To remove the 24-month nursing home coverage requirement for long term care insurance policies sold after July 1, 2006, and to state that a long term care insurance policy shall be incontestable after two years.

DEPARTMENT OF FINANCIAL SERVICES
OIR – Insurance Regulation

RULE NO: RULE TITLE
69O-157.004: Out-of-State Group Long-Term Care Insurance
69O-157.104: Policy Practices and Provisions
69O-157.114: Filing Requirement - Out of State Groups
69O-157.117: Prohibition Against Preexisting Conditions and Probationary Periods in Replacement Policies or Certificates
PURPOSE AND EFFECT: To remove the 24-month nursing home coverage requirement for long term care insurance policies sold after July 1, 2006, and to state that a long term care insurance policy shall be incontestable after two years.
SUMMARY: HB 947 made changes to Florida law regarding Long Term Care. This law did two things, one, it stated that after 24 months, a long term care policy was incontestable, and two, it removed the clause which prohibited a long term care policy from providing for less than 24 consecutive months for nursing home care.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS: No Statement of Estimated Regulatory Cost was prepared.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
SPECIFIC AUTHORITY: 624.308(1), 626.9611, 627.9407(1), (6), 627.9408 FS.
LAW IMPLEMENTED: 624.307(1), 626.9541(1)(a), (g), 627.410, 627.603, 627.646, 627.9402, 627.9403, 627.9405(2), 627.9406, 627.9407, 627.94076, 627.9408 FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
DATE AND TIME: May 14, 2008, 9:30 a.m.
PLACE: 142 Larson Building, 200 East Gaines Street, Tallahassee, Florida
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Gerry Smith [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Gerry Smith [e-mail]

THE FULL TEXT OF THE PROPOSED RULE IS:

69O-157.004 Out-of-State Group Long-Term Care Insurance.

(1) No group long-term care insurance coverage may be offered to a resident of this state under a group policy issued in another state to a group described in Section 627.9405(1)(c) or (d), F.S., unless this state or such other state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in this state has made a determination that such requirements have been met. Evidence to this effect shall be filed by the insurer with the department pursuant to the procedures specified in Section 627.410, F.S. Such evidence shall consist of:

(a) Filing of policy and certificate forms, including rates and rate development information, which demonstrate that the requirements of Sections 627.9401-.9408, Florida Statutes, and these rules have been met, except Section 627.9405(2), F.S; or

(b)1. Filing of a truthful certification by an officer of the insurer that another state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in Florida has made a determination that such requirements have been met; and

2. Filing of the policy and certificate forms to be issued and delivered, including rates and rate development information, which demonstrate that the requirements of another state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in Florida have been met.

(2) In order for a state to be deemed to have statutory and regulatory long-term care insurance requirements substantially similar to those adopted in Florida, such state must require that long-term care policies meet at least all of the following requirements:

(a) A minimum period of coverage of at least 24 consecutive months for each covered person;.  This provision is not applicable to coverage issued or renewed after July 1, 2006.

(b) Minimum loss ratio standards at levels at which benefits are reasonable in relation to premiums and calculated in a manner which provides for adequate reserving of the long-term care insurance risk;

(c) A 30-day “free look” period, or longer, within which individual certificateholders have the right to return the certificate after its delivery and to have the premium refunded for any reason;

(d) A prohibition or limitation on pre-existing condition exclusions at least as favorable to a policyholder as that specified in Section 627.9407(4), Florida Statutes;

(e) A prohibition against a policy or certificate excluding or using waivers or riders of any kind to exclude, limit, or reduce coverage or benefits for specifically named or described pre-existing diseases or physical conditions beyond any pre-existing condition waiting period;

(f) A prohibition or limitation on prior institutionalization provisions at least as favorable to a policyholder as that specified in Section 627.9407(5), Florida Statutes, including the mandatory offer provisions of paragraph (5)(c) of such section;

(g) A prohibition or limitation on policy cancellations or nonrenewals at least as favorable to a policyholder as that specified in Section 627.9407(3)(a), Florida Statutes; and

(h) A prohibition against a policy restricting its coverage to care only in a nursing home or providing significantly more coverage for such care than coverage for lower levels of care;

(i) A requirement that policies prominently disclose that the policy may not cover all of the costs associated with long-term care which may be incurred by the buyer during the period of coverage and that the buyer is advised to periodically review the policy in relation to the changes in the cost of long-term care.

(j) Except for nonpayment of premiums and as provided by Section 627.94076, F.S., provide all insureds an endorsement that provides that upon renewal of a policy on or after July 1, 2008, the coverage shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years after its date of issue.

(3) Unless a group policy issued in another state has been filed for approval in Florida, no such policy or certificate issued thereunder shall contain a statement that the policy has been approved as a long-term care policy meeting the requirements of Florida law or words of similar meaning.

(4)(a) All changes to rates, together with an actuarial memorandum developing and justifying the rate change, shall be filed with the Office pursuant to the procedures specified in Section 627.410, F.S., and Rule Chapter 69O-149, F.A.C., as though the policy had been issued in Florida.

(b) For those policies which have been determined to be regulated by a state with substantially similar long term care insurance requirements, pursuant to paragraph 69O-157.004(1)(b), F.A.C., form and rate changes shall be filed for informational purposes at least 30 days prior to use.

Specific Authority 624.308(1), 627.9407(1) FS. Law Implemented 624.307(1), 627.410, 627.9403, 627.9406, 627.9407(1), (8) FS. History–New 5-17-89, Formerly 4-81.004, Amended 1-13-03, Formerly 4-157.004, Amended_________.

 

69O-157.104 Policy Practices and Provisions.

(1) through (3) No change.

(4) Minimum Coverage.

(a) All long-term care policies shall provide coverage for at least 24 consecutive months for each covered person for care in a nursing home.  This provision is not applicable to coverage issued or renewed after July 1, 2006.

(b) All long-term care policies shall provide coverage for at least one type of lower level of care, in addition to coverage for care in a nursing home.

(c)1.a. No long-term care policy shall provide significantly more coverage for care in a nursing home than coverage for lower levels of care. In furtherance of this requirement, benefits for all lower levels of care in the aggregate, as determined by the insured for each policy, shall provide a level of benefits equivalent to at least 50 percent of the benefits provided for nursing home coverage; i.e., if the nursing home benefit amount is $100 per day then the required lower level of care benefit amount shall be at least $50 per day.

b. For the purposes of applying this 50 percent equivalency requirement to a policy benefit period, the lower level of care shall be, in the aggregate, at least 50 percent of the benefit period provided for nursing home coverage.

c. If a long-term care policy provides nursing home coverage for an unlimited duration, the lower level of care shall be payable for at least 3 years in the aggregate.

2. A long-term care policy may use an overall lifetime benefit maximum, in lieu of the specific coverage identified by paragraph (c), above, which may be exhausted by any combination of benefits provided the overall lifetime benefit maximum is at least 150 percent of the minimum coverage required by paragraph 69O-157.104(4)(a), F.A.C., times the amount of daily nursing home benefit purchased.

(d) For the purposes of this rule, “lower level(s) of care” means the following:

1. Nursing service;

2. Assisted living facility;

3. Home health services;

4. Adult day care center;

5. Adult foster home;

6. Community care for the elderly; and

7. Personal care and social services.

(5) through (11) No change.

Specific Authority 624.308(1), 627.9407(1), (6), 627.9408 FS. Law Implemented 624.307(1), 627.410(6), 627.603, 627.646, 627.9402, 627.9405(2), 627.9407 FS. History–New 1-13-03, Formerly 4-157.104, Amended_________.

 

69O-157.114 Filing Requirement - Out of State Groups.

(1) No group long-term care insurance coverage may be offered to a resident of this state under a group policy issued in another state to a group described in Section 627.9405(1)(c) or (d), F.S., unless this state or such other state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in this state has made a determination that the requirements have been met. Evidence to this effect shall be filed by the insurer with the Office pursuant to the procedures specified in Section 627.410, F.S. The evidence shall consist of:

(a) Filing of policy and certificate forms, including rates and rate development information, as though the policy/certificate were issued in this state, which demonstrate that the requirements of Sections 627.9401-627.9408, F.S., and these rules have been met; or

 (b)1. Filing of a truthful certification by an officer of the insurer that another state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in Florida has made a determination that such requirements have been met; and

2. Filing of the policy and certificate forms to be issued and delivered, including rates and rate development information, which demonstrate that the requirements of another state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in Florida have been met.

(2) In order for a state to be deemed to have statutory and regulatory long-term care insurance requirements substantially similar to those adopted in Florida, that state shall require that long-term care policies meet at least all of the following requirements:

(a) A minimum period of coverage of at least 24 consecutive months for coverage in a nursing home for each covered person and an additional coverage of 50 percent for lower levels of care as provided in subsection 69O-157.104(4), F.A.C.  The minimum 24 month nursing home coverage is not applicable to coverage issued or renewed after July 1, 2006.

(b) The standards of Rules 69O-157.108 and 69O-157.113, F.A.C.;

(c) A 30-day “free look” period, or longer, within which individual certificateholders have the right to return the certificate after its delivery and to have the premium refunded for any reason;

(d) A prohibition or limitation on pre-existing condition exclusions at least as favorable to a policyholder as that specified in Section 627.9407(4), F.S.;

(e) A prohibition against a policy or certificate excluding or using waivers or riders of any kind to exclude, limit, or reduce coverage or benefits for specifically named or described pre-existing diseases or physical conditions beyond any pre-existing condition waiting period;

(f) A prohibition or limitation on prior institutionalization provisions at least as favorable to a certificateholder as that specified in Section 627.9407(5), F.S., including the mandatory offer provisions of paragraph (5)(c) of that section;

(g) A prohibition or limitation on certificate cancellations or nonrenewals at least as favorable to a certificateholder as that specified in Section 627.9407(3)(a), F.S.;

(h) A requirement that a policy and certificate prominently disclose that the policy and certificate may not cover all of the costs associated with long-term care which may be incurred by the buyer during the period of coverage and that the buyer is advised to periodically review the certificate in relation to the changes in the cost of long-term care;

(i) A minimum 30 day grace period for nonpayment of premium with notice and protection requirements as provided by Section 627.94073, F.S.;

(j) Pursuant to Section 627.94072, F.S., a mandatory offer to the potential insured policyholder or certificateholder, as applicable, of a nonforfeiture provision meeting the standards of Rule 69O-157.118, F.A.C.;

(k) Pursuant to Section 627.94072, F.S., a mandatory offer to the potential insured policyholder or certificateholder, as applicable, of an inflation protection provision:

(l) Contain a contingent benefit upon lapse provision at least as favorable to the insured as that in Rule 69O-157.118, F.A.C.;

(m) Disclosure of rating practices to consumers as outlined in Rule 69O-157.107, F.A.C.;

(n) A conversion or continuation privilege at least as favorable as subsection 69O-157.104(8), F.A.C.; and

(o) A prohibition or limitation on an elimination period in excess of 180 days; and

(p) Pursuant to Section 627.94076, F. S., provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years after its date of issue except for nonpayment of premiums. For any long-term care insurance policy issued prior to July 1, 2006, the provisions of Section 627.94076, F.S., shall apply to such policy only upon renewal of such policy on or after July 1, 2008, and the policy shall so provide by endorsement to the policy.

(3) Unless a group policy issued in another state has been filed for approval in Florida, no such policy or certificate issued thereunder shall contain a statement that the policy has been approved as a long-term care policy meeting the requirements of Florida law or words of similar meaning.

(4)(a) All changes to rates, together with an actuarial memorandum developing and justifying the rate change, shall be filed with the Office pursuant to the procedures specified in Section 627.410, F.S., and this rule chapter as though the policy had been issued in Florida.

(b) For those policies which have been determined to be regulated by a state with substantially similar long term care insurance requirements pursuant to paragraph 69O-157.114(1)(b), F.A.C., form and rate changes shall be filed for informational purposes at least 30 days prior to use.

Specific Authority 624.308(1), 627.9407(1), 627.9408 FS. Law Implemented 624.307(1), 627.410, 627.9402, 627.9406, 627.9407(1), (3), (4), (8), (9), 627.94076, 627.9408 FS. History–New 1-13-03, Formerly 4-157.114, Amended_________.

 

69O-157.117 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 time limit on certain defenses, preexisting conditions and probationary periods in the new long-term care policy for similar benefits to the extent that similar exclusions have been satisfied under the original policy.

Specific Authority 624.308(1), 626.9611, 627.9407(1), 627.9408 FS. Law Implemented 624.307(1), 626.9541(1)(a), (g), 627.9402, 627.9407(1), 627.94076,  627.9408 FS. History–New 1-13-03, Formerly 4-157.117, Amended_________.

NAME OF PERSON ORIGINATING PROPOSED RULE: Gerry Smith [e-mail]
NAME OF SUPERVISOR OR PERSON WHO APPROVED THE PROPOSED RULE: Gerry Smith [e-mail]
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: December 27, 2007
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAW: February 1, 2008