02-031 C.M.R. ch. 425, § 8 - Policy Disclosures

Current through 2022-14, April 6, 2022

A. Renewability. All long-term care insurance policies shall contain a renewability provision. The provision shall be appropriately captioned, shall appear on the first page of the policy, and shall clearly state that the coverage is guaranteed renewable or noncancelable. This subsection shall not apply to policies that do not contain a renewability provision and under which the right to nonrenew is reserved solely to the policyholder.

B. Riders and Endorsements. Except for riders or endorsements that effectuate a request made in writing by the insured under an individual policy after date of issue or at reinstatement or renewal that reduce or eliminate the policy, all riders or endorsements added to an individual long-term care insurance policy after the date of issue or at reinstatement or renewal that reduce or eliminate benefits or coverage in the policy shall require signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement that increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in a writing signed by the insured, except if the increased benefits or coverage are required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy, rider or endorsement.

C. Payment of Benefits. A policy that provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or words of similar import, shall comply with the following requirements:

(1) It must include a definition of these terms and an explanation of the terms in its accompanying outline of coverage.

(2) It must clearly disclose that the insured or enrollee may be subject to balance billing as a result of claims adjustment

(3) It must provide a toll-free number that an insured or enrollee may call prior to receiving services to determine the maximum allowable charge permitted by the carrier for a specified service.

(4) The carrier must provide to the superintendent on request complete information on the methodology and specific data used by the carrier or any 3rd party on behalf of the carrier in adjusting any claim submitted by or on behalf of the insured or enrollee. In considering the reasonableness of the methodology for calculating maximum allowable charges, the superintendent shall consider whether the methodology takes into account relevant data specific to this State if there is sufficient data to constitute a representative sample of charge data for the same or comparable service.

D. Limitations. If a policy or certificate contains any limitations with respect to preexisting conditions defined in accordance with 24-A M.R.S.A. §5075(2), the limitations shall appear as a separate paragraph in the policy or certificate and shall be labeled as "Preexisting Condition Limitations."

E. Other Limitations or Conditions on Eligibility for Benefits. A policy or certificate containing any limitation or condition for eligibility, other than those prohibited by 24-A M.R.S.A. §5075, shall set forth a description of the limitations or conditions, including any required number of days of confinement, in a separate paragraph of the policy or certificate labeled "Limitations or Conditions on Eligibility for Benefits."

F. Disclosure of Federal and State Income Tax Consequences

The face page of the policy, certificate or rider shall state prominently whether the policy or certificate is intended to qualify for income tax benefits under federal law and state law.

(1) If the insurer intends tax qualification under federal law, the face page also shall state that the insurer intends tax qualification under Maine law. The statement for income tax qualification shall provide in substance that:

This [policy] [certificate] [rider] is intended to be a federally tax-qualified contract under Internal Revenue Code § 7702(B)(b), and also is intended to be a state tax-qualified contract pursuant to 36 M.R.S.A. §5122(2)(L). The person who pays the premiums may be entitled to an income-tax deduction. The insured should seek the assistance of a personal tax advisor.

(2) If the insurer does not intend tax qualification under the Internal Revenue Code, the policy, certificate or rider may nevertheless be eligible for tax qualification as a long term care insurance policy under Maine law, pursuant to 24-A M.R.S.A. §5075-A. If the policy, certificate or rider does not qualify under the Internal Revenue Code, but is certified under Maine law as "eligible long term care insurance," the statement for income tax qualification shall provide in substance that:

This [policy][certificate][rider] is intended to be a Maine state tax-qualified contract pursuant to 36 M.R.S.A. §5122(2)(L). The person who pays the premiums may be entitled to a Maine income-tax deduction. The [policy][certificate][rider] is not intended to qualify for federal income tax benefits. The insured should seek the assistance of a personal tax advisor.

(3) Every disclosure statement, whether or not tax qualification is intended, shall provide that the insured should seek assistance from a personal tax advisor.

G. Disclosure of Tax Consequences Arising from Accelerated Benefits in Life Insurance Policy. In life insurance policies containing an accelerated benefit for long-term care, there shall be a prominent statement disclosing that payment of accelerated benefits may be taxable as income, and that the insured should seek the assistance of a personal tax advisor.

H. Benefit Triggers. Activities of daily living and cognitive impairment shall be used to measure an insured's need for long term care and shall be described in the policy or certificate in a separate paragraph and shall be labeled "Eligibility for the Payment of Benefits." Any additional benefit triggers shall also be explained in this section. If these triggers differ for different benefits, an explanation of the trigger shall accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this level also shall be specified.

I. Free-Look Provision. Every long-term care insurance policy or certificate shall contain a notice prominently printed on the face page or attached to the policy or certificate stating that the applicant or enrollee has the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the applicant is not satisfied for any reason.

Notes

02-031 C.M.R. ch. 425, § 8