CHAPTER 12. LONG TERM CARE INSURANCE
IC 27-8-12
Chapter 12. Long Term Care Insurance
IC 27-8-12-1
"Applicant" defined
Sec. 1. As used in this chapter, "applicant" means:
(1) an individual who applies for long term care insurance
through an individual insurance policy; or
(2) a prospective holder of a certificate issued under a group
long term care insurance policy.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-2
"Certificate" defined
Sec. 2. As used in this chapter, "certificate" means a document
issued to a member of the group covered under a group insurance
policy, which policy has been delivered or issued for delivery in
Indiana, to signify that the individual named in the certificate is
covered under the policy.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-3
"Certificate holder" defined
Sec. 3. As used in this chapter, "certificate holder" means an
individual to whom a certificate is issued.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-4
"Insurance policy" defined
Sec. 4. As used in this chapter, "insurance policy" means any
policy, contract, subscriber agreement, rider, or endorsement
delivered or issued for delivery in Indiana by an insurer, a fraternal
benefit society, a nonprofit corporation, a health maintenance
organization (as defined in IC 27-13-1-19), a limited service health
maintenance organization (as defined in IC 27-13-34-4), a preferred
provider arrangement, or any other organization.
As added by P.L.275-1987, SEC.1. Amended by P.L.26-1994,
SEC.16.
IC 27-8-12-4.5
"Long term care facility" defined
Sec. 4.5. As used in this chapter, "long term care facility" has the
meaning set forth in IC 12-15-39.6-2.
As added by P.L.75-1994, SEC.9. Amended by P.L.24-1997, SEC.63.
IC 27-8-12-5
"Long term care insurance policy" defined
Sec. 5. (a) As used in this chapter, "long term care insurance
policy" means an insurance policy providing coverage for at least
twelve (12) consecutive months for each covered person on an
expense incurred, indemnity, prepaid, or other basis for one (1) or
more necessary diagnostic, preventive, therapeutic, rehabilitative,
maintenance, or personal care services provided in a setting other
than an acute care wing of a hospital.
(b) The term includes the following:
(1) A policy advertised, marketed, or offered as long term care
insurance.
(2) A group or individual annuity, a life insurance policy, or
riders that provide directly or supplement long term care
insurance.
(3) A policy or rider that provides for payment of benefits based
upon cognitive impairment or the loss of functional capacity.
(c) The term does not include the following:
(1) An insurance policy that is offered primarily to provide
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, comprehensive coverage, catastrophic
coverage, or limited benefit health coverage.
(2) A life insurance policy that accelerates the death benefit
specifically for terminal illness, a medical condition requiring
extraordinary medical intervention, or a permanent institutional
confinement, and that provides 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.
(3) An insurance policy that is offered primarily to provide
basic Medicare supplemental coverage (as defined under
IC 27-8-13).
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,
SEC.9.
IC 27-8-12-6
Compliance with statutory requirements
Sec. 6. An insurance policy may be marketed, advertised, offered,
or sold in Indiana as long term care insurance only if that policy
complies with the requirements of this chapter.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-7
Policy disclosure standards; marketing practices; continuing
education; penalties; reporting practices; rules
Sec. 7. (a) The insurance commissioner shall adopt rules under
IC 4-22-2 establishing standards of full and fair disclosure
concerning long term care insurance policies. The standards must
require disclosure of information concerning the following:
(1) The sale of the policies.
(2) Terms of renewability.
(3) Initial and subsequent terms of eligibility.
(4) Nonduplication of coverage provisions.
(5) Coverage of dependents.
(6) Preexisting conditions.
(7) Termination of insurance coverage.
(8) Probationary periods.
(9) Limitations on coverage.
(10) Exceptions to coverage.
(11) Reductions from coverage.
(12) Elimination periods.
(13) Requirements for replacement.
(14) Recurrent conditions.
(15) Definitions of terms.
(16) Continuation or conversion of coverage.
(b) The insurance commissioner shall adopt rules under IC 4-22-2
to establish minimum standards concerning:
(1) marketing practices;
(2) insurance producer continuing education;
(3) penalties; and
(4) reporting practices;
for long term care insurance.
(c) Rules adopted by the insurance commissioner under this
section must:
(1) recognize the unique, developing, and experimental nature
of long term care insurance; and
(2) where necessary or appropriate, recognize the distinctions
between group insurance policies and individual insurance
policies.
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,
SEC.10; P.L.178-2003, SEC.65.
IC 27-8-12-7.1
Qualification of long term care policies; rules
Sec. 7.1. The department of insurance shall adopt rules under
IC 4-22-2 that establish standards for the qualification of a long term
care policy under IC 12-15-39.6. The rules must include the
following:
(1) The standards adopted under section 7 of this chapter.
(2) The requirement that an insurer or other person who issues
a qualified long term care policy must at a minimum offer to
each policyholder or prospective policyholder a policy that
provides both:
(A) long term care facility coverage; and
(B) home and community care coverage.
(3) A provision that an insurer or other person who complies
with subdivision (2) may elect to also offer a qualified long
term care policy that provides only long term care facility
coverage.
(4) The submission of data by insurers that will allow the
department of insurance, the office of Medicaid policy and
planning, and the division of aging to administer the Indiana
long term care program under IC 12-15-39.6.
(5) Other standards needed to administer the Indiana long term
care program.
As added by P.L.114-1991, SEC.11. Amended by P.L.9-1991,
SEC.94; P.L.2-1992, SEC.786; P.L.4-1993, SEC.260; P.L.5-1993,
SEC.273; P.L.75-1994, SEC.10; P.L.24-1997, SEC.64;
P.L.141-2006, SEC.109.
IC 27-8-12-8
Loss ratio standards rule
Sec. 8. The insurance commissioner may not adopt a rule
establishing loss ratio standards that apply to long term care
insurance policies unless the rule exclusively concerns long term
care insurance.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-9
Termination of policy on grounds of age or deteriorated health
Sec. 9. An insurer that issues a long term care insurance policy
may not cancel, decline to renew, or otherwise terminate the policy
solely on the grounds of the age or deterioration in mental or
physical health of the insured individual or certificate holder.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-10
"Preexisting condition" defined; exclusion of coverage; limitations
Sec. 10. (a) As used in this section, "preexisting condition" means
the existence of:
(1) either:
(A) symptoms that would cause an ordinarily prudent person
to seek diagnosis, care, or treatment; or
(B) a condition for which medical advice or treatment was
recommended by, or received from, a provider of health care
services; within
(2) a period not to exceed either:
(A) twelve (12) months preceding the effective date of
coverage of an insured person who is sixty-five (65) years of
age or older on the effective date of coverage; or
(B) twenty-four (24) months preceding the effective date of
coverage of an insured person who is less than sixty-five
(65) years of age on the effective date of coverage.
(b) A long term care insurance policy may exclude coverage for
a loss or confinement that is the result of a preexisting condition only
if that loss or confinement begins within:
(1) twelve (12) months following the effective date of coverage
of an insured person who is sixty-five (65) years of age or older
on the effective date of coverage; or
(2) twenty-four (24) months following the effective date of
coverage of an insured person who is under sixty-five (65) years
of age on the effective date of coverage.
(c) The insurance commissioner may extend the limitation periods
set forth in subsections (a)(2)(A), (a)(2)(B), and (b), concerning
specific age group categories in specific policies upon a finding that
the extension is in the best interest of the public.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-10.5
Loss or confinement resulting from a preexisting condition;
exclusion of coverage; limitation period; rules
Sec. 10.5. (a) As used in this section, "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 (6) months preceding the effective date of coverage of an
insured individual.
(b) A long term care insurance policy may not use a definition of
preexisting condition that is more restrictive than the definition
contained in subsection (a).
(c) Except for a group long term care policy under
IC 27-8-5-16(1) or IC 27-1-12-37, a long term care insurance policy
may not exclude coverage for a loss or confinement that is the result
of a preexisting condition unless the loss or confinement begins
within six (6) months following the effective date of coverage of an
insured individual.
(d) The commissioner may extend the limitation period under
subsections (a) and (c) concerning a specific age group category in
a specific policy form upon a finding by the commissioner that the
extension is in the best interest of the public.
(e) This section does not prohibit an insurer from doing any of the
following:
(1) Using an application form designed to elicit the complete
health history of an applicant.
(2) Based on an application, underwriting in accordance with
the insurer's established underwriting standards.
(f) Unless otherwise provided in the policy or certificate, a
preexisting condition, regardless of whether the condition is
disclosed on the application, need not be covered until after the
waiting period described in subsection (c).
(g) A long term care insurance policy may not exclude or use a
waiver or rider to exclude, limit, or reduce coverage or benefits for
a specifically named or described preexisting disease or physical
condition beyond the waiting period described in subsection (c).
As added by P.L.114-1991, SEC.12.
IC 27-8-12-10.6
Conditions on eligibility for benefits; restrictions
Sec. 10.6. (a) A long term care insurance policy may not be
delivered or issued for delivery in Indiana if the policy:
(1) conditions eligibility for any benefits on a prior
hospitalization requirement;
(2) conditions eligibility for benefits provided in an institutional
care setting on the receipt of a higher level of institutional care;
or
(3) conditions eligibility for a benefit other than:
(A) a waiver of premium;
(B) postconfinement;
(C) postacute care; or
(D) recuperative benefits;
on a prior institutionalization requirement.
(b) A long term care insurance policy containing a
postconfinement, postacute, or recuperative benefit must clearly
label in a separate paragraph of the policy a statement entitled
"limitations or conditions on eligibility for benefits". Under the
statement, the policy must outline any limitations or conditions for
benefits.
(c) A long term care insurance policy or rider that conditions
eligibility of noninstitutional benefits on the prior receipt of
institutional care must not require a prior institutional stay of more
than thirty (30) days.
(d) A long term care insurance policy or rider that provides
benefits only following institutionalization may not condition such
benefits upon admission to a facility for the same or related
conditions within a period of less than thirty (30) days after
discharge from the institution.
As added by P.L.114-1991, SEC.13.
IC 27-8-12-11
Establishment of new waiting period
Sec. 11. (a) A long term care insurance policy may not:
(1) contain a provision establishing a new waiting period if an
existing policy is converted to or replaced by a new form issued
by the same insurer, except in the case of an increase in benefits
voluntarily selected by the insured individual or group
policyholder;
(2) be canceled, nonrenewed, or otherwise terminated on the
grounds of age or the deterioration of the mental or physical
health of the insured individual or certificate holder;
(3) provide coverage for skilled nursing care only; or
(4) provide significantly more coverage for skilled care than
coverage for a lower level of care.
(b) Subsection (a) does not prohibit an insurer from voluntarily
waiving any authorized waiting period.
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,
SEC.14.
IC 27-8-12-12
No obligation return period; notice
Sec. 12. (a) An individual long term care insurance policyholder
may return the policy within thirty (30) days of its delivery and have
the premium refunded if, after examination of the policy, the
policyholder is not satisfied for any reason.
(b) Each individual long term care insurance policy must have
prominently printed on, or attached to, its first page a notice setting
forth in substance the provisions of subsection (a).
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,
SEC.15.
IC 27-8-12-13
Direct response solicitation issued policies; no obligation return
period; notice
Sec. 13. (a) A person insured under a long term care insurance
policy or certificate issued under a direct response solicitation may
return the policy or certificate within thirty (30) days of its delivery
and have the premium refunded if the insured person is not satisfied
for any reason.
(b) Each long term care insurance policy or certificate issued
under a direct response solicitation must have printed on, or attached
to, its first page a notice setting forth in substance the provisions of
subsection (a).
As added by P.L.275-1987, SEC.1.
IC 27-8-12-14
Outline of coverage; contents
Sec. 14. (a) The insurer shall deliver an outline of the coverage
provided by an individual long term care insurance policy to the
prospective applicant at the time of initial solicitation through means
that prominently direct the attention of the recipient to the document
and the document's purpose.
(b) The commissioner shall prescribe a standard format regarding:
(1) style;
(2) arrangement;
(3) overall appearance; and
(4) content;
for an outline of coverage.
(c) An insurance producer who solicits a long term care insurance
policy shall deliver the outline of coverage before the presentation of
an application or enrollment form.
(d) The outline of coverage must be presented in conjunction with
any application or enrollment form when there is a direct response
solicitation of long term care insurance.
(e) An outline of coverage required under this section must
include the following:
(1) A description of the principal benefits and coverage
provided in the policy.
(2) A statement of the principal exclusions, reductions, and
limitations set forth in the policy.
(3) A statement of the policy's renewal provisions, including
any reservation by the insurer of a right to change premiums.
(4) A statement that the outline of coverage is a summary of the
policy issued or applied for, and that the policy should be
consulted to determine the exact terms of the coverage provided
by the policy.
(5) A description of the terms under which the policy may be
returned and the premium refunded.
(6) A brief description of the relationship of the cost of care and
benefits.
(7) A statement of the terms under which the policy or
certificate may continue or be discontinued, including any
reservation in the policy of the right to change the premium.
(8) A specific statement of the provisions for continuation or
conversion of group coverage.
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,
SEC.16; P.L.178-2003, SEC.66.
IC 27-8-12-14.5
Policy summary; requirements
Sec. 14.5. (a) A policy summary shall be delivered, at the time of
policy delivery, for an individual life insurance policy that provides
long term care benefits within the policy or by a rider.
(b) The insurer shall deliver the policy summary upon the
applicant's request when there is a direct response solicitation. If
there is no request, the insurer shall deliver the policy summary not
later than when the policy is delivered.
(c) The policy summary must include the following:
(1) An explanation of how long a long term care benefit
interacts with other components of the policy, including
deductions from a death benefit.
(2) An illustration of the amount of a benefit, the length of a
benefit, and the guaranteed lifetime benefits for each covered
person.
(3) Any exclusion, reduction, and limitation on benefits of long
term care.
(d) A policy summary required under this section must also
include the following information if applicable:
(1) A disclosure of any effect of exercising rights under the
policy other than rights referred to in subsection (c).
(2) A disclosure of any guarantee related to long term care costs
of insurance charges.
(3) Current and projected maximum lifetime benefits.
As added by P.L.114-1991, SEC.17.
IC 27-8-12-14.6
Benefits funded through life insurance by acceleration of death
benefits; benefit payment status report; contents
Sec. 14.6. If a long term care benefit, funded through a life
insurance vehicle by the acceleration of the death benefit, is in
benefit payment status, a monthly report containing the following
shall be provided to the policyholder:
(1) Any long term care benefit paid out during the month.
(2) An explanation of any change in the policy, including a
change in death benefit or cash value due to long term care
benefits being paid.
(3) The amount of long term care benefits remaining under the
policy.
As added by P.L.114-1991, SEC.18.
IC 27-8-12-15
Group policy certificate; contents
Sec. 15. A certificate issued under a group long term care
insurance policy that is delivered or issued for delivery in Indiana
must include the following:
(1) A description of the principal benefits and coverage
provided in the policy.
(2) A statement of the principal exclusions, reductions, and
limitations set forth in the policy.
(3) A statement that the group master policy should be
consulted to determine the exact terms of the coverage provided
by the policy.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-16
Application of general insurance law
Sec. 16. All other applicable provisions of IC 27 not in conflict
with the provisions of this chapter apply to insurance policies issued
under this chapter. A long term care insurance policy issued under
this chapter is not subject to any rule adopted under IC 27-1-3-7(c).
As added by P.L.275-1987, SEC.1.
IC 27-8-12-17
Group policies issued in another state; requirements
Sec. 17. Group long term care insurance may not be offered to a
resident of Indiana under a group policy issued in another state
unless the commissioner determines that the group long term care
insurance policy substantially complies with insurance requirements
similar to those established under this chapter.
As added by P.L.114-1991, SEC.19.
IC 27-8-12-18
Insurance producer commissions
Sec. 18. (a) An insurer or other entity that provides a commission
to an insurance producer or other representative for the sale of a long
term care insurance policy may not violate the following conditions:
(1) The amount of the first year commission for selling or
servicing the policy may not exceed two hundred percent
(200%) of the amount of the commission paid in the second
year.
(2) The amount of commission provided in years after the
second year must be equal to the amount provided in the second
year.
(3) A commission must be provided each year for at least five
(5) years after the first year.
(b) If an existing long term care policy or certificate is replaced,
the insurer or other entity that issues the replacement policy may not
provide, and its insurance producer may not accept, a commission in
an amount greater than the renewal commission payable by the
replacing insurer on renewal policies, unless the benefits of the
replacement policy or certificate are clearly and substantially greater
than the benefits under the replaced policy or certificate.
(c) This section does not apply to the following:
(1) Life insurance policies and certificates.
(2) A policy or certificate that is sponsored by an employer for
the benefit of:
(A) the employer's employees; or
(B) the employer's employees and their dependents.
As added by P.L.114-1991, SEC.20. Amended by P.L.178-2003,
SEC.67; P.L.173-2007, SEC.29.
IC 27-8-12-19
Violations; civil penalty; amount
Sec. 19. (a) In addition to any other sanction provided under this
article, the commissioner may impose a civil penalty against an
insurer who has violated this chapter or rules adopted under this
chapter. A penalty imposed under this section must be the greater of:
(1) three (3) times the amount of the commissions paid for each
policy involved in the violation; or
(2) ten thousand dollars ($10,000).
(b) In addition to any other sanction provided under this title, the
commissioner may impose a penalty against an insurance producer
who has violated this chapter or rules adopted under this chapter.
The penalty must be the greater of:
(1) up to three (3) times the amount of the commissions paid to
that insurance producer for each policy involved in the
violation; or
(2) twenty-five hundred dollars ($2,500).
As added by P.L.114-1991, SEC.21. Amended by P.L.178-2003,
SEC.68.