Address: 125 South Webster Street
2nd Floor, Madison WI 53703-3474
Mail: PO Box 7873, Madison, WI 53707-7873
Small Business Regulatory Coordinator
The OCI small business coordinator is Eileen Mallow and may be reached at phone number (608) 266-7843 or at email address
eileen.mallow@wisconsin.gov
Analysis Prepared by the Office of the Commissioner of Insurance
FINDING OF EMERGENCY
The Commissioner of Insurance finds that an emergency exists and that the attached rule is necessary for the immediate preservation of the public peace, health, safety, or welfare. Facts constituting the emergency are as follows:
The State of Wisconsin will be implementing the Wisconsin Partnership program effective January 1, 2009, the date approved by the federal government in accordance with the Department of Health and Family Services' application for participation. As part of the enabling statute, the state requires all insurance intermediaries receive specific training prior to January 1, 2009. In order to minimize the impact of the additional training, the proposed rule permits the training, if approved, to qualify for continuing education therefore intermediaries can meet two training requirements simultaneously. For training to be approved and courses offered prior to January 1, 2009, the office needs to promulgate this rule to provide the guidelines necessary for creation and submission of training programs. Therefore the office must promulgate this rule as an emergency rule.
In addition, in order for insurers to offer products intended to qualify for the Wisconsin partnership program, such products shall be submitted to the office prior to use. The insurers must submit those products sufficiently in advance of January 1, 2009, so that there is time for review by the office and implementation time for the insurers.
These changes include modifications to s.
Ins 3.455 including repealing and recreating the applicable definitions and modifying the conversion requirements; modifications to Ins 3.46 including deletion of the blanket exemption for group long-term care products replaced with narrow exceptions, modification to the marketing and advertising requirements with notable new requirement for insurers and intermediaries to submit to OCI marketing and advertisement material prior to use new group insurance requirements, modifications to the permissive limitations and exclusions, disclosures, replacement requirements, reporting requirements for insurers added regarding suitability; conversion modifications, incontestability and standards for marketing. The appendices to s. Ins 3.46 have also been repealed and recreated and now include several reporting forms for tracking suitability, rescissions, claims denial, replacement and lapses by state to be filed by insurers. As noted above the major addition to s.
Ins 3.46 is the intermediary training requirement as required by s.
628.348 (1), Stats. Finally, the changes also include a new section, s.
Ins 3.465 and appendices, related to the Wisconsin partnership program that is to be available beginning January 1, 2009.
A combined rule hearing will be held for both the emergency and permanent rule on June 16th as noticed.
Statutes interpreted
Statutory authority
Explanation of agency authority
The OCI, in order to comply and implement the requirements of
2007 Wis. Act 20, creating the Wisconsin Long-Term Care Insurance Partnership Program (Partnership Program) including the requirements for intermediary training and the process by which insurers submit policies that are intended to qualify for the Partnership Program must adopt the 2000 and 2006 National Association of Insurance Commissioners (NAIC) Long-Term Care Insurance Model Act and Model Laws, pursuant to the Deficit Reduction Act of 2005 (Pub.L. 109-171) (DRA). These amendments are needed to expand consumer protection and comply with the requirements of the Center for Medicare and Medicaid Services (CMS) as delegated to the NAIC the function of regulating the insurers offering long-term care insurance products.
Related statutes or rules
The Partnership Program is described at s.
49.45 (31), Stats., and requires coordination between the OCI and the Department of Health and Family Services.
Plain language summary
The current administrative rule was last revised in 2001 and is not fully compliant with the NAIC Long-Term Care Model Act and NAIC Long-Term Care Model Law (NAIC Model Act and Model Law). When
2007 Wis. Act 20 created the Partnership Program, the OCI is required to implement the NAIC Model Act and Model Law in order for insurers to offer policies compliant with the DRA. Significant portions of the proposed rule update and expand definitions and require disclosure of these definitions to insureds so that they understand how the long-term care, home health care or nursing home insurance policy is able to be used and the limitations or exclusions that may be applied by insurers.
In section 3.455, the modifications primarily address the conversion from a group long-term care insurance policy to an individual long-term care insurance policy. The expanded information is intended to both comply with the NAIC Model Act and Model Law and Wisconsin conversion and continuation law. The section also includes expanded definition related to conversion of long-term care insurance policies.
Section
3.46 modifications begin with updated and revised definitions that are intended to provide consumers with greater specificity regarding terms used within long-term care, home health care and nursing home care insurance policies. Of note the current NAIC Model Act and Model Law do not exempt group long-term care insurers and as such the exemption in s.
3.46 (2) has been struck. Consumer protection elements are introduced or existing protections expanded throughout this section. One tool to both provide a check on the industry and its intermediaries and better assist consumers with the purchase of long-term care, home health care or nursing home care insurance is through the consolidation and expansion of the marketing requirements. Intermediaries and insurers are required to report on their prior dealings with consumers and state that the policy being sold is an appropriate product for that person. Although similar tools are currently required, the expansion requires additional data reporting to the OCI so that as the regulator we are provided a clearer picture of what sales are occurring and trends in the marketplace. The information will also highlight for both OCI and the insurers contracting with intermediaries information that may reveal unacceptable practices including high pressure sales tactics or interactions with persons resulting in a higher rate of complaints than other intermediaries. Appropriateness of each sale is to be reviewed and must meet the insurer's guidelines.
Additionally, some of the modifications reflect changes in our society, for instance the recognition and use of the internet or on-line completion of applications. Also, nonforfeiture of benefits provisions reflect the increasing cost of long-term care and the affect those increases have on the insureds. Some seniors, at a time near to when the policy may be most useful are least able to afford premium increases. Nonforfeiture of benefits or contingent nonforfeiture provisions allow those who have paid premiums for many years benefits even after they are no longer able to keep their policy enforce.
New paragraphs are also added regarding upgrade and down-grades of policies, and expanded disclosure requirements are included for various benefits including nonforfeiture benefits. These modifications reflect the marketplace and include oversight provisions. These types of benefits potentially give consumers greater control and options when faced with increasing premiums rather than just lapsing the policy due in part to financial constraints. Expanded notification to insureds of new benefits or changing access to providers is also contained in this proposed rule, a modification that allows insureds options that they may not previously been informed of or had access to from within the same carrier. Requirements monitoring replacement of policies is also expanded to enhance oversight of actions by intermediaries and insurers.
Finally, s.
3.46 includes a new section related to initial and on-going intermediary training for long-term care insurance products. In part, this provision delineates training requirements related to the Wisconsin Partnership Program, but is required for all intermediaries offering, selling or negotiating long-term care contracts. Insurers are required to verify compliance to the OCI and OCI assure the Department of Health and Family Services that the intermediaries dealing with Wisconsin consumers are aware of the unique programs available in Wisconsin.
Section
3.465 is newly created to implement the requirements of the Wisconsin Long-Term Care Insurance Partnership Program. This section contains minimum inflation protection percentage increases by age as outlined by the federal government in order for the policies offered by insurers both meet the requirements of the Deficit Reduction Act of 2005 (Pub.L. 109-171). The section also delineates when and how insurers exchange existing long-term care insurance policies for policies that are intended to qualify for the Partnership Program in both the individual and group market. Appendices outline various notices that are to be provided to consumers at the time of solicitation and again at the point of sale. These are intended to educate the consumer so that the may be better able to make informed decisions.
Comparison with federal regulations
It is understood that CMS is anticipating promulgating rules related to the reciprocity of the Partnership Program. Those rules are not anticipated to affect OCI.
Comparison of rules in adjacent states
Illinois: Illinois adopted NAIC Model Act and Law in January 2003 with no substantive deviations. Illinois noticed proposed regulations in compliance with the 2006 NAIC Model Act and Law on August 3, 2007, without substantive deviations. Illinois HB 517 authorizing the Medicaid Office to file the review State Partnership Application for participation in the Partnership Program on August 16, 2007.
Iowa: Iowa adopted the 2000 version of the NAIC Model Act and Model Law in July 2003. With the exception of the intermediary training that Iowa promulgated effective January 1, 2009, the state has notice proposals to adopt the 2006 NAIC Model Act and Law. The requirement for intermediary training requires 4 hours of initial training and 3 hour on-going training every 3 years thereafter. Iowa has not implemented the Partnership Program in accordance with the DRA as yet.
Michigan: Michigan adopted the 200 version of the NAIC Model Act and Law in June 2007. Michigan regulates long-term care insurance by statute and as such did not adopt exact language as the NAIC Model but did incorporate each area covered by the Model. Michigan did enact authorizing legislation to implement the Partnership Program in 2007 and filed its State Partnership Application retroactive to October, 2007. Michigan has not implemented the intermediary training for all intermediaries and is currently formalizing the process.
Minnesota: Minnesota adopted the 2000 NAIC Model Act and Law in January 2002, without substantial deviation. The DRA, Partnership Program became effective July 1, 2006. However there has been delays it was not operational until October 2007. Minnesota adopted the intermediary training and additionally requires non-resident intermediaries demonstrate knowledge of unique aspects of the Minnesota medial assistance program.
Summary of factual data and analytical methodologies
The OCI was required to implement portions of the Partnership Program in compliance with
2007 Wis. Act 20, and utilized a subcommittee comprised of consumer, industry, intermediary and regulatory members to achieve its duty. The group met, in open meetings, two times in the past two months to review and discuss Partnership drafts proposed by the OCI.
For the provisions updating and incorporating the NAIC models, the OCI reviewed each NAIC provision against existing Wisconsin law and rule to ensure consumer protections were not lost in the process and to expand consumer information.
Analysis and supporting documentation used to determine rule's effect on small businesses
The key provision that may have an effect on small businesses is the requirement for long-term care intermediary initial and on-going training. The OCI included a provision to permit the training to qualify as continuing education credits and to recognize courses non-resident intermediaries may take in states other than Wisconsin. With the exception of two-credit hours that must include the training information developed and maintained by the Department of Health and Family Services, the training requirements allow for the greatest flexibility to not unduly burden intermediaries or unnecessarily increase expenses related to receiving the required training. It is expected, in light of these considerations that if there is any effect, the effect on small businesses will not be significant.
Initial Regulatory Flexibility Analysis
NOTICE IS HEREBY FURTHER GIVEN that pursuant to s.
227.114, Stats., the proposed rule may have an effect on small businesses. The initial regulatory flexibility analysis is as follows:
Types of small businesses affected
Insurance intermediaries and small insurers offering long-term care insurance or life insurance with long-term care riders.
Description of reporting and bookkeeping procedures required
Insurance intermediaries will need to track their training to insurance compliance with the initial and biennial training requirements and the insurers will need to track the same for the intermediaries authorized to represent them. The tracking should not be a significant burden or require additional procedures than are currently in place for tracking continuing education.
Description of professional skills required
None beyond those currently required.
Fiscal Estimate
State fiscal effect
None
Local fiscal effect
None
Long-range fiscal implications
None
Notice of Hearing
Natural Resources
Fish, Game, etc., Ch.
NR 1—
NOTICE IS HEREBY GIVEN that pursuant to s.
227.11 (2) (a), Stats., interpreting s.
28.11 (5m) (am), Stats., the Department of Natural Resources will hold a public hearing on the revision of s.
NR 47.70, Wis. Adm. Code, relating to the county forest administration grant program.
Hearing Information
NOTICE IS HEREBY FURTHER GIVEN that the hearing will be held on:
June 16, 2008 - Video conference participation will be
Monday available at:
10:00 a.m.
Room 139, State Office Building
718 W. Clairemont Avenue
Eau Claire
Room 8F, State Office Building
101 E. Wilson Street
Madison
Conference Rm. 3, DNR Regional Hdqrs.
107 Sutliff Avenue
Rhinelander
NOTICE IS HEREBY FURTHER GIVEN that pursuant to the Americans with Disabilities Act, reasonable accommodations, including the provision of informational material in an alternative format, will be provided for qualified individuals with disabilities upon request. Please call Jeff Barkley at (608) 264-9217 with specific information on your request at least 10 days before the date of the scheduled hearing.
Agency Contact Person, Submission of Comments, and Copies of Proposed Rule
The proposed rule and fiscal estimate may be reviewed and comments electronically submitted at the following Internet site:
http://adminrules.wisconsin.gov. Written comments on the proposed rule may be submitted via U.S. mail to Mr. Jeff Barkley, Bureau of Forest Management, P.O. Box 7921, Madison, WI 53707. Comments may be submitted until June 17, 2008. Written comments whether submitted electronically or by U.S. mail will have the same weight and effect as oral statements presented at the public hearings. A personal copy of the proposed rule and fiscal estimate may be obtained from Mr. Barkley.
Analysis Prepared by Dept. of Natural Resources
The amendment of s.
28.11 (5m), Stats., in the recent budget necessitates changes to s.
NR 47.70, Wis. Adm. Code, to implement the statutory change to the county forest administration grant program. The change makes eligible for cost-sharing a county's dues to a non-profit organization that represents the collective interests of counties in the county forest program and that serves as a liaison to the Department of Natural Resources. Previously known as the County Forest Administrator Grant, this grant program provides encouragement to counties to hire professional forestry staff to manage their county forests. The previous version of this grant provided 50% cost-sharing of the salary and benefits for a professional forester in the position of county forest administrator or assistant county forest administrator. Those payments would continue under the new version of the program along with cost-sharing of the non-profit organization dues. The maximum payment for the dues portion of this grant for all participating county forests combined is $50,000 annually.
Initial Regulatory Flexibility Analysis
NOTICE IS HEREBY FURTHER GIVEN that pursuant to s.
227.114, Stats., it is not anticipated that the proposed rule will have an economic impact on small businesses. The Department's Small Business Regulatory Coordinator may be contacted at
SmallBusiness@dnr.state.wi.us or by calling (608) 266-1959.
Environmental Analysis
NOTICE IS HEREBY FURTHER GIVEN that the Department has made a preliminary determination that this action does not involve significant adverse environmental effects and does not need an environmental analysis under ch.
NR 150, Wis. Adm. Code. However, based on the comments received, the Department may prepare an environmental analysis before proceeding with the proposal. This environmental review document would summarize the Department's consideration of the impacts of the proposal and reasonable alternatives.
Fiscal Estimate
Summary
The existing non-profit organization representing the collective county forests is the Wisconsin County Forests Association (WCFA). Their existing dues structure for participating counties is $1000 plus an acreage assessment of $.047/acre entered into the county forest program as defined in s.
28.11 Wis. Stats. Currently all twenty-nine counties participate with a total acreage of 2,358,185 acres. Total dues equate to $139,835 annually. Section
28.11 (5m) (am) Wis. Stats., authorizes up to a 50% grant for this portion of the administration grant program, not to exceed $50,000 annually. At the current dues structure, 50% of the total dues is $69,918 which exceeds the maximum $50,000 allotted for this portion of the grant. A pro-rate of this portion of the grant would need to be applied to each county.
Assumptions
•
The WCFA will continue to function as the non-profit organization representing the collective county forests.
•
Future dues to WCFA will not go down.
•
The maximum of $50,000 will be required to fund this portion of the grant in the future.
State government fiscal effect
Increased costs to be absorbed within the agency's budget.
Local government fiscal effect
No local government costs -- with permissive decrease costs and permissive increase revenues.
Types of local governmental units affected
Counties
Fund source affected
