Ill. Admin. Code tit. 50, § 2012.80 - Requirement to Offer Inflation Protection
a) No insurer may offer a long-term care
insurance policy unless the insurer also offers to the policyholder in addition
to any other inflation protection the option to purchase a policy that provides
for benefit levels to increase with benefit maximums or reasonable durations
which are meaningful to account for reasonably anticipated increases in the
costs of long-term care services covered by the policy. Insurers must offer to
each policyholder, at the time of purchase, the option to purchase a policy
with an inflation protection feature no less favorable than one of the
following:
1) Increases benefit levels
annually in a manner so that the increases are compounded annually at a rate
not less than 5%;
2) Guarantees the
insured individual the right to periodically increase benefit levels without
providing evidence of insurability or health status so long as the option for
the previous period has not been declined. The amount of the additional benefit
shall be no less than the difference between the existing policy benefit and
that benefit compounded annually at a rate of at least 5% for the period
beginning with the purchase of the existing benefit and extending until the
year in which the offer is made; or
3) Covers a specified percentage of actual or
reasonable charges and does not include a maximum specified indemnity amount or
limit.
b) Where the
policy is issued to a group, the required offer in subsection (a) shall be made
to the group policyholder; except, if the policy is issued to a discretionary
group, as defined in Section 351A-1(e)(4) of the Code, other than to a
continuing care retirement community, the offering shall be made to each
proposed certificateholder.
c) The
offer in subsection (a) shall not be required of life insurance policies or
riders containing accelerated long-term care benefits.
d) Insurers shall include the following
information in the outline of coverage:
1) A
graphic comparison of the benefit levels of a policy that increases benefits
over the policy period with a policy that does not increase benefits. The
graphic comparison shall show benefit levels over at least a 20 year
period.
2) Any expected premium
increases or additional premiums to pay for automatic or optional benefit
increases.
3) An insurer may use a
reasonable hypothetical or a graphic demonstration for the purposes of this
disclosure.
e) Inflation
protection benefit increases under a policy which contains such benefits shall
continue without regard to an insured's age, claim status or claim history, or
the length of time the person has been insured under the policy.
f) An offer of inflation protection which
provides for automatic benefit increases shall include an offer of a premium
which the insurer expects to remain constant. The offer shall disclose in a
conspicuous manner that the premium may change in the future unless the premium
is guaranteed to remain constant.
g) Inflation protection as provided in
subsection (a)(1) of this Section shall be included in a long-term care
insurance policy unless an insurer obtains a rejection of inflation protection
signed by the policyholder as required by this Section. The rejection may be
either in the application or on a separate form. The rejection shall be
considered a part of the application and shall state, "I have reviewed the
outline of coverage and the graphs that compare the benefits and premiums of
this policy with and without inflation protection. Specifically, I have
reviewed plan(s) ________, and I reject inflation protection."
Notes
Amended at 32 Ill. Reg. 7600, effective May 5, 2008
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