Ariz. Admin. Code § R20-6-1006 - Inflation Protection
A. An
insurer shall not offer a long-term care insurance policy unless the insurer
offers to the policyholder, at the time of purchase, in addition to any other
inflation protection, the option to purchase a policy with an inflation
protection provision 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. The terms of the required provision shall be no less favorable than one
of the following:
1. A provision that
provides for annual increases in benefit levels compounding annually at a rate
of not less than 5%;
2. A provision
that guarantees an insured the right to periodically increase benefit levels
without providing evidence of insurability or health status, if the insured did
not decline the option for the previous period. The increased 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
from the purchase of the existing benefit and extending until the year in which
the offer is made; or 3. A provision for coverage of a specified percentage of
actual or reasonable charges that is not subject to a maximum specified
indemnity amount or limit.
B. If the policy is issued to a group, the
insurer shall extend the offer required by subsection (A) to the group
policyholder; except, if the policy is issued under A.R.S. §
20-1691.04(C) to a group, other than to a continuing care
retirement community, the insurer shall make the offer to each proposed
certificateholder.
C. An insurer is
not required to make the offer in subsection (A) for life insurance policies or
riders with accelerated long-term care benefits.
D. An insurer shall include the information
listed in this subsection in or with 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. If premium increases or additional premiums will be
based on the attained age of the applicant at the time of the increase, the
insurer shall provide a revised schedule of attained-age premiums. An insurer
may use a reasonable hypothetical or a graphic demonstration for this
disclosure.
E.
Inflation-protection benefit increases shall continue without regard to an
insured's age, claim status, claim history, or length of time the person has
been insured under the policy.
F.
An insurer's offer of inflation protection that provides for automatic benefit
increases shall include an offer of a premium that the insurer expects to
remain constant. The insurer shall disclose in the offer in a conspicuous
manner that the premium may change in the future unless the premium is
guaranteed to remain constant.
G.
An insurer shall include in a long-term care insurance policy inflation
protection as provided in subsection (A)(1) unless the insurer obtains a
rejection of inflation protection signed by the insured as required in
subsection (H). The rejection may be either on the application form or on a
separate form.
H. A rejection of
inflation protection is deemed part of an 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
reviewed Plans [insert description of plans], and I reject inflation
protection."
Notes
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