AS Title 21, Chapter 53: Long-term Care Insurance

Chapter 53. Long-term Care Insurance. Sec. 21.53.010. Prohibited sale or advertising. An insurer, hospital or medical service corporation, or fraternal benefit society may not advertise, market, sell, deliver, or offer for delivery a long-term care insurance policy unless the policy complies with this chapter, AS 21.18 , AS 21.45 , the health insurance requirements imposed under AS 21.51 , and, if a group policy, the group health insurance requirements imposed under AS 21.54 , or unless it has been approved by and complies with the Interstate Insurance Product Regulation Compact under AS 21.42.700 . Sec. 21.53.020. Disclosure and performance standards. An insurer, hospital or medical service corporation, or fraternal benefit society that delivers or issues for delivery a long-term care insurance policy may not (1) cancel, fail to renew, or otherwise terminate the policy on the grounds of age or deterioration of the mental or physical health of the insured; (2) include a provision requiring a new waiting period in the event existing coverage is converted to or replaced by a new or another form of health insurance within the same company, unless there is an increase in benefits voluntarily selected by the insured or group policyholder; or (3) provide coverage only for skilled nursing care or provide significantly more coverage for skilled care in a facility than is provided for coverage for lower levels of care. Sec. 21.53.030. Preexisting conditions. (a) An insurer, hospital or medical service corporation, or fraternal benefit society may not include, in a long-term care insurance policy or certificate, 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. (b) In a long-term care insurance policy, an insurer, hospital or medical service corporation, or fraternal benefit society may not exclude coverage for a loss or confinement that is the result of a preexisting condition, unless the loss or confinement begins within six months following the effective date of coverage of an insured person. (c) The director may extend the limitation periods established under (a) and (b) of this section for specific age group categories or specific policy forms, if the director finds that the extension is in the best interest of the public. (d) This section does not prohibit an insurer, hospital or medical service corporation, or fraternal benefit society from using an application form designed to elicit the complete health history of an applicant, and, on the basis of the answers on the application, from applying that insurer's, hospital or medical service corporation's, or fraternal benefit society's established underwriting standards. Unless otherwise provided in the policy, a preexisting condition, regardless of whether it is disclosed on the application, need not be covered until the waiting period described in (b) of this section expires. A long-term care insurance policy may not exclude, limit, or reduce, 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 after the waiting period described in (b) of this section, unless the waiver or rider has been specifically approved by the director. Sec. 21.53.040. Prior hospital or institutional care conditions prohibited. (a) A long-term care insurance policy may not be delivered or issued for delivery in this state if the policy conditions eligibility (1) on a prior hospitalization requirement; (2) on the receipt of a higher level of institutional care, when care is provided in an institutional setting; (3) for noninstitutional benefits on a prior institutional stay of more than 30 days for which benefits are paid; (4) on admission to an institutional care facility for the same or a related condition within a period of less than 30 days after discharge from the institution, if the policy provides benefits only following institutionalization; or (5) for a benefit, other than a waiver of premium, postconfinement, postacute care, or recuperative benefit, on a prior institutionalization. (b) A long-term care insurance policy containing a postconfinement, postacute care, or recuperative benefit must clearly label the limitations or conditions, including any required number of days of confinement, “Limitations or Conditions on Eligibility for Benefits” in a separate paragraph of the policy. Sec. 21.53.050. Right of return; outline of coverage; delivery. (a) A long-term care insurance applicant may return a policy within 30 days after delivery and have the premium refunded if, after examination of the policy, the applicant is not satisfied with the policy. A long-term care insurance policy must have a notice prominently printed on the first page of the policy or separately attached stating that the applicant has the right to return the policy within 30 days of its delivery and to have the premium refunded if, after examination of the policy, the applicant is not satisfied with the policy for any reason. This subsection also applies to application denials, and any refund must be made within 30 days after return or denial. (b) An insurer, hospital or medical service corporation, or fraternal benefit society shall deliver an outline of coverage to a prospective applicant for long-term care insurance at the time of initial solicitation by a means that prominently directs the attention of the recipient to the document and its purpose. In the case of agent solicitations, an agent shall deliver the outline of coverage before the presentation of an application or enrollment form. In the case of direct response solicitations, the outline of coverage must be presented in conjunction with an application or enrollment form. The outline of coverage must 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; (3) a statement of the terms under which the policy may be continued in force or discontinued, including a reservation in the policy of a right to change the premium; continuation or conversion provisions of group coverage must be specifically described; (4) a statement that the outline of coverage is a summary only, not a contract of insurance, and that the policy or group master policy contains governing contractual provisions; (5) a description of the terms under which the policy may be returned and premium refunded; (6) a brief description of the relationship between the cost of care and benefits; and (7) a statement that discloses to the policyholder whether the policy is intended to be a federal qualified long-term care insurance contract under 26 U.S.C. 7702B(b) (Internal Revenue Code). (c) A certificate issued under a group long-term care insurance policy that is delivered or issued for delivery in this state must 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 establishes the governing contractual provisions. (d) For a policy issued to a group defined in AS 21.53.200 (3)(A), an insurer, hospital or medical service corporation, or fraternal benefit society is not required to provide an outline of coverage if the information required on the outline of coverage under (b) of this section is contained in other enrollment materials. An insurer, hospital or medical service corporation, and fraternal benefit society shall provide the enrollment materials to the director on request. (e) If an application for a long-term care insurance policy is approved, the insurer shall deliver the policy to the applicant not later than 30 days after the date of approval. Sec. 21.53.060. Long-term care benefits under life insurance policies; denial of claims. (a) In addition to the requirements of AS 21.45 , at the time of policy delivery, a policy summary shall be included with an individual life insurance policy if the policy or policy rider provides long-term care benefits. In the case of direct response solicitations, the insurer shall deliver the policy summary upon the applicant's request but, regardless of request, shall deliver a policy summary not later than the time of policy delivery. The summary must include (1) an explanation of how the long-term care benefits interact with other components of the policy, including deductions from death benefits; (2) an illustration of the amount and length of benefits, and guaranteed lifetime benefits, if any, for each covered person; (3) an explanation of each exclusion, reduction, and limitation on long-term care benefits; (4) if applicable to the policy type, (A) disclosure of the effects of exercising other rights under the policy; (B) disclosure of guarantees related to the long-term care costs of insurance charges; and (C) current and projected maximum lifetime benefits; and (5) if the director adopts a regulation that permits but does not require inflation protection, and the policy does not provide for inflation protection, a statement that inflation protection is not available under the policy. (b) If a long-term care benefit is paid under a life insurance policy by the acceleration of the policy death benefit, and is in benefit payment status, a monthly report shall be provided to the policyholder. The report must include (1) long-term care benefits paid out during the month; (2) an explanation of changes in the policy, including changes in death benefits or cash values, due to long-term care benefits being paid out; and (3) the amount of long-term care benefits remaining. (c) If a claim under a long-term care insurance policy is denied by an insurer, the insurer shall, within 60 days after the date of a written request by a policyholder or a representative of a policyholder, (1) provide a written explanation of the reasons for the denial; and (2) make available all information directly related to the denial. Sec. 21.53.062. Incontestability period. (a) If a long-term care insurance policy has been in force for less than six months, an insurer may rescind the policy or deny an otherwise valid long-term care claim under the policy on a showing of misrepresentation that is material to the acceptance for coverage. (b) If a long-term care insurance policy has been in force for at least six months but less than two years, an insurer may rescind the policy or deny an otherwise valid long-term care claim under the policy on a showing of misrepresentation that is both material to the acceptance for coverage and pertains to the condition for which benefits are sought. (c) If a long-term care insurance policy has been in force for two years or more, the policy is not contestable on the grounds of misrepresentation alone and may only be contested on a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured's health. (d) If an insurer has paid benefits under a long-term care insurance policy, the insurer may not recover the benefit payments if the policy is rescinded. (e) This section applies to a life insurance policy that accelerates benefits for long-term care. However, if an insured dies, this section does not apply to the remaining death benefit of a life insurance policy that accelerates benefits for long-term care, and the remaining death benefit under the policy is subject to AS 21.45.040 . Sec. 21.53.064. Nonforfeiture benefits. (a) Except as provided in (b) of this section, a long-term care insurance policy may not be delivered or issued for delivery in this state unless the policyholder has been offered the option of purchasing a policy including a nonforfeiture benefit. The insurer may offer a nonforfeiture benefit in the form of a rider to the policy. If a policyholder declines the nonforfeiture benefit, the insurer shall provide a contingent benefit upon lapse that is available for a specified period of time following a substantial increase in premium rates. (b) With respect to group long-term care insurance, an insurer shall make the offer required in (a) of this section to the group policyholder. For a policy issued as group long-term care insurance, other than a continuing care retirement community or other similar entity, the insurer shall make the offer required in (a) of this section to each proposed certificate holder. Sec. 21.53.066. Producer training requirements. (a) A person may not sell, solicit, or negotiate long-term care insurance unless the person is licensed as an insurance producer for health or life insurance lines of authority and has completed a one-time training course that meets the requirements in (d) of this section. (b) A person currently licensed and selling, soliciting, or negotiating long-term care insurance may not continue to sell, solicit, or negotiate long-term care insurance unless the person has completed a one-time training course that meets the requirements in (d) of this section. (c) A person who sells, solicits, or negotiates long-term care insurance shall complete ongoing training that meets the requirements in (e) of this section. (d) The one-time training course required under this section (1) must be at least eight credit hours; (2) may 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; (3) must consist of topics related to long-term care insurance, long-term care services, and, if applicable, qualified long-term care insurance partnership programs, including (A) state and federal requirements and the relationship between qualified state long-term care insurance partnership programs and other public and private coverage of long-term care services; (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 protections; and (F) consumer suitability standards and guidelines. (e) The ongoing training course required under (c) of this section must be at least four credit hours every 24 months and must comply with the requirements in (d)(2) and (3) of this section. (f) The director may approve the training requirements in (d) and (e) of this section as continuing education courses under AS 21.27.020 . (g) An insurer shall (1) obtain verification that a producer received the training required under this section before a producer is permitted to sell, solicit, or negotiate the insurer's long-term care insurance products; (2) maintain records of required training subject to the state's record retention requirements; (3) make the verification required under (1) of this subsection available to the director on request. (h) An insurer shall maintain (1) records with respect to the training of its producers concerning the distribution of its partnership policies that allow the director to provide assurance to the medical assistance program under AS 47.07 that producers have received the training described in (d)(3) of this section and that producers have demonstrated an understanding of the partnership policies and their relationship to public and private coverage of long-term care in this state; and (2) the records described under (1) of this subsection in accordance with the record requirements under AS 21.09.320 and shall make the records available to the director on request. Sec. 21.53.068. Limitations related to producers and third-party administrators. An insurer that authorizes issuance of a long-term care insurance policy by a producer or a third-party administrator under the underwriting authority of the insurer granted to the producer or third-party administrator using the insurer's underwriting guidelines may issue a long-term care insurance policy through the producer or third-party administrator only if the insurer does not compensate the issuer based on the number of policies issued. Sec. 21.53.070. Group long-term care insurance. Group long-term care insurance coverage may not be offered to a resident of this state under a group policy issued in another state, unless the state in which the policy is issued has statutory or regulatory provisions applicable to group long-term care insurance that are substantially similar to this chapter and the director determines that the issuance of the group policy is not contrary to the best interest of the public, results in economies of acquisition or administration, and the benefits are reasonable in relation to the premiums charged. Sec. 21.53.080. Organizational requirements of associations. An insurer, hospital or medical service corporation, or a fraternal benefit society may not issue group long-term care insurance to an association or a trust or the trustee of a fund established, created, or maintained for the benefit of members of one or more associations, unless the association or the insurer of the association files evidence with the director that the association has (1) a minimum of 100 members; (2) been organized and maintained in good faith for purposes other than that of obtaining insurance; (3) been in active existence for at least one year; and (4) a constitution and by-laws that require (A) the association to hold regular meetings not less than annually to further purposes of the members; (B) except for credit unions, the association to collect dues or solicit contributions from members; and (C) the members to have voting privileges and representation on the governing board and committees. Sec. 21.53.090. Required regulations. The director shall adopt regulations regarding (1) the sale of long-term care insurance that provide minimum standards for (A) terms of renewability; (B) initial and subsequent conditions of eligibility; (C) nonduplication of coverage provisions; (D) coverage of dependents; (E) benefit triggers; (F) preexisting conditions and recurrent conditions; (G) termination of insurance, including incontestability periods; (H) continuation or conversion; (I) probationary periods, limitations, exceptions, reductions, and elimination periods; (J) requirements for replacement; (K) producer training, education, compensation, and testing; (L) marketing practices; (M) independent review of benefit determinations; (N) penalties and reporting practices; and (O) premium rates, including rate filing requirements; (2) standard definitions of long-term care insurance terms; (3) nonforfeiture or minimum value requirements; (4) consumer protection standards, including standards for full and fair disclosure setting out the manner and content of required disclosures; and (5) the standard format and content of the outline of coverage required under AS 21.53.050 . Sec. 21.53.200. Definitions. In this chapter, (1) “applicant” means in the case of an individual long-term care insurance policy, the person who seeks to contract for benefits, and in the case of a group long-term care insurance policy, the proposed certificate holder; (2) “certificate” means a certificate issued under a group long-term care insurance policy that has been delivered or issued for delivery in this state; (3) “group long-term care insurance” means a long-term care insurance policy, subscriber's contract, or fraternal benefit society certificate that is delivered or issued for delivery in this state and issued to (A) 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 of them, for employees or former employees or a combination of them, or for members or former members or a combination of them, of the labor organization; (B) a professional, trade, or occupational association for its members or former or retired members, or combination of them, if the 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; (C) an association or a trust or the trustee of a fund established, created, or maintained for the benefit of members of one or more associations that meets the requirements in AS 21.53.080 ; (D) a group other than described in this paragraph if the director determines that the issuance of the group policy is not contrary to the best interest of the public, would result in economies of acquisition or administration, and the benefits are reasonable in relation to the premiums charged; (4) “long-term care insurance” (A) means an individual or group insurance policy, including group and individual life insurance or annuities, a subscriber's contract, fraternal benefit society certificate, 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 that are provided in a setting other than an acute care unit of a hospital, and includes a policy or rider that provides for payment of benefits based on cognitive impairment or loss of functional capacity; (B) does not include (i) an insurance policy, subscriber's contract, or fraternal benefit society certificate 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 insurance and related asset protection coverage, catastrophic coverage, comprehensive coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage; or (ii) a life insurance policy that accelerates 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 provides the option of a lump-sum payment for that benefit if the benefit and the eligibility for the benefit under the life insurance policy are not conditioned on the receipt of long-term care.