97-H 6004 am
Approved Jul. 3, 1997


It is enacted by the General Assembly as follows

SECTION 1. Section 27-34.2-4 of the General Laws in Chapter 27-34.2 entitled "Long Term Care Insurance" is hereby amended to read as follows:

27-34.2-4. Definitions. -- Unless the context requires otherwise, the following definitions apply throughout the chapter:

(1) "Applicant" means:

(i) In the case of an individual long term care insurance policy, the person who seeks to contract for benefits; and

(ii) In the case of a group long term care insurance policy, the proposed certificate holder;

(2) "Certificate" means, for the purposes of this chapter, any certificate issued under a group long term care insurance policy, which policy has been delivered or issued for delivery in this state, except as provided for in section 27-34.2-5;

(3) "Director" means the director of business regulation;

(4) "Group long-term care insurance" means a long term care insurance policy which is delivered or issued for delivery in this state and issued to:

(i) One or more employers or labor organizations, or to a trust, or to the trustees of a fund established by one or more employers or labor organizations, or a combination thereof, for employees or former employees or a combination thereof, or for members or former members, or a combination thereof, of the labor organizations; or

(ii) Any professional, trade, or occupational association for its members or former or retired members, or combination thereof, if that association:

(A) Is composed of individuals all of whom are or were actively engaged in the same profession, trade, or occupation; and

(B) Has been maintained in good faith for purposes other than obtaining insurance; or

(iii) An association, a trust, or the trustee(s) of a fund established, created, or maintained for the benefit of members of one or more associations. Prior to advertising, marketing, or offering that policy within this state, the association or associations, or the insurer of the association or associations, shall file evidence with the director that the association or associations have at the outset a minimum of one hundred (100) persons and have been organized and maintained in good faith for purposes other than that of obtaining insurance, have been in active existence for at least one year, and have a constitution and bylaws which provide that:

(A) The association or associations hold regular meetings not less than annually to further purposes of the members;

(B) Except for credit unions, the association or associations collect dues or solicit contributions from members; and

(C) The members have voting privileges and representation on the governing board and committees;

(iv) Sixty (60) days after that filing the association or associations will be deemed to satisfy those organizational requirements, unless the director makes a finding that the association or associations do not satisfy those organizational requirements; or

(v) A group other than as described in subsections (4)(i), (4)(ii), and (4)(iii), subject to a finding by the director that:

(A) The issuance of the group policy is not contrary to the best interest of the public;

(B) The issuance of the group policy would result in economies of acquisition or administration; and

(C) The benefits are reasonable in relation to the premiums charged.

(5)(i) "Long term care insurance" means any insurance policy or rider advertised, marketed, offered or designed to provide coverage for not less than twelve (12) consecutive months for each covered person on an expense incurred, indemnity, prepaid or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital. This term includes group and individual annuities and life insurance policies or riders which provide directly or which supplement long term care insurance. This term also includes a policy or rider which provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. Long term care insurance may be issued by insurers, fraternal benefit societies, nonprofit health, hospital and medical service corporations, prepaid health plans, health maintenance organizations or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long term care insurance shall not include any insurance policy which was offered primarily to provide basic medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income protection coverage, accident only coverage, specified disease or specified accident coverage or limited benefit health coverage. This list of excluded coverages is illustrative and is not intended to be all inclusive;

(ii) With regard to life insurance, this term does not include life insurance policies which accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement, and which provide the option of a lump sum payment for those benefits and in which neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long term care. Notwithstanding any other provision contained herein, any product advertised, marketed, or offered as long-term care insurance shall be subject to the provisions of this chapter; and

(6) "Policy" means, for the purposes of this chapter, any policy, contract, subscriber agreement, rider, or endorsement delivered or issued for delivery in this state by an insurer, fraternal benefit society, nonprofit health, hospital, or medical service corporation, prepaid health plan, health maintenance organization, or any similar organization.

{ADD (7) Issuer" means any domestic or foreign insurance company as defined in title 27 of these general laws or any other entity legally authorized to issue or deliver long term care insurance contracts pursuant to the provisions of this chapter. ADD}

SECTION 2. Chapter 27-34.2 of the General Laws entitled "Long Term Care Insurance" is hereby amended by adding thereto the following section:

{ADD 27-34.2-20. Nonforfeiture requirements. -- ADD} {ADD (a) Any issuer who offers for purchase a long term care insurance contract shall include with such offer the option for the purchaser to elect to purchase nonforfeiture benefits. All offers shall meet the following requirements:

(1) The nonforfeiture provision shall be appropriately captioned.

(2) The nonforfeiture provisions shall provide at least one (1) of the following:

(i) reduced paid-up insurance;

(ii) extended term insurance;

(iii) shortened benefit period;

(iv) other similar offerings approved by the director.

(b) No long-term care insurance contract may be issued or delivered in this state until the issuer has offered to the purchaser of the contract the option to purchase nonforfeiture benefits. The failure to offer nonforfeiture benefits shall be considered a violation of this chapter and shall subject the issuer to the enforcement remedies and other penalties contained within the chapter.

(c) The director shall promulgate rules and regulations as deemed necessary and appropriate to govern the terms of this section. ADD}

SECTION 3. This act shall take effect upon passage.

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