Ins 3.46(16)(16) Suitability; long-term care, nursing home and home health care policies. Ins 3.46(16)(a)(a) This subsection may not apply to life insurance policies that accelerate benefits for long-term care. Ins 3.46(16)(b)(b) Every insurer marketing long-term care insurance policies shall do all of the following: Ins 3.46(16)(b)1.1. 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. Ins 3.46(16)(b)4.b.b. The number of those who declined to provide information on the personal worksheet. Ins 3.46(16)(b)4.d.d. The number of applicants who chose to confirm after receiving a suitability letter. Ins 3.46(16)(c)1.1. To determine whether the applicant meets the standards developed by the insurer, the agent and insurer shall develop procedures that take the following into consideration: Ins 3.46(16)(c)1.a.a. The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage. Ins 3.46(16)(c)1.b.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. Ins 3.46(16)(c)1.c.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. Ins 3.46(16)(c)2.2. The insurer, and where an agent is involved, the agent shall make reasonable efforts to obtain the information set out in subd. 1. The efforts shall include presentation to the applicant, at or prior to application, the “Long-Term Care Insurance Personal Worksheet.” The personal worksheet used by the insurer shall contain, at a minimum, the information in the format contained in Appendix 2, in not less than 12 point type. The insurer may request the applicant to provide additional information to comply with its suitability standards. A copy of the insurer’s personal worksheet shall be filed with the commissioner. Ins 3.46(16)(c)3.3. A completed personal worksheet shall be returned to the insurer prior to the insurer’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. Ins 3.46(16)(c)4.4. The sale or dissemination outside the company or agency by the insurer or agent of information obtained through the personal worksheet in Appendix 2 is prohibited. Ins 3.46(16)(d)(d) The insurer 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. Ins 3.46(16)(e)(e) Agents shall use the suitability standards developed by the insurer in marketing long-term care insurance. Ins 3.46(16)(f)(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 contained in Appendix 3, in not less than 12 point type. Ins 3.46(16)(g)(g) If the insurer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the insurer may reject the application. In the alternative, the insurer shall send the applicant a letter similar to the sample letter in Appendix 4. However, if the applicant has declined to provide financial information, the insurer 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. Ins 3.46(16)(h)(h) The insurer shall maintain and have available for review by the commissioner 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, after receiving a suitability letter, indicated that the insurer should resume processing the application. Ins 3.46(17)(17) Standards for benefit triggers; long-term care, nursing home and home health care policies. Ins 3.46(17)(a)1.1. “Activities of daily living” includes at least bathing, continence, dressing, eating, toileting, and transferring. Ins 3.46(17)(a)2.2. “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. Ins 3.46(17)(a)3.3. “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. Ins 3.46(17)(a)4.4. “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. Ins 3.46(17)(a)5.5. “Dressing” means putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs. Ins 3.46(17)(a)6.6. “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. Ins 3.46(17)(a)7.7. “Hands-on assistance” means physical assistance, either minimal, moderate or maximal, without which the individual would not be able to perform the activity of daily living. Ins 3.46(17)(a)8.8. “Toileting” means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene. Ins 3.46(17)(a)9.9. “Transferring” means moving into or out of a bed, chair or wheelchair. Ins 3.46(17)(b)(b) A long-term care, nursing home only and home health care only policy or certificate 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 may 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. Ins 3.46(17)(c)1.1. Activities of daily living shall include at least those contained in the definition in par. (a). Ins 3.46(17)(c)2.2. Insurers may use deficiencies to perform activities of daily living to determine when covered benefits are payable in addition to those contained in par. (a) as long as they are defined in the policy. Ins 3.46(17)(d)(d) An insurer may use additional provisions for the determination of when benefits are payable under a policy or certificate; however, the provisions may not restrict, and are not in lieu of, the requirements contained in pars. (b) and (c). Ins 3.46(17)(e)(e) For purposes of this section, the determination of a deficiency may not be more restrictive than any of the following: Ins 3.46(17)(e)1.1. Requiring hands-on assistance of another person to perform the prescribed activities of daily living. Ins 3.46(17)(e)2.2. If the deficiency is due to the presence of cognitive impairment, supervision or verbal cueing by another person is needed in order to protect the insured and others. Ins 3.46(17)(f)(f) Assessments of activities of daily living and cognitive impairment shall be performed by licensed or certified professionals, such as physicians, nurses or social workers. Ins 3.46(17)(g)(g) Long-term care, nursing home only and home health care only policies shall include a clear description of the process for appealing and resolving benefit determinations. Ins 3.46 NoteNote: The rule revision effective August 1, 1996 applies to any policy solicited, delivered or issued after September 1, 1996. After August 1, 1996 but before September 1, 1996, the insurer may market policies under either the current rule or the revised rule, if a policy form conforming to this section has been approved.
Ins 3.46(18)(18) Tax qualified long term care, nursing home and home health care policies. This subsection applies to long term care, nursing home or home health care policies which are intended to be tax qualified under and comply with the requirements of section 7702B of the Internal Revenue Code of 1986, as amended, and any regulations and administrative pronouncements issued under the Code. Ins 3.46(18)(a)(a) In order to qualify for certain tax treatment, long term care, nursing home only and home health care only policy provisions may contain the following conditions as defined in section 7702B of the Internal Revenue Code of 1986 as amended and any regulations and administrative pronouncements issued thereunder notwithstanding sub. (17): Ins 3.46(18)(a)1.1. The terms “severe cognitive impairment” and “substantial supervision” may be used in lieu of the term “cognitive impairment” and its accompanying supervision requirement may be used as a benefit trigger in sub. (17) (a) 3. and (e) 2. Ins 3.46(18)(a)3.3. The requirement that the claimant obtain a certification from a licensed health care practitioner, as defined in section 7702B of the Internal Revenue Code of 1986, as amended, and any regulations and administrative pronouncements issued under the Code, as a condition for claim payment that the functional incapacity or inability to perform at least 2 activities of daily living triggering benefits under the policy is expected to last at least 90 days, may be imposed by the insurer. Ins 3.46(18)(b)(b) The policy shall contain a clear disclosure that the policy is intended to be a tax qualified long term care policy. Ins 3.46(18)(c)(c) The outline of coverage shall prominently disclose that, in order to meet the requirements of a tax qualified policy, the functional incapacity or inability to perform activities of daily living triggering benefits under the policy must be expected to last for at least 90 days. Ins 3.46(18)(d)(d) All other applicable provisions in this section or s. Ins 3.455 shall continue to apply to tax qualified long term care, nursing home and home health care policies. Ins 3.46(19)(19) Nonforfeiture benefit requirements for long-term care. Ins 3.46(19)(a)(a) No insurer may advertise, market or offer a long–term care, nursing home only or home health care only policy or certificate unless the insurer offers, at the time of sale, a shortened benefit period nonforfeiture benefit. Ins 3.46(19)(b)(b) If the offer required to be made under par. (a) is rejected, the insurer shall provide the contingent benefit upon lapse described in this section. Ins 3.46(19)(c)1.1. After rejection of the offer required under par. (a) for individual and group policies without nonforfeiture benefits issued after the effective date of this subsection, the insurer shall provide a contingent benefit upon lapse. Ins 3.46(19)(c)2.2. If 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. Ins 3.46(19)(c)3.3. The contingent benefit on lapse shall be triggered every time an insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured’s initial annual premium set forth in the table in the subdivision based on the insured’s issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least 60 days prior to the due date of the premium reflecting the rate increase. Ins 3.46(19)(c)4.4. On or before the effective date of a substantial premium increase as described in subd. 3. the insurer shall do all of the following: Ins 3.46(19)(c)4.a.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. Ins 3.46(19)(c)4.b.b. Offer to convert the coverage to a paid-up status where 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 subd. 3. Ins 3.46(19)(c)4.c.c. Notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in subd. 3. shall be deemed to be the election of the offer to convert in subd. 4. b., if the ratio is 40% or more. Ins 3.46(19)(d)(d) The required benefits continued as nonforfeiture benefits under par. (a), including contingent benefits upon lapse under par. (b), are computed as follows: Ins 3.46(19)(d)1.1. “Attained age rating” as applied in this paragraph is defined as a schedule of premiums starting from the issue date which increases with age at least 1% per year prior to age 50, and at least 3% per year for age 50 and beyond. Ins 3.46(19)(d)2.2. The nonforfeiture benefit shall provide paid-up long-term care, nursing home only or home care only insurance coverage after lapse. The amounts and frequency of benefits in effect at the time of lapse, but not increased thereafter, shall be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in subd. 3. Ins 3.46(19)(d)3.3. The standard nonforfeiture credit shall be at least 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 may 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 par. (e). Ins 3.46(19)(d)4.4. The nonforfeiture benefit shall begin not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse shall be effective during the first 3 years and subsequent years. For a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of end of the tenth year following the policy or certificate issue date or of the end of the second year following the date the policy or certificate is no longer subject to attained age rating. Ins 3.46(19)(d)5.5. 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. Ins 3.46(19)(e)(e) All benefits paid by the insurer while the policy or certificate is in premium–paying status and in the paid-up status may not exceed the maximum benefits which would have been payable if the policy or certificate had remained in premium-paying status. Ins 3.46(19)(f)(f) There shall be no difference in the minimum nonforfeiture benefits as required under this subsection for group and individual policies. Ins 3.46(19)(g)(g) Premiums charged for a policy or certificate containing nonforfeiture benefits shall be subject to the loss ratio requirements contained in s. Ins 3.455 (5) treating the policy as a whole. Ins 3.46(19)(h)1.1. Except as provided in subd. 2., the provisions of this subsection apply to any long-term care, nursing home, and home health care policy issued in this state on or after January 1, 2002. Ins 3.46(19)(h)2.2. For group long-term care, nursing home, and home health care insurance certificates issued to employer-sponsored groups or labor organizations in this state and in force on or after January 1, 2002, which policy was in force on January 1, 2001, the provisions of this subsection shall not apply. Ins 3.46(19)(i)(i) To determine whether contingent nonforfeiture upon lapse provisions are triggered under par. (c) 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. Ins 3.46(19)(j)(j) A contingent benefit on 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 in par. (c) 3. based on the insured’s issue age, the policy or certificate lapses within 120 days of the due date of the premium so increased, and the ratio is 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. Ins 3.46(20)(20) Incontestability period. An insurer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim only as permitted under ss. 631.11 (1) (b) and 632.76, Stats., and only if in addition to complying with ss. 631.11 (1) (b) and 632.76, Stats., any of the following apply: Ins 3.46(20)(a)(a) For a policy or certificate that has been in force for less than 6 months, the insurer shows the misrepresentation is material to the acceptance for coverage. Ins 3.46(20)(b)(b) For a policy or certificate that has been in force for at least 6 months but less than 2 years, the insurer shows the misrepresentation is both material to the acceptance for coverage and pertains to the condition for which benefits are sought. Ins 3.46(20)(c)(c) For a policy or certificate that has been in force 2 years or more, the insurer shows that the insured knowingly, intentionally and fraudulently misrepresented relevant facts relating to the insured’s health. Ins 3.46(20)(d)1.1. No long-term care insurance policy or certificate may be field issued based on medical or health status unless the compensation to the field issuer is not based on the number of policies or certificates issued. Ins 3.46(20)(d)2.2. For purposes of this paragraph, a policy or certificate that is “field issued” means the producer or third-party administrator using the insurer’s underwriting guidelines underwrites the policy not the insurer, pursuant to the authority granted to the producer or third-party administrator by an insurer. Ins 3.46(20)(e)(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.
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