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ENROLLED
Senate Bill No. 450
(By Senator Minard)
____________
[Passed March 13, 2004; in effect ninety days from passage.]
____________
AN ACT to amend and reenact §33-15A-4, §33-15A-5 and §33-15A-6 of
the code of West Virginia, 1931, as amended; and to amend said
code by adding thereto four new sections, designated §33-15A-
8, §33-15A-9, §33-15A-10 and §33-15A-11, all relating to the
regulation of long-term care insurance policies; defining
terms; establishing extraterritorial jurisdiction; summarizing
disclosure and performance standards for long-term care
insurance; instituting and regulating an incontestability
period; disclosing nonforfeiture benefits; providing the
commissioner authority to promulgate regulations; providing
penalties; and establishing an effective date.
Be it enacted by the Legislature of West Virginia:
That
§33-15A-4, §33-15A-5 and §33-15A-6 of the code of West
Virginia, 1931, as amended
, be amended and reenacted; and that said
code be amended by adding thereto four new sections, designated
§33-15A-8, §33-15A-9, §33-15A-10 and §33-15A-11, all
to read as
follows:
ARTICLE 15A. WEST VIRGINIA LONG-TERM CARE INSURANCE ACT.
§33-15A-4. Definitions.
(a) "Long-term care insurance" means any insurance policy or
rider advertised, marketed, offered or designed to provide
coverage
for not less than
twelve
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
that provide directly or supplement
long-term care insurance. The term also includes a policy or rider
that provides for payment of benefits based upon cognitive
impairment or the loss of functional capacity. The term shall also
include qualified long-term care insurance contracts. Long-term
care insurance may be
issued by insurers; fraternal benefit
societies; nonprofit health, hospital, and medical service
corporations; prepaid health plans; health maintenance
organizations
or any similar organization
to the extent they are
otherwise authorized to issue life or health insurance. Long-term
care insurance shall not include any
insurance policy
that
is
offered primarily to provide basic medicare supplement coverage,
basic hospital expense coverage, basic medical-surgical expense
coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income
or related asset-protection
coverage, accident only coverage, specified disease or specified
accident coverage, or limited benefit health coverage
.
With regard
to life insurance, this term does not include life insurance
policies that accelerate the death benefit specifically for one or
more of the qualifying events of terminal illness, medical
conditions requiring extraordinary medical intervention or
permanent institutional confinement and that provide the option of
a lump-sum payment for those benefits and where neither the
benefits nor the eligibility for the benefits is conditioned upon
the receipt of long-term care. Notwithstanding any other provision
of this article, any product advertised, marketed or offered as
long-term care insurance
shall
be subject to
the provisions of this
article
.
(b) "Applicant" means:
(1) In the case of an individual long-term care insurance
policy, the person who seeks to contract for benefits; and
(2) In the case of a group long-term care insurance policy,
the proposed certificate holder.
(c) "Certificate" means, for the purposes of this
article
, any
certificate issued under a group long-term care insurance policy
delivered or issued for delivery in this state.
(d) "Commissioner" means the insurance commissioner of this
state.
(e) "Group long-term care insurance" means a long-term care
insurance policy
that
is delivered or issued for delivery in this
state and issued to:
(1) One or more employers or labor organizations, or to a
trust or to the trustees of a fund established by one or more
employers or labor organizations, or a combination thereof, for
employees or former employees or a combination thereof or for
members or former members or a combination thereof, of the labor
organizations; or
(2) Any professional, trade or occupational association for
its members or former or retired members, or combination thereof,
if the association:
(A) Is composed of individuals all of whom are or were
actively engaged in the same profession, trade or occupation; and
(B) Has been maintained in good faith for purposes other than
obtaining insurance; or
(3) An association or a trust or the
trustees of a fund
established, created or maintained for the benefit of members of
one or more associations. Prior to advertising, marketing or
offering the policy within this state, the association or
associations, or the insurer of the association or associations,
shall file evidence with the commissioner that the association or
associations have at the outset a minimum of one hundred persons
and have been organized and maintained in good faith for the purposes other than that of obtaining insurance; have been in
active existence for at least one year; and have a constitution and
bylaws
that
provide that:
(A) The association or associations hold regular meetings not
less than annually to further purposes of the members;
(B) Except for credit unions, the association or associations
collect dues or solicit contributions from members; and
(C) The members have voting privileges and representation on
the governing board and committees.
Thirty days after the filing the association or associations
will be deemed to satisfy
the
organizational requirements, unless
the commissioner makes a finding that the association or
associations do not satisfy those organizational requirements.
(4) A group other than as described in subdivisions (1), (2)
and (3), subsection (e) of this section, subject to a finding by
the commissioner that:
(A) The issuance of the group policy is not contrary to the
best interest of the public;
(B) The issuance of the group policy would result in economies
of acquisition or administration;
and
(C) The benefits are reasonable in relation to the premiums
charged.
(f) "Policy" means, for the purposes of this
article
, any
policy, contract, subscriber agreement, rider or endorsement delivered or issued for delivery in this state by an insurer;
fraternal benefit society; nonprofit health, hospital, or medical
service corporation; prepaid health plan; health maintenance
organization
or any similar organization.
(g) (1) "Qualified long-term care insurance contract" or
"federally tax qualified long-term care insurance contract" means
an individual or group insurance contract that meets the
requirements of Section 7702B(b) of the Internal Revenue Code of
1986, as amended, as follows:
(A) The only insurance protection provided under the contract
is coverage of qualified long-term care services. A contract shall
not fail to satisfy the requirements of this paragraph by reason of
payments being made on a per diem or other periodic basis without
regard to the expenses incurred during the period to which the
payments relate;
(B) The contract does not pay or reimburse expenses incurred
for services or items to the extent that the expenses are
reimbursable under Title XVIII of the Social Security Act, as
amended, or would be so reimbursable but for the application of a
deductible or coinsurance amount. The requirements of this
paragraph do not apply to expenses that are reimbursable under
Title XVIII of the Social Security Act only as a secondary payor.
A contract shall not fail to satisfy the requirements of this
paragraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the
period to which the payments relate;
(C) The contract is guaranteed renewable, within the meaning
of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as
amended;
(D) The contract does not provide for a cash surrender value
or other money that can be paid, assigned, pledged as collateral
for a loan, or borrowed except as provided in paragraph E of this
subdivision.
(E) All refunds of premiums and all policyholder dividends or
similar amounts under the contract are to be applied as a reduction
in future premiums or to increase future benefits, except that a
refund on the event of death of the insured or a complete surrender
or cancellation of the contract cannot exceed the aggregate
premiums paid under the contract; and
(F) The contract meets the consumer protection provisions set
forth in Section 7702B(g) of the Internal Revenue Code of 1986, as
amended.
(2) "Qualified long-term care insurance contract" or
"federally tax-qualified long-term care insurance contract" also
means the portion of a life insurance contract that provides
long-term care insurance coverage by rider or as part of the
contract and that satisfies the requirements of Sections 7702B(b)
and (e) of the Internal Revenue Code of 1986, as amended.
§33-15A-5. Extraterritorial jurisdiction - Group long-term care
insurance.
No group long-term care insurance coverage may be offered to
a resident of this state under a group policy issued in another
state to a group described in subdivision (4), subsection (e),
section four of this
article
unless this state or another state
having statutory and regulatory long-term care insurance
requirements substantially similar to those adopted in this state
has made a determination that such requirements have been met.
§33-15A-6. Disclosure and performance standards for long-term care
insurance.
(a) The commissioner may adopt
rules
that include standards
for full and fair disclosure setting forth the manner, content and
required disclosures for the sale of long-term care insurance
policies, terms of renewability, initial and subsequent conditions
of eligibility, nonduplication of coverage provisions, coverage of
dependents, preexisting conditions, termination of insurance,
continuation or conversion, probationary periods, limitations,
exceptions, reductions, elimination periods, requirements for
replacement, recurrent conditions and definitions of terms.
(b) No long-term care insurance policy may:
(1) Be canceled, nonrenewed or otherwise terminated on the
grounds of the age or the deterioration of the mental or physical
health of the insured individual or certificate holder;
(2) Contain a provision establishing a new waiting period in
the event existing coverage is converted to or replaced by a new or
other form within the same company, except with respect to an
increase in benefits voluntarily selected by the insured individual
or group policyholder; or
(3) 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.
(c) Preexisting condition:
(1) No long-term care insurance policy or certificate other
than a policy or certificate thereunder issued to a group as
defined in subdivision (1), subsection (e), section four of this
article
shall use a definition of "preexisting condition"
that
is
more restrictive than the following: Preexisting condition means a
condition for which medical advice or treatment was recommended by,
or received from, a provider of health care services within six
months preceding the effective date of coverage of an insured
person.
(2) No long-term care insurance policy or certificate other
than a policy or certificate thereunder issued to a group as
defined in subdivision (1), subsection (e), section four of this
article
may exclude coverage for a loss or confinement
that
is the
result of a preexisting condition unless
loss
or confinement begins
within six months following the effective date of coverage of an insured person.
(3) The commissioner may extend the limitation periods set
forth in subdivision (1) and (2), subsection (c) of this section as
to specific age group categories in specific policy forms upon
findings that the extension is in the best interest of the public.
(4) The definition of "preexisting condition" does not
prohibit an insurer from using an application form designed to
elicit
the
complete health history of an applicant, and, on the
basis of the answers on that application, from underwriting in
accordance with that insurer's established underwriting standards.
Unless otherwise provided in the policy or certificate, a
preexisting condition, regardless of whether it is disclosed on the
application, need not be covered until the waiting period described
in subdivision (2), subsection (c) of this section expires. No
long-term care insurance policy or certificate may exclude or use
waivers or riders of any kind to exclude, limit or reduce coverage
or benefits for specifically named or described preexisting
diseases or physical conditions beyond the waiting period described
in subdivision (2), subsection (c) of this section.
(d) Prior hospitalization/institutionalization:
(1) No long-term care insurance policy may be delivered or
issued for delivery in this state if
the
policy:
(A) Conditions eligibility for any benefits on a prior
hospitalization requirement;
(B) Conditions eligibility for benefits provided in an
institutional care setting on the receipt of a higher level of
institutional care
; or
(C) Conditions eligibility for any benefits other than waiver
of premium, post-confinement, post-acute care or recuperative
benefits on a prior institutionalization requirement.
(2)
(A)
A long-term care insurance
policy containing
post-confinement, post-acute care or recuperative benefits
shall
clearly label in a separate paragraph of the policy or certificate
entitled "Limitations or Conditions on Eligibility for Benefits"
such limitations or conditions, including any required number of
days of confinement.
(B) A long-term care insurance policy
or rider that
conditions
eligibility of noninstitutional benefits on the prior receipt of
institutional care shall not require a prior institutional stay of
more than thirty days.
(3) No long-term care insurance policy
or rider that
provides
benefits only following institutionalization shall condition such
benefits upon admission to a facility for the same or related
conditions within a period of less than thirty days after discharge
from the institution.
(e) The commissioner may adopt rules establishing loss ratio
standards for long-term care insurance policies provided that a
specific reference to long-term care insurance policies is contained in the rule.
(f) Right to return - free look:
(1)
Long-term care insurance
applicants
shall have the right
to return the policy
or
certificate
within
thirty
days of its
delivery and to have the premium refunded if, after examination of
the policy
or certificate,
the
applicant
is not satisfied for any
reason. Long-term care insurance policies
and certificates
shall
have a notice prominently printed on the first page or attached
thereto stating in substance that the
applicant
shall have the
right to return the policy
or certificate
within thirty days of its
delivery and to have the premium refunded if
,
after examination
of
the policy or certificate, other than a certificate issued pursuant
to a policy issued to a group defined in subdivision (1),
subsection (e), section four of this article, the applicant
is not
satisfied for any reason.
(2) This subsection shall also apply to denials of
applications and any refund must be made within thirty days of the
return or denial.
(g) Outline of coverage:
(1) An outline of coverage shall be delivered to a prospective
applicant for long-term care insurance at the time of initial
solicitation through means
that
prominently direct the attention of
the recipient to the document and its purpose.
(A) The commissioner shall prescribe a standard format, including style, arrangement and overall appearance, and the
content of an outline of coverage.
(B) In the case of agent solicitations, an agent
must
deliver
the outline of coverage prior to the presentation of an application
or enrollment form.
(C) In the case of direct response solicitations, the outline
of coverage
must
be presented in conjunction with any application
or enrollment form.
(D) In the case of a policy issued to a group defined in
subdivision (1), subsection (e), section four of this article, an
outline of coverage shall not be required to be delivered, provided
that the information described in paragraphs (A) through (F),
inclusive, subdivision (2) of this subsection is contained in other
materials relating to enrollment. Upon request, these other
materials shall be made available to the commissioner.
(2) The outline of coverage shall include:
(A) A description of the principal benefits and coverage
provided in the policy;
(B) A statement of the principal exclusions, reductions, and
limitations contained in the policy;
(C) A statement of the terms under which the policy or
certificate, or both, may be continued in force or discontinued,
including any reservation in the policy of a right to change premium. Continuation or conversion provisions of group coverage
shall be specifically described;
(D) A statement that the outline of coverage is a summary
only, not a contract of insurance, and that the policy or group
master policy contain governing contractual provisions;
(E) A description of the terms under which the policy or
certificate may be returned and premium refunded;
(F) A brief description of the relationship of cost of care
and benefits;
and
(G) A statement that discloses to the policyholder or
certificate holder whether the policy is intended to be a federally
tax-qualified long-term care insurance contract under Section
7702(B)(b) of the Internal Revenue Code of 1986, as amended.
(h) A certificate issued pursuant to a group long-term care
insurance policy
that is delivered or issued for delivery in this
state shall include:
(1) A description of the principal benefits and coverage
provided in the policy;
(2) A statement of the principal exclusions, reductions and
limitations contained in the policy; and
(3) A statement that the group master policy determines
governing contractual provisions.
(i)
If an applicant for a long-term care insurance contract or
certificate is approved, the issuer shall deliver the contract or certificate of insurance to the applicant no later than thirty days
after the date of approval.
(j) 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. 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:
(1) An explanation of how the long-term care benefit interacts
with other components of the policy, including deductions from
death benefits;
(2) An illustration of the amount of benefits, the length of
benefit, and the guaranteed lifetime benefits if any, for each
covered person;
(3) Any exclusions, reductions and limitations on benefits of
long-term care;
(4) A statement that any long-term care inflation protection
option required by section eight of the commissioner's rule
relating to long-term care insurance is not available under this
policy; and
(5) If applicable to the policy type, the summary shall also
include:
(A) A disclosure of the effects of exercising other rights
under the policy;
(B) A disclosure of guarantees related to long-term care costs
of insurance charges; and
(C) Current and projected maximum lifetime benefits.
(k) 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:
(1) Any long-term care benefits paid out during the month;
(2) An explanation of any changes in the policy, for example
death benefits or cash values, due to long-term care benefits being
paid out; and
(3) The amount of long-term care benefits existing or
remaining.
(l) If a claim under a long-term care insurance contract is
denied, the issuer shall, within sixty days of the date of a
written request by the policyholder or certificate holder, or a
representative thereof:
(1) Provide a written explanation of the reasons for the
denial; and
(2) Make available all information directly related to the
denial.
(m) Any policy or rider advertised, marketed or offered as
long-term care or nursing home insurance shall comply with the
provisions of this article.
§33-15A-8. Incontestability period.
(a) For a policy or certificate that has been in force for
less than six 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 six months but less than two 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
which pertains to the condition for which benefits are
sought.
(c) After a policy or certificate has been in force for two
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) No long-term care insurance policy or certificate may be
field issued based on medical or health status. For purposes of
this subsection, "field issued" means a policy or certificate issued by an agent or a third-party administrator pursuant to the
underwriting authority granted to the agent or third-party
administrator by an insurer.
(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 four, article thirteen of this chapter. In
all other situations, this section shall apply to life insurance
policies that accelerate benefits for long-term care.
§33-15A-9. Nonforfeiture benefits.
(a) Except as provided in subsection (b) of this section, a
long-term care insurance policy may not be delivered or issued for
delivery in this state unless the policyholder or certificate
holder has been offered the option of purchasing a policy or
certificate including a nonforfeiture benefit. 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
certificate holder 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) of this section shall be made
to the group policyholder. However, if the policy is issued as
group long-term care insurance as defined in subdivision (4),
subsection (e), section four of this article, other than to a
continuing care retirement community or other similar entity, the
offering shall be made to each proposed certificate holder.
(c) The commissioner may promulgate rules pursuant to chapter
twenty-nine-a of this code specifying the type or types of
nonforfeiture benefits to be offered as part of long-term care
insurance policies and certificates, the standards for
nonforfeiture benefits and the rules regarding contingent benefit
upon lapse, including a determination of the specified period of
time during which a contingent benefit upon lapse will be available
and the substantial premium rate increase that triggers a
contingent benefit upon lapse as described in subsection (a) of
this section.
§33-15A-10. Authority to promulgate rules.
The commissioner may issue reasonable rules pursuant to
chapter twenty-nine-a of this code to promote premium adequacy and
to protect the policyholder in the event of substantial rate
increases and to establish minimum standards for marketing practices, agent compensation, agent testing, penalties and
reporting practices for long-term care insurance.
§33-15A-11. Penalties.
In addition to any other penalties provided by the laws of
this state, any insurer and any agent 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 three times the amount of any commissions paid
for each policy involved in the violation or up to ten thousand
dollars, whichever is greater.