(1) Except as provided in subsection (2), a
long-term care insurance policy may not be delivered or issued for delivery in
this state unless the policyholder or certificateholder 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 certificateholder
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.
(2) When a group long term care insurance
policy is issued, the offer required in subsection (1) shall be made to the
group policyholder. However, if the policy is issued as group long-term care
insurance as defined in O.C.G.A. Section
33-42-4, other than to a
continuing care retirement community or similar entity, the offering shall be
made to each proposed certificateholder.
(3) This section does not apply to life
insurance policies or riders containing accelerated long-term care
benefits.
(4) To comply with the
requirement to offer a nonforfeiture benefit pursuant to the provisions of
O.C.G.A. Section
33-42-6 and Rule Section
120-2-16-.28(1):
(a) A policy or certificate offered with
nonforfeiture benefits shall have coverage elements, eligibility, benefit
triggers and benefit length that are the same as coverage to be issued without
nonforfeiture benefits. The nonforfeiture benefit included in the offer shall
be the benefit described in subsection (5); and
(b) The offer shall be in writing if the
nonforfeiture benefit is not otherwise described in the Outline of Coverage or
other materials given to the prospective policyholder.
(5) If the offer required to be made under
subsection (1) is rejected, the insurer shall provide the contingent benefit
upon lapse described in this Section. Even if this offer is accepted for a
policy with a fixed or limited premium paying period, the contingent benefit on
lapse in subsection (6)(d) shall still apply.
(6)
(a)
After rejection of the offer required under subsection (1), for individual and
group policies without nonforfeiture benefits issued after the effective date
of this section, the insurer shall provide a contingent benefit upon
lapse.
(b) In the event 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.
(c) A 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 below 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 30 days prior to the due date of the
premium reflecting the rate increase.
Triggers for a Substantial Premium
Increase
|
Issue Age
|
Percent Increase Over
Initial Premium
|
29 and under
|
200%
|
30-34
|
190%
|
35-39
|
170%
|
40-44
|
150%
|
45-49
|
130%
|
50-54
|
110%
|
55-59
|
90%
|
60
|
70%
|
61
|
66%
|
62
|
62%
|
63
|
58%
|
64
|
54%
|
65
|
50%
|
66
|
48%
|
67
|
46%
|
68
|
44%
|
69
|
42%
|
70
|
40%
|
71
|
38%
|
72
|
36%
|
73
|
34%
|
74
|
32%
|
75
|
30%
|
76
|
28%
|
77
|
26%
|
78
|
24%
|
79
|
22%
|
80
|
20%
|
81
|
19%
|
82
|
18%
|
83
|
17%
|
84
|
16%
|
85
|
15%
|
86
|
14%
|
87
|
13%
|
88
|
12%
|
89
|
11%
|
90 and over
|
10%
|
(d)
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 below 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 in subparagraph (f)(i) is 40 percent 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.
Triggers for a Substantial Premium
Increase
|
Percent Increase
Issue Age
|
Over Initial Premium
|
Under 65
|
50%
|
65-80
|
30%
|
Over 80
|
10%
|
This provision shall be in addition to the contingent benefit
provided by paragraph (c) above and where both are triggered, the benefit
provided shall be at the option of the insured.
(e) On or before the effective date of a
substantial premium increase as defined in paragraph (c) above, the insurer
shall:
(i) Offer to reduce policy benefits
provided by the current coverage without the requirement of additional
underwriting so that required premium payments are not increased;
(ii) Offer to convert the coverage to a
paid-up status with a shortened benefit period in accordance with the terms of
subsection (5). This option may be elected at any time during the 120-day
period referenced in subsection (6)(c); and
(iii) Notify the policyholder or
certificateholder that a default or lapse at any time during the 120-day period
referenced in subsection (6)(c) shall be deemed to be the election of the offer
to convert in subparagraph (ii) above unless the automatic option in paragraph
(f)(iii) applies.
(f) On
or before the effective date of a substantial premium increase as defined in
paragraph (6)(c) above, the insurer shall:
(i)
Offer to reduce policy benefits provided by the current coverage without the
requirement of additional underwriting so that required premium payments are
not increased;
(ii) Offer to
convert the coverage to a paid-up status where the amount payable for each
benefit is 90 percent 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 subsection
(6)(d); and
(iii) Notify the
policyholder or certificateholder that a default or lapse at any time during
the 120-day period referenced in subsection (6)(d) shall be deemed to be the
election of the offer to convert in subparagraph (ii) above if the ratio is 40
percent or more.
(7) Benefits continued as nonforfeiture
benefits, including contingent benefits upon lapse in accordance with
subsection (6)(c) but not subsection (6)(d), are described in this subsection:
(a) For purposes of this subsection, attained
age rating is defined as a schedule of premiums starting from the issue date
which increases age at least one percent per year prior to age 50, and at least
3 percent per year beyond age 50.
(b) For purposes of this subsection, the
nonforfeiture benefit shall be of a shortened benefit period providing paid-up
long-term care insurance coverage after lapse. The same benefits (amounts and
frequency in effect at the time of lapse but not increased thereafter) will be
payable for a qualifying claim, but the lifetime maximum dollars or days of
benefits shall be determined as specified in paragraph (c).
(c) The standard nonforfeiture credit will be
equal to 100 percent 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 shall 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 subsection
(8).
(d)
(i) 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
three years as well as thereafter.
(ii) Notwithstanding subparagraph (i), for a
policy or certificate with attained age rating, the nonforfeiture benefit shall
begin on the earlier of:
(A) The end of the
tenth year following the policy or certificate issue date; or
(B) The end of the second year following the
date the policy or certificate is no longer subject to attained age
rating.
(e)
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.
(8) All benefits paid by the insurer while
the policy or certificate is in premium paying status and in the paid up status
will not exceed the maximum benefits which would be payable if the policy or
certificate had remained in premium paying status.
(9) There shall be no difference in the
minimum nonforfeiture benefits as required under this section for group and
individual policies.
(10) The
requirements set forth in this section shall become effective 12 months after
adoption of this provision and shall apply as follows:
(a) Except as provided in paragraphs (b) and
(c) below, the provisions of this section apply to any long-term care policy
issued in this state on or after the effective date of this amended
regulation.
(b) For certificates
issued on or after the effective date of this section, under a group long-term
care insurance policy as defined in O.C.G.A. Section
33-42-4, which policy was in force
at the time this amended regulation became effective, the provisions of this
section shall not apply.
(c) The
last sentence in subsection (5) and subsections (6)(d) and (6)(f) shall apply
to any long-term care insurance policy or certificate issued in this state
after six months after their adoption, except new certificates on a group
policy as defined in O.C.G.A. Section
33-42-4one year after
adoption.
(11) Premiums
charged for a policy or certificate containing nonforfeiture benefits or a
contingent benefit on lapse shall be subject to the loss ratio requirements of
Section
120-2-16-.19
or Section
120-2-16-.20, whichever is
applicable, treating the policy as a whole.
(12) To determine whether contingent
nonforfeiture upon lapse provisions are triggered under subsection (6)(c) or
(6)(d), 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.
(13) A nonforfeiture
benefit for qualified long-term care insurance contracts that are level premium
contracts shall be offered that meets the following requirements:
(a) The nonforfeiture provision shall be
appropriately captioned;
(b) The
nonforfeiture provision shall provide a benefit available in the event of a
default in the payment of any premiums and shall state that the amount of the
benefit may be adjusted subsequent to being initially granted only as necessary
to reflect changes in claims, persistency and interest as reflected in changes
in rates for premium paying contracts approved by the Commissioner for the same
contract form; and
(c) The
nonforfeiture provision shall provide at least one of the following:
(i) Reduced paid-up insurance;
(ii) Extended term insurance;
(iii) Shortened benefit period; or
(iv) Other similar offerings approved by the
Commissioner.
(14) The requirements of this section shall
apply to any long-term care policy issued in this state on or after April 1,
2009.