Researcher: AR Page 1 4/8/21
OLR Bill Analysis
SB 1046
AN ACT CONCERNING LONG -TERM CARE INSURANCE.
SUMMARY
This bill imposes certain consumer protection measures on insurers,
HMOs, fraternal benefit societies, and hospital or medical service
corporations (referred to collectively as “insurers”) that issue and sell
long-term care (LTC) insurance policies in Connecticut. It also
prohibits an insurer from issuing, delivering, renewing, continuing, or
amending an individual or group LTC policy on or after January 1,
2022, unless that insurer is also authorized or licensed to sell another
line of insurance in Connecticut (e.g., health insurance).
The bill allows the attorney general, at the insurance commissioner’s
recommendation, to take legal action to secure compensation for
insureds if an insurer submits an LTC rate filing with factual
misstatements or omissions that cause an LTC policy to be
underpriced by 50% or more.
It also requires the commissioner to develop a minimum set of
affordable benefit options that insurers must offer to policyholders if
they file a premium rate increase of 20% or more for an individual or
group LTC policy.
By law, insurers filing for a rate increase of 20% or more must
spread the premium increase over at least three years. The bill
prohibits them from filing an additional rate increase during this
period.
Lastly, the bill makes technical and conforming changes.
EFFECTIVE DATE: January 1, 2022
AUTHORIZED LEGAL ACT ION AGAINST CERTAIN INSURERS 2021SB-01046-R000371-BA.DOCX
Researcher: AR Page 2 4/8/21
By law, insurers must file with the insurance commissioner
premium rates for individual and group LTC insurance policies.
Under the bill, the commissioner must refer a rate filing to the attorney
general if he determines that it includes a deliberate or reckless
misstatement or omission that causes the policy to be underpriced by
50% or more.
The bill authorizes the attorney general to investigate and, in
consultation with the insurance commissioner, take necessary legal
action to protect and secure compensation for insureds covered by
these policies. Under the bill, legal action may include (1) a civil action
to recover damages reflecting excessive executive compensation,
shareholder contributions, and broker fees and (2) distributing
damages received to the insureds.
MINIMUM AFFORDABLE B ENEFIT OPTIONS
Under the bill, the commissioner must develop and prescribe a
minimum set of affordable benefit options to be offered by LTC
insurers that file for rate increases of 20% or more. He must do so after
consulting with other state governments and conducting a nationwide
review. The bill (1) requires the commissioner to notify these insurers
of the minimum set of affordable benefit options and (2) authorizes
him to adopt implementing regulations.
By law, LTC insurers must give policyholders the option of
reducing their benefits to reduce their premium rate before
implementing a rate increase. Under the bill, insurers must also allow
policyholders to elect coverage reflecting the minimum set of
affordable benefit options. As with the option to reduce benefits in
existing law, insurers must (1) notify policyholders of this new option,
including a description of the minimum set of affordable benefit
options, and (2) allow policyholders at least 30 days to select new
coverage before they are deemed to have chosen to keep the existing
policy.
COMMITTEE ACTION
Insurance and Real Estate Committee 2021SB-01046-R000371-BA.DOCX
Researcher: AR Page 3 4/8/21
Joint Favorable
Yea 18 Nay 0 (03/22/2021)