Bill Text: MN HF320 | 2011-2012 | 87th Legislature | Introduced
Bill Title: Long-term care insurance premiums increases prohibited on existing policies without advance notice to policyholders and approval of the commissioner.
Sponsorship: Bipartisan Bill
Status: (Introduced - Dead) 2011-02-02 - Introduction and first reading, referred to Commerce and Regulatory Reform [HF320 Detail]
Download: Minnesota-2011-HF320-Introduced.html
1.2relating to insurance; prohibiting increases in long-term care insurance premiums
1.3on existing policies without advance notice to policyholders and approval of the
1.4commissioner;amending Minnesota Statutes 2010, sections 60A.08, subdivision
1.53; 62A.48, subdivision 1; 62S.01, subdivision 13a; 62S.081, subdivision 5;
1.662S.265, subdivision 2.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 60A.08, subdivision 3, is amended to read:
1.9 Subd. 3. Renewal; new policy. Any insurance policy terminating by its provisions
1.10at a specified expiration date or limited as to term by any statute and not otherwise
1.11renewable may be renewed or extended at the option of the insurer, at the premium
1.12rate then required therefor, for a specific additional period or periods by a certificate,
1.13and without requiring the issuance of a new policy. The insurer must also post the
1.14current policy form on its Web site, or must inform the policyholder annually in writing
1.15that a copy of the current policy form is available on request. Renewal of a long-term
1.16care insurance policy at a higher premium rate schedule is subject to section 62A.48,
1.17subdivision 1, or 62S.081, subdivision 5, whichever applies.
1.18EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
1.19premium increase requests submitted on or after that date.
1.20 Sec. 2. Minnesota Statutes 2010, section 62A.48, subdivision 1, is amended to read:
1.21 Subdivision 1. Policy requirements. No individual or group policy, certificate,
1.22subscriber contract, or other evidence of coverage of nursing home care or other long-term
1.23care services shall be offered, issued, delivered, or renewed in this state, whether or not the
1.24policy is issued in this state, unless the policy is offered, issued, delivered, or renewed by
2.1a qualified insurer and the policy satisfies the requirements of sections62A.46 to
62A.56 .
2.2A long-term care policy must cover prescribed long-term care in nursing facilities or the
2.3prescribed long-term home care services in section62A.46, subdivision 4 , clauses (1) to
2.4(5), provided by a home health agency. A long-term care policy may cover both prescribed
2.5long-term care in nursing facilities and the prescribed long-term home care services in
2.6section62A.46, subdivision 4 , clauses (1) to (5), provided by a home health agency.
2.7Coverage under a long-term care policy, other than one that covers only nursing facility
2.8services, must include: a minimum lifetime benefit limit of at least $25,000 for services.
2.9A long-term care policy that covers only nursing facility services must include a minimum
2.10lifetime benefit limit of not less than one year of nursing facility services. Nursing facility
2.11and home care coverages under a long-term care policy must not be subject to separate
2.12lifetime maximums for policies that cover both nursing facility and home health care.
2.13Prior hospitalization may not be required under a long-term care policy.
2.14The policy must cover preexisting conditions during the first six months of coverage
2.15if the insured was not diagnosed or treated for the particular condition during the 90 days
2.16immediately preceding the effective date of coverage. Coverage under the policy may
2.17include a waiting period of up to 180 days before benefits are paid, but there must be no
2.18more than one waiting period per benefit period; for purposes of this sentence, "days" can
2.19mean calendar or benefit days. If benefit days are used, an appropriate premium reduction
2.20and disclosure must be made. If benefit days are used in connection with coverage for
2.21home care services, the waiting period for home care services must not be longer than
2.2290 benefit days. No policy may exclude coverage for mental or nervous disorders which
2.23have a demonstrable organic cause, such as Alzheimer's and related dementias. No
2.24policy may require the insured to be homebound or house confined to receive home care
2.25services. The policy must include a provision that the plan will not be canceled or renewal
2.26refused except on the grounds of nonpayment of the premium, provided that the insurer
2.27may change the premium rate on a class basis on any policy anniversary date, with the
2.28advance approval of the commissioner and written notice of the application for approval
2.29provided to policyholders who would be adversely affected by the premium increase,
2.30sent to policyholders on the day following the insurer's submission of the application,
2.31together with information prepared by the commissioner on how a policyholder may have
2.32meaningful and timely input to the commissioner's decision on such requests for approval.
2.33A provision that the policyholder may elect to have the premium paid in full at age 65 by
2.34payment of a higher premium up to age 65 may be offered. A provision that the premium
2.35would be waived during any period in which benefits are being paid to the insured during
2.36confinement in a nursing facility must be included. A nongroup policyholder may return
3.1a policy within 30 days of its delivery and have the premium refunded in full, less any
3.2benefits paid under the policy, if the policyholder is not satisfied for any reason.
3.3No individual long-term care policy shall be offered or delivered in this state until
3.4the insurer has received from the insured a written designation of at least one person,
3.5in addition to the insured, who is to receive notice of cancellation of the policy for
3.6nonpayment of premium. The insured has the right to designate up to a total of three
3.7persons who are to receive the notice of cancellation, in addition to the insured. The form
3.8used for the written designation must inform the insured that designation of one person is
3.9required and that designation of up to two additional persons is optional and must provide
3.10space clearly designated for listing between one and three persons. The designation shall
3.11include each person's full name, home address, and telephone number. Each time an
3.12individual policy is renewed or continued, the insurer shall notify the insured of the right
3.13to change this written designation.
3.14The insurer may file a policy form that utilizes a plan of care prepared as provided
3.15under section62A.46, subdivision 5 , clause (1) or (2).
3.16EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
3.17premium increase requests submitted on or after that date.
3.18 Sec. 3. Minnesota Statutes 2010, section 62S.01, subdivision 13a, is amended to read:
3.19 Subd. 13a. Exceptional increase. (a) "Exceptional increase" means only those
3.20premium rate increases filed by an insurer as exceptional for which the commissioner
3.21determines that the need for the premium rate increase is justified due to changes in
3.22laws or rules applicable to long-term care coverage in this state, or due to increased and
3.23unexpected utilization that affects the majority of insurers of similar products.
3.24(b) Except as provided in section62S.265 , exceptional increases are subject to
3.25the same requirements as other premium rate schedule increases. The commissioner
3.26may request a review by an independent actuary or a professional actuarial body of the
3.27basis for a request that an increase be considered an exceptional increase. The insurer
3.28must make the report of the review available to affected policyholders upon request and
3.29must inform affected policyholders of their right to make the request. The commissioner,
3.30in determining that the necessary basis for an exceptional increase exists, shall also
3.31determine any potential offsets to higher claims costs and shall consider input from
3.32affected policyholders.
3.33EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
3.34premium increase requests submitted on or after that date.
4.1 Sec. 4. Minnesota Statutes 2010, section 62S.081, subdivision 5, is amended to read:
4.2 Subd. 5. Notice of increase. An insurer shall provide notice of an upcoming request
4.3for a premium rate schedule increase,after at the time the request for approval of the
4.4increasehas been approved by is submitted to the commissioner, to all policyholders
4.5or certificate holders, if applicable, and at least 45days days' notice prior to the
4.6implementation of the premium rate schedule increase by the insurer. The notice must
4.7include the information required by subdivision 2 when the rate increase is requested and
4.8when it is implemented. The notice of the insurer's request for an increase must include
4.9information prepared by the commissioner on how the policyholders and certificate
4.10holders may have meaningful and timely input to the commissioner's decision on this
4.11type of request.
4.12EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
4.13premium increase requests submitted on or after that date.
4.14 Sec. 5. Minnesota Statutes 2010, section 62S.265, subdivision 2, is amended to read:
4.15 Subd. 2. Notice. An insurer shall file a requested premium rate schedule increase,
4.16including an exceptional increase, to the commissioner for prior approval at least 60
4.17days prior to the notice of approved increase to the policyholders required under section
4.1862S.081, subdivision 5, and no earlier than the advance notice to policyholders and
4.19certificate holders of the request for the rate increase required under that same subdivision.
4.20Both the request to the commissioner and the advance notice of the request for the rate
4.21increase to policyholders and certificate holders shall include:
4.22(1) all information required by section62S.081 ;
4.23(2) certification by a qualified actuary that:
4.24(i) if the requested premium rate schedule increase is implemented and the
4.25underlying assumptions, which reflect moderately adverse conditions, are realized, no
4.26further premium rate schedule increases are anticipated; and
4.27(ii) the premium rate filing complies with this section;
4.28(3) an actuarial memorandum justifying the rate schedule change request that
4.29includes:
4.30(i) lifetime projections of earned premiums and incurred claims based on the filed
4.31premium rate schedule increase and the method and assumptions used in determining the
4.32projected values, including reflection of any assumptions that deviate from those used for
4.33pricing other forms currently available for sale;
4.34(A) annual values for the five years preceding and the three years following the
4.35valuation date must be provided separately;
5.1(B) the projections must include the development of the lifetime loss ratio, unless
5.2the rate increase is an exceptional increase;
5.3(C) the projections must demonstrate compliance with subdivision 3; and
5.4(D) for exceptional increases, the projected experience must be limited to the
5.5increases in claims expenses attributable to the approved reasons for the exceptional
5.6increase and, if the commissioner determines that offsets to higher claim costs may exist,
5.7the insurer shall use appropriate net projected experience;
5.8(ii) disclosure of how reserves have been incorporated in this rate increase whenever
5.9the rate increase will trigger contingent benefit upon lapse;
5.10(iii) disclosure of the analysis performed to determine why a rate adjustment is
5.11necessary, which pricing assumptions were not realized and why, and what other actions
5.12taken by the company have been relied upon by the actuary;
5.13(iv) a statement that policy design, underwriting, and claims adjudication practices
5.14have been taken into consideration; and
5.15(v) if it is necessary to maintain consistent premium rates for new certificates and
5.16certificates receiving a rate increase, the insurer shall file composite rates reflecting
5.17projections of new certificates;
5.18(4) a statement that renewal premium rate schedules are not greater than new
5.19business premium rate schedules except for differences attributable to benefits, unless
5.20sufficient justification is provided to the commissioner; and
5.21(5) sufficient information for review and approval of the premium rate schedule
5.22increase by the commissioner.
5.23EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
5.24premium increase requests submitted on or after that date.
1.3on existing policies without advance notice to policyholders and approval of the
1.4commissioner;amending Minnesota Statutes 2010, sections 60A.08, subdivision
1.53; 62A.48, subdivision 1; 62S.01, subdivision 13a; 62S.081, subdivision 5;
1.662S.265, subdivision 2.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2010, section 60A.08, subdivision 3, is amended to read:
1.9 Subd. 3. Renewal; new policy. Any insurance policy terminating by its provisions
1.10at a specified expiration date or limited as to term by any statute and not otherwise
1.11renewable may be renewed or extended at the option of the insurer, at the premium
1.12rate then required therefor, for a specific additional period or periods by a certificate,
1.13and without requiring the issuance of a new policy. The insurer must also post the
1.14current policy form on its Web site, or must inform the policyholder annually in writing
1.15that a copy of the current policy form is available on request. Renewal of a long-term
1.16care insurance policy at a higher premium rate schedule is subject to section 62A.48,
1.17subdivision 1, or 62S.081, subdivision 5, whichever applies.
1.18EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
1.19premium increase requests submitted on or after that date.
1.20 Sec. 2. Minnesota Statutes 2010, section 62A.48, subdivision 1, is amended to read:
1.21 Subdivision 1. Policy requirements. No individual or group policy, certificate,
1.22subscriber contract, or other evidence of coverage of nursing home care or other long-term
1.23care services shall be offered, issued, delivered, or renewed in this state, whether or not the
1.24policy is issued in this state, unless the policy is offered, issued, delivered, or renewed by
2.1a qualified insurer and the policy satisfies the requirements of sections
2.2A long-term care policy must cover prescribed long-term care in nursing facilities or the
2.3prescribed long-term home care services in section
2.4(5), provided by a home health agency. A long-term care policy may cover both prescribed
2.5long-term care in nursing facilities and the prescribed long-term home care services in
2.6section
2.7Coverage under a long-term care policy, other than one that covers only nursing facility
2.8services, must include: a minimum lifetime benefit limit of at least $25,000 for services.
2.9A long-term care policy that covers only nursing facility services must include a minimum
2.10lifetime benefit limit of not less than one year of nursing facility services. Nursing facility
2.11and home care coverages under a long-term care policy must not be subject to separate
2.12lifetime maximums for policies that cover both nursing facility and home health care.
2.13Prior hospitalization may not be required under a long-term care policy.
2.14The policy must cover preexisting conditions during the first six months of coverage
2.15if the insured was not diagnosed or treated for the particular condition during the 90 days
2.16immediately preceding the effective date of coverage. Coverage under the policy may
2.17include a waiting period of up to 180 days before benefits are paid, but there must be no
2.18more than one waiting period per benefit period; for purposes of this sentence, "days" can
2.19mean calendar or benefit days. If benefit days are used, an appropriate premium reduction
2.20and disclosure must be made. If benefit days are used in connection with coverage for
2.21home care services, the waiting period for home care services must not be longer than
2.2290 benefit days. No policy may exclude coverage for mental or nervous disorders which
2.23have a demonstrable organic cause, such as Alzheimer's and related dementias. No
2.24policy may require the insured to be homebound or house confined to receive home care
2.25services. The policy must include a provision that the plan will not be canceled or renewal
2.26refused except on the grounds of nonpayment of the premium, provided that the insurer
2.27may change the premium rate on a class basis on any policy anniversary date, with the
2.28advance approval of the commissioner and written notice of the application for approval
2.29provided to policyholders who would be adversely affected by the premium increase,
2.30sent to policyholders on the day following the insurer's submission of the application,
2.31together with information prepared by the commissioner on how a policyholder may have
2.32meaningful and timely input to the commissioner's decision on such requests for approval.
2.33A provision that the policyholder may elect to have the premium paid in full at age 65 by
2.34payment of a higher premium up to age 65 may be offered. A provision that the premium
2.35would be waived during any period in which benefits are being paid to the insured during
2.36confinement in a nursing facility must be included. A nongroup policyholder may return
3.1a policy within 30 days of its delivery and have the premium refunded in full, less any
3.2benefits paid under the policy, if the policyholder is not satisfied for any reason.
3.3No individual long-term care policy shall be offered or delivered in this state until
3.4the insurer has received from the insured a written designation of at least one person,
3.5in addition to the insured, who is to receive notice of cancellation of the policy for
3.6nonpayment of premium. The insured has the right to designate up to a total of three
3.7persons who are to receive the notice of cancellation, in addition to the insured. The form
3.8used for the written designation must inform the insured that designation of one person is
3.9required and that designation of up to two additional persons is optional and must provide
3.10space clearly designated for listing between one and three persons. The designation shall
3.11include each person's full name, home address, and telephone number. Each time an
3.12individual policy is renewed or continued, the insurer shall notify the insured of the right
3.13to change this written designation.
3.14The insurer may file a policy form that utilizes a plan of care prepared as provided
3.15under section
3.16EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
3.17premium increase requests submitted on or after that date.
3.18 Sec. 3. Minnesota Statutes 2010, section 62S.01, subdivision 13a, is amended to read:
3.19 Subd. 13a. Exceptional increase. (a) "Exceptional increase" means only those
3.20premium rate increases filed by an insurer as exceptional for which the commissioner
3.21determines that the need for the premium rate increase is justified due to changes in
3.22laws or rules applicable to long-term care coverage in this state, or due to increased and
3.23unexpected utilization that affects the majority of insurers of similar products.
3.24(b) Except as provided in section
3.25the same requirements as other premium rate schedule increases. The commissioner
3.26may request a review by an independent actuary or a professional actuarial body of the
3.27basis for a request that an increase be considered an exceptional increase. The insurer
3.28must make the report of the review available to affected policyholders upon request and
3.29must inform affected policyholders of their right to make the request. The commissioner,
3.30in determining that the necessary basis for an exceptional increase exists, shall also
3.31determine any potential offsets to higher claims costs and shall consider input from
3.32affected policyholders.
3.33EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
3.34premium increase requests submitted on or after that date.
4.1 Sec. 4. Minnesota Statutes 2010, section 62S.081, subdivision 5, is amended to read:
4.2 Subd. 5. Notice of increase. An insurer shall provide notice of an upcoming request
4.3for a premium rate schedule increase,
4.4increase
4.5or certificate holders, if applicable, and at least 45
4.6implementation of the premium rate schedule increase by the insurer. The notice must
4.7include the information required by subdivision 2 when the rate increase is requested and
4.8when it is implemented. The notice of the insurer's request for an increase must include
4.9information prepared by the commissioner on how the policyholders and certificate
4.10holders may have meaningful and timely input to the commissioner's decision on this
4.11type of request.
4.12EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
4.13premium increase requests submitted on or after that date.
4.14 Sec. 5. Minnesota Statutes 2010, section 62S.265, subdivision 2, is amended to read:
4.15 Subd. 2. Notice. An insurer shall file a requested premium rate schedule increase,
4.16including an exceptional increase, to the commissioner for prior approval at least 60
4.17days prior to the notice of approved increase to the policyholders required under section
4.1862S.081, subdivision 5, and no earlier than the advance notice to policyholders and
4.19certificate holders of the request for the rate increase required under that same subdivision.
4.20Both the request to the commissioner and the advance notice of the request for the rate
4.21increase to policyholders and certificate holders shall include:
4.22(1) all information required by section
4.23(2) certification by a qualified actuary that:
4.24(i) if the requested premium rate schedule increase is implemented and the
4.25underlying assumptions, which reflect moderately adverse conditions, are realized, no
4.26further premium rate schedule increases are anticipated; and
4.27(ii) the premium rate filing complies with this section;
4.28(3) an actuarial memorandum justifying the rate schedule change request that
4.29includes:
4.30(i) lifetime projections of earned premiums and incurred claims based on the filed
4.31premium rate schedule increase and the method and assumptions used in determining the
4.32projected values, including reflection of any assumptions that deviate from those used for
4.33pricing other forms currently available for sale;
4.34(A) annual values for the five years preceding and the three years following the
4.35valuation date must be provided separately;
5.1(B) the projections must include the development of the lifetime loss ratio, unless
5.2the rate increase is an exceptional increase;
5.3(C) the projections must demonstrate compliance with subdivision 3; and
5.4(D) for exceptional increases, the projected experience must be limited to the
5.5increases in claims expenses attributable to the approved reasons for the exceptional
5.6increase and, if the commissioner determines that offsets to higher claim costs may exist,
5.7the insurer shall use appropriate net projected experience;
5.8(ii) disclosure of how reserves have been incorporated in this rate increase whenever
5.9the rate increase will trigger contingent benefit upon lapse;
5.10(iii) disclosure of the analysis performed to determine why a rate adjustment is
5.11necessary, which pricing assumptions were not realized and why, and what other actions
5.12taken by the company have been relied upon by the actuary;
5.13(iv) a statement that policy design, underwriting, and claims adjudication practices
5.14have been taken into consideration; and
5.15(v) if it is necessary to maintain consistent premium rates for new certificates and
5.16certificates receiving a rate increase, the insurer shall file composite rates reflecting
5.17projections of new certificates;
5.18(4) a statement that renewal premium rate schedules are not greater than new
5.19business premium rate schedules except for differences attributable to benefits, unless
5.20sufficient justification is provided to the commissioner; and
5.21(5) sufficient information for review and approval of the premium rate schedule
5.22increase by the commissioner.
5.23EFFECTIVE DATE.This section is effective January 1, 2012, and applies to
5.24premium increase requests submitted on or after that date.
