Ariz. Admin. Code § R20-6-1010 - Requirements for Application Forms and Replacement Coverage, Prohibition Against Preexisting Conditions and Probationary Periods in Replacement Policies or Certificates; Reporting Requirements
A. An insurer's application form for a
long-term care insurance policy shall include the questions listed in this
Section to elicit information as to whether, as of the date of the application,
the applicant has another long-term care insurance policy or certificate in
force or whether a long-term care policy or certificate is intended to replace
any other health or long-term care policy or certificate presently in force. An
insurer may include the questions in a supplementary application or other form
to be signed by the applicant and insurance producer, except where the coverage
is sold without an insurance producer. For a replacement policy issued to a
group as defined in A.R.S. §
20-1691(5)(a),
the insurer may modify the questions only to the extent necessary to elicit
information about health or long-term care insurance policies other than the
group policy being replaced if the certificateholder has been notified of the
replacement.
1. Do you have another long-term
care insurance policy or certificate in force (including health care service
contract, health maintenance organization contract)?
2. Did you have another long-term care
insurance policy or certificate in force during the last 12 months?
a. If so, with which company?
b. If that policy lapsed, when did it
lapse?
3. Are you
covered by Medicaid?
4. Do you
intend to replace any of your medical or health insurance coverage with this
policy or certificate?
B. The application or enrollment form for
such policies or certificates shall clearly indicate the payment plan the
applicant selects.
C. An insurance
producer shall list any other health insurance policies the insurance producer
has sold to the applicant, including:
1.
Policies that are still in force, and
2. Policies sold in the past five years that
are no longer in force.
D. Solicitations Other than Direct Response.
On determining that a sale will involve replacement, an insurer, other than an
insurer using direct response solicitation methods, or its insurance producer;
shall furnish the applicant, before issuing or delivering the individual
long-term care insurance policy, a notice that substantially conforms to the
form prescribed in Appendix C or D regarding replacement of health or long-term
care coverage. The insurer shall:
1. Give one
copy of the notice to the applicant, and
2. Keep an additional copy signed by the
applicant.
E. Direct
Response Solicitations. Insurers using direct response solicitation methods as
defined in A.R.S. §
20-1661
shall deliver a notice that substantially conforms to the form prescribed in
Appendix C or D regarding replacement of health or long-term care coverage to
the applicant upon issuance of the policy.
F. If replacement is intended, the replacing
insurer shall send the existing insurer written notice of the proposed
replacement within five working days from the date the replacing insurer
receives the application or issues the policy, whichever is sooner. The notice
shall identify the existing policy by name of the insurer and the insured, and
policy number or insured's address including zip code.
G. A life insurance policy that accelerate
benefits for long-term care shall comply with this Section if the policy being
replaced is a long-term care insurance policy. If the policy being replaced is
a life insurance policy, the insurer shall comply with the replacement
requirements of Title 20, Chapter 6, Article 1.1. If a life insurance policy
that accelerates benefits for long-term care is replaced by another such
policy, the replacing insurer shall comply with the requirements of this
Section and with A.R.S. Title 20, Chapter 6, Article 1.1.
H. Prohibition against preexisting conditions
and probationary periods in replacement policies or certificates. If a
long-term care insurance policy or certificate replaces another long-term care
policy or certificate, the replacing insurer shall waive any time periods
applicable to preexisting conditions and probationary periods in the new
long-term care policy for similar benefits if similar exclusions are satisfied
under the original policy.
I.
Reporting requirements.
1. An insurer shall
maintain the following records for each insurance producer:
a. The amount of the insurance producer's
replacement sales as a percent of the insurance producer's total annual sales,
and
b. The amount of lapses of
long-term care insurance policies sold by the insurance producer as a percent
of the insurance producer's total annual sales.
2. No later than June 30 of each year, on the
forms specified in Appendix E and Appendix F, an insurer shall report the
following information for the preceding calendar year to the Department:
a. The 10% of its insurance producers
licensed in Arizona with the greatest percentages of lapses and replacements as
measured by subsection (I)(1);
b.
The number of lapsed policies as a percent of the total annual sales and as a
percent of the insurer's total number of policies in force as of the end of the
preceding calendar year;
c. The
number of replacement policies sold as a percent of the insurer's total annual
sales and as a percent of its total number of policies in force as of the end
of the preceding calendar year; and
d. For qualified long-term care insurance
contracts, the number of claims denied for each class of business, expressed as
a percentage of claims denied.
J. In subsection (I):
1. "Claim" means a request for payment of
benefits under an in-force policy, regardless of whether the benefit claimed is
covered under the policy or any terms or conditions of the policy have been
met.
2. "Denied" means the insurer
refuses to pay a claim for any reason other than for claims not paid for
failure to meet the waiting period or because of an applicable preexisting
condition.
3. "Policy" means only
long-term care insurance.
4.
"Report" means on a statewide basis.
K. Reported replacement and lapse rates do
not alone constitute a violation of insurance laws or necessarily imply
wrongdoing. The reports are for the purpose of reviewing more closely agent
activities regarding the sale of long-term care insurance. Reports required
under this Section shall be filed with the Director.
L. Annual rate certification requirements.
This subsection applies to any long-term care policy issued in Arizona on or
after November 10, 2017. The following annual submission requirements apply
subsequent to initial rate filings for individual long-term care insurance
policies made under this Section:
1. An
actuarial certification prepared, dated and signed by a member of the American
Academy of Actuaries which contains a statement of the sufficiency of the
current premium rate schedule, including:
a.
For the rate schedules currently marketed, that the premium rate schedule
continues to be sufficient to cover anticipated costs under moderately adverse
experience and that the premium rate schedule is reasonably expected to be
sustainable over the life of the form with no future premium increases
anticipated or a statement that margins for moderately adverse experience may
no longer be sufficient. For a statement that margins for moderately adverse
experience may no longer be sufficient, the insurer shall provide to the
Director, within 60 days of the date the actuarial certification is submitted
to the Director, a plan of action, including a time frame, for the
re-establishment of adequate margins for moderately adverse experience so that
the ultimate premium rate schedule would be reasonably expected to be
sustainable over the future life of the form with no future premium increases
anticipated. Failure to submit a plan of action to the Director within 60 days
or to comply with the time frame stated in the plan of action constitutes
grounds for the Director to withdraw or modify approval of the form for future
sales pursuant to A.R.S. §
20-1691.08.
b. For the rate schedules that are no longer
marketed, that the premium rate schedule continues to be sufficient to cover
anticipated costs under best estimate assumptions or that the premium rate
schedule may no longer be sufficient. If the premium rate schedule is no longer
sufficient, the insurer shall provide to the Director, within 60 days of the
date the actuarial certification is submitted to the Director, a plan of
action, including time frame, for the re-establishment of adequate margins for
moderately adverse experience;
2. A description of the review performed that
led to the statement; and
3. An
actuarial memorandum dated and signed by a member of the American Academy of
Actuaries who prepares the information shall be prepared to support the
actuarial certification and provide at least the following information:
a. A detailed explanation of the data sources
and review performed by the actuary prior to making the statement in subsection
(L)(1),
b. A complete description
of experience assumptions and their relationship to the initial pricing
assumptions,
c. A description of
the credibility of the experience data, and
d. An explanation of the analysis and testing
performed in determining the current presence of margins.
4. The actuarial certification required
pursuant to subsection (L)(1) must be based on calendar year data and submitted
annually starting in the second year following the year in which the initial
rate schedules are first used. The actuarial memorandum required pursuant to
subsection (L)(3) must be submitted at least once every three years with the
certification.
Notes
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