SENATE BILL NO. 133
AN ACT TO AMEND PART I, TITLE 18 OF THE DELAWARE CODE RELATING TO INSURANCE; AND PROVIDING FOR A LONG-TERM CARE INSURANCE ACT.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Part I, Title 18 of the Delaware Code by adding thereto a new Chapter, designated as Chapter 71, which new Chapter shall read as follows:
"CHAPTER 71. LONG-TERM CARE INSURANCE
§7101. Statement of Purpose
The purpose of this Chapter is to promote the public interest; to promote the availability of long-term care insurance policies; to protect applicants for long-term care insurance, as defined in this Chapter, from unfair or deceptive sales or enrollment practices; to establish standards for long-term care insurance; to facilitate public understanding and comparison of long-term care insurance policies; and to facilitate flexibility and innovation in the development of long-term care insurance coverage.
The requirements of this Chapter shall apply to policies delivered or issued for delivery in this State on or after its effective date. This Chapter is not intended to supersede the obligations of entities subject to this Chapter to comply with the substance of other applicable insurance laws insofar as such laws not conflict with this Chapter; provided however, that laws and regulations designed and intended to apply to Medicare supplement insurance policies shall not be applied to long-term care insurance. A policy which is not advertised, marketed or offered as long-term care insurance or nursing home insurance need not meet the requirements of this Chapter.
The following words, terms and phrases, when used in this Chapter, shall have the meanings ascribed to them in this Section, except where the context clearly indicates a different meaning:
(a) "Applicant" shall mean:
(1) in the case of an individual long-term care insurance policy, the person who seeks to contract for benefits; and
(2) in the case of a group long-term care insurance policy, the proposed certificate holder.
(b) "Certificate" shall mean, for the purposes of this Chapter, any certificate issued under a group long-term care insurance policy, which policy has been delivered or issued for delivery in this state.
(c) "Commissioner" shall mean the Insurance Commissioner of this State.
(d) "Group long-term care insurance" shall mean a long-term care insurance policy which is delivered or issued for delivery in this state and issued to:
(1) one or more employers or labor organizations, or to a trust or to the trustees of a fund established by one or more employers or labor organizations, or a combination thereof, for employees or former employees or a combination thereof, or for members or former members or a combination thereof, of the labor organization;, or
(2) any professional, trade or occupational association for its members or former or retired members, or combination thereof, if such association is composed of individuals all of whom are or were actively engaged in the same profession, trade or occupation; and such association has been maintained in good faith for purposes other than obtaining insurance; or
(3) an association or a trust or the trustee(s) of a fund established, created or maintained for the benefit of members of one or more associations. Prior to advertising, marketing or offering such policy within this state, each such association or the insurer of such association, shall file evidence with the Commissioner that the association has at the outset a minimum of one hundred persons; has been organized and maintained in good faith for purposes other than that of obtaining insurance; has been in active existence for at least one year; and has a constitution and by-laws which provide that:
(i) the association holds regular meetings not less than annually to further purposes of the members;
(ii) except for credit unions, the association collects dues or solicits contributions from members; and
(iii) the members of the association have voting privileges and representation on the governing board and committees.
Thirty days after such filing the association shall be deemed to satisfy such organizational requirements, unless the Commissioner makes a finding that the association does satisfy those organizational requirements.
(4) a group other than as described in paragraphs (1) through (3) 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
(Ili) the benefits are reasonable in relation to the premiums charged.
(e) "Long-term care insurance" shall mean any insurance policy or rider advertised, marketed, offered or designed to provide coverage for not less than twelve consecutive months for each covered person 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. Such term includes group and individual policies or riders whether issued by insurers; fraternal benefit societies; nonprofit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations or any similar organization. The words "long-term care insurance" shall not include any insurance policy which is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage.
(f) "Policy" shall mean, for the purposes of this Chapter, any policy, contract, subscriber agreement, rider or endorsement delivered or issued for delivery in this state by an insurer;-fraternal benefit society; non-profit health, hospital, or medical service corporation; prepaid health plan; health maintenance organization or any similar organization.
§7104 Extraterritorial Jurisdiction; Group Long-Term Care Insurance
No group long-term care insurance coverage may be offered to a resident of this state under a group policy issued in another state to a group described in §7103(d)(4), 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.
§7105. Disclosure and Performance Standards for Long-Term Care Insurance
(a) The Commissioner may adopt regulations 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, pre-existing conditions, termination of insurance, continuation or conversion, probationary periods, limitations, exceptions, reductions, elimination periods, requirements for replacement, recurrent conditions and definitions of terms.
(b) No long-term care insurance policy may:
(1) be cancelled, nonrenewed 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; or
(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; or
(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.
(c) Pre-existing conditions
(1) No long-term care insurance policy or certificate, other than a policy or certificate thereunder issued to a group as defined in §7103 (d)(1), shall use a definition of "pre-existing condition" which is more restrictive than the following: "Pre-existing condition" shall mean 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.
(2) No long-term care insurance policy or certificate, other than a policy or certificate thereunder issued to a group as defined in §7103 (d)(1), shall exclude coverage for a loss or confinement which is the result of a pre-existing condition, unless such loss or confinement begins within six months following the effective date of coverage of an insured person.
(3) The Commissioner may extend the limitation periods set forth in paragraphs (1) and (2) of this subsection as to specific age group categories in specific policy forms, upon findings that the extension is in the best interest of the public.
(4) The definition of "pre-existing condition" shall not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant; and, on the basis of the answers on that application, from underwriting standards. Unless otherwise provided in the policy or certificate, a pre-existing condition, regardless of whether or not it is disclosed on the application, need not be covered until the waiting period described in paragraph (2) of this subsection expires. No long-term care insurance policy or certificate may exclude or use waivers or riders of any kind to exclude, limit or reduce coverage or benefits for specifically named or described pre-existing diseases or physical conditions beyond the waiting period described in said paragraph (2).
(d) Prior hospitalization and/or institutionalization
(1) No long-term care insurance policy may be delivered or issued for delivery in this state if such policy conditions eligibility for any benefits on a prior hospitalization requirement; or if such policy conditions eligibility for benefits provided in an institutional care setting on the receipt of a higher level of institutional care.
(2) Each long-term care insurance policy which contains any limitation or condition for eligibility, other than those prohibited in paragraph (1) of this subsection, shall clearly label in a separate paragraph of the policy or certificate entitled "Limitations or Conditions on Eligibility for Benefits" such limitations or conditions, including any required number of days of confinement.
(3) A long-term care insurance policy containing a benefit advertised, marketed or offered as a home health care or home care benefit shall not condition receipt of benefits on a prior Institutionalization requirement. A long-term care insurance policy which conditions eligibility of noninstitutional benefits on the prior receipt of institutional benefits on the prior receipt of institutional care shall not require a prior institutional stay of more than thirty (30) days for which benefits are paid.
(4) No long-term care insurance policy which provides benefits only following institutionalization shall condition such benefits upon admission to a facility for the same or related conditions within a period of less than thirty days after discharge from the institution.
§7106. Administrative Procedures
Regulations adopted pursuant to this Chapter shall be in accordance with the provisions of Chapter 101, Title 29 of the Delaware Code."
Section 2. This Act shall be known and may be cited as the "Long-Term Care Insurance Act."
Section 3. Severability.
If any provision of this Act or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby.
Section 4. Effective Date.
This Act shall be effective on January 1, 1990.
Approved July 12, 1989.