3 AAC 28.552 - Policy practices and provisions

(a) The terms "guaranteed renewable" and noncancellable may not be used in an individual long-term care insurance policy without further explanatory language in accordance with the disclosure requirements of 3 AAC 28.555 and subject to the following restrictions:

(1) a policy issued to an individual may not contain renewal provisions other than "guaranteed renewable" or "noncancellable;"

(2) the term guaranteed renewable may only be used when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and when the insurer has no unilateral right to make a change in a provision of the policy or rider while the insurance is in force, and cannot decline to renew, except that rates may be revised by the insurer on a class basis;

(3) the term noncancellable" may only be used when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the insurer has no right to unilaterally make a change in a provision of the insurance or in the premium rate;

(4) the term "level premium" may only be used when the insurer does not have the right to change the premium; and

(5) in addition to the other requirements of this subsection, a qualified long-term care insurance contract must be guaranteed renewable, within the meaning of 26 U.S.C. 7702B(b)(l)(C) (Internal Revenue Code).

(b) A policy may not be delivered or issued for delivery in this state as long-term care insurance if the policy limits or excludes coverage by type of illness, treatment, medical condition, or accident, except as follows:

(1) preexisting conditions or diseases;

(2) mental or nervous disorders; however, this may not permit exclusion or limitation of benefits on the basis of Alzheimer's Disease;

(3) alcoholism and drug addiction;

(4) illness, treatment, or medical condition arising out of

(A) war or an act of war, whether declared or undeclared;

(B) participation in a felony, riot, or insurrection;

(C) service in the armed forces or auxiliary units;

(D) suicide, whether sane or insane, attempted suicide, or intentionally self-inflicted injury; or

(E) aviation, this exclusion applies only to non-fare-paying passengers;

(5) treatment provided in a government facility unless otherwise required by law, services for which benefits are available under Medicare or other governmental program except Medicaid, services provided under a state or federal workers' compensation, employer's liability, or occupational disease law, or a motor vehicle no-fault law, services provided by a member of the covered person's immediate family, and services for which no charge is normally made in the absence of insurance;

(6) expenses for services or items available or paid under another long-term care insurance or health insurance policy;

(7) in the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount.

(c) subsection (b) of this section does not prohibit exclusions and limitations by type of provider. However,

(1)

(a) We long-term care issuer may not deny a claim because services are provided in a state other than the state of policy issue under the following conditions:

(A) when the state other than the state of policy issue does not have the provider licensing, certification, or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers instead of licensure, certification, or registration; or

(B) when the state other than the state of policy issue licenses, certifies or registers the prouder under another name; and

(2) in subsection "state of policy issue" means the state in which the individual policy or certificate was originally issued.

(d) Nothing in (b) of this section prohibits territorial limitations.

(e) Termination of long-term care insurance must be without prejudice to the benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. The extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, or to payment of the maximum benefits and may be subject to a policy waiting period, and all other applicable provisions of the policy.

(f) Continuation or conversion of coverage is subject to the following:

(1) group long-term care insurance issued in this state on or after effective date of regulation must provide covered individuals with a basis for continuation or conversion of coverage; for the purposes of this section,

(A) "a basis for continuation of coverage" means a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate and that is subject only to the continued timely payment of premium when due; group policies that restrict provision of benefits and services to, or contain incentives to use certain providers or facilities may provide substantially equivalent to the benefits of the existing group policy; the director will make a determination as to the substantial equivalency of benefits, and in doing so will take into consideration the differences between managed-care and non-managed-care plans, including provider system arrangements, service availability, benefit levels, and administrative complexity;

(B) "a basis for conversion of coverage" means a policy provision that an individual whose coverage under the group policy would otherwise terminate or has been terminated for a reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy, and a group policy that it replaced, for at least six months immediately before termination, shall be entitled to the issuance of a converted policy by the insurer under whose group policy the individual is covered, without evidence of insurability;

(C) "converted policy" means an individual policy of long-term care insurance providing benefits identical to or benefits determined by the director to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made; if the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use certain providers or facilities, the director, in making a determination as to the substantial equivalency of benefits, will take into consideration the differences between managed-care and non-managed-care plans, including provider system arrangements, service availability, benefit levels, and administrative complexity;

(D) a "managed-care plan" is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management or use of specific provider networks;

(2) written application for the converted policy shall be made and the first premium due, if any shall be paid as directed by the insurer not later than 31 days after termination of coverage under the group policy; the converted policy shall be issued effective on the day following the termination of coverage under the group policy and shall be renewable annually;

(3) unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made; if the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy replaced;

(4) continuation of coverage or issuance of a converted policy shall be mandatory, except if

(A) termination of group coverage was the result of an individual's failure to make a required payment of premium when due; or

(B) the terminating coverage is replaced not later than 31 days after termination, group coverage effective on the day following the termination of coverage, and

(i) the replacement coverage provides benefits identical to or benefits determined by the director to be substantially equivalent to or in excess of those provided by the terminating coverage; and

(ii) the premium for the replacement coverage is calculated in a manner consistent with the requirements of (3) of this subsection;

(5) notwithstanding other provisions of this section, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy that provides benefits on the basis of incurred expenses, may contain a provision that results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100 percent of incurred expenses; the provision may only be included in the converted policy if the converted policy also provides for a premium decrease or refund that reflects the reduction in benefits payable;

(6) the converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, may not exceed those that would have been payable had the individual's coverage under the group policy remained in force and effect; and

(7) notwithstanding other provisions of this section, an insured individual whose eligibility for group long-term care coverage is based upon the individual's relationship to another person must be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage.

(g) If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the insurer and premiums charged to persons under the new group policy;

(1) may not result in an exclusion for preexisting conditions that would have been covered under the group policy being replaced; and

(2) may not vary or otherwise depend on the individual's health or disability status, claim experience or use of long-term care services.

(h) The purchase of additional coverage may not be considered a premium rate increase, but for purposes of the calculation required under 3 AAC 28.579, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium. A reduction in benefits may not be considered a premium change, but for purpose of the calculation required under 3 AAC 28.579, the initial annual premium shall be based on the reduced benefits. The premium charged to an insured may not increase due to either:

(1) the increasing age of the insured at ages beyond 65; or

(2) the duration the insured has been covered under the policy.

(i) In the case of a group defined under AS 21.53.200(3)(A), a requirement that a signature of an insured be acquired by an agent or insurer is satisfied if

(1) the consent is acquired by telephonic or electronic enrollment by the group policyholder or insure a verification of enrollment information shall be provided to the enrollee;

(2) the telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention and prompt retrieval of records; and

(3) the telephonic or electronic enrollment provides necessary and reasonable safeguards to assure that the confidentiality of personally identifiable information and other confidential information or records is maintained.

(j) The insurer shall make available not later than 10 working days, upon request of the director, records that will demonstrate the insurer's ability to confirm enrollment and coverage amounts.

Notes

3 AAC 28.552

Eff. 3/27/2022, Register 241, April 2022

Authority:AS 21.06.090

AS 21.53.020

AS 21.53.030

AS 21.53.050

AS 21.53.090