Chapter Ins 3

Ins 3.46(9)(m) (m) 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. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents. This paragraph may not apply to qualified long-term care insurance contracts.

Ins 3.46(10) (10) Underwriting.

Ins 3.46(10)(a) (a) No insurer may issue a long-term care policy, life insurance-long-term care coverage or a certificate to an applicant 75 years of age or older, unless prior to issuing coverage the insurer obtains one of the following:

Ins 3.46(10)(a)1. 1. A copy of a physical examination.

Ins 3.46(10)(a)2. 2. An assessment of functional capacity.

Ins 3.46(10)(a)3. 3. An attending physician’s statement.

Ins 3.46(10)(a)4. 4. Copies of medical records.

Ins 3.46(10)(b) (b) An insurer selling or issuing long-term care policies or life insurance-long-term care coverage shall maintain a record of all policies, coverage or certificate rescissions or reformations, including voluntary rescissions or reformations, categorized by policies, coverages and certificates within this state and nationwide.

Ins 3.46(10)(c) (c) An insurer subject to par. (b) shall file a report with the office regarding rescissions and reformations not later than March 1 each year on the form prescribed by the commissioner.

Ins 3.46(10)(d) (d) An insurer shall maintain a record of its claims administration guidelines for processing claims under long-term care policies and life insurance-long-term care coverage and shall provide the record to the office on request.

Ins 3.46(10)(e) (e) Sections Ins 3.28 and 3.31 apply to long-term care policies.

Ins 3.46(10)(f) (f) All applications for long-term care insurance policies or certificates, except those that are guaranteed issue, shall contain clear and unambiguous questions designed to ascertain the health condition of the applicant and shall comply with all of the following when applicable:

Ins 3.46(10)(f)1. 1. If the application contains a question that asks whether the applicant has had medication prescribed by a physician, it shall also ask the applicant to list the medication that has been prescribed.

Ins 3.46(10)(f)2. 2. If the medications listed in the application were known by the insurer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, then the insurer may not rescind the policy or certificate for that condition.

Ins 3.46(10)(g) (g) The following language shall be set out in bold font and in a conspicuous location that is in close conjunction with the applicant’s signature block on an application for a long-term care insurance policy or certificate:

“Caution: If your answers on this application are incorrect or untrue, [insurer’s name] has the right to deny benefits or rescind your policy.”

Ins 3.46(10)(h) (h) The following language, or language substantially similar to the following, shall be set out in bold font and in a conspicuous location on the long-term care insurance policy or certificate at the time of delivery:

“Caution: The issuance of this long-term care insurance [policy or certificate] is based upon your responses to the questions on your [application or enrollment form]. A copy of your [application or enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, [the insurer] 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 were incorrect, contact [the insurer] at this address: [insert address].

Ins 3.46(10)(i) (i) A copy of the completed application or enrollment form 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.

Ins 3.46(10)(j) (j) Every insurer or other entity selling or issuing long-term care insurance benefits shall maintain a record of all policy or certificate rescissions, both state and countrywide, except those that the insured voluntarily effectuated and shall annually furnish this information to the commissioner in the format contained in Appendix 8.

Ins 3.46(11) (11) Sale of long-term care and limited benefit policies; required offer of coverage with inflation protection.

Ins 3.46(11)(a) (a) No insurer may advertise, market or offer a long-term care policy or certificate unless the insurer has a form approved under s. 631.20, Stats., for the policy or certificate which adds inflation protection no less favorable than one of the following:

Ins 3.46(11)(a)1. 1. Benefit levels and maximum benefit amounts increase annually and are annually compounded at a rate of not less than 5%. The policy or certificate may provide that the individual insured or certificate holder will be permitted to decline a benefit increase and that if any benefit increase is declined future increases will not be available. Declination of a increase must be by express written election at the time the increase is to take effect.

Ins 3.46(11)(a)2. 2. Benefit levels and maximum benefit amounts increase annually and are annually compounded at a rate equal to the increase in the consumer price index (urban) for the previous year. The insurer may elect to provide in the form that the individual insured or certificate holder will be permitted to decline a benefit increase and that if the benefit increase is declined future increases will not be available. Such a provision shall provide that declination of an increase shall be by express written election at the time the increase is to take effect.

Ins 3.46(11)(a)3. 3. Coverage of a specified percentage, not less than 80%, of actual or reasonable charges for expenses incurred.

Ins 3.46(11)(a)4. 4. Activities of daily living and cognitive impairment triggers shall be described in the policy in a separate paragraph and shall be labeled “Eligibility for the Payment of Benefits.” If an attending physician or other specified person is required to certify a certain level of functional dependency in order to be eligible for benefits, this too shall be specified.

Ins 3.46(11)(b) (b) No insurer may file a form for a long-term care policy or certificate under s. 631.20, Stats., unless the application form is filed with the policy or certificate form and the application form contains a clear and conspicuous disclosure of the offer required under par. (c).

Ins 3.46(11)(c) (c) No insurer or intermediary may contact any person to solicit the sale of a long-term care policy or certificate unless, at the time of contact, the intermediary or insurer makes a clear and conspicuous offer to the person to provide the long-term care policy or certificate with the benefit levels selected by the person and inflation protection as provided under par. (a).

Ins 3.46(11)(d) (d) No insurer or intermediary may accept an application for a long-term care policy or certificate unless it is signed by the applicant and the applicant has indicated acceptance or rejection of the inflation protection on the application.

Ins 3.46(11)(e) (e) If a long-term care policy is a group policy the applicant for the purpose of par. (d) is the proposed certificate holder.

Ins 3.46(11)(f) (f) No insurer or intermediary may advertise or represent that a long-term care policy includes inflation protection unless the policy includes inflation protection at least as favorable as provided under par. (a) 1., 2. or 3.

Ins 3.46(11)(g) (g) This subsection does not require an insurer to accept an application for a long-term care policy or certificate with inflation protection as provided by this subsection if the applicant would be rejected under underwriting criteria for the policy or certificate without the inflation protection.

Ins 3.46(11)(h) (h) Insurers offering group long-term care policies are exempt from pars. (d) and (e) if they comply with all of the following:

Ins 3.46(11)(h)1. 1. The policy is issued to a local, municipal, county, or state public employee group.

Ins 3.46(11)(h)2. 2. The group coverage was negotiated as part of a collective bargaining agreement.

Ins 3.46(11)(h)3. 3. The group coverage is provided to all eligible employees on a guaranteed issue basis.

Ins 3.46(11)(h)4. 4. The policy provides insureds with at least 5% compound annualized inflation protection.

Ins 3.46(12) (12) Sale of long-term care policy or certificate or life insurance-long-term care coverage with lengthy elimination period.

Ins 3.46(12)(a) (a) No insurer may advertise, market or offer a long-term care policy or certificate, or life insurance-long-term care coverage with an elimination period exceeding 180 days unless the insurer has a form approved under s. 631.20, Stats., providing the identical coverage, but with an elimination period of 180 days or less.

Ins 3.46(12)(b) (b) No insurer may file a form for a long-term care policy or certificate or life insurance-long-term care coverage containing an elimination period in excess of 180 days, unless the application form contains a clear and conspicuous disclosure of the offer required under par. (c).

Ins 3.46(12)(c) (c) No insurer or intermediary may contact any person to solicit the sale of a long-term care policy or certificate or life insurance-long-term care coverage with an elimination period in excess of 180 days unless, at the time of the contact, the intermediary or insurer makes a clear and conspicuous offer to the person to provide the policy, certificate or coverage with an elimination period of 180 days or less.

Ins 3.46(12)(d) (d) No insurer or intermediary may accept an application for a long-term care policy or certificate, or life insurance-long-term care coverage, unless it is signed by the applicant and has indicated acceptance or rejection of the offer required under par. (c) on the application.

Ins 3.46(12)(e) (e) If a policy or coverage is a group policy or coverage, the applicant for the purpose of par. (d) is the proposed certificate holder.

Ins 3.46(12)(f) (f) This subsection does not require an insurer to accept an applicant for a policy, certificate or coverage with a 180-day or less elimination period if the applicant would be rejected for the same policy, certificate or coverage with the elimination period in excess of 180 days.

Ins 3.46(13) (13) Commission limits for long-term care, nursing home and home health care policies.

Ins 3.46(13)(a) (a) An insurer may provide compensation to an intermediary, and an intermediary may accept compensation for the sale of a long-term care policy or certificate only if the compensation provided in the 2nd year or period and subsequent years is the same and is provided for at least 5 renewal years.

Ins 3.46(13)(b) (b) Except as provided in par. (c), no person may provide compensation to an intermediary, and no intermediary may accept compensation, relating to the replacement of a long-term care policy or certificate which is greater than the renewal compensation provided by the replacing insurer for the replacing policy or certificate. Long-term care policies this paragraph and par. (c) apply to include, but are not limited to, long-term care policies, nursing home policies and home health care policies issued prior to June 1, 1991.

Ins 3.46(13)(c) (c) A person may provide to an intermediary, and an intermediary may accept, compensation relating to the replacement of a long-term care policy or certificate; which compensation is no greater than the first-year compensation provided by the replacing insurer for the replacing policy or certificate if, in addition to requirements contained in sub. (14), all of the following criteria are satisfied:

Ins 3.46(13)(c)1. 1. The replacing insurer has established reasonable standards for which first-year compensation is appropriate for the replacement.

Ins 3.46(13)(c)2. 2. The standards referenced in subd. 1. include all of the following standards:

Ins 3.46(13)(c)2.a. a. The replacing policy is suitable for the applicant.

Ins 3.46(13)(c)2.b. b. The replacing policy materially improves the position of the applicant, including, but not limited to, the coverage, price, premium stability, or financial strength ratings of the insurer.

Ins 3.46(13)(c)2.c. c. The intermediary has done an assessment of the replacement transaction justifying the replacement according to the insurer’s replacement standards and this subd. 2. c. and submits that assessment to the insurer as part of the application for replacement.

Ins 3.46(13)(c)2.d. d. The insurer evaluates each replacement and affirmatively approves or denies the replacement’s qualification for first-year compensation of the replacing policy.

Ins 3.46(13)(c)2.e. e. The standards and methodology are subject to review by the office of the commissioner of insurance.

Ins 3.46(13)(c)3. 3. The replacing insurer has established an auditable methodology for evaluating replacements that qualify for first-year compensation.

Ins 3.46(14) (14) Replacement; long-term care, nursing home and home health care policies.

Ins 3.46(14)(a) (a) If a long-term care policy or certificate replaces another long-term care policy or certificate, the replacing insurer shall waive any time periods applicable to preexisting conditions, waiting periods, elimination periods 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.

Ins 3.46(14)(b) (b) If a group long-term care policy is replaced by another group long-term care policy purchased by the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new group policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

Ins 3.46(14)(c) (c)

Ins 3.46(14)(c)1. 1. 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 agent, except where the coverage is sold without an agent, containing the following questions may be used:

Ins 3.46(14)(c)1.a. a. Do you have another long-term care insurance policy or certificate in force (including a health care service contract or health maintenance organization contract)?

Ins 3.46(14)(c)1.b. b. Did you have another long-term care insurance policy or certificate in force during the last 12 months?

Ins 3.46(14)(c)1.c. c. If so, with which [company or insurer]?

Ins 3.46(14)(c)1.d. d. If that policy lapsed, when did it lapse?

Ins 3.46(14)(c)1.e. e. Are you covered by Medicaid?

Ins 3.46(14)(c)1.f. f. Do you intend to replace any of your medical or health insurance coverage with this policy [certificate]?

Ins 3.46(14)(c)2. 2. Agents shall list any other health insurance policies they have sold to the applicant, including all of the following:

Ins 3.46(14)(c)2.a. a. List policies sold that are still in force.

Ins 3.46(14)(c)2.b. b. List policies sold in the past 5 years that are no longer in force.

Ins 3.46(14)(c)3. 3. Upon determining that a sale will involve replacement, an insurer; other than an insurer using direct response solicitation methods, or its intermediaries; 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 the 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 in compliance with Appendix 6.

Ins 3.46(14)(c)4. 4. 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 in compliance with Appendix 7.

Ins 3.46(14)(c)5. 5. Where replacement is intended, the replacing insurer shall notify, in writing, the existing insurer of the proposed replacement. The existing policy shall be identified by the insurer, name of the 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 is issued, whichever is sooner.

Ins 3.46(14)(c)6. 6. Life insurance policies that accelerate benefits for long-term care shall comply with this section if the policy being replaced is a long-term care insurance policy. If the policy being replaced is a life insurance policy, the insurer shall comply with the replacement requirements of s. Ins 2.07. If a life insurance policy that accelerates benefits for long-term care is replaced by another such policy, the replacing insurer shall comply with both the long-term care and the life insurance replacement requirements.

Ins 3.46(14)(d) (d) An intermediary taking an application for a long-term care policy or certificate shall do all of the following:

Ins 3.46(14)(d)1. 1. List any other health insurance policies or certificates the intermediary has sold to the applicant.

Ins 3.46(14)(d)2. 2. List separately the policies or certificates that are still in force.

Ins 3.46(14)(d)3. 3. List policies or certificates sold in the past which are no longer in force.

Ins 3.46(14)(d)4. 4. Submit the lists to the insurer with the application.

Ins 3.46(14)(e) (e) Every insurer and person marketing long-term care insurance coverage in this state, directly or through its intermediaries, shall do all of the following:

Ins 3.46(14)(e)1. 1. Establish marketing procedures to assure that any comparison of policies by its intermediaries or other producers will be fair and accurate.

Ins 3.46(14)(e)2. 2. Establish marketing procedures to assure excessive insurance is not sold or issued.

Ins 3.46(14)(e)3. 3. Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for a long-term care policy or certificate already has an accident and sickness or a long-term care policy or certificate and the types and amounts of any such insurance, except that in the case of qualified long-term care insurance contract, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance is not required.

Ins 3.46(14)(e)4. 4. Establish auditable procedures for verifying compliance with this paragraph.

Ins 3.46(14)(f) (f) In recommending the purchase or replacement of any long-term care policy or certificate an intermediary shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.

Ins 3.46(14)(g) (g) Replacement of long-term care, nursing home and home health care policies and certificates issued prior to June 1, 1991 is also subject to this subsection.

Ins 3.46(15) (15) Unintentional lapse; long-term care, nursing home and home health care policies.

Ins 3.46(15)(a) (a) As part of the application process, an insurer shall obtain from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive a 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. Designation may not constitute acceptance of any liability by the third party for services provided to the insured. The written designation shall include the following:

Ins 3.46(15)(a)1. 1. Space for clearly listing at least one person.