WA LTC INITIAL 8 HOUR COURSE
Chapter 6: RCW 48.83, 48.84 and 48.85
RCW 48.83, 48.84 and 48.85
The intent of this chapter is to promote the public interest, support the availability of long-term care coverage, establish standards for long-term care coverage, facilitate public understanding and comparison of long-term care contract benefits, protect persons insured under long-term care insurance policies and certificates, protect applicants for long-term care policies from unfair or deceptive sales or enrollment practices, and provide for flexibility and innovation in the development of long-term care insurance coverage.
[2008 c 145 1.]
Long-term care insurance contracts have the potential of providing benefits that will protect the insureds assets, provide comfort in knowing they have done what is prudent for their future, and give family members relief from what might otherwise be a long and difficult journey of personal care. Unfortunately, if the recommended policy was not appropriate for the situation it might also represent wasted premium dollars. The intent of this legislation is to prevent inappropriate placement of policies and prevent unfair sales practices.
This chapter applies to all long-term care
insurance policies, contracts, or riders delivered or issued for delivery in
this state on or after January 1, 2009. This chapter does not supersede the obligations of
entities subject to this chapter to comply with other applicable laws to the
extent that they do not conflict with this chapter, except that laws and
regulations designed and intended to apply to Medicare supplement insurance
policies shall not be applied to long-term care insurance.
(1) Coverage advertised, marketed, or offered as long-term
care insurance shall comply with the provisions of this chapter. Any coverage,
policy, or rider advertised, marketed, or offered as long-term care or nursing
home insurance shall comply with the provisions of this chapter.
(2) Individual and group long-term care contracts
issued prior to January 1, 2009, remain governed by chapter 48.84 RCW and rules adopted
thereunder.
(3) This chapter is not intended to prohibit approval
of long-term care funded through life insurance.
[2008 c 145 2.]
This chapter is not applicable to Medicare supplemental policies, even though they do provide some amount of skilled care benefits. It applies only to policies and riders that are specifically marketed as long-term care policies. All long-term care policies and riders marketed in this state must comply with Washington requirements. Individual and group contracts issued prior to January 1, 2009 remain governed by chapter 48.84 RCW. Any benefits obtained through life insurance contracts are not affected.
The definitions in this section apply
throughout this chapter unless the context clearly requires otherwise.
(1) "Applicant" means: (a) In the
case of an individual long-term care insurance policy, the person who
seeks to contract for benefits; and (b) in the case of a group long-term
care insurance policy, the proposed certificate holder.
(2) "Certificate" includes any
certificate issued under a group long-term care insurance policy that has been
delivered or issued for delivery in this state.
(3) "Commissioner" means the
insurance commissioner of Washington state.
(4) "Issuer" includes insurance
companies, fraternal benefit societies, health care service contractors, health
maintenance organizations, or other entity delivering or issuing for delivery
any long-term care insurance policy, contract, or rider.
(5) "Long-term care insurance" means
an insurance policy, contract, or rider that is advertised, marketed, offered,
or designed to provide coverage for at least twelve consecutive months for a
covered person. Long-term care insurance may be on an expense incurred,
indemnity, prepaid, or other basis, for one or more necessary or medically
necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or
personal care services, provided in a setting other than an acute care unit of
a hospital. Long-term care insurance includes any policy, contract, or rider
that provides for payment of benefits based upon cognitive impairment or the
loss of functional capacity.
(a) Long-term care insurance includes group and
individual annuities and life insurance policies or riders that provide
directly or supplement long-term care insurance. However, long-term care
insurance does not include life insurance policies that: (i) 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; (ii) provide the option of a lump-sum
payment for those benefits; and (iii) do not condition the benefits or the
eligibility for the benefits upon the receipt of long-term care.
(b) Long-term care insurance also includes qualified
long-term care insurance contracts.
(c) Long-term care insurance does not include any
insurance policy, contract, or rider that is offered primarily to provide
coverage for basic Medicare supplement, basic hospital expense, basic
medical-surgical expense, hospital confinement indemnity, major medical
expense, disability income, related income, asset protection, accident only,
specified disease, specified accident, or limited benefit health.
(6) "Group long-term care insurance"
means a long-term care insurance policy or contract that is delivered or issued
for delivery in this state and is issued to:
(a) One or more employers; one or more labor
organizations; or a trust or the trustees of a fund established by one or more
employers or labor organizations for current or former employees, current or
former members of the labor organizations, or a combination of current and
former employees or members, or a combination of such employers, labor
organizations, trusts, or trustees; or
(b) A professional, trade, or occupational association
for its members or former or retired members, if the association:
(i) Is composed of persons who are or were all
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)(i) An association, trust, or the trustees of a
fund established, created, or maintained for the benefit of members of one or
more associations. Before advertising, marketing, or offering long-term care
coverage in this state, the association or associations, or the insurer of the
association or associations, must file evidence with the commissioner that the
association or associations have at the time of such filing at least one hundred
persons who are members and that the association or associations have been
organized and maintained in good faith for purposes other than that of
obtaining insurance; have been in active existence for at least one year; and
have a constitution and bylaws that provide that:
(A) The association or associations hold regular
meetings at least annually to further the purposes of the members;
(B) Except for credit unions, the association or
associations collect dues or solicit contributions from members; and
(C) The members have voting privileges and
representation on the governing board and committees of the association.
(ii) Thirty days after filing the evidence in
accordance with this section, the association or associations will be deemed to
have satisfied the organizational requirements, unless the commissioner makes a
finding that the association or associations do not satisfy those
organizational requirements; [or]
(d) A group other than as described in (a), (b), or
(c) of this subsection subject to a finding by the commissioner that:
(i) The issuance of the group policy is not contrary
to the best interest of the public;
(ii) The issuance of the group policy would result in
economies of acquisition or administration; and
(iii) The benefits are reasonable in relation to the
premiums charged.
(7) "Policy" includes a document such
as an insurance policy, contract, subscriber agreement, rider, or endorsement
delivered or issued for delivery in this state by an insurer, fraternal benefit
society, health care service contractor, health maintenance organization, or
any similar entity authorized by the insurance commissioner to transact the
business of long-term care insurance.
(8) "Qualified long-term care insurance
contract" or "federally tax-qualified long-term care insurance
contract" means:
(a) An individual or group insurance contract that
meets the requirements of section 7702B(b) of the internal revenue code of
1986, as amended; or
(b) The portion of a life insurance contract that
provides long-term care insurance coverage by rider or as part of the contract
and that satisfies the requirements of sections 7702B(b) and (e) of the
internal revenue code of 1986, as amended.
[2008 c 145 3.]
All contracts are legal documents. As such, terminology is very important since terms have a direct bearing on how the contracts pay benefits. An agent who is not aware of how terms will affect policy benefits and policy types cannot properly represent the product to his or her clients.
A group long-term care insurance policy may not be offered to a resident of this state under a group policy issued in another state to a group described in RCW 48.83.020(6)(d), unless this state or another 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.
[2008 c 145 4.]
Group insurance contracts often originate in a state other than Washington. If an employer or other group wishes to offer long-term care coverage to residents of this state, the coverage must substantially meet our requirements. Therefore, the state of issuance must have substantially similar requirements as Washington has. If the issuing state does not have similar requirements, the group certificates may not be offered to Washington residents.
(1) A long-term care insurance policy or
certificate may not define "preexisting condition" more
restrictively than as a condition for which medical advice or treatment was
recommended by or received from a provider of health care services, within six
months preceding the effective date of coverage of an insured person, unless
the policy or certificate applies to group long-term care insurance under RCW 48.83.020(6) (a), (b), or (c).
(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 six months following the effective date
of coverage of an insured person, unless the policy or certificate applies to a
group as defined in RCW 48.83.020(6)(a).
(3) The commissioner may extend the limitation periods for specific age group
categories in specific policy forms upon finding that the extension is in the
best interest of the public.
(4) An issuer may use an application form designed to elicit the complete
health history of an applicant and underwrite in accordance with that issuer's
established underwriting standards, based on the answers on that application.
Unless otherwise provided in the policy or certificate and regardless of
whether it is disclosed on the application, a preexisting condition need not be
covered until the waiting period expires.
(5) A long-term care insurance policy or certificate may not exclude or use
waivers or riders to exclude, limit, or reduce coverage or benefits for
specifically named or described preexisting diseases or physical conditions
beyond the waiting period.
[2008 c 145 5.]
The point of obtaining long-term care coverage, like all types of coverage, is to obtain benefits when claims arise. Preexisting conditions play an important role in whether or not the insurer will even accept the risk and issue a policy. When a policy is issued, existing health conditions determine if claims will be paid that relate to the health condition that existed at the time of application or in the period of time prior to making application. Like many states, Washington has specified how insurers may define a preexisting condition. In our state long-term care policies may not require greater restrictions than those allowed, but they may make requirements more lenient than mandated. A preexisting condition is defined as one for which medical advice or treatment was recommended by or received from a provider of health care services, within six months preceding the effective date of coverage. Preexisting conditions will not be covered for the first six months following policy issuance.
Example: A physical condition was treated by a doctor on January 1st. The policy was applied for and issued on May 20th. Since January 1st occurred in the previous six months, the physical condition that was treated will not be covered until November 20th.
Of course, insurers may use an application designed to secure the type of information necessary to properly underwrite the application. This would include obtaining facts relating to previous medical conditions. Issued policies may not exclude some health conditions from coverage so the policy must be underwritten based on the facts and either issued or declined; it may not be issued with exclusions, waivers, or riders on specified health conditions.
No long-term care insurance policy may:
(1) Be canceled, non-renewed, or otherwise terminated on the grounds of the
age or the deterioration of the mental or physical health of the insured
individual or certificate holder;
(2) Contain a provision establishing a new waiting period in the event
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;
(3) Provide coverage for skilled nursing care only or provide significantly
more coverage for skilled care in a facility than coverage for lower levels of
care;
(4) Condition eligibility for any benefits on a prior hospitalization
requirement;
(5) Condition eligibility for benefits provided in an institutional care
setting on the receipt of a higher level of institutional care;
(6) Condition eligibility for any benefits other than waiver of premium, post-confinement,
post-acute care, or recuperative benefits on a prior institutionalization
requirement;
(7) Include a post-confinement, post-acute care, or recuperative benefit
unless:
(a) Such requirement is clearly labeled in a separate
paragraph of the policy or certificate entitled "Limitations or
Conditions on Eligibility for Benefits"; and
(b) Such limitations or conditions specify any
required number of days of pre-confinement or post-confinement;
(8) Condition eligibility for non-institutional benefits on the prior receipt
of institutional care;
(9) A long-term care insurance policy or certificate may be field-issued if
the compensation to the field issuer is not based on the number of policies or
certificates issued. For purposes of this section, "field-issued"
means a policy or certificate issued by a producer or a third-party
administrator of the policy pursuant to the underwriting authority by an issuer
and using the issuer's underwriting guidelines.
[2008 c 145 6.]
Once a policy is issued the insurance company may not cancel the policy due to deterioration in health or mental ability. Additionally, the insurer may not refuse to renew the policy or otherwise cancel it. Only if the insured does not pay his or her premiums on a timely basis may the insurer cancel or refuse to renew the policy.
If the insurer changes policy forms or converts coverage, they may not impose a new waiting period on their existing policyholders. This would not apply to changes in coverage requested by the insured.
In Washington insurers may not require prior hospitalization or skilled care prior to paying other benefits, such as custodial care. Any post-confinement, post-acute care, or recuperative benefit unless it is clearly labeled in a separate paragraph that states: limitations or conditions on eligibility for benefits.
Few companies would issue long-term care policies without underwriting since the potential of paying large benefits makes doing so impractical. However, if a company wishes to have field-issued policies, the compensation paid to the field-issuer (agent) may not be based on the number of policies issued. Field issued policies would still use some type of underwriting standard, although it might merely be based upon the answers on an application.
(1) Long-term care insurance applicants
may return a policy or certificate for any reason within thirty days after its
delivery and to have the premium refunded.
(2) All long-term care insurance policies and certificates shall have a
notice prominently printed on or attached to the first page of the policy
stating that the applicant may return the policy or certificate within thirty
days after its delivery and to have the premium refunded.
(3) Refunds or denials of applications must be made within thirty days of the
return or denial.
(4) This section shall not apply to certificates issued pursuant to a policy
issued to a group defined in RCW 48.83.020(6)(a).
[2008 c 145 7.]
Long-term care insurance applicants have thirty days to review their issued policy and either keep or decline it during that time. If the applicant decides to return the policy they must do so within that 30-day period. Premiums will be refunded without any explanation required from the applicant as to why it was returned. There must be a prominent notice regarding this right printed on or attached to the first page of the policy. Refunds (or denials of refunds) must be made within 30 days from policy return.
(1) An outline of coverage must be
delivered 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) The commissioner must prescribe a standard format,
including style, arrangement, overall appearance, and the content of an outline
of coverage.
(b) When an insurance producer makes a solicitation in
person, he or she must deliver an outline of coverage before presenting an
application or enrollment form.
(c) In a direct response solicitation, the outline of
coverage must be presented with an application or enrollment form.
(d) If a policy is issued to a group as defined in RCW
48.83.020(6)(a), an outline of coverage is not
required to be delivered, if the information that the commissioner requires to
be included in the outline of coverage is in other materials relating to
enrollment. Upon request, any such materials must be made available to the
commissioner.
(2) If an issuer approves an application for a long-term care insurance
contract or certificate, the issuer must deliver the contract or certificate of
insurance to the applicant within thirty days after the date of approval. A
policy summary must be delivered with an individual life insurance policy that
provides long-term care benefits within the policy or by rider. In a direct
response solicitation, the issuer must deliver the policy summary, upon
request, before delivery of the policy, if the applicant requests a summary.
(a) The policy summary shall include:
(i) An explanation of how the long-term care benefit
interacts with other components of the policy, including deductions from any
applicable death benefits;
(ii) An illustration of the amount of benefits, the
length of benefits, and the guaranteed lifetime benefits if any, for each
covered person;
(iii) Any exclusions, reductions, and limitations on
benefits of long-term care;
(iv) A statement that any long-term care inflation
protection option required by RCW 48.83.110 is not available under this policy;
and
(v) If applicable to the policy type, the summary must
also include:
(A) A disclosure of the effects of exercising other
rights under the policy;
(B) A disclosure of guarantees related to long-term
care costs of insurance charges; and
(C) Current and projected maximum lifetime benefits.
(b) The provisions of the policy summary may be
incorporated into a basic illustration required under chapter 48.23A RCW, or
into the policy summary which is required under rules adopted by the
commissioner.
[2008 c 145 8.]
The applicant will receive an outline of coverage prior to policy application.
There will be a policy summary with the issued long-term care policy. This summary will explain how the long-term care policy interacts with other sections of the policy. An illustration of the amounts of benefits, length of benefits, and guaranteed lifetime benefits will be included.
If a long-term care benefit funded through a
life insurance policy by the acceleration of the death benefit is in benefit
payment status, a monthly report must be provided to the policyholder. The
report must include:
(1) A record of all long-term care benefits paid out during the month;
(2) An explanation of any changes in the policy resulting from paying the
long-term care benefits, such as a change in the death benefit or cash values;
and
(3) The amount of long-term care benefits that remain to be paid.
[2008 c 145 9.]
Some life insurance policies provide a long-term care benefit by utilizing a policy acceleration of the death benefit. If this is the case and this benefit is initiated, a monthly report must be provided that includes a record of all long-term care benefits paid during the month and an explanation of changes in the policy that result from the payout.
All long-term care denials must be made within sixty days after receipt of a written request made by a policyholder or certificate holder, or his or her representative. All denials of long-term care claims by the issuer must provide a written explanation of the reasons for the denial and make available to the policyholder or certificate holder all information directly related to the denial.
[2008 c 145 10.]
Denials of long-term care benefits must be made in writing within 60 days following the submitted claim for benefits. There must be a written explanation of why the claim was denied. Any information related to the denied claim must be made available to the policyholder or their legal representative.
(1) An issuer may rescind a long-term care
insurance policy or certificate or deny an otherwise valid long-term care
insurance claim if:
(a) A policy or certificate has been in force for less
than six months and upon a showing of misrepresentation that is material to the
acceptance for coverage; or
(b) A policy or certificate that has been in force for
at least six months but less than two years, upon a showing of
misrepresentation that is both material to the acceptance for coverage and that
pertains to the condition for which benefits are sought.
(2) After a policy or certificate has been in force for two years it is not
contestable upon the grounds of misrepresentation alone. Such a policy or
certificate may be contested only upon a showing that the insured knowingly and
intentionally misrepresented relevant facts relating to the insured's health.
(3) An issuer's payments for benefits under a long-term care insurance policy
or certificate may not be recovered by the issuer if the policy or certificate
is rescinded.
(4) This section does not apply to the remaining death benefit of a life
insurance policy that accelerates benefits for long-term care that are governed
by RCW 48.23.050 the state's life insurance incontestability clause. In all
other situations, this section shall apply to life insurance policies that
accelerate benefits for long-term care.
[2008 c 145 11.]
Under specific circumstances an insurance company may deny long-term care benefits for an otherwise qualified claim or even rescind (take back) an issued policy. If the policy has been in force for less than six months when a misrepresentation on the application is discovered that would have affected the issuance of the policy the insurer may deny a submitted claim or rescind the policy entirely. If the policy has been issued longer than six months but less than two years when a misrepresentation is discovered that would have affected policy issuance and a claim has been filed relevant to that misrepresentation the claim may be denied and the policy rescinded.
After the policy has been in force for two or more years it is not contestable due to misrepresentation alone. It may be contested only if it can be proven that the insured knowingly and intentionally misrepresented relevant facts regarding health status of the insured. Any previous benefit payments that may have been made cannot be recovered by the insured.
(1) The commissioner must establish
minimum standards for inflation protection features.
(2) An issuer must comply with the rules adopted by the commissioner that
establish minimum standards for inflation protection features.
[2008 c 145 12.]
Washingtons insurance commissioners office must establish minimum standards for inflation protection in a long-term care policy. Insurers must, of course, comply with the rules adopted.
(1) Except as provided by this section, a
long-term care insurance policy may not be delivered or issued for delivery in
this state unless the policyholder or certificate holder has been offered the
option of purchasing a policy or certificate that includes a nonforfeiture
benefit. The offer of a nonforfeiture benefit may be in the form of a rider
that is attached to the policy. If a policyholder or certificate holder
declines the nonforfeiture benefit, the issuer must provide a contingent
benefit upon lapse that is available for a specified period of time following a
substantial increase in premium rates.
(2) If a group long-term care insurance policy is issued, the offer required
in subsection (1) of this section must be made to the group policyholder.
However, if the policy is issued as group long-term care insurance as defined
in RCW 48.83.020(6)(d) other than to a continuing
care retirement community or other similar entity, the offering shall be made
to each proposed certificate holder.
(3) The commissioner must adopt rules specifying the type or types of
nonforfeiture benefits to be offered as part of long-term care insurance
policies and certificates, the standards for nonforfeiture benefits, and the
rules regarding contingent benefit upon lapse, including a determination of the
specified period of time during which a contingent benefit upon lapse will be
available and the substantial premium rate increase that triggers a contingent
benefit upon lapse.
[2008 c 145 13.]
A long-term care insurance policy cannot be issued in Washington unless the policyholder has the option of a nonforfeiture benefit. This option would likely require additional premium if selected. The nonforfeiture benefit may be part of the policy or be a rider attached to the policy. If the applicant declines to purchase the nonforfeiture benefit, there must be a contingent benefit available upon lapse for a specified time period following a substantial increase in premium rates. In the case of group coverage, the offer must be made to the group policyholder or to each proposed certificate holder, depending upon the situation. Washingtons commissioner will adopt rules specifying the types of nonforfeiture benefits available.
A person may not sell, solicit, or negotiate
long-term care insurance unless he or she is appropriately licensed as an
insurance producer and has successfully completed long-term care coverage education
that meets the requirements of this section.
(1) All long-term care education required by this chapter must meet the
requirements of chapter 48.17 RCW and rules adopted by the commissioner.
(2)(a)(i) After January 1, 2009, prior to soliciting, selling, or negotiating
long-term care insurance coverage, an insurance producer must successfully
complete a one-time education course consisting of no fewer than eight hours on
long-term care coverage, long-term care services, state and federal regulations
and requirements for long-term care and qualified long-term care insurance
coverage, changes or improvements in long-term care services or providers,
alternatives to the purchase of long-term care insurance coverage, the effect
of inflation on benefits and the importance of inflation protection, and
consumer suitability standards and guidelines.
(ii) In order to continue soliciting, selling, or
negotiating long-term care coverage in this state, all insurance producers
selling, soliciting, or negotiating long-term care insurance coverage prior to
January 1, 2009, must successfully complete the eight-hour, one-time long-term
care education and training course no later than July 1, 2009.
(b) In addition to the one-time education and training
requirement set forth in (a) of this subsection, insurance producers who engage
in the solicitation, sale, or negotiation of long-term care insurance coverage
must successfully complete no fewer than four hours every twenty-four months of
continuing education specific to long-term care insurance coverage and issues.
Long-term care insurance coverage continuing education shall consist of topics
related to long-term care insurance, long-term care services, and, if
applicable, qualified state long-term care insurance partnership programs,
including, but not limited to, the following:
(i) State and federal regulations and requirements and
the relationship between qualified state long-term care insurance partnership
programs and other public and private coverage of long-term care services,
including Medicaid;
(ii) Available long-term care services and providers;
(iii) Changes or improvements in long-term care
services or providers;
(iv) Alternatives to the purchase of private long-term
care insurance;
(v) The effect of inflation on benefits and the
importance of inflation protection;
(vi) This chapter and chapters 48.84 and 48.85 RCW;
and
(vii) Consumer suitability standards and guidelines.
(3) The insurance producer education required by this section shall not
include training that is issuer or company product-specific or that includes
any sales or marketing information, materials, or training, other than those
required by state or federal law.
(4) Issuers shall obtain verification that an insurance producer receives
training required by this section before that producer is permitted to sell,
solicit, or otherwise negotiate the issuer's long-term care insurance products.
(5) Issuers shall maintain records subject to the state's record retention
requirements and shall make evidence of that verification available to the
commissioner upon request.
(6)(a) Issuers shall maintain records with respect to the training of its
producers concerning the distribution of its long-term care partnership
policies that will allow the commissioner to provide assurance to the state
department of social and health services, Medicaid division, that insurance
producers engaged in the sale of long-term care insurance contracts have
received the training required by this section and any rules adopted by the
commissioner, and that producers have demonstrated an understanding of the
partnership policies and their relationship to public and private coverage of
long-term care, including Medicaid, in this state.
(b) These records shall be maintained in accordance
with the state's record retention requirements and shall be made available to
the commissioner upon request.
(7) The satisfaction of these training requirements for any state shall be
deemed to satisfy the training requirements of this state.
[2008 c 145 14.]
Washington agents must acquire specific education relating to long-term care products prior to soliciting or selling long-term care contracts. This education must meet the requirements of the state. As of January 1, 2009 producers must successfully complete a one-time 8-hour education course even if he or she has previously completed long-term care education that met state requirements at that time. Agents have until July 1, 2009 to complete the 8 hours of education. Thereafter, agents must complete a 4-hour refresher course each license renewal period that meets current state requirements. The long-term care course is good for a 24-month period, meaning the refresher course must be completed no later than 24 months following completion of the initial 8-hour CE course. These long-term care education requirements are part of the total 24-hour requirement for license renewal; they are not in addition to the 24 hour requirement.
Insurance companies are required to monitor compliance with the education requirements for long-term care. Insurers cannot accept an application from an agent unless he or she has met the long-term care education requirement and given proof of such to the insurer.
If the agent intends to solicit or sell Partnership long-term care products, he or she must also meet the federal requirements for Partnership education. This is a training requirement rather than a state continuing education requirement. What does that mean? It means the Partnership education may be state approved for CE requirements, but it is not required to be state approved. Agents may take courses that meet the federal Partnership training requirement but have not been submitted to the domicile state to receive state education credits.
Issuers must maintain training records that allow the commissioner to provide assurance to the state Department of Social and Health Services, Medicaid Division that such education has been completed. There must be demonstrated evidence that such training provided an understanding of the Partnership policies and their relationship to public and private coverage of long-term care, including Medicaid, in Washington. The satisfaction of the Partnership training in any state will satisfy the training requirements for Partnership education in this state. Agents must still meet the training requirements of Washington, however, to sell long-term care insurance in general.
Issuers and their agents, if any, must
determine whether issuing long-term care insurance coverage to a particular
person is appropriate, except in the case of a life insurance policy that
accelerates benefits for long-term care.
(1) An issuer must:
(a) Develop and use suitability standards to determine
whether the purchase or replacement of long-term care coverage is appropriate
for the needs of the applicant or insured;
(b) Train its agents in the use of the issuer's
suitability standards; and
(c) Maintain a copy of its suitability standards and
make the standards available for inspection, upon request.
(2) The following must be considered when determining whether the
applicant meets the issuer's suitability standards:
(a) The ability of the applicant to pay for the
proposed coverage and any other relevant financial information related to the
purchase of or payment for coverage;
(b) The applicant's goals and needs with respect to
long-term care and the advantages and disadvantages of long-term care coverage
to meet those goals or needs; and
(c) The values, benefits, and costs of the applicant's
existing health or long-term care coverage, if any, when compared to the
values, benefits, and costs of the recommended purchase or replacement.
(3) The sale or transfer of any suitability
information provided to the issuer or agent by the applicant to any other
person or business entity is prohibited.
(4)(a) The commissioner shall adopt, by rule, forms of consumer-friendly
personal worksheets that issuers and their agents must use for applications for
long-term care coverage.
(b) The commissioner may require each issuer to file
its current forms of suitability standards and personal worksheets with the
commissioner.
[2008 c 145 15.]
Long-term care policies are right for many people, but not for every person. It is the job of insurers and agents to make determinations regarding the suitability of placing a policy prior to doing so. This would not apply to life insurance contracts that accelerate long-term care benefits.
Insurers are required to develop suitability standards to aid their agents in making this determination. Once suitability standards are developed, insurers must train their agents in the use of them when recommending or replacing a long-term care contract. Such suitability standards must be available for inspection by the commissioner upon request.
How does an insurer or agent determine if a long-term care policy is appropriate for the specific situation? There are several issues to consider: the income of the applicant, his or her ability to sustain the premium payments for a number of years, any other financial information that is relative to purchasing long-term care insurance (such as assets that may need to be conserved), the applicants personal goals and needs, and whether purchase of a policy would appropriately address those goals and needs. If there is existing insurance in place, the agent must review them to see if the consumers goals and needs are already appropriately addressed by the products in place.
Any information gathered by either the insurer or agent for the purpose of addressing product suitability may not be sold or given to any other person or entity.
The commissioner will develop long-term care worksheets that agents and insurers must use when determining the suitability of long-term care products.
A person engaged in the issuance or solicitation of long-term care coverage shall not engage in unfair methods of competition or unfair or deceptive acts or practices, as such methods, acts, or practices are defined in chapter 48.30 RCW, or as defined by the commissioner.
[2008 c 145 16.]
An agent (or any person) that works in the long-term care insurance market may not engage in unfair methods of competition or deceptive acts. This would include such things as misrepresentation of products, what those products will accomplish, the benefits that can be expected from the policy, or the pricing of LTC products.
An issuer or an insurance producer who violates a law or rule relating to the regulation of long-term care insurance or its marketing shall be subject to a fine of up to three times the amount of the commission paid for each policy involved in the violation or up to ten thousand dollars, whichever is greater.
[2008 c 145 17.]
An insurance company or agent that violates the laws and rules relating to long-term care insurance products can be fined. The amount of the fine will be three times the amount of commission the agent would have earned for the sale of the product, or up to $10,000, whichever is greater.
(1) The commissioner must adopt rules that
include standards for full and fair disclosure setting forth the manner,
content, and required disclosures for the sale of long-term care insurance
policies, terms of renewability, initial and subsequent conditions of
eligibility, non-duplication of coverage provisions, coverage of dependents, preexisting
conditions, termination of insurance, continuation or conversion, probationary
periods, limitations, exceptions, reductions, elimination periods, requirements
for replacement, recurrent conditions, and definitions of terms. The
commissioner must adopt rules establishing loss ratio standards for long-term
care insurance policies. The commissioner must adopt rules to promote premium
adequacy and to protect policyholders in the event of proposed substantial rate
increases, and to establish minimum standards for producer education, marketing
practices, producer compensation, producer testing, penalties, and reporting
practices for long-term care insurance.
(2) The commissioner shall adopt rules establishing standards protecting
patient privacy rights, rights to receive confidential health care services,
and standards for an issuer's timely review of a claim denial upon request of a
covered person.
(3) The commissioner may adopt reasonable rules to effectuate any provision
of this chapter in accordance with the requirements of chapter 34.05 RCW.
[2008 c 145 18.]
Washingtons insurance commissioner is responsible for developing and adopting rules of conduct relating to the long-term care insurance industry. This includes all areas, such as preventing duplication of coverage, policy disclosures, renewability of policies, preexisting conditions, replacement of policies, and all other conditions and situations relating to long-term care products. It also includes the development and implementation of agent education on long-term care products.
If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.
[2008 c 145 23.]
This act takes effect January 1, 2009.
[2008 c 145 24.]
This chapter may be known and cited as the "long-term care insurance act" and is intended to govern the content and sale of long-term care insurance and long-term care benefit contracts as defined in this chapter. This chapter shall be liberally construed to promote the public interest in protecting purchasers of long-term care insurance from unfair or deceptive sales, marketing, and advertising practices. The provisions of this chapter shall apply in addition to other requirements of Title 48 RCW.
[1986 c 170 1.]
The long-term care insurance act is intended to govern the content and sale of long-term care products. It is designed to protect consumers who are interested in purchasing long-term care insurance.
Unless the context requires otherwise, the
definitions in this section apply throughout this chapter.
(1) "Long-term care insurance" or "long-term
care benefit contract" means any insurance policy or benefit contract
primarily advertised, marketed, offered, or designed to provide coverage or
services for either institutional or community-based convalescent, custodial,
chronic, or terminally ill care. Such terms do not include and this chapter
shall not apply to policies or contracts governed by chapter 48.66 RCW and
continuing care retirement communities.
(2) "Loss ratio" means the incurred
claims plus or minus the increase or decrease in reserves as a percentage of
the earned premiums, or the projected incurred claims plus or minus the
increase or decrease in projected reserves as a percentage of projected earned
premiums, as defined by the commissioner.
(3) "Preexisting condition" means a
covered person's medical condition that caused that person to have received
medical advice or treatment during the specified time period before the
effective date of coverage.
(4) "Medicare" means Title XVIII of
the United
States
social security act, or its successor program.
(5) "Medicaid" means Title XIX of the
United
States
social security act, or its successor program.
(6) "Nursing home" means a nursing
home as defined in RCW 18.51.010.
[1986 c 170 2.]
This section provides specific terminology that will apply to long-term care contracts.
(1) The commissioner shall adopt rules
requiring reasonable benefits in relation to the premium or price charged for
long-term care policies and contracts which rules may include but are not
limited to the establishment of minimum loss ratios.
(2) In addition, the commissioner may adopt rules establishing standards for
long-term care coverage benefit limitations, exclusions, exceptions, and
reductions and for policy or contract renewability.
[1986 c 170 3.]
Washingtons commissioner will adopt rules that require reasonable benefits in relation to the premiums paid for the long-term care contracts, including establishment of minimum loss ratios. He or she will also set standards for such things as minimum benefits, exclusions and renewability of contracts.
No long-term care insurance policy or
benefit contract may:
(1) Use riders, waivers, endorsements, or any similar method to limit or
reduce coverage or benefits;
(2) Indemnify against losses resulting from sickness on a different basis
than losses resulting from accidents;
(3) Be canceled, non-renewed, or segregated at the time of re-rating solely
on the grounds of the age or the deterioration of the mental or physical health
of the covered person;
(4) Exclude or limit coverage for preexisting conditions for a period of more
than one year prior to the effective date of the policy or contract or more
than six months after the effective date of the policy or contract;
(5) Differentiate benefit amounts on the basis of the type or level of
nursing home care provided;
(6) Contain a provision establishing any new waiting period in the event an
existing policy or contract is converted to a new or other form within the same
company.
[1986 c 170 4.]
Some things are prohibited in long-term care contracts. These would include such things as use of riders, waivers or endorsements that limit or reduce benefits in the contract, pay benefits differently for sickness than they do from accidents, or experience increases in premiums due to re-rating on the grounds of age or deterioration of health. The previous prohibited provisions are important since they protect consumers who may not have enough experience or knowledge to realize they are being treated unfairly. In many cases the role of the insurance department is to protect consumers from any practice that is unethical or unfair.
(1) The commissioner shall adopt rules
requiring disclosure to consumers of the level, type, and amount of benefits
provided and the limitations, exclusions, and exceptions contained in a
long-term care insurance policy or contract. In adopting such rules the
commissioner shall require an understandable disclosure to consumers of any
cost for services that the consumer will be responsible for in utilizing
benefits covered under the policy or contract.
(2) Each long-term care insurance policy or contract shall include a
provision, prominently displayed on the first page of the policy or contract,
stating in substance that the person to whom the policy or contract is sold
shall be permitted to return the policy or contract within thirty days of its
delivery. In the case of policies or contracts solicited and sold by mail, the
person may return the policy or contract within sixty days. Once the policy or
contract has been returned, the person may have the premium refunded if, after
examination of the policy or contract, the person is not satisfied with it for
any reason. An additional ten percent penalty shall be added to any premium
refund due which is not paid within thirty days of return of the policy or
contract to the insurer or agent. If a person, pursuant to such notice, returns
the policy or contract to the insurer at its branch or home office, or to the
agent from whom the policy or contract was purchased, the policy or contract
shall be void from its inception, and the parties shall be in the same position
as if no policy or contract had been issued.
[1986 c 170 5.]
Until July 1, 2009 there are some provisions that are required in long-term care contracts and certificates. The commissioner develops and adopts these provisions. They pertain to the level, type, and amount of benefits provided. They also pertain to the limitations, exclusions, and exceptions contained in a long-term care insurance policy. The commissioner will also develop disclosures that are user-friendly so consumers can understand what he or she may be responsible for.
There will be a prominent statement displaced on the first page of the policy informing the applicant that he or she may return the policy within the first 30 days following delivery and receive a full premium refund. If the contract was purchased through the mail (without an agent) the insured has sixty days to return the policy and receive a full premium refund. If the refund is not made to the consumer within thirty days of the return of the policy, an additional 10% penalty must be paid to the applicant in addition to the full refund of the premium amount.
Once the policy has been returned for refund, it is as if the contract never existed. That means that no benefits will be payable even if an otherwise covered event would have resulted in benefits being paid under the policy.
(1) The commissioner shall adopt rules
requiring disclosure to consumers of the level, type, and amount of benefits
provided and the limitations, exclusions, and exceptions contained in a
long-term care insurance policy or contract. In adopting such rules the
commissioner shall require an understandable disclosure to consumers of any
cost for services that the consumer will be responsible for in utilizing
benefits covered under the policy or contract.
(2) Each long-term care insurance policy or contract shall include a
provision, prominently displayed on the first page of the policy or contract,
stating in substance that the person to whom the policy or contract is sold
shall be permitted to return the policy or contract within thirty days of its
delivery. In the case of policies or contracts solicited and sold by mail, the
person may return the policy or contract within sixty days. Once the policy or
contract has been returned, the person may have the premium refunded if, after
examination of the policy or contract, the person is not satisfied with it for
any reason. An additional ten percent penalty shall be added to any premium
refund due which is not paid within thirty days of return of the policy or
contract to the insurer or insurance producer. If a person, pursuant to such
notice, returns the policy or contract to the insurer at its branch or home
office, or to the insurance producer from whom the policy or contract was
purchased, the policy or contract shall be void from its inception, and the
parties shall be in the same position as if no policy or contract had been
issued.
(3) No later than January 1, 2010, or when the insurer has used all of its
existing paper long-term care insurance policy forms which were in its
possession on July 1, 2009, whichever is earlier, the notice required by
subsection (2) of this section shall use the term insurance producer in place
of agent.
[2008 c 217 67; 1986 c 170 5.]
As of July 1, 2009 the commissioner will adopt rules requiring disclosure of the level, type, and amounts of benefits provided and the limitations, exclusions and exceptions in the long-term care policy. The disclosure must be consumer-friendly alerting consumers to items their policy will not pay for, such as prescription drugs or personal use items.
All long-term care contracts must include a provision that is prominently displayed on the first page of the contract alerting the applicant that he or she may return the policy within 30 days of delivery, sixty days for contracts purchased through the mail. If the insurer does not return the premium within 30 days of the policys return an additional 10% penalty will be added.
By January 1, 2010, insurers will use the term insurance producer rather than agent.
No agent, broker, or other representative of an insurer, contractor, or other organization selling or offering long-term care insurance policies or benefit contracts may: (1) Complete the medical history portion of any form or application for the purchase of such policy or contract; (2) knowingly sell a long-term care policy or contract to any person who is receiving Medicaid; or (3) use or engage in any unfair or deceptive act or practice in the advertising, sale, or marketing of long-term care policies or contracts.
[1986 c 170 6.]
Until July 1, 2009 agents, brokers, and other representatives are prohibited from:
1. Completing the medical history portion of any application form on behalf of the applicant;
2. Knowingly selling a long-term care contract to any person receiving Medicaid; or
3. Using or engaging in unfair or deceptive acts in the advertising, sale, or marketing of long-term care contracts.
No insurance producer or other representative of an insurer, contractor, or other organization selling or offering long-term care insurance policies or benefit contracts may: (1) Complete the medical history portion of any form or application for the purchase of such policy or contract; (2) knowingly sell a long-term care policy or contract to any person who is receiving Medicaid; or (3) use or engage in any unfair or deceptive act or practice in the advertising, sale, or marketing of long-term care policies or contracts.
[2008 c 217 68; 1986 c 170 6.]
As of July 1, 2009, agents are now referred to as insurance producers. The prohibited practices remain the same, but the reference to agent has been changed to insurance producer. Producers still may not:
1. Complete the medical history portion of any application form on behalf of the applicant;
2. Knowingly sell a long-term care contract to any person receiving Medicaid; or
3. Use or engage in unfair or deceptive acts in the advertising, sale, or marketing of long-term care contracts.
Commencing with reports for accounting periods beginning on or after January 1, 1988, all insurers, fraternal benefit societies, health care services contractors, and health maintenance organizations shall, for reporting and record keeping purposes, separate data concerning long-term care insurance policies and contracts from data concerning other insurance policies and contracts.
[1986 c 170 7.]
Some data is separated for reporting and record keeping purposes. Long-term care data must be separated from other insurance policies and contracts.
If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.
[1986 c 170 9.]
RCW 48.84.060 shall take effect on November 1, 1986, and the commissioner shall adopt all rules necessary to implement RCW 48.84.060 by its effective date including rules prohibiting particular unfair or deceptive acts and practices in the advertising, sale, and marketing of long-term care policies and contracts. The commissioner shall adopt all rules necessary to implement the remaining sections of this chapter by July 1, 1987, and the remaining sections of this chapter shall apply to policies and contracts issued on or after January 1, 1988.
[1986 c 170 10.]
The department of social and health services shall, in conjunction with the office of the insurance commissioner, coordinate a long-term care insurance program entitled the Washington Long-Term Care Partnership, whereby private insurance and Medicaid funds shall be used to finance long-term care. For individuals purchasing a long-term care insurance policy or contract governed by chapter 48.84 RCW and meeting the criteria prescribed in this chapter, and any other terms as specified by the office of the insurance commissioner and the department of social and health services, this program shall allow for the exclusion of some or all of the individual's assets in determination of Medicaid eligibility as approved by the federal health care financing administration.
[1995 1st sp.s. c 18 76; 1993 c 492 458.]
This code was effective until the new code became effective on January 1, 2009.
The department of social and health services shall, in conjunction with the office of the insurance commissioner, coordinate a long-term care insurance program entitled the Washington Long-Term Care Partnership, whereby private insurance and Medicaid funds shall be used to finance long-term care. For individuals purchasing a long-term care insurance policy or contract governed by chapter 48.84 or 48.83 RCW and meeting the criteria prescribed in this chapter, and any other terms as specified by the office of the insurance commissioner and the department of social and health services, this program shall allow for the exclusion of some or all of the individual's assets in determination of Medicaid eligibility as approved by the federal health care financing administration.
[2008 c 145 21; 1995 1st sp.s. c 18 76; 1993 c 492 458.]
This new code includes 48.83 RCW. Long-term care Partnership plans will be developed by the Department of Social and Health Services in conjunction with the insurance commissioners office. Private insurance and Medicaid funds will be used to finance the asset protection portion of Partnership long-term care policies. The amount of long-term care protection purchased by Washington residents will determine the amount of personal assets that will be protected from Medicaids spend-down requirements. Partnership plans protect only assets; never income.
The department of social and health services shall seek approval from the federal health care financing administration to allow the protection of an individual's assets as provided in this chapter. The department shall adopt all rules necessary to implement the Washington Long-Term Care Partnership program, which rules shall permit the exclusion of all or some of an individual's assets in a manner specified by the department in a determination of Medicaid eligibility to the extent that private long-term care insurance provides payment or benefits for services.
[1995 1st sp.s. c 18 77; 1993 c 492 459.]
Under the Partnership programs, individuals who purchase such policies are allowed to keep assets even when their insurance benefits are depleted and they must apply for Medicaid benefits. Policyholders only keep the amount of assets that were purchased under the Partnership long-term care policies. Income is never protected, only assets.
For example: Joseph buys a Partnership long-term care policy that provides $50,000 in long-term care benefits. Joseph actually has $100,000 in assets so he is protecting half of his assets with his Partnership long-term care policy.
When Joseph enters a nursing home he begins receiving benefits from his LTC policy. When the benefits are exhausted Joseph must still spend down $50,000 in assets (the amount left unprotected by his Partnership plan) before he can apply for Medicaid benefits, but he is allowed to keep the $50,000 in assets that were protected under his Partnership plan.
If Joseph had purchased $100,000 in Partnership long-term care benefits all of his assets (but not income) would have been protected from Medicaid spend-down requirements. Once his policy was exhausted he could have immediately applied for Medicaid if he had purchased the higher amount of benefits.
(1) The insurance commissioner shall adopt
rules defining the criteria that long-term care insurance policies must meet to
satisfy the requirements of this chapter. The rules shall provide that all
long-term care insurance policies purchased for the purposes of this chapter:
(a) Be guaranteed renewable;
(b) Provide coverage for nursing home care and provide
coverage for an alternative plan of care benefit, as defined by the
commissioner;
(c) Provide optional coverage for home and
community-based services. Such home and community-based services shall be
included in the coverage unless rejected in writing by the applicant;
(d) Provide automatic inflation protection or similar
coverage for any policyholder through the age of seventy-nine and made optional
at age eighty to protect the policyholder from future increases in the cost of
long-term care;
(e) Not require prior hospitalization or confinement
in a nursing home as a prerequisite to receiving long-term care benefits; and
(f) Contain at least a six-month grace period that
permits reinstatement of the policy or contract retroactive to the date of
termination if the policy or contract holder's nonpayment of premiums arose as
a result of a cognitive impairment suffered by the policy or contract holder as
certified by a physician.
(2) Insurers offering long-term care policies for the purposes of this
chapter shall demonstrate to the satisfaction of the insurance commissioner
that they:
(a) Have procedures to provide notice to each
purchaser of the long-term care consumer education program;
(b) Offer case management services;
(c) Have procedures that provide for the keeping of
individual policy records and procedures for the explanation of coverage and
benefits identifying those payments or services available under the policy that
meet the purposes of this chapter;
(d) Agree to provide the insurance commissioner, on or
before September 1 of each year, an annual report containing information
derived from the long-term care partnership long-term care insurance uniform
data set as specified by the office of the insurance commissioner.
[1995 1st sp.s. c 18 78; 1993 c 492 460.]
Partnership plans must follow federal requirements and our commissioner must adopt rules that comply with the federal guidelines. When insurers apply for approval of their products they must conform to all state and federal Partnership requirements.
Partnership plans must be guaranteed renewable products, have alternative care options, offer optional coverage for home and community based care (for extra premium), include inflation provisions, have no requirement for previous hospitalization, and contain at least a six-month grace period that permits reinstatement of the policy if it has lapsed due to nonpayment resulting from a cognitive impairment.
Furthermore, insurers must have procedures in place to notify each purchaser of the consumer education program, offer case management services, and prove the commissioner with an annual report on or before September 1 each year.
The insurance commissioner shall, with the cooperation of the department of social and health services and members of the long-term care insurance industry, develop a consumer education program designed to educate consumers as to the need for long-term care, methods for financing long-term care, the availability of long-term care insurance, and the availability and eligibility requirements of the asset protection program provided under this chapter.
[1995 1st sp.s. c 18 79; 1993 c 492 461.]
No matter how good a long-term care program is, if consumers are not aware of its existence they cannot benefit. Therefore, the commissioner will develop, in cooperation with the Department of Social and Health Services, a consumer education program. The hope is that those who would not otherwise have purchased long-term care insurance will buy a Partnership long-term care plan since it will provide asset protection (but not income protection). While there is some disagreement, the hope is that Medicaid funding will decrease since these individuals will be protected, at least to some degree, by their Partnership long-term care policy.
End of Chapter 6
United Insurance Educators, Inc.