Chapter 3
Through Partnership Policies
Partnership
policies may never reach all states. At this time, Partnership
policies are only available in California, Connecticut, Indiana and New York. They are not currently
available in Washington, although legislation has been adopted to allow them to
operate. In these states Partnership policies are sold by private insurers in
partnership with each state's Medicaid program. With these policies came a
guarantee that some or all of one's assets will be protected from Medicaid spend-down
requirements, even if the benefits run out under the insurance policy.
Therefore, it is not usually necessary to purchase lifetime benefits when
buying a Partnership policy; simply enough to cover the quantity of assets to
be protected. A three to four year policy is usually recommended.
In California, and Connecticut, the amount
of insurance protection purchased is the amount of assets that will be
protected (dollar for dollar protection). It is not necessary to spend-down
that money, although anything over that amount would have to be spent down. New
York is even more generous. They allow asset protection if a Partnership policy
is purchased with three or more years of coverage. When such a policy is
purchased, the insured becomes eligible for Medicaid after the insured period
(or after 6 or more years of home care) without spending down any assets at
all.
Indiana
was originally like California and Connecticut, but now they use a combination formula, combining dollar-for-dollar
protection and state-set dollar amounts. If a state-set dollar amount is purchased initially, the
policy-owner earns total asset protection.
If initial coverage purchased is less than this specified amount, the
policyowner earns dollar-for-dollar asset protection.
It should be noted that Partnership policies
protect assets, not income. Income must still be spent on nursing home care,
apart from any allowance for a spouse or for personal needs. This is true for
all policies, not just Partnership policies. No policy protects income once
benefits are used up and the insured goes on Medicaid.
Partnership policies can be as good, better
or even worse than traditional policies. It depends, of course, on the options
chosen. It is common to see news articles rating policies, but these ratings
are often unreliable because they do not reflect the options chosen. It is
important for the insurance agent to fully explain available options and allow
the potential insured to make their own choices. The selling agent may want to
encourage inflation options. It is important to purchase a policy that will
cover assisted living facilities.
Policies that allow a person to qualify for benefits easily are also an
advantage.
There is a drawback to Partnership policies:
they only guarantee asset protection in the state where purchased. If the
insured moves, the policy's coverage is retained, but not the feature
that protects the assets from Medicaid spend-down after benefits have been
exhausted. They only work in states that have Partnership plans available.
Therefore, if a person buys such a plan in Indiana but moves to Arizona the
asset protection is lost. It will still pay benefits according to the contract,
but Medicaid application will not recognize the asset protection that the
policy was intended for.
Commissions for selling Partnership policies
are the same or similar when compared to selling other long-term care policies.
Special education is generally required, however, before an agent can market
them. In those states where Partnership policies exist, it has been reported
that few agents seem to be marketing them. Perhaps it is because of the
additional education required or perhaps the cost seems higher than other
policies. Whatever the reason, Partnership policies offer a benefit that other
policies do not: asset protection.
Indiana requires agents who want to sell
Partnership policies to complete the 8 hour traditional LTC insurance CE
requirement plus an additional one-time 7 hour course on the Indiana
partnership program. Five hours are
required per renewal thereafter.
Government recognizes the need for long-term
care insurance policies. Although recognizing this need was a necessary first
step, it is only the beginning. If policies are not affordable, or the need
unrecognized, the end goals cannot be met. It is vital to our state and federal
governments that consumers begin to take on the responsibility of funding their
own long-term care requirements. Taxpayers cannot continue to fund the rising
costs associated with this type of care.
The partnerships were set up with grant
money from the Robert Wood Johnson Foundation. This foundation also made grants
to Consumer Report magazine for some of their research on health-care issues
for seniors. The intent was to help people with assets of between $30,000 and
$100,000, who are considered to be the non-poor, but subject to losing everything
if a nursing home confinement occurs. In addition, it was felt that Medicaid
would save money by transferring the costs of nursing-home care over to
insurance companies.
Those who developed the partnership programs
recognized that the consumers most likely to buy long-term care partnership
coverage were also going to be sensitive to rate and premium increases. The
goal was to give partnership policies economic value to those insured, both when
issued and at the time a claim occurs. Of course, they also wanted to encourage
a competitive marketplace since that tends to keep prices down and values high.
Low lapse rates were also a priority, since a policy that is purchased but not
maintained helps no one. It is necessary to have a long-term commitment to such
policies since they are often purchased many years before the need for their
benefits arrive. Since the partnership plans are an experiment in the four
states that offer them, Federal law actually discourages other states from
enacting them. Some members of Congress are hesitant to encourage the private
insurance companies in this marketplace because they fear it will discourage
government involvement and further bury the chances for government-sponsored
universal coverage.
Exactly how does the asset protection work?
Let's look at some examples:
|
|
Assets |
LTC Insurance Payouts |
Medicaid Countable Assets |
|
Pete |
$50,000 |
$50,000 |
$0 |
|
John |
$200,000 |
$200,000 |
$0 |
|
Marjorie |
$1,000,000 |
$200,000 |
$800,000 |
|
Betty |
$200,000 |
$0 |
$200,000 |
Pete, who has $50,000 in assets, would
normally be required to "spend-down" this money before qualifying for
Medicaid. By purchasing $50,000 worth of insurance benefits, he will have fully
protected his assets. The same situation also applies to John. He has purchased
enough insurance benefits to cover his assets.
Marjorie (a wealthy widow) has a million
dollars in assets. Rather than attempt that amount of insurance protection,
which would be difficult to do, she simply buys sufficient insurance for a
lengthy nursing home stay. Marjorie should probably buy a lifetime policy with
high daily benefit levels. Her goal is to protect the amount of assets that
would likely go to a nursing home confinement. She does not need to try to
match her assets since it is unlikely that it would be necessary to do so. She
merely needs to allow for full nursing home protection.
Perhaps Betty believes her children will
take care of her. She may believe she has this right, therefore she expects it.
Since she has made it known that it is their "duty" she feels no
compulsion to protect herself through insurance. Therefore, her entire $200,000
will be Medicaid countable assets.
Of course, not everyone expects this of
their family. Many who fail to buy such protection have no intention of
burdening anyone else. They merely believe that (a) they are so healthy they
will never need such protection; (b) the government or Medicare and their
Medigap policy will be adequate; or (c) they can't bear to even consider the
possibility that they may need a nursing home so they choose to close their
eyes to the entire subject.
Betty may also have a different approach.
She may simply feel that she does not mind spending her $200,000 for nursing
home care. In fact, she may have set aside this money for that exact purpose.
If that is the case, she actually has planned ahead. She simply planned a
different way than did Pete, John and Marjorie.
As is so often the case, definitions need to
be standardized to avoid misunderstandings or benefit denial. No policy may be
advertised, solicited or issued for delivery as a long-term care partnership
contract which uses definitions more restrictive or less favorable for the
policyholder than that allowed by the state where issued.
Long-term care partnership policies do, of
course, have minimum standards, which must be met. Those standards will be
based on the state where issued. Since each state may have different state
requirements, plans may vary from state to state. In all states, an agent would
be acting illegally if he or she told a prospective client that the policy he
or she was demonstrating for sale was a Partnership policy when, in fact, it
did not meet partnership criteria.
The minimum standards set down by each state
are just that: minimums. They do not prevent the inclusion of other provisions
or benefits that are consumer favorable, as long as they are not inconsistent
with the required standards of the state where issued.
It is the responsibility of every insurance
company and every agent to make reasonable efforts to determine whether the
issuance of a long-term care Partnership policy might duplicate benefits being
received under another disability insurance policy, long-term care policy, or
duplicate other sources of coverage such as a Medicare supplemental policy. The
insurance company or agent must take reasonable steps to determine that the
purchase of the coverage being applied for is suitable for the consumer's needs
based on the financial circumstances of the applicant or insured.
Every applicant must be provided with a copy
of the long-term care Partnership publication (which was developed jointly by
the commissioner and the department of social and health services) no later
than when the long-term care partnership application was signed by the
applicant.
Every long-term care Partnership contract
must state that it is designed to qualify for Medicaid asset protection on the
first page of the contract. A similar statement must be included on every
application for a long-term care Partnership contract and on any outline or
summary of coverage provided to applicants or insured.
The states have passed continuing education
requirements for those agents wishing to market Partnership policies. Although
Washington may never be able to market Partnership plans, it has also passed
educational requirements. It is the responsibility of each agent to contact
their state and determine what those requirements are.
These special educational requirements do
not apply to Medicare supplement policies, contracts between a continuing care
retirement community and its residents, or to long-term care insurance policies
that do not claim to provide asset protection under the Partnership
legislation.
Indiana agents
must obtain specific education in order to sell these policies: a one-time
7-hour CE class or home study on the Indiana partnership program.
These special educational requirements do
not apply to Medicare supplement policies, contracts between a continuing care
retirement community and its residents, or to long-term care insurance policies
that do not claim to provide asset protection under the Partnership
legislation.
Since long-term care eventually involves
anyone who ages and develops the frailty involved with aging, the purpose of
the Indiana long-term care program is consumer protection. In order to achieve this, Indiana has:
1.
Established minimum
standards for long-term care insurance contracts, whether that happens to be a
policy, certificate, or rider;
2.
Established
documentation and reporting requirements for issuers of policies, certificates,
and riders to qualify under the Indiana long-term care program;
3.
Established
procedures that provide full disclosures in the sale of LTC policies,
certificates and riders; and
4.
Facilitated public
understanding regarding long-term care insurance contracts and long-term care
riders that qualify under the Indiana long-term care program.
These requirements apply to any policy,
certificate or rider authorized for sale by the commissioner as qualifying
under the Indiana long-term care program.
Activities
of Daily Living (ADLs)
All of us have a daily routine that involves
such activities as eating, bathing, dressing, and so forth. As we age, our ability to do for ourselves
may diminish. The activities of daily
living (and our ability to perform them) is a measure of our health and
cognitive ability. Therefore, they are
used as a measure, so to speak, for the need for help from others.
Indiana has established a list of five
Activities of Daily Living. In the
definitions, however, number five is divided into two items, which makes for
six actual definitions:
1.
Eating: means feeding oneself by getting food into the
body from a receptacle, feeding tube, or intravenously.
2.
Transferring: means moving into or out of a bed, chair, or
wheelchair.
3.
Dressing: means putting on and taking off all items of
clothing and any necessary braces, fasteners, or artificial limbs.
4.
Bathing: means washing oneself by sponge bath in a tub or
shower, including the task of getting into or out of the tub and shower.
5.
Toileting: means getting to and from the toilet, getting on
and off the toilet, and performing the associated personal hygiene associated
with the task.
6.
Continence: means the ability to maintain control of bowel and
bladder function or when unable to maintain control, the ability to perform
associated personal hygiene, including care for a catheter or colostomy bag.
The term, asset disregard, as used in
this context, applies to the total equity value of personal property, assets,
and resources not exempt under Medicaid regulations, which at a minimum are
equal to the sum of qualifying insurance benefit payments made on behalf of the
qualified insured in determining eligibility for the Medicaid program.
There are two types of asset disregard:
1.
Dollar-for-dollar
asset disregard, which is the
amount of the disregard that is equal to the sum of qualifying insurance
benefit payments made on behalf of the qualified insured, and
2.
Total
asset disregard, which is the
amount of the disregard that is equal to the total sum of assets owned by the
qualified insured once he or she has exhausted all qualifying insurance
benefits.
As used for long-term care, asset protection
means the right extended by IC 12-15-39.6 to beneficiaries of qualified
long-term care insurance policies or certificates to an asset disregard under
the Indiana long-term care program.
As it applies to long-term care, authorized
designee means any person designated in writing to the insurance company by the
policy or certificate holder of a qualified long-term care contract for
purposes of notification.
The average daily private pay rate means the
average daily rate charged by nursing facilities for individuals not qualifying
for federal or state reimbursement, established annually on a calendar year
basis by OMPP for the period immediately preceding the effective date or
renewal date of the contract.
Case
management includes, but is not limited to, the development of a comprehensive
individualized assessment and care plan, as needed, coordination of appropriate
services and the monitor of the delivery of those services.
A case management agency is an agency or
other entity approved by DDARS as meeting DDARS case management standards
contained in the DDARS community and home care services provider manual.
Certificate means any certificate delivered
or issued for delivery in Indiana under a group long-term care policy.
Certificate form means the form on which the
certificate is delivered or issued for delivery by the issuer.
A certificate holder means an owner of a
qualified long-term care insurance certificate or beneficiary of a qualified
long-term care certificate.
As it applies to long-term care contracts,
cognitive impairment means confusion or disorientation resulting from a
deterioration or loss of intellectual capacity that is not related to or the
result of mental illness. It results
from Alzheimers disease or similar forms of senility or irreversible
dementia. This deterioration or loss of
intellectual capacity is established through the use of standardized tests that
reliably measure impairment in the following areas:
Cognitive impairment must result in an
individual requiring 24-hour a day supervision or direct assistance to maintain
his or her safety.
A complex or unstable medical condition
requires the individual to have 24-hour a day professional nursing observation
or professional nursing intervention more than once a day in a setting other
than an acute care wing of a hospital.
DDARS is the abbreviation used for the
Indiana Division of Disability, Aging, and Rehabilitative Services. You may see this either in caps or in lower
case.
As it applies to long-term care, direct
assistance means that the individual cannot perform an activity of daily living
safely or appropriately without continual help or oversight. Direct assistance may vary from requiring a
person to physically stand by or set up the activity to the activity being
totally performed by others.
It is very important to check policy terms,
because some definitions, such as insured event, may have meanings specific to
the policy. As the term is used for
long-term care, it relates to determination of eligibility for benefits under a
qualified policy, certificate, or rider and for determining whether these
benefits result in an asset disregard for a qualified insured, that any one of
the following criteria is met:
1.
The individual has a
deficiency in two or more activities of daily living.
2.
The individual has a
cognitive impairment.
3.
The individual has a
complex and unstable medical condition.
For qualified policies eligible for
favorable tax status, insured event means when the policyholder has become a
chronically ill individual as defined in the Health Insurance Portability and
Accountability Act (HIPAA) of 1996. It
is commonly referred to as Public Law 104-191. When determining the loss of functional
capacity, the policyholder must be unable to perform without substantial
assistance from another, two or more of six listed ADLs, as set forth in HIPAA,
for a period of at least ninety days.
An integrated policy refers to any qualified
long-term care insurance policy or certificate that provides coverage for both
long-term care facilities (such as a nursing home) and home and community based
services (such as home care or adult day health care).
An issuer is the entity that issues a
contract for insurance benefits. It may
include, though not limited to, an insurance company, a fraternal benefit
society, a prepaid health care delivery plan, a health care service plan, a
health maintenance organization, or any other entity that delivers a health
care plan or contract.
In Indiana, a long-term care facility would
be any facility licensed under IC 16-28, including nursing facilities and
residential care facilities.
A long-term care facility policy refers to
any qualified long-term care insurance policy or certificate that provides
coverage primarily for care in a long-term care facility and does not
provide coverage for home and community care.
A Medicaid waiver refers to the home and
community based services waiver for the aged and disabled approved by the
United States Department of Health and Human Services Health Care Financing
Administration under the provisions of Section 1915(c) of the Social Security
Act that allows Indiana to provide certain community and in-home services that
are not covered in the state Medicaid plan, that are instrumental in the
avoidance or delay of institutionalization.
Indianas Medicaid waiver services include:
The letters OMPP stand for the Indiana office of Medicaid policy and planning.
Plan of care means a written individualized
plan of services developed by a case management agency that specifies the type
and frequency of all services required by the individual, the service
providers, and the cost of services.
HIPAA established rules regarding the tax
status of long-term care insurance contracts.
The term, policy eligible for favorable tax status, means the contract
meets the federal HIPAA standards established in 1996. This would have to be clearly stated in the
policy and in the outline of coverage.
It may also refer to Chapter 79 of the Internal Revenue Code of 1986.
Policy form merely means the form on which
the policy is delivered or issued for delivery by the issuer.
A policyholder is the owner of an individual
qualified long-term care insurance policy or a beneficiary of a qualified
individual long-term care insurance policy.
A qualified insured may be either (1) the
beneficiary of a qualified long-term care policy, certificate, or rider
approved by the department of insurance, or (2) enrolled in a prepaid health
care delivery plan that provides long-term care services and qualifies under
this rule. A qualified insured may also
be an individual who is eligible for an asset disregard under a qualified
long-term care policy, certificate, or rider.
As it refers to Partnership plans, a
qualified long-term care insurance policy or certificate means a contract that
meets the requirements set down for such plans, or a policy or certificate
purchased under another states Partnership for Long-Term Care Program, as long
as that other states program is similar to the one in Indiana and OMPP has a
reciprocity agreement with the other states Medicaid program.
A residential care facility may be known by
numerous terms, including assisted living facility, or alternate care
facility. Under the criteria of
Indiana, it would include any facility that:
1.
Provides 24 hour a
day care and services sufficient to support the needs resulting from an
inability to perform activities of daily living or cognitive impairment.
2.
Has a trained and
ready to respond employee on duty in the facility at all times to provide care.
3.
Provides three meals
a day and accommodates special dietary needs.
4.
Has a written
contractual arrangement or other wise ensures that residents receive the
medical care services of a doctor or nurse in case of emergency.
5.
Have appropriate
methods and procedures for the handling and administration of prescribed
medications and treatments.
Service Summary
Service summary means a written summary,
prepared by an issuer for a qualified insured, which identifies the following:
A state-set dollar amount is the least
amount of maximum benefits a policyholder or certificate holder must initially
purchase in a qualified policy or certificate to be eligible for total asset
disregard. The state-set dollar amount
begins at 140,000 for qualified policies with an effective date of 1998 or
earlier. The state-set dollar amount
will increase each year on January first by five percent (5%) compounded
annually, rounded to the nearest one-dollar increment and applies to new
policies effective during each calendar year.
Qualification of LTC Policies, Certificates, & Riders
No long-term care policy, certificate, or
rider will qualify for participation in the Indiana long-term care program
unless the contract complies with Indianas requirements. The commissioner will only approve a
contract for the Indiana program that is an approved qualified integrated
policy and has a favorable tax status under HIPAA.
In Indiana, no long-term care insurance
policy, certificate, or rider may be advertised, solicited, or issued for
delivery as a qualified long-term care insurance contract that does not meet
the requirements of the state and has not been approved by the commissioner as
meeting those requirements. Each issuer
seeking to qualify a long-term care policy, certificate, or rider for participation
in the Indiana long-term care program must do the following:
a.
Received from the
issuer the current edition of a booklet developed by OMPP titled What you
should know about long-term care: The most commonly asked questions about the
Indiana Long-Term Care Program.
b.
Received a
description of the issuers qualified long-term care policy or certificate
benefit option meeting the requirements of sections 36.1(2) and 36.2(2) of this
rule.
c.
Agreed to the release
of information by the issuer to the state as may be needed to evaluate the
Indiana long-term care program and document a claim for Medicaid asset
protection in the following format:
CONSENT AND AUTHORIZATION
TO RELEASE INFORMATION
I hereby agree to the
release of all records and information pertaining to this long-term care policy
or certificate by the [insert issuer name] to the State of Indiana for the
purposes of documenting a claim for Asset Protection under the State Medicaid
program, evaluating the Indiana Long Term Care Program, and meeting Medicaid or
Department of Insurance audit requirements.
I understand that the information
contained in these records will be used for no purpose other than those stated
above, and will be kept strictly confidential by the State of Indiana.
This would be dated and signed by the
applicant.
d.
Received a graphic comparison
showing the differences in premiums and benefits, over at least twenty years,
between a policy or certificate that increases benefits over the length of the
policy and one that does not.
I have been offered a
policy or certificate qualifying under the Indiana Long-Term Care Program which
provides coverage for both nursing home and home and community care services,
and I decline the offer to apply for this coverage.
I understand that in the
event I later want to purchase qualifying home and community care benefits
through a qualifying rider, I may be required to furnish evidence of
insurability and the insurer will have the right to refuse my request.
I also understand that the
cost of purchasing home and community care benefits at a later date will be
more expensive, since the premium for these benefits will be based upon my age
at the time of such purchase.
This would be dated and signed by the applicant.
a.
The certificate value
applied for, or
b.
The state-set dollar
amount in force on the certificates effective date. In the event the value increases as a result of this provision,
the premium may be adjusted accordingly.
An election to choose the lesser value in a certificate must be
supported by a statement signed by the applicant that clearly discloses the
certificate will earn dollar-for-dollar asset protection.
a.
The name and address
of the insured.
b.
The name of the
company whose policy or certificate is being replaced.
c.
The name of the agent
replacing the coverage.
This report shall also include a comparison
of the coverage issued with that being replaced, including a comparison of
premiums and an explanation of how the replacement was beneficial to the
insured. The replacing issuer shall not
cancel, non-renew, or rescind a replacement policy or certificate for any
reason other than nonpayment of premium, material misrepresentation or fraud.
This policy [certificate] qualifies under the Indiana long-term
care insurance program for Medicaid asset protection. This policy [certificate] may provide benefits in excess of the
asset protection provided in the Indiana long-term care program.
LONG TERM-CARE FACILITY POLICY [CERTIFICATE].
This rider qualifies under the Indiana long-term care program for
Medicaid asset protection when attached to a long-term care policy, which also
qualifies for Medicaid asset protection.
This rider may provide benefits in excess of the asset protection provided
in the Indiana long-term care program.
This policy [certificate] does not qualify for Medicaid asset
protection under the Indiana long-term care program. However, this policy [certificate] is an approved long-term care
insurance policy [certificate] under state insurance regulations. For information about polices and
certificates qualifying under the Indiana long-term care program, call the
Senior Health Insurance Information Program of the Department of Insurance at
1-800-452-4800.
a.
An issuer may
discontinue the availability of a qualified policy form or certificate form if
the issuer provides the commissioner in writing, its decision at least 30 days
prior to discontinuing the availability of the form of the qualified policy or
certificate. The following must be
considered a discontinuance of the availability of a qualified policy form or
certificate form: (1) the sale or other transfer of a qualified policy form to
another issuer; (2) failure to actively offer for sale a qualified form in the
previous 12 months; or (3) a change in the rating structure or methodology
unless the issuer complies by providing an actuarial memorandum describing how
the revised rating methodology and resultant rates differ from existing
methodology and rates and the issuer does not subsequently put into effect a
change of rates or rating factors that would cause the percentage differential
between the discounted and subsequent rates as described in the actuarial
memorandum to change. The commissioner
may approve a change to the differential if it is in the public interest to do
so.
b.
An issuer that
discontinues the availability of a qualified policy or certificate form under
clause (a) above may not file for approval of a new long-term care form for a
period of five years after the issuer provides notice to the commissioner of
the discontinuance. The period of
discontinuance may be reduced if the commissioner determines that a shorter
period is appropriate. This clause does
not apply if one of the following are met (1) an issuer discontinues a
qualified policy form as a result of amended law or (2) all existing
policyholders of a discontinued form who are not receiving benefits are
notified by the insurer of the availability of new benefits or provisions and
they have the opportunity to take them.
Any type of long-term care contract intended
for sale in Indiana as a qualified long-term care insurance policy must meet
the minimum benefit standards approved by the insurance commissioner. These minimum standards do not preclude the
inclusion of other provisions or benefits, as long as they are not inconsistent
with the laws and rules already being followed. The minimum standards are in addition to all other
requirements. In order to qualify for
participation in the Indiana long-term care program, an LTC contract must meet
the following:
1.
Provide that maximum
benefits be available in dollars and not in days of care. Therefore, a policy may not state the
maximum as, for example, 695 days of care.
It would have to be stated as a dollar amount instead.
2.
Include a provision
of inflation protection that satisfies either 75% of the average daily private
pay rate, or has an automatic increase in the per diem dollar level in
accordance with either the Consumer Price Index or 5% increase each year over
the previous years dollar benefit amount.
3.
Provide that the
unused maximum benefit amount of the contract increases proportionately with
the inflation protection requirement of Indiana.
In order to be part of the Indiana long-term
care program, the qualified contracts must meet the following requirements:
1.
Have premiums based
on the issue age of the applicant or offer a level premium for the life of the
policy or certificate. It is acceptable
to reduce premiums or use a policy form in which the premiums are no longer
required after a specified time period (this would usually apply in waiver of
premium clauses).
2.
Include a provision
that the policy, certificate, or rider will utilize the insured event criteria
for determining eligibility for benefits and for determining the amount of
asset disregard.
3.
Include a provision
which, in the event the qualified policy or certificate is about to lapse,
offers the insured the option to reduce his or her coverage to a lower benefit
amount. The benefit reduction may not
go below Indianas minimum benefit requirements, however. The issuer is only required to offer this
option one time. Premiums must be based
on the age of the contract holder at the time of issuance of the original
qualified contract.
4.
Include a provision
that ensures, at the time of sale, the issuer does the following:
Offers to collect and
store the name and address of a designed person to be notified if the policy is
about to lapse. If the applicant does
not want anyone notified of a pending lapse, he or she must sign a form stating
they do not wish to participate in this option. Where a person is designated, it is the insurers responsibility
to notify the third party prior to canceling the contract for lack of
payment. Notification must be no later
than 15 days after the beginning of the 30-day grace period. The designated person may be updated
periodically, if the insured decides to change who will be notified.
Provide at least a
90-day guaranteed reinstatement period for a policyholder whose policy or
certificate has lapsed due to nonpayment of premium, who meets the insured
event criteria, and who has paid all required tardy premiums. The reinstated policy or certificate must
have the same benefits, terms, and premiums that were present prior to the
unintended lapse.
5.
Include a provision
that benefits will only be paid after the payment of all other benefit sources
to which the contract holder is entitled, excluding Medicaid. The issuer must make reasonable efforts to
determine whether other benefits from other sources, other than Medicaid, are
available.
6.
Include a provision
that the policy form must not be changed or otherwise modified without the
signed acceptance of the insured, or include a provision that the form issued
under a group long-term care policy will not be changed or modified without the
signed acceptance of the certificate holder.
7.
For purposes of
approving any future premium adjustments, all individual qualified policies
issued by the same issuer must be considered a single risk pool and all group
qualified policies issued by the same issuer must be considered a single risk
pool, except a group issuer may form a separate risk pool whenever at least
2,000 certificates are in force for (a) a single employer, labor organization,
or trust established by a single employer or labor organization, (b) a single
nonprofit association composed of individuals who are or were actively engaged
in the same profession, or (c) a single nonprofit association created and
maintained in good faith for the benefit of its members and not for the purpose
of obtaining insurance. It must have
been in active existence for at least five years, and have a constitution,
bylaws, and a board with member representation.
An issuer may pool their qualified and
nonqualified policies, certificates, and riders to avoid or reduce the amount
of any future premium increase that might otherwise affect the risk pool of
qualified contracts.
Minimum Benefit Standards and Provisions
for Integrated Policies
Only policies that are integrated may be
advertised as such in Indiana. An
integrated policy or certificate must meet the minimum benefit standards
established for such contracts and it must have been approved as such by the
commissioners office. Such contracts
may include additional benefits, but not less than mandated. An integrated policy or certificate is one
that does the following:
1.
Contains or offers a
maximum benefit amount equivalent to at least 365 times the minimum daily
nursing facility benefit. Issuers may
offer additional benefits, but not less.
2.
Upon the initial
effective date, issuers must provide no less than a daily nursing facility
benefit of at least 75% of the average daily private pay rate in nursing
facilities rounded to the next highest $5 or $10 increment. No policy or certificate may pay benefits in
excess of the actual cost of care.
They must also provide no less than a daily home and community-based
benefit of 50% of the daily nursing facility benefit contained in their policy
or certificate (again, the contract may not pay in excess of actual charges for
such care). The daily home and
community-based benefit cannot exceed the daily nursing facility benefit.
3.
If issued on an
expense-incurred basis, provide benefits, which are equal to at least 75% of
the per diem cost incurred by the insured.
4.
Include a provision
that policy or certificate benefits can be used to purchase nursing facility
care or home and community-based care.
Home and community based care must include, at a minimum, home health
nursing, home health aide services, attendant care, respite care, and adult day
care services.
5.
All home and
community based services must include case management services delivered by a
case management agency. The issuer may
establish a limit on case management benefits.
This limit may not be less than 13 times the daily nursing home benefit
per year. Case management benefits may
not count toward the policys or certificates maximum benefit.
6.
Issuers may include
benefits for residential care facilities in an integrated policy or certificate. If they do so, these policies must provide a
daily residential care facility benefit of at least 50% and no more than the
daily nursing facility benefit contained in the contract. If the contract is issued on an expense
incurred basis, provide a daily residential care facility benefit that does not
exceed 50% of the per diem cost incurred by the insured and include a provision
that policy or certificate benefits can be used to purchase care in a nursing
facility or residential care facility.
Minimum Benefit Standards and Provisions
for LTC Facility Policies
All qualified policies relating to long-term
care facility policies must meet the minimum benefit requirements as approved
by Indianas commissioners office. As
for other types, it is acceptable to have higher benefits, but not lesser
benefits. To participate in the Indiana
long-term care program as a long-term care facility policy or certificate, the
following criteria must be met:
1.
The policy must
contain or offer a maximum benefit amount equivalent to at least 365 times the
minimum daily nursing facility benefit. Issuers may offer other benefit amount
options in addition to this minimum benefit amount option.
2.
At a minimum, upon
the initial effective date, provide a daily nursing facility benefit of at
least 75% of the average daily private pay rate in nursing facilities rounded
to the next highest $5 or $10 increment.
No contract may pay benefits in excess of actual charges.
3.
If the contract is
issued on an expense-incurred basis, provide daily nursing facility benefits
that are equal to at least 75% of the per diem cost incurred by the insured.
4.
Insurers may include
benefits for residential care facilities in a long-term care facility
contract. If they do so, the contract
must provide a daily residential care facility benefit of at least 50% and no
more than the daily nursing facility benefit contained in the policy or
certificate. If the contract is issued
on an expense-incurred basis, it must provide a daily residential care facility
benefit that does not exceed 50% of the per diem cost incurred by the insured
and include a provision that policy or certificate benefits can be used to
purchase care in a nursing facility or residential care facility.
All riders that are sold or solicited as a
qualified rider must meet the standards for such and have been approved as such
by the commissioners office. The
issuer may attach a qualified rider to a qualified long-term care policy that
they sell. A qualified rider, which
provides home and community based services, must provide benefits that provide
at least home health nursing, home health aide services, attendant care,
respite care, and adult day care services.
All home and community-based services covered through the qualified
rider must include case management services delivered by a case management
agency. While the issuer may place a
limit on case management benefits, the limit may not be less than 13 times the
daily nursing home benefit per year.
Case management benefits may not count toward the contracts maximum
benefit.
At a minimum, upon the initial effective
date of the qualified rider providing home and community-based services, the qualified
rider must provide a daily home and community based benefit of at least 50% of
the current daily nursing facility benefit of the long-term care facility
policy or certificate. No policy or
certificate may pay benefits in excess of the actual charges. The daily home and community-based benefit
may not exceed the current daily nursing facility benefit of the long-term care
facility contract. If issued on an
expense-incurred basis, it must provide benefits that are equal to at least 75%
of the per diem cost incurred by the insured.
Upon the initial effective date, the qualified rider must at least
provide a maximum benefit amount that is at least 50% of the then current
maximum total benefit amount for the long-term care facility contract and it may
not exceed the current maximum benefit amount of the long-term care facility
policy or certificate.
Qualified policies and certificates have
reporting requirements. The
specifications for the reporting are in the Partnership for Long-Term care
Insurance Uniform Data Set (UDS) manual.
A printed copy must be provided, upon request, by OMPP. Reports must adhere to the most recent UDS
specifications, which include reporting frequencies, file structures, file
triggers and formats, field definitions and state specific requirements as
noted in the Indiana Long-Term Care Program sections.
All reports are due to OMPP no later than 30
days after the close of the reporting periods specified for the respective
reports. The reporting requirements may
vary over time, but they will adhere to the most current requirements in the
manual.
Issuers of qualified policies and
certificates must submit agent sales date to OMPP two times per year for
purposes of creating and maintaining a directory of agents for consumers. The format, time frame of reporting periods
and due date for data will be specified by OMPP.
Insurers must maintain information on
qualified plans regarding any benefits paid under a policy or certificate. The information must be updated
quarterly. Should the insured die after
having received benefits the information on the benefits paid must be retained
for five years following his or her death.
The same is true for any insured that lapses the policy or certificate
after having received benefits: the insurer would keep the information for five
years following the lapse. Unless
notified otherwise by Indiana, after the five years the service summary
provided by the issuer will be deemed to comply with all asset protection
reporting, record keeping, and auditing requirements. The issuer may use microfiche, microfilm, optical storage media,
or any other cost effective method of record storage as alternatives to storage
of paper copies of stipulated information.
When a policy lapses or ceases to be in
force, the issuer must notify the insured of his or her right to request their
service records. Upon written request,
the issuer will provide to the insured or the insureds designee a copy of the
issuers service records, which are necessary to establish the asset
disregard. These records must be
provided to the insured or their authorized designee within sixty days of the
request. The issuer may charge a
reasonable fee to cover the costs of providing each set of requested service
record copies. Furthermore, the insurer must include a statement with the
records advising the insured that it would be in his or her best interest to
save the records in case they need to establish eligibility for Medicaid.
The records will contain evidence of the
insured event (the event that caused benefits to be paid under the policy) and
a description of services provided. For
home and community based care, a copy of the original plan of care, a copy of
the plan of care required by DDARS, and a copy of any changes made in the plan
of care will be part of the service record.
These services will count towards asset protection after the case
management agency adds the documented need for and description of the new
services to the plan of care. In cases
when the service must begin before the revisions to the plan of care are made,
the new services will only count toward asset protection if the revisions to
the plan are made within ten business days of the commencement of the new
services. Issuers must maintain initial
assessments and subsequent ones as part of insured event documentation.
Total asset protection for an individually
owned qualified contract is earned when:
1.
The policy or
certificate includes a maximum benefit equal to or greater than the state-set
dollar amount in force on the original effective date of the policy or
certificate.
2.
The insured did not
request the reduction of the maximum benefit during the term of the policy or
certificate.
3.
All of the qualified
policy or certificate benefits have been exhausted.
Total asset protection for a qualified
policy or certificate that has had a reduction of coverage during the term of the
contract is earned when the contract includes a maximum benefit equal to or
greater than the state-set dollar amount in force on the original effective
date, the maximum benefit was reduced at the request of the insured during the
policy term and, at the time of the reduction, the new maximum benefit was
equal to or greater than the state-set dollar amount in force during the
calendar year in which the reduction took place disregarding any qualifying
insurance benefits the insured may have already received, and finally, all of
the qualified contract benefits have been exhausted.
Total asset protection for a qualified
contract, including riders, that allows spouses to share the benefits is earned
when the policy or certificate includes a maximum benefit equal to or greater
than the state-set dollar amount in force on the original effective date of the
contract and either (1) only one spouse uses the contract and exhausts all the
qualifying benefits, or (2) both spouses use the contract benefits and the remaining
maximum benefit at the time the first spouse has permanently stopped using them
is equal to or greater than the state-set dollar amount in force during that
calendar year disregarding any qualifying benefits the second spouse may have
already received, and the second spouse exhausts the remaining insurance
benefits.
A qualified long-term care insurance
contract owned by an Indiana resident that was purchased as part of another
states Partnership for Long-Term Care Program will earn dollar-for-dollar
asset protection for the qualified insured if the other states program is
similar to Indianas and OMPP has a reciprocity agreement with the other
states Medicaid program.
Benefits paid in excess of the actual
charges do not earn asset protection.
Benefits paid that are not based upon the insured event criteria also do
not earn asset protection. If the care
received is for either home or community-based services it is important to have
a case manager since any benefits paid without one do not earn asset
protection.
Each issuer must send an asset protection
report at least quarterly, with a copy sent to OMPP and to each insured who has
received any benefits since the last asset protection report. Each report must include the amount of asset
protection for which the insured had qualified for prior to the quarter
covered, the total benefits paid by the issuer for services during the reported
quarter, a statement of the amount paid in benefits that qualify for asset
protection, and a summary total of the amount that qualifies for asset
protection. Asset protection reports
are subject to audit by OMPP serving as representative of the commissioner.
Each issuer must prepare a service summary
at the clients request specifically for the insured if applying for
Medicaid. The issuer must also prepare
a service summary when the insured has exhausted his or her benefits under the
contract or when the policy or certificate ceases to be in force for a reason
other than death. The issuer will send a copy to the insured, with a copy going
to OMPP, within 30 days of the date of final payment of qualifying insurance
benefits by the issuer.
The service summary will include the
specific qualified policy or certificate, the total benefits paid for services
to date, and the amount qualifying for asset protection.
Every insurer must file their plan with OMPP
for complying with Indianas requirements for documentation prior to
qualification. No contract may be
approved as a qualified policy or certificate until OMPP has approved the
documentation plan. The plan submitted
to OMPP for approval must:
1.
State the physical
location where the records will be kept (there may be no more than three such
locations),
2.
Give OMPP access to
the records,
3.
Provide the name,
phone number, address, and job title of the person primarily responsible for
maintaining the information,
4.
State the methods for
determining when insurance benefits or prepaid benefits qualify for asset
protection,
5.
Give a description of
electronic and manual systems that will be used,
6.
Specify the
information that will be retained to comply with the requirement, and
7.
Keep copies of forms
and descriptions of standard procedures for maintaining and reporting the
information.
After OMPP reviews the plan of action, it
will advise the department of insurance and the issuer in writing whether the
issuer has any shortcomings in the plan that need to be corrected or resolved
in some manner.
Auditing and
Correcting Record Keeping Deficiencies
Within one year of the first date that any
insured has met the criteria for an insured event, and as often as the OMPP
deems necessary thereafter, OMPP will conduct a systems audit of the issuers
records. It is the responsibility of
the insurer to advise the OMPP when this one-year period has begun (when an
insured event has occurred). Following
the audit, the OMPP must notify the issuer of any inaccuracies and other potential
problems discovered during the audit.
The OMPP will instruct the issuer of the methods they feel are necessary
to correct any problems they found. It
is the responsibility of the issuer to follow those instructions.
Periodically the OMPP will reconcile a
sample of individual applications to Medicaid of persons who have submitted
documentation for qualification for asset protection with reports submitted by
issuers. OMPP has the final decision
concerning sample sizes and other auditing methods. OMPP will alert the issuers to any problems discovered and the
methods they feel are necessary to correct them.
The assistant secretary of OMPP or other
authorized individual may enter into voluntary arrangements with issuers of
qualified long-term care insurance contracts under which the assistant
secretary would issue binding determinations as to whether or not services
qualify for asset protection. The
insureds may submit requests for information and advice through their issuer or
case management agency. When the
following procedures are followed in all material respects, the written
determination of the assistant secretary of OMPP for asset protection will be
binding upon OMPP in all subsequent actions, and OMPP may not make any
assertion contradicting these determinations in any action arising from these
requirements:
1.
All requests for
determinations must be submitted to the assistant secretary of the OMPP or
other authorized individual in writing.
These requests may include, among other things, whether the insured
event has occurred and been adequately documented, whether a care plan is
required, whether a revision of care plan is required, whether a service is in
accord with that care plan, whether a service will qualify for asset
protection, and whether the applicable amount is the amount paid by the issuer
or the amount charged for that service.
2.
The assistant
secretary of OMPP or other authorized person may require issuers and case
management agencies submitting requests for determination to provide all
records and other information necessary for making a determination.
3.
The assistant
secretary of OMPP or other authorized person will render his or her
determination on each request in writing, and it will state the reason for his
or her decision. This would include
such things as relevant facts, documentation of facts, statutes, regulations,
and policies.
4.
A copy of all
determinations of the assistant secretary of OMPP or other authorized person
must be kept on file at OMPP, together with the related records and
information. The original copy will be
sent to the issuer or case management agency that originally requested it. The recipient of the original determination
must be responsible for notifying the insureds agent.
If a review by the OMPP reveals deficiencies
in the record keeping procedures of an issuer, the OMPP will let them know and
expect them to be corrected within a reasonable length of time. If the issuer fails to make the required
corrections, OMPP will notify the department of insurance of the
deficiencies. The commissioner then has
the right to remove the qualification status of long-term care insurance
contracts, if he or she feels that is the best solution. This would not affect the asset protection
in policies and certificates that were purchased while the issuer was qualified
to sell them. It would affect any
that were purchased after qualification was lost. In that case, the contracts sold would not have asset protection.
An insured that is applying for Medicaid
will request a service summary from the issuer of their long-term care
contract. Medicaid authorities will use
that summary when determining eligibility for asset protection. If it is found that the contract lost its
qualification due to deficiencies in the issuers record keeping procedures,
and Medicaid eligibility is lost solely due to this fact, OMPP may require the
issuer to pay for services counting towards asset protection required by the
policyholder until the issuer has paid an amount equal to the amount of the
issuers errors. After that point, if
otherwise eligible, the client could qualify for Medicaid coverage.