CHAPTER 12. LONG TERM CARE INSURANCE
IC 27-8-12
Chapter 12. Long Term Care Insurance
IC 27-8-12-1
"Applicant" defined
Sec. 1. As used in this chapter, "applicant" means:
(1) an individual who applies for long term care insurancethrough an individual insurance policy; or
(2) a prospective holder of a certificate issued under a grouplong term care insurance policy.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-2
"Certificate" defined
Sec. 2. As used in this chapter, "certificate" means a documentissued to a member of the group covered under a group insurancepolicy, which policy has been delivered or issued for delivery inIndiana, to signify that the individual named in the certificate iscovered under the policy.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-3
"Certificate holder" defined
Sec. 3. As used in this chapter, "certificate holder" means anindividual to whom a certificate is issued.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-4
"Insurance policy" defined
Sec. 4. As used in this chapter, "insurance policy" means anypolicy, contract, subscriber agreement, rider, or endorsementdelivered or issued for delivery in Indiana by an insurer, a fraternalbenefit society, a nonprofit corporation, a health maintenanceorganization (as defined in IC 27-13-1-19), a limited service healthmaintenance organization (as defined in IC 27-13-34-4), a preferredprovider arrangement, or any other organization.
As added by P.L.275-1987, SEC.1. Amended by P.L.26-1994,SEC.16.
IC 27-8-12-4.5
"Long term care facility" defined
Sec. 4.5. As used in this chapter, "long term care facility" has themeaning set forth in IC 12-15-39.6-2.
As added by P.L.75-1994, SEC.9. Amended by P.L.24-1997, SEC.63.
IC 27-8-12-5
"Long term care insurance policy" defined
Sec. 5. (a) As used in this chapter, "long term care insurancepolicy" means an insurance policy providing coverage for at leasttwelve (12) consecutive months for each covered person on an
expense incurred, indemnity, prepaid, or other basis for one (1) ormore necessary diagnostic, preventive, therapeutic, rehabilitative,maintenance, or personal care services provided in a setting otherthan an acute care wing of a hospital.
(b) The term includes the following:
(1) A policy advertised, marketed, or offered as long term careinsurance.
(2) A group or individual annuity, a life insurance policy, orriders that provide directly or supplement long term careinsurance.
(3) A policy or rider that provides for payment of benefits basedupon cognitive impairment or the loss of functional capacity.
(c) The term does not include the following:
(1) An insurance policy that is offered primarily to providebasic hospital expense coverage, basic medical-surgical expensecoverage, hospital confinement indemnity coverage, majormedical expense coverage, disability income protectioncoverage, accident only coverage, specified disease or specifiedaccident coverage, comprehensive coverage, catastrophiccoverage, or limited benefit health coverage.
(2) A life insurance policy that accelerates the death benefitspecifically for terminal illness, a medical condition requiringextraordinary medical intervention, or a permanent institutionalconfinement, and that provides the option of a lump sumpayment for those benefits and in which neither the benefits northe eligibility for the benefits is conditioned upon the receipt oflong term care.
(3) An insurance policy that is offered primarily to providebasic Medicare supplemental coverage (as defined underIC 27-8-13).
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,SEC.9.
IC 27-8-12-6
Compliance with statutory requirements
Sec. 6. An insurance policy may be marketed, advertised, offered,or sold in Indiana as long term care insurance only if that policycomplies with the requirements of this chapter.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-7
Policy disclosure standards; marketing practices; continuingeducation; penalties; reporting practices; rules
Sec. 7. (a) The insurance commissioner shall adopt rules underIC 4-22-2 establishing standards of full and fair disclosureconcerning long term care insurance policies. The standards mustrequire disclosure of information concerning the following:
(1) The sale of the policies.
(2) Terms of renewability.
(3) Initial and subsequent terms of eligibility. (4) Nonduplication of coverage provisions.
(5) Coverage of dependents.
(6) Preexisting conditions.
(7) Termination of insurance coverage.
(8) Probationary periods.
(9) Limitations on coverage.
(10) Exceptions to coverage.
(11) Reductions from coverage.
(12) Elimination periods.
(13) Requirements for replacement.
(14) Recurrent conditions.
(15) Definitions of terms.
(16) Continuation or conversion of coverage.
(b) The insurance commissioner shall adopt rules under IC 4-22-2to establish minimum standards concerning:
(1) marketing practices;
(2) insurance producer continuing education;
(3) penalties; and
(4) reporting practices;
for long term care insurance.
(c) Rules adopted by the insurance commissioner under thissection must:
(1) recognize the unique, developing, and experimental natureof long term care insurance; and
(2) where necessary or appropriate, recognize the distinctionsbetween group insurance policies and individual insurancepolicies.
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,SEC.10; P.L.178-2003, SEC.65.
IC 27-8-12-7.1
Qualification of long term care policies; rules
Sec. 7.1. The department of insurance shall adopt rules underIC 4-22-2 that establish standards for the qualification of a long termcare policy under IC 12-15-39.6. The rules must include thefollowing:
(1) The standards adopted under section 7 of this chapter.
(2) The requirement that an insurer or other person who issuesa qualified long term care policy must at a minimum offer toeach policyholder or prospective policyholder a policy thatprovides both:
(A) long term care facility coverage; and
(B) home and community care coverage.
(3) A provision that an insurer or other person who complieswith subdivision (2) may elect to also offer a qualified longterm care policy that provides only long term care facilitycoverage.
(4) The submission of data by insurers that will allow thedepartment of insurance, the office of Medicaid policy andplanning, and the division of aging to administer the Indiana
long term care program under IC 12-15-39.6.
(5) Other standards needed to administer the Indiana long termcare program.
As added by P.L.114-1991, SEC.11. Amended by P.L.9-1991,SEC.94; P.L.2-1992, SEC.786; P.L.4-1993, SEC.260; P.L.5-1993,SEC.273; P.L.75-1994, SEC.10; P.L.24-1997, SEC.64;P.L.141-2006, SEC.109.
IC 27-8-12-8
Loss ratio standards rule
Sec. 8. The insurance commissioner may not adopt a ruleestablishing loss ratio standards that apply to long term careinsurance policies unless the rule exclusively concerns long termcare insurance.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-9
Termination of policy on grounds of age or deteriorated health
Sec. 9. An insurer that issues a long term care insurance policymay not cancel, decline to renew, or otherwise terminate the policysolely on the grounds of the age or deterioration in mental orphysical health of the insured individual or certificate holder.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-10
"Preexisting condition" defined; exclusion of coverage; limitations
Sec. 10. (a) As used in this section, "preexisting condition" meansthe existence of:
(1) either:
(A) symptoms that would cause an ordinarily prudent personto seek diagnosis, care, or treatment; or
(B) a condition for which medical advice or treatment wasrecommended by, or received from, a provider of health careservices; within
(2) a period not to exceed either:
(A) twelve (12) months preceding the effective date ofcoverage of an insured person who is sixty-five (65) years ofage or older on the effective date of coverage; or
(B) twenty-four (24) months preceding the effective date ofcoverage of an insured person who is less than sixty-five(65) years of age on the effective date of coverage.
(b) A long term care insurance policy may exclude coverage fora loss or confinement that is the result of a preexisting condition onlyif that loss or confinement begins within:
(1) twelve (12) months following the effective date of coverageof an insured person who is sixty-five (65) years of age or olderon the effective date of coverage; or
(2) twenty-four (24) months following the effective date ofcoverage of an insured person who is under sixty-five (65) yearsof age on the effective date of coverage. (c) The insurance commissioner may extend the limitation periodsset forth in subsections (a)(2)(A), (a)(2)(B), and (b), concerningspecific age group categories in specific policies upon a finding thatthe extension is in the best interest of the public.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-10.5
Loss or confinement resulting from a preexisting condition;exclusion of coverage; limitation period; rules
Sec. 10.5. (a) As used in this section, "preexisting condition"means a condition for which medical advice or treatment wasrecommended by or received from a provider of health care serviceswithin six (6) months preceding the effective date of coverage of aninsured individual.
(b) A long term care insurance policy may not use a definition ofpreexisting condition that is more restrictive than the definitioncontained in subsection (a).
(c) Except for a group long term care policy underIC 27-8-5-16(1) or IC 27-1-12-37, a long term care insurance policymay not exclude coverage for a loss or confinement that is the resultof a preexisting condition unless the loss or confinement beginswithin six (6) months following the effective date of coverage of aninsured individual.
(d) The commissioner may extend the limitation period undersubsections (a) and (c) concerning a specific age group category ina specific policy form upon a finding by the commissioner that theextension is in the best interest of the public.
(e) This section does not prohibit an insurer from doing any of thefollowing:
(1) Using an application form designed to elicit the completehealth history of an applicant.
(2) Based on an application, underwriting in accordance withthe insurer's established underwriting standards.
(f) Unless otherwise provided in the policy or certificate, apreexisting condition, regardless of whether the condition isdisclosed on the application, need not be covered until after thewaiting period described in subsection (c).
(g) A long term care insurance policy may not exclude or use awaiver or rider to exclude, limit, or reduce coverage or benefits fora specifically named or described preexisting disease or physicalcondition beyond the waiting period described in subsection (c).
As added by P.L.114-1991, SEC.12.
IC 27-8-12-10.6
Conditions on eligibility for benefits; restrictions
Sec. 10.6. (a) A long term care insurance policy may not bedelivered or issued for delivery in Indiana if the policy:
(1) conditions eligibility for any benefits on a priorhospitalization requirement;
(2) conditions eligibility for benefits provided in an institutional
care setting on the receipt of a higher level of institutional care;or
(3) conditions eligibility for a benefit other than:
(A) a waiver of premium;
(B) postconfinement;
(C) postacute care; or
(D) recuperative benefits;
on a prior institutionalization requirement.
(b) A long term care insurance policy containing apostconfinement, postacute, or recuperative benefit must clearlylabel in a separate paragraph of the policy a statement entitled"limitations or conditions on eligibility for benefits". Under thestatement, the policy must outline any limitations or conditions forbenefits.
(c) A long term care insurance policy or rider that conditionseligibility of noninstitutional benefits on the prior receipt ofinstitutional care must not require a prior institutional stay of morethan thirty (30) days.
(d) A long term care insurance policy or rider that providesbenefits only following institutionalization may not condition suchbenefits upon admission to a facility for the same or relatedconditions within a period of less than thirty (30) days afterdischarge from the institution.
As added by P.L.114-1991, SEC.13.
IC 27-8-12-11
Establishment of new waiting period
Sec. 11. (a) A long term care insurance policy may not:
(1) contain a provision establishing a new waiting period if anexisting policy is converted to or replaced by a new form issuedby the same insurer, except in the case of an increase in benefitsvoluntarily selected by the insured individual or grouppolicyholder;
(2) be canceled, nonrenewed, or otherwise terminated on thegrounds of age or the deterioration of the mental or physicalhealth of the insured individual or certificate holder;
(3) provide coverage for skilled nursing care only; or
(4) provide significantly more coverage for skilled care thancoverage for a lower level of care.
(b) Subsection (a) does not prohibit an insurer from voluntarilywaiving any authorized waiting period.
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,SEC.14.
IC 27-8-12-12
No obligation return period; notice
Sec. 12. (a) An individual long term care insurance policyholdermay return the policy within thirty (30) days of its delivery and havethe premium refunded if, after examination of the policy, thepolicyholder is not satisfied for any reason. (b) Each individual long term care insurance policy must haveprominently printed on, or attached to, its first page a notice settingforth in substance the provisions of subsection (a).
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,SEC.15.
IC 27-8-12-13
Direct response solicitation issued policies; no obligation returnperiod; notice
Sec. 13. (a) A person insured under a long term care insurancepolicy or certificate issued under a direct response solicitation mayreturn the policy or certificate within thirty (30) days of its deliveryand have the premium refunded if the insured person is not satisfiedfor any reason.
(b) Each long term care insurance policy or certificate issuedunder a direct response solicitation must have printed on, or attachedto, its first page a notice setting forth in substance the provisions ofsubsection (a).
As added by P.L.275-1987, SEC.1.
IC 27-8-12-14
Outline of coverage; contents
Sec. 14. (a) The insurer shall deliver an outline of the coverageprovided by an individual long term care insurance policy to theprospective applicant at the time of initial solicitation through meansthat prominently direct the attention of the recipient to the documentand the document's purpose.
(b) The commissioner shall prescribe a standard format regarding:
(1) style;
(2) arrangement;
(3) overall appearance; and
(4) content;
for an outline of coverage.
(c) An insurance producer who solicits a long term care insurancepolicy shall deliver the outline of coverage before the presentation ofan application or enrollment form.
(d) The outline of coverage must be presented in conjunction withany application or enrollment form when there is a direct responsesolicitation of long term care insurance.
(e) An outline of coverage required under this section mustinclude the following:
(1) A description of the principal benefits and coverageprovided in the policy.
(2) A statement of the principal exclusions, reductions, andlimitations set forth in the policy.
(3) A statement of the policy's renewal provisions, includingany reservation by the insurer of a right to change premiums.
(4) A statement that the outline of coverage is a summary of thepolicy issued or applied for, and that the policy should beconsulted to determine the exact terms of the coverage provided
by the policy.
(5) A description of the terms under which the policy may bereturned and the premium refunded.
(6) A brief description of the relationship of the cost of care andbenefits.
(7) A statement of the terms under which the policy orcertificate may continue or be discontinued, including anyreservation in the policy of the right to change the premium.
(8) A specific statement of the provisions for continuation orconversion of group coverage.
As added by P.L.275-1987, SEC.1. Amended by P.L.114-1991,SEC.16; P.L.178-2003, SEC.66.
IC 27-8-12-14.5
Policy summary; requirements
Sec. 14.5. (a) A policy summary shall be delivered, at the time ofpolicy delivery, for an individual life insurance policy that provideslong term care benefits within the policy or by a rider.
(b) The insurer shall deliver the policy summary upon theapplicant's request when there is a direct response solicitation. Ifthere is no request, the insurer shall deliver the policy summary notlater than when the policy is delivered.
(c) The policy summary must include the following:
(1) An explanation of how long a long term care benefitinteracts with other components of the policy, includingdeductions from a death benefit.
(2) An illustration of the amount of a benefit, the length of abenefit, and the guaranteed lifetime benefits for each coveredperson.
(3) Any exclusion, reduction, and limitation on benefits of longterm care.
(d) A policy summary required under this section must alsoinclude the following information if applicable:
(1) A disclosure of any effect of exercising rights under thepolicy other than rights referred to in subsection (c).
(2) A disclosure of any guarantee related to long term care costsof insurance charges.
(3) Current and projected maximum lifetime benefits.
As added by P.L.114-1991, SEC.17.
IC 27-8-12-14.6
Benefits funded through life insurance by acceleration of deathbenefits; benefit payment status report; contents
Sec. 14.6. If a long term care benefit, funded through a lifeinsurance vehicle by the acceleration of the death benefit, is inbenefit payment status, a monthly report containing the followingshall be provided to the policyholder:
(1) Any long term care benefit paid out during the month.
(2) An explanation of any change in the policy, including achange in death benefit or cash value due to long term care
benefits being paid.
(3) The amount of long term care benefits remaining under thepolicy.
As added by P.L.114-1991, SEC.18.
IC 27-8-12-15
Group policy certificate; contents
Sec. 15. A certificate issued under a group long term careinsurance policy that is delivered or issued for delivery in Indianamust include the following:
(1) A description of the principal benefits and coverageprovided in the policy.
(2) A statement of the principal exclusions, reductions, andlimitations set forth in the policy.
(3) A statement that the group master policy should beconsulted to determine the exact terms of the coverage providedby the policy.
As added by P.L.275-1987, SEC.1.
IC 27-8-12-16
Application of general insurance law
Sec. 16. All other applicable provisions of IC 27 not in conflictwith the provisions of this chapter apply to insurance policies issuedunder this chapter. A long term care insurance policy issued underthis chapter is not subject to any rule adopted under IC 27-1-3-7(c).
As added by P.L.275-1987, SEC.1.
IC 27-8-12-17
Group policies issued in another state; requirements
Sec. 17. Group long term care insurance may not be offered to aresident of Indiana under a group policy issued in another stateunless the commissioner determines that the group long term careinsurance policy substantially complies with insurance requirementssimilar to those established under this chapter.
As added by P.L.114-1991, SEC.19.
IC 27-8-12-18
Insurance producer commissions
Sec. 18. (a) An insurer or other entity that provides a commissionto an insurance producer or other representative for the sale of a longterm care insurance policy may not violate the following conditions:
(1) The amount of the first year commission for selling orservicing the policy may not exceed two hundred percent(200%) of the amount of the commission paid in the secondyear.
(2) The amount of commission provided in years after thesecond year must be equal to the amount provided in the secondyear.
(3) A commission must be provided each year for at least five(5) years after the first year. (b) If an existing long term care policy or certificate is replaced,the insurer or other entity that issues the replacement policy may notprovide, and its insurance producer may not accept, a commission inan amount greater than the renewal commission payable by thereplacing insurer on renewal policies, unless the benefits of thereplacement policy or certificate are clearly and substantially greaterthan the benefits under the replaced policy or certificate.
(c) This section does not apply to the following:
(1) Life insurance policies and certificates.
(2) A policy or certificate that is sponsored by an employer forthe benefit of:
(A) the employer's employees; or
(B) the employer's employees and their dependents.
As added by P.L.114-1991, SEC.20. Amended by P.L.178-2003,SEC.67; P.L.173-2007, SEC.29.
IC 27-8-12-19
Violations; civil penalty; amount
Sec. 19. (a) In addition to any other sanction provided under thisarticle, the commissioner may impose a civil penalty against aninsurer who has violated this chapter or rules adopted under thischapter. A penalty imposed under this section must be the greater of:
(1) three (3) times the amount of the commissions paid for eachpolicy involved in the violation; or
(2) ten thousand dollars ($10,000).
(b) In addition to any other sanction provided under this title, thecommissioner may impose a penalty against an insurance producerwho has violated this chapter or rules adopted under this chapter.The penalty must be the greater of:
(1) up to three (3) times the amount of the commissions paid tothat insurance producer for each policy involved in theviolation; or
(2) twenty-five hundred dollars ($2,500).
As added by P.L.114-1991, SEC.21. Amended by P.L.178-2003,SEC.68.