Amended IN Assembly April 22, 2019 Amended IN Assembly March 28, 2019 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Assembly Bill No. 1209Introduced by Assembly Member Nazarian(Coauthor: Assembly Member Voepel)February 21, 2019 An act to amend Sections 10232.9 and Section 10236.11 of, and to add Section 10235.45 to, the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGESTAB 1209, as amended, Nazarian. Long-term care benefits.Existing law generally regulates classes of insurance, including life and long-term care insurance. Under existing law, a life insurance policy may accelerate long-term care benefits as an alternative to a life settlement. Existing law authorizes an accelerated death benefit to be added to a life insurance policy to provide for the advance payment of a part of the death proceeds if a qualifying event, including a terminal or chronic illness, occurs.This bill would require an insurer to allow an insured to access or take a policy loan against the cash value of a life insurance policy issued, amended, or renewed on or after January 1, 2021, while the insured receives payment of long-term care benefits, except as specified. The bill would authorize the payment of an accelerated death benefit for long-term care to be applied toward repayment of a pro rata portion of an outstanding policy loan if the payment results in a pro rata reduction in the cash value of the life insurance policy. The bill would require an insurer to notify a policyholder or certificate holder 15 days before the payment of an accelerated death benefit for long-term care if that payment will prohibit or limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy.Existing law requires a premium rate schedule for an individual or group long-term care insurance policy to be filed with and approved by the Insurance Commissioner before a policy is offered, sold, issued, or delivered. Existing law requires a long-term care insurance policy that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum, to pay a maximum benefit payment for home care that is at least 50 percent of the maximum benefit payment for institutional care and at least $50 per day.This bill would prohibit the Insurance Commissioner from approving an initial premium rate schedule for individual or group long-term care insurance that includes scheduled rate increases based on the attained age of the insured or the policy duration. The bill would increase the benefit payment for home care to at least $100 per day under a long-term care insurance policy issued or delivered on or after January 1, 2021, that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1.Section 10232.9 of the Insurance Code is amended to read:10232.9.(a)A long-term care policy or certificate that purports to provide benefits of home care or community-based services, shall provide at least the following:(1)Home health care.(2)Adult day care.(3)Personal care.(4)Homemaker services.(5)Hospice services.(6)Respite care.(b)For purposes of this section, policy definitions of these benefits may be no more restrictive than the following:(1)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.(2)Adult day care is 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.(3)Personal care is assistance with the activities of daily living, including the instrumental activities of daily living, provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction. Instrumental activities of daily living include using the telephone, managing medications, moving about outside, shopping for essentials, preparing meals, laundry, and light housekeeping.(4)Homemaker services is assistance with activities necessary to or consistent with the insureds ability to remain in the insureds residence, that is provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction.(5)Hospice services are outpatient services not paid by Medicare, 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, and to provide supportive care to the primary care giver and the family. Care may be provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction.(6)Respite care is short-term care provided in an institution, in the home, or in a community-based program, that is designed to relieve a primary care giver in the home. This is a separate benefit with its own conditions for eligibility and maximum benefit levels.(c)Home care benefits shall not be limited or excluded by any of the following:(1)Requiring a need for care in a nursing home if home care services are not provided.(2)Requiring that skilled nursing or therapeutic services be used before or with unskilled services.(3)Requiring the existence of an acute condition.(4)Limiting benefits to services provided by Medicare-certified providers or agencies.(5)Limiting benefits to those provided by licensed or skilled personnel when other providers could provide the service, except where prior certification or licensure is required by state law.(6)Defining an eligible provider in a manner that is more restrictive than that used to license that provider by the state where the service is provided.(7)Requiring medical necessity or similar standard as a criteria for benefits. (d)(1)A comprehensive long-term care policy or certificate that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum, shall pay a maximum benefit payment for home care that is at least 50 percent of the maximum benefit payment for institutional care. For policies delivered before January 1, 2021, home care benefits shall be paid at a rate no less than fifty dollars ($50) per day. For policies delivered on or after January 1, 2021, home care benefits shall be paid at a rate no less than one hundred dollars ($100) per day. Insurance products approved for residents in continuing care retirement communities are exempt from this provision.(2)A comprehensive long-term care policy or certificate that sets a durational maximum for institutional care, limiting the length of time that benefits may be received during the life of the policy or certificate, shall allow a similar durational maximum for home care to the maximum in paragraph (1) that is at least one-half of the length of time allowed for institutional care.SEC. 2.SECTION 1. Section 10235.45 is added to the Insurance Code, immediately following Section 10235.40, to read:10235.45. (a) A life insurance policy issued, amended, or renewed on or after January 1, 2021, that accelerates benefits for long-term care shall not prohibit or otherwise limit the policyholders right to access or take out a policy loan against the cash value of the life insurance policy due to the payment of long-term care benefits, except as provided in paragraphs (1) and (2).(1) Payment of an accelerated death benefit for long-term care shall result in no more than a pro rata reduction in the cash value of the life insurance policy. A reduction in cash value shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment. Future access to policy loans may be limited to the remaining cash value.(2) Notwithstanding paragraph (1), payment of an accelerated death benefit for long-term care, plus any administrative expense charges, future premiums, and accrued interest, may be considered a lien against the death benefit of the life insurance policy, and access to the cash value of the life insurance policy may be restricted to the excess of the cash value over the sum of any outstanding policy loans and the lien. Future access to policy loans may also be limited to the excess of the cash value over the sum of any outstanding policy loans and the lien.(b) If payment of an accelerated death benefit for long-term care results in a pro rata reduction in the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the payment may be applied toward repayment of a pro rata portion of outstanding policy loans. The amount of the loan repayment shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment.(c) If payment of an accelerated death benefit for long-term care will prohibit or otherwise limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the insurer shall send the policyholder or certificate holder a statement demonstrating the effect of the acceleration on any remaining death benefit, cash value or accumulation account, policy loan, and premium payment. The statement shall include a notice explaining that the payment of accelerated death benefits for long-term care will reduce and potentially eliminate any remaining death benefit. The statement shall be provided at least 15 days before payment of the accelerated death benefit.SEC. 3.SEC. 2. Section 10236.11 of the Insurance Code is amended to read:10236.11. The premium rate schedules for all individual and group long-term care insurance policies issued in this state shall be filed with and receive the prior approval of the commissioner before the policy may be offered, sold, issued, or delivered to a resident of this state.All initial rate filings shall be subject to the following:(a) No approval for an initial premium schedule shall be granted unless the actuary performing the review for the commissioner certifies 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. The certification may rely on supporting data in the filing. The actuary performing the review may request an actuarial demonstration that the assumptions the insurer has used are reasonable. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and creditable data from other studies, or both.(b) The insurer shall submit to the commissioner for approval a rate filing for each policy form that includes at least all of the following information:(1) An actuarial memorandum that describes the assumptions the insurer used to develop the premium rate schedule. The actuarial assumptions shall include, but not be limited to, a sufficiently detailed description of morbidity assumptions, voluntary lapse rates, mortality assumptions, asset investment yield rates, a description of all expense components, and plan and option mix assumptions. The memorandum shall also include the expected lifetime loss ratio and projections of yearly earned premiums, incurred claims, incurred claim loss ratios, and changes in contract reserves.(2) An actuarial certification consisting of at least all of 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.(C) A statement that the underwriting and claims adjudication processes have 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 all of the following:(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.(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 that statement cannot be made, a complete description of the situations in which this does not occur and the type and level of change in the reserve assumptions that would be necessary for the difference to be sufficient. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under subdivision (a) based on a standard age distribution.(E) 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 a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.(c) Premium rate schedules and new policy forms shall be filed by January 1, 2002, for all group long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, and for all previously approved individual long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, unless the January 1, 2002, deadline is extended by the commissioner. Insurers may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) January 1, 2003. Insurers that have filed premium rate schedules and new policy forms by March 1, 2002, may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) June 30, 2003.(d) This section shall not be construed as prohibiting an insurer from filing new group and individual policy forms, or from relieving an insurer of the obligation to file these forms, with the commissioner after January 1, 2003, if the policy form meets all the requirements of this chapter.(e) The commissioner shall not approve an initial premium rate schedule that includes scheduled rate increases based on the attained age of the insured or the duration of the policy.
Amended IN Assembly April 22, 2019 Amended IN Assembly March 28, 2019 CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION Assembly Bill No. 1209Introduced by Assembly Member Nazarian(Coauthor: Assembly Member Voepel)February 21, 2019 An act to amend Sections 10232.9 and Section 10236.11 of, and to add Section 10235.45 to, the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGESTAB 1209, as amended, Nazarian. Long-term care benefits.Existing law generally regulates classes of insurance, including life and long-term care insurance. Under existing law, a life insurance policy may accelerate long-term care benefits as an alternative to a life settlement. Existing law authorizes an accelerated death benefit to be added to a life insurance policy to provide for the advance payment of a part of the death proceeds if a qualifying event, including a terminal or chronic illness, occurs.This bill would require an insurer to allow an insured to access or take a policy loan against the cash value of a life insurance policy issued, amended, or renewed on or after January 1, 2021, while the insured receives payment of long-term care benefits, except as specified. The bill would authorize the payment of an accelerated death benefit for long-term care to be applied toward repayment of a pro rata portion of an outstanding policy loan if the payment results in a pro rata reduction in the cash value of the life insurance policy. The bill would require an insurer to notify a policyholder or certificate holder 15 days before the payment of an accelerated death benefit for long-term care if that payment will prohibit or limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy.Existing law requires a premium rate schedule for an individual or group long-term care insurance policy to be filed with and approved by the Insurance Commissioner before a policy is offered, sold, issued, or delivered. Existing law requires a long-term care insurance policy that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum, to pay a maximum benefit payment for home care that is at least 50 percent of the maximum benefit payment for institutional care and at least $50 per day.This bill would prohibit the Insurance Commissioner from approving an initial premium rate schedule for individual or group long-term care insurance that includes scheduled rate increases based on the attained age of the insured or the policy duration. The bill would increase the benefit payment for home care to at least $100 per day under a long-term care insurance policy issued or delivered on or after January 1, 2021, that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO
Amended IN Assembly April 22, 2019 Amended IN Assembly March 28, 2019
Amended IN Assembly April 22, 2019
Amended IN Assembly March 28, 2019
CALIFORNIA LEGISLATURE 20192020 REGULAR SESSION
Assembly Bill No. 1209
Introduced by Assembly Member Nazarian(Coauthor: Assembly Member Voepel)February 21, 2019
Introduced by Assembly Member Nazarian(Coauthor: Assembly Member Voepel)
February 21, 2019
An act to amend Sections 10232.9 and Section 10236.11 of, and to add Section 10235.45 to, the Insurance Code, relating to insurance.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 1209, as amended, Nazarian. Long-term care benefits.
Existing law generally regulates classes of insurance, including life and long-term care insurance. Under existing law, a life insurance policy may accelerate long-term care benefits as an alternative to a life settlement. Existing law authorizes an accelerated death benefit to be added to a life insurance policy to provide for the advance payment of a part of the death proceeds if a qualifying event, including a terminal or chronic illness, occurs.This bill would require an insurer to allow an insured to access or take a policy loan against the cash value of a life insurance policy issued, amended, or renewed on or after January 1, 2021, while the insured receives payment of long-term care benefits, except as specified. The bill would authorize the payment of an accelerated death benefit for long-term care to be applied toward repayment of a pro rata portion of an outstanding policy loan if the payment results in a pro rata reduction in the cash value of the life insurance policy. The bill would require an insurer to notify a policyholder or certificate holder 15 days before the payment of an accelerated death benefit for long-term care if that payment will prohibit or limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy.Existing law requires a premium rate schedule for an individual or group long-term care insurance policy to be filed with and approved by the Insurance Commissioner before a policy is offered, sold, issued, or delivered. Existing law requires a long-term care insurance policy that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum, to pay a maximum benefit payment for home care that is at least 50 percent of the maximum benefit payment for institutional care and at least $50 per day.This bill would prohibit the Insurance Commissioner from approving an initial premium rate schedule for individual or group long-term care insurance that includes scheduled rate increases based on the attained age of the insured or the policy duration. The bill would increase the benefit payment for home care to at least $100 per day under a long-term care insurance policy issued or delivered on or after January 1, 2021, that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum.
Existing law generally regulates classes of insurance, including life and long-term care insurance. Under existing law, a life insurance policy may accelerate long-term care benefits as an alternative to a life settlement. Existing law authorizes an accelerated death benefit to be added to a life insurance policy to provide for the advance payment of a part of the death proceeds if a qualifying event, including a terminal or chronic illness, occurs.
This bill would require an insurer to allow an insured to access or take a policy loan against the cash value of a life insurance policy issued, amended, or renewed on or after January 1, 2021, while the insured receives payment of long-term care benefits, except as specified. The bill would authorize the payment of an accelerated death benefit for long-term care to be applied toward repayment of a pro rata portion of an outstanding policy loan if the payment results in a pro rata reduction in the cash value of the life insurance policy. The bill would require an insurer to notify a policyholder or certificate holder 15 days before the payment of an accelerated death benefit for long-term care if that payment will prohibit or limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy.
Existing law requires a premium rate schedule for an individual or group long-term care insurance policy to be filed with and approved by the Insurance Commissioner before a policy is offered, sold, issued, or delivered. Existing law requires a long-term care insurance policy that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum, to pay a maximum benefit payment for home care that is at least 50 percent of the maximum benefit payment for institutional care and at least $50 per day.
This bill would prohibit the Insurance Commissioner from approving an initial premium rate schedule for individual or group long-term care insurance that includes scheduled rate increases based on the attained age of the insured or the policy duration. The bill would increase the benefit payment for home care to at least $100 per day under a long-term care insurance policy issued or delivered on or after January 1, 2021, that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1.Section 10232.9 of the Insurance Code is amended to read:10232.9.(a)A long-term care policy or certificate that purports to provide benefits of home care or community-based services, shall provide at least the following:(1)Home health care.(2)Adult day care.(3)Personal care.(4)Homemaker services.(5)Hospice services.(6)Respite care.(b)For purposes of this section, policy definitions of these benefits may be no more restrictive than the following:(1)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.(2)Adult day care is 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.(3)Personal care is assistance with the activities of daily living, including the instrumental activities of daily living, provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction. Instrumental activities of daily living include using the telephone, managing medications, moving about outside, shopping for essentials, preparing meals, laundry, and light housekeeping.(4)Homemaker services is assistance with activities necessary to or consistent with the insureds ability to remain in the insureds residence, that is provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction.(5)Hospice services are outpatient services not paid by Medicare, 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, and to provide supportive care to the primary care giver and the family. Care may be provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction.(6)Respite care is short-term care provided in an institution, in the home, or in a community-based program, that is designed to relieve a primary care giver in the home. This is a separate benefit with its own conditions for eligibility and maximum benefit levels.(c)Home care benefits shall not be limited or excluded by any of the following:(1)Requiring a need for care in a nursing home if home care services are not provided.(2)Requiring that skilled nursing or therapeutic services be used before or with unskilled services.(3)Requiring the existence of an acute condition.(4)Limiting benefits to services provided by Medicare-certified providers or agencies.(5)Limiting benefits to those provided by licensed or skilled personnel when other providers could provide the service, except where prior certification or licensure is required by state law.(6)Defining an eligible provider in a manner that is more restrictive than that used to license that provider by the state where the service is provided.(7)Requiring medical necessity or similar standard as a criteria for benefits. (d)(1)A comprehensive long-term care policy or certificate that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum, shall pay a maximum benefit payment for home care that is at least 50 percent of the maximum benefit payment for institutional care. For policies delivered before January 1, 2021, home care benefits shall be paid at a rate no less than fifty dollars ($50) per day. For policies delivered on or after January 1, 2021, home care benefits shall be paid at a rate no less than one hundred dollars ($100) per day. Insurance products approved for residents in continuing care retirement communities are exempt from this provision.(2)A comprehensive long-term care policy or certificate that sets a durational maximum for institutional care, limiting the length of time that benefits may be received during the life of the policy or certificate, shall allow a similar durational maximum for home care to the maximum in paragraph (1) that is at least one-half of the length of time allowed for institutional care.SEC. 2.SECTION 1. Section 10235.45 is added to the Insurance Code, immediately following Section 10235.40, to read:10235.45. (a) A life insurance policy issued, amended, or renewed on or after January 1, 2021, that accelerates benefits for long-term care shall not prohibit or otherwise limit the policyholders right to access or take out a policy loan against the cash value of the life insurance policy due to the payment of long-term care benefits, except as provided in paragraphs (1) and (2).(1) Payment of an accelerated death benefit for long-term care shall result in no more than a pro rata reduction in the cash value of the life insurance policy. A reduction in cash value shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment. Future access to policy loans may be limited to the remaining cash value.(2) Notwithstanding paragraph (1), payment of an accelerated death benefit for long-term care, plus any administrative expense charges, future premiums, and accrued interest, may be considered a lien against the death benefit of the life insurance policy, and access to the cash value of the life insurance policy may be restricted to the excess of the cash value over the sum of any outstanding policy loans and the lien. Future access to policy loans may also be limited to the excess of the cash value over the sum of any outstanding policy loans and the lien.(b) If payment of an accelerated death benefit for long-term care results in a pro rata reduction in the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the payment may be applied toward repayment of a pro rata portion of outstanding policy loans. The amount of the loan repayment shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment.(c) If payment of an accelerated death benefit for long-term care will prohibit or otherwise limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the insurer shall send the policyholder or certificate holder a statement demonstrating the effect of the acceleration on any remaining death benefit, cash value or accumulation account, policy loan, and premium payment. The statement shall include a notice explaining that the payment of accelerated death benefits for long-term care will reduce and potentially eliminate any remaining death benefit. The statement shall be provided at least 15 days before payment of the accelerated death benefit.SEC. 3.SEC. 2. Section 10236.11 of the Insurance Code is amended to read:10236.11. The premium rate schedules for all individual and group long-term care insurance policies issued in this state shall be filed with and receive the prior approval of the commissioner before the policy may be offered, sold, issued, or delivered to a resident of this state.All initial rate filings shall be subject to the following:(a) No approval for an initial premium schedule shall be granted unless the actuary performing the review for the commissioner certifies 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. The certification may rely on supporting data in the filing. The actuary performing the review may request an actuarial demonstration that the assumptions the insurer has used are reasonable. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and creditable data from other studies, or both.(b) The insurer shall submit to the commissioner for approval a rate filing for each policy form that includes at least all of the following information:(1) An actuarial memorandum that describes the assumptions the insurer used to develop the premium rate schedule. The actuarial assumptions shall include, but not be limited to, a sufficiently detailed description of morbidity assumptions, voluntary lapse rates, mortality assumptions, asset investment yield rates, a description of all expense components, and plan and option mix assumptions. The memorandum shall also include the expected lifetime loss ratio and projections of yearly earned premiums, incurred claims, incurred claim loss ratios, and changes in contract reserves.(2) An actuarial certification consisting of at least all of 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.(C) A statement that the underwriting and claims adjudication processes have 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 all of the following:(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.(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 that statement cannot be made, a complete description of the situations in which this does not occur and the type and level of change in the reserve assumptions that would be necessary for the difference to be sufficient. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under subdivision (a) based on a standard age distribution.(E) 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 a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.(c) Premium rate schedules and new policy forms shall be filed by January 1, 2002, for all group long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, and for all previously approved individual long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, unless the January 1, 2002, deadline is extended by the commissioner. Insurers may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) January 1, 2003. Insurers that have filed premium rate schedules and new policy forms by March 1, 2002, may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) June 30, 2003.(d) This section shall not be construed as prohibiting an insurer from filing new group and individual policy forms, or from relieving an insurer of the obligation to file these forms, with the commissioner after January 1, 2003, if the policy form meets all the requirements of this chapter.(e) The commissioner shall not approve an initial premium rate schedule that includes scheduled rate increases based on the attained age of the insured or the duration of the policy.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
(a)A long-term care policy or certificate that purports to provide benefits of home care or community-based services, shall provide at least the following:
(1)Home health care.
(2)Adult day care.
(3)Personal care.
(4)Homemaker services.
(5)Hospice services.
(6)Respite care.
(b)For purposes of this section, policy definitions of these benefits may be no more restrictive than the following:
(1)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.
(2)Adult day care is 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.
(3)Personal care is assistance with the activities of daily living, including the instrumental activities of daily living, provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction. Instrumental activities of daily living include using the telephone, managing medications, moving about outside, shopping for essentials, preparing meals, laundry, and light housekeeping.
(4)Homemaker services is assistance with activities necessary to or consistent with the insureds ability to remain in the insureds residence, that is provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction.
(5)Hospice services are outpatient services not paid by Medicare, 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, and to provide supportive care to the primary care giver and the family. Care may be provided by a skilled or unskilled person under a plan of care developed by a physician or a multidisciplinary team under medical direction.
(6)Respite care is short-term care provided in an institution, in the home, or in a community-based program, that is designed to relieve a primary care giver in the home. This is a separate benefit with its own conditions for eligibility and maximum benefit levels.
(c)Home care benefits shall not be limited or excluded by any of the following:
(1)Requiring a need for care in a nursing home if home care services are not provided.
(2)Requiring that skilled nursing or therapeutic services be used before or with unskilled services.
(3)Requiring the existence of an acute condition.
(4)Limiting benefits to services provided by Medicare-certified providers or agencies.
(5)Limiting benefits to those provided by licensed or skilled personnel when other providers could provide the service, except where prior certification or licensure is required by state law.
(6)Defining an eligible provider in a manner that is more restrictive than that used to license that provider by the state where the service is provided.
(7)Requiring medical necessity or similar standard as a criteria for benefits.
(d)(1)A comprehensive long-term care policy or certificate that provides for both institutional care and home care and that sets a daily, weekly, or monthly benefit payment maximum, shall pay a maximum benefit payment for home care that is at least 50 percent of the maximum benefit payment for institutional care. For policies delivered before January 1, 2021, home care benefits shall be paid at a rate no less than fifty dollars ($50) per day. For policies delivered on or after January 1, 2021, home care benefits shall be paid at a rate no less than one hundred dollars ($100) per day. Insurance products approved for residents in continuing care retirement communities are exempt from this provision.
(2)A comprehensive long-term care policy or certificate that sets a durational maximum for institutional care, limiting the length of time that benefits may be received during the life of the policy or certificate, shall allow a similar durational maximum for home care to the maximum in paragraph (1) that is at least one-half of the length of time allowed for institutional care.
SEC. 2.SECTION 1. Section 10235.45 is added to the Insurance Code, immediately following Section 10235.40, to read:10235.45. (a) A life insurance policy issued, amended, or renewed on or after January 1, 2021, that accelerates benefits for long-term care shall not prohibit or otherwise limit the policyholders right to access or take out a policy loan against the cash value of the life insurance policy due to the payment of long-term care benefits, except as provided in paragraphs (1) and (2).(1) Payment of an accelerated death benefit for long-term care shall result in no more than a pro rata reduction in the cash value of the life insurance policy. A reduction in cash value shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment. Future access to policy loans may be limited to the remaining cash value.(2) Notwithstanding paragraph (1), payment of an accelerated death benefit for long-term care, plus any administrative expense charges, future premiums, and accrued interest, may be considered a lien against the death benefit of the life insurance policy, and access to the cash value of the life insurance policy may be restricted to the excess of the cash value over the sum of any outstanding policy loans and the lien. Future access to policy loans may also be limited to the excess of the cash value over the sum of any outstanding policy loans and the lien.(b) If payment of an accelerated death benefit for long-term care results in a pro rata reduction in the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the payment may be applied toward repayment of a pro rata portion of outstanding policy loans. The amount of the loan repayment shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment.(c) If payment of an accelerated death benefit for long-term care will prohibit or otherwise limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the insurer shall send the policyholder or certificate holder a statement demonstrating the effect of the acceleration on any remaining death benefit, cash value or accumulation account, policy loan, and premium payment. The statement shall include a notice explaining that the payment of accelerated death benefits for long-term care will reduce and potentially eliminate any remaining death benefit. The statement shall be provided at least 15 days before payment of the accelerated death benefit.
SEC. 2.SECTION 1. Section 10235.45 is added to the Insurance Code, immediately following Section 10235.40, to read:
### SEC. 2.SECTION 1.
10235.45. (a) A life insurance policy issued, amended, or renewed on or after January 1, 2021, that accelerates benefits for long-term care shall not prohibit or otherwise limit the policyholders right to access or take out a policy loan against the cash value of the life insurance policy due to the payment of long-term care benefits, except as provided in paragraphs (1) and (2).(1) Payment of an accelerated death benefit for long-term care shall result in no more than a pro rata reduction in the cash value of the life insurance policy. A reduction in cash value shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment. Future access to policy loans may be limited to the remaining cash value.(2) Notwithstanding paragraph (1), payment of an accelerated death benefit for long-term care, plus any administrative expense charges, future premiums, and accrued interest, may be considered a lien against the death benefit of the life insurance policy, and access to the cash value of the life insurance policy may be restricted to the excess of the cash value over the sum of any outstanding policy loans and the lien. Future access to policy loans may also be limited to the excess of the cash value over the sum of any outstanding policy loans and the lien.(b) If payment of an accelerated death benefit for long-term care results in a pro rata reduction in the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the payment may be applied toward repayment of a pro rata portion of outstanding policy loans. The amount of the loan repayment shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment.(c) If payment of an accelerated death benefit for long-term care will prohibit or otherwise limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the insurer shall send the policyholder or certificate holder a statement demonstrating the effect of the acceleration on any remaining death benefit, cash value or accumulation account, policy loan, and premium payment. The statement shall include a notice explaining that the payment of accelerated death benefits for long-term care will reduce and potentially eliminate any remaining death benefit. The statement shall be provided at least 15 days before payment of the accelerated death benefit.
10235.45. (a) A life insurance policy issued, amended, or renewed on or after January 1, 2021, that accelerates benefits for long-term care shall not prohibit or otherwise limit the policyholders right to access or take out a policy loan against the cash value of the life insurance policy due to the payment of long-term care benefits, except as provided in paragraphs (1) and (2).(1) Payment of an accelerated death benefit for long-term care shall result in no more than a pro rata reduction in the cash value of the life insurance policy. A reduction in cash value shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment. Future access to policy loans may be limited to the remaining cash value.(2) Notwithstanding paragraph (1), payment of an accelerated death benefit for long-term care, plus any administrative expense charges, future premiums, and accrued interest, may be considered a lien against the death benefit of the life insurance policy, and access to the cash value of the life insurance policy may be restricted to the excess of the cash value over the sum of any outstanding policy loans and the lien. Future access to policy loans may also be limited to the excess of the cash value over the sum of any outstanding policy loans and the lien.(b) If payment of an accelerated death benefit for long-term care results in a pro rata reduction in the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the payment may be applied toward repayment of a pro rata portion of outstanding policy loans. The amount of the loan repayment shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment.(c) If payment of an accelerated death benefit for long-term care will prohibit or otherwise limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the insurer shall send the policyholder or certificate holder a statement demonstrating the effect of the acceleration on any remaining death benefit, cash value or accumulation account, policy loan, and premium payment. The statement shall include a notice explaining that the payment of accelerated death benefits for long-term care will reduce and potentially eliminate any remaining death benefit. The statement shall be provided at least 15 days before payment of the accelerated death benefit.
10235.45. (a) A life insurance policy issued, amended, or renewed on or after January 1, 2021, that accelerates benefits for long-term care shall not prohibit or otherwise limit the policyholders right to access or take out a policy loan against the cash value of the life insurance policy due to the payment of long-term care benefits, except as provided in paragraphs (1) and (2).(1) Payment of an accelerated death benefit for long-term care shall result in no more than a pro rata reduction in the cash value of the life insurance policy. A reduction in cash value shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment. Future access to policy loans may be limited to the remaining cash value.(2) Notwithstanding paragraph (1), payment of an accelerated death benefit for long-term care, plus any administrative expense charges, future premiums, and accrued interest, may be considered a lien against the death benefit of the life insurance policy, and access to the cash value of the life insurance policy may be restricted to the excess of the cash value over the sum of any outstanding policy loans and the lien. Future access to policy loans may also be limited to the excess of the cash value over the sum of any outstanding policy loans and the lien.(b) If payment of an accelerated death benefit for long-term care results in a pro rata reduction in the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the payment may be applied toward repayment of a pro rata portion of outstanding policy loans. The amount of the loan repayment shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment.(c) If payment of an accelerated death benefit for long-term care will prohibit or otherwise limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the insurer shall send the policyholder or certificate holder a statement demonstrating the effect of the acceleration on any remaining death benefit, cash value or accumulation account, policy loan, and premium payment. The statement shall include a notice explaining that the payment of accelerated death benefits for long-term care will reduce and potentially eliminate any remaining death benefit. The statement shall be provided at least 15 days before payment of the accelerated death benefit.
10235.45. (a) A life insurance policy issued, amended, or renewed on or after January 1, 2021, that accelerates benefits for long-term care shall not prohibit or otherwise limit the policyholders right to access or take out a policy loan against the cash value of the life insurance policy due to the payment of long-term care benefits, except as provided in paragraphs (1) and (2).
(1) Payment of an accelerated death benefit for long-term care shall result in no more than a pro rata reduction in the cash value of the life insurance policy. A reduction in cash value shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment. Future access to policy loans may be limited to the remaining cash value.
(2) Notwithstanding paragraph (1), payment of an accelerated death benefit for long-term care, plus any administrative expense charges, future premiums, and accrued interest, may be considered a lien against the death benefit of the life insurance policy, and access to the cash value of the life insurance policy may be restricted to the excess of the cash value over the sum of any outstanding policy loans and the lien. Future access to policy loans may also be limited to the excess of the cash value over the sum of any outstanding policy loans and the lien.
(b) If payment of an accelerated death benefit for long-term care results in a pro rata reduction in the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the payment may be applied toward repayment of a pro rata portion of outstanding policy loans. The amount of the loan repayment shall be proportionally equal to the percentage of death benefits accelerated to produce the accelerated death benefit payment.
(c) If payment of an accelerated death benefit for long-term care will prohibit or otherwise limit the policyholders right to access or take a policy loan against the cash value of the life insurance policy issued, amended, or renewed on or after January 1, 2021, the insurer shall send the policyholder or certificate holder a statement demonstrating the effect of the acceleration on any remaining death benefit, cash value or accumulation account, policy loan, and premium payment. The statement shall include a notice explaining that the payment of accelerated death benefits for long-term care will reduce and potentially eliminate any remaining death benefit. The statement shall be provided at least 15 days before payment of the accelerated death benefit.
SEC. 3.SEC. 2. Section 10236.11 of the Insurance Code is amended to read:10236.11. The premium rate schedules for all individual and group long-term care insurance policies issued in this state shall be filed with and receive the prior approval of the commissioner before the policy may be offered, sold, issued, or delivered to a resident of this state.All initial rate filings shall be subject to the following:(a) No approval for an initial premium schedule shall be granted unless the actuary performing the review for the commissioner certifies 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. The certification may rely on supporting data in the filing. The actuary performing the review may request an actuarial demonstration that the assumptions the insurer has used are reasonable. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and creditable data from other studies, or both.(b) The insurer shall submit to the commissioner for approval a rate filing for each policy form that includes at least all of the following information:(1) An actuarial memorandum that describes the assumptions the insurer used to develop the premium rate schedule. The actuarial assumptions shall include, but not be limited to, a sufficiently detailed description of morbidity assumptions, voluntary lapse rates, mortality assumptions, asset investment yield rates, a description of all expense components, and plan and option mix assumptions. The memorandum shall also include the expected lifetime loss ratio and projections of yearly earned premiums, incurred claims, incurred claim loss ratios, and changes in contract reserves.(2) An actuarial certification consisting of at least all of 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.(C) A statement that the underwriting and claims adjudication processes have 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 all of the following:(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.(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 that statement cannot be made, a complete description of the situations in which this does not occur and the type and level of change in the reserve assumptions that would be necessary for the difference to be sufficient. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under subdivision (a) based on a standard age distribution.(E) 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 a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.(c) Premium rate schedules and new policy forms shall be filed by January 1, 2002, for all group long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, and for all previously approved individual long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, unless the January 1, 2002, deadline is extended by the commissioner. Insurers may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) January 1, 2003. Insurers that have filed premium rate schedules and new policy forms by March 1, 2002, may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) June 30, 2003.(d) This section shall not be construed as prohibiting an insurer from filing new group and individual policy forms, or from relieving an insurer of the obligation to file these forms, with the commissioner after January 1, 2003, if the policy form meets all the requirements of this chapter.(e) The commissioner shall not approve an initial premium rate schedule that includes scheduled rate increases based on the attained age of the insured or the duration of the policy.
SEC. 3.SEC. 2. Section 10236.11 of the Insurance Code is amended to read:
### SEC. 3.SEC. 2.
10236.11. The premium rate schedules for all individual and group long-term care insurance policies issued in this state shall be filed with and receive the prior approval of the commissioner before the policy may be offered, sold, issued, or delivered to a resident of this state.All initial rate filings shall be subject to the following:(a) No approval for an initial premium schedule shall be granted unless the actuary performing the review for the commissioner certifies 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. The certification may rely on supporting data in the filing. The actuary performing the review may request an actuarial demonstration that the assumptions the insurer has used are reasonable. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and creditable data from other studies, or both.(b) The insurer shall submit to the commissioner for approval a rate filing for each policy form that includes at least all of the following information:(1) An actuarial memorandum that describes the assumptions the insurer used to develop the premium rate schedule. The actuarial assumptions shall include, but not be limited to, a sufficiently detailed description of morbidity assumptions, voluntary lapse rates, mortality assumptions, asset investment yield rates, a description of all expense components, and plan and option mix assumptions. The memorandum shall also include the expected lifetime loss ratio and projections of yearly earned premiums, incurred claims, incurred claim loss ratios, and changes in contract reserves.(2) An actuarial certification consisting of at least all of 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.(C) A statement that the underwriting and claims adjudication processes have 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 all of the following:(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.(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 that statement cannot be made, a complete description of the situations in which this does not occur and the type and level of change in the reserve assumptions that would be necessary for the difference to be sufficient. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under subdivision (a) based on a standard age distribution.(E) 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 a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.(c) Premium rate schedules and new policy forms shall be filed by January 1, 2002, for all group long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, and for all previously approved individual long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, unless the January 1, 2002, deadline is extended by the commissioner. Insurers may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) January 1, 2003. Insurers that have filed premium rate schedules and new policy forms by March 1, 2002, may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) June 30, 2003.(d) This section shall not be construed as prohibiting an insurer from filing new group and individual policy forms, or from relieving an insurer of the obligation to file these forms, with the commissioner after January 1, 2003, if the policy form meets all the requirements of this chapter.(e) The commissioner shall not approve an initial premium rate schedule that includes scheduled rate increases based on the attained age of the insured or the duration of the policy.
10236.11. The premium rate schedules for all individual and group long-term care insurance policies issued in this state shall be filed with and receive the prior approval of the commissioner before the policy may be offered, sold, issued, or delivered to a resident of this state.All initial rate filings shall be subject to the following:(a) No approval for an initial premium schedule shall be granted unless the actuary performing the review for the commissioner certifies 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. The certification may rely on supporting data in the filing. The actuary performing the review may request an actuarial demonstration that the assumptions the insurer has used are reasonable. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and creditable data from other studies, or both.(b) The insurer shall submit to the commissioner for approval a rate filing for each policy form that includes at least all of the following information:(1) An actuarial memorandum that describes the assumptions the insurer used to develop the premium rate schedule. The actuarial assumptions shall include, but not be limited to, a sufficiently detailed description of morbidity assumptions, voluntary lapse rates, mortality assumptions, asset investment yield rates, a description of all expense components, and plan and option mix assumptions. The memorandum shall also include the expected lifetime loss ratio and projections of yearly earned premiums, incurred claims, incurred claim loss ratios, and changes in contract reserves.(2) An actuarial certification consisting of at least all of 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.(C) A statement that the underwriting and claims adjudication processes have 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 all of the following:(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.(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 that statement cannot be made, a complete description of the situations in which this does not occur and the type and level of change in the reserve assumptions that would be necessary for the difference to be sufficient. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under subdivision (a) based on a standard age distribution.(E) 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 a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.(c) Premium rate schedules and new policy forms shall be filed by January 1, 2002, for all group long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, and for all previously approved individual long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, unless the January 1, 2002, deadline is extended by the commissioner. Insurers may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) January 1, 2003. Insurers that have filed premium rate schedules and new policy forms by March 1, 2002, may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) June 30, 2003.(d) This section shall not be construed as prohibiting an insurer from filing new group and individual policy forms, or from relieving an insurer of the obligation to file these forms, with the commissioner after January 1, 2003, if the policy form meets all the requirements of this chapter.(e) The commissioner shall not approve an initial premium rate schedule that includes scheduled rate increases based on the attained age of the insured or the duration of the policy.
10236.11. The premium rate schedules for all individual and group long-term care insurance policies issued in this state shall be filed with and receive the prior approval of the commissioner before the policy may be offered, sold, issued, or delivered to a resident of this state.All initial rate filings shall be subject to the following:(a) No approval for an initial premium schedule shall be granted unless the actuary performing the review for the commissioner certifies 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. The certification may rely on supporting data in the filing. The actuary performing the review may request an actuarial demonstration that the assumptions the insurer has used are reasonable. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and creditable data from other studies, or both.(b) The insurer shall submit to the commissioner for approval a rate filing for each policy form that includes at least all of the following information:(1) An actuarial memorandum that describes the assumptions the insurer used to develop the premium rate schedule. The actuarial assumptions shall include, but not be limited to, a sufficiently detailed description of morbidity assumptions, voluntary lapse rates, mortality assumptions, asset investment yield rates, a description of all expense components, and plan and option mix assumptions. The memorandum shall also include the expected lifetime loss ratio and projections of yearly earned premiums, incurred claims, incurred claim loss ratios, and changes in contract reserves.(2) An actuarial certification consisting of at least all of 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.(C) A statement that the underwriting and claims adjudication processes have 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 all of the following:(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.(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 that statement cannot be made, a complete description of the situations in which this does not occur and the type and level of change in the reserve assumptions that would be necessary for the difference to be sufficient. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under subdivision (a) based on a standard age distribution.(E) 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 a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.(c) Premium rate schedules and new policy forms shall be filed by January 1, 2002, for all group long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, and for all previously approved individual long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, unless the January 1, 2002, deadline is extended by the commissioner. Insurers may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) January 1, 2003. Insurers that have filed premium rate schedules and new policy forms by March 1, 2002, may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) June 30, 2003.(d) This section shall not be construed as prohibiting an insurer from filing new group and individual policy forms, or from relieving an insurer of the obligation to file these forms, with the commissioner after January 1, 2003, if the policy form meets all the requirements of this chapter.(e) The commissioner shall not approve an initial premium rate schedule that includes scheduled rate increases based on the attained age of the insured or the duration of the policy.
10236.11. The premium rate schedules for all individual and group long-term care insurance policies issued in this state shall be filed with and receive the prior approval of the commissioner before the policy may be offered, sold, issued, or delivered to a resident of this state.
All initial rate filings shall be subject to the following:
(a) No approval for an initial premium schedule shall be granted unless the actuary performing the review for the commissioner certifies 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. The certification may rely on supporting data in the filing. The actuary performing the review may request an actuarial demonstration that the assumptions the insurer has used are reasonable. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and creditable data from other studies, or both.
(b) The insurer shall submit to the commissioner for approval a rate filing for each policy form that includes at least all of the following information:
(1) An actuarial memorandum that describes the assumptions the insurer used to develop the premium rate schedule. The actuarial assumptions shall include, but not be limited to, a sufficiently detailed description of morbidity assumptions, voluntary lapse rates, mortality assumptions, asset investment yield rates, a description of all expense components, and plan and option mix assumptions. The memorandum shall also include the expected lifetime loss ratio and projections of yearly earned premiums, incurred claims, incurred claim loss ratios, and changes in contract reserves.
(2) An actuarial certification consisting of at least all of 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.
(C) A statement that the underwriting and claims adjudication processes have 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 all of the following:
(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.
(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 that statement cannot be made, a complete description of the situations in which this does not occur and the type and level of change in the reserve assumptions that would be necessary for the difference to be sufficient. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under subdivision (a) based on a standard age distribution.
(E) 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 a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.
(c) Premium rate schedules and new policy forms shall be filed by January 1, 2002, for all group long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, and for all previously approved individual long-term care insurance policies that an insurer will offer, sell, issue, or deliver on or after January 1, 2003, unless the January 1, 2002, deadline is extended by the commissioner. Insurers may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) January 1, 2003. Insurers that have filed premium rate schedules and new policy forms by March 1, 2002, may continue to offer and market long-term care insurance policies approved prior to January 1, 2002, until the earlier of (1) 90 days after approval of both the premium rate schedules and new policy forms filed pursuant to this section or (2) June 30, 2003.
(d) This section shall not be construed as prohibiting an insurer from filing new group and individual policy forms, or from relieving an insurer of the obligation to file these forms, with the commissioner after January 1, 2003, if the policy form meets all the requirements of this chapter.
(e) The commissioner shall not approve an initial premium rate schedule that includes scheduled rate increases based on the attained age of the insured or the duration of the policy.