Bill 4611

                    Current Status

Bill Number:               4611
Ratification Number:       473
Act Number                 409
Introducing Body:          House
Subject:                   Long term care insurance requirements for
                           policies, provision deleted

(A409, R473, H4611)

AN ACT TO AMEND SECTION 38-72-20, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE INTENTIONS AND EXCEPTIONS OF THE LONG TERM CARE INSURANCE ACT, SO AS TO DELETE THE PROVISION THAT A POLICY NOT ADVERTISED, MARKETED, OR OFFERED AS LONG TERM CARE INSURANCE OR NURSING HOME INSURANCE NEED NOT MEET THE REQUIREMENTS OF THE ACT; SECTION 38-72-40, RELATING TO DEFINITIONS PERTAINING TO THE ACT, SO AS TO REVISE THE DEFINITION OF "LONG TERM CARE INSURANCE"; AND SECTION 38-72-60, RELATING TO REGULATIONS, POLICY AND CERTIFICATE REQUIREMENTS, POLICYHOLDERS RIGHTS, AND COVERAGE OUTLINE FOR LONG TERM CARE INSURANCE, SO AS TO REVISE THE REQUIREMENTS FOR PREEXISTING CONDITIONS AND FOR THE CONDITIONING OF BENEFITS, CHANGE THE REFERENCES TO POLICYHOLDER TO APPLICANT, PROVIDE FOR REFERENCES TO CERTIFICATE AS WELL AS POLICY, DELETE THE PROVISIONS FOR RETURN OF A POLICY ISSUED PURSUANT TO A DIRECT RESPONSE, REVISE THE REQUIREMENTS FOR AN OUTLINE OF COVERAGE, PROVIDE FOR A POLICY SUMMARY AND REPORT, AND PROVIDE FOR A RIDER AS WELL AS A POLICY TO COMPLY WITH THE ACT.

Be it enacted by the General Assembly of the State of South Carolina:

Long term care insurance requirements for policies, provision deleted

SECTION 1. Section 38-72-20 of the 1976 Code is amended to read:

"Section 38-72-20. This chapter is not intended to supersede the obligations of entities subject to this chapter to comply with the substance of other applicable insurance laws insofar as they do not conflict with this chapter, except that laws and regulations designed and intended to apply to medicare supplement insurance policies must not be applied to long term care insurance."

Long term care insurance defined

SECTION 2. Section 38-72-40(1) of the 1976 Code is amended to read:

"(1) 'Long term care insurance' means an insurance policy or a rider advertised, marketed, offered, or designed to provide benefits for not less than twelve consecutive months for each covered person on an expense incurred, indemnity, prepaid, or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. The term includes group and individual annuities and life insurance policies or riders which provide directly or which supplement long term care insurance. It also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long term care insurance may be issued by insurers, fraternal benefit societies, nonprofit health, hospital, and medical service corporations, prepaid health plans, health maintenance organizations, or a similar organization to the extent they otherwise are authorized to issue life or health insurance. Long term care insurance does not include an insurance policy offered primarily to provide basic medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income or related asset protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage."

Requirements revised for long term care insurance

SECTION 3. Section 38-72-60 of the 1976 Code is amended to read:

"Section 38-72-60. (A) The commissioner shall submit to the General Assembly for approval regulations to carry out the purposes of this chapter.

(B) No long term care insurance policy may:

(1) for individual policies, be canceled, nonrenewed, or otherwise terminated except for nonpayment of the premium;

(2) contain a provision establishing a new waiting period if existing coverage is converted to or replaced by a new or other form within the same company, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder;

(3) contain a provision requiring eligibility for or receipt of benefits under Medicare or Medicaid as a condition for payment of benefits under the policy; or

(4) contain coverage for skilled nursing care only or contain coverage that provides significantly more skilled care in a facility than coverage for lower levels of care in a facility.

(C) The following applies to preexisting conditions:

(1) No long term care insurance policy or certificate, other than a policy or certificate issued to a group as defined in Section 38-72-40(5)(a), may use a definition of 'preexisting condition' which is more restrictive than the following: 'Preexisting condition' means a condition for which medical advice or treatment was recommended by or received from a provider of health care services within six months preceding the effective date of coverage of an insured person.

(2) No long term care insurance policy or certificate, other than a policy or certificate issued to a group as defined in Section 38-72-40(5)(a), may exclude coverage for a loss or confinement which is the result of a preexisting condition unless loss or confinement begins within six months following the effective date of coverage of an insured person.

(3) The commissioner may extend the limitation periods set forth in items (1) and (2) of this subsection as to specific age group categories in specific policy forms upon findings that the extension is in the best interest of the public.

(4) The definition of 'preexisting condition' does not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant and, on the basis of the answers on that application, from underwriting in accordance with that insurer's established underwriting standards.

(D) (1) No long term care insurance policy may be delivered or issued for delivery in this State if the policy conditions eligibility for benefits:

(a) on a prior hospitalization requirement;

(b) provided in an institutional care setting on the receipt of a higher level of institutional care; or

(c) other than waiver of premium, post-confinement, post-acute care, or recuperative benefits on a prior institutionalization requirement.

(2) (a) A long term care insurance policy containing post-confinement, post-acute care, or recuperative benefits clearly must label in a separate paragraph of the policy or certificate entitled 'Limitations or Conditions on Eligibility for Benefits' limitations or conditions, including the required number of days of confinement.

(b) A long term care insurance policy or rider which conditions eligibility of post-confinement, post-acute care, or recuperative benefits on the prior receipt of institutional care may not require a prior institutional stay of more than thirty days.

(E) The following applies to the right of the policyholder to return the policy:

Long term care insurance applicants have the right to return the policy or certificate within thirty days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the applicant is not satisfied for any reason. Long term care insurance policies and certificates must have a notice prominently printed on the first page or attached to it stating in substance that the applicant has the right to return the policy or certificate within thirty days of its delivery and to have the premium refunded if, after examination of the policy or certificate, other than a certificate issued pursuant to a policy issued to a group as defined in Section 38-72-40(5)(a), the applicant is not satisfied for any reason.

(F) (1) An outline of coverage must be delivered to a prospective applicant for long term care insurance at the time of initial solicitation through means which prominently direct the attention of the recipient to the document and its purpose.

(a) The commissioner shall prescribe a standard format, including style, arrangement, and overall appearance, and the content of an outline of coverage.

(b) For agent solicitations, an agent shall deliver the outline of coverage before the presentation of an application or enrollment form.

(c) For direct response solicitations, the outline of coverage must be presented in conjunction with an application or enrollment form.

(2) The outline of coverage must include a:

(a) description of the principal benefits and coverage provided in the policy;

(b) statement of the principal exclusions, reductions, and limitations contained in the policy;

(c) statement of the terms under which the policy or certificate, or both, may be continued in force or discontinued, including a reservation in the policy of a right to change the premium. Continuation or conversion provisions of group coverage must be described specifically.

(d) statement that the outline of coverage is a summary only, not a contract of insurance, and that the policy or group master policy contains governing contractual provisions;

(e) description of the terms under which the policy or certificate may be returned and premium refunded;

(f) brief description of the relationship of cost of care and benefits.

(G) A certificate issued pursuant to a group long term care insurance policy delivered or issued for delivery in this State must include a:

(1) description of the principal benefits and coverage provided in the policy;

(2) statement of the principal exclusions, reductions, and limitations contained in the policy; and

(3) statement that the group master policy determines governing contractual provisions.

(H) At the time of policy delivery, a policy summary must be delivered for an individual life insurance policy which provides long term care benefits within the policy or by rider. For direct response solicitations, the insurer shall deliver the policy summary upon the applicant's request but, regardless of a request, shall make the delivery no later than at the time of policy delivery. In addition to complying with all applicable requirements, the summary also must include:

(1) explanation of how the long term care benefit interacts with other components of the policy, including deductions from death benefits;

(2) illustration of the amount of benefits, the length of benefits, and the guaranteed lifetime benefits, if any, for each covered person;

(3) exclusions, reductions, and limitations on benefits of long term care;

(4) if applicable to the policy type:

(a) disclosure of the effects of exercising other rights under the policy;

(b) disclosure of guarantees related to long term care costs of insurance charges;

(c) current and projected maximum lifetime benefits.

(I) When a long term care benefit, funded through a life insurance vehicle by the acceleration of the death benefit, is in benefit payment status, a monthly report must be provided to the policyholder. The report must include:

(1) long term care benefits paid out during the month;

(2) explanation of changes in the policy, such as death benefits or cash values, due to long term care benefits being paid out;

(3) amount of long term care benefits existing or remaining.

(J) A policy or rider advertised, marketed, or offered as long term care or nursing home insurance must comply with the provisions of this chapter."

Time effective

SECTION 4. This act takes effect upon approval by the Governor.

Approved the 11th day of April, 1990.