY AND SCOPE
Section 2012.20
Applicability and Scope
a) Except as otherwise specifically provided, this Part applies
to all long-term care insurance policies including qualified long-term care
insurance contracts and life insurance policies that accelerate benefits for
long-term care insurance delivered or issued for delivery in this State by any
insurer on or after June 15, 1990. Certain provisions of this Part apply only
to qualified long-term care insurance contracts as noted.
b) Additionally, this Part is intended to apply to policies
having indemnity benefits that are triggered by activities of daily living and
sold as disability income insurance, if:
1) The benefits of the disability income policy are dependent
upon or vary in amount based on the receipt of long-term care services;
2) The disability income policy is advertised, marketed or
offered as insurance for long-term care services; or
3) Benefits under the policy may commence after the policyholder
has reached Social Security's normal retirement age unless benefits are
designed to replace lost income or pay for specific expenses other than
long-term care services.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.30 DEFINITIONS
Section 2012.30 Definitions
"Accelerated
Long-Term Care Benefit" means a life insurance policy, contract, rider
endorsement or amendment that contains benefits providing payment from life or
endowment or annuity benefits in advance of the time they would otherwise be
payable at any time during the insured's lifetime as an indemnity for long-term
care.
"Applicant",
as defined in Section 351A-1 of the Illinois Insurance Code, means:
in the case of an individual long-term care insurance policy, the
person who seeks to contract for benefits;
in the case of a group long-term care insurance policy, the proposed
certificateholder.
"Certificate",
as defined in Section 351A-1 of the Illinois Insurance Code, means any
certificate issued under a group long-term care insurance policy, which policy
has been delivered or issued for delivery in this State.
"Chronically
Ill Individual", for all long-term care policies that are marketed as
"qualified" pursuant to the Internal Revenue Code of 1986, as amended
(26 USC 7702B(c)(2)(A)), means any individual who has been certified by a
licensed health care practitioner as:
being unable to perform (without substantial assistance from another
individual) at least 2 activities of daily living for a period of at least 90
days due to a loss of functional capacity;
having a level of disability similar (as determined under regulations
prescribed by the Secretary in consultation with the Secretary of Health and
Human Services) to the level of disability described in the preceding paragraph;
or
requiring
substantial supervision to protect the individual from threats to health and
safety due to severe cognitive impairment.
The term does
not include any individual otherwise meeting the requirements of this
definition unless within the preceding 12-month period a licensed health care
practitioner has certified that the individual meets these requirements.
"Code"
means the Illinois Insurance Code [215 ILCS 5].
"Director" means the
Director of the Illinois Department of Insurance.
"Exceptional
Increase" means only those increases filed by an insurer as exceptional
for which the Director 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 to increased and unexpected utilization that affects
the majority of insurers of similar products.
Except as provided
in Sections 2012.112 and 2012.113, exceptional increases are subject to the
same requirements as other premium rate schedule increases found in Section
2012.112 or 2012.113.
The Director
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 Director,
in determining that the necessary basis for exceptional increase exists, shall
also determine any potential offsets to higher claims costs.
"Group
Long-Term Care Insurance", as defined in Section 351A-1 of the Code
[215 ILCS 5/351A-1], means a long-term care insurance policy which is
delivered or issued for delivery in this State and issued to one of the
following:
One or
more employers or labor organizations, or to a trust or to the trustee(s) 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.
Any
professional, trade or occupational association for its members or former or
retired members, or combination thereof, if such association:
is
composed of individuals all of whom are or were actively engaged in the same
profession, trade or occupation; and
has been
maintained in good faith for purposes other than obtaining insurance.
An association
or a trust or the trustee(s) of a fund established, created or maintained for
the benefit of members of one or more associations. Prior to advertising,
marketing or offering such policy within this State, the association or associations,
or the insurer of the association or associations, shall file evidence with the
Director that the association or associations have at the outset a minimum of
100 members and 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 by-laws which provide that:
the
association or associations hold regular meetings not less than annually to
further purposes of the members;
except
for credit unions, the association or associations collect dues or solicit
contributions from members; and
the
members have voting privileges and representation on the governing board and
committees.
Thirty days after such filing the association or associations will be
deemed to satisfy such organizational requirements, unless the Director makes a
finding that the association or associations do not satisfy those
organizational requirements.
A group
other than as described in subparagraphs under the definition of Group
Long-Term Care Insurance, subject to a finding by the Director that:
the
issuance of the group policy is not contrary to the best interest of the
public;
the
issuance of the group policy would result in economies of acquisition or
administration; and
the
benefits are reasonable in relation to the premiums charged.
"Incidental", as used in Sections
2012.112(j) and 2012.113(j), means that the value of the long-term care benefit
provided is less than 10% of the total value of the benefits provided over the
life of the policy. These values shall be measured as of the date of issue.
"Insurer"
includes insurance companies; fraternal benefit societies; nonprofit health,
hospital, and medical service corporations; prepaid health plans; health
maintenance organizations or any similar organization.
"Long-Term
Care Insurance", as defined in Section 351A-1 of the Code, means
any accident and health insurance policy 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 or
riders which provide directly or which supplement long-term care insurance.
The term also includes a policy or rider which 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 which 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, specified disease or specified accident coverage, or
limited benefit health coverage. Long-term care insurance may include benefits
for care and treatment in accordance with the tenets and practices of any
established church or religious denomination which teaches
reliance on spiritual treatment through prayer for healing.
"Maintenance or Personal Care
Services", within the meaning of the Internal Revenue Code of 1986, as
amended (26 USC 7702B(c)(3)), 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).
"Policy",
as defined in Section 351A-1 of the Illinois Insurance Code, means any
policy, contract, subscriber agreement, rider or endorsement delivered or issued
for delivery in this State by an insurer, fraternal benefit society, non-profit
health, hospital, or medical service corporation, prepaid health plan,
health maintenance organization or any similar organization.
"Qualified
Actuary" means a member in good standing of the American Academy of
Actuaries.
"Qualified
Long-Term Care Contract" has the same meaning as that for a
"Qualified long-term care insurance contract" described in Section
351A-1 of the Code.
"Qualified
Long-Term Care Insurance Partnership Policy" means a policy that meets all
of the following requirements:
It covers an
insured who was a resident of Illinois when coverage first became effective
under the policy;
It is a
qualified long-term care insurance policy as defined in section 7702B(b) of the
Internal Revenue Code of 1986 issued not earlier than the effective date of the
State plan amendment;
It meets the
model regulations and requirements of the National Association of Insurance
Commissioners model specified in paragraph (5) of Title VI, section 6021 of the
federal Deficit Reduction Act of 2005 (42 USC 1305), and the Director of the
Department of Insurance certifies it as meeting these requirements; and
If the policy
is sold to an individual who:
has not
attained age 61 as of the date of purchase, the policy provides compound annual
inflation protection;
has attained
age 61 but has not attained age 76 as of the date of purchase, the policy
provides some level of inflation protection; or
has attained
age 76 as of the date of purchase, the policy may, but is not required to,
provide some level of inflation protection.
"Qualified
Long-Term Care Services" means necessary diagnostic, preventive,
therapeutic, curing, treating, mitigating and rehabilitation services, and
maintenance or personal care services that are required by a chronically ill
individual, that are provided pursuant to a plan of care prescribed by a
licensed heath care practitioner.
"Respite
Service" may include, but is not limited to, temporary care for insureds
aimed at relieving stress for the insureds families. Respite service shall be
provided for vacation, rest, errands, family crisis or emergency.
"Similar Policy Forms"
means all of the long-term care insurance policies and certificates issued by
an insurer in the same long-term care benefit classification as the policy form
being considered. Certificates of groups that meet the definition of
"Group Long-Term Care Insurance" found in Section 351A-1(e)(1) of the
Code 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, non-institutional
long-term care benefits only, or comprehensive long-term care benefits.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.40 POLICY DEFINITIONS
Section 2012.40 Policy
Definitions
a) For policies issued after January 1, 2009, no long-term care
insurance policy delivered or issued for delivery in this State shall use the
terms set forth below, unless the terms are defined in the policy and the
definitions satisfy the following requirements.
"Activities
of Daily Living" means at least bathing, continence, dressing, eating,
toileting and transferring.
"Acute
Condition" means a condition that causes the individual to be medically
unstable. Such individual requires frequent monitoring by medical
professionals, such as physicians and registered nurses, in order to maintain
his or her health status.
"Adult
Day Care" means a program, for 6 or more individuals, of social and
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.
"Assistive Equipment" may
include, but is not limited to, tangible personal property with a useful life
of at least one year, expressly designed and used for increasing independent
functioning in specific tasks or activities of independent living in the home
that directly results in a demonstrated decrease in need for assistance from
another individual in performing certain tasks or activities.
"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.
"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.
"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).
"Dressing"
means putting on and taking off all items of clothing and any necessary braces,
fasteners or artificial limbs.
"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.
"Electronic
Home Response Services" may include, but are not limited to, services
designed to provide a 24 hour per day emergency communication link to
assistance outside the home for individuals with such severe disabilities that
they are incapable of using conventional or modified communication devices such
as the telephone, and who have no other persons available in the home should an
emergency arise.
"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.
"Home
Health Care Services" means medical and nonmedical services provided to
persons in their residences who are ill or have disabilities or infirmities.
Examples of such services may include, but are not limited to, homemaker
services, assistance with activities of daily living and respite care services.
"Homemaker
Service" may include, but is not limited to, non-medical support provided
by trained and professionally supervised homemakers to maintain, strengthen and
safeguard the functioning of individuals in their own homes.
"Licensed
Health Care Practitioner" means any physician (as defined in section
1861(r)(1) of the Social Security Act) and any registered professional nurse,
licensed social worker, or other individual who meets requirements as may be
prescribed by the Secretary.
"Maintenance
Home Health Care Services" may include, but is not limited to, medically
related services provided in the home in accordance with services prescribed by
a physician. Specific components of maintenance home health care may include:
nursing services; physical, respiratory or speech therapy; and medical/health
care services provided by a home health care aide.
"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.
"Mental
or Nervous Disorder" shall not be defined to include more than neurosis,
psychoneurosis, psychopathy, psychosis, or mental or emotional disease or
disorder.
"Personal
Care" means the provision of hands-on services to assist an individual
with activities of daily living, such as bathing, eating, dressing,
transferring and toileting.
"Plan of
Care" in qualified plans means the specific type and frequency of all
services required to maintain the individual in the community, the service
providers, and the cost of services. The plan of care shall be specified in
writing by a licensed health care provider.
"Respite
Service" may include, but is not limited to, temporary care for insureds
aimed at relieving stress for the insureds' families. Respite service shall be
provided for vacation, rest, errands, family crisis or emergency.
"Skilled
Nursing Care", "Intermediate Care", "Personal Care",
"Home Care", "Specialized Care", "Assisted Living
Care" and other services shall be defined in relation to the level of
skill required, the nature of the care and the setting in which care must be delivered.
"Toileting"
means getting to and from the toilet, getting on and off the toilet, and
performing associated personal hygiene.
"Transferring"
means moving into or out of a bed, chair or wheelchair.
b) For policies issued after January 1, 2009, all providers of
services, including, but not limited to, "skilled nursing facility",
"intermediate care facility", "extended care facility",
"specialized care providers", "assisted living facility",
"convalescent nursing home", "personal care facility", and
"home care agency" shall 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 shall also state what requirements a provider must
meet in lieu of licensure, certification or registration when 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 when the state licenses,
certifies or registers the provider of services under another name.
c) For policies issued prior to January 1, 2009, no insurance
policy or certificate may be advertised, solicited, delivered or issued for
delivery in this State as a traditional long-term care policy unless the policy
or subscriber contract contains definitions or terms that are not more
restrictive than the requirements of this Section.
"Activities
of Daily Living" means at least bathing, continence, dressing, eating,
toileting and transferring.
"Acute
Condition" means a condition that causes the individual to be medically
unstable. Such individual requires frequent monitoring by medical
professionals, such as physicians and registered nurses, in order to maintain
his or her health status.
"Adult
Day Care" means a program for 6 or more individuals, of social and
health-related services provided during the day in a community group setting
for the purpose of supporting frail, impaired elderly or other adults with
disabilities who can benefit from care in a group setting outside the home.
All
providers of services, including but not limited to skilled nursing facility,
intermediate care facility, convalescent nursing home, personal care facility,
and home care agency shall be defined in relation to the services and
facilities required to be available and the licensure or degree status of those
providing or supervising the services. The definition may require that the
provider be appropriately licensed or certified.
"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.
"Chronically
Ill Individual", for all traditional long-term care policies that are
marketed as "qualified" pursuant to the Internal Revenue Code of
1986, as amended (26 USC 7702B(c)(2)(A)), the term "chronically ill
individual" means any individual who has been certified by a licensed
health care practitioner as:
being unable to perform (without substantial assistance from
another individual) at least 2 activities of daily living for a period of at
least 90 days due to a loss of functional capacity,
requiring substantial supervision to protect such individual
from threats to health and safety due to severe cognitive impairment.
Such term
shall not include any individual otherwise meeting the requirements of the
preceding sentence unless within the preceding 12-month period a licensed
health care practitioner has certified that such individual meets such
requirements.
"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.
"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).
"Dressing"
means putting on and taking off all items of clothing and any necessary braces,
fasteners or artificial limbs.
"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.
"Exceptional
Increase" means only those increases filed by an insurer as exceptional
for which the Director determines the need for the premium rate increase is
justified:
Due to changes
in laws or regulations applicable to traditional long-term care coverage in
this State; or
Due to
increased and unexpected utilization that affects the majority of insurers of
similar products.
Except as
proved in Sections 2012.112 and 2012.113, exceptional increases are subject to
the same requirements as other premium rate schedule increases.
The Director
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
Director, in determining that the necessary basis for exceptional increase
exists, shall also determine any potential offsets to higher claims costs.
"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.
"Home
Health Care Services" means medical and nonmedical services provided to
persons in their residences who are ill or have disabilities or infirmities.
Examples of such services may include but are not limited to homemaker
services, assistance with activities of daily living and respite care services.
"Incidental",
as used in Sections 2012.112(j) and 2012.113(j), means that the value of the
traditional long-term care benefit provided is less than 10% of the total value
of the benefits provided over the life of the policy. These values shall be
measured as of the date of issue.
"Licensed
Health Care Practitioner" means any physician (as defined in Section 1861(r)(1)
of the Social Security Act) and any registered professional nurse, licensed
social worker, or other individual who meets requirements as may be prescribed
by the Secretary.
"Maintenance
or Personal Care Services" within the meaning of the internal Revenue Code
of 1986, as amended (26 USC 7702B(c)(3)), 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).
"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.
"Mental
or Nervous Disorder" shall not be defined to include more than neurosis,
psychoneurosis, psychopathy, psychosis, or mental or emotional disease or
disorder.
"Personal
Care" means the provision of hands-on services to assist an individual
with activities of daily living, such as bathing, eating, dressing,
transferring and toileting.
"Plan of
Care" in qualified plans means the specific type and frequency of all
services required to maintain the individual in the community, the service
providers, and the cost of services. The plan of care shall be specified in
writing by a licensed health care provider.
"Qualified
Actuary" means a member in good standing of the American Academy of
Actuaries.
"Qualified
Long-Term Care Contract" has the same meaning as that for a "Qualified
long-term care insurance contract" described in Section 351A-1 of the
Code.
"Qualified
Long-Term Care Services" means necessary diagnostic, preventive,
therapeutic, curing, treating, mitigating and rehabilitation services, and
maintenance or personal care services that are required by a chronically ill
individual and provided pursuant to a plan of care prescribed by a licensed
heath care practitioner.
"Similar
Policy Forms" means all of the traditional long-term care insurance
policies and certificates issued by an insurer in the same traditional
long-term care benefit classification as the policy form being considered.
Certificates of groups that meet the definition found in Section 2012.30 are
not considered similar to certificates or policies otherwise issued as
traditional long-term care insurance, but are similar to other comparable
certificates with the same traditional long-term care benefit classifications.
For purposes of determining similar policy forms, traditional long-term care
benefit classifications are defined as follows: institutional traditional
long-term care benefits only, non-institutional traditional long-term care benefits
only, or comprehensive traditional long-term care benefits.
"Skilled
Nursing Care", "Intermediate Care", "Personal Care",
"Home Care", and other services shall be defined in relation to the
level of skill required, the nature of the care and the setting in which care
must be delivered.
"Toileting"
means getting to and from the toilet, getting on and off the toilet, and
performing associated personal hygiene.
"Transferring"
means moving into or out of a bed, chair or wheelchair.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.50 POLICY PRACTICES AND PROVISIONS
Section 2012.50 Policy
Practices and Provisions
a) Renewability. The terms "guaranteed renewable" and
"noncancellable" shall not be used in any individual long-term care
insurance policy or certificate without explanatory language in accordance with
the disclosure requirements of Section 2012.62.
1) A policy issued to an individual shall not contain renewal
provisions other than "guaranteed renewable" or
"noncancellable".
2) The term "guaranteed renewable" may be used only
when the insured has the right to continue the long-term care insurance in
force by the timely payment of premiums and when the insurer has no unilateral
right to make any change in any provision of the policy or rider while the
insurance is in force, and cannot decline to renew, except that rates may be
revised by the insurer on a class basis.
3) The term "noncancellable" may be used only when the
insured has the right to continue the long-term care insurance in force by the
timely payment of premiums during which period the insurer has no right to
unilaterally make any change in any provision of the insurance or in the
premium rate.
4) The term "level premium" may only be used when the
insurer does not have the right to change the premium.
5) In addition to the other requirements of subsection (a), a
qualified long-term care insurance contract shall be guaranteed renewable, within
the meaning of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as
amended.
b) Limitations and Exclusions. A policy may not be delivered or
issued for delivery in this State as long-term care insurance if the policy
limits or excludes coverage by type of illness, treatment, medical condition or
accident, except as follows:
1) Preexisting conditions or diseases;
2) Mental or nervous disorders; however, this shall not permit
exclusion or limitation of benefits on the basis of Alzheimer's Disease or senile
dementia;
3) Alcoholism and drug addiction;
4) Illness, treatment or medical condition arising out of:
A) war or act of war (whether declared or undeclared);
B) participation in a felony, riot or insurrection;
C) service in the armed forces or units auxiliary thereto;
D) suicide (sane or insane), attempted suicide or intentionally
self-inflicted injury; or
E) aviation (this exclusion applies only to non-fare paying passengers);
5) 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;
6) Expenses for services or items available or paid under another
traditional long-term care insurance or health insurance policy;
7) In the case of a tax qualified long-term care insurance
contract, 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;
8) This
subsection (b) is not intended to prohibit exclusions and limitations by type
of provider. However, no long term care issuer may deny a claim because
services are provided in a state other than in the state in which the policy was
issued under the following conditions:
A) When
the state other than the state in which the policy was issued does not have the
provider licensing, certification or registration required in the policy, but when
the provider satisfies the policy requirements outlined for providers in lieu
of licensure, certification or registration; or
B) When
the state other than the state in which the policy was issued licenses,
certifies or registers the provider under another name.
9) This
subsection (b) is not intended to prohibit territorial limitations.
c) Extension of Benefits. Termination of long-term care
insurance shall be without prejudice to any benefits payable for
institutionalization if such institutionalization began while the long-term
care insurance was in force and continues without interruption after
termination. Such 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.
d) Continuation or Conversion
1) Group long-term care insurance issued in this State on or
after February 1, 1994 shall provide covered individuals with a basis for
continuation or conversion of coverage.
2) For the purposes of this Section, "a basis for
continuation of coverage" means a policy provision which maintains
coverage under the existing group policy when such coverage would otherwise
terminate and which is subject only to the continued timely payment of premium
when due. Group policies which restrict provision of benefits and services to,
or contain incentives to use certain providers or facilities may provide
continuation benefits which are substantially equivalent to the benefits of the
existing group policy. The Director shall make a determination as to the
substantial equivalency of benefits, and in doing so shall take into
consideration the differences between managed care and non-managed care plans,
including, but not limited to, provider system arrangements, service availability,
benefit levels and administrative complexity.
3) 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, shall be entitled to the issuance of a
converted policy by the insurer under whose group policy the individual is
covered, without evidence of insurability.
4) 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 Director to be substantially
equivalent to or in excess of those provided under the group policy from which
conversion is made. Where the group policy from which conversion is made
restricts the provision of benefits and services, or contains incentives to use
certain providers and/or facilities, the Director, in making a determination as
to the substantial equivalency of benefits, shall take into consideration the
differences between managed care and non-managed care plans, including, but not
limited to, provider system arrangements, service availability, benefit levels
and administrative complexity. The converted policy offered shall be on a form
that is available for general sale in this State.
5) Written application for the converted policy shall be made and
the first premium due, if any, shall be paid as directed by the insurer not
later than thirty-one days after termination of coverage under the group
policy. The converted policy shall be issued effective on the day following
the termination of coverage under the group policy, and shall be guaranteed
renewable.
6) Unless the group policy from which conversion is made replaced
previous group coverage, the premium for the converted policy shall be
calculated on the basis of the insured's age at inception of coverage under the
group policy from which conversion is made. Where the group policy from which
conversion is made replaced previous group coverage, the premium for the
converted policy shall be calculated on the basis of the insured's age at
inception of coverage under the group policy replaced.
7) Continuation of coverage or issuance of a converted policy
shall be mandatory, except where:
A) Termination of group coverage resulted from an individual's
failure to make any required payment of premium or contribution when due; or
B) The terminating coverage is replaced not later than 31 days
after termination, by group coverage effective on the day following the
termination of coverage:
i) Providing benefits identical to or benefits determined by the
Director to be substantially similar to, or in excess of, those provided by the
terminating coverage; and
ii) The premium for which is calculated in a manner consistent
with the requirements of subsection (d)(6).
8) 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 which 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 100% of incurred expenses. This provision
shall 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.
9) 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, shall not exceed those that would have
been payable had the individual's coverage under the group policy remained in
force and effect.
10) Notwithstanding any other provision of this Section, any
insured individual whose eligibility for group long-term care coverage is based
upon his or her relationship to another person, shall be entitled to
continuation of coverage under the group policy upon termination of the
qualifying relationship by death or dissolution of marriage.
11) For the purposes of this Section, a "Managed-Care
Plan" is 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.
e) 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 insurer shall offer coverage to all
persons covered under the previous group policy on its date of termination.
Coverage provided or offered to individuals by the insurer and premiums charged
to persons under the new group policy:
1) Shall not result in any exclusion for preexisting conditions
that would have been covered under the group policy being replaced; and
2) Shall not vary or otherwise depend on the individual's health
or disability status, claim experience or use of long-term care services.
f) The premiums charged to an insured shall not increase due to
either:
1) The increasing age of the insured at ages beyond 65; or
2) The duration the insured has been covered under the policy.
g) No long-term care insurance policy shall provide coverage for
skilled nursing care only or provide significantly more coverage for skilled
care in a facility than coverage for lower levels of care.
h) Electronic Enrollment for Group Policies
1) In the case of a group defined in Section 351A-1(e) of the
Code, any requirement that a signature of an insured be obtained by an
insurance producer or insurer shall be deemed satisfied if:
A) The consent is obtained by telephonic or electronic enrollment
by the group policyholder or insurer. A verification of enrollment information
shall be provided to the enrollee;
B) The telephonic or electronic enrollment provides necessary and
reasonable safeguards to assure the accuracy, retention and prompt retrieval of
records; and
C) The telephonic or electronic enrollment provides necessary and
reasonable safeguards to assure that the confidentiality of individually
identifiable information and privileged information is maintained.
2) Upon request of the Director the insurer shall make available
records that will demonstrate the insurer's ability to confirm enrollment and
coverage amounts.
i) Except for subsections (a)(1), (b)(8) and (9) and (g), which
become effective January 1, 2009, subsections (a) through (h) become effective
July 1, 2008.
j) For policies issued from July 1, 2008 through January 1, 2009,
the following requirements taken from subsections (a)(1), (b)(8) and (g) apply:
1) For purposes of subsection (a), no individual long-term care
insurance policy or certificate issued to an individual shall contain renewal
provisions less favorable to the insured than "guaranteed renewable".
2) Subsection (b) is not intended to prohibit exclusions and
limitations for payment of services provided outside the United States.
3) For purposes of subsection (g), no traditional long-term care insurance policy
shall:
A) be cancelled, nonrenewed or otherwise terminated on grounds of
the age or deterioration of the mental or physical health of the insured
individual or certificateholder;
B) contain a provision establishing a new waiting period in the
event existing coverage is converted to or replaced by new or other coverage,
except with respect to an increase in benefits voluntarily selected by the
insured individual or group policyholder;
C) provide coverage for skilled nursing care only or provide
significantly more coverage for skilled care in a facility than coverage for
lower levels of care.
4) There
is no requirement for subsection (b)(9) prior to January 1, 2009.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.55 UNINTENTIONAL LAPSE
Section 2012.55
Unintentional Lapse
Each insurer offering long-term
care insurance shall, as a protection against unintentional lapse, comply with
the following:
a) Notice before lapse or termination.
1) No individual long-term care policy or certificate shall be
issued until the insurer has received from the applicant 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. The applicant has the right to designate
at least one person who is to receive the notice of termination, in addition to
the insured. Designation shall not constitute acceptance of any liability on
the third party for services provided to the insured. The form used for the
written designation must provide space clearly designated for listing at least
one person. The designation shall include each person's full name and home
address. In the case of an applicant who elects not to designate an additional
person, the waiver shall 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 30 days after a premium is due and unpaid. I elect NOT to
designate any person to receive such notice." The insurer shall also
notify the insured of the right to change this written designation, no less
often than once every 2 years.
2) 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 subsection (a)(1) need not be met
until 60 days after the policyholder or certificateholder is no longer on such
a payment plan. The application or enrollment form for such policies or
certificates shall clearly indicate the payment plan selected by the applicant.
3) 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 insurer, at least 30 days before the effective
date of the lapse or termination, has given notice to the insured and to those
persons designated pursuant to subsection (a)(1), at the address provided by
the insured for purposes of receiving notice of lapse or termination. Notice shall
be given by first class United States mail, postage prepaid; and notice shall
not be given until 30 days after a premium is due and unpaid. Notice shall be
deemed to have been given as of 5 days after the date of mailing.
b) In addition to the requirements of subsection (a), a long-term
care insurance policy or certificate shall include a provision that provides
for reinstatement of coverage, in the event of lapse if the insurer 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. This option shall be available to the insured if requested
within 5 months after termination and shall allow for the collection of past
due premium when appropriate. The standard of proof of cognitive impairment or
loss of functional capacity shall not be more stringent than the benefit
eligibility criteria on cognitive impairment or the loss of functional capacity
contained in the policy and certificate.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.60 REQUIRED DISCLOSURE PROVISIONS
Section 2012.60 Required
Disclosure Provisions
a) Renewability. Individual long-term care insurance policies
shall contain a renewability provision. The provision shall be appropriately captioned,
shall appear on the first page of the policy, and shall clearly state that the
coverage is guaranteed renewable or noncancellable. This provision shall not
apply to policies which do not contain a renewability provision and under which
the right to nonrenew is reserved solely to the policyholder as long as
required premiums are paid on time. A long-term care insurance policy or
certificate, other than one where the insurer does not have the right to change
the premium, shall include a statement that premium rates may change.
b) Riders and Endorsements. Except for riders or endorsements by
which the insurer 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 date of issue or at
reinstatement or renewal which reduce or eliminate benefits or coverage in the
policy shall require signed acceptance by the individual insured. After the
date of policy issue, any rider or endorsement which increases benefits or
coverage with a concomitant increase in premium during the policy term must be
agreed to in writing signed by the insured, except if the increased benefits or
coverage are required by law. Where a separate additional premium is charged
for benefits provided in connection with riders or endorsements, such premium
charge shall be set forth in the policy, rider or endorsement.
c) Payment of Benefits. A long-term care insurance policy or
certificate that provides for the payment of benefits based on standards
described as "usual and customary," "reasonable and
customary" or words of similar import shall include a definition of such
terms and an explanation of such terms in its accompanying outline of coverage.
d) Limitations: If a long-term care insurance policy or
certificate contains any limitations with respect to preexisting conditions,
such limitations shall appear as a separate paragraph of the policy or
certificate and shall be labeled "Preexisting Condition Limitations".
Limitations to preexisting conditions shall be in accordance with Section
351A-5 of the Code.
e) Other Limitations or Conditions on Eligibility for Benefits. In
addition to complying with Section 351A-6 of the Code, beginning August 30,
1990, a long-term care insurance policy or certificate containing any
limitations or conditions for eligibility other than those prohibited in
Section 351A-6 shall set forth a description of such limitations or conditions,
including any required number of days of confinement in a separate paragraph of
the policy or certificate and shall label such paragraph "Limitations or
Conditions on Eligibility for Benefits".
f) Disclosure Requirements for Accelerated Life Products
1) Policy Summary
At the time of
policy delivery, a policy summary shall be delivered for an individual life
insurance policy that provides long-term care benefits within the policy or by
rider. This requirement does not apply to qualified long-term care insurance
contracts. In the case of direct response solicitations, the insurer shall
deliver the policy summary upon the applicant's request, but regardless of
request shall make delivery no later than at the time of policy delivery. In
addition to complying with all applicable requirements, the summary shall also
include:
A) an explanation of how the long-term care benefit interacts with
other components of the policy, including deductions from death benefits;
B) an illustration of the amount of benefits, the length of
benefit, and the guaranteed lifetime benefits if any, for each covered person;
C) any exclusion, reductions and limitations on benefits of
long-term care; and
D) if applicable to the policy type, the summary shall also
include:
i) disclosure of the effects of exercising other rights under
the policy;
ii) disclosure of guarantees related to long-term care costs of
insurance charges; and
iii) current and projected maximum lifetime benefits.
2) Benefit Reports
Any time a
long-term care benefit, funded through a life insurance vehicle by the
acceleration of the death benefit, is in benefit payment status, a monthly
report shall be provided to the policyholder. The report shall include:
A) any long-term care benefits paid during the month;
B) an explanation of any changes in the policy, including changes
in death benefits or cash values, due to long-term care benefits being paid
out; and
C) the amount of long-term care benefits existing or remaining.
3) Outline of Coverage
The Outline of
Coverage should include an example filled out in John Doe form that illustrates
how the long-term care benefit is calculated. Refer to Section 2012.110 and
Exhibit C for format and content requirements.
g) Disclosure of Tax Consequences. With regard to life insurance
policies that provide an accelerated benefit for long-term care, a disclosure
statement is required at the time of application for the policy or rider and at
the time the accelerated benefit payment request is submitted, that receipt of
these accelerated benefits may be taxable, and that assistance should be sought
from a personal tax advisor. This disclosure statement shall be prominently
displayed on the first page of the policy or rider and any other related
documents. This subsection (g) shall not apply to qualified long-term care
insurance contracts.
h) Benefit Triggers. Activities of daily living and cognitive
impairment shall be used to measure an insured's need for long-term care and
shall be described in the policy or certificate in a separate paragraph and
shall be labeled "Eligibility for the Payment of Benefits". Any
additional benefit triggers shall also be explained in this paragraph. If
these triggers differ for different benefits, explanation of the trigger shall
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 shall be specified.
i) A qualified long-term care insurance contract shall include a
disclosure statement in the policy and in the outline of coverage as contained
in Exhibit C(3) that indicates that the policy is intended to be a qualified
long-term care insurance contract under Section 7702B(b) of the Internal
Revenue Code of 1986, as amended (26 USC 7702B(b)).
j) A nonqualified traditional long-term care insurance contract
shall include a disclosure statement in the policy and in the outline of
coverage as contained in Exhibit C(3). The disclosure statement shall indicate
that the policy is not intended to be a qualified long-term care insurance
contract under Section 7702B(b) of the Internal Revenue Code of 1986, as
amended (26 USC 7702B).
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.62 REQUIRED DISCLOSURE OF RATING PRACTICES TO CONSUMERS
Section 2012.62 Required
Disclosure of Rating Practices to Consumers
a) This Section shall apply as follows:
1) Except as provided in subsection (a)(2), this Section applies
to any long-term care policy issued in this State on or after January 1, 2003.
2) For certificates issued on or after July 1, 2002, under a
group long-term care insurance policy as defined in Section 351A-1(e)(1) of the
Code that was in force prior to July 1, 2002, the provisions of this Section
shall apply on the policy anniversary following July 1, 2003.
b) Other than policies for which no applicable premium rate or
rate schedule increases can be made, insurers shall provide all of the
information listed in this subsection (b) to the applicant at the time of
application or enrollment, unless the method of application does not allow for
delivery at that time. In such a case, an insurer shall 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.
1) A statement that the policy may be subject to rate increases
in the future;
2) An explanation of potential future premium rate revisions, and
the policyholder's or certificateholder's option in the event of a premium rate
revision;
3) The premium rate or rate schedules applicable to the applicant
that will be in effect until a request is made for an increase;
4) A general explanation for applying premium rate or rate
schedule adjustments that shall include:
A) A description of when premium rate or rate schedule adjustments
will be effective (e.g., next anniversary date, next billing date, etc.); and
B) The right to a revised premium rate or rate schedule as
provided in subsection (b)(3) of this Section if the premium rate or rate
schedule is changed;
5) Required Rate Information
A) Information regarding each premium rate increase on this policy
form or similar policy forms over the past 10 years for this State or any other
state that, at a minimum, identifies:
i) The policy forms for which premium rates have been increased;
ii) The calendar years when the form was available for purchase;
and
iii) 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.
B) The insurer may, in a fair manner, provide additional
explanatory information related to the rate increases.
C) An insurer shall have the right to exclude from the disclosure
premium rate increases that only apply to blocks of business acquired from other
nonaffiliated insurers or the long-term care policies acquired from other
nonaffiliated insurers when those increases occurred prior to the acquisition.
D) If an acquiring insurer files for a rate increase on a
long-term care policy form acquired from nonaffiliated insurers or a block of
policy forms acquired from nonaffiliated insurers on or before July 1, 2002, or
the end of a 24 month period following the acquisition of the block or
policies, the acquiring insurer may exclude that rate increase from the
disclosure. However, the nonaffiliated selling company shall include the
disclosure of that rate increase in accordance with subsection (b)(5)(A) of
this Section.
E) If the acquiring insurer in subsection (b)(5)(D) of this
Section files for a subsequent rate increase, even within the 24 month period,
on the same policy form acquired from nonaffiliated insurers or block of policy
forms acquired from nonaffiliated insurers referenced in subsection (b)(5)(D)
of this Section, the acquiring insurer shall make all disclosures required by
subsection (b)(5)(A) of this Section, including disclosure of the earlier rate
increase referenced in subsection (b)(5)(D) of this Section.
c) An applicant shall sign an acknowledgment at the time of
application, unless the method of application does not allow for signature at
that time, that the insurer made the disclosure required under subsections
(b)(1) and (5) of this Section. If due to the method of application the
applicant cannot sign an acknowledgment at the time of application, the
applicant shall sign no later than at the time of delivery of the policy or
certificate.
d) An insurer shall use Exhibits F and J to comply with the
requirements of subsections (b) and (c) of this Section.
e) An insurer shall provide notice of an upcoming premium rate
schedule increase to all policyholders or certificateholders, if applicable, at
least 45 days prior to the implementation of the premium rate schedule increase
by the insurer. The notice shall include the information required by
subsection (b) of this Section when the rate increase is implemented.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.64 INITIAL FILING REQUIREMENTS
Section 2012.64 Initial
Filing Requirements
a) This Section applies to any long-term care policy issued in
this State on or after January 1, 2003, except that subsections (b)(2)(D) and
(b)(3) apply to any long-term care policy issued in this State on or after July
1, 2018.
b) An insurer shall provide the information listed in this subsection
(b) to the Director 30 days prior to making a long-term care insurance form
available for sale.
1) A copy of the disclosure documents required in Section
2012.62; 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
statement that the premiums contain at least the minimum margin for moderately
adverse experience defined in subsection (b)(2)(D)(i) or the specification of
and justification for a lower margin as required by subsection (b)(2)(D)(ii).
i) A
composite margin shall not be less than 10% of lifetime claims.
ii) A
composite margin that is less than 10% may be justified in uncommon
circumstances. The proposed amount, full justification of the proposed amount
and methods to monitor developing experience that would be the basis for
withdrawal of approval for such lower margins must be submitted.
iii) A
composite margin lower than otherwise considered appropriate for the
stand-alone long-term care policy may be justified for long-term care benefits
provided through a life policy or an annuity contract. The lower composite margin,
if utilized, shall be justified by appropriate actuarial demonstration
addressing margins and volatility when considering the entirety of the product.
iv) A
greater margin may be appropriate in circumstances in which the company has
less credible experience to support its assumptions used to determine the
premium rates.
E) Either:
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 insurer,
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 insurer with an explanation of the differences.
F) A
statement that reserve requirements have been reviewed and considered. Support
for this statement shall include:
i) Sufficient
detail or sample calculations that provide a complete depiction of the reserve
amounts to be held; and
ii) 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. An aggregate distribution of anticipated issues may
be used as long as the underlying gross premiums maintain a reasonably
consistent relationship.
3) An
actuarial memorandum prepared, dated and signed by the member of the Academy of
Actuaries shall be included and shall address and support each specific item
required as part of the actuarial certification and shall provide at least the
following information:
A) An
explanation of the review performed by the actuary prior to making the
statements in subsections (b)(2)(B) and (C);
B) A
complete description of pricing assumptions;
C) Sources
and levels of margins incorporated into the gross premiums that are the basis
for the statement in subsection (b)(2)(A) of the actuarial certification and an
explanation of the analysis and testing performed in determining the
sufficiency of the margins. Deviations in margins between ages, sexes, plans or
states shall be clearly described. Deviations in margins required to be
described are other than those produced utilizing generally accepted actuarial
methods for smoothing and interpolating gross premium scales; and
D) A
demonstration that the gross premiums include the minimum composite margin
specified in subsection (b)(2)(D).
c) In any review of the actuarial certification and actuarial
memorandum, the Director may request review by an actuary with experience in
long-term care pricing who is independent of the company. In the event the
Director asks for additional information as a result of any review, the period
in subsection (b) does not include the period during which the insurer is preparing
the requested information.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.65 PROHIBITION AGAINST POST CLAIMS UNDERWRITING
Section 2012.65 Prohibition
Against Post Claims Underwriting
a) All applications for long-term care insurance policies or
certificates except those which are guaranteed issue shall contain unambiguous
questions designed to ascertain the health condition of the applicant.
1) If an application for long-term care insurance contains a
question which asks whether the applicant has had medication prescribed by a
physician, it must also ask the applicant to list the medication that has been
prescribed.
2) If the medications listed in the application were known by the
insurer, or should be known 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 shall not be rescinded for that condition.
b) Except for policies or certificates that are guaranteed issue:
1) The following language shall be set out conspicuously and in
close conjunction with the applicant's signature block on an application for a
traditional long-term care insurance policy or certificate:
Caution: If
your answers on this application are incorrect or untrue, [company] may have
the right to deny benefits or rescind your policy.
2) The following language shall be set out on the 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 may have 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]
3) Prior to issuance of a long-term care policy or certificate to
an applicant age 80 or older, the insurer shall obtain one of the following:
A) A report of a physical examination;
B) An assessment of functional capacity;
C) An attending physician's statement; or
D) Copies of medical records.
c) A copy of the completed application or enrollment form
(whichever is applicable) shall 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.
d) Every insurer, as defined in Section 2012.30 of this Part,
selling or issuing long-term care insurance benefits shall maintain a record of
all policy or certificate rescissions, both State and countrywide, except those
the insured voluntarily effectuated and shall annually furnish this information
to the Director of Insurance in the format prescribed in Exhibit D.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.70 MINIMUM STANDARDS FOR HOME HEALTH AND COMMUNITY CARE BENEFITS IN LONG-TERM CARE INSURANCE POLICIES
Section 2012.70 Minimum
Standards for Home Health and Community Care Benefits in Long-Term Care
Insurance Policies
a) A long-term care insurance policy or certificate may not, if
it provides benefits for home health care or community care services, limit or
exclude benefits:
1) By requiring that the insured/claimant would need skilled care
in a skilled nursing facility if home health care services were not provided;
2) By requiring that the insured/claimant first or simultaneously
receive nursing and/or therapeutic services in a home or community or
institutional setting before home health care services are covered;
3) By limiting eligible services to services provided by
registered nurses or licensed practical nurses;
4) By requiring that a nurse or therapist provide services
covered by 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;
5) By requiring that the insured/claimant have an acute condition
before home health care services are covered;
6) By excluding coverage for personal care services provided by a
home health aide;
7) 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;
8) By limiting benefits to services provided by Medicare-certified
agencies or providers;
9) By excluding coverage for adult day care services.
b) A long-term care insurance policy or certificate, if it
provides for home health or community care services, shall 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 shall not apply to policies or
certificates issued to residents of continuing care retirement communities.
c) 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.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.80 REQUIREMENT TO OFFER INFLATION PROTECTION
Section 2012.80 Requirement
to Offer Inflation Protection
a) No insurer may offer a long-term care insurance policy unless
the insurer also offers to the policyholder in addition to any other inflation
protection the option to purchase a policy that provides for benefit levels to
increase with benefit maximums or reasonable durations which are meaningful to
account for reasonably anticipated increases in the costs of long-term care
services covered by the policy. Insurers must offer to each policyholder, at
the time of purchase, the option to purchase a policy with an inflation
protection feature no less favorable than one of the following:
1) Increases benefit levels annually in a manner so that the
increases are compounded annually at a rate not less than 5%;
2) 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 shall be no less than the difference between
the existing policy benefit and that benefit compounded annually at a rate of
at least 5% for the period beginning with the purchase of the existing benefit
and extending until the year in which the offer is made; or
3) Covers a specified percentage of actual or reasonable charges
and does not include a maximum specified indemnity amount or limit.
b) Where the policy is issued to a group, the required offer in
subsection (a) shall be made to the group policyholder; except, if the policy
is issued to a discretionary group, as defined in Section 351A-1(e)(4) of the
Code, other than to a continuing care retirement community, the offering shall
be made to each proposed certificateholder.
c) The offer in subsection (a) shall not be required of life
insurance policies or riders containing accelerated long-term care benefits.
d) Insurers shall include the following information in the
outline of coverage:
1) 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 shall show benefit levels over at least a 20
year period.
2) Any expected premium increases or additional premiums to pay
for automatic or optional benefit increases.
3) An insurer may use a reasonable hypothetical or a graphic
demonstration for the purposes of this disclosure.
e) Inflation protection benefit increases under a policy which
contains such benefits shall continue without regard to an insured's age, claim
status or claim history, or the length of time the person has been insured
under the policy.
f) An offer of inflation protection which provides for automatic
benefit increases shall include an offer of a premium which the insurer expects
to remain constant. The offer shall disclose in a conspicuous manner that the
premium may change in the future unless the premium is guaranteed to remain
constant.
g) Inflation protection as provided in subsection (a)(1) of this
Section shall be included in a long-term care insurance policy unless an
insurer obtains a rejection of inflation protection signed by the policyholder
as required by this Section. The rejection may be either in the application or
on a separate form. The rejection shall be considered a part of the application
and shall state, "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 plan(s) ________, and I
reject inflation protection."
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.83 INCONTESTABILITY PERIOD
Section 2012.83 Incontestability Period
a) For a
policy or certificate that has been in force for less than 6 months, an insurer
may rescind a long-term care insurance policy or certificate or deny an
otherwise valid long-term care insurance claim upon a showing of
misrepresentation that is material to the acceptance for coverage.
b) For a
policy or certificate that has been in force for at least 6 months but less
than 2 years, an insurer may rescind a long-term care insurance policy or
certificate or deny an otherwise valid long-term care insurance claim upon a
showing of misrepresentation that is both material to the acceptance for
coverage and that pertains to the condition for which benefits are sought.
c) After
a policy or certificate has been in force for 2 years, it is not contestable
upon the grounds of misrepresentation alone; the policy or certificate may be
contested only upon a showing that the insured knowingly and intentionally
misrepresented relevant facts relating to the insured's health.
d) A
long-term care insurance policy or certificate may be field issued based on
medical or health status if the compensation to the field issuer is not based
on the number of policies or certificates issued. For purposes of this
Section, "field issued" means a policy or certificate issued by a
producer or an agent or a third-party administrator pursuant to the underwriting
authority granted to the producer, agent or third party administrator by an
insurer and using the insurer's underwriting guidelines.
e) If an
insurer has paid benefits under the long-term care insurance policy or
certificate, the benefit payments may not be recovered by the insurer in the
event that the policy or certificate is rescinded.
f) In
the event of the death of the insured, this Section shall not apply to the
remaining death benefit of a life insurance policy that accelerates benefits
for long-term care. In this situation, the remaining death benefits under
these policies shall be governed by Section 224(1)(c) of the Code. In all
other situations, this Section shall apply to life insurance policies that
accelerate benefits for long-term care.
(Source: Added at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.86 NONFORFEITURE BENEFITS
Section 2012.86 Nonforfeiture Benefits
a) Except
as provided in subsection (b), a long-term care insurance policy may not be
delivered or issued for delivery in this State unless the policyholder or
certificateholder has been offered the option of purchasing a policy or
certificate including a nonforfeiture benefit as specified in Section 2012.127
of this Part. The offer of a nonforfeiture benefit may be in the form of a
rider that is attached to the policy. In the event the policyholder or
certificateholder declines the nonforfeiture benefit, the insurer shall provide
a contingent benefit upon lapse that shall be available for a specified period
of time following a substantial increase in premium rates.
b) When
a group long-term care insurance policy is issued, the offer required in
subsection (a) shall be made to the group policyholder. However, if the policy
is issued as group long-term care insurance as defined in Section 351A-1(e)(4)
of the Code, other than to a continuing care retirement community or other
similar entity, the offering shall be made to each proposed certificateholder.
(Source: Added at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.90 REQUIREMENTS FOR APPLICATION FORMS AND REPLACEMENT COVERAGE
Section 2012.90 Requirements
for Application Forms and Replacement Coverage
a) Application forms shall include the following questions
designed to elicit information as to whether, as of the date of the
application, the applicant has another long-term care insurance policy or
certificate in force or whether a long-term care policy or certificate is
intended to replace any other accident and sickness or long-term care policy or
certificate presently in force. A supplementary application or other form to
be signed by the applicant and insurance producer, except where the coverage is
sold without an insurance producer, containing such questions may be used.
With regard to a replacement policy issued to a group defined by Section
351A-1(e)(1) of the Code the following 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, however, that
the certificateholder has been notified of the replacement.
1) Do you have another long-term care insurance policy or
certificate in force (including health care service contract, health
maintenance organization contract)?
2) Did you have another long-term care insurance policy or
certificate in force during the last 12 months?
A) If so, with which company?
B) If that policy lapsed, when did it lapse?
3) Are you covered by Medicaid?
4) Do you intend to replace any of your medical or health
insurance coverage with this policy (certificate)?
b) Insurance producers shall list any other health insurance
policies they have sold to the applicant.
1) List policies sold which are still in force.
2) List policies sold in the past 5 years which are no longer in
force.
c) Solicitations Other than Direct Response. Upon determining
that a sale will involve replacement, an insurer, other than an insurer using
direct response solicitation methods, or its insurance producer, shall furnish
the applicant, prior to issuance or delivery of the individual long-term care
insurance policy, a notice regarding replacement of accident and sickness or
long-term care coverage. One copy of such notice shall be retained by the
applicant and an additional copy signed by the applicant shall be retained by
the insurer. The required notice shall be provided as set forth in Exhibit A
of this Part.
d) Direct Response Solicitations. Insurers using direct response
solicitation methods shall deliver a notice regarding replacement of accident
and sickness or long-term care coverage to the applicant upon issuance of the
policy. The required notice shall be provided as set forth in Exhibit B of
this Part.
e) Where replacement is intended, the replacing insurer shall
provide written notice to the existing insurer of the proposed replacement.
The existing policy shall be identified by the insurer, name of insured and
policy number or address including zip code. Notice shall be made within 5
working days from the date the application is received by the insurer or the
date the policy issued, whichever is sooner.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.95 REPORTING REQUIREMENTS
Section 2012.95 Reporting
Requirements
All insurers shall:
a) Maintain records for each insurance producer of that
producer's amount of replacement sales as a percent of the 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 producer's total sales.
b) Report annually by June 30 the 10% of its insurance producers
with the greatest percentages of lapses and replacements as measured by
subsection (a) as provided in Exhibit K.
c) 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 as provided in
Exhibit K.
d) 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 as provided in
Exhibit K.
e) Report annually by June 30, for qualified long-term care
insurance contracts, the number of claims denied for each class of business,
expressed as a percentage of claims denied, as provided by Exhibit I.
f) For purposes of this Section:
1) "Policy" means only long-term care insurance;
2) Subject to subsection (f)(3), "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;
3) "Denied" means the insurer 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
4) "Report" means on a Statewide basis.
g) Reports
required under this Section shall be filed with the Director.
h) Annual
Rate Certification Requirements
1) This
subsection (h) applies to any long-term care policy issued in this State on or
after July 1, 2018.
2) The
submission requirements required by Section 2012.97 shall apply subsequent to
initial rate filings for individual long-term care insurance policies made
under this Section 2012.95.
3) The
actuarial certification required pursuant to Section 2012.97(c) must be based
on calendar year data and submitted annually no later than May 1 of each year
starting in the second year following the year in which the initial rate
schedules are first used.
4) The
actuarial memorandum required pursuant to Section 2012.97(d) must be submitted
at least once every 3 years with the certification.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.97 ANNUAL RATE CERTIFICATION REQUIREMENTS
Section 2012.97 Annual Rate Certification Requirements
a) This
Section applies to any long-term care policy issued in this State on or after July
1, 2018.
b) The
annual rate certifications required by subsection (c) and the memorandum
required by subsection (d), shall be filed in accordance with the filing
requirements in Section 2012.95.
c) An
annual actuarial certification prepared, dated and signed by a member of the
American Academy of Actuaries who provides the information shall be included
and shall provide at least the following information:
1) A
statement of the sufficiency of the current premium rate schedule including:
A) For the
rate schedules currently marketed,
i) The
premium rate schedule continues to be 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; or
ii) If
the above statement cannot be made, a statement that margins for moderately
adverse experience may no longer be sufficient. In this situation, the insurer
shall provide to the Director, within 60 days of the date the actuarial
certification is submitted to the Director, a plan of action, including a time
frame, for the re-establishment of adequate margins for moderately adverse
experience so that the ultimate premium rate schedule would be reasonably
expected to be sustainable over the future life of the form with no future
premium increases anticipated. Failure to submit a plan of action to the
Director within 60 days or to comply with the time frame stated in the plan of
action constitutes grounds for the Director to withdraw or modify its approval
of the form for future sales pursuant to Section 143 of the Illinois Insurance
Code.
B) For the
rate schedules that are no longer marketed,
i) That
the premium rate schedule continues to be sufficient to cover anticipated costs
under best estimate assumptions; or
ii) That
the premium rate schedule may no longer be sufficient. In this situation, the
insurer shall provide to the Director, within 60 days of the date the actuarial
certification is submitted to the Director, a plan of action, including a time
frame, for the re-establishment of adequate margins for moderately adverse
experience.
2) A
description of the review performed that led to the statement.
d) An
actuarial memorandum dated and signed by a member of the American Academy of
Actuaries who prepares the information shall be prepared to support the
actuarial certification and provide at least the following information:
1) A
detailed explanation of the data sources and review performed by the actuary
prior to making the statement in subsection (c)(1).
2) A
complete description of experience assumptions and their relationship to the
initial pricing assumptions.
3) A
description of the credibility of the experience data.
4) An
explanation of the analysis and testing performed in determining the current
presence of margins.
(Source: Added at 42 Ill. Reg. 4867,
effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.100 FILING REQUIREMENT
Section 2012.100 Filing
Requirement
Prior to an insurer offering
group long-term care insurance to a resident of this State pursuant to Section
351A-2 of the Code, it shall file with the Director evidence that the group
policy or certificate thereunder has been approved by a state that has adopted
the National Association of Insurance Commissioners' model legislation on
Long-Term Care Insurance and attendant regulations, 2301 McGee Street, Suite
800, Kansas City, Missouri 64108 (2000) (no subsequent dates or editions).
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.110 LOSS RATIO
Section 2012.110 Loss Ratio
a) This Section shall apply to all long-term care insurance
policies or certificates, except those covered under Sections 2012.64, 2012.112
and 2012.113.
b) Notice of Rate Schedule Increase
1) An insurer shall provide notice of a pending premium rate
schedule increase, including an exceptional increase, to the Director at least
30 days prior to the notice to the policyholders. The notice shall include:
A) An actuarial memorandum documenting that benefits under the long-term
care insurance policies are reasonable in relation to premiums by demonstrating
that the expected loss ratio meets the requirements in subsection (c),
calculated in a manner that provides for adequate reserving of the long-term
care insurance. In evaluating the expected loss ratio, due consideration shall
be given to all relevant factors, including:
i) Statistical credibility of incurred claims experience and
earned premiums;
ii) The period for which rates are computed to provide coverage;
iii) Experienced and projected trends;
iv) Concentration of experience within early policy duration;
v) Expected claim fluctuation;
vi) Experience refunds, adjustments or dividends;
vii) Renewability features;
viii) Interest;
ix) Experimental nature of the coverage;
x) Product features such as long elimination periods (period
between when the claim arises and insured is eligible to receive benefits),
high deductibles and high maximum limits.
B) A statement that, upon approval of the requested amount, the
insurer agrees to not implement future rate increases on each subject policy
for 3 years from the date of implementation of a single rate increase for each
policy form.
C) In lieu of a single increase, the insurer may request a series
of scheduled rate increases that are actuarially equivalent to the single
amount requested by the insurer over the lifetime of the policy. The entire
series would be reviewed and considered at one time as part of the current rate
increase filing. After implementation of the first increase, the insurer is
subject to the 3-year monitoring provision in Section 2012.112(d), but the
Director is allowed to require modification of later increases that were not
appropriate based on the experience following the initial rate increase. When
determining the rate comparison for new business, forms subject to a series of
increases shall not be included.
D) A statement indicating whether the increase or series of
scheduled increases triggers the offering of a contingent benefit upon lapse.
The insurer shall offer a contingent benefit upon lapse for any increase,
whether a single increase or a series of scheduled increases, that would
trigger the offering of the contingent benefit upon lapse as defined in Section
2012.127(d). The insurer shall notify policyholders and certificate holders of
the contingent benefit upon lapse, in conjunction with the implementation of a
rate increase. If the rate increase is approved as a series of scheduled
increases and the sum of all scheduled increases would ultimately trigger the
offering of the contingent benefit upon lapse, the insurer will be required to
include the contingent benefit upon lapse and the notification at the time of
each scheduled increase.
E) The premium increase notification letter to
policyholders at the time of the premium rate increase for informational
purposes. The insurer shall clearly disclose to policyholders the following
elements:
i) The
amount of the premium rate increase requested and implementation schedule
(e.g., single premium increase applied or phased in through a series of premium
increases);
ii) Available
benefit reduction/rate increase mitigation actions;
iii) Clear
disclosure addressing the guaranteed renewable nature of the policy/coverage
and that the insured should understand that premium rates may increase again in
the future; and
iv) Offer
of contingent benefit upon lapse, if applicable.
2) At the request of the insurer, the Director may also
consider other options that may be made
available to insureds that may mitigate the impact of the rate increases on the
insured population or alternative actuarial methodologies relating to the rate
increase. The insurer shall provide an explanation and demonstration on how the
methodology is actuarially justified and/or how the new mitigation option may
reasonably benefit insureds. No alternative method/approach may be used until
it has been accepted by the Director.
c) Loss Ratio
1) The
expected loss ratio shall be at least:
A) the greater of 60% or the lifetime loss ratio used in
the original pricing, applied to the current rate schedule on July 1, 2018;
plus
B) Either:
i) 80% applied to any premium increase that
is filed after that date on an individual policy form; or
ii) 75% applied to any premium increase that is filed on a group
policy form.
2) All present and accumulated values used to determine rate increases
shall use the maximum valuation interest rate for contract reserves as
specified in 50 Ill. Adm. Code 2004 (Accident and Health Reserves). The actuary
shall disclose as part of the actuarial memorandum the use of any appropriate
averages.
d) Subsections (b) and (c) shall not apply to life insurance
policies that accelerate benefits for long-term care. 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:
1) The interest credited internally to determine cash value
accumulations, including long-term care, if any, is guaranteed not to be less
than the minimum guaranteed interest rate for cash value accumulations without
long-term care set forth in the policy;
2) The portion of the policy that provides life insurance
benefits meets the nonforfeiture requirements of Section 229.2 of the Code;
3) The policy meets the disclosure requirements of Sections 351A-9.1
and 351A-9.2 of the Code;
4) Any policy illustration that meets the applicable requirements
of 50 Ill. Adm. Code 1406;
5) An actuarial memorandum is filed with the Department that
includes:
A) A description of the basis on which the long-term care rates
were determined;
B) A description of the basis for the reserves;
C) A summary of the type of policy, benefits, renewability,
general marketing method, and limits on ages of issuance;
D) A description and a table of each actuarial assumption used.
For expenses, an insurer must include percent of premium dollars per policy and
dollars per unit of benefits, if any;
E) A description and a table of the anticipated policy reserves
and additional reserves to be held in each future year for active lives;
F) The estimated average annual premium per policy and the
average issue age;
G) A statement as to whether underwriting is performed at the time
of application. The statement shall indicate whether underwriting is used and,
if used, the statement shall 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 shall indicate whether
the enrollee or any dependent will be underwritten and when underwriting
occurs; and
H) 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.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.112 PREMIUM RATE SCHEDULE INCREASES
Section 2012.112 Premium
Rate Schedule Increases
a) This Section shall apply as follows:
1) Except as provided in subsection (a)(2), this Section applies
to any long-term care policy or certificate issued in this State on or after
January 1, 2003 and prior to July 1, 2018.
2) For certificates issued on or after July 1, 2002 and before July
1, 2018, under a group long-term care insurance policy as defined in Section 351A-1(e)(1)
of the Code, if the policy was in force prior to July 1, 2002, the provisions
of this Section shall apply on the policy anniversary following July 1, 2003.
b) An insurer shall provide notice of a pending premium rate
schedule increase, including an exceptional increase, to the Director at least
30 days prior to the notice to the policyholders and shall include:
1) Information required by Section 2012.62.
2) Certification by a qualified actuary that:
A) If the requested premium rate schedule increase is implemented
and the underlying assumptions that reflect moderately adverse conditions are
realized, no further premium rate schedule increases are anticipated;
B) The premium rate filing is in compliance with the provisions of
this Section;
C) The
insurer may request a premium rate schedule increase less than what is required
under this Section. The Director may approve that premium rate schedule
increase without submission of the certification in subsection (b)(2)(A) if:
i) the
actuarial memorandum discloses the premium rate schedule increase necessary to
make the certification required under subsection (b)(2)(A);
ii) the
premium rate schedule increase filing satisfies all other requirements of this Section;
and
iii) the
premium rate increase filing is, in the opinion of the Director, in the best
interest of policyholders.
3) An actuarial memorandum justifying the rate schedule change
request that includes:
A) 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;
i) Annual values for the 5 years preceding and the 3 years
following the valuation date shall be provided separately;
ii) The projections shall include the development of the lifetime
loss ratio, unless the rate increase is an exceptional increase;
iii) The projections shall demonstrate compliance with subsection
(c); and
iv) For exceptional increases, the projected experience should be
limited to the increases in claims expenses attributable to the approved
reasons for the exceptional increase; and in the event the Director determines,
as provided in the definition of "Exceptional Increase" found in
Section 2012.30, that offsets may exist, the insurer shall use appropriate net
projected experience;
B) Disclosure of how reserves have been incorporated in this rate
increase whenever the rate increase will trigger the contingent benefit upon
lapse;
C) 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 company have been relied on by the actuary;
D) A statement that policy design, underwriting and claims
adjudication practices have been taken into consideration;
E) In the event that it is necessary to maintain consistent
premium rates for new certificates and certificates receiving a rate increase,
the insurer will need to file composite rates reflecting projections of new
certificates.
4) 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
Director.
5) A statement that, upon approval of the requested amount, the
insurer agrees to not implement future rate increases on each subject policy
for three years from the date of implementation of a single rate increase for
each policy form.
6) In lieu of a single increase, the insurer may request a series
of scheduled rate increases that are actuarially equivalent to the single
amount requested by the insurer over the lifetime of the policy. The entire
series would be reviewed and considered at one time as part of the current rate
increase filing. However, after implementation of the first increase, the
insurer is subject to the three-year monitoring provision in subsection (d), but
the Director is allowed to require modification of later increases that were
not appropriate based on the experience following the initial rate increase.
When determining the rate comparison for new business, forms subject to a
series of increases shall not be included.
7) The
insurer shall file with the Director the premium increase notification letter
to policyholders at the time of the premium rate increase for informational
purposes. The insurer shall clearly disclose to policyholders the following
elements:
A) The
amount of the premium rate increase requested and the implementation schedule
(e.g., single premium increase applied or phased in a series of premium
increases);
B) Available
benefit reduction/rate increase mitigation actions;
C) Clear
disclosure addressing the guaranteed renewable nature of the policy/coverage
and that the insured should understand that premium rates may increase again in
the future; and
D) Offer
of contingent benefit upon lapse, if applicable.
8) Sufficient
information for review and approval by the Director of the premium rate schedule
increase.
c) All
premium rate schedule increases shall be determined in accordance with the
following requirements:
1) Exceptional increases shall provide that 70% of the present
value of projected additional premiums from the exceptional increase will be
returned to policyholders in benefits;
2) Premium rate schedule increases shall be calculated such 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:
A) The accumulated value of the initial earned premium times the
greater of:
i) 58%;
or
ii) the
originally filed loss ratio;
B) 85% of the accumulated value of prior premium rate schedule
increases on an earned basis;
C) The present value of future projected initial earned premiums
times the greater of:
i) 58%;
or
ii) the
originally filed loss ratio; and
D) 85% of the present value of future projected premiums not in
subsection (c)(2)(C) on an earned basis;
3) In the event that a policy form has both exceptional and other
increases, the values in subsections (c)(2)(B) and (D) will also include 70%
for exceptional rate increase amounts;
4) All present and accumulated values used to determine rate
increases shall use the maximum valuation interest rate for contract reserves
as specified in 50 Ill. Adm. Code 2004 (Accident and Health Reserves). The
actuary shall disclose as part of the actuarial memorandum the use of any
appropriate averages; and
5) The present value of future projected incurred claims
calculated in subsection (c)(2) shall be on a best estimate basis.
d) For each rate increase that is implemented, the insurer shall
file for review and approval by the Director updated projections, as defined in
subsection (b)(3)(A), annually for the next 3 years and include a comparison of
actual results to projected values. The Director may extend the period to
greater than 3 years if actual results are not consistent with projected values
from prior projections. For group insurance policies that meet the conditions
in subsection (k), the projections required by this subsection (d) shall be
provided to the policyholder in lieu of filing with the Director.
e) If any premium rate in the revised premium rate schedule is
greater than 200% of the comparable rate in the initial premium schedule,
lifetime projections, as defined in subsection (b)(3)(A), shall be filed for
review and approval by the Director every 5 years following the end of the
required period in subsection (d). For group insurance policies that meet the
conditions in subsection (k), the projections required by this subsection (e)
shall be provided to the policyholder in lieu of filing with the Director.
f) If the Director has determined 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 (c), the Director:
1) May require the insurer to implement any of the following:
A) Premium rate schedule adjustments; or
B) Other measures to reduce the difference between the projected
and actual experience.
2) Should give consideration to subsection (b)(3)(E) when
determining whether the actual experience adequately matches the projected
experience.
g) If the majority of the policies or certificates to which the
increase is applicable are eligible for the contingent benefit upon lapse, the
insurer shall file:
1) A plan, subject to the Director's 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
Director may impose the condition in subsection (h); and
2) The original anticipated lifetime loss ratio, and the premium
rate schedule increase that would have been calculated according to subsection
(c) of this Section had the greater of the original anticipated lifetime loss
ratio or 58% been used in the calculations described in subsections (c)(2)(A)
and (c)(2)(C).
h) Significant Adverse Lapsation
1) For a rate increase filing that meets the following criteria,
the Director shall review, for all policies included in the filing, the
projected lapse rates and past lapse rates during the 12 months following each
increase to determine if significant adverse lapsation has occurred or is
anticipated:
A) The rate increase is not the first rate increase requested for
the specific policy form or forms;
B) The rate increase is not an exceptional increase; and
C) The majority of the policies or certificates to which the
increase is applicable is eligible for the contingent benefit upon lapse.
2) In the event 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 insurer following the requested rate
increase, the Director may determine that a rate spiral exists. Following the
determination that a rate spiral exists, the Director may require the insurer
to offer, without underwriting, to 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 insurer or its affiliates.
A) The offer shall:
i) Be subject to the approval of the Director;
ii) Be based on actuarially sound principles, but not be based on
attained age; and
iii) Provide that maximum benefits under any new policy accepted
by an insured shall be reduced by comparable benefits already paid under the
existing policy.
B) The insurer shall 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 shall be limited to the lesser of:
i) The maximum rate increase determined based on the combined
experience; and
ii) The maximum rate increase determined based only on the
experience of the insured's originally issued form plus 10%.
i) If the Director determines that the insurer has exhibited a
persistent practice of filing inadequate initial premium rates for long-term
care insurance, the Director may, in addition to the provisions of subsection
(h), prohibit the insurer from either of the following:
1) Filing and marketing comparable coverage for a period of up to
5 years; or
2) Offering all other similar coverages and limiting marketing of
new applications to the products subject to recent premium rate schedule
increases.
j) Subsections (a) through (i) shall not apply to policies for
which the long-term care benefits provided by the policy are
"Incidental", as defined in Section 2012.30, if the policy complies
with all of the following provisions:
1) The interest credited internally to determine cash value
accumulations, including long-term care, if any, is guaranteed not to be less
than the minimum guaranteed interest rate for cash value accumulations without
long-term care set forth in the policy;
2) 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:
A) Section 229.2 of the Code;
B) Section 229.4 of the Code;
3) The policy meets the disclosure requirements of Sections 351A-9.1
and 9.2 of the Code;
4) The portion of the policy that provides insurance benefits
other than long-term care coverage meets the requirements as applicable in the
following:
A) Policy illustrations as required by 50 Ill. Adm. Code 1406;
B) Disclosure requirements in 50 Ill. Adm. Code 1551;
5) An actuarial memorandum is filed with the Director that
includes:
A) A description of the basis on which the long-term care rates
were determined;
B) A description of the basis for the reserves;
C) A summary of the type of policy, benefits, renewability,
general marketing method, and limits on ages of issuance;
D) A description and a table of each actuarial assumption used. For
expenses, an insurer must include percent of premium dollars per policy and
dollars per unit of benefits, if any;
E) A description and a table of the anticipated policy reserves
and additional reserves to be held in each future year for active lives;
F) The estimated average annual premium per policy and the
average issue age;
G) A statement as to whether underwriting is performed at the time
of application. The statement shall indicate whether underwriting is used and,
if used, the statement shall 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 shall indicate whether
the enrollee or any dependent will be underwritten and when underwriting
occurs; and
H) 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.
k) At the request of the insurer, the Director may also
consider other options that may be made
available to insureds that may mitigate the impact of the rate increases on the
insured population or alternative actuarial methodologies relating to the rate
increase. The insurer shall provide an explanation and demonstration on how that
methodology is actuarially justified and/or how the new mitigation option may
reasonably benefit insureds. No alternative method/approach may be used until
it has been accepted by the Director.
l) Subsections (f) and (h) shall not apply to group insurance
policies as defined in Section 351A-1(e)(1) of the Code if:
1) The policies insure 250 or more persons and the policyholder
has 5,000 or more eligible employees of a single employer; or
2) The policyholder, and not the certificate holders, pays a
material portion of the premium, which shall not be less than 20% of the total
premium for the group in the calendar year prior to the year a rate increase is
filed.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.113 PREMIUM RATE SCHEDULE INCREASES FOR POLICIES SUBJECT TO LOSS RATIO LIMITS RELATED TO ORIGINAL FILINGS
Section 2012.113 Premium Rate Schedule Increases for
Policies Subject to Loss Ratio Limits Related to Original Filings
a) This Section shall apply
as follows:
1) Except
as provided in subsection (a)(2), this Section applies to any long-term care
policy or certificate issued in this State on or after July 1, 2018.
2) For
certificates issued on or after July 1, 2018, under a group long-term care
insurance policy as defined in Section 351A-1(e)(1) of the Code, which was in
force prior to July 1, 2018, the provisions of this Section shall apply on the
policy anniversary following January 1, 2019.
b) An
insurer shall provide notice of a pending premium rate schedule increase,
including an exceptional increase, to the Director at least 30 days prior to
the notice to the policyholders and shall include:
1) Information
required by Section 2012.62;
2) Certification
by a qualified actuary that:
A) 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;
B) The
premium rate filing is in compliance with the provisions of this Section;
C) The
insurer may request a premium rate schedule increase less than what is required
under this Section and the Director may approve that premium rate schedule
increase, without submission of the certification in subsection (b)(2)(A), if:
i) the
actuarial memorandum discloses the premium rate schedule increase necessary to
make the certification required under subsection (b)(2)(A);
ii) the
premium rate schedule increase filing satisfies all other requirements of this Section;
and
iii) the
premium rate schedule increase filing is, in the opinion of the Director, in
the best interest of policyholders;
3) An
actuarial memorandum justifying the rate schedule change request that includes:
A) 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.
i) Annual
values for the 5 years preceding and the 3 years following the valuation date
shall be provided separately;
ii) The
projections shall include the development of the lifetime loss ratio, unless
the rate increase is an exceptional increase;
iii) The
projections shall demonstrate compliance with subsection (c); and
iv) For
exceptional increases, the projected experience should be limited to the
increases in claims expenses attributable to the approved reasons for the
exceptional increase. In the event the Director determines, as provided in the
definition of "exceptional increase" found in Section 2012.30, that
offsets may exist, the insurer shall use appropriate net projected experience;
B) Disclosure
of how reserves have been incorporated in this rate increase whenever the rate
increase will trigger contingent benefit upon lapse;
C) 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 company have been relied on by the actuary;
D) A
statement that policy design, underwriting and claims adjudication practices
have been taken into consideration;
E) In the
event that it is necessary to maintain consistent premium rates for new
certificates and certificates receiving a rate increase, composite rates, filed
by the insurer, reflecting projections of new certificates; and
F) A
demonstration that actual and projected costs exceed costs anticipated at the
time of initial pricing under moderately adverse experience and that the
composite margin specified in Section 2012.64(b)(2)(D) is projected to be
exhausted;
4) 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 Director; and
5) Sufficient
information for review and approval of the premium rate schedule increase by
the Director.
c) All
premium rate schedule increases shall be determined in accordance with the
following requirements:
1) Exceptional
increases shall provide that 70% of the present value of projected additional
premiums from the exceptional increase will be returned to policyholders in
benefits;
2) Premium
rate schedule increases shall be calculated such that the sum of the lesser of
the accumulated value of incurred claims, without the inclusion of active life
reserves, or the accumulated value of historic expected claims, without the
inclusion of active life reserves, plus the present value of future projected
incurred claims, projected without the inclusion of active life reserves, will
not be less than the sum of the following:
A) The
accumulated value of the initial earned premium times the greater of:
i) 58%; or
ii) the originally filed
loss ratio;
B) 85% of
the accumulated value of prior premium rate schedule increases on an earned
basis;
C) The
present value of future projected initial earned premiums times the greater of:
i) 58%; or
ii) the originally filed
loss ratio; and
D) 85% of
the present value of future projected premiums not in subsection (c)(2)(C) on
an earned basis;
3) In
the event that a policy form has both exceptional and other increases, the
values in subsections (c)(2)(B) and (D) will also include 70% for exceptional
rate increase amounts;
4) All
present and accumulated values used to determine rate increases shall use the
maximum valuation interest rate for contract reserves specified in 50 Ill. Adm.
Code 2004 (Accident and Health Reserves). The actuary shall disclose as part
of the actuarial memorandum the use of any appropriate averages; and
5) The
present value of future projected incurred claims calculated in subsection
(c)(2) shall be on a best estimate basis.
d) For
each rate increase that is implemented, the insurer shall file for review and
approval by the Director updated projections, as defined in subsection
(b)(3)(A), annually for the next 3 years and include a comparison of actual
results to projected values. The Director may extend the period to greater
than 3 years if actual results are not consistent with projected values from
prior projections. For group insurance policies that meet the conditions in
subsection (k), the projections required by this subsection (d) shall be
provided to the policyholder in lieu of filing with the Director.
e) If
any premium rate in the revised premium rate schedule is greater than 200% of
the comparable rate in the initial premium schedule, lifetime projections, as
defined in subsection (b)(3)(A), shall be filed for review and approval by the
Director every 5 years following the end of the required period in subsection
(d). For group insurance policies that meet the conditions in subsection (k),
the projections required by this subsection (e) shall be provided to the
policyholder in lieu of filing with the Director.
f) If
the Director has determined 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
(c), the Director:
1) May
require the insurer to implement any of the following:
A) Premium
rate schedule adjustments; or
B) Other
measures to reduce the difference between the projected and actual experience.
2) Should
give consideration to subsection (b)(3)(E) when determining whether the actual
experience adequately matches the projected experience.
g) If
the majority of the policies or certificates to which the increase is
applicable are eligible for the contingent benefit upon lapse, the insurer
shall file a plan, subject to Director 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 Director may impose the
condition in subsection (h).
h) Significant
Adverse Lapsation
1) For a
rate increase filing that meets the following criteria, the Director shall
review, for all policies included in the filing, the projected lapse rates and
past lapse rates during the 12 months following each increase to determine if
significant adverse lapsation has occurred or is anticipated:
A) The
rate increase is not the first rate increase requested for the specific policy
form or forms;
B) The
rate increase is not an exceptional increase; and
C) The
majority of the policies or certificates to which the increase is applicable is
eligible for the contingent benefit upon lapse.
2) In
the event 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 insurer following the requested rate increase, the
Director may determine that a rate spiral exists. Following the determination
that a rate spiral exists, the Director may require the insurer to offer,
without underwriting, to 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 insurer or its affiliates.
A) The
offer shall:
i) Be
subject to the approval of the Director;
ii) Be
based on actuarially sound principles, but not be based on attained age; and
iii) Provide
that maximum benefits under any new policy accepted by an insured shall be
reduced by comparable benefits already paid under the existing policy.
B) The
insurer shall 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
shall be limited to the lesser of:
i) The
maximum rate increase determined based on the combined experience; and
ii) The
maximum rate increase determined based only on the experience of the insureds
originally issued the form plus 10%.
i) If
the Director determines that the insurer has exhibited a persistent practice of
filing inadequate initial premium rates for long-term care insurance, the
Director may, in addition to the provisions of subsection (h), prohibit the
insurer from either of the following:
1) Filing
and marketing comparable coverage for a period of up to 5 years; or
2) Offering
all other similar coverages and limiting marketing of new applications to the products
subject to recent premium rate schedule increases.
j) Subsections
(a) through (i) shall not apply to policies for which the long-term care
benefits provided by the policy are "incidental", as defined in
Section 2012.30, if the policy complies with all of the following provisions:
1) 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;
2) The
portion of the policy that provides insurance benefits other than long-term
care coverage meets the nonforfeiture requirements, as applicable, in either of
the following:
A) Section
229.2 of the Code;
B) Section
229.4 of the Code;
3) The
policy meets the disclosure requirements of Sections 351A-9.1 and 351A-9.2 of
the Code;
4) The
portion of the policy that provides insurance benefits other than long-term
care coverage meets the requirements, as applicable, in the following:
A) Policy
illustrations as required by 50 Ill. Adm. Code 1406;
B) Disclosure
requirements in 50 Ill. Adm. Code 1551;
5) An
actuarial memorandum is filed with the Director that includes:
A) A
description of the basis on which the long-term care rates were determined;
B) A
description of the basis for the reserves;
C) A
summary of the type of policy, benefits, renewability, general marketing
method, and limits on ages of issuance;
D) A
description and a table of each actuarial assumption used. For expenses, an
insurer must include percent of premium dollars per policy and dollars per unit
of benefits, if any;
E) A
description and a table of the anticipated policy reserves and additional
reserves to be held in each future year for active lives;
F) The
estimated average annual premium per policy and the average issue age;
G) A
statement as to whether underwriting is performed at the time of application.
The statement shall indicate whether underwriting is used and, if used, the
statement shall 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 shall indicate whether the enrollee or
any dependent will be underwritten and when underwriting occurs; and
H) 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.
k) At
the request of the insurer, the Director may also consider other options that
may be made available to insureds that may mitigate the impact of the rate
increases on the insured population or alternative actuarial methodologies
relating to the rate increase. The insurer shall provide an explanation and
demonstration on how the methodology is actuarially justified and/or how the
new mitigation option may reasonably benefit insureds. No alternative
method/approach may be used until it has been accepted by the Director.
l) Subsections
(f) and (h) shall not apply to group insurance policies as defined in Section
351A-1(e)(1) of the Code if:
1) The
policies insure 250 or more persons and the policyholder has 5,000 or more
eligible employees of a single employer; or
2) The
policyholder, and not the certificateholders, pays a material portion of the
premium, which shall not be less than 20% of the total premium for the group in
the calendar year prior to the year a rate increase is filed.
(Source: Added at 42 Ill. Reg. 4867,
effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.115 FILING REQUIREMENTS FOR ADVERTISING
Section 2012.115 Filing
Requirements for Advertising
Every insurer, as defined
herein, providing long-term care insurance or benefits in this State shall
comply with 50 Ill. Adm. Code 2002.180.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.120 RESERVE STANDARDS
Section 2012.120 Reserve
Standards
a) When long-term care benefits are provided through the
acceleration of benefits under group or individual life policies or riders to
such policies, policy reserves for such benefits shall be determined in
accordance with Section 223 of the Code. Claim reserves must also be
established when the policy or rider is in claim status (see 50 Ill. Adm. Code
2004.40). Reserves for policies and riders subject to this subsection should
be based on the multiple decrement model utilizing all relevant decrements
except for voluntary termination rates. Single decrement approximations are
acceptable if the calculation produces reserves which differ from the reserves
based on the multiple decrement approach by less than 5% for each combination
of issue age and duration, or are greater than the reserves based on the
multiple decrement approach, or if the reserves for this line of business are
less than 5% of the statutory net worth of the company. The calculations may
take into account the reduction in life insurance benefits due to the payment
of long-term care benefits. However, in no event shall the reserves for the
long-term care benefit and life insurance benefit be less than the reserves for
the life insurance benefit assuming no long-term care benefit. In the
development and calculation of reserves for policies and riders subject to this
subsection, due regard shall be given to the applicable policy provisions,
marketing methods, administrative procedures and all other considerations which
have an impact on projected claim costs, including, but not limited to, the
following:
1) Definition of insured events
2) Covered long-term care facilities
3) Existence of home convalescence care coverage
4) Definition of facilities
5) Existence or absence of barriers to eligibility
6) Premium waiver provision
7) Renewability
8) Ability to raise premiums
9) Marketing method
10) Underwriting procedures
11) Claims adjustment procedures
12) Waiting period
13) Maximum benefit
14) Availability of eligible facilities
15) Margins in claim costs
16) Optional nature of benefit
17) Delay in eligibility for benefit
18) Inflation protection provisions
19) Guaranteed insurability option
b) The valuation morbidity table shall be accompanied by a
statement declaring it as appropriate as a statutory valuation table by a
member of the American Academy of Actuaries.
c) When long-term care benefits are provided other than as in
subsection (a), reserves shall be determined in accordance with Section 353a of
the Code.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.121 PRODUCER TRAINING REQUIREMENTS
Section 2012.121 Producer Training Requirements
a) Long-Term Care Training
Required
1) An
individual may not sell, solicit or negotiate long-term care insurance unless
the individual is licensed as an insurance producer for accident and health and
has completed a one-time training course. The training shall meet the
requirements set forth in subsection (b).
2) An
individual already licensed and selling, soliciting or negotiating long-term
care insurance on July 1, 2008 may not continue to sell, solicit or negotiate
long term care insurance unless the individual has completed a one-time training
course, as set forth in subsection (b), by July
1, 2009.
3) In
addition to the one-time training course required in subsection (a)(1) and (2),
an individual who sells, solicits or negotiates long-term care insurance shall
complete ongoing training as set forth in subsection (b).
4) The
training requirements of subsection (b) may be approved as continuing education
courses under Section 500-35(b)(1) of the Code.
b) Minimum Education and
Training Requirements
1) The
one-time training required by this Section shall be no less than 8 hours. The
ongoing training required by this Section shall be no less than 4 hours and
must be completed before each subsequent license renewal. A producer who
fails to complete the 4 hours ongoing training prior to license renewal will
have 12 months from that renewal date to complete the ongoing training without
having to complete the 8 hour course again.
2) The
training required under subsection (b)(1) shall consist of topics related to
long-term care insurance, long-term care services and, if applicable, qualified
state long-term care insurance Partnership programs as prescribed in 42 USC
1396p, including, but not limited to:
A) State
and federal regulations and requirements and the relationship between qualified
state long-term care insurance Partnership programs and other public and
private coverage of long-term care services, including Medicaid;
B) Available
long-term care services and providers;
C) Changes
or improvements in long-term care services or providers;
D) Alternatives
to the purchase of private long-term care insurance;
E) The
effect of inflation on benefits and the importance of inflation protection; and
F) Consumer
suitability standards and guidelines.
3) The
training required by this Section shall not include training that is insurer or
company product specific or that includes any sales or marketing information,
materials, or training, other than those required by State or federal law.
c) Verification of Training
1) Insurers
subject to this Part shall obtain verification that a producer receives
training required by subsection (a) before a producer is permitted to sell,
solicit or negotiate the insurer's long-term care insurance products, maintain
records subject to the state's record retention requirements, and make that
verification available to the Director upon request.
2) Insurers
subject to this Part shall maintain records with respect to the training of their
producers concerning the distribution of their Partnership policies that will
allow the state insurance department to provide assurance to the state Medicaid
agency that producers have received the training contained in subsection
(b)(2)(A) as required by subsection (a) and that producers have demonstrated an
understanding of the Partnership policies and their relationship to public and
private coverage of long-term care, including Medicaid, in this State. These
records shall be maintained in accordance with the state's record retention
requirements and shall be made available to the Director upon request.
d) The
satisfaction of these training requirements in any state shall be deemed to
satisfy the training requirements in this State.
(Source: Amended at 38 Ill.
Reg. 2186, effective January 2, 2014)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.122 STANDARDS FOR MARKETING
Section 2012.122 Standards
for Marketing
a) Every insurer, as defined herein, marketing long-term care
insurance coverage in this State, directly or through its producers, shall:
1) Establish marketing procedures and producer training
requirements to assure that:
A) Any marketing activities, including any comparison of policies,
by its agents or other producers will be fair and accurate; and
B) Excessive insurance is not sold or issued.
2) Display prominently by type or stamp or other appropriate
means on the first page of the outline of coverage and policy the following:
"NOTICE TO BUYER: THIS POLICY MAY NOT COVER ALL 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."
3) Provide copies of the disclosure forms required in Section
2012.62(c) and Exhibits F and J to the applicant.
4) Inquire of a prospective applicant or enrollee for long-term
care insurance, and otherwise make every reasonable effort to identify, whether
the applicant or enrollee already has accident and sickness or long-term care
insurance and the types and amounts of any such insurance, except that, in the
case of qualified long-term care insurance contracts, an inquiry into whether a
prospective applicant or enrollee for long-term care insurance has accident and
sickness insurance is not required.
5) Every insurer or entity marketing long-term care insurance
shall establish auditable procedures for verifying compliance with this
subsection (a).
6) The insurer shall, at solicitation, provide written notice to
the prospective policyholder and certificateholder of the Senior Health
Insurance Program (SHIP) that such a program is available and the most current
name, address and telephone number of the program. The current address and
toll-free telephone number is One Natural Resources Way, #100 Springfield IL
62702-1271 (800)252-8966. The current email address is
AGING.SHIP@illinois.gov.
7) For long-term care health insurance policies and certificates,
use the terms "noncancellable" or "level premium" only when
the policy or certificate conforms to Section 2012.50(a)(3).
8) Provide an explanation of the contingent benefit upon lapse
provided for in Section 2012.127(d)(2) and, if applicable, the additional
contingent benefit upon lapse provided to policies with fixed or limited
premium paying periods in Section 2012.127(d)(3).
b) In addition to the practices prohibited in Article XXVI of the
Code, the following acts and practices are prohibited:
1) Twisting. Knowingly making any misleading representation or
incomplete or fraudulent comparison of any insurance policies or insurers for
the purpose of inducing, or tending to induce, any person to lapse, forfeit,
surrender, terminate, retain, pledge, assign, borrow on or convert any
insurance policy or to take out a policy of insurance with another insurer.
2) 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.
3) 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.
4) Misrepresentation. Misrepresenting a material fact in selling
or offering to sell a long-term care insurance policy.
c) With respect to the obligations set forth in this subsection,
the primary responsibility of an association when endorsing or procuring
long-term care insurance shall be to educate its members concerning long-term
care issues in general so that its members can make informed decisions.
Associations should provide information regarding long-term care insurance
policies or certificates to ensure that members of such associations receive a balanced
and complete explanation of the features in the policies or certificates that
are being sold by the insurer.
1) The insurer shall file with this Department the following
material:
A) The policy and certificate;
B) A corresponding outline of coverage, as referenced in Exhibit C
of this Part; and
C) All advertisements requested by the Department.
2) The association shall disclose in any long-term care insurance
solicitation:
A) 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 the endorsement or sale
of the policy or certificate to its members; and
B) A brief description of the processes under which such policies
and the insurer issuing such policies were selected.
3) If the association and the insurer have interlocking
directorates or trustee arrangements, the association shall disclose that fact
to its members.
4) The board of directors of associations shall review and
approve such insurance policies as well as the compensation arrangements made
with the insurer.
5) With respect to long-term care insurance contracts, the association
shall also:
A) Engage the services of a person with expertise in long-term
care insurance, not affiliated with the insurer, to conduct an examination of
the policies including its benefits, features, and rates and update such
examination thereafter in the event of a material change;
B) Actively
monitor the marketing efforts of the insurer and its agents; and
C) Review
and approve all marketing materials or other insurance communications used to
promote sales or sent to members regarding the policies or certificates.
6) No group long-term care insurance policy or certificate may be
issued to an association unless the insurer files with this Department the
information required in this subsection (c).
7) The insurer shall not issue a long-term care policy or
certificate to an association or continue to market such a policy or
certificate unless the insurer certifies annually that the association has
complied with the requirements set forth in this subsection (c).
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.123 SUITABILITY
Section 2012.123 Suitability
a) This Section shall not apply to life insurance policies that
accelerate benefits for long-term care.
b) Every insurer, health care service plan or other entity
marketing long-term care insurance (the "issuer") shall:
1) 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;
2) Train its insurance producers in the use of its suitability
standards; and
3) Maintain a copy of its suitability standards and make them
available for inspection upon request by the Director.
c) To determine whether the applicant meets the standards
developed by the issuer:
1) The insurance producer and issuer shall develop procedures
that take the following into consideration:
A) The ability to pay for the proposed coverage and other
pertinent financial information related to the purchase of the coverage;
B) 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
C) 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.
2) The issuer, and where an insurance producer is involved, the
insurance producer shall make reasonable efforts to obtain the information
referenced in subsection (c)(1). The efforts shall include presentation to the
applicant, at or prior to application, of the " Long-Term Care Insurance
Personal Worksheet". The personal worksheet used by the issuer shall
contain, at a minimum, the information in the format contained in Exhibit F, in
not less than 12 point type. The issuer may request the applicant to provide
additional information to comply with its suitability standards. A copy of the
issuer's personal worksheet shall be filed with the Director.
3) A completed personal worksheet shall be returned to the issuer
prior to the issuer's consideration of the applicant for coverage, except the
personal worksheet need not be returned for sales of employer group long-term
care insurance to employees and their spouses.
4) The sale or dissemination outside the company or agency by the
issuer or insurance producer of information obtained through the personal
worksheet in Exhibit F is prohibited.
d) The issuer shall use the suitability standards it has
developed pursuant to this Section in determining whether issuing long-term
care insurance coverage to an applicant is appropriate.
e) Insurance producers shall use the suitability standards
developed by the issuer in marketing long-term care insurance.
f) 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" shall be provided. The form shall be in the
format found in Exhibit G, in not less than 12 point type.
g) 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 shall send the applicant a suitability letter similar to the one
found in Exhibit H. However, if the applicant has declined to provide
financial information, the issuer may use some other method to verify the
applicant's intent. Either the applicant's returned letter or a record of the
alternative method of verification shall be made part of the applicant's file.
h) The issuer shall report annually by June 30 to the Director
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 those who chose to confirm after receiving a suitability letter.
(Source: Amended at 38 Ill.
Reg. 2186, effective January 2, 2014)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.124 PROHIBITION AGAINST PREEXISTING CONDITIONS AND PROBATIONARY PERIODS IN REPLACEMENT POLICIES OR CERTIFICATES
Section 2012.124 Prohibition
Against Preexisting Conditions and Probationary Periods in Replacement Policies
or Certificates
If a long-term care insurance
policy or certificate replaces another long-term care policy or certificate,
the replacing insurer shall waive any time periods applicable to preexisting
conditions and probationary periods in the new long-term care policy for
similar benefits to the extent that similar exclusions have been satisfied
under the original policy.
(Source: Section 2012.126
renumbered to Section 2012.124 and amended at 32 Ill. Reg. 7600, effective May
5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.125 AVAILABILITY OF NEW SERVICES OR PROVIDERS
Section 2012.125 Availability of New Services or
Providers
a) An
insurer shall notify policyholders of the availability of a new long-term care
policy series that provides coverage for new long-term care services or
providers that are material in nature and not previously available through the
insurer to the general public. The notice shall be provided within 12 months after
the date the new policy series is made available for sale in this State. New
long-term care services or providers that are material in nature shall not
include changes to policy structure or benefits or provisions that are minor in
nature. Examples of when notification need not be provided include changes in
elimination periods, benefit periods and benefit amounts.
b) Notwithstanding
subsection (a), notification is not required for any policy issued prior to
July 2008, or to any policyholder or certificateholder who is currently
eligible for benefits, within an elimination period or on claim, or who
previously has been in claim status, or who would not be eligible to apply for
coverage due to issue age limitations under the new policy. The insurer may
require that policyholders meet all eligibility requirements, including
underwriting and payment of the required premium to add new services or
providers.
c) The insurer shall make
the new coverage available in one of the following ways:
1) By
adding a rider to the existing policy and charging a separate premium for the
new rider based on the insured's attained age;
2) By
exchanging the existing policy or certificate for one with an issue age based
on the present 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 shall be based on premiums paid or reserves held for the
prior policy or certificate;
3) By
exchanging the existing policy or certificate for a new policy or certificate
in which consideration for past insured status shall be 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
4) By an
alternative program (such as underwriting concessions) developed by the insurer
that meets the intent of this Section if the program is filed with and approved
by the Director.
d) An
insurer is not required to notify 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
through a discrete entity, such as a financial institution or brokerage, for
which specialized products are available that are not available for sale to the
general public. Policyholders that purchased such a proprietary policy shall
be notified when a new long-term care policy series that provides coverage for
new long-term care services or providers that are material in nature is made
available to that limited distribution channel.
e) Policies
issued pursuant to this Section shall be considered exchanges and not
replacements. These exchanges shall not be subject to Sections 2012.90 and
2012.123 of this Part, and the reporting requirements of Section 2012.95(a) through
(e) of this Part.
f) When
the policy is offered through an employer, labor organization or professional,
trade or occupational association, the required notification in subsection (a)
shall be made to the offering entity. However, if the policy is issued to a
group defined in Section 351A-1(e)(4) of the Code, the notification shall be
made to each certificateholder.
g) Nothing
in this Section shall prohibit an insurer from offering any policy, rider,
certificate or coverage change to any policyholder or certificateholder. However,
upon request, any policyholder may apply for currently available coverage that
includes the new services or providers. The insurer may require that
policyholders meet all eligibility requirements, including underwriting and payment
of the required premium to add new services or providers.
h) This
Section does not apply to life insurance policies or riders containing
accelerated long-term care benefits.
i) The
provisions of this Section apply on and after January 1, 2009.
(Source: Added at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.126 RIGHT TO REDUCE COVERAGE AND LOWER PREMIUMS
Section 2012.126 Right to
Reduce Coverage and Lower Premiums
a) Coverage
Reduction Options
1) Every
long-term care insurance policy and certificate shall include a provision that
allows the policyholder or certificateholder to reduce coverage and lower the
policy or certificate premium in at least one of the following ways:
A) Reducing
the maximum benefit; or
B) Reducing
the daily, weekly or monthly benefit amount.
2) The
insurer may also offer other reduction options that are consistent with the
policy or certificate design or the carrier's administrative processes.
3) In
the event the reduction in coverage involves the reduction or elimination of
the inflation protection provision, the insurer shall allow the policyholder to
continue the benefit amount in effect at the time of the reduction.
b) The
provision shall include a description of the ways in which coverage may be
reduced and the process for requesting and implementing a reduction in
coverage.
c) The
premium for the reduced coverage shall:
1) Be
based on the same age and underwriting class used to determine the premium for
the coverage currently in force; and
2) Be consistent with the
approved rate table.
d) The
insurer 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.
e) If a
policy or certificate is about to lapse, the insurer shall provide a written
reminder to the policyholder or certificateholder of his or her right to reduce
coverage and premiums in the notice required by Section 2012.55(a)(3).
f) This
Section does not apply to life insurance policies or riders containing
accelerated long-term care benefits.
g) The
requirements of this Section shall apply to any long-term care policy issued in
this State on or after July 2009.
h) A
premium increase notice required by Section 2012.62(e) shall include:
1) An
offer to reduce policy benefits provided by the current coverage, consistent
with the requirements of this Section;
2) A
disclosure stating that all options available to the policyholder may not be of
equal value; and
3) In
the case of a partnership policy, a disclosure that some benefit reduction
options may result in a loss in partnership status that may reduce policyholder
protections.
i) The
requirements of subsection (h) shall apply to any rate increase implemented in
this State on or after January 1, 2019.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.127 NONFORFEITURE BENEFIT REQUIREMENT
Section 2012.127
Nonforfeiture Benefit Requirement
a) This Section does not apply to life insurance policies or
riders containing accelerated long-term care benefits.
b) To comply with the requirement to offer a nonforfeiture
benefit pursuant to Section 2012.86 of this Part:
1) A policy or certificate offered with nonforfeiture benefits
shall have coverage elements, eligibility, benefit triggers and benefit length
that are the same as coverage to be issued without nonforfeiture benefits. The
nonforfeiture benefit included in the offer shall be the benefit described in
Section 2012.127(e); and
2) The
offer shall be in writing if the nonforfeiture benefit is not otherwise
described in the Outline of Coverage or other materials given to the
prospective policyholder.
c) If
the offer required to be made under Section 2012.86 is rejected, the insurer
shall provide the contingent benefit upon lapse described in this Section. Even
if this offer is accepted for a policy with a fixed or limited premium paying
period, the contingent benefit upon lapse in subsection (d)(3) shall still
apply.
d) After rejection of the offer required under Section 2012.86,
for individual and group policies without nonforfeiture benefits, the insurer
shall provide the contingent benefit upon lapse:
1) In
the event a group policyholder elects to make the nonforfeiture benefit an
option to the certificateholder, a certificate shall provide either the
nonforfeiture benefit or the contingent benefit upon lapse.
2) For policies or certificates that have reached their twentieth
duration, a contingent benefit on lapse shall be triggered every time an
insurer increases the premium rates. For policies or certificates that have not
reached their twentieth duration, a contingent benefit on lapse shall be
triggered every time an insurer 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 below based on
the insured's issue age, and the policy or certificate lapsing within 120 days after
the due date of the premium so increased. Unless otherwise required,
policyholders shall be notified at least 30 days prior to the due date of the
premium reflecting the rate increase.
Triggers for a Substantial Premium
Increase
|
Issue Age
|
|
Percent
Increase Over
Initial
Premium
|
|
|
|
|
|
54 and under
|
|
100%
|
|
55-59
|
|
90%
|
|
60
|
|
70%
|
|
61
|
|
66%
|
|
62
|
|
62%
|
|
63
|
|
58%
|
|
64
|
|
54%
|
|
65
|
|
50%
|
|
66
|
|
48%
|
|
67
|
|
46%
|
|
68
|
|
44%
|
|
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%
|
3) A
contingent benefit upon lapse shall also be triggered for policies with a fixed
or limited premium paying period every time an insurer 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 below based on the insured's issue age, the policy or certificate
lapsing within 120 days after the due date of the premium so increased, and the
ratio in subsection (d)(5)(B) being 40% or more. Unless otherwise required,
policyholders shall be notified at least 30 days prior to the due date of the
premium reflecting the rate increase. This subsection (d)(3) becomes effective
January 1, 2009.
Triggers
for a Substantial Premium Increase
|
Issue Age
|
|
Percent Increase Over Initial Premium
|
|
Under 65
|
|
50%
|
|
65-80
|
|
30%
|
|
Over 80
|
|
10%
|
This provision
shall be in addition to the contingent benefit provided by subsection (d)(2)
and, when both are triggered, the benefit provided shall be at the option of
the insured.
4) On or before the effective date of a substantial premium
increase as defined in subsection (d)(2), the insurer shall:
A) Offer to reduce policy benefits provided by the current
coverage without the requirement of additional underwriting so that required
premium payments are not increased;
B) Offer to convert the coverage to a paid-up status with a
shortened benefit period in accordance with the terms of subsection (e). This
option may be elected at any time during the 120-day period referenced in subsection
(d)(2); and
C) Notify the policyholder or certificateholder that a default or
lapse at any time during the 120-day period referenced in subsection (d)(2)
shall be deemed to be the election of the offer to convert in subsection (d)(4)
unless the automatic option in subsection (d)(5)(C) applies.
5) On or
before the effective date of a substantial premium increase, as defined in subsection
(d)(3), the insurer shall:
A) Offer
to reduce policy benefits provided by the current coverage without the
requirement of additional underwriting so that required premium payments are
not increased;
B) Offer
to convert the coverage to a paid-up status when the amount payable for each
benefit is 90% 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 120-day period referenced in subsection (d)(3); and
C) Notify
the policyholder or certificateholder that a default or lapse at any time
during the 120-day period referenced in subsection (d)(3) shall be deemed to be
the election of the offer to convert in subsection (d)(5)(B) if the ratio is
40% or more.
6) For policies issued prior to July 1, 2002, the insurer shall
provide these benefits without amending the contract or certificate to include
them.
e) Benefits continued as nonforfeiture benefits, including
contingent benefits upon lapse in accordance with subsection (d)(2), but not subsection
(d)(3), are described as follows:
1) For purposes of this Section, attained age rating is defined
as a schedule of premiums starting from the issue date which increases age at
least 1% per year prior to age 50, and at least 3% per year beyond age 50.
2) For purposes of this Section, the nonforfeiture shall be a
shortened benefit period providing paid-up traditional 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 shall be
determined as specified in subsection (e)(3).
3) The standard nonforfeiture credit will be equal to 100% of the
sum of all premiums paid, including the premiums paid prior to any changes in
benefits. The insurer 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 shall not be less than 30 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 (f) of this Section.
4) No policy or certificate which includes a nonforfeiture
benefit shall begin a nonforfeiture benefit later than the end of the third
year following the policy or certificate issue date except that, for a policy
or certificate with attained age rating, the nonforfeiture benefit shall 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.
5) 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.
f) All benefits paid by the insurer while the policy or
certificate is in premium paying status and in the paid up status will not
exceed the maximum benefits which would have been payable if the policy or
certificate had remained in premium paying status.
g) There shall be no difference in the minimum nonforfeiture
benefits as required under this Section for group and individual policies.
h) The requirements of this Section shall apply to any long-term
care policy issued in this State, and shall apply as follows:
1) Except as provided in subsections (h)(2) and (3), the
provisions of this Section apply to any long-term care policy issued in this State
on or after July 2008.
2) For certificates issued on or after July 2008, under a group
long-term care insurance policy issued to one or more employers or labor
organizations, or to a trust or to the trustee or 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, which
policy was in force in July 2008, the provisions of this Section shall not
apply.
3) The last sentence in subsection (c) and all of subsections (d)(3)
and (d)(4) shall apply to any long-term care insurance policy or certificate
issued in this State after January 2009, except new certificates on a group
policy issued to one or more employers or labor organizations, or to a trust or
to the trustee or 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, after July 2009.
i) Premiums charged for a policy or certificate containing
nonforfeiture benefits or a contingent benefit on lapse shall be subject to the
loss ratio requirements of Sections 2012.110, 2012.112 or Section 2012.113,
whichever is applicable, treating the policy as a whole.
j) To determine whether contingent nonforfeiture upon lapse
provisions are triggered under subsection (d)(2) or (d)(3), a replacing insurer
that purchased or otherwise assumed a block or blocks of long-term care
insurance policies from another insurer shall calculate the percentage increase
based on the initial annual premium paid by the insured when the policy was
first purchased from the original insurer.
k) A nonforfeiture benefit for qualified long-term care insurance
contracts that are level premium contracts shall be offered that meets the
following requirements:
1) The nonforfeiture provision shall be appropriately captioned;
2) The nonforfeiture provision shall provide a benefit available
in the event of a default in the payment of any premiums and shall 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 contracts approved by the
Director for the same contract form; and
3) The nonforfeiture provision shall provide at least one of the
following:
A) Reduced paid-up insurance;
B) Extended term insurance;
C) Shortened benefit period; or
D) Other similar offerings approved by the Director.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.128 STANDARDS FOR BENEFIT TRIGGERS
Section 2012.128 Standards
for Benefit Triggers
a) A long-term care insurance policy shall condition the payment
of benefits on a determination of the insured's ability to perform activities
of daily living and on cognitive impairment. Eligibility for the payment of
benefits shall not be more restrictive than requiring either a deficiency in
the ability to perform not more than 3 of the activities of daily living or the
presence of cognitive impairment.
b) Insurers may use activities of daily living to trigger covered
benefits as long as they are defined in the policy. Activities of daily living
shall include but not be limited to the following, as defined in Section
2012.40 of this Part and in the policy:
1) Bathing;
2) Continence;
3) Dressing;
4) Eating;
5) Toileting; and
6) Transferring.
c) An insurer may use additional provisions for the determination
of when benefits are payable under a policy or certificate; however, the
provisions shall not restrict, and are not in lieu of, the requirements
contained in subsections (a) and (b) of this Section.
d) For purposes of this Section the determination of a deficiency
shall not be more restrictive than:
1) Requiring the hands-on assistance of another person to perform
the prescribed activities of daily living; or
2) 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.
e) Assessments of activities of daily living and cognitive
impairment shall be performed by licensed or certified professionals, such as
physicians, nurses or social workers.
f) Long-term care insurance policies shall include a clear
description of the process for appealing and resolving benefit determinations.
g) The requirements set forth in this Section shall apply as
follows:
1) Except as provided in subsection (g)(2) of this Section, the
provisions of this Section apply to a long-term care policy issued in this
State.
2) For certificates issued under a group long-term care insurance
policy as defined in Section 351A-1(e)(1) of the Code, the provisions of this
Section shall not apply.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.129 ADDITIONAL STANDARDS FOR BENEFIT TRIGGERS FOR QUALIFIED LONG-TERM CARE
Section 2012.129 Additional Standards
for Benefit Triggers for Qualified Long-Term Care
a) A qualified long-term care insurance contract shall 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.
b) A qualified long-term care insurance contract shall 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 90 days
due to a loss of functional capacity or to severe cognitive impairment.
c) Certifications regarding activities of daily living and
cognitive impairment required pursuant to subsection (b) of this Section shall
be performed by the following licensed or certified professionals: physicians,
registered professional nurses, licensed social workers, or other individuals
who meet requirements prescribed by the Secretary of the Treasury under the
authority of Section 7702B of the IRS Code (26 USC 7702B).
d) Certifications required pursuant to subsection (b) of this
Section may be performed by a licensed health care practitioner at the
direction of the carrier as is reasonably necessary with respect to a specific
claim, except that when a licensed health care practitioner has certified that
an insured is unable to perform activities of daily living for an expected
period of at least 90 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 90 day
period.
e) Qualified long-term care insurance contracts shall include a
clear description of the process for appealing and resolving disputes with
respect to benefit determinations.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.130 STANDARD FORMAT OUTLINE OF COVERAGE REQUIREMENTS
Section 2012.130 Standard
Format Outline of Coverage Requirements
This Section implements,
interprets and makes specific the provisions of Section 351A-8 of the Code in
prescribing a standard format and the content of an outline of coverage.
a) The outline of coverage shall be a free-standing document,
using no smaller than ten point type.
b) The outline of coverage shall contain no material of an
advertising nature.
c) Text which is capitalized or underscored in the standard
format outline of coverage may be emphasized by other means which provide
prominence equivalent to such capitalization or underscoring.
d) Use of the text and sequence of text of the standard format
outline of coverage is mandatory unless otherwise specifically indicated.
e) The standard format, including style, arrangement and overall
appearance, and the content of an outline of coverage appears in Exhibit C of
this Part.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.140 REQUIREMENT TO DELIVER SHOPPER'S GUIDE
Section 2012.140 Requirement
to Deliver Shopper's Guide
a) 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 Director shall be provided to all prospective
applicants of a long-term care insurance policy or certificate.
1) In the case of insurance producer solicitations, a producer
must deliver the shopper's guide prior to the presentation of an application or
enrollment form.
2) In the case of direct response solicitations, the shopper's
guide must be presented in conjunction with any application or enrollment form.
b) Life insurance policies or riders containing accelerated
traditional long-term care benefits are not required to furnish the
above-referenced guide, but shall furnish the policy summary required under
Section 351A-9.1 of the Code.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.145 LONG-TERM CARE INSURANCE PARTNERSHIP PROGRAM
Section 2012.145 Long-Term Care Insurance Partnership
Program
a) In
accordance with section 6021 of the Deficit Reduction Act of 2005 (42 USC 1305)
and the Illinois Long-Term Care Partnership Program Act [215 ILCS 132], in
addition to the applicable provisions of this Part, the provisions of this Section
shall apply to any qualified State long-term care insurance partnership policy.
b) The policy provides the
following inflation protections:
1) If
the policy is sold to an individual who has not attained age 61 as of the date
of purchase, the policy shall provide compound annual inflation protection at a
rate of at least 3%, or at a rate based on the changes in the Consumer Price
Index for All Urban Consumers: U.S. city average as determined by the Bureau of
Labor Statistics of the U.S. Department of Labor.
2) If
the policy is sold to an individual who has attained age 61 but has not
attained age 76 as of the date of purchase, the policy shall provide inflation
protection expressed in simple or compound interest annually at a rate of at
least 3% or at a rate based on the changes in the Consumer Price Index for All
Urban Consumers: U.S. city average as determined by the Bureau of Labor
Statistics of the U.S. Department of Labor.
3) If
the policy is sold to an individual who has attained age 76 as of the date of
purchase, the policy may, but is not required to, provide some level of
inflation protection.
c) Offers of Exchange
1) An
insurer shall offer, on a onetime basis, in writing, to all existing
policyholders that were issued a long-term care policy on or after May 5, 2008,
the date of the last long-term care (LTC) regulation revision, the option to
exchange their existing LTC coverage for coverage that is intended to qualify
under Illinois' Long-Term Care Partnership Program (LTCPP). The insurer shall
provide written notification of this onetime offer within 12 months from the
date on which the company begins to offer partnership coverage in this State. The
offer shall be made on a nondiscriminatory basis without regard to the age or
health status of the insured and shall remain open for a minimum of 90 days
from the date of mailing by the insurer.
2) The
mandatory offer of an exchange shall only apply to products issued by the
insurer that are comparable to the type of policy form, such as group policies
and individual policies, and on the policy series that the company has
certified as partnership qualified. This exchange may be subject to
underwriting.
3) Premiums
may be adjusted based on the results of the underwriting process or the
exchange may be denied by the insurer.
4) A
policy received in an exchange after the effective date of Illinois' LTCPP is
treated as newly issued and is eligible for qualified policy status. For purposes
of applying the Medicaid rules relating to qualified LTC partnership policies,
the addition of a rider, endorsement or change in schedule page for a policy
may be treated as giving rise to an exchange. The effective date of the LTC partnership
policy shall be the date the policy was exchanged.
d) Filing Requirements for Long-Term
Care Insurance Partnership Policies
1) A
partnership policy shall not be issued or issued for delivery in this State
unless filed with and approved by the Director in accordance with the
procedures set forth in Section 143 of the Code. Any policy submitted for
approval as a partnership policy shall be accompanied by a properly executed
Partnership Certification Form (Exhibit M).
2) Insurers
requesting to make use of a previously approved policy form as a qualified State
LTC partnership policy shall submit to the Director a Partnership Certification
Form signed by an officer of the company. The Partnership Certification Form
shall be accompanied by a copy of the policy or certificate form listed, the
approval date, and a bookmark for each of the requirements listed in sections
II and III of the form. A Partnership Certification Form shall be required for
each policy form submitted for partnership qualification.
e) Partnership Disclosure
Notice
A partnership policy issued or
issued for delivery in this State shall include a Partnership Disclosure Notice
(Exhibit L) explaining the benefits associated with a partnership policy and
indicating that, at the time issued, the policy is a qualified State LTC insurance
partnership policy. The Partnership Disclosure Notice shall also include a
statement indicating that, by purchasing this partnership policy, the insured
does not automatically qualify for Medicaid.
f) Producer Training
Requirements
The training requirements for a
producer to sell, solicit or negotiate LTC insurance, which includes the LTCPP,
are listed in Section 2012.121. The training requirements must be met before
any producer attempts to sell, solicit or negotiate an LTC partnership policy.
(Source: Added at 38 Ill. Reg. 2186,
effective January 2, 2014)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.150 PENALTIES
Section 2012.150 Penalties
In addition to any other
penalties provided by the laws of this State any insurer or any insurance
producer found to have violated any requirement of this State relating to the
regulation of long-term care insurance or the marketing of such insurance shall
be subject to a fine of up to 3 times the amount of any commissions paid for
each policy involved in the violation or up to $10,000, whichever is greater.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
Section 2012.EXHIBIT A Replacement Notice for Other Than Direct Response Solicitations
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT B REPLACEMENT NOTICE FOR DIRECT RESPONSE SOLICITATIONS
Section 2012.EXHIBIT B Replacement
Notice for Direct Response Solicitations
NOTICE
TO APPLICANT REGARDING REPLACEMENT OF ACCIDENT AND SICKNESS OR
LONG-TERM
CARE INSURANCE
[Insurance
Company's Name and Address]
SAVE THIS NOTICE! IT MAY BE
IMPORTANT TO YOU IN THE FUTURE.
According to [your application]
[information you have furnished], you intend to lapse or otherwise terminate
existing accident and sickness or long-term care insurance and replace it with
the long-term care insurance policy delivered herewith issued by [Company Name]
Insurance Company. Your new policy provides 30 days within which you may
decide, without cost, whether you desire to keep the policy. For your own
information and protection, you should be aware of and seriously consider
certain factors which may affect the insurance protection available to you
under the new policy.
You should review this new
coverage carefully, comparing it will all accident and sickness or long-term
care insurance coverage you now have, and terminate your present policy only
if, after due consideration, you find that purchase of this long-term coverage
is a wise decision.
1. Health conditions which you may presently have (preexisting
conditions), may not be immediately or fully covered under the new policy. This
could result in denial or delay in payment of benefits under the new policy,
whereas a similar claim might have been payable under your present policy.
2. State law provides that your replacement policy or certificate
may not contain new preexisting conditions or probation periods. Your insurer
will waive any time periods applicable to preexisting conditions or
probationary periods in the new policy (or coverage) for similar benefits to
the extent such time was spent (depleted) under the original policy.
3. If you are replacing existing long-term care insurance
coverage you may wish to secure the advice of your present insurer or its
insurance producer regarding the proposed replacement of your present policy. This
is not only your right, but it is also in your best interest to make sure you
understand all the relevant factors involved in replacing your present
coverage.
4. [To be included only if the application is attached to the
policy.] If, after due consideration, you still wish to terminate you present
policy and replace it with new coverage, read the copy of the application
attached to your new policy and be sure that all questions are answered fully
and correctly. Omissions or misstatements in the application could cause an
otherwise valid claim to be denied. Carefully check the application and write
to [Company Name and Address] within 30 days if any information is not correct
and complete, or if any past medical history has been left out of the
application.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT C STANDARD FORMAT OUTLINE OF COVERAGE
Section 2012.EXHIBIT C Standard
Format Outline of Coverage
[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 contract, 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 contract within the meaning of the Internal Revenue Code of
1986, as amended (26 USC 7702B(b)).
OR
Federal Tax Implications of this [POLICY] [CERTIFICATE]. This [POLICY]
[CERTIFICATE] is not intended to be a federally tax-qualified long-term care
insurance contract within the meaning of the Internal Revenue Code of 1986 as
amended (26 USC 7702B(b)). 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
include one of the following permissible policy renewability provisions:]
1) Policies and certificates that are guaranteed renewable shall
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 shall
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 include
continuation/conversion provisions applicable to the certificate and group
policy;]
c) [Include waiver of premium provisions or state that there are
no 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 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 deductible(s), waiting periods,
elimination periods and benefit maximums.]
b) [Institutional benefits, by skill level.]
c) [Non-institutional benefits, by skill level.]
d) Eligibility for Payment of Benefits.
[Activities of daily living and cognitive impairment shall 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 in this Section. If
these benefit triggers differ for different benefits, explanation of the
triggers should 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) Non-eligible facilities/provider;
c) Non-eligible levels of care (e.g., unlicensed providers, care
or treatment provided by a family member, etc.);
d) Exclusions/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 9 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 cost 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 ORGANIC 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.
16. GRAPHIC COMPARISON.
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 shall show benefit levels over at least a 20 year period.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT D RESCISSION REPORTING FORMAT
Section 2012.EXHIBIT D Rescission
Reporting Format
RESCISSION
REPORTING FORMS FOR
LONG-TERM
CARE POLICIES
FOR
THE STATE OF ILLINOIS
FOR
THE REPORTING YEAR 20[ ]
|
Company Name:
|
|
|
Address:
|
|
|
|
|
|
Phone Number:
|
|
|
|
|
|
Due:
March 1 annually
Instructions:
The purpose of this form is to
report all rescissions of long-term care insurance policies or certificates.
Those rescissions voluntarily effectuated by an insured are not required to be
included in this report. Please furnish one form per rescission.
|
Policy
Form
#
|
Policy
and
Certificate
#
|
Name
of
Insured
|
Date
of
Policy
Issuance
|
Date/s
Claim/s
Submitted
|
Date
of
Rescission
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Detailed reason for rescission:
|
Signature
|
|
Name
and Title (please type)
|
|
Date
|
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT E CLASS OF INSURANCE - ACCIDENT AND HEALTH (REPEALED)
Section 2012.EXHIBIT E Class
of Insurance − Accident and Health (Repealed)
(Source: Repealed at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT F LONG-TERM CARE INSURANCE PERSONAL WORKSHEET
Section 2012.EXHIBIT F Long-Term
Care Insurance Personal Worksheet
People buy long-term care
insurance for many reasons. Some don't want to use their own assets to pay for
long-term care. Some buy insurance to make sure they can choose the type of
care they get. Others don't want their family to have to pay for care or don't
want to go on Medicaid. But long-term care insurance may be expensive, and may
not be right for everyone.
The company will ask you to fill
out this worksheet to help you and the company decide if you should buy this
policy. By State law, the insurance company must fill out part of the
information on this worksheet.
Premium Information
|
Policy Form Number(s)
|
|
|
|
The premium for the coverage
you are considering will be
|
[$
|
|
per month,
or
|
|
$
|
|
per year,] [a one-time single
premium of
|
$
|
|
]
|
|
Type of Policy
(noncancellable/guaranteed renewable):
|
|
|
The Company's Right to
Increase Premiums:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[The company cannot raise your
rates on this policy.] [The company has a right to increase premiums on this
policy form in the future, provided it raises rates for all policies in the
same class in this State.] [Insurers shall use appropriate bracketed statement.
Rate guarantees shall not be shown on this form.]
Rate Increase History
The company has sold long-term
care insurance since [year] and has sold this policy since [year]. [The
company has never raised its rates for any long-term care policy it has sold in
this State or any other state.] [The company has not raised its rates for this
policy form or similar policy forms in this State or any other state in the
last 10 years.] [The company has raised its premium rates on this policy form
or similar policy forms in the last 10 years. Following is a summary of the
rate increases.]
[The issuer shall list each
premium increase it has instituted on this or similar policy forms in this
State or any other state during the last 10 years. The list shall provide the
policy form, the calendar years the form was available for sale, and the
calendar year and the amount (percentage) of each increase.]
[The insurer shall provide
minimum and maximum percentages if the rate increase is variable by rating characteristics.
The insurer may provide, in a fair manner, additional explanatory information
as appropriate.]
Questions
Related to Your Income
|
How will you pay each year's
premium?
|
|
|
From my Income
|
From my
Savings/Investments
|
My Family will Pay
|
|
[ Have you considered whether you could afford to
keep this policy if the premiums were raised substantially?]
|
|
What is your annual income?
(check one)
|
|
Under $10,000
|
$[10-20,000]
|
$[20-30,000]
|
|
|
$[30-50,000]
|
Over
$50,000
|
|
|
|
How do you expect your income
to change over the next 10 years? (check one)
|
|
No change
|
Increase
|
Decrease
|
|
|
If you
will be paying premiums with money received only from your own income, a rule
of thumb is that you may not be able to afford this policy if the premiums
will be more than 7% of your income.
|
|
Will you buy inflation
protection? (check one)
|
Yes
|
No
|
|
If not, have you considered
how you will pay for the difference between future costs and your daily
benefit amount?
|
|
|
From my Income
|
From my Savings/Investments
|
My Family will Pay
|
|
The
national average annual cost of care in [insert year] was [insert $ amount],
but this figure varies across the country. In ten years the national average
annual cost would be about [insert $ amount] if costs increase 5% annually.
|
|
What
elimination period are you considering? Number of day _____ Approximate cost
|
|
$
|
|
for that
period of care.
|
|
How are you planning to pay
for your care during the elimination period? (check one)
|
|
|
From my Income
|
From my Savings/Investments
|
My Family will Pay
|
|
|
|
|
|
|
|
|
|
|
Questions Related
to Your Savings and Investments
|
Not counting your home, about
how much are all of your assets (your savings and investments) worth? (check
one)
|
|
Under $20,000
|
$20,000-$30,000
|
$30,000-$50,000
|
Over $50,000
|
|
How do you expect your assets
to change over the next ten years? (check one)
|
|
Stay
about the same
|
Increase
|
Decrease
|
|
If you are buying this policy
to protect your assets and your assets are less than $30,000, you may wish to
consider other options for financing your long-term care.
|
|
|
|
|
|
|
Disclosure
Statement
|
The
answers to the questions above describe my financial situation
|
|
Or
|
|
I
choose not to complete this information
|
|
(Check
one.)
|
|
I acknowledge that the carrier and/or its agent (below) has reviewed this form with me
including
the premium, premium rate increase history and potential for premium
increases in the future. [For direct mail situations, use the following: I
acknowledge that I have reviewed this form including their premium, premium
rate increase history and potential for premium increases in the future.] I
understand the above disclosures. I understand that the rates for this
policy may increase in the future. (This box must be checked).
|
|
|
|
Signed:
|
|
|
|
|
|
|
(Applicant)
|
|
(Date)
|
|
[ I explained to the applicant the importance of completing this information.
|
|
Signed:
|
|
|
|
|
|
|
(Insurance
Producer)
|
|
(Date)
|
|
|
|
|
Insurance Producer's Printed
Name:
|
|
]
|
|
[Choose the appropriate
sentences depending on whether this is a direct mail or insurance producer
sale.]
|
|
[In order for us to process
your application, please return this signed statement to [name of company],
along with your application.]
|
|
[My insurance producer has
advised me that this policy does not appear to be suitable for me. However,
I still want the company to consider my application.]
|
|
Signed:
|
|
|
|
|
|
|
(Applicant)
|
|
(Date)
|
|
The company may contact you to
verify your answers.
|
|
[When the Long-Term Care
Insurance Personal Worksheet is furnished to employees and their spouses
under employer group policies, the text from the heading "Disclosure
Statement" to the end of the page may be removed.]
|
|
|
|
|
|
|
|
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT G THINGS YOU SHOULD KNOW BEFORE YOU BUY LONG-TERM CARE INSURANCE
Section 2012.EXHIBIT G Things
You Should Know Before You Buy Long-Term Care Insurance
|
Long-Term Care Insurance
|
·
|
A long-term care insurance
policy may pay most of the costs for your care in a nursing home. Many
policies also pay for care at home or other community settings. Since
policies can vary in coverage, you should read this policy and make sure you
understand what it covers before you buy it.
|
|
|
·
|
[You should not buy this
insurance policy unless you can afford to pay the premiums every year.] [Remember
that the company can increase premiums in the future.] [For single premium
policies, delete this bullet; for noncancellable policies, delete the second
sentence only.]
|
|
|
·
|
The personal worksheet
includes questions designed to help you and the company determine whether
this policy is suitable for your needs.
|
|
Medicare
|
·
|
Medicare does not pay for most
long-term care
|
|
Medicaid
|
·
|
Medicaid will generally pay
for long-term care if you have very little income and few assets. You
probably should not buy this policy if you are now eligible for Medicaid.
|
|
|
·
|
Many people become eligible
for Medicaid after they have used up their own financial resources by paying
for long-term care services.
|
|
|
·
|
When Medicaid pays your
spouse's nursing home bills, you are allowed to keep your house and
furniture, a living allowance, and some of your joint assets.
|
|
|
·
|
Your choice of long-term care
services may be limited if you are receiving Medicaid. To learn more about
Medicaid, contact your local or State Medicaid agency.
|
|
Shopper's Guide
|
·
|
Make sure the insurance
company or insurance producer gives you a copy of a book called the National
Association of Insurance Commissioners' "Shopper's Guide to Long-Term
Care Insurance." Read it carefully. If you have decided to apply for
long-term care insurance, you have the right to return the policy within 30
days and get back any premium you have paid if you are dissatisfied for any
reason or choose not to purchase the policy.
|
|
Counseling
|
·
|
Free counseling and additional
information about long-term care insurance is available through your State's
insurance counseling program. Contact your State insurance department or
Department on Aging for more information about the senior health insurance
counseling program in your State.
|
|
Facilities
|
·
|
Some long-term care insurance
contracts provide for benefit payments in certain facilities only if they are
licensed or certified, such as in assisted living centers. However, not all
states regulate these facilities in the same way. Also, many people move to
a different state from where they purchased their long-term care insurance
policy. Read the policy carefully to determine what types of facilities
qualify for benefit payments, and to determine that payment for a covered
service will be made if you move to a state that has a different licensing
scheme for facilities than the one in which you purchased the policy.
|
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT H LONG-TERM CARE INSURANCE SUITABILITY LETTER
Section 2012.EXHIBIT H Long-Term
Care Insurance Suitability Letter
Dear [Applicant]:
Your recent application for
long-term care insurance included a "personal worksheet", which asked
questions about your finances and your reasons for buying long-term care
insurance. For your protection, State law requires us to consider this information
when we review your application, to avoid selling a policy to those who may not
need coverage.
[Your answers indicate that
long-term care insurance may not meet your financial needs. We suggest that
you review the information provided along with your application, including the
booklet "Shopper's Guide to Long-Term Care Insurance" and the page
titled "Things You Should Know Before Buying Long-Term Care
Insurance." Your State insurance department also has information about
long-term care insurance and may be able to refer you to a counselor free of
charge who can help you decide whether to buy this policy.]
[You chose not to provide any
financial information for us to review.]
We have suspended our final
review of your application. If, after careful consideration, you still believe
this policy is what you want, check the appropriate box below and return this
letter to us within the next 60 days. We will then continue reviewing your
application and issue a policy if you meet our medical standards.
If we do not hear from you
within the next 60 days, we will close your file and not issue you a policy.
You should understand that you will not have any coverage until we hear back
from you, approve your application and issue you a policy.
Please check one box and return
in the enclosed envelope.
Yes, [although my worksheet indicates that long-term care insurance may not be a suitable
purchase,] I wish to purchase this coverage. Please resume review of my
application. [Delete the phrase in brackets if the applicant did not answer
the questions about income.]
No.
I have decided not to buy a policy at this time.
|
|
|
|
|
APPLICANT'S SIGNATURE
|
|
DATE
|
Please return to [issuer] at
[address] by [date].
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT I CLAIMS DENIAL REPORTING FORM: LONG-TERM CARE INSURANCE
Section 2012.EXHIBIT I Claims
Denial Reporting Form: Long-Term Care Insurance
|
For the State of Illinois For
the Reporting Year of:
|
|
|
Company Name:
|
|
Due: June 30 annually
|
|
Company Address:
|
|
|
|
|
Company NAIC Number:
|
|
|
Contact Person:
|
|
Phone Number:
|
|
|
Line of Business:
|
Individual
|
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
Instructions
The purpose of this format is to report all long-term care
claim denials under in force long-term care insurance policies.
"Denied" means a claim that is not paid for any reason other than for
claims not paid for failure to meet the waiting period or because of an
applicable preexisting condition.
|
|
|
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
Claims 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
|
|
|
1 The nationwide data may be viewed as a more representative
and credible indicator where the data for claims 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 Example - a benefit
trigger not met, certification by a licensed health care practitioner not
provided, no plan of care.
(Source: Amended at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT J POTENTIAL RATE INCREASE DISCLOSURE
Section 2012.EXHIBIT J Potential
Rate Increase Disclosure
Instructions:
This form provides information
to the applicant regarding premium rate schedules, rate schedule adjustments,
potential rate revisions, and policyholder options in the event of a rate
increase.
Insurers shall provide all of
the following information to the applicant:
Long-Term
Care Insurance
Potential
Rate Increase Disclosure Form
1. [Premium Rate] [Premium Rate
Schedules]: [Premium rate] [Premium rate schedules] that [is] [are] applicable
to you and that will be in effect until a request is made and [filed]
[approved] for an increase [is] [are] [on the application] [$ ].
2. The [premium] [premium rate
schedule] for this policy [will be shown on the schedule page of] [will be
attached to] your policy.
3. Rate Schedule Adjustments:
The company will provide a
description of when premium rate or rate schedule adjustments will be effective
(e.g., next anniversary date, next billing date, etc.) (fill in the blank):
4. Potential Rate Revisions:
This policy is Guaranteed
Renewable. This means that the rates for this product may be increased in the
future. Your rates can NOT be increased due to your increasing age or
declining health, but your rates may go up based on the experience of all policyholders
with a policy similar to yours.
If you receive a premium rate or
premium rate schedule increase in the future, you will be notified of the new
premium amount and you will be able to exercise at least one of the following
options:
· Pay the
increased premium and continue your policy in force as is.
· Reduce your
policy benefits to a level such that your premiums will not increase.
· (Subject to
state law minimum standards.)
· Exercise your
nonforfeiture option if purchased. (This option is available for purchase for
an additional premium.)
· Exercise your
contingent nonforfeiture rights.* (This option may be available if you do not
purchase a separate nonforfeiture option.)
* Contingent Nonforfeiture
If the premium rate for your
policy goes up in the future and you didn't buy a nonforfeiture option, you may
be eligible for contingent nonforfeiture. Here's how to tell if you are
eligible:
You will keep some long-term
care insurance coverage, if:
· Your premium
after the increase exceeds your original premium by the percentage shown (or
more) in the following table; and
· You lapse (not
pay more premiums) within 120 days of the increase.
The amount of coverage (i.e.,
new lifetime maximum benefit amount) you will keep will equal the total amount
of premiums you've paid since your policy was first issued. If you have
already received benefits under the policy, so that the remaining maximum
benefit amount is less than the total amount of premiums you've paid, the
amount of coverage will be that remaining amount.
Except for this reduced lifetime
maximum benefit amount, all other policy benefits will remain at the levels
attained at the time of the lapse and will not increase thereafter.
Should you choose this
Contingent Nonforfeiture option, your policy, with this reduced maximum benefit
amount, will be considered "paid-up" with no further premiums due.
Example:
· You bought the
policy at age 65 and paid the $1,000 annual premium for 10 years, so you have
paid a total of $10,000 in premium.
· In the eleventh
year, you receive a rate increase of 50%, or $500 for a new annual premium of
$1,500, and you decide to lapse the policy (not pay any more premiums).
· Your paid-up
policy benefits are $10,000 (provided you have at least $10,000 of benefits
remaining under your policy.)
Contingent
Nonforfeiture
Cumulative
Premium Increase over Initial Premium
That
qualifies for Contingent Nonforfeiture
(Percentage
increase is cumulative from date of original issue.
It
does NOT represent a one-time increase.)
|
|
Issue
Age
|
Percent
Increase Over Initial Premium
|
|
54
and under
|
100%
|
|
55-59
|
90%
|
|
60
|
70%
|
|
61
|
66%
|
|
62
|
62%
|
|
63
|
58%
|
|
64
|
54%
|
|
65
|
50%
|
|
66
|
48%
|
|
67
|
46%
|
|
68
|
44%
|
|
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%
|
[The following contingent nonforfeiture disclosure need only
be included for those limited pay policies to which Section 2012.127(d)(3) and
(d)(5) are applicable.]
In addition to the contingent nonforfeiture benefits
described in this Exhibit, the following reduced paid-up contingent
nonforfeiture benefit is an option in all policies that have a fixed or limited
premium payment period, even if you selected a nonforfeiture benefit when you
bought your policy. If both the reduced paid up benefit AND the contingent
benefit described are triggered by the same rate increase, you can choose
either of the two benefits.
You are eligible for the reduced paid-up contingent
nonforfeiture benefit when all three conditions shown below are met:
1. The
premium you are required to pay after the increase exceeds your original
premium by the same percentage or more shown in the following chart:
|
Triggers for a
Substantial Premium Increase
|
|
Issue Age
|
|
Percent Increase
Over Initial Premium
|
|
Under 65
|
|
50%
|
|
65-80
|
|
30%
|
|
Over 80
|
|
10%
|
2. You
stop paying your premiums within 120 days after the premium increase took
effect; AND
3. The
ratio of the number of months you already paid premiums is 40% or more than the
number of months you originally agreed to pay.
If you exercise this option, your coverage will be converted
to reduced paid-up status. That means there will be no additional premiums
required. Your benefits will change in the following ways:
a. The
total lifetime amount of benefits your reduced paid-up policy will provide can
be determined by multiplying 90% of the lifetime benefit amount at the time the
policy becomes paid up by the ratio of the number of months you already paid
premiums to the number of months you agreed to pay them.
b. The daily benefit
amounts you purchased will also be adjusted by the same ratio.
If you purchased lifetime benefits, only the daily benefit
amounts you purchased will be adjusted by the applicable ratio.
Example:
· You
bought the policy at age 65 with an annual premium payable for 10 years.
· In the sixth year, you receive a
rate increase of 35% and you decide to stop paying premiums.
· Because you have already paid 50%
of your total premium payments and that is more than the 40% ratio, your
paid-up policy benefits are .45 (.90 times .50) times the total benefit amount
that was in effect when you stopped paying your premiums. If you purchased
inflation protection, it will not continue to apply to the benefits in the
reduced paid-up policy.
(Source: Amended at 42 Ill.
Reg. 4867, effective February 27, 2018)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT K REPLACEMENT AND LAPSE REPORTING FORM
Section 2012.EXHIBIT K Replacement and Lapse Reporting Form
Long-Term Care
Insurance
Replacement and Lapse
Reporting Form
|
For the State of
|
|
|
Reporting Year of
|
|
|
|
|
|
Company Name:
|
|
Due: June 30 annually
|
|
Company Address:
|
|
|
Company NAIC Number:
|
|
|
Contact Person:
|
|
|
Phone Number:
|
|
|
|
|
|
|
|
Instructions
The purpose of this form is to report on a statewide basis
information regarding long-term care insurance policy replacements and lapses.
Specifically, every insurer shall maintain records for each agent on that
agent's amount of long-term care insurance replacement sales as a percent of
the agent's total annual sales and the amount of lapses of long-term care
insurance policies sold by the agent as a percent of the agent's total annual
sales. The tables below should be used to report the 10% of the insurer's
agents with the greatest percentages of replacements and lapses.
Listing of the 10% of Agents with the Greatest Percentage of
Replacements
|
Agent's Name
|
Number of Policies
Sold By This Agent
|
Number of Policies
Replaced By This Agent
|
Number of
Replacements As % of Number Sold By This Agent
|
|
|
|
|
|
|
Agent's Name
|
Number of Policies
Sold By This Agent
|
Number of Policies
Lapsed By This Agent
|
Number of Lapses As
% of Number Sold By This Agent
|
|
|
|
|
|
Company Totals:
|
Percentage of Replacement Policies Sold to Total Annual
Sales
|
|
%
|
|
Percentage of Replacement Policies Sold to Policies in
Force (as of the end of the preceding calendar year)
|
|
%
|
|
Percentage of Lapsed Policies to Total Annual Sales
|
|
%
|
|
Percentage of Lapsed Policies to Policies in Force (as of
the end of the preceding calendar year)
|
|
%
|
|
|
(Source: Added at 32 Ill.
Reg. 7600, effective May 5, 2008)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT L LONG-TERM CARE INSURANCE PARTNERSHIP DISCLOSURE NOTICE
Section 2012.EXHIBIT L Long-Term Care Insurance Partnership
Disclosure Notice
Long-Term
Care Insurance Partnership Disclosure Notice
(Company
Name)
(Company
Address)
(Policyholder/Certificateholder) Name:
(Policy/Certificate) Number/Identifier:
Effective Date:
Important
Information Regarding Your Policy's (Certificate's)
Long-Term
Care Insurance Partnership Status
NOTE: Please keep
this notice with your long term care insurance policy (certificate)
Partnership Policy (Certificate) Status. Your long-term
care insurance policy (certificate) is intended to qualify as a Partnership
Policy (Certificate) under the Illinois Long-Term Care Partnership Program as
of your Policy's (Certificate's) effective date.
The long-term care insurance policy (certificate) recently
purchased and enclosed qualifies for the Illinois Long-Term Care Insurance
Partnership Program. Insurance companies voluntarily agree to participate in
the Partnership Program by offering long term care insurance coverage that
meets certain state and federal requirements. Long-Term Care Insurance Policies
(Certificates) that qualify as Partnership Policies (Certificates) may protect
your assets through a feature known as "Asset Disregard" under
Illinois' Medicaid Program.
Asset Disregard means that an amount of the
policyholder's (certificateholder's) assets equal to the amount of long-term
care insurance benefits received under a qualified Partnership Policy (Certificate)
will be disregarded for the purpose of determining the insured's eligibility
for Medicaid. This generally allows a person to keep assets equal to the
insurance benefits received under a qualified Partnership Policy (Certificate)
without affecting the person's eligibility for Medicaid. In addition, the
purchase of this Partnership Policy does not automatically qualify you for
Medicaid.
What Could Disqualify Your Policy (Certificate) as a
Partnership Policy. If you make any changes to your policy (certificate),
such changes could affect whether your policy (certificate) continues to be a
Partnership Policy (Certificate). Before you make any changes, you should
consult with (carrier name) to determine the effect of a proposed change. In
addition, if you move to a state that does not maintain a Partnership Program
or does not recognize your policy (certificate) as a Partnership Policy (Certificate),
you would not receive beneficial treatment of your policy (certificate) under
the Medicaid program of that state. The information contained in this
disclosure is based on current Illinois and Federal law. These laws may be
subject to change. Any change in law could reduce or eliminate the beneficial
treatment of your policy (certificate) under Illinois' Medicaid Program.
Additional Information. If you have questions regarding
long-term care insurance policies (certificates), please contact (carrier name).
If you have questions regarding current laws governing Medicaid eligibility,
you should contact the Illinois Department of Healthcare and Family Services.
(Source: Added at 38 Ill.
Reg. 2186, effective January 2, 2014)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER z: ACCIDENT AND HEALTH INSURANCE
PART 2012
LONG-TERM CARE INSURANCE
SECTION 2012.EXHIBIT M LONG-TERM CARE INSURANCE PARTNERSHIP CERTIFICATION FORM
Section 2012.EXHIBIT M Long-Term Care Insurance
Partnership Certification Form
Long-Term Care
Insurance Partnership Certification Form
NOTE: This
Form must be completed and submitted with each long-term care policy or
certificate form for which the insurer is seeking Partnership qualification. A
separate form must be completed for each policy form and a specimen copy of the
form, including all riders and endorsements, must be attached. A long-term
care insurance policy or certificate form may not be issued in Illinois as a
partnership policy or certificate unless and until this form has been submitted
to and approved by the Illinois Department of Insurance.
Under section 1917(b)(5)(B)(iii) of the Social Security Act
(42 USC 1396p(b)(5)(B)(iii)), the state insurance commissioner of a state
implementing a qualified state long-term care insurance partnership ("Qualified
Partnership") may certify that long-term care insurance policies
(including certificates issued under a group insurance contract) covered under
the Qualified Partnership meet certain consumer protection requirements, and
policies so certified are deemed to satisfy those requirements. These consumer
protection requirements are set forth in section 1917(b)(5)(A) of the Social Security
Act (42 USC 1396p(b)(5)(A)) and principally include certain specified
provisions of the Long-Term Care Insurance Model Regulation and Long-Term Care
Insurance Model Act promulgated by the National Association of Insurance
Commissioners (as adopted as of October 2000) (referred to herein as the "2000
Model Regulation" and "2000 Model Act", respectively).
I. GENERAL INFORMATION
A. Name,
address and telephone number of issuer:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
B. Name,
address, telephone number, and email address (if available) of an employee of
issuer who will be the contact person for information relating to this form:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
C. Policy
form numbers (or other identifying information, such as certificate series) for
policies covered by this Issuer Certification Form:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Specimen copies of each of the above policy forms, including
any riders and endorsements, shall be provided upon request.
II. QUESTIONS REGARDING APPLICABLE PROVISIONS
Please answer each of the questions below with respect to
the policy forms identified in section I.C above. For purposes of answering
the questions below, any provision of the 2000 Model Regulation or 2000 Model
Act listed below shall be treated as including any other provision of the 2000
Model Regulation or 2000 Model Act necessary to implement the provision.
|
NAIC Model Regulation Requirement
|
Identify Policy Page # and
Provision OR use this space to explain if requirement is inapplicable
|
|
Section 6A (relating to guaranteed renewal or
noncancellability), other than paragraph (5), and the requirements of Section
6B of the 2000 Model Act relating to Section 6A
|
|
|
Section 6B (relating to prohibitions on limitations and
exclusions), other than paragraph (7)
|
|
|
Section 6C (relating to extension of benefits)
|
|
|
Section 6D (relating to continuation or conversion of
coverage)
|
|
|
Section 6E (relating to discontinuance and replacement of
policies)
|
|
|
Section 7 (relating to unintentional lapse)
|
|
|
Section 8 (relating to disclosure), other than Sections
8F, 8G, 8H and 8I
|
|
|
Section 9 (relating to required disclosure of rating
practices to consumer)
|
|
|
Section 11 (relating to prohibitions against post-claims
underwriting)
|
|
|
Section 12 (relating to minimum standards)
|
|
|
Section 14 (relating to application forms and replacement
coverage)
|
|
|
Section 15 (relating to reporting requirements)
|
|
|
Section 22 (relating to filing requirements for marketing)
|
|
|
Section 23 (relating to standards for marketing),
including inaccurate completion of medical histories, other than paragraphs
(1), (6) and (9) of Section 23C
|
|
|
Section 24 (relating to suitability)
|
|
|
Section 25 (relating to prohibition against pre-existing
conditions and probationary periods in replacement policies or certificates)
|
|
|
Section 26 (relating to contingent nonforfeiture benefits,
if the policyholder declines the offer of a nonforfeiture provision described
in section 7702B(g)(4) of the Internal Revenue Code of 1986 (26 USC
7702B(g)(4))
|
|
|
Section 29 (relating to standard format outline of
coverage)
|
|
|
Section 30 (relating to requirement to deliver shopper's
guide)
|
|
|
NAIC Model Act Requirements
|
Identify Policy Page # and
Provision OR use this space to explain if requirement is inapplicable
|
|
Section 6C (relating to pre-existing conditions)
|
|
|
Section 6D (relating to prior hospitalization)
|
|
|
Section 8 (relating to contingent nonforfeiture benefits)
|
|
|
Section 6F (relating to right to return)
|
|
|
Section 6G (relating to outline of coverage)
|
|
|
Section 6H (relating to requirements for certificates
under group plans)
|
|
|
Section 6J (relating to policy summary)
|
|
|
Section 6K (relating to monthly reports on accelerated
death benefits)
|
|
|
Section 7 (relating to incontestability period)
|
|
Part III. INFLATION PROTECTION
Identify the policy provision or provide form number of
endorsement or amendment form (and date of approval) for inflation protection
coverage in compliance with 50 Ill. Adm. Code 2012.145(b)(1) through (b)(3).
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Part IV. Certification
I hereby certify that the answers, accompanying documents,
and other information set forth herein are, to the best of my knowledge and
belief, true, correct and complete and the policy [certificate] satisfies the
requirements necessary for a qualified State long-term care insurance
partnership policy in the State of Illinois.
__________________ _____________________________________________
Date Name
and Title of Officer of the Insurer
____________________________________________
Signature of Officer of the
Insurer
(Source: Added at 38 Ill. Reg. 2186,
effective January 2, 2014)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
