PRINTER'S NO. 181
No. 177 Session of 1997
INTRODUCED BY HOLL, JANUARY 23, 1997
REFERRED TO BANKING AND INSURANCE, JANUARY 23, 1997
AN ACT
1 Establishing a Long-term Care Partnership Program to be
2 administered by the Department of Public Welfare; providing
3 for the protection of certain assets of long-term care
4 insurance policyholders and for coordination of the same with
5 the Department of Public Welfare's medical assistance
6 program; providing for long-term care insurance and the
7 related duties of the Insurance Department; establishing the
8 Long-term Care Insurance Review Board; and assigning duties
9 and responsibilities to the Department of Aging.
10 The General Assembly of the Commonwealth of Pennsylvania
11 hereby enacts as follows:
12 Section 1. Short title.
13 This act shall be known and may be cited as the Long-term
14 Care Partnership Act.
15 Section 2. Definitions.
16 The following words and phrases when used in this act shall
17 have the meanings given to them in this section unless the
18 context clearly indicates otherwise:
19 "Activity of daily living (ADL)." The term includes each of
20 the following:
21 (1) Dressing.
1 (2) Bathing.
2 (3) Eating.
3 (4) Feeding.
4 (5) Toileting.
5 (6) Transferring from bed to chair.
6 In each instance, an ADL deficiency is determined by reference
7 to the need for human assistance in performing that activity.
8 "Asset protection." The right extended by this act to
9 persons purchasing precertified long-term care insurance
10 policies to retain certain assets by excluding those assets from
11 consideration for Medicaid eligibility.
12 "Insured event." For the purpose of determining asset
13 protection for a privately insured individual, any one of the
14 following criteria must be satisfied:
15 (1) The individual has a documented need for substantial
16 human assistance or supervision with two or more ADL's.
17 (2) The individual exhibits specific behavior problems
18 requiring daily supervision, including, but not limited to,
19 wandering, abusive or assaultive behavior, poor judgment or
20 uncooperativeness which poses a danger to self or others and
21 extreme or bizarre personal hygiene habits.
22 "Long-term care insurance policy." An insurance policy
23 authorized for sale by the Insurance Department under this act
24 and the regulations promulgated under this act. In order for a
25 policy to guarantee asset protection, the policy must provide an
26 option to include benefits for a continuum of long-term care
27 services, including home-based and community-based care in
28 addition to nursing home care.
29 "Policyholder." The certificate holder of a group long-term
30 care insurance policy or a precertified group long-term care
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1 insurance policy as well as the owner of an individual long-term
2 care insurance policy or a precertified individual long-term
3 care insurance policy.
4 "Precertified long-term care insurance policy." A long-term
5 care insurance policy issued for delivery to any resident of
6 this Commonwealth which is designed to provide, within the terms
7 and conditions of the policy, contract or certificate, benefits
8 on an expense incurred, indemnity or prepaid basis for necessary
9 care or treatment of an injury, illness or loss of functional
10 capacity provided by a certified or licensed health care
11 provider in a setting other than an acute care hospital for at
12 least one year and which is certified by the Insurance
13 Department prior to sale to Commonwealth residents.
14 "Preexisting condition." A condition for which medical
15 advice or treatment was recommended by or received from a
16 provider of health care services within six months prior to the
17 effective date of coverage of the insured.
18 "Program." The Long-term Care Partnership Program
19 established in section 3.
20 "Service summary." A written summary prepared by an insurer
21 for an individual policyholder which identifies the specific
22 precertified policy, the total benefits paid for services
23 rendered to date and the amount qualifying for asset protection.
24 Section 3. Long-term Care Partnership Program.
25 (a) Program established.--There is hereby established the
26 Long-term Care Partnership Program to be administered by the
27 Department of Public Welfare with the assistance of the
28 Insurance Department. Under the program, private insurance and
29 Medicaid funds shall be combined to finance long-term care. In
30 order to avail himself or herself of this program, an individual
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1 shall purchase, or have purchased on his or her behalf, a
2 precertified long-term care insurance policy in an amount
3 commensurate with the assets the individual desires to protect
4 from consideration for Medicaid eligibility. Assets are
5 protected under this program to the extent that they are equal
6 to the amount of long-term care insurance benefit payments
7 provided and shall not be considered by the Department of Public
8 Welfare in determining the individual's eligibility for
9 Medicaid, the amount of any Medicaid payment or any subsequent
10 recovery by the Commonwealth of payment for medical services,
11 either from the individual or from the individual's estate.
12 (b) Amendment of regulations.--The Department of Public
13 Welfare shall promulgate amendments to its medical assistance
14 regulations to allow for the protection of assets pursuant to
15 subsection (a). This protection shall be afforded to the extent
16 approved by the Federal Health Care Financing Agency to any
17 purchaser of a precertified long-term care policy delivered,
18 issued or renewed on or after June 1, 1997. The Department of
19 Public Welfare shall count insurance benefit payments toward
20 asset protection to the extent payments are for any of the
21 following:
22 (1) Services Medicaid approves or covers for its
23 recipients.
24 (2) The lower of the actual charge and the amount paid
25 by the insurance company.
26 (3) Nursing home care or services delivered to insureds
27 in the community.
28 (4) Services provided after the individual meets the
29 coverage requirements for long-term care benefits established
30 by the Insurance Department pursuant to this act.
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1 (c) Waivers.--The Department of Public Welfare shall request
2 form the Department of Health and Human Services the necessary
3 Medicaid waivers under section 1915 of the Social Security Act
4 (49 Stat. 620, 42 U.S.C. § 1396n) to provide asset protection to
5 individuals who participate in the program and any other waivers
6 as may be necessary to implement this act.
7 Section 4. Standards for precertified long-term care insurance
8 policies.
9 (a) General rule.--The Insurance Department shall only
10 precertify long-term care insurance policies that meet all of
11 the following:
12 (1) Alert the purchaser to the availability of consumer
13 information and public education provided by the Department
14 of Aging under section 6.
15 (2) Offer the option of benefits for home-based and
16 community-based services in addition to nursing home care as
17 part of a continuum of long-term care services.
18 (3) Offer case management services approved by the
19 Department of Public Welfare for all home-care benefits.
20 (4) Offer automatic inflation protection or periodic per
21 diem upgrades until the insured begins to collect long-term
22 care benefits.
23 (5) Provide information to the Department of Public
24 Welfare necessary to document the extent of Medicaid asset
25 protection.
26 (6) Do not require prior hospitalization or a prior stay
27 in a nursing home as a condition for providing long-term care
28 benefits.
29 (7) Do not limit or exclude coverage by type of illness,
30 treatment, medical condition or accident, except for:
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1 (i) Preexisting conditions or diseases;
2 (ii) Mental or nervous conditions, exclusive of
3 Alzheimer's disease;
4 (iii) Alcohol or drug addition; and
5 (iv) Illness or injury arising out of war,
6 participation in a felony, service in the armed forces or
7 suicide attempt.
8 (8) Do not contain provisions establishing new waiting
9 periods for benefits in the event existing coverage is
10 converted to or replaced by a new form within the same
11 company, except with respect to an increase in benefits
12 voluntarily selected by the insured individual or group
13 policyholder.
14 (b) Additional requirements.--No long-term care insurance
15 policy may be advertised, solicited or issued for delivery in
16 this Commonwealth as precertified long-term care policy that
17 does not meet the minimum standards set forth in this section.
18 The standards delineated in this section are minimum standards
19 and do not preclude the inclusion of other provisions or
20 benefits not inconsistent with these standards. Each insurer
21 seeking precertification of a long-term care insurance product
22 shall:
23 (1) Notify the Insurance Department in writing as to the
24 method it will use to alert the consumer, prior to purchase,
25 of the availability of consumer information and public
26 education which is provided by the Department of Aging.
27 (2) Offer the option of or include a provision for home-
28 based and community-based services with a minimum benefit of
29 one year at issue, in addition to nursing home care. Home-
30 based and community-based services shall include, but not be
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1 limited to, medical services provided in the home such as
2 skilled nursing care, physical, occupational, respiratory and
3 speech therapy, other therapeutic services, home health aide
4 services and support services which shall include, but not be
5 limited to, homemaker and adult day-care health services. All
6 home-care plans shall include case management services
7 delivered by a coordination, assessment and monitoring agency
8 approved by the Department of Public Welfare or by a home
9 health care agency approved by the Department of Public
10 Welfare. Case management services shall include, but not be
11 limited to, the development of a comprehensive individualized
12 assessment and care plan and, as needed, coordination of
13 appropriate services and monitoring of delivery of those
14 services.
15 (c) Inflation protection.--Precertified long-term care
16 insurance policies shall include a provision for inflation
17 protection which meets at least one of the following:
18 (1) The policy covers at least 70% of actual or
19 reasonable charges, where reasonable is defined as not less
20 than 90% of the average private pay rate for that service
21 based on a listing of actual or allowable rates that shall be
22 inflated or updated annually by the Department of Public
23 Welfare, and does not include a maximum specified daily
24 indemnity amount or daily limit.
25 (2) The policy provides for automatic increases in the
26 per diem dollar level, with or without related increases in
27 premiums, in accordance with the Consumer Price Index or at a
28 rate of not less than 5% each year over the previous year for
29 each year that the contract is in force. Premiums shall be
30 based on the age of the policyholder at the time of the
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1 issuance of the precertified policy.
2 (3) The policy provides, on a guaranteed issue basis, at
3 premiums based on the age of the policyholder at the time of
4 the issuance of the precertified policy, periodic per diem
5 upgrades, in accordance with the following: Unless the
6 insured takes positive action to decline them, periodic per
7 diem upgrades automatically increase the level of daily
8 coverage to meet or exceed the minimum inflation adjusted
9 daily benefit, defined as the amount or amounts derived by
10 taking the minimum daily benefits for nursing home care and,
11 where applicable, home-based and community-based services at
12 the time of the purchase as specified in subsection (d) and
13 increasing them by the Consumer Price Index or 5% each year
14 over the previous year for each year that the contract is in
15 force. The schedule of minimum per diem dollar amounts shall
16 be updated and maintained at the Insurance Department. A
17 precertified policy containing this inflation protection
18 provision shall remain precertified as long as the insured's
19 daily benefit amount automatically equals or exceeds the
20 minimum inflation adjusted daily benefit. The insurer shall
21 notify those policyholders choosing the upgrade option when
22 the upgrades automatically are taking effect and what the
23 increased premium, if any, will be. The insurer shall also
24 provide to the policyholder at the time of the upgrade the
25 opportunity to decline the upgrade. In addition, the insurer
26 shall notify the policyholder that the insurance policy will
27 lose its precertification at the time the insured's daily
28 benefit amount becomes less than the minimum inflation
29 adjusted daily benefit.
30 (d) Minimum benefits.--At a minimum, precertified long-term
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1 care insurance policies shall provide a nursing home benefit of
2 at least $80 per day if issued in calendar year 1997 or 1998;
3 $84 per day if issued in 1999; $88 per day if issued in 2000;
4 $92.50 per day if issued in 2001; and $97 per day if issued in
5 2001. No policy need pay for care in excess of the actual
6 charges. In addition, those policies issued with home-based and
7 community-based services shall provide a home-based and
8 community-based benefit of at least $40 per day if issued in
9 1997 or 1998; $42 per day if issued in 1999; $44 per day if
10 issued in 2000; $46.25 per day if issued in 2001; and $48.40 per
11 day if issued in 2002. No policy need pay for care in excess of
12 the actual charges. Policies issued on an expense-incurred basis
13 shall provide benefits that are equal to at least 70% of the
14 actual or reasonable charges incurred by the insured. Expense-
15 incurred policies need not meet the minimum daily benefit levels
16 described in this subsection.
17 (e) Application provisions.--Precertified long-term care
18 insurance policies shall use applications to be signed by the
19 applicant that contain the following provisions:
20 (1) A general description of this act and related
21 regulations as prepared by the Department of Aging, including
22 that department's toll-free telephone number.
23 (2) An agreement to the release of information by the
24 insurer to the Commonwealth as may be needed to evaluate this
25 act and document a claim for Medicaid asset protection This
26 release shall be in the following format:
27 I hereby agree to the release of my insurance records
28 pertaining to this long-term care policy by the
29 (insert insurance company name) to the Commonwealth
30 of Pennsylvania for the purpose of documenting a
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1 claim for asset protection under the State medical
2 assistance program, evaluating the Long-term Care
3 Partnership Act and meeting Medicaid audit
4 requirements. I understand that my records will be
5 used for no purpose other than those stated above and
6 will be kept strictly confidential by the
7 Commonwealth of Pennsylvania.
8 ........................
9 (Signature of Applicant)
10 (3) A description regarding mandatory inflation
11 protection that shall be in the following format:
12 NOTICE TO APPLICANT REGARDING MANDATORY INFLATION
13 PROTECTION
14 In order for this long-term care policy to remain
15 precertified by the Commonwealth and qualify to
16 provide asset protection for the State medical
17 assistance program, daily coverage benefits must meet
18 or exceed standards established by the Commonwealth.
19 Depending on the option you choose to automatically
20 inflate daily coverage benefits, premimums may rise
21 over the life of the policy contract. The insurance
22 company will provide you with a graphic comparison
23 showing the differences in premimums and benefits,
24 over at least a 20-year period, between a policy that
25 increases benefits over the policy period and a
26 policy that does not increase benefits. Failure to
27 maintain the required daily coverage benefits will
28 result in the policy losing its precertification
29 status and no longer being allowed to provide asset
30 protection. It is the insurance company's
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1 responsibility to automatically inflate daily benefit
2 levels to maintain precertification; it is your
3 responsibility to make premium payments in order to
4 maintain pertcertification.
5 (4) A graphic comparison showing the difference in
6 premiums and benefits, over at least a 20-year period,
7 between a policy that increases benefits and a policy that
8 does not increase benefits.
9 (f) Cancellation and refund.--All precertified long-term
10 care insurance policies shall include a provision that allows
11 for a 30-day period which coverage may be canceled by the
12 applicant by delivering or mailing the evidence of purchase of
13 the policy to the insurer or the agent through whom it was
14 effected. The applicant shall be entitled to a full refund of
15 any premium that was paid. The policy shall have a notice
16 prominently printed on the first page of the policy or
17 certificate or attached thereto stating in substance that the
18 policyholder or certificate holder shall have the right to
19 return the policy or certificate to the insurer or its agent for
20 cancellation within 30 days of its delivery and to the premium
21 refunded if, after examination of the policy or certificate, the
22 insured person is not satisfied for any reason.
23 (g) Prior hospitalization or nursing home stay not
24 required.--No precertified long-term care insurance policy shall
25 require prior hospitalization or a prior stay in a nursing home
26 as a condition for providing benefits
27 (h) Service summary.--Each insurer shall prepare a service
28 summary at the client's request specifically for the purpose of
29 the policyholder or certificate holder applying for State
30 medical assistance benefits. Also, the insurer shall prepare a
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1 service summary when the policyholder has exhausted benefits
2 under the policy or when the policy ceases to be in force for a
3 reason other than the death of the policyholder, whichever comes
4 first. The service summary shall identify the specific
5 precertified policy, the total benefits paid for services
6 rendered to date and the amount qualifying for asset protection.
7 (i) Determination of reasonable benefits.--Benefits under
8 precertified long-term care insurance policies shall be deemed
9 reasonable in relation to premiums, provided the loss ration is
10 at least 60%, calculated in a manner that provides for adequate
11 reserving of the long-term care insurance risk. In evaluating
12 the expected and actual loss ratios, the Insurance Commissioner
13 shall consider the statistical credibility of incurred claims
14 experience and earned premiums, the period for which rates are
15 computed to provide coverage, experienced and projected trends,
16 concentration of experience within early policy duration,
17 expected claim fluctuation, renewability features, appropriate
18 expense factors, interest, policy reserves, the mix of business
19 by risk classification and product features such as preexisting
20 condition periods of exclusion, high deductibles and high
21 maximum limits.
22 (j) Termination.--An insurer may cancel, refuse to renew or
23 otherwise terminate long-term care insurance only for nonpayment
24 of premiums or material misrepresentation. Prior to cancellation
25 for nonpayment of premium, the insurer is obligated to provide
26 written notice to the insured and to any individual designated
27 by the insured to receive notice of pending cancellation for
28 nonpayment of premiums. An insurer may not cancel, decline to
29 renew or otherwise terminate a policy solely on the grounds of
30 the age or deteriorating health of the insured.
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1 (k) Removal of precertification status.--The Insurance
2 Commissioner reserves the right to remove precertification
3 status of long-term care insurance policies when deemed
4 necessary. If the Insurance Commissioner removes
5 precertification status from a long-term care insurance policy,
6 policyholders who purchased their policies while the policy was
7 precertified shall retain the right to asset protection.
8 Policyholders who purchase such a policy after the removal of
9 precertification status have no right to asset protection.
10 Section 5. Long-term Care Insurance Review Board.
11 (a) Establishment.--There is hereby established within the
12 Insurance Department a board to be known as the Long-term Care
13 Insurance Review Board.
14 (b) Composition.--The board shall be composed of seven
15 members as follows:
16 (1) Two members of the Senate appointed by the President
17 pro tempore.
18 (2) Two members of the House of Representatives
19 appointed by the Speaker of the House.
20 (3) Three members of the general public appointed by the
21 Governor.
22 (c) Terms of office.--The terms of office of the members of
23 the General Assembly shall be coterminous with their elective
24 terms of office. The terms of office of the other members shall
25 be for four years, except that of the other members first
26 appointed, one shall serve for four years, one shall serve for
27 three years and one shall serve for two years.
28 (d) Vacancies.--Vacancies in the membership of the board
29 shall be filled in the same manner as the original appointments.
30 Vacancies in public member positions shall be filled for the
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1 remainder of the unexpired term.
2 (e) Chairman, meetings and compensation.--The board members
3 shall elect a chairman every year from among the public members.
4 All business transacted by the board shall be conducted in
5 accordance with the act of July 3, 1986 (P.L.388, No.84), known
6 as the Sunshine Act. Meetings of the board shall be held at
7 least three times annually or at the call of the chairman. The
8 public members of the board shall not be entitled to
9 compensation but shall be entitled to reimbursement for all
10 necessary and reasonable expenses.
11 (f) Power and duties.--The board shall have the power and
12 its duties shall be to review decisions of the Insurance
13 Commissioner relating to long-term care insurance. The board may
14 also review decisions of the Insurance Commissioner relating to
15 the denial of benefits under long-term care insurance policies
16 and decisions of the board shall take precedence over the
17 decision of the Insurance Commissioner.
18 Section 6. Responsibilities of the Department of Aging.
19 The Department of Aging shall establish an outreach program
20 to educate Commonwealth residents regarding:
21 (1) The need for long-term care.
22 (2) Mechanisms for financing long-term care.
23 (3) The availability of long-term care insurance.
24 (4) The asset protection provided under this act.
25 The Department of Aging shall provide public information to
26 assist individuals in choosing appropriate long-term care
27 insurance coverage.
28 Section 7. Repeals.
29 All acts or parts of acts are repealed insofar as they are
30 inconsistent with this act.
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1 Section 8. Effective date.
2 This act shall take effect in 60 days.
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