Servces 
Department of Health and Human 

OFFICE OF

GENERA

INSPECTOR 
STATE REGULATION

LONG  CARE INSURANCE 
OF  TERM
Richard P. Kusserow 
INSPECfOR GENERA 
cIa  MAY 1991  GENRA

OFFCE OF INSPECfOR 
The miion of the Offce of Inspector General (OIG), as mandated by Public Law 95-452 
as amended, is to protect the integrty of the Department of Health and Human Servces 
(HS) programs as well as the health and welfare of beneficiaries served by those programs.
Th 
statutory mision is carred out through a nationwide network of audits, investigations 
and inpections conducted by three OIG operating components: the Offce of Audit 
Servce, the Offce of Investigations, and the Offce of Evaluation and Inspections. The 
OIG also inorm the Secetary of HHS of program and management problems and 
recmmends 
courses to correct them. 
OFFCE OF AUDIT SERVICE 
The OIG's Offce of Audit Servce (OAS) provides all auditing servces for HHS, either by 
conducting audits with its own audit resource or by overseeing audit work done by others. 
Audits examie the performance of HHS programs and/or its grantees and contractors in 
cag 
out their respective responsibilties and are intended to provide independent 
asessments of HHS program and operations in order to reduce waste, abuse, and 
mimanagement and to promote economy and effciency throughout the Department. 
OFFCE OF INTIGATIONS 
. The OIG' s Offce of Investigations (01) conducts criminal, civi, and admitrative 
investigations of allegations of wrongdoing in HHS programs or to HHS beneficiaries and of 
unjust enrchment by providers. The investigative effort of 01 lead to crmial convictions 
admtrative sanctions, or "cvi money penalties. The 01 also oversees State Medicaid fraud 
control units which investigate and prosecute fraud and patient abuse in the Medicaid 
program 
AN 
OFFCE OF EVALUATION  INSPECIONS 
The OIG's Offce of Evaluation and Inpections (OEl conducts short-term management and 
program evaluations (called inspections) that foc on isues of concern to the Department 
the Congres, and the public. The fidings and recommendations contained in these 
inpection report generate rapid, accrate, and up-to-date information on the effciency, 
vulnerabilty, and effectivenes of departmental programs. This report was prepared in San 
Francisco under the direction of Regional Inpector General Kaye D. Kidwell and Deputy 
Regional Inpector General Paul  Gottlober. Project staff included: 
Tom Purv

Elen Kotler 
Don Lob 
Vicki Greene, Headquarters  - -
Department of Health and Human Servces

OFFICE OF

INSPECTOR GENERA

STATE REGULATION

OF LONG-TERM CARE INSURANCE

Richard P. Kusserow 
INSPECfOR GENERA 
"0 
:t~0ia OEI

09-91-00700  EXECUTIVE  SUMMAR 

PUROSE 
The purpose of this inspection was to obtain current information on consumer 
problems and State regulation of private long-term care (LTC) insurance. 
BACKGROUN 
Ths inspection was requested by Congressman Ron Wyden, Chairman of the House 
Small Business Subcommittee on Regulation, Business Opportunities, and Energy. 
Long-term care insurance policies provide "coverage for not less than 12 consecutive 
months...for one or more necessary...diagnostic, preventive, therapeutic, rehabilitative 
maintenance or personal care servces, provided in a setting other than an acute care 
unit of a hospita1." 1 Long-term care insurance has grown significantly only recently. 
The number of LTC policies has increased from 125 000 in 1986 to more than 
1.6 milion in 1990. 
In 1986, the National Association of Insurance Commissioners (NAIC) developed the 
first "Long-Term Care Insurance Model Act in collaboration with the Department of 
Health and Human Servces (HHS) and insurance industry representatives. The 
following year, it issued its first model regulation. The model act and regulation 
provide States with minimum standards to use in crafting LTC insurance laws and 
regulations. The NArC modifies the model act and regulation frequently to improve 
policyholder coverage and strengthen consumer protection. Both were revised most 
recently in December 1990. A lag exists before States adopt model changes, and 
new State standards usually do not apply to policies already 
in effect. 
While States have primary responsibility for regulating private insurance, the Federal 
government has played a role in regulating Medicare supplemental insurance 
commonly known as Medigap insurance. In 1980, Congress enacted the Baucus 
amendment to the Social Security Act. The amendment defies minimum standards 
that policies must meet before they can be marketed as certified Medigap policies. 
Congress enacted further Medigap  Omnibus Budget Reconcilation 
controls in the 
Act of 1990. Currently, no Federal laws govern LTC insurance. 
lAs  defined in section 4A of the NAIC Long-Term Care Insurance Model Act.  METIODOLOGY 
In order to answer Congressman Wyden s questions about State LTC insurance 
regulation, we (1) analyzed all 50 States' LTC insurance laws and regulations 
(2) requested complaint and enforcement data from all State insurance 
commissioners, and (3) conducted telephone intervews with State insurance 
regulators and counselors in 8 States. We also conducted telephone intervews with 
NArC offcials, two industry representatives, and representatives of five national and 
three State consumer advocate organizations. 
FIINGS 
mol  mol regtin 
States sustantiII meet both the  act and  standards. 
OnIv  17 
We considered a State to "substantially meet" the model act and regulation 
if its 
provisions conform with all applicable sections of the model act or regulation even 
though the State language varies. We considered a State to "partially meet" the 
standards if its provisions conform with only a portion of the model act or regulation. 
Although all 50 States have LTC insurance laws, only 17 States substantially meet 
both the model act and the model regulation minimum standards. Specifcally, 
25 States substantially meet and 20 States partially meet the model act 
minimum standards, and 
18 States substantially meet and 10 States partially meet the model regulation 
minimum standards. 
State totals reflect State laws and regulations that had been adopted through March 
1991. Of all 50 States, 8 States are considering stronger LTC  , and 
insurance laws
14 are considering stronger regulations. 
innce 
Long-term care  complaint data are incomplete and inoncluse. 
Twenty-one States reported receiving a total of 840 complaints in 1990. The major 
categories of complaints are: (1) claims handling delays, (2) premium and refund 
disputes, and (3) agent misrepresentation. Seventeen States were unable to provide 
complaint data because (1) they do not keep separate LTC insurance information, or 
(2) the data were not readily accessible. Twelve States did not respond to our 
request for complaint data.  States report litle enforcement action a1!ainst  TC inance companie and agents. 
Only 10 of the 30 States that responded to our request were able to 
provide data on 
the number of administrative and enforcement actions they had taken against LTC 
insurance companies and agents. Four States reported 26 actions in 1990, and 
6 States said they had taken no action. Penalties included monetary fines, license 
suspensions and revocations, and cease and desist orders. Twenty States do not 
ata for LTC insurance. 
maintain readily available enforcement 

Alost all of the insurance counselors, consumer advocates, and industry 
representatives believe that State enforcement and monitorig need to be 
strengthened. Insurance regulators in four of the eight sample States volunteered 
that resource constraints prevent them from adequately enforcing their LTC 
insurance laws and regulations. 
MAITS 
FOR CONGREIONAL CONSIDERATION 
If Congress decides to impose minimum Federal standards for LTC insurance, it 
should consider that: 
strong laws and regulations will have limited effectiveness if they are not 
adequately monitored and enforced

minimum standards may improve consumer protection in some States 
opinion is divided on whether the NArC model act and regulation provide 
adequate consumer protection 
mandating more strigent consumer protection may increase premiums, and 
minimum standards should allow insurers flexibility to develop innovative 
products that could benefit consumers.  . . . . . . . . . . 
. . . . . . ..  ..  ..  ..  ..  ..  ..  ..  ..  ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ...   ..  ..  ..  ..  ..  ..  . . . . . . . . . 
 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TABLE OF CONTENTS

PAGE

EXCU SUMY

INODUCTON . 
FIINGS 
. . . . . . . . . . . . . . . . 5 
Only 17 States substantially meet both the model act 
and model regulation standards 
Long-term care insurance complaint data are 
incomplete and inconclusive 
. 5 
States report little enforcement action 
against LTC insurance companies and agents  . . . . . . . . . . . . . . . . . . . . . . . . 6 
MATTRS FOR CONGREIONAL CONSIDERATION . . . . . . . . . . . . . . . . . 7 
APPENDICE 
Appendix A: Summary of State Long-Term Care Insurance Provisions 
Appendix B: Organizations Intervewed by the OIG 
Appendix C: NArC's Long-term Care Insurance Model Act 
Appendix D: NArC's Long-term Care Insurance Model Regulation  INTRODUCTION 
OBJCT 
We conducted this inspection at the request of Congressman Ron Wyden, Chairman 
of the House Small Business Subcommittee on Regulation, Business Opportunities 
and Energy. In January 1991, he asked the Offce of Inspector General (OIG) to 
obtain current inormation on consumer problems and State regulation of private 
long-term care (LTC) insurance. Specifically, he asked the OIG to: 
which States have adopted the National Association of 
assess the extent to 
Insurance Commissioners (NArC) Long-Term Care Insurance Model Act and 
Model Regulation or other significant laws or regulations; 
document the nature and range of consumer complaints about LTC insurance; 
determine how States monitor compliance with and enforce their LTC 
insurance laws and regulations; and 
obtain the views of selected regulatory offcials, insurance counselors 
consumer advocates, and industry representatives regarding (1) the major 
problems consumers are experiencing with LTC insurance adequacy of 
, (2) tp.e 
State regulation, and (3) the need for reform. 
BACKGROUN 
Long-term care insurance policies provide IIcoverage for not less than 12 consecutive 
months...for one or more necessary...diagnostic, preventive, therapeutic, rehabiltative 
maintenance or personal care servces, provided in a setting other than an acute care 
unit of a hospital."l These policies vary in terms of (1) the servces they cover 
(2) the amounts they pay per day, (3) the duration of coverage, and (4) coverage 
conditions or other restrictions. 
The need for long-term care is growing. During the past decade, life expectancies 
have increased and hospitals have discharged patients earlier to contain costs. While 
an individual's need for long-term care may be temporary, consumers purchase 
insurance to guard against financial ruin. 
Long-term care insurance has grown significantly only recently. According 
to a 1989 
General Accounting Office (GAO) report, only a few companies offered policies 
lAs  defined in section 4A of the NAIC Long-Term Care Insurance Model Act.  2 As of 
before 1986 when approximately 125 000 policies were in effect. July 1990 
more than 100 companies underwote more than 1.6 milion LTC insurance policies. 
Regtin  Regtin 
State  and the NAIC Modl Act and 
States have primary responsibilty for regulating the insurance industry. The NArC 
provides a forum for State insurance officials to discuss common problems 
standardize the annual reporting of financial information by insurance companies 
and develop model legislative acts for adoption by the States. 
In 1986, NArC developed its first model act which provides States with minimum 
standards to use in crafting LTC insurance laws and regulations. The model act 
deceptive sales or enrollment 
goals are to (1) protect policy applicants from unfair or 
practices, (2) faciltate public understanding and the comparison of policies, and 
(3) encourage flexible and innovative policy coverage. In 1987, NArC issued its first 
LTC insurance model regulation, which provides requirements specifically for 
implementing the model act. 
State insurance regulators, industry representatives, consumer advocates, and offcials 
from the Department" of Health and Human Servces (HHS) 
participated in drafting 
the model act and regulation. The NArC modifies the model act and regulation 
frequently to improve policyholder coverage and strengthen consumer protection. 
Both were last revised in December 1990. A lag exists before States adopt model 
act and regulation changes, and new State standards usually do not apply to policies 
already in effect. Neither the NArC nor States know what percentage of policies 
currently in effect, meet NArC standards. 
Fedal Regtin 
While States have primary responsibility for regulating the private insurance market 
the Federal government has played a role in regulating Medicare supplemental 
insurance, commonly known as Medigap insurance. In 1980, Congress enacted the 
Baucus Amendment of the Social Security Act establishing minimum standards that 
policies must meet before they can be marketed as certified Medigap policies. 
Congress enacted additional Medigap controls in the Omnibus Budget Reconcilation 
Act of 1990. Currently, no Federal laws govern LTC insurance. 
2Lne:-Term Care Insurance: State Rel!latorv ReQuirementS Provide Inconsistent Consumer 
ProteCtion. General Accounting Office, April 1989 
The Federal Role in Consumer Protection and Rel!lation of Long Term Care Insurance. 
Departmental Work Group on Consumer Protection and Long Term Care Insurance, U. S. 
Department of Health and Human Servce, January 1991, p. 1  Cons 
Prevus Stuie of LTC Insance Regutin and  Complaints 
During the past 3 years, Congress and others have undertaken several studies 
concerning long-term care: 
House Agg Subcmmttee on Health and Long-Term Cae Report on 
Priate LTC Inurance 
In May 1989, the House Aging Subcommittee on Health and Long-Term 
Care, chaired by Congressman Claude Pepper, issued a report entitled 
Private Long-Term Care Insurance: Unfit for Sale?" The Subcommittee 
found that, in 1987, 70 percent of the States had no LTC insurance laws or 
regulations and only 14 percent had any professional staff specifically assigned 
to LTC insurance issues. 
GAO Studies on State Regulatory Requirements for LTC Inurance 
An April 1989 GAO survey of all 50 States found that (1) about half the 
States had adopted LTC insurance legislation, (2) legislation varied in the 
extent to which it met the NAIC's standards , and (3) few States maintained 
statistics on LTC insurance complaints. The GAO currently is studying eight 
States to update its information. 
House Energy and Commerce Subcommttee on Oversight and Investigations 
Surey of LTC Complaits 
The House Energy and Commerce Subcommittee on Oversight and 
Investigations, chaired by Congressman John Dingell, surveyed States to 
identify LTC insurance complaints and State responses. 
In a 1990 hearing, 
Congressman Dingell expressed concern that (1) States did not identify 
complaints by tye of policy, and (2) State regulation continues to be 
inadequate. Other Subcommittee concerns include duplicate coverage 
inappropriate movement of consumers from one policy to another, lack of 
clearly defined policy benefits, and lack of sanctions against agents and 
insurers who mislead consumers. 
America Asocation of Retied PeoplelProject Hope Study of State 
Reguation of LTC Inurance 
The American Association of Retired People has hired Project Hope to 
(1) survey all 50 States to evaluate conformity of State laws with NArC's 
model act and regulation and (2) assess the adequacy of State regulatory 
activity .  ---
House Joint Surey of State Insurance Regulatory Agencies 
The House Aging Subcommittee on Health and Long-Term Care, chaired by 
Congressman Edward R. Roybal, and the House Small Business Subcommittee 
on Regulation, Business Opportunities, and Energy, chaired by Congressman 
Ron Wyden, are conducting a direct survey of State insurance departments to 
obtain information about their regulation of LTC insurance policies. In March 
1991, Congressmen Wyden and Roybal jointly requested information on issues 
including budget levels, complaint data, agent regulation, and loss ratios. 
METIODOLOGY 
Congressman Wyden asked the OIG to answer a series of questions about each 
State s LTC insurance laws and regulations. Although NArC's model act and 
regulation were amended most recently in December 1990, we based our analysis 
model language because States have not yet had 
priarily on the January 1990 
suffcient time to adopt the December amendments. Congressman Wyden 
questions cover most key issues pertaining to individual LTC insurance policies 
included in the model act and regulation. We did not review provisions dealing with 
group policies. 
Since some applicable laws and regulations are found in 
other sections of State 
insurance codes, we sent each State a copy of our analysis which was based on the 
LTC laws and regulations on file with NArC. We asked the State to verify our 
analysis and identify any 'other relevant provisions in the insurance codes. Three 
States (Alaska, New Jersey, and Nevada) did not respond. Two States (North 
Dakota and New Mexico) responded too late for their verification to be included in 
this report. Where necessary, we conducted telephone intervews to clarify the 
States' responses. 
We conducted detailed telephone intervews with eight State insurance regulators in 
eight sample States. We selected the States based on (1) the extent to which they 
have adopted strict LTC 
insurance laws and regulations and (2) the prevalence of 
LTC insurance counseling programs. The States with strong laws and regulations are 
Massachusetts, Minnesota, New York, and Wisconsin. The States with weak laws 
and regulations are Kentucky, Maryland, Texas, and Utah. The States with 
counseling programs are Maryland, Massachusetts, Texas, and Wisconsin. 
We conducted additional telephone intervews with NArC officials, six state insurance 
counselors, two industry representatives, and representatives of five national and 
three State consumer advocate organizations. Whenever possible, we coordinated 
with GAO and other  LTC insurance regulation. In 
agencies that are studying 
selecting our sample of eight States for detailed intervews, we did not 
duplicate the 
eight States in GAO'
s current survey.  FINDINGS

On 17 States substantiaI meet QQhe mod  act and..el regu ation standards. 
The model act contains some provisions, such as a prohibition against requiring prior 
hospitalization that are not incorporated in the model regulation. On the other 
hand, some important provisions, such as inflation protection and post-claims 
underwting, are included only in the model regulation. Thus, some States may 
comply with the act but not the regulation and vice versa. 
Although all 50 States have LTC insurance laws, only 17 States substantially meet 
both the model act and model regulation minimum standards. 
wr 
STA1E COMPIlCE  MODEL ACf AN REGUlTION 
Requirement  NumberA of Sctatets  in Compliance
Regulation 
Substantially meet 
Partially meet 
Generally do not meet 
These totals reflect laws and regulations that States had adopted through March 
1991. Of all 50 States, 8 are considering stronger LTC insurance laws, and 14 are 
considering stronger regulations. It is possible that more States would meet model 
act and regulation standards if pending proposals are adopted. Appendix A details 
the extent to which States have implemented specific provisions. 
Long-term care insurance complait data are incomplete and inconclusive. 
Only 21 States provided complaint data. They received a total of 840 complaints in 
1990, a 78 percent increase from 1988. 
STA1E COMPIA DATA AR INCOMPLE 
1988  1989  199  TOTAL 
States reporting  n/a 
Number of complaints  471  756  2067 
4We considered a State to "substantially meet" the model act and regulation if itS provisions 
conform with all applicable sections of the model act or regulation even though the State language 
varies. We considered a State to "partially meet" a standard if its proviions conform with only a 
portion of the model act and regulation.  COMPI. REORTE 
IN 199
TO  STATE 
Comon complaints  Number 
Claim delays  104 
Premium and refund disputes 
Agent misrepresentation/misconduct 
Marketing and sales practices 
Claim denials 
Poor policyholder servce 
Unstisfactory settlements

Recisions 
Refusals to insure

Other 
Noncategoried complaints  388 
Total  840 
Seventeen States were unable to provide complaint data because they do not keep 
separate LTC insurance information or could not readily 
access the data. Twelve 
States did not respond to our request for complaint data. 
The NArC is developing a pilot project to track complaints in the "senior market 
(i.  , both LTC and Medigap). It is requesting that all States use a standardized 
complaint form to ensure systematic collection of comparable data and 
to allow for 
automation. 
Thee of the State insurance commission staff and three of the consumer advocates 
attn'buted the small number of reported complaints to the fact that LTC insurance 
policies have become more common only recently. They believe problems may not
surface in signcant numbers until current purchasers begin filing claims many years
from now. Two insurance commission staff attributed the small number of 
complaints to their States' strict LTC insurance laws and regulations. 
States report little enforcement acton against LTC insurance companies and agents. 
Of the 30 States that responded to our request for enforcement data, only 10 were
able to provide the number of administrative and enforcement actions they had 
taken against LTC insurance companies and agents. Four 
States reported 26 actions 
, and 6 States said they had taken no action. 
in 1990 Penalties included monetary 
fines, license suspensions and revocations, and cease and desist orders. Twenty
States said they do not maintain readily available enforcement data for LTC 
msurance. 
Alost 
all of the insurance counselors, consumer advocates, and industry 
representatives believe that State enforcement and monitoring need to be 
strengthened. Insurance regulators in four of the eight sample States volunteered 
that resource constraints prevent them from adequately enforcing their LTC 
insurance laws and regulations.  MATTERS FOR CONGRESSIONAL CONSIDERATION

If Congress decides to impose minimum Federal standards for LTC insurance, it 
should consider the following: 
Strong laws and regulations will have limited effectiveness if they are not 
adequately monitored and enforced.  Almost all the industry representatives 
consumer advocates, and insurance counselors believe that State monitoring 
and enforcement of LTC insurance needs to be 
strengthened. A tyical 
comment came from a Health Insurance Association of America offcial: 
What we need is not new laws, but enforcement of 
existing laws. 
Minimum standards may improve consumer protection in some States. 
Opinion is divided on whether NAIC's model act and regulation provide 
adequate consumer protection.  Industry representatives believe that NAIC's 
model act and regulation generally are a good basis for LTC insurance 
regulation. Most of the  , consumer advocates, and State 
insurance counselors
regulators believe that the model act and regulation are a good starting point. 
Some consumer advocates believe the model act and regulation are too weak. 
Mandating more stringent consumer protection may increase premiums. 
All of the insurance counselors and consumer advocates as well as five of the 
eight State insurance regulators identified the high cost .of premiums as a 
major problem. 
Previous studies have estimated that only 10 to 40 percent of 
seniors can afford private LTC insurance. 
Industry representatives and State regulators also caution that overregulation 
could reduce the number of companies willng to offer LTC insurance. 
Insurance regulators in three States (Massachusetts, Minnesota, and New 
York) said that fewer companies are willing to sell LTC insurance in their 
States because of their strict requirements. 
Minimum standards should allow flexibilty and innovation.  The LTC 
insurance market is stil evolving, and flexibility that allows insurers to develop 
inovative new products could benefit consumers. 
The Federal Role in Consumer Protection and Re ulation of Lone-Term Care Insurance. draft 
discusion paper, The Department Work Group on Consumer Protection and Long-Term Care 
Insurance, U.S. Department of Health and Human Servce,  The 
January 1991, p. 1; and 
Unaffordabiltv of Nursine Home Insurance. Familes USA Foundation, January 199.  APPENIX A 
SUMY 
OF STATE LONG-TERM CAR INSURCE PROVISIONS 
Ths section summarizes our analysis of Congressman Wyden s specific questions. 
We will provide a detailed State-by-State analysis in a separate report. 
Twenty-eight States require po cies to pe guarntee4 renew 
Section 6A of the model regulation requires individual policies to be 
guaranteed
renewable. Ths  may not (1) unilaterally change any policy 
means that the insurer 
provision, (2) decline to renew a policy, except for nonpayment of premiums, and 
(3) revise premium rates, except on a 
class basis. 
Twenty-eight States substantially meet this model requirement. Although three 
States require guaranteed renewability, their definition does not meet all model 
regulation criteria. Three other States do not require guaranteed renewability, but 
insurers must meet model regulation criteria if they use the term. We found no 
' LTC insurance laws or regulations and were unable to 
provision in 12 States
determine requirements for 4 States. 
Section 6B of the model act contains a more limited renewability requirement which 
prohibits insurers from cancellng or not renewig an individual's LTC insurance 
policy based on age or health deterioration. All but four States substantially meet 
this requirement. 
No State requires policies to be noncacellable. 
Although neither the model act nor the model regulation requires policies to be 
noncancellable, section 6A of the 
regulation establishes a standard definition that 
policy must meet if the term "noncancellable" is used: (1) the policy may not be 
cancelled, except for nonpayment of premiums, and (2) the insurer may not make 
any unilateral changes in the policy provisions or premium rate. 
Although no State requires policies to be noncancellable, 23 States require policies to 
meet the model regulation s standard definition if the term "noncancellable" is used. 
Five States use a standard defiition partially based on the model, and one has a 
stricter definition. We found no provision in 17 States and were unable to determine 
the requirements in 4 States. 
Twenty-seen States have no post-claims underwtig provsions. 
Post-claims underwting refers to the practice of medically underwting a policy 
when a claim is fied rather than at the time of application. If the 
insurer discovers  any "incorrect or untrue answer" in the application, the insurer may yoid the policy 
or deny the claim. The model regulation requires insurers to (1) ascertain the 
applicant s health condition and (2) provide disclaimers informing the consumer of 
s right to rescind the policy if further underwting 
the insurer  uncovers an untrue or 
incorrect statement. For applicants over the age of 80, additional medical 
inormation is required prior to the issuance of a policy. 
Only 12 States have adopted the model regulation liting post-claims underwting. 
State has a provision partially based on the model, 4 have other requirements 
and 27 have no provision. We were unable to determine coverage for six States. 
States conform with or exceed the NArC contestable period stadard. 
The contestable period is the time during which an insurer may deny a claim or void 
a policy because of a misstatement that the insured made in an application.6 The 
contestable period usually appears in the general section of a State s insurance code 
and tyically applies to all lines of life and health insurance, including LTC 
insurance. The NAIC's Uniform Individual Accident and Sickness Policy Provision 
Model Law provides for a maxmum 3-year contestable period for individual 
policies.7 Al the States for which information was available conform with or exceed 
this standard, i.  , have shorter contestable periods. 
CONTABLE PEROD STANAR 
Requirement  Number of States 
6-month contestable period 
year contestable period

year indivdua1/-year group 
year contestable period

Information unavailable

Seventeen States require 
ination protecton as an optional provision. 
Although the model regulation does not require that policies include infation 
protection, it does require that insurers offer consumers optional protection. 
offered, the inflation protection must be at least as favorable as one of the following 
options: (1) compounded annual increases
, (2) the right to periodically increase 
benefit levels without requiring evidence of health status, or (3) a percentage of 
actual charges. The December 1990 amendments to the model regulations added 
the requirement that the increases be compounded annually at a 
rate not less than 
5 percent, but did not specify an index on which to base the rate. 
6 These time limitations generally do not apply in the 
cae of 
fraudulent misstatements. 
7 Th 
NAIC has not established a contestable period for group policies.  Although no States require that all policies include inflation protection
, 17 States 
require inflation protection as an optional provision. We found no provision in 
28 States and were unable to determine if there was a provision in 5 States. Of the 
17 States that require inflation protection as an option, 14 require compound rate 
increases; the other 3 require simple rate increases. Five of the 17 States specif the 
Consumer Price Index (CPI), the CPI for Urban Areas, or the Medical CPI as the 
basis for calculating interest. The other 12 States do not specify an index. 
Although 20 States defie ski  interme4iate cae. o  fie cut04ial care. 
Many long-term care insurance policies contain definitions of terms such as skilled 
intermediate, and custodial care. Insurers may condition eligibility and set benefit 
levels based on these definitions. Section 5 of the model regulation defines home 
health care, skilled nursing care, intermediate nursing care, personal care, and home 
care "in relation to the level of skill required, the nature of the care, and the setting 
in which care must be delivered.  It also defines providers in relation to servces and 
facilities required and the licensure or degree status of the provider. It does not 
define custodial care. 
We found that 20 States substantially adopted the model definitions. Four States 
had their own specifc defiitions for skilled, intermediate, and custodial care. Eight 
States defined the terms based on State facilty licensing laws or other definitions. 
We found no provision in 14 States' laws and regulations and were unable to 
determne the 
definitions in 4 States. 
Most States prohibit prior institutionalition requirements for home care benefits. 
State requirements regarding home care benefits vary greatly. Both NArC and the 
States have evolved gradually--from allowing insurers to require a 3-day prior 
hospitalization to the current model regulation that prohibits requirng prior 
any benefits, including home care. 
institutionalization for 

With exceptions, Section 6D of the model act prohibits companies from conditioning 
eligibilty for any benefits on (1) prior hospitalization or (2) the receipt of a higher 
level of institutional care. Most States have adopted a provision that meets or 
exceeds the model act prohibition. The following table summaries the State laws 
and regulations.  PROIDmON AGAlSf REQUIG PRIOR CONFME 
Requirement  Number of States 
Conforms with or exceeds the 
model act prohibition 
Prohibits prior hospitaliztion only

Allow prior hospitaliztion or 
institutionaliztion if an identical

policy is offered that prohibits prior
hospitaliztion or institutionaliztion 
No provion found

Unable to determine 
lit 
Most States prohibit the sale of LTC insurance policies that  coverage to skied 
nursing care only or offer more generous coverage for skied than nons kied care. 
Section 6B(3) of the model act states that "no LTC insurance policy shall 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." It does not define or 
specify a measurement for "more coverage. 
Several States require that coverage be measured by the number of days of care. 
We found that 44 States have prohibited policies that limit coverage to skilled 
nursing care only. We found no provision in five States and were unable to 
determine coverage in one State. 
Thirt-eight States also have provisions prohibiting policies that provide significantly 
more coverage for skil1  d care in a facilty than coverage for lower levels of care. 
One State allows significantly greater coverage. Another State has no provision but 
would reject a policy if the benefits were unreasonable. Nine states have 
provisions. We were unable to determine the provision in one State. 
Whe all States have maxum preexistig condition exclusion periods. 23 do not 
meet current NArC standards. 
Section 6C of the model act requires that individual policies use a definition of 
preexisting condition" no more restrictive than: "... a condition for which medical 
advice or treatment was recommended by, or received from, a provider of health 
care servces, within six (6) months preceding the effective date of coverage on an 
insured person." The act further prohibits policies from excluding coverage for a 
preexisting condition unless loss or confinement begins within 6 months 
following the 
effective date of coverage of an insured person.  Although all 50 States limit preexisting condition exclusions, 23 States do not 
conform with NArC's model act. For example, previous versions of the model act

defined preexisting conditions as the presence of symptoms which would cause an

ordinarily prudent person to seek diagnosis, care, or treatment. Although this

definition has been eliminated, nine States stil include it. Another 
14 States have

provisions which do not confonn with the model act because they contain prior 
coverage restrictions which depend on the policyholder s age or some other variation. 
Most States require coerage for Aleimer s disease and related dementia. 
Model regulation sections 6B(2) and 16EI0 specifically require coverage for 
Alzheimer s disease and related degenerative and dementing ilnesses. Most States 
require coverage for these conditions. 
AL'S 
DEM 
AN  COVEGE 
Requirement  Number of States 
Alzheimer s Dementia 
Specific coverage required 
State indicates it requires

coverage based on other

laws/regulations

No specific coverage

requirement

Unable to determine 
Although most States require insurers to cover Alzheimer s disease and related 
dementia, insurers may use other allowed policy restrictions (e.g.
, medical necessity,
preexisting conditions) to deny claims. An industry representative identified this as
an important loophole that should be 
closed. 
onll 
Although 48 States require stadard-Ilies of 
coverage.  substantiall meet 
all model act and regulation requirements. 
Section 6G of the model act requires that insurers furnish applicants a standard 
before a sale is made. Section 16 of the model regulation
outline of coverage 
prescribes a standard format for the 
outline of coverage. 
OUT 
REQUI STANAR  OF COVEGE PRIOR TO SAL 
Requirement  Number of States 
Substantially meet model act

and regulation

Partially meet model act and

regulation
       Require standard outline, but do not 
specify when it must be provded 
Require standard outline, but allow 
it to be delivered after sale (at time 
policy is delivered) 
No outline requirement found 
Nineteen States require that lie inurace policies providing long-term cae benefits 
conform to the model act and regulation. 
The model act (section 4A) defies LTC insurance as including LTC coverage or 
supplemental coverage that is provided as a benefit in a life 
insurance policy. For a 
State to substantially conform with the model act and regulation, its defiition of 
LtTCe insruramnce  musct inacludre lifee in suraincen poslicieus thrat parovinde ocr sueppl.ement long-
REGUlTION OF LI INSURCE BPOEUNCI  TIT PROVIE 
TE CA 
LONG-
Requirement  Number of States 
Provion substantially basd on model 
No provion found, but State report 
life insurance policies are covered 
by LTC laws/regulations 
Other provsion in laws not basd 
on model

No provion found

Unable to determine 
Onl 11 States spe  require poticy summaries for  t1;
lje insurance poijcies 
provde LTC benefits. 
Section 61 of the model act requires that, if a life insurance policy provides LTC 
benefits, a policy summary must be provided to the applicant at the time the life 
insurance policy is delivered. The policy summary is similar to the required outline 
of coverage in intent, but it also includes a detailed explanation of how long-term 
care benefits interact with the rest of the life insurance policy. Some States believe 
that the policy summary requirement duplicates the requirement for an outline 
coverage. 
Only 11 States specifically require policy summaries. Seven more require delivery of 
some sort of outline or summary with a life insurance policy. We did not find a 
provision in 25 States and were unable to determne coverage in 7 states.  , "... , "
mium 
Seven States mandate standard or  LTC benefit packages. 
Three States mandate standard benefit packages for all LTC insurance. Minnesota 
establishes two long-term care insurance policy categories and sets minimum 
standards and minimum coverage for each. New York mandates specifc coverage 
and payment amounts, and Wisconsin mandates a detailed list of coverage 
agreements and payment amounts. Four States have mandated minimum benefit 
packages, and three States have mandated partial benefit packages for home care 
servces. Thirt-four States have not mandated a standard benefit package. We 
were unable to determine coverage in six States.

Industry and consumer representatives disagree on the value of mandating benefit 
packages. According to industry representatives, such a mandate may drive some 
insurers from the market. They argue that no one policy is best for everyone 
because people s needs vary based on their financial and family resources, health 
and other circumstances. On the other hand, national consumer advocates urge 
greater standardization.

mium 
Th-one 
States p.ave  loss ratio requirements tp.at meet mode 
standards. 
Section 6E of the model act authorizes the State insurance commissioner to establish 
loss ratio (i.e., benefits paid out divided by premiums earned) standards for long-
term care insurance policies. Section 14 of the model regulation requires the 
expected loss ratio for individual policies to be at least 60 percent. 
Approximately half of the individuals we intervewed volunteered an opinion that 
States should not currently emphasize loss ratio regulation because LTC insurance is 
too new to calculate loss ratios precisely. Because of the substantial lag time 
between purchase and use, neither companies nor regulators can project anticipated 
claims or premiums. An 
industry representative stated that with the declining 
average age of individuals purchasing LTC insurance policies  actual loss ratio 
experience will take a minimum of 10 years to develop." A State insurance 
commission representative noted  we want the companies to be around to pay 
benefits, and if we are too tough in loss ratio requirements in the early years by 
making companies sell only to high-risk people at first, then the companies may go 
under. 
Thirt-one States have loss ratio requirements set at least as high as the model 
regulation s suggested 60 percent. Seven States have established loss ratios at less 
than 60 percent. Four of these base their loss ratios on the different terms of 
renewabilty; for example, 50 percent for optional renewabilty, 55 percent for 
guaranteed renewabilty, and 60 percent for noncancellable policies. Eight States  have the authority to establish loss ratios but have not done so. We found no 
provision in two States and were unable to determine requirements in two States. 
Eleven States reported specic procdures for loss ratio enforcement. 
Although the model act and regulation do not provide specifc procedures for 
enforcing LTC insurance loss ratios, general provisions in most State insurance codes 
cover enforcement. No States reported taking any actions concerning loss ratio 
enforcement, although 11 have specific enforcement procedures. Oklahoma and 
Wisconsin indicated that they annually review loss ratios. Most other States review 
them only upon initial rate filing and when insurers seek rate increases. If the loss 
ratio is not met, States usually require rate reductions. They also can impose 
penalties. 
Th 
States consider expected premiums and claims wp.en evaluatig loss ratios. 
Calculation of LTC insurance loss ratios is a complex task. Since policies usually are 
bought years before a claim is fied and since LTC insurance policies are so new 
quantitative descriptions of expected premiums earned and benefits paid out may not 
be accurate. At present, 30 States use expected premiums and claims to measure 
loss ratios. Four States consider both actual and expected claims and benefits, and 
three consider only actual. We found no provisions in eight States and were unable 
to determine coverage in five States. 
Nine States mandate refunds to policyholders when loss ratios are not met. 
The model act and regulation do not require that States mandate refunds to 
policyholders if loss ratios are not met. However, nine States have adopted such a 
requirement. The refund usually is granted in one of three forms--premium 
reduction, cash refund, or extra benefits. Thee of the nine States have specific 
regulations calling for refunds. The remaining six States have laws but no 
implementing regulations. We found no provisions in 33 States and were unable to 
determine coverage in 8 States. 
Sixeen States have strct prior rate 
approval requirements. 
Under a prior rate approval system, policy rates are reviewed and approved by the 
State before a LTC insurance policy can be issued. Under a "file-and-use" system 
an insurer submits the rate to the State and, if the rate is not specifcally 
disapproved, proceeds to issue LTC insurance policies. Most States specify a period 
(usually 30 to 60 days) within which the regulatory agency must act on a company 
request. 
1\- The model act and regulation do not address the issue of prior rate approval for 
LTC insurance. According to NArC, most States require rate approval in the 
general insurance codes. We were able to identify only one State (Rhode Island) 
that specifically requires rate approval as part of its LTC insurance provisions. 
REQUI 
PRIOR RATE APPROV AL-ANUSE 
Requirement  Number of States 
State has a strict prior rate 
approvl requirement

Prior approval in practice, but 
State technically allow file-and-use 
State allows file-and-use 
Dual option--prior approval or file-
and-use depending upon whether insurer 
has met specified criteria 
State does not approve rates 
Unable to determine 
Whe al 
States have fical solvency requirements. none has specic provisions for 
long-term cae inurace. 
According to NArC, all States have fiscal solvency requirements that apply to all 
lies of insurance. No States have fiscal solvency requirements that are specific 
LTC insurance. 
Regulation of solvency is complex and detailed, involving legal criteria, surveilance 
and enforcement. The most important criteria are dollar requirements to fund initial 
and on-going capital assets and surplus reserves to meet future claims. The NArC 
issues standard instructions and examiers handbooks specifically designed for 
surveilance of fiscal solvency. The NArC coordinates the auditing of some 
companies using teams of examiners from the company s home State and other 
States in which the company does business. State agencies take informal action or 
issue formal orders to remedy fiscal solvency problems. 
Thee 
State insurance regulators and two consumer advocates expressed concerns 
about the future fiscal solvency of LTC insurance companies. They are concerned 
because the market is new and policyholders may not start 
filng claims in large 
numbers for many years. Insurance companies may not be pricing policies 
appropriately. By the time they recognize insolvency, it may be too late to take 
corrective action. The NArC is developing fiscal solvency accreditation guidelines.  Twenty-three States reported minimum specific dollar requirements for capital and 
surplus funds.

REQUI 
FICA SOLVECY 
Asts 
Aggegate of Minimum Capital 
and Surplus ReQuirements  Number of States 
$100 00 to $500 
00 to 
:: $500, $1 millon 
:: $1 millon to $2 milion

:: $2 millon

No specific dollar amount 
Unable to determine 
States have broad authority to impose penalties againt both agents and insurers. 
Al States have authority in the general section of their insurance codes to impose 
penalties against agents and insurers who violate State insurance laws or regulations 
including those that apply to LTC insurance. The penalties usually include fines 
license suspensions, revocations or nonrenewals, and cease and desist orders. If 
certain conditions are present, penalties also may include restitution, jail sentences 
or referrals for felony prosecution. 
According to NArC, all States have adopted at least a modifed version of the NArC 
Unfair Trade Practices Model Act. This model act authories penalties against both 
agents and insurers for a wide range of prohibited practices, including 
misrepresentations. Monetary  000 for most violations and 
penalties are set at $1 
$25 000 for either flagrant violations or violations of cease and desist orders. 
Because each individual act or practice (each policy sale) constitutes a separate 
violation, the total fines can escalate rapidly. The act caps aggregate penalties at 
$100 000 for most violations and $250,000 for flagrant violations or violations of cease 
and desist orders. 
The NAIC did not establish specific penalties for LTC insurance violations until 
December 1990. Section 24 of the model regulation now 
prescribes penalties against 
companies and agents for violations of any LTC insurance 
laws or regulations 
including prohibited marketing practices. The regulation calls for fines of up to 
three times the amount of the commissions paid for each policy involved in the 
violation or up to $10 000, whichever is greater. These fines are in addition to any 
other penalties authorized by State law. At least six States have penalty provisions in 
their LTC insurance laws or regulations.  Few States currently lit commssion qjferentia  e of new and renewa 
s for the sa 
policies. 
Although NArC did not have any agent compensation standards for LTC insurance
until December 1990, four States had adopted them by March 
1991. The agent
compensation standards currently are the only 
optional provision in the model act or 
regulation. 
The drafting language that accompanies the December amendments cites two 
competing considerations to explain why the provision is optional. 
On the one hand 
it acknowledges that the senior market "has been identified as being susceptible to
abusive marketing practices." On the other hand, it notes that "not all policy
replacements are improper" because "LTC insurance and LTC insurance regulations 
are continually changing.

The NArC's optional provision restricts first year 
commission per policy to no more
than 200 percent of second year commission. It also requires that (1) the 
commission received in subsequent years be equal to the amount received in the 
second year and (2) the commission be provided for a "reasonable number of years
(the model language does not define what 
constitutes a reasonable number of years). 
Industry representatives believe it is inappropriate to 
limit commission differentials 
for the sale of new and renewal policies and oppose the NAIC optional 
provision.
They maintain that differential commissions should be permitted because long-term
care is a complex product and initial 
sales require significantly more agent time than 
renewals. 
No State specicay prohibits the sale of multiple or 
d.!licatie !ong-term care 
insurance policies. 
Although no State has a specific prohibition against the sale of multiple or 
duplicative LTC insurance policies, all States have the authority to regulate their 
sale.
The regulatory authority is based on the NArC Model Unfair Trade 
Practices Act 
that all States have adopted. Furthermore, section 20 of the December 1990 LTC 
model regulation amendments requires that "in recommending the purchase or
replacement of any LTC insurance policy or certificate an agent shall make
reasonable efforts to determine the 
appropriateness of a recommended purchase or
replacement." Although this provision could be used to regulate sales of 
inappropriate multiple or duplicative policies, few States have adopted it since it is so
new. Nine 
States specifically identified this act or other provision as a basis for 
regulating the sale of multiple policies, and 13 States identified provisions regarding 
the sale of duplicative policies.  APPENDIX B

ORGANTIONS INRVIWED  TH 
BY  OIG 
Insurance Commissioners' Offces: 
Kentucky

Maryland

Massachusetts

Minnesota

New York 
Texas

Utah

Wisconsin

Consumer Advocate Organizations: 
Consumer Health Advocates, Boston, Massachusetts

Texas Citizen Action, Austin, Texas

American Association of Retired Persons, Washington D.

Consumers Union, Washington D.

Families USA, Washigton D.

Older Women s League, Washigton D.

United Seniors Health Cooperative, Washington D.

Center for Public Representation
, Madison, Wisconsin

Counseling Programs: 
Seniors Health Insurance Counseling and Advocacy Program, Baltimore 
Maryland 
Servng Health Information Needs of Elders, Boston, Massachusetts 
Ombudsman Program, State Department of Aging, St. Paul, Minnesota 
Senior Federation, St. Paul, Minnesota 
Insurance Board, Senior Concerns and Issues Section, Austin, Texas 
Wisconsin Bureau on Agig, Madison, Wisconsin 
Industry Representatives: 
Health Insurance Association of America, Washington D.

LTC Incorporated, Kirkland, Washington
 APPENDIX C  Januar 
Model Reation ServCl-
G- TER  CARE I  CE MODEL ACT
SURA.. 
Table of Contents 
Secon l.  Puose 
Secon  Scope 
Secon 3.  Short Title 
Secon  Defitions 
Secon 5.  ExtraterrtOrial Jurdicton - Group Long-Term Car Inurce 
Secon  Disclosur and Performce Stadards for Long-Term Car Insurance 
Seon  Admistratie Procedurs 
Secon 8.  Severabilty
Seon 
Effece Date 
Section 1.  Puose 
The purose of this Act is to promote the public interest, to promote the avaiabilty of long-term 
unai 
car insurance policies, to protet applicants for long-term ca insurance, as defied, from 
estalih stadar 
or deceptie sales or enrollment practices, to  cfoar  long-term car insurance, to 
faciltate public understadig and comparon of long.term  insurance policies, and to
ca 
facitate flexibilty and innovation in the development oflong-term  inurance coverage. 
fCleoxmbmilteyn at:n Td hineo pvuatriosne  wclitahu sree sepveicde tnoc elos nlge-gteirlmat icea i nitnesnutr atnoc ep rcoovteera tghe.  publi whe regng th nee to permt
Comment: The Task Force regnizes the viabilty of at hlon g-term car prouct fudesdp theugyh  aa ldie dinrsu rance vehicle.
and th Ac is not intended to prohibit approval of  prouct Seon 4 now  th prouct 
Hthow deveefrit.i osnt aotef  lmieus itn uerxaanmcee a tnhde airc ecixdeitnitg a nsdta hteuatteh  rteos edrevtee srmtaed wahre tahnrd a fmuenrd mreenvitsi otnos o athr r nceoces saero tnos a suuthcho raies 
approval of the prouct 
Section 2.  Scope 
Torh ea rferu itmhee enftfse cotife t dha tAec to f sthha A acptp lyT toh p oAlicctie iss  dneolti einre   nodre ids stuoe sdu fpoer rdseedliee rtyh i n th state on 
obligations of
entities subjec to th Ac to comply with th substace of other applicale insurce 
laws insofar 
as they do not confct with th Act, except tht laws and reguations designed and intended to 
apply to Medcar supplement insurance policies shal not be applied to long-term ca insurance. 
Note: Se Secon 61. 
Th 
U!=1oumramnceen tl:e gilatiosne cnoont  imna ckoens fcctl weait ht htht  eAnctit ies subjec to the Act must contiue to comply with other applicale
Section 3.  Short Title 
Th 
Act may be known and cite as the "Long-Term Car Insurance Ac(' 
Section 4.  Defitions 
Unless the context reuis otherwse, the defitions in th secon apply thoughout th Act. 
A. "
Long-term car insurce" meas any insurance policy or rider adverted, makete, 
th,.lve 
offere or designed to provide coverage for not less  (12) consecutie months for 
each covere person on an expense incur, indemnty, prepaid or other basis; for one or 
more necessar or medcally necessar diagnostic, preventie, 
therapeutic, rehabiltatie
matenance or personal car servces, provided in a settg other than an acute car unt 
Copyrght :SAlC  " "
Long Term Car Insurance Model Act 
of a hospital. Such term includes group and individual annuities and lie insurance policies 
or ride!'s which provide dictly or which supplement long-term car insurance. Such term 
also includes a policy or rider which provides for payment of benefitS based upon cogntie
impaient or the loss of fuctional capacity" Long-term car insurance may be issued by 
insurers: fraternal benefit societies: nonprofit heath. hospital. and medcal servce corpo
rations: prepaid heath plans: heath matenace organations or any siar organation 
to the extent they are otherv.,-ise authoried to issue life or health insurapncre.i Lyon g-term car 
insura.'1ce shan not include any insurance policy which is offere  to provide 
1edicare supplement coverage. basic hospita expense coverage, basic medcal
basic 
surgical expense coverage, hospital confiement indemnity coverage, major medcal
expense coverage. disability income or relate asset-protelcittone c overage, accident only 
coverage. specifed diseae or speced accident coverage, or  benefit heth coverage. 
B. "Applicant 
" mea.'1s: 
.n) In the case of an individual long-term car insurance policy, the person who seeks to 
contract for benefits, and 
- - (s:21 Int the acase oft a greoup lo.ng-t erm car insurance policy, the proposed certcate holder. 
th 
C. "Certcate" means. for the puroses of  Act, any certcate issued under a group long-
term care insurance policy, which policy has ben deliere or issued for deliery 
in this
th 
D. " Commissioner" means the Insurance Commissioner of  state. 
Drafting :Sote: \\nere the word "Commissioner  appears in th Act, the appropriate designation for the cmefinsurance
supervisory offcial of the state shouid be substitute. 
E. "Group long-term care insurance" meas a long-term car insurance policy which is
delivere or issued for delivery in this state and issued to: 
tnt 
(1) One or more employers or labor organations, or to a  or to the trstes of a fud 
estalished by one or more employers or labor orgaations, or a combination thereof 
for employees or former employees or a combination 
thereof or for members or former 
members or a combination theref, of the labor organations; or 
(2) Any professional. trade or occupational association for its members or former  rerid
or 
members, or combination thereof, if such assocation: 
(a) Is composed of indiduals al of whom ar or were actely engaged in the same
profession, trade or occupation; and 
maitaed in  obtag 
(') Has been  good faith for puroses other than  insurance; 
(3) An 
 association or a trst or the trste(s) of a fud established, crete or mataied
for the benefit of members of one or more associations. Pror to advertsing, maketig
or offerig such policy withi this SLate, the association or associations. or the insurr
of the association or associations, 
shal fie evidenmce i.u.itmh t he Commissioner that the 
association or associations have at the outset a  of 100 persons and have
been organized and mataied in good faith for  obtaig
puroses other than that of 
insurance. have been in active existence for at least one 
yea; and have a constitution
and bylaws which provide that: 
640-2  ~~~ '! 
Model Reation Sece-Januar 
(a) The assocation or assocations hold reguar meetigs not less tha annualy to
fuer 
puroses of the members; 
crt 
(b) Except for  unons, the assocation or associations collec dues or solicit 
contrbutions frm members; and 
(c) The members have votig prieges and representation on the governg board
and committs. 
Th 
afr 
(30) days  such fig th assocation or assoctions wi 
be deemed to
satisfy such organational reuiments, uness th Commsioner maes a fidig
that the association or assocations do not satify those orantiona reuiments. 
fidig
(4) A group other than as descrbed in Subsecons E(l), E(2) and E(3), subjec to a 
by the Commisioner that: 
(a) The issuance of the group policy is not contrar to the bet interest of th public; 
(b) The issuance of the group policy would result in ecnomies of acquiition or
administration; and 
(c) The benefits ar reonable in relation to th premium ched. 
th 
. F. "Policy" meas, for the puroses of  Act, any policy, contract subscrber agrment
th 
rider or endorsement deliere or issued fur deliery in  state by an inurr, fratern
benefit socety; nonprofit heath, hospita, or smeidacar se rovcer cgorparattioin;o prnepa.id  heth
plan: heath matenance organation or any 
eupDwaprerhcoaphtnahf  stisedittnara ht gteiee  s sllst'ahohuwoet ued,p  li:dlnba  sTyind ushi;re anh nsnAeutcirtec rht  sdh i:smem  fpinar aitttenreener nadnnaceatldcc  r jpetdbuoea a onraneprccfpreaitlt ogywr  snit tonoht   etatihstinaled   o sssootp:agtr  hetnaUryone tynofd  parsuy crg otistrfreis ut . lph oos etaegrtnphhdayo .r  it nhneood r.lis ebdpg yui ltasaaIlnt.p  i poaoennocrd m l  smitao.tye  ti Ucndboceclnt aurotd res eCc e'suir.uta vciat   inoncd. ro cDaaetneripotocennadsstige:.
ftaohnre.d  o lrer gaeldaadtteiidoon nt oss,h" o touhrl  d"c ropurreorsvpi"do aens  tdmhiaagty   tbtehere ma psp urosri tien  tun.d eAr cs Tt hl atwe.  "byr eatipnlasn"s  sahnodu lOd blet rieoplnacse  bmya yt hbeeI t nes ausnbys  t"eivrteuUnettse,
Th defition of "long-term ca inuratnhce "p unuderr 't h Ac is desgned to alow maum  sc.
intensity and level. whe aaurg tht  renale  flexbilty in benefit 
trmehehet.a  Titlhtya At Ieco. f  ismse riavntcteeenns.da Pecdue rt ouo arpn eptr emtoot  ntlhoa n dcge-afttei  ncs.a el oinn. gou-rt earrcnme  cc oap moliibnceiuitx riotpconee c t tioohmvnaerreys  f ef.ibo taerhn  raed  i ldntohoinratg  tga-ot ne gmrtrmiuac pdc,  apoatrer   iiecnnotduvIiederrcua.g aeetlh   firponaorp lueiecaruycchti ceo.f
paonl iaccyu oter  ac arird leuirnn tots  oseuf  cah h ao psopliitcay",  ies. gin..t elidee odr  taoc acdloewn tp aanydm seinct koef sb.e nefitala wnghuna ag ep oinr ttohn  doef fai thioosnp itcao nhcaer bnge  "dotehsri gthtaen
for. and duly  or certed as a long-term ca proder or swig 
Secton 5.  Extatrrtorial Jursdcton -
Group Long-Term Car Insurance 
No group long-term  th 
grup policy issued icna ra niontsheurr asntcaet ec toov ear aggreu pma dye bsec robfefe irne  Steo cao rne s4iEde(n t4 )o,f u nesss ttahte  under a
sanioathre r state havig statUtotrhy a nd reguatory long-te ca inurance reuiments subssttaattiea loyr
to those adopte in  state ha made a determtion that such reuiments have been
met. 
JurCton Oovetre :o tBhyer l hieiatithg p oelxictireast esrhrotourldia bl ej ulridtiect oinn  ttoh  "mdaietri.o na grups:' it is not the drafrs ' intention tht
Copyrght  NAlC  199  Long Term Car lnuranc:e Model ACt 
Section 6.  Disclosure and Performance Standards for Long-Term Care Insurance 
A. The Commissioner may adopt reguations that include stadards for  diclosur
settg  reui  fu and fai 
forth the maner,  disclosurs for the sale of long-term car
content  and 
insurance policies subsequent conditions of eligibilty, 
, terms of renewabilty, intial  and 
non-duplication of coverage proviions, coverage of dependents, prexitig conditions
termination of insuraneclei.t cioontniu ation or converson, probationary perreionds,t  litations
exceptions. reuctons.  period. reuimenrs fur replacement,  condions 
and defiitions of terms.

Comment: Thi  tion permitS the adoption of regulations estalihig diclosur stadar. 
renewabilty and
eligibiJit\. terms and conaitlons. and other performc:e reuimentS for long.term c:ar insuranc:e. Reguations under
subsecion should reolOnize the developing and unque natur of long.term ca inurance and th dicton between 
grup and indi..idual long. term care insurace policies. 
B. :\0 long.term car insurance policy may: 
( 1 ) Be cancelled, nonrenewed or otherwe termate on th grounds of the age or the
deterioration of the mental or physical heath of the insur indidual or certcate 
holder: or 
(2) Contain a provision estalishig a  extig 
new waitig period in the event  coverage
is convertd to or replaced by a new or other form with 
the same company, except
with respect to an incrse in benefits voluntay selec by the insur incfdual 
group policyholder; or 
(3) Provide coverage for 
skied nuring car only or provide signcantly more coverage
for skiled  ca. 
car in a facity than coverage for lower levels of 
C. Prexitig condition: 
(1) No long-term care insurance policy or certcate 
other than a  certcate
policy or 
thereunder issued to a group as defied in Secon 
4E(1) shal use a defition of 
prexisting condition" which is more restctie than the followig: Prxitig
condition meas a condition for which medcal 
advice or trtment was reommended
by, or reeived from a provider of heath  with  preedg
inurc ar servces,  six (6) months 
the effectie date of 
coverage of an 
person. 
(2) No long.term car insurance policy or certcate other than a  certcate
thereunder issued to a group as  policy or 
defied in Secon 4E(1) may exclude coverage for a
loss or confiement which is the result of a prexitig 
condition uness such loss or
confiement begis with si 
insur  (6) months followig the effectie date of coverage of an
person. 
(3) The Commissioner may extend the litation 
periods set forth in Sections GCm and (2)
above as to specc age grup categories in spec policy forms upon fidigs that the
extension  is  in the best interest of the public. 
(4) The defiition of "
prexitig condition" does not prohibit an 
application form designed to elicit the complete  insurr from using an
the basis of the answers on that application heath history of  an applicant and 
, from underwtig in accordance with
that insurer s establihed underwtig 
stadards. Unless otherwse 
policy or certcate provided in the
, a prexistig condition, regardless of whether it is disclosed on the
application, need not be covere 
unti the waitig period descrbed 
in Section GC(2)

expires.  No  long-term care insurance policy or certcate may exclude or use war' ers or 
64()4  Model Reguation Servce-July 199 
lit 
riders of any kind to exclude.  or reuce coverage or benefits for s  ..caly named 
or described prexistig diseases or physical conditions beyond the waitig period 
described in Section 602). 
D. Prior hospitalization institutionalation: 
(1) :\0 long-term care insurance policy may be deliere or issued for deliery in thi state 
if such policy: 
hospitaation reuiment; 
(aJ Conditions eligibilty for any benefits on a prior 
(bl Conditions eligibilty for benefits. provided in an institutional ca settg on the 
reeipt of a higher level of institutional car; or 
Ie) Conditions eligibilty for any benefitS oth th waer of preum ponfement, 
post.acute care or reuperatie benefits on a prior insttutionalation reuiment. 
contag  ca 
(2) (al	 A long-term car insurance policy  post- confement, post-acute 
clealy label in a separate paragraph of 
recuperatie benefits shal  the policy or 
certcate entitled "Liitations or Corndeituionis  on Eligibilty for Benefits" such 
liitations or conditions, includig any  number of days of confement. 
(b) A long-term care insurance policy or rider which conditions eligibilty of non- . 
reui a 
institutional benefits on the prior reeipt of institutional ca sha not 
thi 
prior institutional stay of more than  (30) days. 
priy 
Drafting Note: The amendment to the secon is  intended to reui immedate and clear diclosur whe 
cloang.- term car insurance policy or rider conditions eligibilty for non-institUtional benefits on prior reipt of intitUtional 
ca 
(3) No long-term  insurance policy or rider which provides benefits only followig
institutionalation sha condition such benefitS tuhpo nt ahdm sion to a facity for the 
with a  afr diche 
same or relate conditions  period of less  (30) days 
frm the intitution. 
t.ay  ch.
eliate 
Drafting Note: The Dee 1988 amendment to th secon  the  prior hospitation scrn for new 
laongga-tte rtmh c pario irn huorscpeit aptoinlic si. cSom eb asst toen m tahy  wsiths t op acrocnusiadre rd ae m"dougalr-pophtiio gne"g arlptheirn ta:ne  tmoa kteh tt ota prohiition
bIfe snoe,f itthse o fno lplroiwori gh opsrpoivtiiaoant iiso nsu cmha ya nb ea ltdeernlet:ree:  "oNr oi slsounegd. tfeorrm d celaie riyn iunr tche  Sptoaltice yu wnlhecshs  ctohne diintisounrsr  tohr  eoltbhirl teyn tiotyf 
ca inurce 
offerig that policy alo offers a long-term  policy whch doe not condition eligibiltY oibenefits on such a
reuimen 
Editdorsr rNsot e: Seon SD(3) is language frm the eorlgitie m odel act whch did not prohibit prior insttUtionaltion.
Th  Seon  afr 
intended that  SD(2) would be  adoption of th amendments to th seon whch
prohibit prior institUtionalation. State should exame thir Seon  cafuy durg th pros of adoption or
amendment of th Act 
estalihig  stadar 
E. Tchae  Commsioner may adopt reguations spec  loss ratio  cafor  long-term
insurance policies provided that a  reference to long-term  insurance 
policies is contaed in the reguation. 
fr 
retu . 
F. Right to  look: 
ca 
Long.tetrmh   inurance applicants sha have th right to retu th  certcate
policy or 
with 
(30) days of its delery and to have th preum reded if, afr examtion 
of the policy or certcate, the applicat is not satified for any reon. Long-term
inurance 
policies and certcate sha have a notice promiently prite on th fit page 
Coyr 
NAlC  Long.Term Car Insurance Mocel Ac: 
or attched thereto statig in substace tht the applicat shal have the right to retu 
the policy or certcate withi thirty (30) days of itS deliery and to have the premium
refuded if, afr examation of the policy or certcate, other than a certcate issued 
pursuant to a policy issued to a group defied in Section 4Eil) of thi Act, the applicant is 
not satisfied for any reason. 
G. (1)  A.  outline of coverage shal be deliere to a prospemctiee aap plicant for long-termd cairte 
insurance at the  solicitation though  which promiently 
rie of  intial 
the attntion of the repient to the document and itS purose. 
(a) The Commsioner shal prescrbe a stadard formt. includig style, arangement 
and overal appearance, and the content of an outle of coverage. 
(bl In the case of agent solicitations, an agent must delier the outle of coverage 
prior to the presentation of an application or enrollent form. 
di 
response solicitations, th outle of coverage must be presente 
' (C) In the case of 
in conjuncrin with any application or enrollent form. 
(2) The outle of coverage shal include: 
(a) A descrption of the pricipal benefits and coverage provided in the policy; 
(b) A statement of the pricipal exclusions, reuctons, and litations contaed 
the policy;

(c) A statement of the terms under which the policy or certcate, or both, may be
contiued in force or dicontiued, includig any reservation in the policy of a 
right to change premium. Contiuation or conversion proviions of group coverage
shal be speccalydescribed; 
(d) A statement that the outle of coverage is a summa only, not a contract of 
inurce, and tht the policy or grup mater policy contas governg contractal 
provisions; 
(e) A descrption of the terms under which the policy or certcate may be returned 
and premium refuded; and 
(f) A brief descrption of the relationship of cost of care and benefits. 
H. A certcate issued. pursuant to a group long-term car insurance policy which policy is
th 
deliere or issued for deliery in  st9te shal include: 
(1) A descrption of the pricipal benefitS and coverage pro\.ided in the policy; 
(2) A statement of the pricipal exclusions, reductions and limitations contained in the 
policy; and 
(3) A statement that the group mater policy determes governg contractual provisions. 
Comment: The above provisions are deemed appropriate due to the parcular nature of long.term care insurance. and 
are consistent with g1oup insurance laws. Specific stadards would be contaned in reguations Implementing this Act. 
sum 
tie 
At the  of policy deliery, a policy  shal be delivered for an indriduallie 
insurance policy which provides long-term car  rider. In 
benefits ..ithi the policy or by 
640
 Model Reguation Servce - July 199 
dit 
the case of  response solicitations. th insurr shal delier the policy summa upon 
the applicant s reuest. but regaress of reuest sha mae such deliery no later than at 
the tie of policy deliery. In addition to complyig with al applicable reuiments. the 
summa shal 
also include: 
(1) An explanation of how the long.term car benefit interacts with other components of 
the policy, includig deductions from death benefits; 
(2) An ilustration of the amount of benefits, th lengt of benefit, and the guarante
lietie benefitS if any, for each covere person; 
(3) .Ay exclusions, reuctions and litations on benefits oflong-term car; and 
sum 
(4) If applicablp. to the policy tye. the  shal alo include: 
(a) A diclosur of the effects of exerciing other rights under the policy; 
(b) A disclosur of guarantees relate to long-term car costs of insurance charges, 
and 
maum lietie 
(c) Curnt  benefits. 
and projecte 
inurcs  th 
term ca benefit, fuded though a lie  vehicle by  acceleration 
J. Any tie a long-
of the death benefit, is in benefit payment statu, a monthly report shal be provided to the 
policyholder. Such report shal include: 
(1) Any long-term car benefits paid out durg the month; 
(2) An explanation of any changes in the policy, e.g. death benefits or cash values, due to 
long-term car benefits being paid out; and 
ca  remag. 
(3) The amount oflong-term  benefits exitig or 
K. Any policy or rider adverted, makete or offered as long-term car or nursing home 
insurance sha comply with the provisions of this Act. 
Section 7.  Admnistrate Procedures 
th 
ReguationS" adopte puruant to  Act shal be in accordance with the provisions of (cite section 
of state insurance code relatig to the adoption and promulgation of rules and reguations or cite 
the state s admintratie procedurs act, if applicable). 
Section 8.  Severabilty 
If any provision of ths Act or the application theref to any person or circumstace is for any 
reson held to be invald, the remader of the Act and the application of such provision to other 
circumstaces shal not be afecte thereby. 
persons or 
Section 9.  Effective Date 
Th Act shall be effece 
(insert date). 
pyrght NArC  640- ";  Long.Tenn Car Insurance Model Act 
Legistar' e H  tory (011 references are  to  the  Proceedintls of the NAICJ 
1987 Proc. 111  19. 655.  6;7.080, 700 (adopted).

1987 Proc. 1115. 23. 632.633. 727, i30. i34 (amended and reprinted).

1988 Proc. 19. 20.21. 629.630. 652. 66I.665/amended and reprintedl.

1989 Proc. I  9.  2S. 703, i54-755. i89.793 (a.mendedl.

1989 Proc. 1113. 23.24. .J6B. 476-4";7. 479-484  (a.mendead .a nd reprintedl.

1990 Proc. 16. 27.28. 477. 541.5.J2.  556-561  (a.mended  reprinted).

640
 APPENDIX D

Model Reguation Servce-Januar 199 
LONG-TERM CAR INSURA"iCE MODEL REGULATION 
Table of Contents 
Section l.  Purose

Section 2.  Authority

Section 3.  Applicabilty and Scope

Section 4.  Defitions

Section 5.  Policy Defitions

Section 6.  PPolicy Poracticesl andi Procviionsi
 es
Reui 
Section 7.  Diclosur Proviions

Agait  Clais Underwtig
Section 8.
 Prohibition  Post 
Minum 
Section 9.  Standards for Home Heath Car Benefits in Long-Term Car Insurance
Section 10.  Reuiment to Offer Ination Protetion

Section 11.  Reuiments for Replacement

Section 12.  Discretionar Powers of Commsioner

Section 13.  Reserve Standards

Section 14.  Loss Ratio

Section 15.  Filg Requiment

Section 16.  Stadard Fonnt Outle of Coverage

Section 1.  Puose 
The purose of 
thi reguation is to implement (cite section of law which sets 
Term Car Insurance Model ActJ, to promote the public interest forth the  NAlC Long-
, to promote the 
utenrma ic aorr  dinescuerpatniec es acloevse orra ge. to prote applicants for long-term car insurancaev,a aiasb diletfyie dof, lfornogm
enrollent practices, to facitate public understadig and comparon
ooff lloonngg--tteerrmm  ca inurce coverages, and to facitate flexibilty and inovation in the development
car insurance. 
Section 2.  Authority 
Th 
reguation is issued 
puruant to the authority veste in the Commissioner under (cite sections
oflaw  Inurce 
authoreitnyac ttgo t hi ssue reNAglCu atioLnosn g-Ter Car  Model Ac and estalihig th Commis.sioner
Section 3.  Applicabilty and Scope 
Except as otherwe specifcaly provided, thi 
reguation applies to all long-
policies deliere or issued for  afr  term car insurance
deliery in ths state on or  the effectie date heref, by insurrs;
fraternal benefit societies; nonprofit heath, hospita and medcal servce 
heath plans; heath  corporatioQ.s; prepaid
matenance organations 
simar organations. 
and al 
Drafting Note: This 
concractS. subscriber ar eguatimon.e lnitkSe .t hrei dersN aAlnC
d enLdonogrs-Temeremnt SC awr hIentshuerra inscseu eMdo bdye li nAscut.r eisr si:n tended to apply to policies.

nonprofit heath. hospita and medcal servce  fraternal benent societies:
all simar organations. In  corporations: prepaid heath plans: health matenance organations and
order to include such 
Juntsudti:crtylo nte. ramnin9o ol tngeyr  ofar cbtoy rss.p seecpca rSatteat Uretgourya tcioitnasti omonrag. yaD nbeaept ireonendsui.g i ru.ep gouna tsitoantes  lsahwo ualndd  riedgeunattii otnh.e min siunr aanccceo rddeanpcae rweintht
Parcular te!"ology used by these plans. organizations and arangeImn eanntyS  e(vee.nt. the reguation should provide that the
member! may be substitute for. or added to, the corrspondig terms  thg .. concract. policy. certcate. subscriber 
used in  reguation. 
P:1 
641 " " " "
Long-Term Car Insurance Mociel Reguation 
Se(:tion 4.  Definitions 
. For the purose of this reguation, the terms "long-tenn car insurance;' " car
group long-term 
insurance;' " commissioner," "applicant:' " policy" and "cert.icare" shall have the meanings set
. forth in Section  of the  AlC  Long-Term Car Insurance Model Act. 
diDnersfaiunfritatiinoncnge   osNfuo ptethIee":- a1 sb'o.ol"'v"';ee: r te"ef rf,mhices: ; wc11oo onrdit  .,"ih neC eso;tr aint.em  ,shhisoausltido  mnbeeo  sdu"eb slaa tapuctptee ds.ah Troosu  tlihnde   bethxeti estn tnr ceogrupolartaito.n .l :nhhtaetO   a,,hphlepS r omSopea le:ll3o :ntae-c td eISsi lnmoata aoanu pioter dt.h teh ce  ruielli
Se(:tion 5.  Policy Definitions 
No long-term care insurance policy deliered or  in thi state shal 
issued for deliery  use the terms
set fort below, unless the term ar defied in the policy and the 
defitions satify the followig
requirments: 
A. "
Acute condition" means that the indidual is medcaly unstale. 
reuis  Such an indidual
frquent mmoniattoariig  by medical professional, such as physicians and registere
nures, in order to 
his or her heath statu. 
B. "Home healithn cfair  servces" means medical and nonmedcal servces, provided to il
disabled or  persons in their residences. Such servces may include 
lig  homemaker
servces, assistance with actities of daiy  and respite car services. 
C, "Medicare" shall be defied as "The Heath Insurance for the Aged Act, Title XVIII of the
Social Security Amendments of 
Par I of Public Law 89- , as En1a9c6te5d a bs yT thheen  ECigohntsy-tiNtuinteth o Cr Loantgerrs s.'\ eonf tdheed U;' noirt e" TSittalete Is,
of America and popularly known as the Health Insurance 
for the Aged Act, as then
constitute and any later amendments or substitutes thereof,' or words of simar 
import. 
D. "Menta or nervous diorder" shal not be defied to 
include more than neurosis, psycho
neurosis, psychopathy, psychosis, or menta or emotional diseae or disorder. 
E. "Skied nuring car;' "
shal be defied in  intermediate car;' "spekrsio narle cuar;i' "home car;' and other servces
relation to the level of  , the nat1l of 
settg in which car must be deliered.  the car and the
F. Al  lite 
providers of servces, includig but 
not  skied nuring facilty,
ca facilty,  intermedate car facity;' " to " extended
fraeciutyi,"  and "home car agency" shal be decfoinevda ilnes rceelnatt inonu rtoin tghe h soemrvec;'e "s p aenrsdo fnaacli lctieasr
the servctoe sb.e T ahvea iable and the licensur or degr statUs of those providig ot' supervsing
defition may requi 
certed.  that the provide: be appropriately licensed or
D:afting  ote: State laws relacig to
relerence to or i.corporation of the  nuring and other faciities and agencies are nOt uniiorm. Accordigly, specc
i.di-idual State law may be requi i. struCtur_'lg' each deiiition. 
Co:nment: This section is intende; ,0 spear;.. reuid 
definitional elements of sever:ll terms commonly 
term C::t" tnsur:Jce policies. while ;11l0Wtng s
 ome c1exibility i.  fOW1d in lon!r'
,he deiiitions themselves.

Se(:tion 6. 
Policy Practices and Provisions 
Renewability. The terms "
in any inciduallong-termg ucaarra nted renewable" and "noncancellable" shal not be used
insurance policy without fuher 
accordance with the  e."'planatory language in
disclosur 
reuiments of Section 7 of this reguation. 
641.  Model &!guation ServCt-:Januar 199

(1) No such policy issued to an indidual shal conta 
renewal pr?vi ions less favora?le 
to the insur tha "guarante renewable:' However, the Comnussloner may authonze
nonrnewal on a statewide basis, on terms and conditions 
deemed necessaI by the
Commissioner, to best pro  t the interests of the insurs, if the insurr demonstrats: 
wi 
(a) That renewal  jeopardie the insurrs solvency; or 
(b) That: 
(i) 
The actual paid 
clais and expenses have substatialy exceeed the premium
and investment income associate with the policies; and 
(ii) The policies wil contiue to experience substatial and unexpecte losses over
their lifetie; and 
and 
The projecte loss experience of the policies 
(Ui)  canot be signcantly improved
or mitigated though reonable rate 
adjustments or other reonable methods;
(iv) The insurer has made repeated and good faith attempts to 
fig  stabilize loss

experience of the policies, includig the tiely 
for rate adjustments. 
(2) The term "
contiue thgeu laornagn-tteeermd  renewable" may be used  only  when the insur has the right to
car insurance in force by the tiely payment of premiums and
when the insurr has no unateral right to mae 
any change in any provision of the
policy or rider whie the 
insurance is in force, and cannot 
declie to renew, except that
rates may be revied by the 
insurr on a class basis. 
(3) The term "noncancellable
when the insured has the right to
contiue the  " may be used  only 
long-term 
durg  car insurance in force by the tiely payment of premiums
which period the 
insurr has no right to unilaterally make any change in any
proviion of the inurance or in  ur 
the premi  rate. 
B. Litations and Exclusions. No policy may be deliere or issued for deliery in this state
as long-term car insurance if such pol,ic ye  xcept as follows: 
trtment liits or excludes coverage by tye of iless
, medcal condition or accident
(1) Prxistig 
conditions or dieaes; 
(2) Mental or nervous diorders; however
, this shal not permit 
exclusion or 
benefits on the basis of Alheimer  liitation of
s Disease' 
(3) Alcoholism and drg 
addiction; 
(4) Illness, 
tratment or  medcal  condition arsing out of:
(a) VIlar or act of war (whether declard or undeclard); 
(b) Parcipation in a 
insurtion; 
felony, riot or 
(c) Service in the aned  auxar 
forces or  unts  thereto; 
(d) Suicide (sane or insane), attmpte 
suicide or intentionaly self-inflcte 
injury; or 
(e)  Av;atidn (this exclusion applies only to non-farpayig 
passengers). 
COPYrght NAlC 1990 
641.  ,,  ""

Long-Term Car Insurance Model Reguation 
(5) Trtment provided in a governent facilty (unless otherwse requid by law),
servces for which benefits ar avaiable under  Medca  or other governental program
(except Medcaid), any state or federal workers' compensation, employer 
s liabilty or 
occupational  diseae  law, or any motor vehicle no-fault law, servces provided by a
member or the covere persons immedate famy and servces for which no charge is
nonny 
made in the absence or insurance. 
Th 
(6)  Subsection B is not intended to prohibit 
exclusions and liitations by 
litations.  tye or 
provider or terrtorial 
Drafting Note: Pargraph (6) is intended to permt (al exclusions and litations for payment for servces provided
outside the Unite States and (bl legitite varations in benefit levels to reflec dierences in provider rates. 
C. Extension or Benefits. Termation of long-term car insurance shal be without prejudice
to any benefits payable ror institutionalation if 
such institutionalation began whie the
long.term car insurance was in force and contiues without interrption 
afr termation.
Such extension or benefits beyond the period the long-
liite  term car insurance was 
in force
may be  to the duration of the benefit period, if any, or to payment of the maum
benefits and may be subjec to any policy waitig period, and al other applicale proviions
or the policy. 
D. Contiuation or 
Conversion. 
(1) Group long-term car insurance issued in this state on or afr the effectie date of this
section shall provide covere indiduals with a basis for contiuation or conversion of 
coverage. 
(2) For the puroses of 
mtahii tsaecitsi on  a basis ror contiuation or coverage" meas a policy
proviion which 
coverage under the existig group policy when such
coverage would otherwse termate and which is subject only to the 
contiued tiely
payment or premium when due. Group policies which 
servces to, or conta incenties to use cert  restrct proviion of benefits and
providers andlor racities may provide
contiuation benefits which ar substatialy equialent to the benefits of the exitig
group policy. The Commsioner shal make a determation as to the substatial
equialency of benefits, and in doing so, shal tae into consideration the dierences
between maaged 
car and non-maaged car plans, includig, but not 
lited to
provider system arangements, servce avaiabilty, benefit levels and admtrative
complexity 
(3) For the puroses or 
thi section  a basis for conversion of coverage" meas a policy
provision that an indidual whose coverage under the group policy would otherwe
terminate or has been termate for any reson, includig 
dicontiuance of the
group policy in its entity or  insur 
contiuously insur  with respect to an  class, and who has been
under the group policy (and any group policy which it 
replaced),
for at least SLX months imedately prior to termation, shal be entitled to the
convert 
issuance of a  policy by the 
insurr under whose group policy he or she is
covered 
thout evidence or LasurabUity. 
(4) Forthe puroses of ths 
section. "convert policy" meas an ind.dual 
policy or long-
term car insurance providig 
benefits identical to or benefits determined by the
Commsioner to be substatialy equialent to or in excess or those provided under the
group policy from which conversion is made. 
Where the group policy from which
conversion is made 
cert  restrcts provision of benefits and servces to, or contas incenties
to use  mag 
providers and! or facities, the COmmsioner. in  a determation
as to the substatial equIalency or benefits, sha tae Lato consideration the dierences 
641-4  Model Reguation Servce  Januar 199 
betw  n maaged car and non-maaged car plans. includig, but not lite to
provider system arangements, servce avaiabilty, benefit levels and admstratie 
complexity. 
(5) Written application for the convert policy shal be made and the fist premium due. if
any, shall be paid as dited by the insurr not later than thir-one (31) days afr
termination of coverage under the group 
policy. The convened policy shall be issued
effective on the day folloy."ing the termation of 
coverage under the group policy,  and 
shal be renewable annualy.

(6) Unless the group policy from which 
conversion is made replaced 
previous group
coverage, the premium for the convert 
policy shal be 
calculate on the basis of the
insurd' s age at inception of coverage under the group policy from which .
conversion is
made. \Vhere the group policy from which conversion is made replaced previous group 
coverage, the premium for the convert 
policy shal be 
calculate on the basis of the
insured' s age at inception of coverage under the group policy replaced. 
(7) Continuation of coverage or issuance of a convert 
policy shal be madatory, except
where: 
(a) Termination of group coverage resulte from an indidual's faiur 
to make any
requid payment ofpremiwn or contrbution when 
due; or 
(b) The terminating coverage is replaced not later than thi-one (31) days afr
termination, by 
gTOUP coverage effectie on the day followig the termation of
coverage: 
(i) Providig 
benefits identical to or benefits determed by the Commisioner to
be substatialy equialent to or in excess of those provided by the termatig
coverage; and 
(ii) The premium for which is calculated in a 
maner consistent with the requie
ments of Paragraph (6) of 
ths section. 
(8) Not\l"ithstadig any other 
provision of thi section, a convertd policy issued to an
indidual who at the tie of conversion is covere by another long-
policy which provides benefits on the basis of  term car insurance
incur expenses, may conta" a
provision which results in a 
reuction of benefits payable if the benefits provided under
the additional coverage, together with the fu 
benefits provided by the convertd
policy, would result in payment of more than  incux 
provision sha only be included in the conve1r0t0d  ppeorlciecnyt  of  expenses. Such
if the convert 
provides for a premium  policy also
decrease or refud which reflects the reuction in benefits
payable. 
(9) The convertd policy may provide that the benefits payable under the convert 
together with the benefits payable under the group policy from which  policy,
made, shall not exceed those that would  conversion is 
have been payable had the individ ual'
coverage under the group policy 
remaed in 
force and effect. 
(10) Notwithstandig any 
other provision of thi section, any insurd 
indi"idual whose
eligibilty for group long-term 
car coverage is based upon his or her relationship to
another person, shal be entitled to contiuation of 
qua.g  coverage under the group policy
upon termination of the 
relationship by death or disolution of maage. 
opyrght  NAlC 1990 
641 " "
Long-Term Car Insurce Model Reguation 
thi 
(11) For the purposes of  section: a "Managed-Car Plan" is a heath car or assiste
living arrangement 
designed to coordiate patient care or control costs through
utiation re\-1.ew, case maagement or use of specifc provider networks. 
Section 7.  Requied Disclosure Provisions 
A. 
Renewabilty. Individual long-term car insurance policies shall contai a renewabilty
provision. Such provision shall be appropriately captioned
, shall appear on the 
of the policy. and shal clealy state the  fist page
duration, where lited, of renewabilty and the
duration of the term of coverage for which the policy is issued and for which it 
may be
renewed. Ths provision shal not apply to policies which do not conta a renewabilty
provision, and under which the right to nonrenew is reserved solely to the 
policyholder. 
" Drafting :-ote: The last sentence of this subsection is intended to apply to long-termcar 
combined with life insurance policies. since lie insurance policies generaly do not conta renpeowliacbieilst yw hpircohv aiior npsa. r of
B. 
Riders and Endorsements. Except for riders or endorsements by 
whch th inurr effecate
a request made in wrtig by the insux under an indiduallong.term car insurance 
apoflircy , all riders or endorsements added to an indidual long-term car insurance policy
date of issue or at reinstatement or renewal which  eliate 
reuce or 
coverage in the policy shal reui  benefits or
signed acceptace by the  Afr 
indidual IDsux.  the
date of policy issue, any rider or endorsement which increses benefits or coverage with a
concomitant increase in premium durg  agr 
the policy term must be  to in wrtig
signed by the insured, except if the incresed 
benefits or coverage 
ar requi by law
Where a separate additional 
premium is charged for benefits provided in connection with
riders or endorsements, such premium charge 
shal be set forth in the policy, rider or
endorsement. 
C. Payment of 
Benefits. A long-term 
stadar  car insurance policy which provides for the payment of
benefits based on 
or words of simar import sdehscarble  iasn clude uasu adl  efiatniodn c uotof mary,  reonale and custoID
such terms and an explanation of
such terms in its 
accompanyig outle of coverage. 
D. Litations. If 
with repe to Par eloxngi-titger cmo ncadrit ioinnss.u sruacnhc eli tpaotiloicny so rs chear tacaptpee c ontas any litations
as a separate paragraph
of the policy or certcate and sha be labeled as "Prxistig Condition Litations:' 
E. Other Litations or Conditions on Eligibilty for 
Benefits. A long-
policy or certcate contaig  term car insurance
any litations or conditions for eligibilty other than those
prohibite in (insert 
citation to state law corrspondig to 
Car Insurance Model Act) shal set forth a description ofS  ection 6D(2) of the LDng-Term
requi  such litations or conditions

includig  any  number of days of confieme  , in a separate paragraph of the
policy or certcate and shal label such paragraph "Litations or 
for Benefits:'  Conditions on Eligibilty
Section 8.  Prohibition Against Post-
Claims Underwiting 
A. All 
applications for long-term 
guaranteed issue  car insurance policies or certcates except those which are 
health condition osfh atlh CeOn taaip cplelai cant.  and  unambiguous questions designed to  the 
ascert
B. (1 If  an  application for long-term car insurance contais a question which asks whether
the applicant has had 
medication prescrbed by a physician, it must 
applicant to list the medcation that has been  also ask the
prescribed. 
641-6  Model Reguation Servce-Januar 199 
(2) If the medcations 
liste in such application were known by the ins  , or should have
been known at the tie of application. to be ditly relate to a medcal condition for
which coverage would otherwse be denied
, then the policy or certcate shal not
rescinded for that condition. 
c. Except for policies or certcates which ar guarante issue: 
(1) The following language shal be set out conspicuously and in close conjunction with
the applicant's 
signatur block on an application for a long-term car insurance policy
or certcate: 
th 
Caution: If your anwers on  appliC3on ar incorr or 
untre, (company)
has the right to deny benefits or rescind your policy. 
(2) The follo..ing language, or language substatialy simar to the followig, shal be set
douelt iceoryn:s picuously on the long-term car insurance policy or certcate at the tie of
Caution: The issuance of this long-
term care insurance (policy) (certificate)
is based upon your responses to the questions on your application. A 
your (application) (enrollment form) (is enclosed) (was  copy of

retaied by you when
you applied). If your answers are incorrect or untre, the 
company has the
right to deny benefits or rescind your 
policy. The best time to clear up any
questions is now, before a claim arses! If, for any 
reason, any of your
answers are incorrect, contact the company at this address: (insert 
address) 
(3) Pror to issuance of a long-term car policy or certcate to 
or older, the insurer shal obta one of the followig:  an applicant age eighty (80)
(a) A report of a physical examination; 
(b) An assessment of fuctional capacity; 
(c) An 
attndig physicians statement; or 
(d) Copies of medcal reords. 
D. A copy of the completed application or enrollment form (whichever is applicable) 
deliered to the insur  shal be

no later than at the tie of deliery of the policy or certcate
uness it was retaed by the applicant at the 
tie of application. 
E. Every insurr or other entity sellg 
matai a  or issuig lon?-term care insurance benefits shal
record of al policy or certcate rescissions, both state and countrde
those which the  fuh  , except
insur voluntay effectuate and shal annualy  ths inormtion
to the Insurance Commissioner in the 
formt 
Insurance Commissioners.  prescribed by the National Association of
Section 9. 
Minimum Standards for Home Health Care Benefits 
 Long-Term Care 
Insurance Policies  in
A. A long-term care insurance policy or 
health car services, lit or exclude becneerfittsc:a te may not. if it provides benefits for home
(1) By requig  insurd/clait 
that the  would nee skied car in 
facilty if home  a skied nursing
heath car servces were not provided; 
Copyrght  NAlC 1990 
6-H Lollg-Term Car Insurance Model Reguation 
reuig  insu.clait fit 
(2) By  that the  or simultaeously reeive nursing an  /or
therapeutic servces in a home or community settg before home health car ser.i1ces 
ar covere;

liiting 
(3) By  eligible semces to servces provided by registered nurses or licensed
practical nurses; 
requig 
(4) By  that a nurse or therapist provide servces 
can 
covered by the policy that 
be provided by a home heath aide. or other licensed or certed home car worker
actig withi the scope of hi or her licensur or certcation. 
reuig  insurclait 
(5) By 
that the  have an acute condition before home heath 
car servces ar covere; 
litig 
(6) By  benefits to servces provided by Medcarerted agencies or providers. 
B. Home heath car coverage may be applied to the nonhome 
heath car benefits provided in .
determg 
the policy or certcate when  maximum coverage under the terms of the
policy or certcate. 
tDerramft cianrge  cNoovteer:a gSeu busnedcetri tohne  Bp opliecrym. iTtsh eth seu hbosemceti ohne ailst hn octa rin tbeenndefeidt tso  to be counte toward the maum length of long-
would make the benefit ilusory. It is suggeste that fewer than 40 visits armeousnttr ctot  homaen  hileuastohr yc ahro tmoe a h peeartiho dc oafr t bieen ewfhiti.ch
Section 10.  Requirement to Offer Inflation Protection 
A. No insurr 
may offer a long-term car insurance policy  alo 
uness the insurr  offers to the
policyholder the option to purchase a policy that provides for benefit levels to 
maums  meagf  incrse with

benefit  or reasonable durations which ar 
anticipate incres  to account for reonably
in the costs of long. term car servces covere by the policy. Insurrs
must offer to each policyholder, at the tie of purchase, the option to purchase a policy 
with an ination protetion featU no less favorable than one of the followig: 
(1) Increses benefit levels annualy, (in a maner so that the increses 
ar compounded
annualy); 
(2) Guarantes the insur indidual the right to periodicaly incrse 
without providig  benefit levels
evidence of insurabilty or heath status so long as the option for the
previous period has not been 
declied; or 
(3) Covers a specifed percentage of actual or 
reonable charges. 
B. Where the policy is issued to a group, the requi 
offer in Subsection A above shal be 
made to the group policyholder, except, 
 ii  the policy is issued to a group defied in (Section
4E(4) of the Act) other than to a contiuig care retiment communty, the offerig shal
be made to each proposed certcateholder. 
C- The offer in Subsecrion A above  requi 
shal not be  of: 
(1) Lie insurance 
policies or riders containg accelerate long-tenn car benefits. nor 
(2) Expense incurd 
long-term 
car insurance policies. 
641 , .
Mode! Reguation Servce-January 199 
D. Insurers shall include the foUowig informtion in or with the outlie of coverage: 
(1) A graphic comparson of the benefit levels of a policy that increses benefits over the
policy period \\'1th a policy that does not increse benefits. The graphic comparson 
shal show benefit levels over at leat a twenty (20) yea period. 
(2) Any 
expected premiwn increses or additional premiwns to pay for automatic or
optional benefit increses. If premium 
on the atted age of the applicant ati nthcere tsiees  oofr  athded iitniocnreasl epr,e tmheiu imnssu -r.r1  be based
disclose the magntude of the potential  shal also
premium the applicant would n  to pay at
ages 75 and 85 for benefit incrses. 
An insurer may use a 
th  reasonable hypothetical, or a graphic demonstration
puroses of  diclosur.  , for the
Drafting Note: It is intended that meaingf inflation protetion be provided. It is suggeste that a minmum of fie
bpeenrceefnitt  m(5i%im) (ucmomsp ooru nddueradt)i oannsn ucaolu cldos itn icnlucdres ep rboev uidsiegd  iansc ar ebeasse  tfoor  adtetteedrm  g futu costs and premiums. Meagf
or for some multiple of the policy  maum benefit. or throughout the period oagfe ,c oorv eforra ga ep.e riod such as  at leat 20 yea 
Section 11.  Requirements for Replacement 
dit 
Question Concerning Replacement. 
Indidual and  response solicite long-term car
insurance application forms shall include a question designed to elicit informtion 
whether the proposed insurance policy is intended to replace  as to 
any other accident and
sickness or long-term 
car insurance policy presently in force. A supplementa 
application
contag 
or other form to be signed by the 
 pplicant  such a question may be used. 
B. Solicitations Other than Dirt Response. Upon determing that a sale 'N 
involve
replacement, an insurer; other than an 
fuh  insurr using dict response solicitarion methods,
or its agent; shal  the applicant, prior to issuance or delivery or the individual long-
term car insurance policy, a notice 
long-term  regardig replacement of accident and sickness or
car coverage. One copy of such notice 
shal be retaied by the applicant and an
additional copy signed by the applicant shal be retaied by the insurr. The reui
notice shal be provided in the foUowig 
maner: 
NOTICE TO APPLICANT REGARDING REPLACEMENT 
OF INDIVIDUAL ACCIDENT AND SICKNESS OR LONG
TERM CARE INSURANCE 
According to (your application 
! (information you have furnished), you intend to lapse or otherwise terminate
existing accident and sickness or long 
term care insurance and replace it with an individual long-
insurance policy to be issued by (company nameJ Insurance Company. Your new policy providest ethrmir tc are
days within which you may decide.  (30)
without cost. whether you desire to keep the 
information and protection policy. For your own
, you should be aware of and seriously consider certain factors which may affect
the insurance protection available to you under the new 
policy. 
Health conditions which you may presently have (preexisting conditions). may not be immediately 
or fully covered under the new 
pOlicy. This could result in deniaior delay in payment 
under the new policy. whereas a similar claim might have been payable under your presoefn bt enefits
policy. 
2. You may wish to secure the advice of your present insurer or its agent regarding the proposed 
replacement of your present 
policy. This is not only your right, but it is also in your best interest to
make sure you understand all the relevant factors involved in replacIng your present coverage, 
opyrght NArC 
1990 
641.  LoI1g-Term Car Inurance Model  atioI1 
3. 
If, after due consideration, you stll wish to terminate your present policy and replace it with new
coverage, be certin to 
trfuJly and completely answer aJl questons on the application concerning 
your medical healt history. Failure to include aJl material medical information on an application 
may provide a basis  for  the company to deny any fure claims and to refund your premium as
though your policy had never been in force. After the application has been completed and before 
your sign it, reread it carefully to be certain that all information has been 
properly recorded. 
The above "Notice to Applicant" was delivered to me on: 
(Date) 
(Applicant' s Signature) 
Dit  di 
C. 
Response Solicitations. 
Insuxrs using  response solicitation methods sha delier
a notice regardig replacement of accident and sickness or long-
applicant upon issuance of the policy. The reui notice sha bet perromv icdaerd  cino vtherea fgoel ltoow thige
maner: 
NOTICE TO APPLICANT REGARDING REPLACEMENT 
OF ACCIDENT AND SICKNESS OR LONG-
TERM CARE INSURANCE 
According to (your application) (information you have furnished), you intend to lapse or otherwise terminate 
existing accident and sickness or long-
term care insurance .and replace it 
insurance. policy delivered herewith issued by (company name) Insurance  with the long-term care
Company. Your new policy
provides thirt  (30)  days within which you may decide. without cost whether you desire to keep the 
For your own information and protecton policy.
, you should be aware of and seriously consider certain factors
which may affect the insurance protection available to you under the new policy. 
1. Healt conditions which you may presently have (preexisting conditions), may not be immediately 
or fully covered under the new 
policy. This could result in denial or delay in payment of benefits
under the new policy, whereas a similar claim might have been payable under your present 
policy. 
2. You may wish to secure the advice of your present insurer or its agent regarding the proposed 
replacement of your present policy. This is not only your right, but it is also in your best interest to 
make sure you understand all the relevant factors involved in replacing your present coverage. 
3. 
(To be included only if the application is attached to the 
wish to terminate your present policy and replace it wpiothlic nye.Jw If ,c aofvteerr adguee ,c roenasdid eration, you still
the copy of the 
application attached to your new policy and be sure that all questions are 	
correctly. Omissions or misstatements in the application could cause an othearwnsiswee vraeldid f uclllayi man d
be denied. Carefully check the application and write to lcompany name and addressl within 
thirt
days if any information is not correct and complete. or if any past medical history has been left 
(30) 	
out of the application. 
(Company Name) 
G41  Model Reguation Servce-
Januar 199 
Section 12.  Discretionar Powers of Commssioner 
The Commissioner may upon wrttn reuest and  administratie hearg, 
to modi or suspend a specifc provision or provisiaofr ns oafn  issue an order
this reguation ..-ith respect to a specifc
long- nn care insurance policy or certcate upon a wrttn fidig that: 
A. The modication or 
suspension would be in the best interest of the 
insurs; and 
B. The purposes to be achieved could not be effectiely or 
modication or suspension; and  effciently achieved without the

C. (1) The modication or suspension is necessar to the 
resonable approach for insurg  development of an  innovatie and 
long-term car; or 
(2) The policy or certcate is 
to be issued to residents of a lie car or contiuig car
retiment communty or some other residential communty for the 
elderly and the
modication or suspension is reasonably relate to the specal nee or natur of such
a comm unity; or 
(3) The modification or suspension is necessar to 
permit long-term car insurance to be
sold as par of, or in conjunction with, another insurance product. 
lite 
Drafting  ote: This provision is intended to provide the 
accommodate specifc and inno\"ative long-term care insuranCocmem pirsosdiuocnte r with  discrtion and flexibilty to
interest. This provision is intended to be used sparigly for this purose.  which ar shown to be in the publics best
Section 13.  Reserve Standards 
A. When long-term care benefits ar 
provided through the acceleration of benefits under 
indidual lie 
group or  policies or riders to such policies, policy reserves for such benefits 
shal be determined in accordance with (cite the stadard valuation law for lie insurance
which contais a 
section referrg to "special benefits" for which 
Clai  tales must be approved
by the commissioner).  reserves must also be established in the case 
policy or rider is in clai status.  when such
Reserves for policies and riders subject to 
utig  this subsection should be based on the multiple
decrement model 
al relevant decrements except for voluntar termation 
Single decrement  rates.
approxitions ar acceptale if the calculation produces essentialy
simar reserves
, if the reserve is clealy more conservatie
, or if the reserve is immaterial.
The calculations may take into account the reduction in 
payment of long- lie insurance benefits due to the
term car benefits. However, in no event shal the reserves for the long-
term car 
benefit  and  the lie insurance benefit be less than the reserves
insurance benefit assumg no long-term car benefit.  for the lie 
In the development and 

subsection, due regard shcaallclu lation of reserves for policies and riders subject to this
be given to the applicable policy 
provisions, marketig
methods, administratie procedurs and al other 
projected clai  considerations which have an impact on
costS. 
includig, but not lited to, the followig: 
(1) Definition of insured events;

(2) Covered long-term care facilties; 
(3) Existence of 
home convalescence 
car coverage; 
(4) Defiition of 
facilties; 
CoPyrght N.
\lC 1390

tr Long.Term Car Insurance Model Reguation 
(5) Existence or absence of barers to eligibilty; 
(6) Premium waier provision:

(7 
Renewability;

(8) Ability to raise premiums; 
(9) Marketig method;

no)U nderwtig procedurs;

Clais 
(11)  adjustment procedurs; 
(12) Waitig period; 
Maxum 
(13)  benefit; 
Avaiabilty of 
( 14)  eligible facilties; 
(15) Margis in  costs; 
claim 
(16) Optional nature of benefit; 
(17) Delay  in  eligibilty for benefit; 
(18) Inflation protection proviions; and 
(19) Guaranteed insurabilty option. 
Any applicable valuation morbidity tale shal be certed 
as appropriate as a statutory
val uation tale by a member of the American Academy of Actuares. 
B. When long-term car 
benefits are provided other than as  Subsection A above, reserves
shal be determed  in  accordance wriethu (ciit e law referrgin  to mium heath insurance
reserves, the NArC version of which  reserves "using a tale estalihed for reserve 
qualed actuar 
puroses by a  and acceptale to the commissioner 
Section 14.  Loss Ratio 
Benefits under inclduallong-
to premiums provided the expteercmte c ar insurance polleicaiet s shal be deemed reasonable  in  relation
which provides for adequate  loss ratio is at  sixty percent, calculated in a maner
reservg of the long-term car 
expecte loss ratio, due consideration shal be gien to al relevainnt sfuarcatonrcse,  irnickl.u dInig e: valuatig the
A. 
Statistical credibility of 
incurd clais experience and earned premiums; 
B. The period for which rates 
ar computed to provide coverage; 
C. 
Experienced and projected trnds; 
D. 
Concentration of experience with 
early policy duration; 
clai 
E. Expected  fluctuation; 
4J Januar 
Model Reguation Servce-:
F. Experience refuds, adjustment. or didends; 
G. Renewabilty featurs; 
H. .-'1 appropriate expense factors;

Interest;

J. Experiental natur of the coverage; 
K. 
Policy reserves;

L Mi of business by risk classifcation; and

M. lPi tosdu.c t featurs such as long eliation periods, high deductbles and high maum
t.n 
Drafting Note: The enumeration of the  items includes factrs traditionaly not alowed in calculatig rate.
oBfe tchaeussee  foafc ttohres  dwesi irp rtoov fiodset esur fdceiveenlotp lmateitnutd oef t toh ea clhoinegv-ete trhme  scixat yp preorcuntc t1 0t8h8e  rdatriao.f rs' intention is that th consideration
Filng Requiement 
Section 15. 
Pror to an insurer or similar organation offerig 
th  grO\.P long-term car insurance to a resident of
state pursuant to S(tion 5 of the Long- Term Car Insurance Model Act, it shal fie with the
Commssioner evidences thtat athe gtroeup p.o licy 
state havig statutory  or certcate thereunder has b  n approved by a
th or regulatory long-term car insurance reuiments substatialy simar
to those adopte in 
Section 16.  Standard Format Outlie of Coverage 
Ths 
section of the reguation implements, interprets and makes specc, the proviions of (Secon
6G of the Long-Term Car Insurance Model Act) (cite provision oflaw reuig the Commsioner
to prescrbe the 
formt and content of an outle of coverage) in prescrbing a 
stadard formt and
the content of an outle of coverage. 
The outlie of coverage shal be a frstadig document, using no smaer than ten point
tye. 
B. The outlie of 
coverage shal conta no material of an advertsing natur. 
C. Text which is capitaed or underscore in the standard 
emphasized by other  f':!1t outlie of coverage may be
underscorig.  meas which provide prominence equialent to such capitaation or
D. Use of the text and sequence of text of the 
stadard formt outle of coverage is madatory 
unless otherwise 
specifcaly indicate. 
E. Formt for outle of coverage: 
opyrght  NAlC 1990 
641.  Te 
Long- Car Inurance Model Reguation 
rCOMPANY NAME) 
(ADDRESS -CIT & STATE) 
(TELEPHONE NUMBER) 
LONG-TERM CARE INSURANCE

OUTLINE OF COVERAGE

(Policy Number or Group Master Policy and Certificate Number) 
(Except for policies or certificates which are guarantee 
issue, the following caution statement, .or language
substantially similar. must appear as follows in the outine of coverage. 
Cauton: The issuance of this long-term care insurance (policy) (certficate) is based upon your responses
to the questons on your application. A copy of your 
(application) (enrollment formj (is enclosed) (was
retained by you when you applied). If your answers are 
incorrct or untre, the company has the right to
deny benefits or rescind your policy. The best time to clear up any questions is now
, before a claim arises!
, for any reason, any of your answers are incorrect. contact the company at this address: (insert address) 
1. This  an individual policy of insuranceJ(a group
policy is 
 policyj which was issued in the (indicate 
jurisdiction in which group policy was issued)). 
2. PURPOSE OF OUTLINE OF 
COVERAGE. This outline of coverage provides a very brief description of 
the important features of the policy. You should compare this outline of coverage to outlines of eoverage 
for other policies available to you. This is not an insurance contract, but only a summary of coverage. 
Only the indivdual or group policy contains governing 
contractual provisions. This means that the
policy or group policy sets fort in detail the rights and obligations of both you and the insurance
company. Therefore, if you purchase this 
coverage, or any other coverage, it is important that you
READ YOUR POLICY (OR CERTlFICATE) CAREFULLY! 
3. TERMS UNDER WHICH THE 
POLICY OR CERTIFICATE MAY BE 
RETRNED AND 
PREMIUM
REFUNDED. 
(al (Provide a brief descripton of the right to return  look" provision of the policy. 
tree 
(bl (Include a statement that the policy either does or does not 
contain provisions providing for a
refund or partial refund 

at  premium upon the death 
certficate. If the policy contains such provisions, inciudaet  aa nd ienssucrredi potri osunrr eondfe rt hem.  at  the policy or
4. THIS IS NOT MEDICARE SUPPLEMENT 
COVERAGE. If you are eligible for Medicare, 
review the
Medicare Supplement Buyer's Guide available from the insurance company. 
(a)  For agentsj Neither  insert company namej nor its agents 
represent Medicare, the federal
government or any state government 
(b) (For direct 
responseJ (insert company namej is not representing Medicare, the 

or any state government  federal  government 
5. LONG-TERM CARE COVERAGE. Policies of this category are designed to provide coverage for one 
necess 
or mare  necess 
or medically  diagnOSc, prvent, therapeutc, rehabilitatie, maintenance.
or persona! care servces. provided in a setting 
other than an acute care unit of a hospital
nursing home, in the community or in the home.  , such as in a 
641 Model Reguation Servce  Januar 199

This policy provides coverage in the form of a fixed dollar indemnity benefit for covered long-
term care 
expenses. subject to policy (limitations) (waiting periods) and (coinsurancej requirements. (Modify this 
paragraph if the policy is not an indemnity policy. 
6. BENEFITS PROVIDED BY THIS POLICY. 
(a) (Covered servces. related deductible(s), waiting periods. elimination periods and benefit maximums. 
(b) (Institutional benefits. by skilievel.j 
(c) (Non-institutonal benefits, by skilleve!.) 
(Any benefit screens must be explained in this section. If these screens differ for di 
erent benefits,
explanation of the screen should accompany each benefit 
description. If an attending physician or
other specified person must certfy a certain level of functonal dependency in order to be eligible for 
benefits. this  too  must be specified. If actties of daily livng (ADLs) are used to measure an insured'
need for long-term care, then these qualifying criteria or 
screns must be explained. 
7. 
LIMITATIONS AND EXCLUSIONS. 
(Describe: 
(a) Preexisting conditions;

(b) Non-eligible facilities/provider; 
(c) Nan-eligible levels of care (e.g., unlicensed providers, car or treatment provided by a family
member, etc. 
(d) Exclusions/exceptions;

(e) Umitations.

(Tis section should provide a brief specific description of any policy provisions which limit. exclude, 
restct reduce, delay, or in any other manner operate to qualify 
payment of the benefits described in (6)
above. 
THIS POLICY MAY NOT COVER ALL THE 
EXPENSES ASSOCIATED WIT YOUR LONG-TERM
CARE NEEDS. 
8. RELATIONSHIP OF 
COST OF CARE AND BENEFITS. Because the casts of long-
term care services
will likely increase over time, you should consider whether and how the benefits of this plan may be 
adjusted. (As applicable, indicate the following:

(a) That the benefit leve! will not increase over time; 
(b) Any automatic benefit 
adjustment provisions; 
(c) Whether the insured will be guaranteed the option to buy additional benefits and the basis upon 
which benefits will be increased over time if not by a specified amount or percentage: 
(d) If there is such a guarantee, include whether 
additional underwriting or health screening will be
required. the frequency and amounts of the upgrade 
options, and any significant restrictions or 
limitations: 
(el And finally, describe whether there will be any additional premium charge imposed. and how that is 
to be calculated. 
Copyrght NAlC 1990

641.  Long-Term Car Insurce Model Reguation 
9. TERMS UNDER WHICH THE POLICY (OR CERTIFICATE) MAY BE CONTINUED IN FORCE 
DISCONTINUED. 
((a) Describe the policy renewability provisions: 
(b) For group coverage, specifically describe continuation!conversion provisions applicable to the 
certificate and group pOlicy: 
(c) Describe waiver of premium provisions or state that there are not such provisions; 
(d) State whether or not the company has a right to change premium, and if such a 
describe clearly and concisely each circumstance under which premium may change. right exists.
, O. ALZHEIMER' S DISEASE AND OTHER ORGANIC BRAIN DISOROERS. 
(State that the policy provides coverage for insureds clinically diagnosed as having Alzheimer's
disease or related degenerative and dementing ilnesses. Specifically describe each benefit screen or 
other policy provision which provides preconditions to the availabilty of policy benefits for such an 
insured. 
. PREMIUM. 
((a) State the total annual premium for the policy; 
(b) If the premium varies with an 
applicant's choice among benefit options. indicate the portion of 
annual premium which corresponds to, 
each benefit option. 
, 2. ADOmONAL FEATURES. 
((a) Indicate if medical underwriting is used: 
(b) Describe other important features. 
Legilatve History (al 
references are to the  Proceedines of the NA/C/ 
1988 P1'c.  19.  20.21. 629.630.  652. 656-661  (adopted).
1989 P1'c. 19. 24-25, 703, 754-755. 791. 794 (amended). 
11999809  ??rroocc.-  11(a1m3. e2n3d.2e4d.  a46n8.  r4e7p6r-i4n7te7d )48.4 -493  (amended and reprinted).
641.