Senate Bill No. 111

Introduced By waterman

By Request of the State Auditor

A Bill for an Act entitled: "An Act relating to long-term care insurance; providing for monthly reports to policyholders; providing definitions; regulating policy terms concerning preexisting conditions or probationary periods; requiring an outline of coverage in a specified format and requiring approval of the outline by the commissioner of insurance; requiring certain disclosures; providing for exceptions to cancellation of policies; regulating conditions of prior hospitalization or institutionalization; authorizing the commissioner of insurance to adopt rules; regulating policy waiting periods; requiring delivery of a policy; regulating denial of claims; providing for benefit triggers;

amending sections 33-20-128, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1113, 33-22-1114, 33-22-1115, and 33-22-1121, MCA; and providing effective dates and a retroactive applicability date."

Be it enacted by the Legislature of the State of Montana:

Section 1.  Section 33-20-128, MCA, is amended to read:

"33-20-128.   Life insurance policy paying long-term benefits -- quarterly monthly report. When a long-term care benefit, funded through a life insurance vehicle by the acceleration of the death benefit, is in benefit payment status, a quarterly monthly report must be provided to the policyholder. The report must include the following information for the month for which the report is issued:

(1)  the amount of long-term care benefits paid out during each the month of the quarter;

(2)  an explanation of any changes in the policy, including without limitation death benefits or cash values, resulting from long-term care benefits having been paid out; and

(3)  the amount of long-term care benefits existing or remaining."

Section 2.  Section 33-22-1107, MCA, is amended to read:

"33-22-1107.   Definitions. As used in this part, the following definitions apply:

(1) "Activities of daily living" means:

(a) eating;

(b) toileting;

(c) transferring;

(d) bathing;

(e) dressing; and

(f) continence.

(1)(2)  "Applicant" means:

(a)  in the case of an individual long-term care insurance policy, the person who seeks to contract for the insurance; and

(b)  in the case of a group long-term care insurance policy, the proposed certificate holder.

(2)(3)  "Appropriate sale criteria" means the set of conditions that an insurance company is required to address with an applicant that help to determine whether or not a particular insurance policy or contract offered for sale is appropriate to the applicant. These conditions must include but are not limited to any insurance premium involved in the policy, the income of the applicant, and the savings and investments of the applicant.

(3)(4)  "Certificate" means a document issued to a member of the group covered under a group insurance policy that has been delivered or issued for delivery in this state as evidence that the individual named in the certificate is covered under the policy.

(5) "Chronically ill individual" means an individual who has been certified by a licensed health care practitioner as:

(a) being unable to perform, without substantial assistance from another individual, at least two activities of daily living for a past, present, or future period of at least 90 days due to a loss of functional capacity; or

(b) requiring substantial supervision to protect the individual from threats to the individual's health and safety due to a severe cognitive impairment.

(4)(6)  "Group long-term care insurance" means a long-term care insurance policy that is delivered or issued for delivery in this state and issued to:

(a)  (i) an employer;

(ii) a labor organization;

(iii) a trust established by an employer or labor organization; or

(iv) a trustee of a fund established by an employer or labor organization or a combination of employers and labor organizations for:

(A)  employees or former employees or a combination of employees and former employees; or

(B)  members or former members of the labor organization or a combination of members and former members;

(b)  a professional, trade, or occupational association for its current, former, or retired members or a combination of current, former, and retired members, if the association:

(i)  is composed of individuals all of whom are or were actively engaged in the same profession, trade, or occupation; and

(ii) has been maintained in good faith for purposes other than obtaining insurance; or

(c)  an association, a trust, or the trustee of a fund established, created, or maintained for the benefit of members of one or more associations.

(i)  Prior to advertising, marketing, or offering the policy within this state, the association or the insurer of the association shall file evidence with the commissioner that the association has:

(A)  a minimum of 100 persons at the outset;

(B)  been organized and maintained in good faith for purposes other than obtaining insurance;

(C)  been in active existence for at least 1 year; and

(D)  a constitution and bylaws requiring that the association hold regular meetings at least annually to further purposes of the membership; except for credit unions, the association collects dues or solicits contributions from members; and the members have voting privileges and representation on the governing board and committees.

(ii) Thirty days after filing, the association is considered as having satisfied the organizational requirements unless the commissioner finds after hearing that the association does not satisfy the organizational requirements.

(d)  a group other than as described in subsections (4)(a) (6)(a) through (4)(c) (6)(c) if the commissioner determines that the:

(i)  issuance of the group policy is not contrary to the best interests of the public;

(ii) issuance of the group policy would result in economies of acquisition or administration; and

(iii) benefits are reasonable in relation to the premiums charged.

(7) "Licensed health care practitioner" means any of the following individuals when licensed in this state:

(a) a physician, as defined in 42 U.S.C. 1395x(r)(1);

(b) a registered professional nurse;

(c) a licensed social worker; or

(d) another individual as determined by the rules of the commissioner adopted for purposes of compliance with the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191.

(5)(8)  (a) "Long-term care insurance":

(i)  means a policy as defined in subsection (6) (10) that is advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for a covered person, on an expense-incurred, indemnity, prepaid, or other basis, for a necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, or maintenance, or personal care service provided in a setting other than an acute care unit of a hospital that:

(A) is required by a chronically ill individual; and

(B) is provided pursuant to a plan of care prescribed by a licensed health care practitioner;

(ii) includes group and individual insurance policies or riders, whether issued by an insurer, fraternal benefit society, health service corporation, prepaid health plan, health maintenance organization, or similar organization;

(iii) includes group and individual annuities and life insurance policies or riders that provide directly or that supplement long-term care insurance; and

(iv) includes any product advertised, marketed, or offered as long-term care insurance regardless of any exceptions to the definition included in this section;

(v) means individual or group policies or certificates that do not pay or reimburse expenses incurred for service or items to the extent that the expenses are reimbursable under 42 U.S.C. 1395 or would be reimbursable except for the application of a deductible or coinsurance amount;

(vi) means individual or group policies or certificates that do not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed; and

(vii) means individual or group policies or certificates for which all refunds of premiums and all policyholder dividends or similar amounts under those policies or certificates are to be applied as a reduction in future premiums or to increase future benefits.

(b)  Long-term care insurance does not include:

(i) an insurance policy that is offered primarily to provide basic medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income protection coverage, accident-only coverage, specified disease or specified accident coverage, or limited benefit health coverage.; or

(c)(ii)  Long-term care insurance does not include life insurance policies that accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement and that provide the option of a lump-sum payment for those benefits and in which neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long-term care.

(d)(c)  An insurance policy that is offered primarily to provide basic medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income protection coverage, accident-only coverage, specified disease or specified accident coverage, or limited benefit health coverage and that also contains long-term care insurance benefits of a duration of at least 6 months is not required to meet the requirements of this part unless the premium allocable to the long-term care insurance benefits contained in the policy is greater than 25% of the total policy premium.

(9) "Maintenance or personal care services" means care, including protection from threats to health and safety due to a severe cognitive impairment, the primary purpose of which is to provide needed assistance to an individual with a disability that renders the individual a chronically ill individual.

(6)(10)  "Policy" means a policy as defined in 33-15-102, a membership contract as defined in 33-30-101, a health care services agreement as defined in 33-31-102 delivered or issued for delivery in this state by an insurer, fraternal benefit society, health service corporation, prepaid health plan, health maintenance organization, or similar organization.

(7)(11)  "Preexisting condition" means a condition for which medical advice or treatment was recommended by or received from a provider of health care services within 6 months preceding the effective date of coverage of an insured person.

(12) "Transferring" means moving into or out of a bed, chair, or wheelchair."

Section 3.  Section 33-22-1108, MCA, is amended to read:

"33-22-1108.   Preexisting condition -- definition. (1) A long-term care insurance policy or certificate other than a policy or certificate issued to a group as defined specified in 33-22-1107(3)(a) 33-22-1107(6)(a)(ii), (6)(a)(iii), or (6)(a)(iv) may not use a definition of preexisting condition which that is more restrictive than the definition in 33-22-1107.

(2)  A long-term care insurance policy or certificate may not exclude coverage for a loss or confinement that is the result of a preexisting condition unless the loss or confinement begins within 6 months following the effective date of coverage of an insured person.

(3) If a long-term care insurance policy or certificate replaces with similar benefits another long-term care insurance policy or certificate, the insurer issuing the replacing policy or certificate shall waive any time periods applicable to preexisting conditions or probationary periods in the replacing long-term care policy or certificate to the extent that similar time periods have been satisfied under the original policy.

(3)(4)  The commissioner may extend the limitation periods in subsections (1) and (2) as to specific age group categories in specific policy forms if extending the limitation periods is in the best interests of the public.

(4)(5)  An insurer may use an application form designed to elicit the complete health history of an applicant and on the basis of the answers on that application perform underwriting in accordance with the insurer's established underwriting standards. Unless otherwise provided in the long-term care insurance policy or certificate, a preexisting condition, regardless of whether it is disclosed on the application, need not be covered until the waiting period described in subsection (2) expires. A long-term care insurance policy or certificate may not exclude or use a waiver or rider of any kind to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions beyond the waiting period described in subsection (2)."

Section 4.  Section 33-22-1111, MCA, is amended to read:

"33-22-1111.   Outline of coverage. (1)(a) An insurer shall deliver an outline of coverage as approved by the commissioner to a prospective applicant for long-term care insurance at the time of initial solicitation through means that prominently direct the attention of the recipient to the document and its purpose.

(a)(b)  The commissioner shall prescribe a standard format, including style, arrangement, and overall appearance, and the content of the outline of coverage.

(b)(c)  In the case of insurance producer solicitations, an insurance producer shall deliver the outline of coverage prior to the presentation of an application or enrollment form.

(c)(d)  In the case of direct response solicitations, the insurer shall deliver the outline of coverage upon the earlier of the applicant's request or the delivery of the policy.

(2)  The outline of coverage must include:

(a)  a description of the principal benefits and coverage provided in the policy;

(b)  a statement of the principal exclusions, reductions, and limitations contained in the policy;

(c)  a statement of the terms under which the policy or certificate, or both, may be continued in force or discontinued, including any reservation in the policy of a right to change premiums. Continuation or conversion provisions of a group policy must be specifically described.

(d)  a statement that the outline of coverage is only a summary only of the policy issued or applied for, not a contract of insurance, and that the policy or group master policy contains governing contractual provisions;

(e)  a description of the terms under which the policy or certificate may be returned and the premium refunded; and

(f)  a brief description of the relationship of cost of care and benefits.

(3) The outline of coverage:

(a) must prominently display the name of the insurer;

(b) must be a freestanding document not dependant for purposes of reader comprehension upon any other document;

(c) must use no smaller than 12-point type; and

(d) may not contain material of an advertising nature."

Section 5.  Section 33-22-1113, MCA, is amended to read:

"33-22-1113.   Disclosure and performance standards for long-term care insurance. (1) The commissioner may by rule adopt standards for full and fair disclosure, setting forth the manner, content, and disclosures required to be made in a long-term care insurance policy, including but not limited to:

(a)  terms of renewability;

(b)  initial and subsequent conditions of eligibility;

(c)  nonduplication of coverage provisions;

(d)  coverage of dependents;

(e)  preexisting conditions;

(f)  termination of insurance;

(g)  continuation or conversion;

(h)  probationary periods;

(i)  limitations;

(j)  exceptions;

(k)  reductions;

(l)  elimination periods;

(m)  requirements for replacement;

(n)  recurrent conditions; and

(o)  definition of terms;

(p) prohibitions on limitations and exclusions;

(q) extension of benefits;

(r) discontinuance and replacement of policies;

(s) unintentional lapse;

(t) prohibitions against postclaim underwriting;

(u) minimum standards for home health and community care benefits;

(v) inflation protection; and

(w) incontestability period.

(2)  A group long-term care insurance policy must include a provision relating to conversion on termination of eligibility as described in 33-22-508 or include a provision for continuation of coverage that maintains coverage under the existing group policy if the coverage would otherwise terminate."

Section 6.  Section 33-22-1114, MCA, is amended to read:

"33-22-1114.   Prohibited practices and policy provisions. (1) An insurance company may not issue a refund to a person other than the owner of the policy or certificate.

(2)  A long-term care insurance policy may not:

(a)  be canceled, nonrenewed, or otherwise terminated on the any grounds of the age or the deterioration of the mental or physical health of an insured or a certificate holder other than the insured's or certificate holder's failure to pay the premium;

(b)  contain a provision establishing a new waiting period if existing coverage is converted to or replaced by a new or other form within the same company, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder; or

(c)  provide coverage for only skilled nursing care or provide substantially more coverage for skilled nursing care in a facility than coverage for lower levels of care."

Section 7.  Section 33-22-1115, MCA, is amended to read:

"33-22-1115.   Prior hospitalization or institutionalization. (1) A long-term care insurance policy may not be delivered or issued for delivery in Montana if the policy conditions eligibility for a benefit:

(a)  on a prior hospitalization requirement; or

(b)  provided in an institutional care setting on the receipt of a higher level of institutional care; or

(c) other than waiver of premium, postconfinement benefits, postacute care benefits, or recuperative benefits, on a prior institutionalization requirement.

(2)  A long-term care insurance policy containing a limitation or condition for eligibility other than those prohibited in subsection (1) must clearly label, in a separate paragraph of the policy or certificate entitled "Limitations or Conditions on Eligibility for Benefits", the limitations or conditions, including the required number of days of confinement.

(3)  A long-term care insurance policy that contains a benefit advertised, marketed, or offered as a home health care benefit may not condition receipt of a benefit on a prior institutionalization requirement.

(4)  A long-term care insurance policy that conditions eligibility of noninstitutional benefits on the prior receipt of institutional care may not require a prior institutional stay of more than 30 days for which benefits are paid.

(5)  A long-term care insurance policy that provides a benefit only following institutionalization may not condition the benefit upon admission to a facility for the same or a related condition within a period of less than 30 days after discharge from the institution."

Section 8.  Section 33-22-1121, MCA, is amended to read:

"33-22-1121.   Rules. The commissioner may adopt rules necessary to implement this part, including but not limited to rules that:

(1) establish loss ratio standards for long-term care insurance policies; and

(2)  specify the requirements for offering the sale of a policy with nonforfeiture benefits and the types of appropriate sale criteria to be communicated at the time of application;

(3) establish a requirement for the mandatory triggering of policy benefits based upon the number of activities of daily living an individual is capable or incapable of performing; and

(4) are necessary to implement a determination made by the secretary of health and human services pursuant to Public Law 104-191 as to who is a licensed health care practitioner."

NEW SECTION. Section 9.  Policy waiting periods not cumulative. A waiting or elimination period contained in a long-term care insurance policy under which an insured is required to wait a specified period of time before receiving policy benefits must be concurrent with any 90-day period used to determine whether an individual is a chronically ill individual.

NEW SECTION. Section 10.  Delivery of policy or certificate. If an application for a long-term care insurance policy or a certificate meeting the requirements of Public Law 104-191 is approved, the issuer of the policy or certificate shall deliver the policy or certificate to the applicant, policyholder, or certificate holder not later than 30 days after the date of issue.

NEW SECTION. Section 11. Denial of claims. If a claim under a long-term care insurance policy or certificate meeting the requirements of Public Law 104-191 is denied, the issuer shall, not later than 60 days after the receipt of a written request by the policy holder, certificate holder, or the representative of either of them:

(1) provide a written explanation of the reasons for the denial; and

(2) provide all information possessed by the issuer relating to the denial.

NEW SECTION. Section 12. Benefit triggers. A long-term care insurance policy or certificate may not be delivered or issued for delivery in this state unless it complies with the requirements, as established by rules of the commissioner, for the triggering of mandatory provision of benefits.

NEW SECTION. Section 13.  Codification instruction. [Sections 9 through 12] are intended to be codified as an integral part of Title 33, chapter 22, part 11, and the provisions of Title 33, chapter 22, part 11, apply to [sections 9 through 12].

NEW SECTION. Section 14.  Retroactive applicability. [Sections 1 through 12] apply retroactively, within the meaning of 1-2-109, to long-term care insurance policies or certificates as defined in 33-22-1107 issued in Montana or issued for delivery in Montana after January 1, 1997.

NEW SECTION. Section 15.  Effective dates. (1) Except as provided in subsection (2), [this act] is effective on passage and approval.

(2) [Sections 1 through 7 and 9 through 12] are effective October 1, 1997.

-END-