Microsoft Word - LTC adopted Rule-SOS-change 7-1-09.doc

VERMONT DEPARTMENT OF BANKING, INSURANCE, SECURITIES

AND HEALTH CARE ADMINISTRATION

RULE H-2009-01

LONG-TERM CARE INSURANCE REGULATION

Table of Contents

Section 1. Purpose

Section 2. Authority

Section 3. Applicability and Scope

Section 4. Definitions

Section 5. Policy Definitions

Section 6. Policy Practices and Provisions

Section 7. Unintentional Lapse

Section 8. Required Disclosure Provisions

Section 9. Required Disclosure of Rating Practices to Consumers

Section 10. Initial Filing Requirements

Section 11. Requirements for Applications, Underwriting and Prohibition Against Post-

Claims Underwriting

Section 12. Minimum Standards for Home Health Care and Community Care Benefits

in Long-Term Care Insurance Policies

Section 13. Requirement to Offer Inflation Protection

Section 14. Requirements for Application Forms and Replacement Coverage

Section 15. Reporting Requirements

Section 16. Licensing

Section 17. Discretionary Powers of Commissioner

Section 18. Reserve Standards

Section 19. Loss Ratios

Section 20. Premium Rate Schedule Increases

Section 21. Filing Requirement

Section 22. Filing Requirements for Advertising

Section 23. Standards for Marketing

Section 24. Suitability

Section 25. Prohibition Against Pre-existing Conditions, Waiting Periods and

Probationary Periods in Replacement Policies or Certificates

Section 26. Availability of New Services or Providers

Section 27. Right to Reduce Coverage and Lower Premiums

Section 28. Nonforfeiture Benefit Requirement

Section 29. Standards for Benefit Triggers

Section 30. Additional Standards for Benefit Triggers for Qualified Long-Term

Care Insurance Contracts

Section 31. Appealing an Insurer’s Determination That The Benefit Trigger Is Not Met

Section 32. Standard Format Outline of Coverage

Section 33. Requirement to Deliver Shopper’s Guide

Section 34. Producer Requirements

Section 35. Long-term care partnership policies

Section 36. Penalties

Section 37. Severability

Section 38. Effective Date

Appendix A. Rescission Reporting Form

Appendix B. Personal Worksheet

Appendix C. Disclosure Form

Appendix D. Long-Term Care Insurance Suitability Letter

Appendix E. Sample Claims Denial Format

Appendix F. Potential Rate Increase Disclosure Form

Appendix G. Replacement and Lapse Reporting Form

Appendix H. Partnership Program Notice

Appendix I. Partnership Status Disclosure Notice

Appendix J. Issuer Certification Form

Appendix K. Policyholder Long-Term Care Partnership Program Status Form

Appendix L. Long-Term Partnership Exchange Notification Form

Appendix M. Premium Rate Disclosure For Required Benefit Configurations

Section 1. Purpose

The purpose of this regulation is to implement Title 8, Chapter 154, to promote the public

interest, to promote the availability of long-term care insurance coverage, to protect applicants

for long-term care insurance from unfair or deceptive sales or enrollment practices, to facilitate

public understanding and comparison of long-term care insurance coverage, to facilitate

flexibility and innovation in the development of long-term care insurance and to support

consumers of long-term care insurance in attaining and maintaining their highest level of

functioning in the most independent and least restrictive setting.

Section 2. Authority

This regulation is issued pursuant to the authority vested in the Commissioner under Title 8,

Chapters 1, 101, 107, 129, 131 and 154 and other applicable law.

Section 3. Applicability and Scope

Except as otherwise specifically provided, this regulation applies to any insurance policy or rider

advertised, marketed, offered or designed to provide coverage for long-term care services,

including qualified long-term care policies, long-term care partnership policies and life insurance

policies that accelerate benefits to pay for long-term care, delivered, issued for delivery, or

renewed in this state, by insurers, fraternal benefit societies, hospital and medical service

corporations, prepaid health plans, health maintenance organizations and all similar

organizations. Certain provisions of this regulation apply only to qualified long-term care

insurance contracts or long-term care partnership policies as noted.

Section 4. Definitions

For the purpose of this regulation, the terms “long-term care insurance,” “group long-term care

insurance,” “Commissioner,” “applicant,” “policy” and “certificate” shall have the meanings set

forth in 8 V.S.A. § 8082. The term “qualified long-term care insurance” shall have the meaning

set forth in Section 7702B of the Internal Revenue Code of 1986 as amended. In addition, the

following definitions apply.

A. “Benefit trigger” means a contractual provision in a policy of long-term care insurance

conditioning the payment of benefits on a determination of the insured’s ability to

perform activities of daily living, or on a cognitive impairment. For purposes of a

qualified long-term care insurance contract, “Benefit trigger” shall include a

determination by a licensed health care practitioner that an insured is a chronically ill

individual.

B. “Compound annual inflation protection” means automatic annual compounded inflation

increases at a rate not less than three percent (3%); or automatic annual compounded

inflation increases at a rate based on changes in the consumer price index. “Consumer

price index” means consumer price index for all urban consumers, U.S. city average, all

items, as determined by the Bureau of Labor Statistics of the United States Department of

Labor

C. “Department” shall refer to the Vermont Department of Banking, Insurance, Securities

and Health Care Administration.

D. (1) “Exceptional increase” means only those increases filed by an insurer as

exceptional for which the Commissioner determines the need for the premium

rate increase is justified:

(a) Due to changes in laws or regulations applicable to long-term care

coverage in this state; or

(b) Due to increased and unexpected utilization that affects the majority of

insurers of similar products.

(2) Except as provided in Section 20, Exceptional increases are subject to the same

requirements as other premium rate schedule increases.

(3) As with other filings, the Commissioner may request a review by an independent

actuary or a professional actuarial body of the basis for a request that an increase

be considered an Exceptional increase.

(4) The Commissioner, in determining that the necessary basis for an Exceptional

increase exists, shall also determine any potential offsets to higher claims costs.

E. “Incidental,” as used in Section 20J, means that the value of the long-term care benefits

provided is less than ten percent (10%) of the total value of the benefits provided over the

life of the policy. These values shall be measured as of the date of issue.

F. “Qualified actuary” means a member in good standing of the American Academy of

Actuaries.

G. “Similar policy forms” means all of the 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. Certificates of groups that meet the definition in 8 V.S.A. §8082(4)(A)

are not considered similar to certificates or policies otherwise issued as long-term care

insurance, but are similar to other comparable certificates with the same long-term care

benefit classifications.

H. “Simple inflation protection” means an automatic inflation feature that provides annual

simple inflation increases (not compounded) at a rate not less than three percent (3%), or

at a rate based on changes in the consumer price index. “Consumer price index” means

consumer price index for all urban consumers, U.S. city average, all items, as determined

by the Bureau of Labor Statistics of the United States Department of Labor.

I. “Some level of inflation protection” means an inflation feature that meets the definition

of Simple inflation protection or compound inflation protection as defined in this Section.

J. "Qualified state long-term care insurance partnership policy” or "Partnership policy "

means an insurance policy that meets the following requirements:

(1) The policy covers an insured who was a resident of Vermont (or a

Partnership State) when coverage first became effective under the policy.

(2) The policy is a qualified long-term care insurance contract as defined in

Section 7702B(b) of the Internal Revenue Code of 1986, as amended, and

was issued no earlier than the effective date of Vermont’s plan amendment

required by section 6021 of the Deficit Reduction Act of 2005 (Pub.L.

109-171).

(3) The policy meets all of the applicable requirements of the National

Association of Insurance Commissioners long-term care insurance model

act and model regulation as those requirements are set forth in Section

1917(b)(5)(A) of the Social Security Act (42 USC Section

1396p(b)(5)(A)).

(4) The policy provides the level of inflation protection set forth in Section 36

of this Regulation.

Section 5. Policy Definitions

No long-term care insurance policy delivered, issued for delivery, or renewed in this state shall

use the terms or concepts set forth below, unless the terms are defined in the policy and the

definitions satisfy the following minimum requirements:

A. “Activities of daily living” means at least bathing, continence, dressing, eating, toileting

and transferring.

B. “Acute condition” means that the individual is medically unstable. Such an individual

requires frequent monitoring by medical professionals, such as physicians and registered

nurses, in order to maintain his or her health status.

C. “Adult day care services” means medical or nonmedical care on a less than 24-hour basis

provided in a licensed facility outside the residence, for persons in need of personal

services, supervision, protection, or assistance in sustaining daily needs, including eating,

bathing, dressing, ambulating, transferring, toileting, and taking medications..

D. “Assisted Living Residence” means a licensed program or facility that combines housing,

health and supportive services to support resident independence and aging in place.

E. “Bathing” means washing oneself by sponge bath; or in either a tub or shower, including

the task of getting into or out of the tub or shower.

F. “Cognitive impairment” means a deficiency in a person’s short or long-term memory,

orientation as to person, place and time, deductive or abstract reasoning, or judgment as it

relates to safety awareness.

G. “Continence” means the ability to maintain control of bowel and bladder function; or,

when unable to maintain control of bowel or bladder function, the ability to perform

associated personal hygiene (including caring for catheter or colostomy bag).

H. “Dressing” means putting on and taking off all items of clothing, including items such as

any necessary braces, fasteners, or artificial limbs.

I. “Eating” means feeding oneself by getting food into the body from a receptacle (such as a

plate, cup or table) or by a feeding tube or intravenously.

J. “Elimination period” means the specified number of days of out of pocket expenses paid

by the insured for long-term care services after the insurance benefits are triggered, but

before the benefits are paid under the policy.

K. “Hands-on assistance” means physical assistance (minimal, moderate or maximal)

without which the individual would not be able to perform one or more activities of daily

living.

L. “Home health care services” means skilled nursing or other professional services in the

residence, including, but not limited to, part-time and intermittent skilled nursing

services, home health aid services, physical therapy, occupational therapy, or speech

therapy and audiology services, and medical social services by a social worker.

M. “Long-term care services” means necessary or medically necessary diagnostic,

preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in

a covered setting.

N. “Medicare” shall be defined as “The Health Insurance for the Aged Act, Title XVIII of

the Social Security Amendments of 1965 as Then Constituted or Later Amended,” or

“Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the

United States of America and popularly known as the Health Insurance for the Aged Act,

as then constituted and any later amendments or substitutes thereof,” or words of similar

import.

O. “Mental health condition ” means any condition or disorder involving mental illness or

alcohol or substance abuse that falls under any of the diagnostic categories listed in the

mental disorders section of the international classification of disease, as periodically

revised.

P. “Nursing facility care” means care and services provided in a nursing home licensed

pursuant to Title 33 V.S.A., Chapter 71.

Q. “Residential care” means care rendered in a facility licensed as a residential care home

pursuant to Title 33 V.S.A., Chapter 71.

R. “Personal care” means skilled nursing or other professional services to aid with the

activities of daily living and cognitive impairments, including the instrumental activities

of daily living, under a plan of care developed by a licensed or certified professional such

as a physician, nurse or social worker. “Instrumental activities of daily living” include

using the telephone, managing medications, moving about outside, shopping for

essentials, preparing meals, laundry, and light housekeeping.

S. "Pre-existing 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.

T. “Toileting” means getting to and from the toilet, getting on and off the toilet, and

performing associated personal hygiene.

U. “Transferring” means moving into or out of a bed, chair or wheelchair.

Section 6. Policy Practices and Provisions

A. Renewability. The terms “guaranteed renewable” and “noncancellable” shall not

be used in any individual long-term care insurance policy without further explanatory

language in accordance with the disclosure requirements of this regulation.

(1) A policy issued to an individual shall not contain renewal provisions other than

“guaranteed renewable” or “noncancellable.”

(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 and when the insurer has no unilateral right to make any change in any

provision of the policy or rider while the insurance is in force, and cannot decline

to renew, except that rates may be revised by the insurer on a class basis. The

term “class basis” shall be defined in the policy.

(3) 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.

(4) The term “level premium,” “fixed premium” and similar words may only be used

when the insurer does not have the right to change the premium.

(5) In addition to the other requirements of this subsection, a qualified long-term care

insurance contract shall be guaranteed renewable, within the meaning of Section

7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended.

B. Limitations and Exclusions. No policy may be delivered or issued for delivery in this

state as long-term care insurance if the policy limits or excludes coverage by type of

illness, treatment, medical condition or accident, except as follows:

(1) Pre-existing conditions or diseases, provided that the exclusion complies with 8

V.S.A. § 8086 and the definition is no 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) Illness, treatment or medical condition arising out of:

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

(b) Participation in a felony, riot or insurrection;

(d) The insured’s attempted suicide (while sane), or intentionally self-inflicted

injury (while sane); or

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

(3) Treatment provided in a government facility (unless otherwise required by law),

services for which benefits are payable 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

except as required by Section 6(H)(3), and services for which no charge is

normally made in the absence of insurance.

(4) Expenses for services or items paid under another long-term care insurance or

health insurance policy;

(5) 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) (a) This subsection is not intended to prohibit, exclude, or limit 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:

(i) 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

regulation; or

(ii) When the state other than the state of policy issue licenses, certifies

or registers the provider under another name.

(b) For purposes of this paragraph, “state of policy issue” means the state in

which the individual policy or certificate was originally issued.

(7) This subsection is not intended to prohibit territorial limitations.

C. Extension of Benefits. Termination of long-term care insurance shall be without

prejudice to any benefits payable for institutionalization if such institutionalization began

while the long-term care insurance was in force and continues without interruption after

termination. Such extension of benefit 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.

D. Continuation or Conversion.

(1) Group long-term care insurance issued or renewed on or after the effective

date of this regulation shall provide covered individuals with a basis for

continuation or conversion of coverage.

(2) For the purposes of this section, “a basis for continuation of coverage” means a

policy provision which 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 which restrict

provision of benefits and services to, or contain incentives to use certain providers

and/or facilities, may provide continuation benefits that are substantially

equivalent to the benefits of the existing group policy. The Commissioner shall

make a determination as to the substantial equivalency of benefits, and in doing

so, 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.

(3) For the purposes of this section, “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.

(4) For the purposes of this section, “converted policy” means an individual policy of

long-term care insurance providing benefits identical to or benefits determined by

the Commissioner to be substantially equivalent to or in excess of those provided

under the group from which conversion is made. Where the group policy from

which conversion is made restricts provision of benefits and services to, or

contains incentives to use certain providers and/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.

(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 not later than thirty-one (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) 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.

(7) Continuation of coverage or issuance of a converted policy shall be mandatory,

except where:

(a) Termination of group coverage resulted from an individual’s failure to

make any required payment of premium or contribution when due; or

(b) The terminating coverage is replaced not later than thirty-one (31) days

after termination, by group coverage effective on the day following the

termination of coverage:

(i) 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

(ii) The premium for which is calculated in a manner consistent with

the requirements of Paragraph (6) of this section.

(8) Notwithstanding any other provision of this section, a converted policy issued to

an individual who at the time of conversion is covered by another long-term care

insurance policy that provides benefits on the basis of incurred expenses, may

contain a provision that 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 percent 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.

(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.

(10) Notwithstanding any other provision of this section, an insured individual whose

eligibility for group long-term care coverage is based upon his or her relationship

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 or civil union.

(11) For the purposes of this section, 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.

E. Discontinuance and Replacement

If a group long-term care policy is replaced by another group long-term care policy

purchased by 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 premiums charged to persons under

the new group policy:

(1) Shall not result in an exclusion for pre-existing conditions that would

have been covered under the group policy being replaced; and

(2) Shall not vary or otherwise depend on the individual’s health or

disability status, claim experience or use of long-term care services.

F. (1) The premium charged to an insured shall not increase due to either:

(a) The increasing age of the insured at ages beyond sixty-five (65); or

(b) The duration the insured has been covered under the policy.

(2) The purchase of additional coverage shall not be considered a premium

rate increase, but for purposes of the calculation required under Section

27, the portion of the premium attributable to the additional coverage shall

be added to and considered part of the initial annual premium.

(3) A reduction in benefits shall not be considered a premium change, but for

purpose of the calculation required under Section 27, the initial annual premium

shall be based on the reduced benefits.

G. Electronic Enrollment for Group Policies

(1) In the case of group long-term care insurance as defined in 8 V.S.A.§ 8082(4)(A),

any requirement that a signature of an insured be obtained by a producer or

insurer shall be deemed satisfied if:

(a) The group policyholder or the insurer obtains the policyholder’s consent

by telephonic or electronic enrollment. A verification of enrollment

information shall be provided to the enrollee;

(b) The telephonic or electronic enrollment provides necessary and

reasonable safeguards to assure the accuracy, retention and prompt

retrieval of records;

reasonable safeguards to ensure that the confidentiality of individually

identifiable information and privileged information as defined by state and

federal law is maintained; and

(d) In the case of telephonic enrollment, the carrier records the entire

telephone call and retains a copy of this recording.

(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.

H. Required Coverage

(1) No policy may provide coverage for Nursing facility care only or provide

significantly more coverage for skilled care.

(2) Policies shall not define an eligible provider or facility in a manner that is more

restrictive than that used to license that provider or facility by the state where the

service is provided.

(3) Family Caregivers

(a) Policies must cover services delivered by a member of the individual's

family if:

(1) the family member is a regular employee of an organization which

is providing the services;

(2) the organization receives the payment for the services; and

(3) the family member receives no compensation other than the normal

compensation for employees in his or her job category.

(b) Insurers selling long-term care insurance in Vermont shall offer an

optional insurance rider that covers Long-term care services provided by a

family member licensed to provide the necessary or medically necessary

services.

(4) Every long-term care policy or certificate shall provide at least the following:

(a) Home health care services;

(b) Personal care;

(d) Hospice services.

(5) For the purposes of this section, policy definitions of these benefits may be no

more restrictive than the following:

(a) “Home health care” is skilled nursing or other professional services in the

residence, including, but not limited to, part-time and intermittent skilled

nursing services, home health aid services, physical therapy, occupational

therapy, or speech therapy and audiology services, and medical social

services by a social worker.

(b) “Personal care” means skilled nursing or other professional services to aid

with the activities of daily living and cognitive impairments, including the

instrumental activities of daily living, under a plan of care developed by a

licensed or certified professional such as a physician, nurse or social

worker. “Instrumental activities of daily living” include using the

telephone, managing medications, moving about outside, shopping for

essentials, preparing meals, laundry, and light housekeeping.

basis provided in a licensed facility outside the residence, for persons in

need of personal services, supervision, protection, or assistance in

sustaining daily needs, including eating, bathing, dressing, ambulating,

transferring, toileting, and taking medications.

(d) “Hospice services” are services that are designed to provide palliative

care, alleviate the physical, emotional, social, and spiritual discomforts of

an individual who is experiencing the last phases of life due to the

existence of a terminal disease.

(6) Nothing in this subsection shall be interpreted to prohibit insurers from offering

additional long-term care services.

I. Elimination Periods:

(1) The definition of “elimination period” may be no more restrictive than the

definition set forth in Section 5 of this Regulation;

(2) The elimination period may not exceed 100 days for any covered benefit; and

(3) Policies may not require a deductible or elimination period to be satisfied between

levels of care and/or benefit types (any waiver of a deductible or elimination

period for a particular benefit shall be deemed to be a waiver of the deductible or

elimination period for all benefits). This requirement does not prohibit an insurer

from offering a zero-day elimination period for one or more levels of care.

J. No long-term care insurance policy may:

(1) Require payment of premiums more frequently than monthly;

(2) Impose a preexisting condition exclusion inconsistent with the requirements of 8

V.S.A. § 8086;

(3) Deny benefits or coverage on the basis that the need for long-term care services

arises from a mental health condition, including Alzheimer’s disease, dementia

and other related disorders;

(4) Deny benefits or rescind a policy upon a showing of fraud or misrepresentation

except as provided otherwise by 8 V.S.A. § 8094; or

(5) Provide benefits for less than 365 benefit days or provide a minimum daily

benefit of less than $75. The minimum daily benefit amount may be adjusted to

reflect, at the Commissioner's discretion, appropriate inflation factors. Insurers

may issue a policy with a daily benefit of less than $75 only if the combined total

of the new coverage and any existing long-term care coverage for daily benefits

equals or exceeds $75.

K. Required Benefit Configurations.

(1) Insurers selling long-term care insurance in Vermont shall provide a price quote

and offer all Vermont applicants the opportunity to elect the following benefit

configurations:

(a) A policy that includes a 90 or 100-day elimination period, a 5-year

benefit period and a $200 maximum daily benefit;

(b) A policy that includes a 90 or 100-day elimination period, a 3-year

benefit period and a $150 maximum daily benefit; and

maximum daily benefit and a 2-year benefit period.

(2) Insurers shall provide price quotes for the benefit configurations described in

subsection K(1) of this section that include price variations for the following

benefit options:

(a) Compound inflation protection at a rate of 5%;

(b) Simple inflation protection at a rate of 5%;

(3) Insurers shall submit the annual premium for a currently marketed long-term care

policy required by subsections (K)(1) and (K)(2) of this section. Insurers shall

complete Appendix M and submit this form to the Department annually on or

before June 30

. In addition, insurers shall notify the Department of any changes

to the information submitted in Appendix M.

(4) The Commissioner may waive one or more requirements of this section for good

cause, or approve alternative benefit configurations so long as the alternative

benefit configuration meets the intent of this subsection and the benefit

configuration is filed with and approved by the Commissioner.

(5) Where the policy is issued to a group, the required offer shall be made to the

group policyholder.

(6) This offer shall not be required of life or annuity policies containing long-term

care benefits.

(7) Nothing shall prohibit the insurer from offering additional options provided that

the insurer provides a price quote for each of the required benefit configurations.

Any modifications to these benefit configurations shall be priced and quoted

separately.

L. Right to Return

Individual long-term care insurance policyholders and persons insured under a long-term

care insurance policy issued pursuant to a direct response solicitation shall have the right

to return the policy within 30 days of its delivery and to have the premium refunded if,

after examination of the policy, the policyholder is not satisfied for any reason. Insurers

shall prominently print a notice on the first page of these policies stating in substance that

the policyholder shall have the right to return the policy within 30 days of its delivery and

to have the premium refunded if, after examination of the policy, the policyholder is not

satisfied for any reason.

M. Denial of claims: If a claim under a long-term care insurance contract is denied,

the issuer shall, within 60 days of the date of a written request by the policyholder

or certificate holder, or a representative thereof:

(1) Provide a written explanation of the reasons for the denial;

(2) Describe any additional material or information necessary for the member

to perfect the request and an explanation of why such material or

information is necessary;

(3) Explain the insured’s right to internal appeal, the time limits applicable to

such procedures, and the right to submit new or additional information

relating to the claim;

(4) If the insurer relied upon an internal rule, guideline, protocol, or other

similar criterion, state the specific rule, guideline, protocol, or other

similar criterion and provide a copy upon request;

(5) Provide an explanation of the scientific or clinical judgment or other

reason for the determination, if applicable; and

(6) Make available all information directly related to the denial.

Section 7. Unintentional Lapse

Each insurer offering long-term care insurance shall, as a protection against unintentional lapse,

comply with the following:

A. (1) Notice before lapse or termination. No individual long-term care policy

or certificate shall be issued until the insurer has received from the

applicant either a written designation of at least one person, in addition to

the applicant, who is to receive notice of lapse or termination of the policy

or certificate for nonpayment of premium, or a written waiver dated and

signed by the applicant electing not to designate additional persons to

receive notice. The applicant has the right to designate at least one person

who is to receive the notice of termination, in addition to the insured.

(a) Designation shall not constitute acceptance of any liability on the third

party for services provided to the insured.

(b) The form used for the written designation must provide space clearly

designated for listing at least one person. The designation shall include

each person’s full name and home address.

person, the waiver shall state: “Protection against unintended lapse. I

understand that I have the right to designate at least one person other than

myself to receive notice of lapse or termination of this long-term care

insurance policy for nonpayment of premium. I understand that notice

will not be given until thirty (30) days after a premium is due and unpaid.

I elect NOT to designate a person to receive this notice.”

(d) The insurer shall notify the insured of the right to change this written

designation, no less often than once every two (2) years.

(2) When the policyholder or certificateholder pays premium for a long-

term care insurance policy or certificate through a payroll or pension

deduction plan, the requirements contained in subsection A(1) need

not be met until sixty (60) days after the policyholder or certificate-

holder is no longer on such a payment plan. The application or

enrollment form for such policies or certificates shall clearly indicate

the payment plan selected by the applicant.

(3) Lapse or termination for nonpayment of premium. No individual long-term care

policy or certificate shall lapse or be terminated for nonpayment of premium

unless the insurer, at least thirty (30) days before the effective date of the lapse or

termination, has given notice to the insured and to those persons designated

pursuant to subsection A(1), at the address provided by the insured for the

purposes of receiving notice of lapse or termination. Notice shall be given by first

class United States mail, postage prepaid; and notice may not be given until thirty

(30) days after a premium is due and unpaid. Notice shall be deemed to have

been given as of five (5) days after the date of mailing. The notice shall state that

the insured has the right to reduce the maximum benefit or reduce the daily,

weekly or monthly benefit amount, consistent with Section 27 of this Regulation.

B. Reinstatement. In addition to the requirement in subsection A, a long-term care

insurance policy or certificate shall include a provision that provides for reinstatement of

coverage in the event of lapse if the insurer is provided proof that the policyholder or

certificateholder was cognitively impaired or had a loss of functional capacity before the

grace period contained in the policy expired. This option shall be available to the insured

if requested within five (5) months after termination and shall allow for the collection of

past due premium, where appropriate. The standard of proof of cognitive impairment or

loss of functional capacity shall not be more stringent than the benefit eligibility criteria

on cognitive impairment or the loss of functional capacity contained in the policy and

certificate.

Section 8. Required Disclosure Provisions

A. Renewability. Individual long-term care insurance policies shall contain a renewability

provision.

(1) Such provision shall be appropriately captioned, shall appear on the first page of

the policy, and shall clearly state the coverage is guaranteed renewable or

noncancellable. This provision shall not apply to long-term care policies which

are part of, or combined with, life insurance policies which do not contain a

renewability provision and under which the right to nonrenew is reserved solely to

the policyholder.

(2) A long-term care policy or certificate, other than one where the insurer does not

have the right to change the premium, shall include a statement that premium

rates may change.

B. Riders and Endorsements. Except for riders or endorsements by which the insurer

effectuates a request made in writing by the insured under an individual long-term care

insurance policy, all riders or endorsements added to an individual long-term care

insurance policy after date of issue or at reinstatement or renewal which reduce or

eliminate benefits or coverage in the policy shall require signed acceptance by the

individual insured. After the date of policy issue, any rider or endorsement which

increases benefits or coverage with a concomitant increase in premium during the policy

term must be agreed to in writing and signed by the insured, except if the increased

benefits or coverage are required by law. Where a separate additional premium is

charged for benefits provided in connection with riders or endorsements, such premium

charge shall be set forth in the policy, rider or endorsement.

C. Payment of Benefits. A long-term care insurance policy which provides for the payment

of benefits based on standards described as “usual and customary,” “reasonable and

customary” or words of similar import shall include a definition of such terms and an

explanation of such terms in its accompanying outline of coverage.

D. Facilities Coverage. A long-term care insurance policy that provides for the payment of

benefits for services received in specific types of facilities, such as assisted living

residences, shall set forth a clear description of the types of facilities wherein such

payment of benefits is provided and any limitations or conditions for eligibility of

coverage.

E. Pre-existing Condition Limitations. If a long-term care insurance policy or certificate

contains any limitations with respect to pre-existing conditions, such limitations shall

appear as a separate paragraph of the policy or certificate and shall be labeled as “Pre-

existing Condition Limitations.” Any pre-existing condition limitation must comply with

8 V.S.A. § 8086 or other applicable law.

F. Disclosure of Tax Consequences. With regard to life insurance policies that provide an

accelerated benefit for long-term care, a disclosure statement is required at the time of

application for the policy or rider and at the time the accelerated benefit payment request

is submitted that receipt of these accelerated benefits may be taxable, and that assistance

should be sought from a personal tax advisor. The disclosure statement shall be

prominently displayed on the first page of the policy or rider and any other related

documents. This subsection shall not apply to qualified long-term care insurance

contracts.

G. Benefit Triggers. Activities of daily living and cognitive impairment shall be used to

measure an insured’s need for long-term care and shall be described in the policy or

certificate in a separate paragraph and shall be labeled “Eligibility for the Payment of

Benefits.” Any additional Benefit triggers shall also be explained in this section. If these

triggers differ for different benefits, explanation of the trigger shall accompany each

benefit description. If an attending physician or other specified person must certify a

certain level of functional dependency in order to be eligible for benefits, this too shall be

specified.

H. Other Limitations or Conditions on Eligibility for Benefits. A long-term care insurance

policy or certificate containing any limitations or conditions for eligibility other than

those prohibited in 8 V.S.A. § 8085 shall set forth a description of such limitations or

conditions, including satisfaction of the elimination period, in a separate paragraph of the

policy or certificate and shall label such paragraph “Limitations or Conditions on

Eligibility for Benefits.”

I. A qualified long-term care insurance contract shall include a disclosure statement

in the policy and in the outline of coverage as contained in Section 32E(3) that the policy

is intended to be a qualified long-term care insurance contract under Section 7702B(b) of

the Internal Revenue Code of 1986, as amended.

Section 9. Required Disclosure of Rating Practices to Consumers

A. This section shall apply as follows:

(1) Except as provided in Paragraph (2), this section applies to any long-term care

policy or certificate issued in this state on or after January 1, 2010.

(2) For certificates issued on or after the effective date of this amended regulation

under a group long-term care insurance policy as defined in 8 V.S.A §8082(4)(A),

which policy was in force at the time this amended regulation became effective,

the provisions of this section shall apply on the policy anniversary following

January 1, 2010.

B. Other than policies for which no applicable premium rate or rate schedule increases can

be made, insurers shall provide all of the information listed in this subsection to the

applicant at the time of application or enrollment, unless the method of application does

not allow for delivery at that time. In such a case, an insurer shall provide all of the

information listed in this section to the applicant no later than at the time of delivery of

the policy or certificate.

(1) A statement in a conspicuous manner that the policy may be subject to rate

increases in the future;

(2) An explanation of potential future premium rate revisions, and the policy-

holder’s or certificateholder’s option in the event of a premium rate revision;

(3) The premium rate or rate schedules applicable to the applicant that will be in

effect until a request is made for an increase and the Department approves the

proposed rate increase;

(4) A general explanation for applying premium rate or rate schedule adjustments that

shall include:

(a) A description of when premium rate or rate schedule adjustments will be

effective (e.g., next anniversary date, next billing date, etc.); and

(b) The right to a revised premium rate or rate schedule as provided in

subsection(B)(2), above, if the premium rate or rate schedule is changed;

(5) (a) Information regarding each premium rate increase on this policy

form or Similar policy forms over the past ten (10) years for this state or

any other state that, at a minimum, identifies:

(i) The policy forms for which premium rates have been increased;

(ii) The calendar years when the form was available for purchase; and

(iii) The amount or percent of each increase. The percentage may be

expressed as a percentage of the premium rate prior to the increase,

and may also be expressed as minimum and maximum percentages

if the rate increase is variable by rating characteristics.

(b) The insurer may, in a fair manner, provide additional explanatory

information related to the rate increases.

requirements for premium rate increases that only apply to blocks of

business acquired from other nonaffiliated insurers or the long-term care

policies acquired from other nonaffiliated insurers when those increases

occurred prior to the acquisition.

(d) If an acquiring insurer files for a rate increase on a long-term care policy

form acquired from nonaffiliated insurers or a block of policy forms

acquired from nonaffiliated insurers on or before the later of the effective

date of this section or the end of a twenty-four-month period following the

acquisition of the block or policies, the acquiring insurer may exclude that

rate increase from the disclosure. However, the nonaffiliated selling

company shall include the disclosure of that rate increase in accordance

with Subparagraph (a) of this paragraph.

(e) If the acquiring insurer in Subparagraph (d) above files for a subsequent

rate increase, even within the twenty-four-month period, on the same

policy form acquired from nonaffiliated insurers or block of policy forms

acquired from nonaffiliated insurers referenced in Subparagraph (d), the

acquiring insurer shall make all disclosures required by Paragraph (5),

including disclosure of the earlier rate increase referenced in

Subparagraph (d).

C. An applicant shall sign an acknowledgement at the time of application, unless the method

of application does not allow for signature at that time, that the insurer made the

disclosure required under subsection B(1) and (5). If due to the method of application the

applicant cannot sign an acknowledgement at the time of application, the applicant shall

sign no later than at the time of delivery of the policy or certificate.

D. An insurer shall use the forms in Appendices B and F to comply with the requirements of

subsections A and B of this section.

E. An insurer shall provide notice of an upcoming premium rate schedule increase to all

policyholders or certificateholders, if applicable, at least forty-five (45) days prior to the

implementation of the premium rate schedule increase by the insurer. The notice shall

include the information required by subsection B when the rate increase is implemented.

Section 10. Initial Filing Requirements

A. This section applies to any long-term care policy issued in this state on or after January 1,

2010.

B. Pursuant to 8 V.S.A. § 4062, no policy form shall be sold or marketed in this state prior

to approval by the Commissioner. Product forms, including but not limited to policy

forms, member handbooks, certificates, endorsements, riders, and applications, shall not

be approved if the forms contain any provision which is unjust, unfair, inequitable,

misleading, or contrary to the law of this state.

C. Pursuant to 8 V.S.A. § 4062, insurers shall file premium rates for approval by the

Commissioner prior to implementation. No rate shall be approved if it is excessive,

inadequate or unfairly discriminatory. An insurer shall provide the information listed in

this subsection to the Commissioner:

(1) A copy of the disclosure documents required in Section 9; and

(2) An actuarial certification consisting of at least the following:

(a) A statement that the initial premium rate schedule is sufficient to cover

anticipated costs under moderately adverse experience and that the

premium rate schedule is reasonably expected to be sustainable over the

life of the form with no future premium increases anticipated;

(b) A statement that the policy design and coverage provided have been

reviewed and taken into consideration;

been reviewed and taken into consideration;

(d) A complete description of the basis for contract reserves that are

anticipated to be held under the form, to include:

(i) Sufficient detail or sample calculations provided so as to have a

complete depiction of the reserve amounts to be held;

(ii) A statement that the assumptions used for reserves contain

reasonable margins for adverse experience;

(iii) A statement that the net valuation premium for renewal years does

not increase (except for attained-age rating where permitted); and

(iv) A statement that the difference between the gross premium and the

net valuation premium for renewal years is sufficient to cover

expected renewal expenses; or if such a statement cannot be made,

a complete description of the situations where this does not occur;

(I) An aggregate distribution of anticipated issues may be used

as long as the underlying gross premiums maintain a

reasonably consistent relationship;

(II) If the gross premiums for certain age groups appear to be

inconsistent with this requirement, the Commissioner may

request a demonstration under Subsection C based on a

standard age distribution; and

(e) (i) A statement that the premium rate schedule is not less than

the premium rate schedule for existing Similar policy forms also

available from the insurer except for reasonable differences

attributable to benefits; or

(ii) A comparison of the premium schedules for Similar policy forms

that are currently available from the insurer with an explanation of

the differences.

D. The Commissioner may request an actuarial demonstration that benefits are reasonable in

relation to premiums and any other information he or she deems necessary for review of

the rates. The actuarial demonstration shall include either premium and claim experience

on Similar policy forms, adjusted for any premium or benefit differences, relevant and

credible data from other studies, or both.

Section 11. Requirements for Applications, Underwriting and Prohibition Against Post-

Claims Underwriting

A. Requirements for applications and health questions:

1. All applications for long-term care insurance except that which is guaranteed

issue, shall contain clear, unambiguous, short, simple questions designed to

ascertain the health condition of the applicant.

2. Questions Concerning Medications:

(a) If an application for long-term care insurance contains a question that asks

whether the applicant has had medication prescribed by a physician, it

must also ask the applicant to list the medication that has been prescribed.

(b) If the medications listed in such application were known by the insurer, or

should have been known at the time of application, to be directly related to

a medical condition for which coverage would otherwise be denied, then

the policy or certificate shall not be rescinded for that condition.

3. Except for policies or certificates which are guaranteed issue:

(a) The following warning shall be printed conspicuously and in close

conjunction with the applicant’s signature block:

“Caution: If your answers on this application are misstated or untrue,

the insurer may have the right to deny benefits or rescind your

coverage.”

(b) The following language, or language substantially similar to the following,

shall be set out conspicuously on the long-term care insurance policy or

certificate at the time of delivery:

Caution: The issuance of this long-term care insurance

[policy][certificate] is based upon your responses to the questions

on your application. A copy of your [application][enrollment

form] [is enclosed] [was retained by you when you applied]. If

your answers are misstated or untrue, 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! If, for any reason, any

of your answers are incorrect, contact the company at this

address: [insert address]

age eighty (80) or older, the insurer shall obtain one of the following:

(i) A report of a physical examination;

(ii) An assessment of functional capacity;

(iii) An attending physician’s statement; or

(iv) Copies of medical records.

4. A copy of the completed application or enrollment form (whichever is applicable)

shall be delivered to the insured no later than at the time of delivery of the policy

or certificate unless it was retained by the applicant at the time of application.

B. Contestability Periods

1. For a policy or certificate that has been in force for less than six months, an

insurer may rescind a long-term care insurance policy or certificate or deny an

otherwise valid long-term care insurance claim upon a showing of

misrepresentation that is material to the acceptance for coverage.

2. For a policy or certificate that has been in force for at least six months but less

than two years, an insurer may rescind a long-term care insurance policy or

certificate or deny an otherwise valid long-term care insurance claim upon a

showing of misrepresentation that is both material to the acceptance for coverage

and which pertains to the condition for which benefits are sought.

3. After a policy or certificate has been in force for two years, it is not contestable

upon the grounds of misrepresentation alone, but may be contested only upon a

showing that the insured knowingly and intentionally misrepresented relevant

facts relating to the insured's health that are both material to the acceptance for

coverage and which pertain to the condition for which benefits are sought.

4. If an insurer has paid benefits under the long-term care insurance policy or

certificate, the benefit payments may not be recovered by the insurer in the event

that the policy or certificate is rescinded.

5. In the event of the death of the insured, this section shall not apply to the

remaining death benefit of a life insurance policy that accelerates benefits for

long-term care. In this situation, the remaining death benefits under these policies

shall be governed by sections 3731 and 4065 of Title 8.

C. Underwriting procedures must comply with applicable sections of Chapter 129 of Title 8.

D. Prohibition Against Post-Claims Underwriting:

1. An insurer may not place an elimination rider, deny a claim or rescind coverage

for an otherwise valid long-term care claim except as provided in Subsection B of

this section.

2, Every insurer or other entity selling or issuing long-term care insurance benefits

shall maintain a record of all policy or certificate rescissions, both state and

countrywide, except those that the insured voluntarily effectuated, and shall

annually furnish this information to the Commissioner in the format prescribed by

the National Association of Insurance Commissioners in Appendix A.

Section 12. Minimum Standards for Home Health Care and Community Care Benefits

in Long-Term Care Insurance Policies

A. A long-term care insurance policy or certificate shall not limit or exclude benefits for

home health care services or community services. In addition, a long-term care policy or

certificate shall not limit or exclude benefits for home health care or community services:

(1) By requiring that the insured/claimant would need skilled care in a skilled nursing

facility if home health care services were not provided;

(2) By requiring that the insured/claimant first or simultaneously receive nursing

and/or therapeutic services in a home, or community or institutional setting before

home health care services are covered;

(3) By limiting eligible services to services provided by registered nurses or licensed

practical nurses;

(4) By requiring that a nurse or therapist provide services covered by the policy that

can be provided by a home health aide, or other licensed or certified home care

worker acting within the scope of his or her licensure or certification;

(5) By excluding coverage for personal care services provided by a home health aide;

(6) By requiring that the provision of home health care services be at a level of

certification or licensure greater than that required by the eligible service;

(7) By requiring that the insured/claimant have an acute condition before home health

care services are covered;

(8) By limiting benefits to services provided by Medicare-certified agencies or

providers;

(9) By excluding coverage for adult day care services; or

(10) By requiring prior confinement in any type of medical or health facility.

B. A long-term care insurance policy or certificate shall provide total home health or

community care coverage equal to the coverage available for nursing home benefits

under the policy or certificate. This requirement shall not apply to policies or certificates

issued to residents of continuing care retirement communities.

C. Home health care coverage may be applied to the non-home health care benefits provided

in the policy or certificate when determining maximum coverage under the terms of the

policy or certificate.

Section 13. Requirement to Offer Inflation Protection

A. No insurer may offer a long-term care insurance policy unless the insurer also offers to

the policyholder, in addition to any other inflation protection, the option to purchase a

policy that provides for benefit levels to increase with benefit maximums or reasonable

durations which are meaningful to account for reasonably anticipated increases in the

costs of long-term care services covered by the policy. Insurers must offer to each

policyholder, at the time of purchase, the option to purchase a policy with inflation

protection that increases benefit levels annually in a manner so that the increases are

compounded annually at a rate no less than five percent (5%). A policyholder must

affirmatively decline this offer in writing before an insurer can offer a policy that does

not include 5% compound inflation. Insurers may also offer the option to purchase a

policy that:

(1) Guarantees the insured individual the right to periodically increase benefit levels

without providing evidence of insurability or health status so long as the option

for the previous period has not been declined. The amount of the additional

benefit shall be no less than the difference between the existing policy benefit and

that benefit compounded annually at a rate of at least five percent (5%) for the

period beginning with the purchase of the existing benefit and extending until the

year in which the offer is made; or

(2) Covers a specified percentage of actual or reasonable charges and does not

include a maximum specified indemnity amount or limit.

B. Where the policy is issued to a group, the required offer in Subsection A shall be made to

the group policyholder; except, if the policy is issued to a group defined in 8 V.S.A. §

8082 (4)(D), other than to a continuing care retirement community, the offering shall be

made to each proposed certificateholder.

C. The offer in Subsection A shall not be required for life insurance policies or riders

containing accelerated long-term care benefits.

D. Insurers shall include the following information in or with the outline of coverage:

(1) A graphic comparison of the benefit levels of a policy that increases benefits over

the policy period with a policy that does not increase benefits. The graphic

comparison shall show benefit levels over at least a twenty (20) year period; and

(2) A hypothetical or graphic demonstration of any expected premium increases or

additional premiums to pay for automatic or optional benefit increases. If

premium increases or additional premiums will be based on the attained age of the

applicant at the time of the increase, the insurer shall also disclose the magnitude

of the potential premiums the applicant would need to pay at ages 75 and 85 for

benefit increases.

E. Inflation protection benefit increases under a policy that contains these benefits

shall continue without regard to an insured’s age, claim status or claim history, or

the length of time the person has been insured under the policy.

F. An offer of inflation protection that provides for automatic benefit increases shall include

an offer of a premium which the insurer expects to remain constant. The offer shall

disclose in a conspicuous manner that the premium may change in the future unless the

premium is guaranteed to remain constant.

G. (1) Inflation protection as provided in subsection A(1) of this section shall be

included in a long-term care insurance policy unless an insurer obtains a

rejection of inflation protection signed by the policyholder as required in

this subsection. The rejection may be either in the application or in a

separate form.

(2) The rejection shall be considered a part of the application and shall state:

“I have reviewed the outline of coverage and the graphs that compare the

benefits and premiums of this policy with and without 5% compound inflation

protection. Specifically, I have reviewed this feature, and I reject 5% compound

inflation protection. I understand that I may elect other inflation protection

options if available.”

Section 14. Requirements for Application Forms and Replacement Coverage

A. Application forms shall include the following questions designed to elicit information as

to whether, as of the date of the application, the applicant has another long-term care

insurance policy or certificate in force or whether a long-term care policy or certificate is

intended to replace any other accident and sickness or long-term care policy or certificate

presently in force. A supplementary application or other form to be signed by the

applicant and producer, except where the coverage is sold without a producer, containing

such questions may be used. With regard to a replacement policy issued to a group

defined in 8 V.S.A.§ 8082(4)(A), the following questions may be modified only to the

extent necessary to elicit information about health or long-term care insurance policies

other than the group policy being replaced, provided that the certificateholder has been

notified of the replacement.

(1) Do you have another long-term care insurance policy or certificate in force

(including a health care service contract or a health maintenance organization

contract)?

(2) Did you have another long-term care insurance policy or certificate in force

during the last twelve (12) months?

(a) If so, with which company?

(b) If that policy lapsed, when did it lapse?

(3) Are you covered by Medicaid? Note: Medicaid is not the same as Medicare. You

are covered by Medicaid if you receive Supplemental Security Income (SSI) or if

you have applied and been found eligible by the appropriate state agency.

(4) Do you intend to replace any of your medical or health insurance coverage with

this policy or certificate?

B. Producers shall list on the application (or other form referred to in Section 14(A) above)

any other health insurance policies they have sold to the applicant, including policies still

in force and policies sold within the past five (5) years which are no longer in force.

C. Solicitations Other than Direct Response. Upon determining that a sale will involve

replacement, an insurer, other than an insurer using direct response solicitation methods,

or its producer, shall furnish the applicant, prior to issuance or delivery of the individual

long-term care insurance policy, a notice regarding replacement of accident and sickness

or long-term care coverage. One copy of such notice shall be retained by the applicant

and an additional copy signed by the applicant shall be retained by the insurer. The

required notice shall be provided in the following manner:

NOTICE TO APPLICANT REGARDING REPLACEMENT OF INDIVIDUAL ACCIDENT

AND SICKNESS OR LONG-TERM CARE INSURANCE

[Insurance company’s name and address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to [your application] [information you have furnished], you intend to let lapse

or otherwise terminate existing accident and sickness or long-term care insurance and

replace it with an individual long-term care insurance policy to be issued by [company

name]. Your new policy provides thirty (30) days within which you may decide, without

cost, whether you desire to keep the policy. For your own information and protection,

you should be aware of and seriously consider certain factors which may affect the

insurance protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all accident and

sickness or long-term care insurance coverage you now have, and terminate your

present policy only if, after due consideration, you find that purchase of this long-term

care coverage is a wise decision.

STATEMENT TO APPLICANT BY AGENT [BROKER OR OTHER

REPRESENTATIVE]:

I have reviewed your current medical or health insurance coverage. I believe the

replacement of insurance involved in this transaction materially improves your position.

My conclusion has taken into account the following considerations, which I call to your

attention:

1. Health 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. State law provides that your replacement policy or certificate may not

contain new preexisting conditions, waiting periods, elimination periods or

probationary periods. The insurer will waive any time periods applicable

to preexisting conditions, waiting periods, elimination periods, or

probationary periods in the new policy or coverage for similar benefits to

the extent such time was spent (depleted) under the original policy.

3. If you are replacing existing long-term care insurance coverage you may

wish to secure the advice of your present insurer, its agent or producer, a

family member or other advisor 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.

4. If, after due consideration, you still wish to terminate your present policy

and replace it with new coverage, be certain to truthfully and completely

answer all questions on the application concerning your medical health

history. Failure to include all material medical information on the

application may provide a basis for the company to deny any future claims

and to refund your premium as though your policy has never been in

force. After the application has been completed and before you sign it,

reread it carefully to be certain that all information has been properly

recorded.

______________________________________________

(Signature of Agent, Broker or Other Representative)

[Typed Name and Address of Agent or Broker]

The above “Notice to Applicant” was delivered to me on:

___________________________________

(Date)

___________________________________

(Applicant’s Signature)

D. Direct Response Solicitations. Insurers using direct response solicitation methods shall

deliver a notice regarding replacement of accident and sickness or long-term care

coverage to the applicant upon issuance of the policy. The required notice shall be

provided in the following manner:

NOTICE TO APPLICANT REGARDING REPLACEMENT

ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

[Insurance company’s name and address]

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to [your application] [information you have furnished], you intend to let lapse

or otherwise terminate existing accident and sickness or long-term care insurance and

replace it with the long-term care insurance policy delivered herewith issued by

[company name]. Your new policy provides thirty (30) days within which you may

decide, without cost, whether you desire to keep the policy. For your own information

and protection, you should be aware of and seriously consider certain factors which

may affect the insurance protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all accident and

sickness or long-term care insurance coverage you now have, and terminate your

present policy only if, after due consideration, you find that purchase of this long-term

care coverage is a wise decision.

1. Health 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. State law provides that your replacement policy or certificate may not

contain new preexisting conditions, waiting periods, elimination periods or

probationary periods. Your insurer will waive any time periods applicable

to preexisting conditions, waiting periods, elimination periods, or

probationary periods in the new policy or coverage for similar benefits to

the extent such time was spent or depleted under the original policy.

3. If you are replacing existing long-term care insurance coverage, you may

wish to secure the advice of your present insurer, its producer or agent, a

family member, or other advisor 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.

4. [To be included only if the application is attached to the policy.] If after

due consideration, you still wish to terminate your present policy and

replace it with new coverage, read the copy of the application attached to

your new policy and be sure that all questions are answered fully and

correctly. Omissions or misstatements in the application could cause an

otherwise valid claim to be denied. Carefully check the application and

write to [company name and address] within thirty (30) days if any

information is not correct and complete, or if any past medical history has

been left out of the application.

__________________________

(Company Name)

E. Where replacement is intended, the replacing insurer shall notify, in writing, the

existing insurer of the proposed replacement. The existing policy shall be identified by

the insurer, name of the insured and policy number or address including zip code. Notice

shall be made within five (5) working days from the date the application is received by

the insurer or the date the policy is issued, whichever is sooner.

F. Life insurance policies that accelerate benefits for long-term care shall comply

with this section if the policy being replaced is a long-term care insurance policy. If the

policy being replaced is a life insurance policy, the insurer shall comply with the

replacement requirements of Regulation I-2001-03. If a life insurance policy that

accelerates benefits for long-term care is replaced by another such policy, the replacing

insurer shall comply with both the long-term care and the life insurance replacement

requirements.

Section 15. Reporting Requirements

A. Every insurer shall maintain records for each producer of that producer’s amount of

replacement sales as a percent of the producer’s total annual long-term care insurance

policy sales. Each insurer shall also maintain record for each producer of that producer’s

amount of lapses of long-term care insurance policies sold by the producer as a percent of

the producer’s total sales of long-term care insurance policies.

B. Every insurer shall report annually by June 30 the top ten percent (10%) of its producers

with the greatest percentages of lapses and replacements as measured by subsection

15(A) above. (Appendix G)

C. Reported replacement and lapse rates do not alone constitute a violation of

insurance laws or necessarily imply wrongdoing. The reports are for the purpose of

reviewing more closely producer activities regarding the sale of long-term care insurance.

D. Every insurer shall report annually by June 30 the number of lapsed policies as a

percent of its total annual sales and as a percent of its total number of policies in force as

of the end of the preceding calendar year. (Appendix G)

E. Every insurer shall report annually by June 30 the number of replacement policies

sold as a percent of its total annual long-term care insurance policy sales and as a percent

of its total number of policies in force as of the preceding calendar year. (Appendix G)

F. Every insurer shall report annually by June 30, for qualified long-term care

insurance contracts and non-qualified long-term care insurance contracts, the number of

claims denied for each class of business, expressed as a percentage of claims denied.

(Appendix E)

G. Every insurer shall report annually by June 30, for qualified long-term care insurance

contracts and non-qualified long-term care insurance contracts, the number of claims

denied or not paid because the insured did not meet the benefit trigger under the policy.

H. Every insurer shall report annually by June 30 the number of policies returned within the

30-day free look period.

I. Every insurer shall report annually by June 30 the number of internal appeals requested

and the outcome of each internal appeal.

J. Every insurer shall report annually by June 30 the number of independent reviews

requested and the outcome of each independent review.

K. Every insurer shall report annually by June 30 the number of policy or certificate

rescissions, both state and countrywide. (Appendix A)

L. For purposes of this section:

(1) “Policy” means only long-term care insurance;

(2) Subject to Paragraph (3), “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;

(3) “Denied” means the insurer refuses to pay a claim for any reason other

than for claims not paid for failure to satisfy the elimination period or because of

an applicable preexisting condition; and

(4) “Report” means on a statewide basis unless specified to the contrary.

M. Reports required under this section shall be filed with the Commissioner.

Section 16. Licensing

A producer is not authorized to sell, solicit or negotiate with respect to long-term care insurance

except as authorized under Title 8, Chapter 131.

Section 17. Discretionary Powers of Commissioner

A. The Commissioner may, upon written request and after an administrative hearing, issue

an order to modify or suspend a specific provision or provisions of this regulation with

respect to a specific long-term care insurance policy or certificate upon a written finding

that:

(1). The modification or suspension would be in the best interest of insureds;

(2) The purposes to be achieved could not be effectively or efficiently achieved

without the modification or suspension; and

(3) (a) The modification or suspension is necessary to the development of an

innovative and reasonable approach for insuring long-term care; or

(b) The policy or certificate is to be issued to residents of a life care or

continuing care retirement community or some other residential

community for the elderly and the modification or suspension is

reasonably related to the special needs or nature of such a community; or

insurance to be sold as part of, or in conjunction with, another insurance

product.

B. Consistent with the standards and procedures established in subdivision A, the

Commissioner may issue a temporary order modifying or suspending a specific provision

or provisions of this regulation provided that the Commissioner provides notice of the

temporary order and holds an administrative hearing within 20 days of the date that the

Commissioner issues the temporary order.

Section 18. Reserve Standards

A. When long-term care benefits are provided through the acceleration of benefits under

group or individual life policies or riders to such policies, policy reserve for such benefits

shall be determined in accordance in accordance Vermont’s standard valuation law, Title

8, Subchapter 4, 8 V.S.A. § 3781, et seq. Claim reserves must also be established in the

case when such policy or rider is in claim status.

Reserves for policies and riders subject to this subsection should be based on the multiple

decrement model utilizing all relevant decrements except for voluntary termination rates.

Single decrement approximations are acceptable if the calculation produces essentially

similar reserves, if the reserve is clearly more conservative, or if the reserve is

immaterial. The calculations may take into account the reduction in life insurance

benefits due to the payment of long-term care benefits. However, in no event shall the

reserves for the long-term care benefit and the life insurance benefit be less than the

reserves for the life insurance benefit assuming no long-term care benefit.

In the development and calculation of reserves for policies and riders subject to this

subsection, due regard shall be given to the applicable policy provisions, marketing

methods, administrative procedures and all other considerations which have an impact on

projected claim costs, including, but not limited to, the following:

(1) Definition of insured events;

(2) Covered long-term care facilities;

(3) Existence of home convalescence care coverage;

(4) Definition of facilities;

(5) Existence or absence of barriers to eligibility;

(6) Premium waiver provision;

(7) Renewability;

(8) Ability to raise premiums;

(9) Marketing methods;

(10) Underwriting procedures;

(11) Claims adjustment procedures;

(12) Waiting periods;

(13) Maximum benefits;

(14) Availability of eligible facilities;

(15) Margins in claim costs;

(16) Optional nature of benefits;

(17) Delay in eligibility;

(18) Inflation protection provisions; and

(19) Guaranteed insurability option.

Any applicable valuation morbidity table shall be certified as appropriate as a statutory

valuation table by a member of the American Academy of Actuaries.

B. When long-term care benefits are provided other than as in subsection A, reserves shall

be as directed by the Commissioner.

Section 19. Loss Ratios

A. This section shall apply to all long-term care insurance policies or certificates, except

where application conflicts with specific portions of Sections 10 (initial filing

requirements) and 20 (premium rate schedule increases).

B. Benefits under individual long-term care insurance policies shall be deemed reasonable in

relation to premiums provided the expected loss ratio is at least sixty percent, and

benefits under group long-term policies shall be deemed reasonable in relation to

premiums provided the expected loss ratio is at least seventy percent. In evaluating the

expected loss ratio, due consideration shall be given to all relevant factors, including:

(1) Statistical credibility of incurred claims experience and earned premiums;

(2) The period for which rates are computed to provide coverage;

(3) Experienced and projected trends;

(4) Concentration of experience within early policy duration;

(5) Expected claim fluctuation;

(6) Experience refunds, adjustments or dividends;

(7) Renewability features;

(8) All appropriate expense factors;

(9) Interest;

(10) Experimental nature of the coverage;

(11) Policy reserves;

(12) Mix of business by risk classification; and

(13) Product features such as long elimination periods, high deductibles and high

maximum limits.

C. Subsection B shall not apply to life insurance policies that accelerate benefits for

long-term care. A life insurance policy that funds long-term care benefits entirely

by accelerating the death benefit is considered to provide reasonable benefits in

relation to premiums paid, if the policy complies with all of the following

provisions:

(1) The interest credited internally to determine cash value accumulations,

including long-term care, if any, are guaranteed not to be less than the minimum

guaranteed interest rate for cash value accumulations without long-term care set

forth in the policy;

(2) The portion of the policy that provides life insurance benefits meets the

nonforfeiture requirements of the Standard Nonforfeiture Law for Life Insurance,

Title 8, Chapter 103, and any other applicable provisions of Vermont law;

(3) The policy meets the disclosure requirements of 8 V.S.A. §§ 8091 and 8092, and

this regulation;

(4) Any policy illustration that meets the applicable requirements of Vermont

Insurance Regulation 98-1 Life Insurance Illustrations and any later amendments;

and

(5) An actuarial memorandum prepared and signed by an actuary who is a member in

good standing of the American Academy of Actuaries is filed with the

Department that includes:

(a) A description of the basis on which the long-term care rates were

determined;

(b) A description of the basis for the reserves;

method, and limits on ages of issuance;

(d) A description and a table of each actuarial assumption used. For expenses,

an insurer must include percent of premium dollars per policy and dollars

per unit of benefits, if any;

(e) A description and a table of the anticipated policy reserves and additional

reserves to be held in each future year for active lives;

(f) The estimated average annual premium per policy and the average issue

age;

(g) A statement as to whether underwriting is performed at the time of

application. The statement shall indicate whether underwriting is used

and, if used, the statement shall include a description of the type or types

of underwriting used, such as medical underwriting or functional

assessment underwriting. Concerning a group policy, the statement shall

indicate whether the enrollee or any dependent will be underwritten and

when underwriting occurs; and

(h) A description of the effect of the long-term care policy provision on the

required premiums, nonforfeiture values and reserves on the underlying

life insurance policy, both for active lives and those in long-term care

claim status.

Section 20. Premium Rate Schedule Increases

A. This section shall apply as follows:

(1) Except as provided in Paragraph (2), this section applies to any long-term care

policy or certificate issued in this state on or after July 1, 2010.

(2) For certificates issued on or after the effective date of this amended regulation

under a group long-term care insurance policy as defined in 8 V.S.A. §

8082(4)(A), which policy was in force at the time this amended regulation

became effective, the provisions of this section shall apply on the policy

anniversary following January 1, 2011.

B. An insurer shall request approval of a premium rate schedule increase, including an

Exceptional increase, as required by 8 V.S.A. §4062, at least 60 days prior to the

anticipated notice to the policyholders. Such rate request filing shall include:

(1) Information required by Section 9;

(2) Certification by a Qualified actuary that:

(a) If the requested premium rate schedule increase is implemented and the

underlying assumptions, which reflect moderately adverse conditions, are

realized, no further premium rate schedule increases are anticipated;

(b) The premium rate filing is in compliance with the provisions of this

section;

(3) An actuarial memorandum justifying the rate schedule change request that

includes:

(a) Lifetime projections of earned premiums and incurred claims based on the

filed premium rate schedule increase, and the method and assumptions

used in determining the projected values, including reflection of any

assumptions that deviate from those used for pricing other forms currently

available for sale;

(i) Annual values for the five (5) years preceding and the three (3)

years following the valuation date shall be provided separately;

(ii) The projections shall include the development of the lifetime loss

ratio, unless the rate increase is an Exceptional increase;

(iii) The projections shall demonstrate compliance with subsection C;

and

(iv) For Exceptional increases,

(I) The projected experience should be limited to the increases

in claims expenses attributable to the approved reasons for

the Exceptional increase set forth in Section 4(D) of this

Regulation; and

(II) In the event the Commissioner determines as provided in

Section 4(D)(4) that offsets may exist, the insurer shall use

appropriate net projected experience;

(b) Disclosure of how reserves have been incorporated in this rate increase

whenever the rate increase will trigger contingent benefit upon lapse;

necessary, which pricing assumptions were not realized and why, and

what other actions taken by the company have been relied on by the

actuary;

(d) A statement that policy design, underwriting and claims adjudication

practices have been taken into consideration; and

(e) In the event that it is necessary to maintain consistent premium rates for

new certificates and certificates receiving a rate increase, the insurer will

need to file composite rates reflecting projections of new certificates;

(4) A statement that renewal premium rate schedules are not greater than new

business premium rate schedules except for differences attributable to benefits,

unless sufficient justification is provided to the Commissioner; and

(5) Any other information deemed necessary for review and approval of the premium

rate schedule increase by the Commissioner.

C. All premium rate schedule increases shall be determined in accordance with the

following requirements:

(1) Exceptional increases shall provide that seventy percent (70%) of the present

value of projected additional premiums from the Exceptional increase will be

returned to policyholders in benefits;

(2) Premium rate schedule increases shall be calculated such that the sum of the

accumulated value of incurred claims, without the inclusion of active life

reserves, and the present value of future projected incurred claims, without the

inclusion of active life reserves, will not be less than the sum of the following:

(a) The accumulated value of the initial earned premium times fifty-eight

percent (58%);

(b) Eighty-five percent (85%) of the accumulated value of prior

premium rate schedule increases on an earned basis;

fifty-eight percent (58%); and

(d) Eighty-five percent (85%) of the present value of future projected

premiums not in Subparagraph (c) on an earned basis;

(3) In the event that a policy form has both exceptional and other increases,

the values in Paragraph (2)(b) and (2)(d) will also include seventy percent

(70%) for exceptional rate increase amounts; and

(4) All present and accumulated values used to determine rate increases shall use the

maximum valuation interest rate for contract reserves permitted by law in the

valuation of whole life insurance issued on the same date as the contract at issue.

The actuary shall disclose as part of the actuarial memorandum the use of any

appropriate averages.

D. For each rate increase that is implemented, the insurer shall file for approval by the

Commissioner updated projections, as defined in subsection B(3)(a), annually for the

next three (3) years and include a comparison of actual results to projected values. The

Commissioner may extend the period to greater than three (3) years if actual results are

not consistent with projected values from prior projections. For group insurance policies

that meet the conditions in Subsection K, the projections required by this subsection shall

be provided to the policyholder in lieu of filing with the Commissioner.

E. If any premium rate in the revised premium rate schedule is greater than 200 percent of

the comparable rate in the initial premium schedule, lifetime projections, as defined in

Subsection (B)(3)(a), shall be filed for approval by the Commissioner every five (5) years

following the end of the required period in Subsection D. For group insurance policies

that meet the conditions in Subsection K, the projections required by this subsection shall

be provided to the policyholder in lieu of filing with the Commissioner.

F. (1) If the Commissioner has determined that the actual experience following a

rate increase does not adequately match the projected experience and that the

current projections under moderately adverse conditions demonstrate that incurred

claims will not exceed proportions of premiums specified in subsection C, the

Commissioner may require the insurer to implement any of the following:

(a) Premium rate schedule adjustments; or

(b) Other measures to reduce the difference between the projected and actual

experience.

(2) In determining whether the actual experience adequately matches the projected

experience, consideration should be given to Subsection (B)(3)(e), if appropriate.

G. If the majority of the policies or certificates to which the increase is applicable are

eligible for the contingent benefit upon lapse, the insurer shall file:

(1) A plan, subject to Commissioner approval, for improved administration or claims

processing designed to eliminate the potential for further deterioration of the

policy form requiring further premium rate schedule increases, or both, or to

demonstrate that appropriate administration and claims processing have been

implemented or are in effect; otherwise the Commissioner may impose the

condition in subsection H of this section; and

(2) The original anticipated lifetime loss ratio, and the premium rate schedule

increase that would have been calculated according to subsection C had the

greater of the original anticipated lifetime loss ratio or fifty-eight percent (58%)

been used in the calculations described in Subsection (C)(2)(a) and (c).

H. (1) For a rate increase filing that meets the following criteria, the

Commissioner shall review, for all policies included in the filing, the projected

lapse rates and past lapse rates during the twelve (12) months following each

increase to determine if significant adverse lapse rates have occurred or is

anticipated:

(a) The rate increase is not the first rate increase requested for the

specific policy form or forms;

(b) The rate increase is not an Exceptional increase; and

applicable are eligible for the contingent benefit upon lapse.

(2) In the event the Commissioner determines significant adverse lapse rates has

occurred, is anticipated in the filing or is evidenced in the actual results as

presented in the updated projections provided by the insurer following the

requested rate increase, the Commissioner may determine that a rate spiral exists.

Following the determination that a rate spiral exists, the Commissioner may

require the insurer to offer, without underwriting, to all in force insureds subject

to the rate increase the option to replace existing coverage with one or more

reasonably comparable products being offered by the insurer or its affiliates.

(a) The offer shall:

(i) Be subject to the approval of the Commissioner;

(ii) Be based on actuarially sound principles, but not be based on

attained age; and

(iii) Provide that maximum benefits under any new policy accepted by

an insured shall be reduced by comparable benefits already paid

under the existing policy.

(b) The insurer shall maintain the experience of all the replacement insureds

separate from the experience of insureds originally issued the policy

forms. In the event of a request for a rate increase on the policy form, the

rate increase shall be limited to the lesser of:

(i) The maximum rate increase determined based on the combined

experience; and

(ii) The maximum rate increase determined based only on the

experience of the insureds to which the form was originally issued

plus ten percent (10%).

I. If the Commissioner determines that the insurer has exhibited a persistent practice of

filing inadequate initial premium rates for long-term care insurance, the Commissioner

may, in addition to the provisions of subsection H of this section and any other provisions

of Vermont law, prohibit the insurer from either of the following:

(1) Filing and marketing comparable coverage for a period of up to five (5)

years; or

(2) Offering all other similar coverages and limiting marketing of new applications to

the products subject to recent premium rate schedule increases.

J. Subsections A through I shall not apply to policies for which the long-term care benefits

provided by the policy are Incidental, as defined in Section 4(E), if the policy complies

with all of the following provisions:

(1) The interest credited internally to determine cash value accumulations, including

long-term care, if any, are guaranteed not to be less than the minimum guaranteed

interest rate for cash value accumulations without long-term care set forth in the

policy;

(2) The portion of the policy that provides insurance benefits other than long-term

care coverage meets the nonforfeiture requirements as applicable in any of the

following:

(a) 8 V.S.A. §§ 3741 – 3749;

(b) 8 V.S.A. § 3750; and

(3) The policy meets the disclosure requirements of 8 V.S.A. Chapter 154 and this

Rule.

(4) The portion of the policy that provides insurance benefits other than long-term

care coverage meets the requirements as applicable in the following:

(a) Policy illustrations as required by Vermont Insurance Regulation 98-1

Life Insurance Illustrations and later amendments;

(b) Disclosure requirements in 8 V.S.A. §3856 and other applicable laws.

(5) An actuarial memorandum is filed with the Commissioner that includes:

(a) A description of the basis on which the long-term care rates were

determined;

(b) A description of the basis for the reserves;

method, and limits on ages of issuance;

(d) A description and a table of each actuarial assumption used. For expenses,

an insurer must include percent of premium dollars per policy and dollars

per unit of benefits, if any;

(e) A description and a table of the anticipated policy reserves and additional

reserves to be held in each future year for active lives;

(f) The estimated average annual premium per policy and the average issue

age;

(g) A statement as to whether underwriting is performed at the time of

application. The statement shall indicate whether underwriting is used and,

if used, the statement shall include a description of the type or types of

underwriting used, such as medical underwriting or functional assessment

underwriting. Concerning a group policy, the statement shall indicate

whether the enrollee or any dependent will be underwritten and when

underwriting occurs; and

(h) A description of the effect of the long-term care policy provision on the

required premiums, nonforfeiture values and reserves on the underlying

insurance policy, both for active lives and those in long-term care claim

status.

K. Subsections F and H shall not apply to group insurance policies as defined in 8 V.S.A.

§8082(4)(A) where:

(1) The policies insure 250 or more persons and the policyholder has 5,000 or

more eligible employees of a single employer; or

(2) The policyholder, and not the certificateholders, pays a material portion of

the premium, which shall not be less than twenty percent (20%) of the

total premium for the group in the calendar year prior to the year a rate

increase is filed.

Section 21. Filing Requirements

A. Pursuant to 8 V.S.A. § 4062, insurers shall file all forms and rates for approval by the

Commissioner prior to use of the form or rate. No form or rate shall be approved if it

contains any provision which is unjust, unfair, inequitable, misleading, or contrary to the

law of this state.

B. Forms, as used in this Rule, shall include the following: all product forms, including but

not limited to, policy forms, member handbooks, certificates, endorsements, riders, and

applications.

Section 22. Filing Requirements for Advertising

A. Every insurer or other entity providing long-term care insurance or benefits in Vermont

shall file a copy of any long-term care insurance advertisement intended for use in

Vermont whether through written, radio, television, internet, electronic, or other medium

to the Commissioner for review and approval. In addition, all advertisements shall be

retained by the insurer or other entity for at least three years from the date the

advertisement was first used.

B. The Commissioner may exempt from these requirements any advertising form or material

when, in the Commissioner’s opinion, this requirement may not be reasonably applied.

Section 23. Standards for Marketing

A. Every insurer or other entity marketing long-term care insurance coverage in Vermont,

directly or through its agents or producers, shall:

(1) Establish marketing procedures and training requirements to ensure that any

marketing activities, including comparison of policies by its agents or producers,

will be fair, accurate and understandable;

(2) Establish marketing procedures and training requirements to ensure policies sold

are suitable and that excessive insurance is not sold or issued;

(3) Display prominently by type, stamp or other appropriate means on the first page

of the outline of coverage and policy the following:

“Notice to buyer: This policy may not cover all of the costs associated with

long-term care incurred by the buyer during the period of coverage. The

buyer is advised to review carefully all policy limitations.”

(4) Provide copies of the disclosure forms required in Section 9(D) (Appendices B

and F) to the applicant.

(5) Inquire and otherwise make every reasonable effort to identify whether a

prospective applicant or enrollee for long-term care insurance already has

accident and sickness or long-term care insurance and the types and amounts of

any such insurance.

(i) An agent or producer who initiates an application shall submit to the

insurer, with or as part of the application, a statement signed by both the

applicant and the agent or producer as to whether the applicant has

existing policies or contracts. If the answer is “no,” the agent or producer’s

duties with respect to replacement are complete.

(ii) If the applicant answered “yes” to the question regarding existing

coverage referred to in Subsection A, the agent or producer shall present

and read to the applicant, not later than at the time of taking the

application, the following notice regarding replacements: “A replacement

occurs when a new policy or contract is purchased and, in connection with

the sale, you discontinue making premium payments on the existing policy

or contract. Make sure you know the facts and carefully consider whether

a replacement is in your best interests. Contact your existing company or

its agent or producer for information about the old policy or contract. Ask

for and retain all sales material used by the agent or producer in the sales

presentation. Be sure that you are making an informed decision.”

(iii) In connection with a replacement transaction the agent or producer shall

leave with the applicant at the time an application for a new policy or

contract is completed the original or a copy of all sales material. With

respect to electronically presented sales material, it shall be provided to

the policy or contract owner in printed form no later than at the time of

policy or contract delivery.

(iv) In connection with a replacement transaction the agent or producer shall

submit to the insurer to which an application for a policy or contract is

presented, a copy of each document required by this Section, a statement

identifying any preprinted or electronically presented company approved

sales materials used, and copies of any individualized sales materials,

including any illustrations related to the specific policy or contract

purchased.

(v) In connection with a replacement transaction, the insurer shall notify any

other existing insurer that may be affected by the proposed replacement

within five (5) business days of receipt of a completed application

indicating replacement or when the replacement is identified if not

indicated on the application, and mail a copy of the available illustration

or policy summary for the proposed policy or available disclosure

document for the proposed contract within five (5) business days of a

request from an existing insurer.

(6) Establish auditable procedures for verifying compliance with this section.

(7) If the state in which the policy or certificate is to be delivered or issued for

delivery has a senior insurance counseling program approved by the

Commissioner, the insurer and agent or producer shall, at solicitation, provide

written notice to the prospective policyholder and certificateholder that the

program is available and the name, address and telephone number of the program.

(8) Use the terms “noncancellable” or “level premium” only when the policy or

certificate conforms to Section 6(A)(3) and Section 6(A)(4) of this regulation.

(9) Provide an explanation of contingent benefit upon lapse rights provided for in

Section 28(C)(2).

B. In addition to the practices prohibited in Title 8, Chapter 129, and other applicable

Vermont law, the following acts and practices are prohibited:

(1) Twisting. Knowingly making any misleading representation or incomplete or

fraudulent comparison of any insurance policies or insurers for the purpose of

inducing, or tending to induce, any person to forfeit, surrender, let lapse,

terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to

take out a policy of insurance with another insurer.

(2) High pressure tactics. Employing any method of marketing having the effect of

or tending to induce the purchase of insurance through force, fright, threat,

whether explicit or implied, or undue pressure to purchase or recommend the

purchase of insurance.

(3) Cold lead advertising. Making use directly or indirectly of any method of

marketing which fails to disclose in a conspicuous manner that a purpose of the

method of marketing is solicitation of insurance and that contact will be made by

an insurance agent or producer or insurance company.

(4) Misrepresentation. Misrepresenting a material fact in selling or offering to sell a

long-term care insurance policy.

(5) Replacement of Long-Term Care Insurance Benefits Unnecessarily. No insurer,

broker, agent, producer or other person shall cause a policyholder to replace a

long-term care insurance policy unnecessarily. Nothing in this section shall be

construed to allow an insurer, broker, agent, producer or other person to cause a

policyholder to replace a long-term care insurance policy that will result in a

decrease in benefits and an increase in premium.

C. (1) With respect to the obligations set forth in this subsection, the primary

responsibility of an association or trust, as defined by 8 V.S.A. § 8082(4), when

endorsing or selling long-term care insurance shall be to educate its members

concerning long-term care issues in general so that its members can make

informed decisions. Such groups shall provide objective information regarding

long-term care insurance policies or certificates endorsed or sold by such groups

to ensure that members receive a balanced and complete explanation of the

features in the policies or certificates that are being endorsed or sold.

(2) The insurer shall file for approval with the Commissioner, in accordance with 8

V.S.A. § 4062 and any other applicable law, the following material:

(a) The policy and certificate,

(b) A corresponding outline of coverage, and

(3) The association or trust shall disclose in any long-term care insurance solicitation:

(a) The specific nature and amount of the compensation arrangements

(including all fees, commissions, administrative fees and other forms of

financial support) that the association or trust receives from endorsement

or sale of the policy or certificate to its members; and

(b) A brief description of the process under which the policies and the insurer

issuing the policies were selected.

(4) If the association or trust and the insurer have interlocking directorates or trustee

arrangements, this fact shall be disclosed to its members.

(5) The board of directors (or other responsible party if no board of directors exists)

of any group under 8 V.S.A. §§ 8082(4)(B) or (C) selling or endorsing long-term

policies or certificates shall review and approve the insurance policies as well as

the compensation arrangements made with the insurer.

(6) The association or trust shall also:

(a) At the time of the group’s decision to endorse, engage the services of a

person with expertise in long-term care insurance not affiliated with the

insurer to conduct an examination of the policies, including its benefits,

features and rates and update the examinations thereafter in the event of

material changes;

(b) Actively monitor the marketing efforts of the insurer and its agents or

producers; and

communications used to promote sales or sent to members regarding the

policies or certificates.

(7) No group long-term care insurance policy or certificate may be issued to an

association unless the insurer files with the Department the information required

in this subsection.

(8) The insurer shall not issue a long-term care policy or certificate to an association

or continue to market such a policy or certificate unless the insurer certifies

annually that the association has complied with the requirements set forth in this

section.

(9) Nothing in this subsection should be construed to mean that other applicable long-

term care laws and regulation do not apply to policies issued through associations

or trusts.

D. Failure to comply with the filing and certification requirements of this section constitutes

an unfair trade practice in violation of Title 8, Chapter 129.

Section 24. Suitability

A. This section shall not apply to life insurance policies that accelerate benefits for

long-term care.

B. Every insurer or other entity marketing long-term care insurance (the “issuer”) shall:

(1) Develop and use suitability standards to determine whether the purchase or

replacement of long-term care insurance is appropriate for the needs of the

applicant;

(2) Train its agents or producers in the use of its suitability standards; and

(3) Maintain a copy of its suitability standards and make them available for

inspection upon request by the Commissioner.

C. (1) To determine whether the applicant meets the standards developed by the

issuer, the agent or producer and issuer shall develop procedures that take the

following into consideration:

(a) The ability to pay for the proposed coverage and other pertinent financial

information related to the purchase of the coverage, including but not

limited to the applicant’s age, income, assets, expenses and financial

eligibility for Medicaid;

(b) The applicant’s goals or needs with respect to long-term care and the

advantages and disadvantages of insurance to meet these goals or needs,

including but not limited to asset protection; and

when compared to the values, benefits and costs of the recommended

purchase or replacement.

(2) The issuer, and where a agent or producer is involved, the agent or producer shall

obtain the information set out in Paragraph (1) above, and shall present to the

applicant, at or prior to application, the “Long-Term Care Insurance Personal

Worksheet.” The personal worksheet used by the issuer shall contain, at a

minimum, the information in the format contained in Appendix B, in not less than

twelve (12) point type. The issuer may request the applicant to provide additional

information to comply with its suitability standards. A copy of the issuer’s

personal worksheet shall be filed with the Commissioner for approval. Issuers

must refile the personal worksheet with the Commissioner for approval if the

issuer changes the personal worksheet.

(3) A completed personal worksheet shall be returned to the issuer prior to the

issuer’s consideration of the applicant for coverage, except the personal

worksheet need not be returned for sales of employer group long-term care

insurance coverage to employees and their spouses.

(4) The sale or dissemination outside the insurer or agency by the issuer or its agent

or producer of information obtained through the personal worksheet in Appendix

B is prohibited.

D. The issuer, and where an agent or producer is involved, the agent or producer, shall use

the suitability standards it has developed pursuant to this section in determining whether

issuing long-term care insurance coverage to an applicant is appropriate. The issuer shall

file a copy of the suitability standards with the Department on or before June 30, 2010.

Thereafter, the issuer shall file the standards annually only if the issuer revises the

suitability standards.

E. At the same time as the personal worksheet is provided to the applicant, the insurer and

where an agent or producer is involved, the agent or producer, shall provide the

disclosure form entitled “Things You Should Know Before You Buy Long-Term Care

Insurance.” The form shall be in the format contained in Appendix C, in readable font

that is not less than twelve (12) point type.

F. (1) The issuer, and where an agent or producer is involved, the agent or producer,

shall not issue a long-term care insurance policy to a consumer unless the policy

is suitable based on the suitability information provided by the applicant at the

time of sale.

(2) If the issuer determines that the applicant does not meet its financial suitability

standards, or if the applicant has declined to provide financial information

requested in the personal worksheet, the issuer may reject the application. In the

alternative, the issuer shall send the applicant a letter similar to Appendix D.

However, if the applicant has declined to provide financial information, the issuer

may use some other method to verify the applicant’s intent. Either the applicant’s

returned letter or a record of the alternative method of verification shall be made

part of the applicant’s file and retained by the issuer.

G. The issuer shall report annually, by June 30, to the Commissioner the total number of

applications received from Vermont residents, the number of those who declined to

provide information on the personal worksheet, the number of applicants who did not

meet the suitability standards, and the number of those who chose to confirm after

receiving a suitability letter.

Section 25. Prohibition Against Pre-existing Conditions, Elimination Periods and

Probationary Periods in Replacement Policies or Certificates

A. If a long-term care insurance policy or certificate replaces another long-term care policy

or certificate, the replacing insurer shall waive any time periods applicable to preexisting

conditions, elimination periods and probationary periods in the new long-term care policy

for similar benefits to the extent that similar exclusions and elimination periods have been

satisfied under the original policy or certificate.

Section 26. Availability of New Services or Providers

A. An insurer shall notify policyholders of the availability of a new long-term policy series

that provides coverage for new long-term care services or providers that are material in

nature and not previously available through the insurer to the general public. The notice

shall be provided within twelve (12) months of the date that the new policy series is made

available for sale in this state.

B. Notwithstanding subsection A above, notification is not required for any policy issued

prior to the effective date of this section or to any policyholder or certificateholder who is

currently eligible for benefits, within an elimination period or on a claim, or who

previously had been in claim status, or who would not be eligible to apply for coverage

due to issue age limitation under the new policy. The insurer may require that

policyholders meet all eligibility requirements, including underwriting and payment of

the required premium to add such new services or providers.

C. The insurer shall make the new coverage available in one of the following ways:

(1) By adding a rider to the existing policy and charging a separate premium for the

new rider based on the insured’s attained age;

(2) By exchanging the existing policy or certificate for one with an issue age based on

the present age of the insured and recognizing past insured status by granting

premium credits toward the premiums for the new policy or certificate. The

premium credits shall be based on premiums paid or reserves held for the prior

policy or certificate;

(3) By exchanging the existing policy or certificate for a new policy or certificate in

which consideration for past insured status shall be recognized by setting the

premium for the new policy or certificate at the issue age of the policy or

certificate being exchanged. The cost for the new policy or certificate may

recognize the difference in reserves between the new policy or certificate and the

original policy or certificate; or

(4) By an alternative program developed by the insurer that meets the intent of this

section if the program is filed with and approved by the Commissioner.

D. An insurer is not required to notify policyholders of a new proprietary policy series

created and filed for use in a limited distribution channel. For purposes of this

subsection, “limited distribution channel” means through a discrete entity, such as a

financial institution or brokerage, for which specialized products are available that are not

available for sale to the general public. Policyholders that purchased such a new

proprietary policy shall be notified when a new long-term care policy series that provides

coverage for new long-term care services or providers material in nature is made

available to that limited distribution channel.

E. Policies issued pursuant to this section shall be considered exchanges and not

replacements. These exchanges shall not be subject to Sections 14 and 24, and the

reporting requirements of Section 15A to E of this Regulation.

F. Where the policy is offered through an employer, labor organization, professional, trade

or occupational association, the required notification in subsection A above shall be made

to the offering entity. However, if the policy is issued to a group defined in 8 V.S.A. §

4079(4), the notification shall be made to each certificateholder.

G. Nothing in this section shall prohibit an insurer from offering any policy, rider, certificate

or coverage change to any policyholder or certificateholder. However, upon request any

policyholder may apply for currently available coverage that includes the new services or

providers. The insurer may require that policyholders meet all eligibility requirements,

including underwriting and payment of the required premium to add such new services or

providers.

H. This section does not apply to life insurance policies or riders containing accelerated

long-term care benefits.

Section 27. Right to Reduce Coverage and Lower Premiums

A. (1) Every long-term care insurance policy and certificate shall include a

provision that allows the policyholder or certificateholder to reduce coverage and

lower the policy or certificate premium in the following ways:

(a) Reducing the maximum benefit; and

(b) Reducing the daily, weekly or monthly benefit amount.

(2) The insurer may also offer other reduction options that are consistent with the

policy or certificate design or the insurer’s administrative processes.

(3) Upon a showing that the insurer is unable to offer one or more methods to reduce

coverage pursuant to Section 27.A(1), the Department may, in its discretion,

waive the requirement that the insurer offer the option to reduce coverage by

maximum benefit and by reducing the daily, weekly or monthly benefit amount.

B. The provision shall include a description of the ways in which coverage may be reduced

and the process for requesting and implementing a reduction in coverage.

C. The age to determine the premium for the reduced coverage shall be based on the age

used to determine the premiums for the coverage currently in force.

D. The insurer may limit any reduction in coverage to plans or options available for that

policy form and to those for which benefits will be available after consideration of claims

paid or payable.

E. If a policy or certificate is about to lapse, the insurer shall provide a written reminder to

the policyholder or certificateholder of his or her right to reduce coverage and premiums

in the notice required by Section 7(A)(3) of this regulation.

F. This section does not apply to life insurance policies or riders containing accelerated

long-term care benefits.

G. The requirement of this section shall apply to any long-term care policy issued in this

state on or after the January 1, 2010.

Section 28. Nonforfeiture Benefit Requirement

A. This section does not apply to life insurance policies or riders containing accelerated

long-term care benefits. A long-term care insurance policy may not be delivered or issued

for delivery in Vermont unless the policyholder has been offered the option of purchasing

a policy or certificate including a nonforfeiture benefit. If a nonforfeiture benefit is

declined, the insurer shall provide a contingent benefit upon lapse. To comply with these

requirements:

(1) Nonforfeiture benefits offered shall have coverage elements, eligibility, Benefit

triggers and benefit length that are the same as coverage to be issued without

nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the

benefit described in subsection D; and

(2) The offer shall be in writing. If the nonforfeiture benefit is described in the

Outline of Coverage or other materials given to the prospective policyholder this

shall be sufficient.

B. If the offer of a nonforfeiture benefit required by 8 V.S.A. § 8095 is rejected, the insurer

shall provide the contingent benefit upon lapse described in this section.

C. (1) In the event a group policyholder elects to make the nonforfeiture benefit

an option to the certificateholder, a certificate shall provide either the

nonforfeiture benefit or the contingent benefit upon lapse.

(2) The contingent benefit on lapse shall be triggered every time an insurer

increases the premium rates to a level which results in a cumulative increase of

the annual premium equal to or exceeding the percentage of the insured’s initial

annual premium set forth below based on the insured’s issue age, and the policy

or certificate lapses within 120 days of the due date of the premium so increased.

Unless otherwise required, policyholders shall be notified at least thirty (30) days

prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase

Issue Age Percent Increase Over

Initial Premium

29 and under 200%

30-34 190%

35-39 170%

40-44 150%

45-49 130%

50-54 110%

55-59 90%

60 70%

61 66%

62 62%

63 58%

64 54%

65 50%

66 48%

67 46%

68 44%

69 42%

70 40%

71 38%

72 36%

73 34%

74 32%

75 30%

76 28%

77 26%

78 24%

79 22%

80 20%

81 19%

82 18%

83 17%

84 16%

85 15%

86 14%

87 13%

88 12%

89 11%

90 and over 10%

(3) On or before the effective date of a substantial premium increase as defined in

Paragraph (2) above, the insurer shall:

(a) Provide a written offer to reduce policy benefits provided by the current

coverage without the requirement of additional underwriting so that

required premium payments are not increased;

(b) Provide a written offer to convert the coverage to a paid-up status with a

shortened benefit period in accordance with the terms of subsection D.

This option may be elected at any time during the 120-day period

referenced in subsection (C)(2); and

the 120-day period referenced in subsection (C)(2) shall be deemed to be

the election of the offer to convert in Subparagraph (b) above.

D. Benefits continued as nonforfeiture benefits, including contingent benefits upon

lapse, are described in this subsection:

(1) For purposes of this subsection, attained age rating is defined as a schedule of

premiums starting from the issue date which increases age at least one percent per

year prior to age fifty (50), and at least three percent (3%) per year beyond age

fifty (50).

(2) For purposes of this subsection, the nonforfeiture benefit shall be of a

shortened benefit period providing paid-up long-term care insurance coverage

after lapse. The same benefits (amounts and frequency in effect at the time of

lapse but not increased thereafter) will be payable for a qualifying claim, but the

lifetime maximum dollars or days of benefits shall be determined as specified in

Paragraph (3).

(3) The standard nonforfeiture credit will be equal to 100% of the sum of all

premiums paid, including the premiums paid prior to any changes in benefits.

The insurer may offer additional shortened benefit period options, as long as the

benefits for each duration equal or exceed the standard nonforfeiture credit for

that duration. However, the minimum nonforfeiture credit shall not be less than

thirty (30) times the daily nursing home benefit at the time of lapse. In either

event, the calculation of the nonforfeiture credit is subject to the limitation of

Subsection E.

(4) (a) The nonforfeiture benefit shall begin not later than the end of the

third year following the policy or certificate issue date. The contingent

benefit upon lapse shall be effective during the first three (3) years as well

as thereafter.

(b) Notwithstanding Subparagraph (a), for a policy or certificate with attained

age rating, the nonforfeiture benefit shall begin on the earlier of:

(i) The end of the tenth year following the policy or certificate issue

date; or

(ii) The end of the second year following the date the policy or

certificate is no longer subject to attained age rating.

(5) Nonforfeiture credits may be used for all care and services qualifying for benefits

under the terms of the policy or certificate, up to the limits specified in the policy

or certificate.

E. All benefits paid by the insurer while the policy or certificate is in premium paying status

and in the paid up status will not exceed the maximum benefits which would be payable

if the policy or certificate had remained in premium paying status.

F. There shall be no difference in the minimum nonforfeiture benefits as required under this

section for group and individual policies.

G. The requirements set forth in this section shall become effective twelve (12) months after

adoption of this provision and shall apply as follows:

(1) Except as provided in Paragraph (2), the provisions of this section apply to any

long-term care policy issued in this state on or after the effective date of this

amended regulation.

(2) For certificates issued on or after the effective date of this section, under a group

long-term care insurance policy as defined in 8 V.S.A. § 8082(4)(A), which

policy was in force at the time this amended regulation became effective, the

provisions of this section shall not apply.

H. Premiums charged for a policy or certificate containing nonforfeiture benefits or a

contingent benefit on lapse shall be subject to the loss ratio requirements of Section 19

treating the policy as a whole.

I. To determine whether contingent nonforfeiture upon lapse provisions are triggered under

subsection (C)(2), a replacing insurer that purchased or otherwise assumed a block or

blocks of long-term care insurance policies from another insurer shall calculate the

percentage increase based on the initial annual premium paid by the insured when the

policy was first purchased from the original insurer.

J. A nonforfeiture benefit for qualified long-term care insurance contracts that are level

premium contracts shall be offered that meets the following requirements:

(1) The nonforfeiture provision shall be appropriately captioned;

(2) The nonforfeiture provision shall provide a benefit available in the event of a

default in the payment of any premiums and shall state that the amount of the

benefit may be adjusted subsequent to being initially granted only as necessary to

reflect changes in claims, persistency and interest as reflected in changes in rates

for premium paying contracts approved by the Commissioner for the same

contract form; and

(3) The nonforfeiture provision shall provide at least one of the following:

(a) Reduced paid-up insurance;

(b) Shortened benefit period; or

Section 29. Standards for Benefit Triggers

A. A long-term care insurance policy shall condition the payment of benefits on a

determination of the insured’s ability to perform activities of daily living or on cognitive

impairment. Eligibility for the payment of benefits shall not be more restrictive than

requiring either a deficiency in the ability to perform not more than two (2) of the

activities of daily living or the presence of cognitive impairment.

B. (1) Activities of daily living shall include at least the following as defined in

Section 5 of this regulation:

(a) Bathing;

(b) Continence;

(d) Eating;

(e) Toileting; and

(f) Transferring.

(2) Insurers may use activities of daily living in addition to those contained in

Paragraph (1) to trigger covered benefits as long as they are clearly defined in the

policy.

C. An insurer may use additional provisions for the determination of when benefits are

payable under a policy or certificate. However the provisions shall not be more

restrictive, and shall not be in lieu of, the requirements contained in subsections A and B.

D. For purposes of this section the determination of a deficiency shall not be more restrictive

than:

(1) Requiring the hands-on assistance of another person to perform the prescribed

activities of daily living; or

(2) If the deficiency is due to the presence of a cognitive impairment, supervision or

verbal cueing by another person is needed in order to protect the insured or others.

E. Assessments of activities of daily living and cognitive impairment shall be performed by

licensed or certified professionals, such as physicians, nurses or social workers.

F. A long-term care insurance policy shall include a clear description of the process for

appealing and resolving disputes with respect to benefit determinations. These standards

shall be consistent with Section 31.

Section 30. Additional Standards for Benefit Triggers for Qualified Long-Term Care

Insurance Contracts

A. For purposes of this section, the following definitions apply:

(1) “Qualified long-term care services” means services that meet the requirements of

Section 7702(c)(1) of the Internal Revenue Code of 1986, as amended, as follows:

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 are provided pursuant to a plan of

care prescribed by a licensed health care practitioner.

(2) (a) “Chronically ill individual” has the meaning prescribed for this

term by Section 7702B(c)(2) of the Internal Revenue Code of 1986, as

amended. Under this provision, a chronically ill individual means any

individual who has been certified by a licensed health care practitioner as:

(i) 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

(ii) Requiring substantial supervision to protect the individual from

threats to health and safety due to severe cognitive impairment.

(b) The term “chronically ill individual” 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.

(3) “Licensed health care practitioner” means a physician, as defined in Section

1861(r)(1) of the Social Security Act, a registered professional nurse, licensed

social worker or other individual who meets requirements prescribed by the

Secretary of the Treasury.

(4) “Maintenance or personal care services” means any care the primary purpose of

which is the provision of needed assistance with any of the disabilities as a result

of which the individual is a chronically ill individual (including the protection

from threats to health and safety due to severe cognitive impairment).

B. A qualified long-term care insurance contract shall pay only for qualified long-term care

services received by a chronically ill individual provided pursuant to a plan of care

prescribed by a licensed health care practitioner.

C. A qualified long-term care insurance contract shall condition the payment of benefits on a

determination of the insured’s inability to perform activities of daily living for an

expected period of at least ninety (90) days due to a loss of functional capacity or to

severe cognitive impairment.

D. Certifications regarding activities of daily living and cognitive impairment required

pursuant to subsection C shall be performed by the following licensed or certified

professionals: physicians, registered professional nurses, licensed social workers, or

other individuals who meet requirements prescribed by the Secretary of the Treasury.

E. Certifications required pursuant to subsection C may be performed by a licensed

health care professional at the direction of the insurer as is reasonably necessary with

respect to a specific claim, except that when a licensed health care practitioner has

certified that an insured is unable to perform activities of daily living for an expected

period of at least ninety (90) days due to a loss of functional capacity and the insured is in

claim status, the certification may not be rescinded and additional certifications may not

be performed until after the expiration of the ninety-day period.

F. Qualified long-term care insurance contracts shall include a clear description of the

process for appealing and resolving disputes with respect to benefit determinations.

These standards shall be consistent with Section 31.

Section 31. Appealing an Insurer’s Determination That The Benefit Trigger Is Not Met

A. If an insurer determines that the Benefit trigger of a long-term care insurance policy has

not been met, it shall provide a clear, written notice to the insured of all of the following:

(1) The specific reason that the insurer determined that the insured’s Benefit trigger

has not been met.

(2) A description of any additional material or information necessary for the member

to perfect the request and an explanation of why such material or information is

necessary;

(3) The insured’s right to internal appeal in accordance with Subsections B and C, the

time limits applicable to such procedures, and the right to submit new or

additional information relating to the Benefit trigger denial with the appeal

request.

(4) The insured’s right, after exhaustion of the insurer’s internal appeal process, to

have the Benefit trigger determination reviewed under the independent review

process in accordance with Subsection C, and the affect of such an election.

(5) If an internal rule, guideline, protocol, or other similar criterion was relied upon in

making the adverse benefit determination, either the specific rule, guideline,

protocol, or other similar criterion; or a statement that such a rule, guideline,

protocol, or other similar criterion was relied upon in making the adverse benefit

determination and that a copy of such rule, guideline, protocol, or other criterion

will be provided free of charge to the member upon request.

(6) An explanation of the scientific or clinical judgment or other reason for the

determination, if applicable.

B. Internal Appeal. The internal appeal procedures shall provide at least the following:

(1) An insured may request an appeal of the insurer’s determination that the Benefit

trigger was not met, by sending a written request to the insurer, along with any

additional supporting information, within one-hundred and eighty (180) calendar

days after the insured receives the insurer’s benefit determination notice.

(2) The internal appeal shall provide the insured with the opportunity to submit

written comments, documents, records, and other information relating to the

internal appeal.

(3) The internal appeal shall provide, free of charge, reasonable access to, and copies

of, all documents, records, and other information relevant to the member’s

internal appeal.

(4) The internal appeal shall provide for a review that takes into account all

comments, documents, records and other information submitted by the member

relating to the internal appeal, without regard to whether such information was

submitted or considered in the initial benefit determination.

(5) The internal appeal shall provide for a review that does not afford deference to the

initial adverse benefit determination and ensures that the person or persons

reviewing the grievance on behalf of insurer shall not have been involved with the

adverse benefit determination or other issue that is the subject of the internal

appeal, nor shall such person or persons be the subordinate(s) of any individual

who was involved with the initial determination or other issue that is the subject

of the grievance.

(6) The internal appeal shall consider any information provided by the insured’s

treating providers.

(7) The internal appeal rights shall not exceed two levels of internal appeals, and the

second level shall be voluntary. The insurer shall waive any right to assert that a

member has failed to exhaust administrative remedies because the member did

not elect to submit a grievance to the voluntary second level of grievances.

(8) The internal appeal shall provide members for whom English is not a primary

language with information in their primary language, if requested, about how to

file an internal appeal and how to participate in the internal appeal process. This

information may be provided telephonically or in written form.

C. The internal appeal shall be completed and written notice of the internal appeal decision

shall be sent to the insured within thirty (30) calendar days of the insurer’s receipt of all

necessary information upon which a final determination can be made.

(1) If the determination that the Benefit trigger was not met is upheld upon internal

appeal, the notice of the internal appeal decision shall describe any additional

internal appeal rights offered by the insurer.

(2) If the determination that the Benefit trigger was not met is upheld after the

internal appeal process has been exhausted, and new or additional information has

not been provided to the insurer for consideration, the insurer shall provide a

written description of the insured’s right to request an independent review of the

benefit determination as described in Subsection D.

(3) If the determination that the Benefit trigger was not met is upheld after the

internal appeal process has been exhausted, the insurer shall provide the following

information in the written notice of the internal appeal decision:

(a) the titles and credentials of the reviewer(s) responsible for the internal

appeal decision;

(b) the reviewer(s) decision, drafted in sufficient detail for the insured to

understand the review(s) decision; and

including any internal rule, guideline, protocol or other criterion that the

reviewer(s) relied upon.

D. Independent Review of Benefit Trigger Determination.

(1) Request.

(a) An insured who is not satisfied with the insurer’s Benefit trigger

determination may request an independent review of the determination. A written

request for an independent review shall be made by the insured or insured’s

representative to the insurer within ninety (90) calendar days after the insurer’s

written notice of the final internal appeal decision is received by the insured.

(b) The insured may request the opportunity for the insured or his or her

representative to participate in person or by telephone.

(2) Independent Review Process.

(a) The insurer shall refer the appeal on a rotating basis to the next

independent review organization on the Department’s list of contracted

independent review organizations. If the organization has a conflict of

interest, then the insurer shall assign the appeal to the next independent

review organization on the Department’s list of independent review

organizations without a conflict.

(b) The insurer shall acknowledge the insured’s request for independent

review in writing, to the insured and to the Commissioner, within fifteen

(15) business days of receipt of the request. Such acknowledgment shall

include: (1) a copy of the insured’s request for an internal appeal; (2) a

copy of the insurer’s determination on internal appeal; (3) a copy of the

insured’s request for an independent review; and (4) the name of the

independent review organization selected to review the insured’s request

for independent review. The Department may request additional

information and documentation about the internal appeal or the

independent review at any time.

participate in person or by telephone, the independent review organization

shall meet by teleconference with the insured, his or her treating provider,

and a clinical representative of the health insurer, to review and discuss

the evidence in the appeal.

(d) The insured may submit new or additional information not previously

provided to the insurer. When submitting new information, the insured

may request that the health insurer reconsider the decision being appealed

based on the additional information being provided. In addition, if the

independent review organization to whom the appeal is assigned

determines at any time that information it has received as part of the

appeal was not available or not made available to the health insurer during

its internal review process, the independent review organization shall

request the health insurer to reconsider the decision based on the new

information. Any such request shall stay the review by the independent

review organization for no more than fifteen (15) days.

(e) The independent review organization shall provide the insurer and insured

written notice of its decision regarding the insurer’s determination within

thirty (30) calendar days from the date the insurer received the request for

an independent review of the benefit trigger determination. If the

independent review organization overturns the insurer’s decision, it shall:

(i) Establish the date that the Benefit trigger was deemed to have been

met;

(ii) Establish the specific period of time under review for which the

insurer declined eligibility but during which the independent

review organization deemed the Benefit trigger to have been met.

(iii) For qualified long-term care insurance contracts, the independent

review organization shall make a determination that the insured is

a chronically ill individual.

(f) The decision of the independent review organization with respect to

whether the insured met the Benefit trigger will be final and binding on

the insurer.

(g) Nothing in this section shall restrict the insured’s right to submit a new

claim after the independent review decision, should the independent

review organization uphold the insurer’s decision, if the insured’s

condition changes.

(h) At any time before or after the request for independent review has been

received and referred to the independent review organization, the insured

may submit new or additional information not previously provided to the

insurer but pertinent to the Benefit trigger denial. The insurer shall

consider such information and affirm or overturn its Benefit trigger

determination. If the insurer affirms its Benefit trigger determination, the

insurer shall promptly provide such new or additional information to the

independent review organization for its review. If the insurer overturns

its Benefit trigger determination:

(i) The insurer shall provide notice to the independent review

organization, the insured and the Department of its decision; and

(ii) The independent review process shall immediately cease.

E. Qualifications of an Independent Review Organization. The Department shall from time

to time enter into contracts with as many independent review organizations as it deems

necessary to conduct the review provided for in this regulation. The contracts shall set

forth all terms that the Department deems necessary to ensure a full, fair and timely

review of appeals. Selection of the independent review organizations shall include review

of proposals with regard to at least the following:

(1) Proposed scope of services;

(2) Fee structure and total estimated costs of reviews;

(3) Number and qualifications of reviewers, who shall include licensed health care

professionals in appropriate disciplines and specialties for determining functional

or cognitive impairment (e.g. physical therapy, occupational therapy, neurology,

physical medicine and rehabilitation);

(4) Accreditation;

(5) Procedures to ensure the confidentiality of the appeals, including identifiable

health care information used in reviewing the appeals;

(6) Procedures to ensure the neutrality of reviewers;

(7) Administrative and operational policies and procedures; and

(8) Procedures to ensure that no conflict of interest exists among the organization and

its reviewers and the health insurer or insured whose case is under review.

F. Applicability. The requirements of this section apply to Benefit trigger determinations on

or after January 1, 2010. However, it shall not apply to long-term care insurance claims

made under a group long-term care insurance policy that insures a plan governed by the

Employee Retirement Income Security Act of 1974, as amended.

Section 32. Standard Format Outline of Coverage

This section of the regulation implements, interprets and makes specific the provisions of 8

V.S.A. § 8090 in prescribing a standard format and the content of an outline of coverage.

A. The outline of coverage shall be a free-standing document, and shall use a readable font

that is no smaller than twelve point type.

B. The outline of coverage shall contain no material of an advertising nature.

C. Text which is capitalized or underscored in the standard format outline of coverage may

be emphasized by other means which provide prominence equivalent to such

capitalization or underscoring.

D. Use of the text and sequence of text of the standard format outline of coverage is

mandatory, unless otherwise specifically indicated.

E. The format for the outline of coverage must be:

[COMPANY NAME]

[ADDRESS – CITY & STATE]

[TELEPHONE NUMBER]

LONG-TERM CARE INSURANCE

OUTLINE OF COVERAGE

[Policy Number or Group Master Policy & Certificate Number]

[Except for policies or certificates which are guaranteed issue, the following caution statement,

or language substantially similar, must appear as follows in the outline of coverage.]

Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your

responses to the questions on your application. A copy of your [application] [enrollment form]

[is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue,

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! If, for any reason, any of your answers are incorrect,

contact the company at this address: [insert address]

1. This policy is [an individual policy of insurance] ([a group policy] which was issued in

[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 coverage for other policies available to you. This is not an

insurance contract, but only a summary of coverage. Only the individual or group policy

contains governing contractual provisions. This means that the policy or group policy

sets forth 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 CERTIFICATE) CAREFULLY!

3. PREMIUM.

[(a) State the total annual premium for the policy;

(b) State the total monthly premium for the policy;

the portion of annual premium which corresponds to each benefit option.]

4. LIMITATIONS AND EXCLUSIONS.

[Describe:

(a) Preexisting conditions;

(b) Non-eligible facilities/providers;

by a family member, etc.);

(d) Exclusions/exceptions;

(e) Limitations.]

[This section should provide a brief specific description of any policy provisions which

limit, exclude, restrict, reduce, or 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 WITH

YOUR LONG-TERM CARE NEEDS. IF THE POLICY DOES NOT COVER ALL

NECESSARY EXPENSES, YOU WILL HAVE TO PAY EXPENSES THAT ARE NOT

COVERED.

5. FEDERAL TAX CONSEQUENCES.

This [POLICY] [CERTIFICATE] is intended to be a federally tax-qualified long-term

care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as

amended.

Federal Tax Implications of this [POLICY] [CERTIFICATE]. This [POLICY]

[CERTIFICATE] is not intended to be a federally tax-qualified long-term care

insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986

as amended. Benefits received under the [POLICY] [CERTIFICATE] may be

taxable as income.

6. TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE

CONTINUED IN FORCE OR DISCONTINUED.

(a) [For long-term care health insurance policies or certificates, describe one of the

following permissible policy renewability provisions:

(1) Policies and certificates that are guaranteed renewable shall contain the

following statement:] RENEWABILITY: THIS POLICY

[CERTIFICATE] IS GUARANTEED RENEWABLE. This means you

have the right, subject to the terms of your policy, [certificate] to continue

this policy as long as you pay your premiums on time. [Company Name]

cannot change any of the terms of your policy on its own, except that, in

the future, IT MAY INCREASE THE PREMIUM YOU PAY.

(2) [Policies and certificates that are noncancellable shall contain the

following statement:] RENEWABILITY: THIS POLICY

[CERTIFICATE] IS NONCANCELLABLE. This means that you have

the right, subject to the terms of your policy, to continue this policy as

long as you pay your premiums on time. [Company Name] cannot change

any of the terms of your policy on its own and cannot change the premium

you currently pay. However, if your policy contains an inflation

protection feature where you choose to increase your benefits, [Company

Name] may increase your premium at that time for those additional

benefits.

(b) [For group coverage, specifically describe continuation/conversion provisions

applicable to the certificate and group policy;]

provisions.]

7. TERMS UNDER WHICH THE COMPANY MAY CHANGE PREMIUMS.

[In bold type larger than the maximum type required to be used for the other provisions

of the outline of coverage, state whether or not the company has a right to change the

premium, and if a right exists, describe clearly and concisely each circumstance under

which the premium may change.]

8. TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED

AND PREMIUM REFUNDED.

(a) [Provide a brief description of the right to return – “free look” provision of the

policy.]

(b) [Include a statement that the policy either does or does not contain provisions

providing for a refund or partial refund of premium upon the death of an insured

or surrender of the policy or certificate. If the policy contains such provisions,

include a description of them.]

9. 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 agents] Neither [insert company name] nor its agents represent Medicare, the

federal government or any state government.

(b) [For direct response] [insurance company name] is not representing Medicare, the

federal government or any state government.

10. LONG-TERM CARE COVERAGE. Policies of this category are designed to provide

coverage for one or more necessary or medically necessary diagnostic, preventive,

therapeutic, rehabilitative, maintenance, or personal care services, provided in a covered

setting , such as in a nursing home, in the community or in the home.

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

[coinsurance] requirements. [Modify this paragraph if the policy is not an indemnity

policy.]

11. BENEFITS PROVIDED BY THIS POLICY.

(a) [Covered services, related deductible(s), waiting periods, elimination periods and

benefit maximums.]

(b) [Institutional benefits, by skill level.]

(d) [Eligibility for Payment of Benefits]

[Activities of daily living, cognitive impairment or the existence of mental health

condition shall be used to measure an insured’s need for long-term care and must

be defined and described as part of the outline of coverage.]

[Any additional Benefit triggers must also be explained. If these triggers differ

for different benefits, explanation of the trigger should accompany each benefit

description. If an attending physician or other specified person must certify a

certain level of functional dependency in order to be eligible for benefits, this too

must be specified.]

12. RELATIONSHIP OF COSTS OF CARE AND BENEFITS. Because the costs 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 level will not increase over time;

(b) Any automatic benefit adjustment provisions;

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; and

(e) Describe whether there will be any additional premium charge imposed, and how

that is to be calculated.]

YOU SHOULD CAREFULLY DETERMINE WHETHER PURCHASING

COMPOUND INFLATION PROTECTION IS AN APPROPRIATE CHOICE

FOR YOUR BENEFIT NEEDS.

13. ALZHEIMER’S DISEASE AND MENTAL HEALTH CONDITIONS.

[State that the policy provides coverage for insureds having Alzheimer’s disease and

related diseases or mental health conditions. Specifically describe each benefit screen or

other policy provision which provides preconditions to the availability of policy benefits

for such an insured.]

14. ADDITIONAL FEATURES.

[(a) Indicate if medical underwriting is used;

(b) Describe other important features.]

15. IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE

INSURANCE, CONTACT THE STATE HEALTH INSURANCE ASSISTANCE

PROGRAM (SHIP) AT 1-800-642-5119 OR THE VERMONT DEPARTMENT OF

BANKING, INSURANCE, SECURITIES AND HEALTH CARE ADMINISTRATION

(BISHCA) AT 1-800-631-7788. CONTACT THE INSURANCE COMPANY IF YOU

HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE

INSURANCE POLICY OR CERTIFICATE.

Section 33. Requirement to Deliver Shopper’s Guide

A. A long-term care insurance shopper’s guide approved by the Commissioner shall be

provided to all prospective applicants of a long-term care insurance policy or certificate.

(1) In the case of agent solicitations, an agent must deliver the shopper’s guide prior

to the presentation of an application or enrollment form.

(2) In the case of direct response solicitations, the shopper’s guide must be presented

in conjunction with any application or enrollment form.

B. Life insurance policies or riders containing accelerated long-term care benefits are not

required to furnish the above-reference guide, but shall furnish the policy summary

required by 8 V.S.A. §8091.

Section 34. Producer Requirements

A. An individual may not sell, solicit or negotiate long-term care insurance

unless the individual is licensed as an insurance agent or producer for accident and health

or sickness or life and has completed the training requirements set forth in subsection B.

For resident licensees, this training can count towards the twenty-four (24) hours of

continuing education required in 8 V.S.A. § 4800a and any regulation promulgated

thereunder if the training satisfies all requirements for continuing education, including

course approval and provider registration. The training requirements of Subsection B

must be approved for continuing education under 8 V.S.A. § 4800a.

B. Training Requirements.

(1) An agent or producer selling, soliciting or negotiating the sale of any long-term

care insurance policy must complete one, eight (8) hour course specific to long-

term care, not less than two hours of which shall contain Vermont-specific

information including Vermont Medicaid information. The Vermont-specific

information can be part of an eight-hour course or may be provided as a separate

course. The initial training requirement shall apply as follows:

(a) Insurance agents or producers licensed to sell long-term care

insurance policies after March 31, 2010 must complete the one-

time eight-hour training before the agent or producer may sell,

solicit or negotiate the sale of any long-term care insurance policy.

(b) Insurance agents or producers licensed to sell long-term care

insurance policies on or before March 31, 2010 must complete the

one-time eight-hour training or before March 31, 2011.

(2) An agent or producer selling, soliciting or negotiating the sale of any long-term

care insurance policy must also complete no less than four (4) hours of ongoing

training every 24 months ending March 31

of odd-numbered calendar years.

The Commissioner may, at his or her discretion, require agents and producers

licensed to sell long-term care insurance to complete additional ongoing training

if the Commissioner determines that such training is needed due to significant

changes in the long-term care statute or the Medicaid program.

(3) The training required under Subsections (B)(1) and (B)(2) shall consist of topics

related to long-term care insurance, long-term care services and, if applicable,

qualified state long-term care insurance Partnership programs, including, but not

limited to:

a. State and federal regulations and requirements and the relationship between

qualified state long-term care insurance Partnership programs and other public

and private coverage of long-term care services, including Medicaid;

b. Available long-term care services and providers;

c. Changes or improvements in long-term care services or providers;

d. Alternatives to the purchase of private long-term care insurance;

e. The effect of inflation on benefits and the importance of inflation protection;

and

f. Consumer suitability standards and guidelines.

(4) The training required by this section shall not include training that is

insurer or company product specific or that includes any sales or marketing

information, materials, or training, other than those required by state or federal

law.

C. Insurer’s Obligations.

(1) Insurers subject to this Regulation shall obtain verification that an agent or

producer receives training required by this Regulation before an agent or producer

is permitted to sell, solicit or negotiate the insurer’s long-term care insurance

products, maintain records subject to the state’s record retention requirements,

and make that verification available to the Commissioner upon request.

(2) Each insurer subject to this Regulation shall maintain the training records that

demonstrate that agents and producers have received the training contained in

subsection (B)(1) and (B)(2). These records shall be maintained in accordance

with the state’s record retention requirements and shall be made available to the

Department upon request.

D. Satisfaction of the training requirements in any state shall be deemed to satisfy the

training requirements in Vermont, except for the Vermont-specific training required as

set forth in Subsection (B)(1) of this Section.

E. Agent and Producer Compensation Requirements.

(1) Agents and producers must obtain a prior written agreement with an applicant,

policyholder or other member of the public concerning fees or charges made by

that agent or producer directly to the applicant, policyholder or other member of

the public for that agent or producer procuring, servicing, or providing advice on

insurance contracts.

(2) Commissions, expense allowances, bonuses, fees or any other compensation

received directly by agents or producers from any legal entity engaged in the

insurance business is exempt from this requirement.

Section 35. Long-Term Care Partnership Policies

A. Applicability. In accordance with Section 6021 of the Deficit Reduction Act of 2005

(Pub.L. 109-171) and in addition to the requirements of Chapter 154 of Title 8 and other

applicable laws, the provisions of this section shall apply to long-term care insurance that

is intended to qualify under Vermont’s long-term care partnership program as a

Partnership policy.

B. Policy Certification.

(1) A Partnership policy shall not be issued or issued for delivery in Vermont unless

filed with and approved by the Department. Any policy submitted for

certification as a Partnership policy shall be accompanied by a Partnership

Certification Form (Appendix J).

(2) Insurers requesting to make use of a previously approved policy form as a

Partnership policy shall submit to the Department a Partnership Certification

Form signed by an officer of the company. A Partnership Certification Form shall

be required for each policy form submitted for partnership qualification

(Appendix J).

C. Notice Requirements.

(1) An insurer or its agent, soliciting or offering to sell a policy that is intended to

qualify as a Partnership policy, shall provide to each prospective applicant a

Partnership Program Notice (Appendix H), outlining the requirements and

benefits of a Partnership policy. A similar notice may be used for this purpose if

filed and approved by the Department. The Partnership Program Notice shall be

provided with the required Outline of Coverage.

(2) A Partnership policy issued or issued for delivery in Vermont shall be

accompanied by a Partnership Disclosure Notice (Appendix I) explaining the

benefits associated with a Partnership policy and indicating that at the time issued,

the policy is intended to be a Qualified state long-term care insurance partnership

policy. A similar notice may be used if filed and approved by the Department.

The Partnership Disclosure Notice shall also include a statement indicating that

by purchasing this Partnership policy, the insured does not automatically qualify

for Medicaid.

(3) Insurers issuing a Partnership policy shall provide a Policyholder Long-Term

Care Partnership Program Status Form (Appendix K) upon request of the

policyholder or the policyholder’s representative. A similar notice may be used if

filed and approved by the Department.

D. Inflation Protection. A Partnership policy must provide at least the following levels of

inflation protection:

(1) If a policy is sold to a person who is less than sixty-one (61) years of age as of the

date of purchase of the policy, the policy must provide automatic annual

compounded inflation increases at a rate not less than three percent (3%); or

provide automatic annual compounded inflation increases at a rate based on

changes in the consumer price index. “Consumer price index” means consumer

price index for all urban consumers, U.S. city average, all items, as determined by

the Bureau of Labor Statistics of the United States Department of Labor.

(2) If a policy is sold to a person who is at least sixty-one (61) years of age but less

than seventy-six (76) years of age as of the date of purchase of the policy, the

policy must provide Some level of inflation protection. “Some level of inflation

protection” means an inflation feature that meets the requirements of

Subsection(D)(1) or “Simple inflation protection” as defined by Section 4(H) of

this Regulation.

(3) If a policy is sold to a person aged seventy-six (76) or older, the policy may, but is

not required to, provide Some level of inflation protection.

(4) The Department may also approve an alternative inflation method (including an

alternative index) so long as such method is submitted to the Department with an

explanation and demonstration as to how the alternative method provides for

benefit levels to increase with benefit maximums or reasonable durations which

are meaningful to account for reasonably anticipated increases in the costs of

long-term care services covered by the policy. No alternative method may be used

until the Department has approved such method.

(5) Inflation protection benefit increases shall continue without regard to an insured's

age, claim status or claim history, or the length of time the person has been

insured under the policy.

E. Exchange.

(1) A policy received in an exchange after the effective date of Vermont’s long-term

care partnership program is treated as newly issued and thus is eligible for

Partnership policy status. For purposes of applying the Medicaid rules relating to

Vermont’s long-term care partnership program, the addition of a rider,

endorsement, or change in schedule page for a policy may be treated as giving

rise to an exchange.

(2) An insurer shall offer, on a one time basis, in writing, to all existing policyholders

that were issued long-term care coverage of the type certified by the insurer on or

after February 8, 2006, the option to exchange their existing long-term care

coverage for coverage that is intended to qualify under Vermont’s long-term care

partnership program. The mandatory offer of an exchange shall only apply to

products issued by the insurer that are comparable to the type of policy form (e.g.

group policies, individual policies, etc.) and on the policy series that the company

has certified as partnership qualified. The following rules shall apply to the offer

to exchange:

(a) Insurers must send policyholders the written offer of exchange within

eighteen months of the date that an insurer begins to advertise, market,

offer, sell or issue policies that qualify under Vermont’s long-term care

partnership program. The written offer of exchange used for this purpose

shall be accompanied by The Long-Term Care Partnership Exchange

Notification Form (Appendix L). An alternative form may be used for this

purpose if filed and approved by the Department. The offer of exchange

shall also be accompanied by Partnership Program Notice (Appendix H).

(b) The offer shall be made on a nondiscriminatory basis without regard to the

age or health status of the insured. However, the insurer may underwrite

if the policy is amended to provide additional benefits or inflation

protection.

calculated on the basis of the insured’s age at inception of coverage under

the existing policy. Any portion of the policy that was issued prior to the

exchange date shall be priced based on the policyholder’s age when the

policy was originally issued. Any portion of the policy that is added as a

result of the exchange may be priced based on the policyholder’s age at

the time of the exchange.

(d) The offer shall remain open for a minimum of forty-five (45) days from

the date of mailing by the insurer.

(e) If there is no change in coverage material to the risk, policies exchanged

under this provision shall not be subject to any medical underwriting or

approval process.

(f) Any addition to a policy as a result of any exchange shall be subject to the

right to return set forth in 8 V.S.A. § 8089 and all applicable regulations.

(i) In the event of an exchange, the insured shall not lose any rights, benefits

or built-up value that has accrued under the original policy with respect to

the benefits provided under the original policy, including, but not limited

to, rights established because of the lapse of time related to pre-existing

condition exclusions, elimination periods, or incontestability clauses.

(j) Notwithstanding subsection E(2), an insurer is not required to offer an

exchange to an individual who is eligible for benefits or within an

elimination period, or who has been in claim status.

(3) For those insureds with long-term care policies issued before February 8, 2006, an

insurer may offer any insured an option to exchange an existing policy for a

policy that qualifies as a Partnership policy under Vermont’s long-term care

partnership program. The requirements set forth in subsection (E)(2) shall apply

to any such exchange.

F. Policy amendments. Any amendment to the policy that alters the status of a Partnership

policy so that it no longer meets the applicable partnership standards must affirmatively

disclose that fact and include an amended schedule page that removes the references to

the long-term care partnership program.

G. Reporting Requirements.

(1) Each insurer issuing a Partnership policy shall provide regular reports to the

United States Secretary of Health and Human Services in accordance with

regulations of the Secretary that include notification of the date benefits were

paid, the amount paid, the date the policy terminates, and such other information

as the Secretary determines may be appropriate to the administration of

partnerships. Upon request from the Department, insurers shall provide a copy of

these reports to the Department.

(2) In addition to the reporting requirements set forth in Subsection (G)(1), each

insurer issuing a Partnership policy shall provide annual reports to the Department

on or before June 30 that include the following information for the prior calendar

year:

(a) the total number of certified policies the insurer has issued or

issued for delivery in Vermont;

(b) the total number of lives covered by Partnership policies certified in

Vermont;

(d) the total number of claims paid under Partnership policies certified in

Vermont;

(e) the total number of lapsed Partnership policies certified in Vermont;

(f) the total number of Partnership policies certified in Vermont that were

terminated due to benefit exhaustion; and

(g) the total amount of premium collected and attributable to Partnership

policies certified in Vermont.

Section 36 Penalties

A. No policy may be advertised, marketed or offered as long-term care insurance unless it

complies with the provisions of 8 V.S.A. Chapters 129 and 154 and this regulation.

B. In addition to any other remedy or sanction provided by law, after notice and opportunity

for hearing the Commissioner may assess an administrative penalty in an amount not to

exceed $10,000.00 for each violation against any person who violates any provision of 8

V.S.A. Chapter 154 or this regulation.

C. A person who violates a provision of 8 V.S.A. Chapter 154 or this regulation shall be

fined not more than $10,000.00, or imprisoned for not more than six months, or both.

D. The Department, or the Attorney General at the request of the Department, may bring an

action to enforce the provisions of this chapter in the superior court.

Section 37 Severability

The provisions of this Regulation are severable. If any provision of this Regulation is invalid, or

if any application thereof to any person or circumstance is invalid, the invalidity shall not affect

other provisions or applications which can be given effect without the invalid provision or

application.

Section 38 Effective Date; Repeal

Sections 1 through 34 and sections 36 through 37 of this regulation shall become effective on

April 1, 2010. Section 35 of this regulation shall become effective upon the effective date of

Vermont’s state plan amendment required by section 6021 of the Deficit Reduction Act of 2005

(Pub.L. 109-171). BISHCA Regulation 91-1 shall be repealed at midnight on March 31, 2010.

APPENDIX A

RESCISSION REPORTING FORM FOR

LONG-TERM CARE POLICIES

FOR THE STATE OF VERMONT

FOR THE REPORTING YEAR 20[ ]

Company Name: _____________________________________________________________

Address: ___________________________________________________________________

___________________________________________________________________

Phone Number: _______________________________________________________________

Due: June 30 annually

Instructions:

The purpose of this form is to report all rescissions of long-term care insurance policies or

certificates. Please furnish one form per rescission.

Policy

Form #

Policy and

Certificate #

Name of

Insured

Date of

Policy

Issuance

Date/s

Claim/s

Submitted

Date of

Rescission

Detailed reason for rescission: _____________________________________________________

______________________________________________________________________________

__________________________________

Signature

__________________________________

Name and Title (please type)

__________________________________

Date

APPENDIX B

Long-Term Care Insurance

Personal Worksheet

People buy long-term care insurance for many reasons. Some don’t want to use their own assets

to pay for long-term care. Some buy insurance to make sure they can choose the type of care

they get. Others don’t want their family to have to pay for care or don’t want to go on Medicaid.

But long-term care insurance may be expensive, and may not be right for everyone.

Drafting Note: This form includes questions insurers and producers must ask to determine

suitability. Insurers and producers are encouraged to ask additional questions beyond what is

provided for in this form.

Existing Long-Term Care Insurance

Do you currently have a long-term care insurance policy? Yes No (circle one)

If yes, list the carrier, policy number and premium ________________________________

Are you considering discontinuing making premium payments under this policy? ________

If you intend to replace this policy explain why ___________________________________

NOTICE: A replacement occurs when a new policy or contract is purchased and, in connection

with the sale, you discontinue making premium payments on the existing policy or contract.

Make sure you know the facts and carefully consider whether a replacement is in your best

interests. Contact your existing company or its agent for information about the old policy or

contract. Ask for and retain all sales material used by the agent in the sales presentation. Be sure

that you are making an informed decision.

Drafting Note: If the applicant answered “yes” to the question regarding existing coverage, the

producer must read this notice to the applicant.

Premium Information For New Policy

Policy Form Numbers _____________________

The premium for the coverage you are considering will be [$_________ per month, or $_______

per year,] [a one-time single premium of $____________.]

Type of Policy (noncancellable/guaranteed renewable): ________________________________

The Company's Right to Increase Premiums:

[The company cannot raise your premiums on this policy.] [The company may increase

premiums on this policy form in the future as long as the company raises rates for all policies in

the same class in this state.] Drafting note: Insurers shall use appropriate bracketed statement.

Rate guarantees shall not be shown on this form.

Rate Increase History

The company has sold long-term care insurance since [year] and has sold this policy since [year].

[The company has never raised its rates for any long-term care policy it has sold in this state or

any other state.] [The company has not raised its rates for this policy form or Similar policy

forms in this state or any other state in the last 10 years.] [The company has raised its premium

rates on this policy form or Similar policy forms in the last 10 years. Following is a summary of

the rate increases.]

Drafting Note: A company may use the first bracketed sentence above only if it has never

increased rates under any prior policy forms in this state or any other state. The issuer shall list

each premium increase it has instituted on this or Similar policy forms in this state or any other

state during the last 10 years. The list shall provide the policy form, the calendar years the form

was available for sale, and the calendar year and the amount (percentage) of each increase. The

insurer shall provide minimum and maximum percentages if the rate increase is variable by

rating characteristics. The insurer may provide, in a fair manner, additional explanatory

information as appropriate.

Questions Related to Your Income

How will you pay each year’s premium?

From my Income From my Savings/Investments My Family will Pay

[ Have you considered whether you could afford to keep this policy if the premiums went up,

for example, by 20%?]

Drafting Note: The issuer must use the bracketed sentence unless the policy is fully paid up or is

a noncancellable policy.

What is your annual income? (check one)Under $10,000 $10-20,000 $20-30,000

$30-50,000 $50-70,000 $70-100,000  Over $100,000

How do you expect your income to change over the next 10 years? (check one)

No change Increase Decrease

If you will be paying premiums with money received only from your own income, a rule of

thumb is that you may not be able to afford this policy if the premiums will be more than 7%

of your income.

Will you buy inflation protection? (check one)  Yes  No

If not, have you considered how you will pay for the difference between future costs and your daily

benefit amount?

From my Income From my Savings/Investments My Family will Pay

The national average annual cost of care in [insert year] was [insert $ amount], but this

figure varies across the country. In ten years the national average annual cost would be

about [insert $ amount] if costs increase 5% annually.

Drafting Note: The projected cost can be based on federal estimates in a current year. In the

above statement, the second figure equals 163% of the first figure.

What elimination period are you considering? Number of days _______Approximate cost

$__________ for that period of care.

How are you planning to pay for your care during the elimination period? (check one)

From my Income From my Savings/Investments My Family will Pay

Questions Related to Your Savings and Investments

Not counting your home, about how much are all of your assets (your savings and investments)

worth? (check one)

Under $20,000 $20,000-$30,000 $30,000-$50,000 $50,000-$80,000

 $80,000-$120,000  $120,000-$150,000  Over $150,000

How do you expect your assets to change over the next ten years? (check one)

Stay about the same Increase Decrease

If you are buying this policy to protect your assets and your assets are less than $50,000,

you may wish to consider other options for financing your long-term care.

[Drafting Note: The $50,000 asset level may be adjusted to reflect, at the Commissioner's

discretion, appropriate inflation factors.]

Disclosure Statement

 The answers to the questions above describe my financial situation. I

understand the company will review this form and notify me if the

company determines that this coverage is not appropriate because of my

financial situation or existing insurance coverage. I also understand that

the company cannot sell or otherwise disseminate the information

included on this form, and that the company may not use this form for

any purpose other than determining whether this product is suitable for

me.

 I choose not to complete this information.

(Check one.)

 I acknowledge that the insurer and/or its agent (below) has reviewed this

form with me including the premium, premium rate increase history and

potential for premium increases in the future. [For direct mail situations,

use the following: I acknowledge that I have reviewed this form

including the premium, premium rate increase history and potential for

premium increases in the future.] I understand the above disclosures. I

understand that the rates for this policy may increase in the future.

(This box must be checked).

Signed: ___________________________________ _____________________________

(Applicant) (Date)

 I explained to the applicant the importance of completing this information.

Signed: ___________________________________ _____________________________

(Agent) (Date)

Agent’s Printed Name: ________________________________________ ]

[In order for us to process your application, please return this signed statement to [name of

company], along with your application.]

[My agent has advised me that this policy does not seem to be suitable for me. However, I still

want the company to consider my application.

Signed: ___________________________________ ____________________________]

(Applicant) (Date)

Drafting Note: Choose the appropriate sentences depending on whether this is a direct mail or

agent sale.

The company may contact you to verify your answers.

Drafting Note: When the Long-Term Care Insurance Personal Worksheet is furnished to

employees and their spouses under employer group policies, the text from the heading

“Disclosure Statement” to the end of the page may be removed. Insurers should remember their

reporting obligations in 8 V.S.A. § 8084b(g) and this Regulation.

APPENDIX C

Things You Should Know Before You Buy

Long-Term Care Insurance

Long-Term

Care

Insurance

• A long-term care insurance policy may not pay all necessary expenses for

your care in a nursing home, care at home or other community settings. If

the policy does not cover all necessary expenses, you will have to pay

expenses that are not covered. Since policies can vary in coverage, you

should read this policy and make sure you understand what it covers before

you buy it.

• [You should not buy this insurance policy unless you can afford to pay the

premiums every year.] [Remember that the company can increase

premiums in the future.]

Drafting Note: For single premium policies, delete this bullet; for noncancellable policies,

delete the second sentence only.

• The personal worksheet includes questions designed to help you and the

company determine whether this policy is suitable for your needs.

Medicare

• Medicare does not pay for most long-term care.

Medicaid

• Medicaid will generally pay for long-term care if you have very little

income and few assets. You should not buy this policy if you are now

eligible for Medicaid.

• Many people become eligible for Medicaid after they have used up their

own financial resources by paying for long-term care services.

• When Medicaid pays your spouse’s nursing home bills, you are allowed to

keep your house and furniture, a living allowance, and some of your joint

assets.

• Your choice of long-term care services may be limited if you are receiving

Medicaid. To learn more about Medicaid, contact your local or state

Medicaid agency.

Shopper’s

Guide

• Make sure the insurance company or agent gives you a copy of a book

called the National Association of Insurance Commissioners’ “Shopper’s

Guide to Long-Term Care Insurance.” Read it carefully. If you have

decided to apply for long-term care insurance, you have the right to return

the policy within 30 days and get back any premium you have paid if you

are dissatisfied for any reason or choose not to purchase the policy. The

Vermont Department of Banking, Insurance, Securities and Health Care

Administration (BISHCA) also publishes a consumers’ publication about

long-term care insurance. You can request a copy of this publication by

calling 1-800-631-7788 or on BISHCA’s website:

http://www.bishca.state.vt.us/HcaDiv/consumerpubs_healthcare/index_con

sumerpubs.html.

Counseling

• Free counseling and additional information about long-term care insurance

are available through your state’s insurance counseling program. Contact

the State Health Insurance Assistance Program (SHIP) at 1-800-642-5119

or the Vermont Department of Banking, Insurance, Securities and Health

Care Administration (BISHCA) at 1-800-631-7788 for more information

about the senior health insurance counseling program in your state.

Facilities

• Some long-term care insurance contracts provide for benefit payments in

certain facilities only if they are licensed or certified, such as in assisted

living centers. However, not all states regulate these facilities in the same

way. Also, many people move into a different state from where they

purchased their long-term care insurance policy. Read the policy carefully

to determine what types of facilities qualify for benefit payments, and to

determine that payment for a covered service will be made if you move to

a state that has a different licensing scheme for facilities than the one in

which you purchased the policy.

APPENDIX D Long-Term Care Insurance Suitability Letter

Dear [Applicant]:

Your recent application for long-term care insurance included a “personal worksheet,” which

asked questions about your finances and your reasons for buying long-term care insurance. For

your protection, state law requires us to consider this information when we review your

application, to avoid selling a policy to those who may not need coverage or who cannot afford

to purchase long-term care insurance.

[Your answers indicate that you may not be able to afford or you may not need long-term care

insurance. We suggest that you review the information provided along with your application,

including the booklet “Shopper’s Guide to Long-Term Care Insurance” and the page titled

“Things You Should Know Before Buying Long-Term Care Insurance.” If you have questions

about long-term care insurance, you can contact the State Health Insurance Assistance Program

(SHIP) at 1-800-642-5119 or the Vermont Department of Banking, Insurance, Securities and

Health Care Administration (BISHCA) at 1-800-631-7788.]

[You chose not to provide any financial information for us to review.]

Drafting Note: Choose the paragraph that applies.

We have suspended our final review of your application. If, after careful consideration, you still

believe this policy is what you want, check the appropriate box below and return this letter to us

within the next 60 days. We will then continue reviewing your application and issue a policy if

you meet our medical and financial standards.

If we do not hear from you within the next 60 days, we will close your file and not issue you a

policy. You should understand that you will not have any coverage until we hear back from you,

approve your application and issue you a policy.

Please check one box and return in the enclosed envelope.

 Yes, [although my worksheet indicates that long-term care insurance may not be a

suitable purchase,] I wish to purchase this coverage. My insurance agent did not pressure

me to make this decision. Please resume review of my application.

Drafting Note: Delete the phrase in brackets if the applicant did not answer the questions about

income.

 No.

_________________________________________ ______________________________

APPLICANT’S SIGNATURE DATE

Please return to [issuer] at [address] by [date].

APPENDIX E

Claims Denial Reporting Form

Long-Term Care Insurance

For the State of Vermont

For the Reporting Year of ________________

Company Name: __________________________________________ Due: June 30 annually

Company Address: _____________________________________________________________

______________________________________________________________________________

Company NAIC Number: ________________________________________________________

Contact Person: _____________________________Phone Number: ______________________

Line of Business: Individual Group

Instructions

The purpose of this form is to report all long-term care claim denials under in force long-term care

insurance policies. “Denied” means a claim that is not paid for any reason other than for claims not paid

for failure to meet the waiting period or because of an applicable preexisting condition.

State

Data

Nationwide

Data

1 Total Number of Long-Term Care Claims Reported

2 Total Number of Long-Term Care Claims Denied/Not Paid

3 Number of Claims Not Paid due to Preexisting Condition Exclusion

4 Number of Claims Not Paid due to Waiting (Elimination) Period Not

Met

5 Net Number of Long-Term Care Claims Denied for Reporting Purposes

(Line 2 Minus Line 3 Minus Line 4)

6 Percentage of Long-Term Care Claims Denied of Those Reported (Line

5 Divided By Line 1)

7 Number of Long-Term Care Claim Denied due to:

• Long-Term Care Services Not Covered under the Policy

• Provider/Facility Not Qualified under the Policy

• Benefit Eligibility Criteria Not Met

• Other

1. The nationwide data may be viewed as a more representative and credible indicator where the

data for claims reported and denied for your state are small in number.

2. Example—home health care claim filed under a nursing home only policy (please note: nursing

home only policies are not allowed for issuance in Vermont).

3. Example—a facility that does not meet the minimum level of care requirements or the licensing

requirements as outlined in the policy.

4. Examples—a Benefit trigger not met, certification by a licensed health care practitioner not

provided, no plan of care.

APPENDIX F

Instructions:

This form provides information to the applicant regarding premium rate schedules, rate schedule

adjustments, potential rate revisions, and policyholder options in the event of a rate increase.

Use of this form is mandated by Section 9.

Insurers shall provide all of the following information to the applicant:

Long-Term Care Insurance

Potential Rate Increase Disclosure Form

1. [Premium Rate] [Premium Rate Schedules]: [Premium rate] [Premium rate schedules]

that [is][are] applicable to you and that will be in effect until a request is made and an

increase approved by the Vermont Department of Banking, Insurance, Securities and

Health Care Administration [is][are] [on the application][$_____])

2. The [premium] [premium rate schedule] for this policy [will be shown on the

schedule page of] [will be attached to] your policy.

3. Rate Schedule Adjustments:

The company will provide a description of when premium rate or rate schedule

adjustments will be effective (e.g., next anniversary date, next billing date, etc.) (fill in

the blank): __________________.

4. Potential Rate Revisions:

This policy is Guaranteed Renewable. This means that the rates for this product may

be increased in the future. Your rates can NOT be increased due to your increasing age

or declining health, but your rates may go up based on the experience of all policyholders

with a policy similar to yours.

If you receive a premium rate or premium rate schedule increase in the future, you

will be notified of the new premium amount and you will be able to exercise at least

one of the following options:

 Pay the increased premium and continue your policy in force as is.

 Reduce your policy benefits to a level such that your premiums will not increase.

(Subject to state law minimum standards.)

 Exercise your nonforfeiture option if purchased. (This option is available for

purchase for an additional premium.)

 Exercise your contingent nonforfeiture rights.* (This option is available if you do not

purchase a separate nonforfeiture option.)

Turn the Page

* Contingent Nonforfeiture

If the premium rate for your policy goes up in the future and you didn’t buy a nonforfeiture

option, you may be eligible for contingent nonforfeiture. Here’s how to tell if you are eligible:

You will keep some long-term care insurance coverage, if:

• Your premium after the increase exceeds your original premium by the percentage shown (or

more) in the following table; and

• You lapse (not pay more premiums) within 120 days of the increase.

The amount of coverage (i.e., new lifetime maximum benefit amount) you will keep will equal

the total amount of premiums you’ve paid since your policy was first issued. If you have

already received benefits under the policy, so that the remaining maximum benefit amount is

less than the total amount of premiums you’ve paid, the amount of coverage will be that

remaining amount.

Except for this reduced lifetime maximum benefit amount, all other policy benefits will remain

at the levels attained at the time of the lapse and will not increase thereafter.

Should you choose this Contingent Nonforfeiture option, your policy, with this reduced

maximum benefit amount, will be considered “paid-up” with no further premiums due.

Example:

• You bought the policy at age 65 and paid the $1,000 annual premium for 10 years, so you

have paid a total of $10,000 in premium.

• In the eleventh year, you receive a rate increase of 50%, or $500 for a new annual premium

of $1,500, and you decide to lapse the policy (not pay any more premiums).

• Your “paid-up” policy benefits are $10,000 (provided you have a least $10,000 of benefits

remaining under your policy.)

Turn the Page

Contingent Nonforfeiture

Cumulative Premium Increase over Initial Premium

That qualifies for Contingent Nonforfeiture

(Percentage increase is cumulative from date of original issue. It does NOT represent a one-time

increase.)

Issue Age Percent Increase Over Initial Premium

29 and under 200%

30-34 190%

35-39 170%

40-44 150%

45-49 130%

50-54 110%

55-59 90%

60 70%

61 66%

62 62%

63 58%

64 54%

65 50%

66 48%

67 46%

68 44%

69 42%

70 40%

71 38%

72 36%

73 34%

74 32%

75 30%

76 28%

77 26%

78 24%

79 22%

80 20%

81 19%

82 18%

83 17%

84 16%

85 15%

86 14%

87 13%

88 12%

89 11%

90 and over 10%

APPENDIX G

Long-Term Care Insurance

Replacement and Lapse Reporting Form

For the State of ______________ For the Reporting Year of ___________

Company Name: ___________________

Company Address: ___________________

Company Person: ___________________

Instructions

The purpose of this form is to report on a statewide basis information regarding long-term

care insurance policy replacements and lapses. Specifically, every insurer shall maintain

records for each agent on that agent’s amount of long-term care insurance replacement

sales as a percent of the agent’s total annual sales and the amount of lapses of long-term

care insurance policies sold by the agent as a percent of the agent’s total annual sales.

The tables below should be used to report the ten percent (10%) of the insurer’s agents

with the greatest percentages of replacement and lapses.

Listing of the 10% of Producers with the Greatest Percentage of Replacements

Producer’s name Number of Policies

Sold by This

Producer

Number of Policies

Replaced by This

Producer

Number of

Replacements As %

of Number Sold By

This Producer

Listing of the 10% of Agents with the Greatest Percentage of Lapses

Producer’s name Number of Policies

Sold by This

Producer

Number of Policies

Lapsed by This

Producer

Number of Lapses

As % of Number

Sold By This

Producer

Company Tools

Percentage of Replacement Policies Sold to Total Annual Sales ____%

Percentage of Replacement Policies Sold to Policies In Force (as of the end of the

preceding calendar year) ____%

Percentages of Lapsed Policies to Total Annual Sales ____%

Percentages of Lapsed Policies to Policies In Force (as of the end of the preceding

calendar year) ____%

Appendix H

Partnership Program Notice

This Notice explains how the Vermont Long-Term Care Partnership Program

works and provides important consumer information regarding the policies that

are certified as Partnership Policies.

What is the Vermont Long-Term Care Partnership Program?

Some long-term care insurance policies sold in Vermont may qualify for the

Vermont Long-Term Care Partnership Program (the Partnership Program). The

Partnership Program is a partnership between state government and private

insurance companies to assist individuals in planning their long-term care needs.

Insurance companies voluntarily agree to participate in the Partnership Program

by offering long-term care insurance coverage that meets certain State and

Federal requirements. Long-term care insurance policies that qualify as

Partnership Policies may protect the policyholder's assets through a feature

known as "Asset Disregard" under Vermont's Medicaid program.

How Could the Partnership Program Help Protect Assets?

Long-term care insurance helps individuals prepare for future long-term care

needs. Qualified Partnership Policies provide an additional level of protection. In

particular, such policies may permit individuals to protect resources under

Vermont’s Medicaid Program if assistance is ever needed under that program

and the individual would be otherwise eligible for the Vermont Medicaid Program.

In addition, if these specific protected resources are still in existence when the

individual dies and they are part of the decedent's probate estate, they will not be

recoverable under state law. The resource, eligibility and estate recovery

provisions of the Vermont Medicaid Program permit the disregard of an amount

of assets which is equal to the amount of insurance benefits you have received

from your qualified Partnership Policy. For example, if you receive $200,000 of

insurance benefits from your qualified Partnership Policy, you would be able to

retain $200,000 of resources and still be eligible for long-term care services

provided under the Medicaid Program. This disregard is above and beyond the

resources normally permitted to be retained by an individual and still qualify for

Medicaid. (Note: special rules may apply to persons whose home equity exceeds

$500,000.) This protection of assets applies to individuals in need of long- term

care services both in the community or residing in a long-term care facility.

It is important to understand that all other Medicaid eligibility criteria will apply at

the time you apply for Medicaid. The purchase of a Partnership Policy does

not automatically qualify you for Medicaid. In addition, please note that

Medicaid eligibility requirements may change over time.

Asset Disregard is not available under a long-term care insurance policy that is

not a Partnership Policy. Therefore, you should consider if Asset Disregard is

important to you, and whether a Partnership Policy meets your needs.

What are the Requirements for a Partnership Policy?

In order for a policy to qualify as a Partnership Policy, it must, among other

requirements:

• be issued to an individual after {insert effective date of Vermont’s long-

term care partnership program};

• cover an individual who was an Vermont resident when coverage first

becomes effective under the policy;

• be a tax-qualified policy under Section 7702(B)(b) of the Internal Revenue

Code of 1986;

• meet consumer protection standards required by federal legislation; and

• meet the following inflation protection requirements:

o For ages 60 or younger, the policy must provide Compound annual

inflation protection

o For ages 61 to 65, the policy must provide some level of inflation

protection

o For ages 76 and older, the policy does not have to provide inflation

protection.

If you apply and are approved for long-term care insurance coverage, [carrier

name] will provide you with written documentation as to whether or not your

policy qualifies as a Partnership Policy.

What Could Disqualify a Policy as a Partnership Policy?

If you make certain types of changes to a Partnership Policy, such changes could

affect whether or not the policy continues to qualify as a Partnership Policy. If

you purchase a Partnership Policy and later decide to make any changes, you

should first consult with [carrier name] to determine the effect of a proposed

change. In addition, if you move to a state that does not maintain a Partnership

Program or does not recognize your policy as a Partnership Policy, you would

not receive beneficial treatment of your policy under the Medicaid program of that

state. The information contained in this disclosure is based on current Vermont

and Federal laws. These laws may be subject to change. Any change in law

could reduce or eliminate the beneficial treatment of your policy under Vermont's

Medicaid program.

Additional Consumer Protections.

In addition to providing asset protection, a qualified Partnership Policy has other

important features. Partnership Policies must be qualified long-term care

insurance contracts under Federal tax law. As such the insurance benefits you

receive from the policy generally will be subject to beneficial income tax

treatment. (Please note that a policy can be a tax qualified long-term care

insurance contract under Federal tax law, with the same beneficial income tax

treatment, even if it is not a Partnership Policy.) In addition, if you were under

age 76 when you purchased your qualified Partnership Policy, it must provide

inflation protection to help protect against potential future increases in the cost of

long-term care. (Purchasers over the age of 76 must be offered the option of

purchasing a policy with inflation protection).

Additional Information. If you have questions regarding the insurance policy

please contact [insert name of carrier.] If you have questions regarding current

laws governing Medicaid eligibility, you should contact the Vermont Health

Access Member Services at 1-800-250-8427.

Drafting Note: This form is intended for use with individual long-term care

insurance. The insurer may modify these forms for use with group long-term

care insurance without filing with the Department so long as no substantive

revisions are made. For example, the term “policy” may be replaced with

“certificate” or “coverage,” and the term “policyholder” may be replaced with

“certificateholder.”

Appendix I

Partnership Status Disclosure Notice

Important Information Regarding Your Policy’s

Long-Term Care Partnership Status

This disclosure notice is issued in conjunction with your long-term care policy:

Some long-term care insurance policies sold in Vermont qualify for the Vermont

Long-Term Care Partnership Program. Insurance companies voluntarily agree to

participate in the Partnership Program by offering long-term care insurance

coverage that meets certain State and Federal requirements. Long-term care

insurance policies that qualify as Partnership Policies may be entitled to special

treatment, and in particular an “Asset Disregard,” under Vermont’s Medicaid

program.

Asset Disregard. Asset disregard means that an amount of the policyholder’s

assets equal to the amount of long-term care insurance benefits received under a

qualified Partnership Policy will be disregarded for the purpose of determining the

insured’s eligibility for Medicaid. This generally allows a person to keep assets

equal to the insurance benefits received under a qualified Partnership Policy

without affecting the person’s eligibility for Medicaid. In addition, if these specific

protected resources are still in existence when the individual dies and they are

part of the decedent's probate estate, they will not be recoverable under state

law.

The resource, eligibility and estate recovery provisions of the Vermont Medicaid

Program permit the disregard of an amount of assets which is equal to the

amount of insurance benefits you have received from your qualified Partnership

Policy. For example, if you receive $200,000 of insurance benefits from your

qualified Partnership Policy, you would be able to retain $200,000 of resources

and still be eligible for long-term care services provided under the Medicaid

Program. This disregard is above and beyond the resources normally permitted

to be retained by an individual and still qualify for Medicaid. (Note: special rules

may apply to persons whose home equity exceeds $500,000.) This protection of

assets applies to individuals in need of long-term care services both in the

community or residing in a long-term care facility.

It is important to understand that all other Medicaid eligibility criteria will apply at

the time you apply for Medicaid. The purchase of a Partnership Policy does

not automatically qualify you for Medicaid. In addition, please note that

Medicaid eligibility requirements may change over time.

Partnership Policy Status. Your long-term care insurance policy is

intended to qualify as a Partnership Policy under the Vermont Long-Term

Care Partnership Program as of your Policy's effective date.

What Could Disqualify Your Policy as a Partnership Policy

. If you make any

changes to your policy, such changes could affect whether your policy continues

to be a Partnership Policy. Before you make any changes, you should

consult with [insert name of carrier] to determine the effect of a proposed

change. In addition, if you move to a State that does not maintain a Partnership

Program or does not recognize your policy as a Partnership Policy, you would

not receive beneficial treatment of your policy under the Medicaid program of that

State. The information contained in this Notice is based on current State and

Federal laws. These laws may be subject to change. Any change in law could

reduce or eliminate the beneficial treatment of your policy under Vermont’s

Medicaid program.

Additional Information.

If you have questions regarding your insurance policy

please contact [insert name of carrier.] If you have questions regarding current

laws governing Medicaid eligibility, you should contact the Vermont Health

Access Member Services at 1-800-250-8427.

Drafting Note: This form is intended for use with individual long-term care

insurance. The insurer may modify these forms for use with group long-term

care insurance without filing with the Department so long as no substantive

revisions are made. For example, the term “policy” may be replaced with

“certificate” or “coverage,” and the term “policyholder” may be replaced with

“certificateholder.”

Appendix J

ISSUER CERTIFICATION FORM

(relating to Qualified State Long-Term Care Insurance Partnership Policies)

Under section 1917(b)(5)(B)(iii) of the Social Security Act (42 U.S.C.

1396p(b)(5)(B)(iii)), the State insurance commissioner of a State implementing a

Qualified State Long-term Care Insurance Partnership (“Qualified Partnership”)

may certify that long-term care insurance policies (including certificates issued

under a group insurance contract) covered under the Qualified Partnership meet

certain consumer protection requirements, and policies so certified are deemed

to satisfy such requirements. These consumer protection requirements are set

forth in section 1917(b)(5)(A) of the Social Security Act (42 U.S.C.

1396p(b)(5)(A)) and principally include certain specified provisions of the Long-

Term Care Insurance Model Regulation and Long-Term Care Insurance Model

Act promulgated by the National Association of Insurance Commissioners (as

adopted as of October 2000) (referred to herein as the “2000 Model Regulation”

and “2000 Model Act” respectively).

To provide the Commissioner with information necessary to provide a

certification for policies, this Issuer Certification Form requests information and a

certification from issuers of long-term care insurance policies with respect to

policy forms that may be covered under the Qualified Partnership of the State.

An insurance company may request certification of policies from time to time and,

accordingly, may supplement this issuer certification form, e.g., as it introduces

new long-term care insurance policy forms for issuance.

I. GENERAL INFORMATION

A. Name, address and telephone number of issuer:

______________________________________________________

B. Name, address, telephone number, and email address (if

available) of an employee of issuer who will be the contact

person for information relating to this form:

______________________________________________________

C. Policy form number(s) (or other identifying information, such

as certificate series) for policies covered by this Issuer

Certification Form:

______________________________________________________

Specimen copies of each of the above policy forms, including any riders and

endorsements, shall be provided upon request.

II. QUESTIONS REGARDING APPLICABLE PROVISIONS OF THE 2000

MODEL REGULATION AND 2000 MODEL ACT

Please answer each of the questions below with respect to the policy forms

identified in section I.C above. For purposes of answering the questions below,

any provision of the 2000 Model Regulation or 2000 Model Act listed below shall

be treated as including any other provision of the 2000 Model Regulation or 2000

Model Act necessary to implement the provision.

Are the following requirements of the 2000 Model Regulation met with respect to

all policies (including certificates issued under a group insurance contract)

intended to be covered under the Qualified Partnership that are issued on each

of the policy forms identified in section I.C above?

Yes ___ No ___ N/A ___ A. Section 6A (relating to guaranteed renewal

or noncancellability), other than paragraph (5)

thereof, and the requirements of section 6B of

the 2000 Model Act relating to such section 6A.

Yes ___ No ___ N/A ___ B. Section 6B (relating to prohibitions on limitations

and exclusions) other than paragraph (7) thereof.

Yes ___ No ___ N/A ___ C. Section 6C (relating to extension of benefits).

Yes ___ No ___ N/A ___ D. Section 6D (relating to continuation or conversion

of coverage).

Yes ___ No ___ N/A ___ E. Section 6E (relating to discontinuance and

100

replacement of policies).

Yes ___ No ___ N/A ___ F. Section 7 (relating to unintentional lapse).

Yes ___ No ___ N/A ___ G. Section 8 (relating to disclosure), other than

sections 8F, 8G, 8H, and 8I thereof.

Yes ___ No ___ N/A ___ H. Section 9 (relating to required disclosure of rating

practices to consumer).

Yes ___ No ___ N/A ___ I. Section 11 (relating to prohibitions against post-

claims underwriting).

Yes ___ No ___ N/A ___ J. Section 12 (relating to minimum standards).

Yes ___ No ___ N/A ___ K. Section 14 (relating to application forms and

replacement coverage).

Yes ___ No ___ N/A ___ L. Section 15 (relating to reporting requirements).

Yes ___ No ___ N/A ___ M. Section 22 (relating to filing requirements for

marketing).

Yes ___ No ___ N/A ___ N. Section 23 (relating to standards for

marketing), including inaccurate completion of

medical histories, other than paragraphs (1),

(6), and (9) of section 23C.

Yes ___ No ___ N/A ___ O. Section 24 (relating to suitability).

Yes ___ No ___ N/A ___ P. Section 25 (relating to prohibition against

preexisting conditions and probationary

periods in replacement policies or certificates).

Yes ___ No ___ N/A ___ Q. The provisions of section 26 relating to

contingent nonforfeiture benefits, if the

policyholder declines the offer of a

nonforfeiture provision described in section

7702B(g)(4) of the Internal Revenue Code of

1986 (26 U.S.C. 7702B(g)(4)).

Yes ___ No ___ N/A ___ R. Section 29 (relating to standard format outline

of coverage).

Yes ___ No ___ N/A ___ S. Section 30 (relating to requirement to deliver

shopper’s guide).

101

Are the following requirements of the 2000 Model Act met with respect to all

policies (including certificates issued under a group insurance contract) intended

to be covered under the Qualified Partnership that are issued on each of the

policy forms identified in section I.C above?

Yes ___ No ___ N/A ___ A. Section 6C (relating to preexisting conditions).

Yes ___ No ___ N/A ___ B. Section 6D (relating to prior hospitalization).

Yes ___ No ___ N/A ___ C. The provisions of section 28 relating to

contingent nonforfeiture benefits.

Yes ___ No ___ N/A ___ D. Section 6F (relating to right to return).

Yes ___ No ___ N/A ___ E. Section 6G (relating to outline of coverage).

Yes ___ No ___ N/A ___ F. Section 6H (relating to requirements for

certificates under group plans).

Yes ___ No ___ N/A ___ G. Section 6J (relating to policy summary).

Yes ___ No ___ N/A ___ H. Section 6K (relating to monthly reports on

accelerated death benefits).

Yes ___ No ___ N/A ___ I. Section 7 (relating to incontestability period).

In order for a policy to be covered under the Vermont Partnership Program, the

answers to all questions above should be “yes” (or “N/A” where all requirements

with respect to a provision above are not applicable). If answers differ between

policy forms (e.g., a requirement would be answered “Yes” for one form and

“N/A” for another), you should use separate Issuer Certification Forms for such

policies.

Yes ______ No ______ N/A ______ Certification by company officer that the

submitted Qualified LTCP policy will only be sold by producers who have

received training and demonstrated evidence of an understanding of Qualified

LTCP policies and how they relate to other public and private coverage of long-

term care.

Yes ______ No ______ N/A ______ Certification by company officer that the

appropriate inflation protections will be offered.

102

III. CERTIFICATION

I hereby certify that the answers, accompanying documents, and other

information set forth herein are, to the best of my knowledge and belief, true,

correct, and complete.

________ ______________________________

Date Name and title of officer of the Issuer

_________________________________

Signature of officer of the Issuer

103

Appendix K

POLICYHOLDER LONG-TERM CARE

PARTNERSHIP PROGRAM STATUS FORM

[Issuer Letterhead]

LONG-TERM CARE PARTNERSHIP PROGRAM POLICY SUMMARY

1. Name of Insured:

___________________________________

2. Policy Number:

___________________________________

3. Effective date of Coverage :

___________________________________

4. The policy was issued in the state of:

___________________________________

5. Issue age of the insured at the time

the coverage was issued

___________________________________

6. The policy/certificate was issued [ ] With [ ] Without inflation coverage

7. The inflation coverage is [ ] Simple Inflation [ ] Compound Inflation [ ] None

8. The inflation coverage is currently in effect on the coverage [ ] Yes [ ] No

If no, the date inflation coverage ceased __________

9. The policy meets the standards of a tax qualified long-term care policy [ ] Yes

[ ] No

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10. The cumulative dollar amount of insurance benefits paid $ _______

(Note: The indicated amount does not include any payments for cash surrender,

return of premium death benefits, or waiver of premium, and if joint coverage, the

amount is for the indicated insured only)

11. The total dollar amount of insurance benefits remaining available under the

policy $ ________.

12. Date this form was completed ____________.

13. The name, phone number and email address of the person completing this

form:

______________________________

Name and Title

______________________________

Phone Number

______________________________

Email Address

I hereby certify that the above information is true and accurate at the time of this

certification.

______________________________ ________________

Signature Date

105

Appendix L

The Long-Term Care Partnership Exchange Notification Form

Date: _________________________

Company name: _________________________

Address: _________________________

Contact information: _________________________

Company identifiers: _________________________

Insured’s name: _________________________

Address: _________________________

Policy number: _________________________

Policy issue date: _________________________

Our company participates in Vermont’s Long-Term Care Partnership Program by

offering long-term care insurance policies that meet certain state and federal

requirements. Under the Partnership Program, policies that meet these

requirements may allow you to protect a portion of your assets from Medicaid’s

“spend down” requirements if you should ever need to apply for Medicaid

benefits to pay for long-term care expenses in the future.

Partnership policies may allow you to keep a dollar of your own assets for every

dollar of benefits paid by the policy for long-term care services should you need

to apply for Medicaid. The Partnership Program Notice provides additional

information about the Vermont Long-Term Care Partnership Program and how

the Partnership Program could help you to protect certain assets.

Although we sell long-term care insurance policies that qualify as Partnership

Policies, the policy you currently have with us does not qualify for the

Partnership Program. Therefore, we are notifying you that you may be able to

exchange your current long-term care policy for a new policy that qualifies under

the partnership program.

106

However, before you consider exchanging your current long-term care policy for

a policy that qualifies under the partnership program, there are several things you

should know. You may be required to update your policy by adding benefits if

your current policy does not include required inflation protection. Also, you may

be required to add benefits or consumer protections that were not required when

your policy was issued.

You should very carefully consider any change in benefits because the changes

may increase your premium. Also, if you change your policy, you may be

required to answer health questions that will determine whether we will issue you

a new policy (medical underwriting).

In addition, if you move to a state that does not maintain a partnership program

or does not recognize your policy as a Partnership Policy, you would not receive

the asset protection under the Medicaid laws of that state.

If you have questions regarding your insurance policy please contact [insert

name of carrier.] If you have questions regarding current laws governing

Medicaid eligibility, you should contact the Vermont Health Access Member

Services at 1-800-250-8427.

Drafting Note: This form is intended for use with individual long-term care

insurance. The insurer may modify these forms for use with group long-term

care insurance without filing with the Department so long as no substantive

revisions are made. For example, the term “policy” may be replaced with

“certificate” or “coverage,” and the term “policyholder” may be replaced with

“certificateholder.”

107

Appendix M

Long-Term Care Insurance Premium Rate Disclosure For Required Benefit

Configurations

Company Name:

Company Address

Company NAIC Number:

________________________________________________________

Line of Business: Individual  Group 

Instructions

The purpose of this form is to provide consumers with estimates of the cost of sample

long-term care plans that are required by Section (6)(K) of this Regulation. Premium

rates disclosed on this form will be posted on the Department’s website. Insurers must

complete and submit this form annually on or before June 30

. The Department will not

approve policy and/or rate filings unless this form has been submitted to the Department.

Please provide for the annual premium for each currently marketed long-term care policy

required by Section 6(K). In addition to the benefit parameters described below, assume

that the policy does not include a non-forfeiture option, any optional riders, and annual

standard rates (excluding all discounts such as preferred or marital). The insurer is

responsible for notifying the Department of any changes that will impact the information

submitted herein.

Benefit Configurations

Benefit Configuration I

: $200 Daily Benefit; 90 or 100-Day Elimination Period; 5-Year

Benefit Period

With 5% compound

inflation protection

With 5% Simple

inflation protection

With no inflation

protection or GPO at

issue

Policy Form

Number

Age 45

Age 50

Age 55

Age 60

Age 65

Age 70

Age 75

108

Benefit Configuration II: $150 Daily Benefit; 90 or 100-Day Elimination Period; 3-Year

Benefit Period

With 5% compound

inflation protection

With 5% Simple

inflation protection

With no inflation

protection or GPO at

issue

Policy Form

Number

Age 45

Age 50

Age 55

Age 60

Age 65

Age 70

Age 75

Benefit Configuration III: $100 Daily Benefit; 90 or 100-Day Elimination Period; 2-Year

Benefit Period

With 5% compound

inflation protection

With 5% Simple

inflation protection

With no inflation

protection or GPO at

issue

Policy Form

Number

Age 45

Age 50

Age 55

Age 60

Age 65

Age 70

Age 75