Kentucky Administrative Regulations › Title 806 - PUBLIC PROTECTION CABINET - DEPARTMENT OF INSURANCE › Chapter 17 - Health Insurance Contracts › Section 806 KAR 17:081 - Minimum standards for long-term care insurance policies

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				304.1-040,
				304.2-310,
				304.6-070,
				304.6-130-304.6-180,
				304.9-080,
				304.12-020,
				304.12-030,
				304.12-130,
				304.14-120(2),
				304.14-600-304.14-644,
				304.15-310,
				304.15-315,
				304.18-120,
				304.18-127,
				304.29-600,
				304.32-290,
				304.38-220,
				26 U.S.C.
				7702B,
				42
				U.S.C. 1395x(r),
				45
				C.F.R. 160.103
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				304.2-110(1) authorizes the
				Commissioner of Insurance to promulgate administrative regulations necessary
				for or as an aid to the effectuation of any provision of the Kentucky Insurance
				Code.
				KRS
				304.14-615(1) requires the
				Commissioner of Insurance to promulgate administrative regulations establishing
				minimum standards for the manner, content, and sale of long-term care insurance
				policies.
				KRS
				304.14-620 requires the Commissioner of
				Insurance to promulgate administrative regulations to establish minimum
				standards for marketing practices, agent compensation, agent testing,
				penalties, and reporting practices for long-term care insurance.
				KRS
				304.32-250 authorizes the Commissioner of
				Insurance to promulgate reasonable administrative regulations necessary for the
				proper administration of KRS Chapter 304.32.
				KRS
				304.38-150 authorizes the Commissioner of
				Insurance to promulgate reasonable administrative regulations necessary for the
				proper administration of KRS Chapter 304.38. EO 2008-507, effective June 16,
				2008, established the Department of Insurance and the Commissioner of Insurance
				as the head of the Department. This administrative regulation establishes
				minimum standards for long-term care insurance.
Section 1. Definitions.
(1) "Applicant" is defined in
			 KRS
			 304.14-600(3).
(2) "Attained age rating" means a schedule of
			 premiums starting from the issue date which increases age at least one (1)
			 percent per year prior to age fifty (50), and at least three (3) percent per
			 year beyond age fifty (50).
(3)
			 "Certificate" is defined in
			 KRS
			 304.14-600(4).
(4) "Chronically-ill individual", pursuant to
			 26 U.S.C.
			 7702B(c)(2):
(a) Means any individual who has been
			 certified by a licensed health care practitioner as:
1. Being unable to perform without
			 substantial assistance from another individual at least two (2) activities of
			 daily living for a period of at least ninety (90) days due to a loss of
			 functional capacity; or
2.
			 Requiring substantial supervision to protect the individual from threats to
			 health and safety due to severe cognitive impairment; and
(b) Shall not include an individual otherwise
			 meeting these requirements unless within the preceding twelve month period a
			 licensed health care practitioner has certified that the individual meets these
			 requirements.
(5)
			 "Claim" means a request for payment of benefits under an in-force policy
			 regardless of whether the benefit claimed is covered under the policy or any
			 terms or conditions of the policy have been met.
(6) "Cold lead advertising" means the use of
			 any method of marketing which fails to disclose in a clear, easy to notice
			 manner that a purpose of the method of marketing is solicitation of insurance
			 and contact will be made by an insurance agent or insurance company.
(7) "Commissioner" means the Commissioner of
			 Insurance.
(8) "Denied claim" means
			 the insurer refuses to pay a claim for any reason except for failure to meet
			 the waiting period or due to an applicable preexisting condition.
(9) "Department" means the Department of
			 Insurance.
(10) "Exceptional
			 increase" means a premium rate increase filed by an insurer as exceptional,
			 which the commissioner determines is necessary and justified due to:
(a) Changes in Kentucky laws or
			 administrative regulations applicable to long-term care coverage; or
(b) Increased and unexpected utilization that
			 affects the majority of insurers of similar products.
(11) "Group long-term care insurance" is
			 defined in
			 KRS
			 304.14-600(5).
(12) "High pressure tactics" means employing
			 any method of marketing that may affect or induce the purchase of insurance
			 through force, fright, explicit or implied threat, or create undue pressure to
			 purchase or recommend the purchase of insurance.
(13) "Incidental" is defined in
			 KRS
			 304.14-600(1).
(14) "Individually-identifiable information"
			 means personal information gathered in connection with an insurance transaction
			 from which judgment may be made regarding an individual's character, habits,
			 avocations, finances, occupation, general reputation, credit, health or other
			 personal characteristics including an individual's name, address, and medical
			 record information.
(15) "Insurer"
			 is defined in
			 KRS
			 304.1-040.
(16) "Interlocking directorates" means two
			 (2) separate boards of directors that have at least one (1) director in
			 common.
(17) "Kentucky insurance
			 code" means the statutes referenced in
			 KRS 304.1-010
			 and the administrative regulations established in KAR Title 806.
(18) "Licensed health care practitioner"
			 means a physician as defined in
			 42
			 U.S.C. 1395x(r), registered
			 nurse, licensed social worker, or other individual who meets the requirements
			 of
			 26 U.S.C.
			 7702B(c)(4).
(19) "Limited distribution channel" means a
			 discrete entity, including a financial institution or brokerage, through which
			 a specialized product is made available to a purchaser other than the general
			 public.
(20) "Long-term care
			 benefits classifications" means:
(a)
			 Institutional long-term care benefits only;
(b) Noninstitutional long-term care benefits
			 only; or
(c) Comprehensive
			 long-term care benefits.
(21) "Long-term care insurance" is defined in
			 KRS
			 304.14-600(2).
(22) "Maintenance or personal care services"
			 means care for which the primary purpose is the provision of needed assistance
			 with a disability as a result of which the individual is a chronically-ill
			 individual, including protection from threats to health and safety due to
			 severe cognitive impairment.
(23)
			 "Managed-care plan" means a health care or assisted living arrangement designed
			 to coordinate patient care or control costs through utilization review, case
			 management, or use of specific provider networks.
(24) "Misrepresentation" means
			 misrepresenting a material fact in selling or offering to sell a long-term care
			 insurance policy.
(25) "Policy" is
			 defined in
			 KRS
			 304.14-600(6).
(26) "Qualified actuary" means a member in
			 good standing of the American Academy of Actuaries.
(27) "Qualified long-term care insurance
			 contract" or "federally tax-qualified long-term care insurance contract" means:
(a) An individual or group insurance contract
			 that meets the requirements of
			 26 U.S.C.
			 7702B(b) as follows:
1. The insurance protection provided under
			 the contract shall be limited to coverage of qualified long-term care services
			 and the contract shall not fail to satisfy the requirements of this
			 subparagraph by reason of payments being made on a per diem or other periodic
			 basis without regard to the expenses incurred during the period to which the
			 payments relate;
2.
a. The contract shall not pay or reimburse
			 expenses incurred for services or items to the extent that the expenses are
			 reimbursable under Title XVIII of the Social Security Act, as amended,
			 42 U.S.C.
			 1395 et seq., or would be reimbursable except
			 for the application of a deductible or coinsurance amount;
b. The requirements of this subparagraph
			 shall not apply to expenses that are reimbursable under
			 42 U.S.C.
			 1395 et seq. as a secondary payor;
			 and
c. The contract shall not fail
			 to satisfy the requirements of this subparagraph by reason of payments being
			 made on a per diem or other periodic basis without regard to the expenses
			 incurred during the period to which the payments relate;
3. The contract shall be guaranteed
			 renewable, as established in
			 26 U.S.C.
			 7702B(b)(1)(C);
4. The contract shall not provide for a cash
			 surrender value or other money that may be paid, assigned, pledged as
			 collateral for a loan, or borrowed except as required in subparagraph 5 of this
			 paragraph;
5. Refunds of premiums
			 and policyholder dividends or similar amounts under the contract shall be
			 applied as a reduction in future premiums or to increase future benefits,
			 except that a refund upon death of the insured, a complete surrender, or
			 cancellation of the contract shall not exceed the aggregate premiums paid under
			 the contract; and
6. The contract
			 shall meet the consumer protection provisions as established in
			 26 U.S.C.
			 7702B(g); or
(b) The portion of a life
			 insurance contract that:
1. Provides
			 long-term care insurance coverage by rider or as part of the contract;
			 and
2. Meets the requirements of
			 26 U.S.C.
			 7702B(b) and (e).
(28) "Qualified
			 long-term care services" means services required in
			 26 U.S.C.
			 7702B(c)(1), including
			 necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation
			 and rehabilitative services, and maintenance or personal care services which
			 are required by a chronically-ill individual, and provided pursuant to a plan
			 of care prescribed by a licensed health care practitioner.
(29) "Similar policy forms" means:
(a) Long-term care insurance policies and
			 certificates issued by an insurer in the same long-term care benefit
			 classification as the policy form being considered; or
(b) Certificates of groups, as identified in
			 KRS
			 304.14-600(5)(a) similar to
			 other comparable certificates of groups that meet the definition in
			 KRS
			 304.14-600(5)(a) with the
			 same long-term care benefit classifications.
(30) "Twisting" means knowingly making a
			 misleading representation or incomplete or fraudulent comparison of insurance
			 policies or insurers for the purpose of inducing, or tending to induce, a
			 person to:
(a) Lapse, forfeit, surrender,
			 terminate, retain, pledge, assign, borrow on, or convert an insurance policy;
			 or
(b) Secure an insurance policy
			 from another insurer.