18 Del. Admin. Code § 1404-6.0

Current through Register Vol. 28, No. 5, November 1, 2024

Section 1404-6.0 - Policy Practices and Provisions

6.1 Renewability. The terms "guaranteed renewable" and "noncancellable" shall not be used in any individual long-term care insurance policy without providing further explanatory language in accordance with the disclosure requirements of Section 7.0 of this regulation.

6.1.1 No such policy issued to an individual shall contain renewal provisions less favorable to the insured than "guaranteed renewable." However, the Commissioner may authorize nonrenewal on a statewide basis, on terms and conditions deemed necessary by the Commissioner, to best protect the interests of the insureds, if the insurer demonstrates: That renewal will jeopardize the insurer's solvency.

6.1.2 The term "guaranteed renewable" may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums, during which period the insurer has no unilateral right to make any change in any provision of the policy or rider, and cannot decline to renew and cannot revise rates except on a class basis in accordance with subsection 6.1.4 of this regulation. This cost disclosure must be approved by the Commissioner and included in any solicitation and also prominently displayed on the initial policy.

6.1.3 Every long-term care insurance policy or certificate issued or delivered in this State must be "guaranteed renewable" as defined in subsection 6.1.2 of this regulation, and contain a cost disclosure section as defined section 6.1.6 below, and as further defined by Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended.

6.1.4 The term "noncancellable" may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the insurer has no right to unilaterally make any change in any provision of the insurance or in the premium rate.

6.1.5 The term "level premium" may only be used when the insurer does not have the right to change the premium.

6.1.6 Cost Disclosure Information.

6.1.6.1 The following cost disclosure information shall appear in bold print on the cover page of every individual policy and Outline of Coverage issued or delivered in this state: "This policy provides only the following price protection, and no more. Your premiums may not increase by more than X% during any given calendar year and your benefits may not decrease. Any representations that these increases will not take place are unauthorized and shall not be relied upon."

6.1.6.2 The following cost disclosure information shall appear in bold print on the cover page of every certificate and Outline of Coverage issued or delivered in this state: "This policy provides only the following price protection, and no more. Your premiums are guaranteed to remain the same for the first 3 years this policy is in force. Your premiums may not increase by more than X% during any three year rating period. Insurers will be allowed a carry forward of the initially disclosed maximum premium increase, but said carry forward is lost within 24 months if not utilized." Any additional language that appears under the cost disclosure section must be approved in advance by the Delaware Insurance Department. The purpose of this cost disclosure section is twofold: first, to make crystal clear to the purchaser what the maximum cost will be from year to year, and second, to prohibit the practice of low pricing during the early years of a policy followed by dramatic increases designed to produce a high ratio of cancellations when the group insured reaches that age at which its members are more likely to file claims. Therefore, this section does not permit annual increases to be accumulated and applied all at once. For example, if the price is $100 in the initial year of the policy and 10% is the represented annual maximum increase, then during the second year of the policy, the maximum allowable price is $110, the third year of the policy the maximum allowable price is not more than 110% of the price actually charges during year two of the policy. It is not permissible to charge $121 during the third year of the policy unless $110 had actually been charged during year two of the policy. In other words, any permitted annual price increase not implemented during a calendar year is thereafter waived and may not be considered in calculating future prices.

6.1.7 In addition to other requirements of subsection 6.1 of this regulation, a qualified long-term care insurance contract shall be guaranteed renewable.

6.2 Limitations and Exclusions. No policy may be delivered or issued for delivery in this state as long-term care insurance if such policy limits or excludes coverage by type of illness, treatment, medical condition or accident, except as follows:

6.2.1 Preexisting conditions;

6.2.2 Mental or nervous disorders; however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer's Disease;

6.2.3 Alcoholism and drug addiction;

6.2.4 Illness, treatment or medical condition arising out of:

6.2.4.1 War or act of war (whether declared or undeclared);

6.2.4.2 Participation in a felony, riot or insurrection;

6.2.4.3 Service in the armed forces or units auxiliary thereto;

6.2.4.4 Suicide (sane or insane), attempted suicide or intentionally self-inflicted injury; or

6.2.4.5 Aviation (this exclusion applies only to non-fare-paying passengers).

6.2.5 Treatment provided in a government facility (unless otherwise required by law), services for which benefits are available under Medicare or other governmental program (except Medicaid), any state or federal workers' compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law, services provided by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance.

6.2.6 No territorial limitations are permissible, except that nothing herein shall preclude limiting benefits for specific services to a specific dollar amount, or to that dollar amount which is reasonable and prevailing in a particular geographic area which is defined and clearly delineated in the original offering or solicitation and the initial policy or certificate, or to specific providers within a particular geographic area. Moreover, nothing herein shall prohibit the limitation of services to a particular geographic area when the insured elects to receive services within that specific geographical area. For purposes of this clause, the location of receipt of services must be within 50 miles of the domicile of the insured at the time of entry therein or that area, including the nearest three nursing homes, whichever distance is greater.

6.2.7 Expenses for services or items available or paid under another long-term care insurance or health insurance policy.

6.2.8 In the case of a qualified long-term care insurance contract expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount.

6.2.9 Subsection 6.2 of this regulation is not intended to prohibit exclusions and limitations by type of provider. However, no long-term care issuer may deny a claim because services are provided in a state other than the state of policy issued under the following conditions:

6.2.9.1 When the state other than the state of policy issue does not have the provider licensing, certification or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification or registration; or

6.2.9.2 When the state other than the state of policy issue licenses, certifies or registers the provider under another name.

6.3 Extension of Benefits. Termination of long-term care insurance shall be without prejudice to any benefits payable for institutionalization which began while the long-term care insurance was in force and continues without interruption after termination. Such extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits and may be subject to any policy waiting period, and all other applicable provisions of the policy.

6.4 Continuation or Conversion.

6.4.1 Group long-term care insurance issued in this state on or after the effective date of Section 6.0 of this regulation shall provide covered individuals with a basis for continuation or conversion of coverage.

6.4.2 For the purposes of Section 6.0 of this regulation, "a basis for continuation of coverage" means a policy provision that maintains coverage under the existing group policy when such coverage would otherwise terminate and which is subject only to the continued timely payment of premium when due. Group policies that restrict provision of benefits and services to certain providers or facilities, or that contain incentives to use certain providers or facilities, may provide continuation benefits that are substantially equivalent to the benefits under the existing policy. The Commissioner shall make a determination as to the substantial equivalency of benefits, and in so doing, shall take into consideration the differences between managed care and non-managed care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity.

6.4.3 For the purposes of Section 6.0 of this regulation, "a basis for conversion of coverage" means a policy provision that an individual whose coverage under the group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy (and any group policy which it replaced), for at least six months immediately prior to termination, shall be entitled to the issuance of a converted policy by the insurer under whose group policy he or she is covered, without evidence of insurability.

6.4.4 For the purposes of Section 6.0 of this regulation, "converted policy" means an individual policy of long-term care insurance providing benefits identical to or determined by the Commissioner to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made.

6.4.4.1 Where the group policy from which conversion is made restricts provision of benefits and services to certain providers or facilities, or contains incentives to use certain providers or facilities, the Commissioner, in making a determination as to the substantial equivalency of benefits, shall take into consideration the differences between managed care and non-managed care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity. When the policyholder or certificate holder is no longer in the geographical area of the provider system or available services, the insurer must calculate the financial worth of the group policy and make a cash contribution toward the purchase of any health insurance policy the policyholder may select.

6.4.5 Written application for the converted policy shall be made and the first premium due, if any, shall be paid as directed by the insurer no later than 31 days after termination of coverage under the group policy. The converted policy shall be issued effective on the day following the termination of coverage under the group policy, and shall be renewable annually.

6.4.6 Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. Where the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy replaced.

6.4.7 Continuation of coverage or issuance of a converted policy shall be mandatory, except where:

6.4.7.1 Termination of group coverage resulted from an individual's failure to make any required payment of premium or contribution when due; or

6.4.7.2 The terminating coverage is replaced no later than 31 days after termination, by group coverage effective on the day following the termination of coverage:

6.4.7.2.1 Providing benefits identical to or benefits determined by the Commissioner to be substantially equivalent to or in excess of those provided by the terminating coverage; and

6.4.7.2.2 The premium for which is calculated in a manner consistent with the requirements of Section 6.0 of this regulation.

6.4.8 Notwithstanding any other provision of Section 6.0 of this regulation, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy which provides benefits on the basis of incurred expenses, may contain a provision which results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100% of incurred expenses. Such provision shall only be included in the converted policy if the converted policy also provides for a premium decrease or refund which reflects the reduction in benefits payable.

6.4.9 The converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, shall not exceed those that would have been payable had the individual's coverage under the group policy remained in force and effect.

6.4.10 Notwithstanding any other provision of Section 6.0 of this regulation, any insured individual whose eligibility for group long-term care coverage is based upon the relationship of the insured individual to another person, shall be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage.

6.4.11 For the purposes of Section 6.0 of this regulation: a "Managed-Care Plan" is 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.

6.5 Discontinuance and Replacement. If a group long-term care insurance policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the insurer and the premiums charged under the new group policy:

6.5.1 Shall not result in any exclusion for pre-existing conditions that would have been covered under the group policy being replaced; and

6.5.2 Shall not vary or otherwise depend on the individual's health or disability status, claim experience or use of long-term care services.

6.6 The premiums charged to an insured for long-term care insurance shall not increase due to either:

6.6.1 The increasing age of the insured at ages beyond 65; or

6.6.2 The duration the insured has been covered under the policy.

6.7 The purchase of additional coverage shall not be considered a premium rate increase, but for purposes of calculation required under this regulation, the portion of the premium attributable to the additional coverage shall be added to and considered a part of the initial annual premium.

6.8 A reduction in benefits shall not be considered a premium change, but for purpose of the calculation required under this regulation, the initial annual premium shall be based on the reduced benefits.

6.9 Electronic Enrollment for Group Policies

6.9.1 In the case of a group defined in 18 Del.C. § 7103(4) a. any requirement that a signature of an insured be obtained by an agent or insurer shall be deemed satisfied if:

6.9.1.1 The consent is obtained by telephonic or electronic enrollment by the group policyholder or insurer. A verification of enrollment information shall be provided to the enrollee;

6.9.1.2 The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention and prompt retrieval of records; and

6.9.1.3 The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure that the confidentiality of individually identifiable information is maintained.

6.9.2 The insurer shall make available, upon request of the Commissioner, records that will demonstrate the insurer's ability to confirm enrollment and coverage amounts.

18 Del. Admin. Code § 1404-6.0

2 DE Reg. 2113 (05/01/99)
14 DE Reg. 316 (10/01/10)
25 DE Reg. 714 (1/1/2022)
26 DE Reg. 767 (3/1/2023) (Final)