28 Tex. Admin. Code § 3.3820 - Requirement To Offer Inflation Protection
(a) No insurer or other entity may offer a
long-term care insurance policy or certificate in this state unless such
insurer or other entity also offers to the prospective insured, or to the group
policyholder, if the group policy will be issued to an employer, labor union,
or continuing care retirement center, the option to purchase a policy that
provides for benefit levels to increase throughout the interval of coverage to
account for reasonably anticipated increases in the costs of long-term care
services covered by the policy. Insurers must offer to each applicant, at the
time of purchase, the option to purchase a policy that provides the inflation
protection set out in paragraphs (1), (2), or (3) of this subsection.
(1) The policy and certificate shall be
structured so that benefit levels increase annually, in a manner so that the
increases are compounded at a rate not less than 5.0% annually throughout the
interval of coverage.
(2) The
policy and certificate shall guarantee the policyholder and certificate holder,
if applicable, the opportunity to increase benefit levels on the annual policy
anniversary date throughout the interval of coverage without providing evidence
of insurability or health status, such that the additional benefit amount is
not less than 5.0% greater than the original benefit amount, compounded
annually. Such increase to benefit levels shall occur automatically unless the
policyholders and certificate holders, if applicable, specifically rejected the
option to increase in writing within 30 days following the anniversary date of
the policy or coverage.
(3) The
policy shall cover a specified percentage of actual or reasonable charges
throughout the interval of coverage and not include a maximum specified
indemnity or per diem amount or limit.
(b) The inflation protection provisions in
subsection (a) of this section shall be required to be included in any
long-term care insurance policy and certificate unless an insurer obtains a
written rejection of inflation protection signed by the prospective
policyholder, as provided in this subsection.
(1) The rejection shall be considered 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 (and
certificate, if applicable) with and without inflation protection. I realize
that based on current health care cost trends, the benefits provided by a
long-term care plan which does not have meaningful inflation protection may be
significantly diminished in terms of real value to me, depending on the amount
of time which elapses between the date I purchase the policy and the date on
which I first become eligible to use them. Specifically I have reviewed Plans
___________, and I reject inflation protection."
(2) The agent shall provide information to
assist the prospective policyholder in accurately completing the statement with
respect to the plans reviewed by the applicant and specified in paragraph (1)
of this subsection.
(c)
Where the policy is offered to a group, the offer required by provisions of
this subsection shall be made to the group policyholder; except that in the
instance where the group policy will not be issued to an employer, labor union,
or continuing care retirement community, the offering shall be made to each
prospective covered individual.
(d)
Inflation protection benefit increases under a policy which contains provisions
for such increases, whether automatic or optional with the insured, 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.
(e) An offer of inflation protection
providing for automatic benefit increases shall include an offer of a premium
which the insurer expects to remain constant. Such offer shall disclose in a
conspicuous manner, in no smaller than 12-point (where one point is 1/72 of an
inch) boldface type, that the premium may change in the future unless the
premium is guaranteed to remain constant.
(f) Upon rejection of the inflation
protection set forth in subsection (a) of this section, an insurer may offer
other forms of inflation protection.
Notes
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