SENATE BILL NO. 156
AS AMENDED BY SENATE AMENDMENT NO. 1
AN ACT TO AMEND CHAPTER 71, TITLE 18, DELAWARE CODE, RELATING TO LONG-TERM CARE INSURANCE.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend §7103(4)c.3., Chapter 71, Title 18, Delaware Code, by
striking the second sentence thereof in its entirety and substituting in lieu thereof the following:
"Thirty days after such filing the association shall be deemed to satisfy such organizational requirements, unless the Commissioner makes a finding that the association or associations do not satisfy those organizational requirements."
Section 2. Amend §7103(5), Chapter 71, Title 18, Delaware Code, by
striking said subsection in its entirety and substituting in lieu thereof a new subsection (5) to read as follows:
"(5) "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 annuities and life insurance policies or riders which provide directly or which supplement long-term care insurance. Such term also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Such term includes group and individual policies or riders whether issued by insurers; fraternal benefit societies; non-profit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations or any similar organization to the extent they are otherwise authorized to issue life or health insurance. The words "long-term care" shall not include any insurance policy which 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 or related asset-protection coverage, or limited benefit health coverage. With regard to life insurance, this term does not include life insurance policies which accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement, and which provide the option of a lump-sum payment for those benefits and in which neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long-term care. Notwithstanding any other provision contained herein, any product advertised, marketed, or offered as long-term care insurance shall be subject to the provisions of this Chapter."
Section 3. Amend §7104, Title 18, Delaware Code, by deleting the citation '§7103(4)d.' as it appears therein and by inserting in lieu thereof the citation '§7103(4)'.
Section 4. Amend §71050), Chapter 71, Title 18, Delaware Code, by adding thereto a new subsection (4) to read as follows:
"(4) Conditions eligibility for any benefits other than waiver of
premium, post-confinement, post-acute care or recuperative benefits on a prior institutionalization requirement."
Section 5. Amend §71050)(2), Chapter 71, Title 18, Delaware Code, by
striking said subsection in its entirety and substituting in lieu thereof the following:
"(2) A long-term care insurance policy containing post-confinement, post-acute care or recuperative benefits 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."
Section 6. Amend §7105(d)(3), Chapter 71, Title 18, Delaware Code, by
striking such subsection in its entirety and substituting in lieu thereof the following new §7105(d)(3) to read as follows:
(3) A long-term care insurance policy or rider which conditions
eligibility for non-institutional benefits on the prior receipt of institutional care shall not require a prior institutional stay of more than thirty (30) days."
Section 7. Amend §7105, Chapter 71, Title 18, Delaware Code, by adding thereto new subsection (e), (f), (g), (h), (j), (k), and (1) to read as follows:
"(e) The Commissioner may adopt regulations establishing loss ratio standards for long-term care insurance policies provided that a specific reference to long-term care insurance policies is contained in the regulation.
(f) Right to Return-Free Look: Long-term care applicants shall the right to return the policy or certificate within thirty (30) days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the applicant is not satisfied for any reason. Long-term care insurance policies and certificates shall have a notice prominently printed on the first page or attached thereto stating in substance that the applicant shall have the right to return the policy or certificate within thirty (30) days of its delivery and to have the premium refunded if, after examination of the policy or certificate, other than a certificate issued pursuant to a policy issued to a group defined in section 7103(4)(d) of this Chapter, the applicant is not satisfied for any reason.
(g) Outline of coverage.
(1) An outline of coverage shall be delivered to a prospective applicant for long-term care insurance at the time of the initial solicitation through means which prominently direct the attention of the recipient to the document and its purpose.
(i) The Commissioner shall prescribe a standard format,
including style, arrangement and overall appearance, and the content of an outline of coverage.
ii. In the case of agent solicitations, an agent must deliver the outline of coverage prior to the presentation of an application or enrollment form.
iii. In the case of direct response solicitations, the outline of coverage must be presented in conjunction with any application or enrollment form.
(2) The outline of coverage shall include:
(i) A description of the principal benefits and coverage provided in the policy.
(i) A statement of the principal exclusions, reductions, and limitations contained in the policy.
(i) A statement of the terms under which the policy or certificate, or both, may be continued in force or discontinued, including any reservation in the policy of a right to change premium. Continuation or conversion of group coverage shall be
(iv) A statement that the outline of coverage is a summary only, not a contract of insurance, and that the policy or group master policy contains governing contractual provisions.
(v) A description of the terms under which the policy or certificate may be returned and premium refunded.
(vi) A brief description of the relationship of cost of care and benefits.
(h) A certificate issued pursuant to a group long-term care insurance policy which policy is delivered or issued'for delivery in this state shall include:
(i) A description of the principal benefits and coverage provided in the policy;
(i) A statement of the principal exclusions, reductions and
limitations contained in the policy; and
(i) A statement that the group master policy determines
governing contractual provisions.
(j) At the time of policy delivery, a policy summary shall be
delivered for an individual life insurance policy which provides long-term care benefits within the policy or by rider. In the case of direct response solicitations, the insurer shall deliver the policy summary upon the applicant's request, but regardless of request shall make delivery no later than at the time of policy delivery. In addition to complying with all applicable requirements, the summary shall also include:
(i) An explanation of how the long-term care benefit interacts with other components of thp policy, including deductions from death benefits;
(ii) An illustration of the amount of benefits, the length of benefit, and the guaranteed lifetime benefits if any, for each covered person;
(i) Any exclusions, reductions and limitations on benefits of long-term care; and
(ii) If applicable to the policy type, the summary shall include a disclosure of the effects of exercising other rights under the policy, a disclosure of guarantee related to long-term care costs of insurance charges, and current and projected maximum lifetime benefits.
(k) Any time a long-term care benefit, funded through a life insurance vehicle by the acceleration of the death benefit, is in benefit payment status, a monthly report shall be provided to the policy holder. Such report shall include:
(i) Any long-term care benefits paid out during the month;
(i) An explanation of any changes in the policy , e.g. death benefits or cash values, due to long-term care benefits being paid out; and
(i) The amount of long-term care benefits existing or remaining.
(1) Any policy or rider advertised, marketed or offered as long-term care or nursing home insurance shall comply with the provisions of this Chapter."
Section 8. Amend §7106, Chapter 71, Title 18, Delaware Code, by Inserting before the existing sentence thereof a new sentence to read as follows:
"The Commissioner shall issue reasonable regulations to establish minimum standards for marketing practices, agent compensation, agent testing, penalties and reporting practices for long-term care insurance, and any other rules and regulations necessary for or as an aid to the administration or effectuation of any provision of this Chapter."
Section 9. Amend Chapter 71, Title 18, Delaware Code, by adding thereto new Sections 7107 and 7108 to read as follows:
If any provision of this Chapter or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the chapter and the application of such provision to other persons or circumstances shall not be affected thereby.
In addition to any other penalties provided by the laws of this state, any insurer or agent found to have violated any requirement of this state relating to the regulation of long-term care insurance or the marketing of such insurance shall be subject to a fine of up to three times the amount of any commissions paid for each policy involved in the violation or up to $10,000, whichever is greater."
Approved July 11, 1991.