Cal. Insurance Code - INS § 10235. Section 10235.
Except as provided in Section 10235.95, this article applies to all long-term care insurance policies delivered or issued for delivery in this state on or after January 1, 1990.
ARTICLE 4. Implementation [10235. - 10236.15.]
Cal. Insurance Code - INS 4.
in effectCal. Insurance Code - INS § 10235.2. Section 10235.2.
No long-term care insurance policy delivered or issued for delivery in this state shall use the terms set forth below, unless the terms are defined in the policy and the definitions satisfy the following requirements:
(a)
“Medicare” shall be defined as the “Health Insurance for the Aged Act,” Title XVIII of the Social Security Amendments of 1965 as then constituted or later amended, or Title I, Part I of Public Law 89-97, as enacted by the 89th Congress of the United States of America and
popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof, or words of similar import.
(b)
“Skilled nursing care,” “intermediate care,” “home health care,” and other services shall be defined in relation to the level of skill required, the nature of the care and the setting in which care is required to be delivered.
(c)
All providers of services, including, but not limited to, skilled nursing facilities, intermediate care facilities, and home health agencies shall be defined in relation to the services and facilities required to be available and the licensure or degree status of those providing or supervising the services. The definition may require that the provider be appropriately licensed or certified.
Cal. Insurance Code - INS § 10235.8. Section 10235.8.
No policy may be delivered or issued for delivery in this state as long-term care insurance if the policy limits or excludes coverage by type of illness, treatment, medical condition, or accident, except as to the following:
(a)
Preexisting conditions or diseases.
(b)
Alcoholism and drug addiction.
(c)
Illness, treatment, or a medical condition arising out of any of the following:
(1)
War or act of war, whether declared or undeclared.
(2)
Participation in a felony, riot, or
insurrection.
(3)
Service in the Armed Forces or units auxiliary thereto.
(4)
Suicide, whether or not the person had mental capacity to control what he or she was doing, attempted suicide, or intentionally self-inflicted injury.
(5)
Aviation in the capacity of a non-fare-paying passenger.
(d)
Treatment provided in a government facility, unless otherwise required by law, services for which benefits are available under Medicare or other governmental programs (except Medi-Cal or medicaid), state or federal workers’ compensation, employer’s liability or occupational disease law, or a motor vehicle no fault law, services provided by a member of the covered person’s immediate family, and services for which no charge is normally made in the absence of
insurance.
(e)
This section does not prohibit exclusions and limitations by type of provider or territorial limitations.
Cal. Insurance Code - INS § 10235.9. Section 10235.9.
(a)
Every insurer shall report annually by June 30 the total number of claims denied by each class of business in the state and the number of these claims denied for failure to meet the waiting period or because of a preexisting condition as of the end of the preceding calendar year.
(b)
The insurer shall provide every policyholder or certificate holder whose claim is denied a written notice within 40 days of the date of denial of the reasons for the denial and all information
directly related to the denial. Insurers shall annually report to the department the number of denied claims.
(c)
The department shall make available to the public, upon request, the denial rate of claims by insurer.
Cal. Insurance Code - INS § 10235.9a. Section 10235.9a.
For policies or certificates issued on or after January 1, 2017, that contain an alternate plan of care provision pursuant to Section 10231.3, if an insurer and insured cannot agree on the terms of an alternate plan of care, the insurer shall provide a written explanation to the policyholder or certificate holder as to the specific reason or reasons why the agreement cannot be reached. The insurer shall provide the written explanation within 60 days of the insurer’s determination that an agreement cannot be reached.
Cal. Insurance Code - INS § 10235.10. Section 10235.10.
Termination of long-term care insurance shall be without prejudice to any benefits payable for institutionalization if that institutionalization began while the long-term care insurance was in force and continues without interruption after termination. This extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits and may be subject to any policy waiting period, and all other applicable provisions of the policy.
Cal. Insurance Code - INS § 10235.14. Section 10235.14.
(a)
Individual long-term care insurance policies shall contain a renewability provision. This provision shall be appropriately captioned, shall appear on the first page of the policy, and shall clearly disclose the term of coverage for which the policy is initially issued, the terms and conditions under which the policy may be renewed, and whether or not the issuer has the right to change the premium. If this right exists, the policy provisions shall clearly and concisely describe each circumstance under which the premium may change.
(b)
Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term shall be agreed to in writing signed by the insured, unless the increased benefits or coverage are required by law. If a separate additional premium is charged for benefits provided in connection with riders or endorsements, that premium charge shall be set forth in the policy, rider, or endorsement.
(c)
If a long-term
care insurance policy or certificate contains any limitations with respect to preexisting conditions, those limitations shall appear as a separate paragraph of the policy or certificate and shall be labeled as “preexisting condition limitations.”
(d)
A long-term care insurance policy or certificate containing any limitations or conditions for eligibility shall set forth in a separate paragraph of the policy or certificate a description of those limitations or conditions, including any required number of days of confinement, and shall label that paragraph “Limitations or Conditions on Eligibility for Benefits.”
Cal. Insurance Code - INS § 10235.16. Section 10235.16.
(a)
Long-term care insurance application forms shall include a question designed to elicit information as to whether the proposed insurance is intended to replace any other accident and sickness or long-term care insurance presently in force. A supplementary application or other form to be signed by the applicant containing such a question may be used.
(b)
Upon determining that a sale will involve replacement, an insurer, other than an insurer using direct response
solicitation methods, or its agent shall furnish the applicant, prior to issuance or delivery of a policy or certificate, a notice regarding replacement of accident and sickness or long-term care coverage. One copy of this notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the insurer. The required notice shall be provided in the following form:
“NOTICE TO APPLICANT REGARDING REPLACEMENT OF ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE
According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with long-term care insurance coverage to be issued by (company name) Insurance Company. Your new coverage provides thirty (30) days within which you may decide, without cost, whether
you desire to keep the coverage. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new coverage.
(1)
Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new coverage. This could result in denial or delay in payment of benefits under the new coverage, whereas a similar claim might have been payable under your present coverage.
(2)
You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present coverage. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.
(3)
If,
after due consideration, you still wish to terminate your present coverage and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your coverage had never been in force. After the application has been completed and before you sign it, reread it carefully to be certain that all the information has been properly recorded.
The above “Notice to Applicant” was delivered to me on:
(Date)
(Applicant’s Signature)”
(c)
For group coverage not subject to the 30-day return provision of Section 10232.7, the notice shall be modified to reflect the appropriate time period in which the policy may be returned and premium refunded.
(d)
The replacement notice shall include the following statement except when the replacement coverage is group insurance as described in subdivision (a) of Section 10231.6:
COMPARISON TO YOUR CURRENT COVERAGE: I have reviewed your current long-term care coverage. To the best of my knowledge, the replacement of insurance involved in this transaction materially improves your position for the following reasons:
____
Additional or different benefits
(please specify) ______.
____
No change in benefits, but lower premiums.
____
Fewer benefits and lower premiums.
____
Other (please specify) ______.
(Signature of Agent and Name of Insurer)
(Signature of Applicant)
(Date)
Cal. Insurance Code - INS § 10235.17. Section 10235.17.
For purposes of this chapter, the commissioner shall define inappropriate replacement of long-term care insurance in consultation with other interested parties.
Cal. Insurance Code - INS § 10235.18. Section 10235.18.
(a)
Insurers using direct response solicitation methods shall deliver a notice regarding replacement of accident and sickness or long-term care coverage to the applicant upon issuance of the policy or certificate. The required notice shall be provided in the following form:
“NOTICE TO APPLICANT REGARDING REPLACEMENT OF ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE
According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with the
long-term care insurance coverage delivered herewith issued by (company name) Insurance Company. Your new coverage provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy or certificate. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new coverage.
(1)
Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new coverage. This could result in denial or delay in payment of benefits under the new coverage, whereas a similar claim might have been payable under your present coverage.
(2)
You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy coverage. This is not only your
right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.
(3)
(To be included only if the application is attached to the policy or certificate). If, after due consideration, you still wish to terminate your present coverage and replace it with new coverage, read the copy of the application attached to your new coverage and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to (company name and address) within thirty (30) days if any information is not correct and complete, or if any past medical history has been left out of the application.
(Company Name)”
(b)
For group coverage not subject to the 30-day return provision of Section 10232.7, the notice shall be modified to reflect the appropriate time period in which the policy may be returned and premium refunded.
Cal. Insurance Code - INS § 10235.20. Section 10235.20.
The commissioner may waive a specific provision or provisions of this article with respect to a specific long-term care insurance policy or certificate upon making written findings specified in subdivisions (a), (b), and (c), as follows:
(a)
The waiver would be in the best interest of the insureds.
(b)
The underlying purposes of this article could not be effectively or efficiently achieved without the waiver.
(c)
Any of the following:
(1)
The waiver is necessary to the development of an innovative and reasonable approach for insuring long-term care.
(2)
The policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the waiver is reasonably related to the special needs or nature of such a community.
(3)
The waiver is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product.
The commissioner may condition any waiver upon compliance with alternative requirements to achieve the purposes of this article.
Cal. Insurance Code - INS § 10235.30. Section 10235.30.
(a)
No insurer may deliver or issue for delivery a long-term care policy in this state unless the insurer offers at the time of application an option to purchase a shortened benefit period nonforfeiture benefit with the following features:
(1)
Eligibility begins no later than after 10 years of premium payments.
(2)
The lifetime maximum benefit is no less than the dollar equivalent of three months of care at the
nursing facility per diem benefit contained in the policy or the amount of the premiums paid, whichever is greater.
(3)
The same benefits covered in the policy and any riders at the time eligibility begins are payable for a qualifying claim.
(4)
The lifetime maximum benefit may be reduced by the amount of any claims already paid.
(5)
Cash back, extended term, and reduced paid-up forms of nonforfeiture benefits shall not be allowed.
(6)
The lifetime maximum benefit amount increases proportionally with the number of years of premium payment.
(b)
This section shall not apply to life insurance policies that accelerate benefits for long-term care.
Cal. Insurance Code - INS § 10235.35. Section 10235.35.
(a)
Notwithstanding any other law, the commissioner may require the administration by an insurer of the contingent benefit upon lapse, as described in Section 28 (A), (D) (3), (E), (F), (G), and (J) of the Long-Term Care Insurance Model Regulation promulgated by the National Association of Insurance Commissioners, as adopted in September 2014, as a condition of approval or acknowledgment of a rate adjustment for a block of business for which the contingent benefit upon lapse is not otherwise available.
(b)
The insurer shall notify policyholders and certificate holders of the contingent benefit upon lapse when required by the commissioner in conjunction with the implementation of a
rate adjustment. The commissioner may require an insurer who files for such a rate adjustment to allow policyholders and certificate holders to reduce coverage pursuant to Section 10235.50 to avoid an increase in the policy’s premium amount.
(c)
The commissioner may also approve any other alternative mechanism filed by the insurer in lieu of the contingent benefit upon lapse.
Cal. Insurance Code - INS § 10235.36. Section 10235.36.
(a)
When a shortened benefit period nonforfeiture benefit, as described in Section 10235.30, or a contingent benefit upon lapse, as described in Section 10235.35, is conferred, the insurer shall mail to and receive from each policyholder or certificate holder an election form which allows the policyholder or certificate holder to elect one of the following:
(1)
A written designation listing the name, address, and telephone number of at least one individual, in addition to the policyholder or certificate holder, who is to receive the annual notice as described in subdivision (c).
(2)
A confirmation that the
policyholder or certificate holder designates the same person previously designated in Section 10235.40 to receive the annual notice as described in subdivision (c).
(3)
A waiver signed and dated by the policyholder or certificate holder electing not to designate additional persons to receive the annual notice as described in subdivision (c). The required waiver shall read as follows:
“I understand that I have the right to designate at least one person other than myself to receive annual notification related to the
benefit retained under this long-term care insurance policy. I elect not to designate any person other than myself to receive the notice.
________________________________________________
___________
Signature of Policyholder or Certificate Holder
Date”
(b)
The insurer shall notify all holders of a shortened benefit period nonforfeiture benefit or a contingent benefit upon lapse at the time of the annual notice as described in subdivision (c), of the right to change the election described in subdivision (a).
(c)
At the time a shortened benefit
period nonforfeiture benefit or contingent benefit upon lapse is conferred and annually thereafter the insurer shall notify all holders of the benefit and, if elected, at least one individual designated pursuant to paragraph (1) or (2) of subdivision (a) by first-class United States mail, postage prepaid, of all of the following:
(1)
The availability of the shortened benefit period nonforfeiture benefit or contingent benefit upon lapse.
(2)
The dollar amount of the shortened benefit period nonforfeiture benefit or contingent benefit upon lapse calculated up to 60 days prior to the date of the annual notice. The notice shall state that the amount may have been reduced if benefits were
paid in the period subsequent to the date on which that amount was calculated.
(3)
The name, address, and telephone number of the insurer for questions about the shortened benefit period nonforfeiture benefit or contingent benefit upon lapse.
(d)
For individuals who hold contingent benefits upon lapse as of the effective date of this section, the insurer shall send the election form required in subdivision (a) by July 1, 2016.
(e)
If, upon proper mailing by the insurer, the policyholder or certificate holder fails to return the election form described in subdivision (a) within 90 days, the failure will be deemed a waiver
as provided in paragraph (3) of subdivision (a).
Cal. Insurance Code - INS § 10235.40. Section 10235.40.
(a)
An individual long-term care policy or certificate shall not be issued until the applicant has been given the right to designate at least one individual, in addition to the applicant, to receive notice of lapse or termination of a policy or certificate for nonpayment of premium. The insurer shall receive from each applicant one of the following:
(1)
A written designation listing the name, address, and telephone number of at least one individual, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium.
(2)
A waiver signed and dated by the applicant electing not to designate additional persons to receive notice. The required waiver shall read as follows:
“Protection Against Unintended Lapse.
I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until 30 days after a premium is due and unpaid. I elect not to designate any person to receive the notice.
Signature of Applicant
Date”
(b)
The insurer shall notify the insured of the right to change the written designation, no less often than once every two years.
(c)
If the policyholder or certificate holder pays the premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in subdivision (a) need not be met until 60 days after the
policyholder or certificate holder is no longer on that deduction payment plan. The application or enrollment form for a certified long-term care insurance policy or certificate shall clearly indicate the deduction payment plan selected by the applicant.
(d)
An individual long-term care policy or certificate shall
not lapse or be terminated for nonpayment of premium unless the insurer, at least 30 days before the effective date of the lapse or termination, gives notice to the insured and to the individual or individuals designated pursuant to subdivision (a), at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice shall be given by first-class United States mail, postage prepaid, not less than 30 days after a premium is due and unpaid.
(e)
A long-term care insurance policy or certificate shall include a provision that, in the event of lapse, provides for reinstatement of coverage, if the insurer is provided with proof of the insured’s cognitive impairment or the loss of functional capacity. This option shall be available to the insured if requested within five months after termination
and shall allow for the collection of a past due premium, if appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity contained in the policy certificate.
(f)
If a universal life insurance policy includes coverage for long-term care and may lapse due to insufficient account value even if all scheduled premiums are paid on time and no loans or withdrawals are taken, then an applicant shall receive the disclosure below or a substantially similar disclosure that contains all of the information below. The disclosure shall
be submitted to the commissioner for approval. The disclosure shall be signed and dated by the applicant and the agent. One copy of the disclosure shall be retained by the applicant and an additional copy shall be retained by the insurer. The disclosure shall be in the following form:
“Disclosure of Risk of Lapse and Offer of Protection Against Lapse
APPLICANT: Please review and check the appropriate line(s), and sign and date below.
My agent has explained to me that the universal life insurance policy I am
applying for may lapse (terminate) due to insufficient account value, even if
I pay all the scheduled premiums on time and take no loans or withdrawals,
and that if my life insurance policy lapses then I will also lose my long-term
care
coverage.
____
I have been offered a benefit that would guarantee the policy
against lapse if I pay all required premiums on time, take no
loans or withdrawals, and comply with other policy provisions. I
have reviewed this offer.
____
I have been offered a policy that includes long-term care
coverage and is guaranteed against lapse if I pay all required
premiums on time, take no loans or withdrawals, and comply
with other policy provisions. I have reviewed this proposal.
____
I have been informed by my agent that other insurers offer
policies that include long-term care coverage and that would be
guaranteed against lapse
if I pay all required premiums on time
and take no loans or withdrawals. However, the insurer of the
policy that I am applying for does not. I understand that I will
have to apply for insurance with a different insurance company if
I would like to purchase a policy that includes long-term care
coverage with this kind of lapse protection.
Signature of applicant
Date
AGENT: Please review and check the appropriate line(s), and sign and date
below.
I have explained to the applicant that the universal life insurance policy the applicant is applying for may lapse due to insufficient account value, even if all scheduled premiums are paid on time and no loans or withdrawals are taken, and that if the life insurance policy lapses then the long-term care coverage will also be lost.
____ I offered the applicant, and the applicant has reviewed, the following
option(s) [check all that apply]:
____
An optional no-lapse guarantee
benefit.
I have explained that a no-lapse guarantee benefit would
guarantee the policy against lapse if all required premiums are paid
on time and no loans or withdrawals are taken.
____
A different universal life policy that includes long-term care
coverage and is offered with a no-lapse guarantee benefit.
I have explained that a no-lapse guarantee benefit would guarantee
the policy against lapse if all required premiums are paid on time
and no loans or withdrawals are taken.
____
A whole life policy that includes long-term care coverage.
I have explained that a whole life policy is guaranteed
against lapse if all required premiums are paid on time.
____
A stand-alone long-term care policy.
I have explained that a stand-alone long-term care policy is
guaranteed against lapse if all required premiums are paid
on time.
____
I have explained that the applicant will have to apply for
insurance with a different insurance company if the applicant
would like to purchase a policy that includes long-term care
coverage and would be guaranteed against lapse if all required
premiums are paid on time and no loans or withdrawals are taken.
Signature of agent
Date”
Cal. Insurance Code - INS § 10235.45. Section 10235.45.
(a)
If a life insurance policy contains long-term care benefits and permits policy loans or cash withdrawals, then access to those loans or withdrawals shall not be prohibited or limited 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 and cash withdrawals may
be limited to the remaining cash value.
(2)
Notwithstanding paragraph (1), payment of an accelerated death benefit for long-term care 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 outstanding policy loans and the lien. Future access to policy loans and cash withdrawals may also be limited to the excess of the cash value over the sum of outstanding policy loans and the lien.
(3)
This subdivision applies only to policies issued on or after January 1, 2021.
(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, 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)
At least 30 days before the expected first payment of an accelerated death benefit for long-term care, the insurer shall provide the policyholder or certificate holder with a statement that includes
the information described in this subdivision. Alternatively, an insurer may provide the statement at the time of payment, but only if the insurer allows cancellation of the payment for at least 30 days after it is made.
(1)
The statement shall be dated and shall include all of the following:
(A)
An explanation of changes to the policy that have occurred as a result of the payment, or would occur as a result of the estimated payment, including, but not limited to, a prohibition or limitation of access to loans or cash withdrawals.
(B)
A numerical demonstration of the
estimated effect of the payment on any applicable remaining policy values. The demonstration shall include, if applicable, impact to the death benefit, cash value or accumulation amount, policy loan value, outstanding policy loan amount, no-lapse guarantee, policy lien, premium payments or cost of insurance
charges, and any other values impacted by the payment.
(C)
A notice stating: “WARNING: Payment of an accelerated death benefit for long-term care will reduce and may potentially eliminate your death benefit. Receipt of an accelerated death benefit for long-term care may be taxable and may also adversely affect your eligibility for Medicaid or other government entitlements. Please consult a financial advisor.”
(2)
If the statement is provided before the payment date, it shall also
include all of the following:
(A)
The expected payment date.
(B)
An explanation that the policyholder or certificate holder may request payment before the expected payment date.
(C)
Notice that the policyholder or certificate holder may cancel the payment by contacting the insurer at the insurer’s address or telephone number at any time before the expected payment date.
(3)
If the statement is provided at the time of payment, it shall also include notice that the policyholder or certificate holder may cancel the payment by contacting the insurer at the insurer’s address or telephone number within the cancellation period and returning the
payment.
(d)
The statement required by subdivision (c) is required only once per
policyholder for an individual policy, or once per certificate holder for a group policy, and does not need to be provided for later accelerated death benefit claims by the same policyholder or certificate holder.
(e)
No later than 30 days after every payment of an accelerated death benefit for long-term care, or 45 days after the first payment of an accelerated death benefit for long-term care, the insurer shall provide the policyholder or certificate holder with a
statement summarizing the effect of the payment on the remaining policy values. The statement shall include all of the following:
(1)
The accelerated death benefits paid out during the prior month.
(2)
An explanation of changes, if applicable, to the remaining death benefit, cash value or accumulation account, policy loan value, outstanding policy loan amount, no-lapse guarantee, policy lien, premium payments or cost of insurance
charges, and any other values impacted by the payment.
(3)
The amount of the remaining benefits that can be accelerated.
(f)
If a policyholder or certificate holder initiates a request to take a loan or withdrawal from the cash value of a life insurance policy that accelerates benefits for long-term care, the insurer shall provide the policyholder or certificate holder with a statement that includes the information described in paragraph (3).
(1)
Except for a loan that is immediately approved pursuant to paragraph (2), a request to take a loan or withdrawal shall be deemed incomplete, and the insurer shall not approve the loan or withdrawal, until the information has been provided and the policyholder or certificate holder submits a response that finalizes the request for the loan or withdrawal.
(2)
The insurer may immediately approve a loan and provide the statement at the time of payment, but only if the loan is not treated as a taxable
distribution for federal income tax purposes and the insurer permits cancellation of the loan for at least 30 days after the loan payment has been made.
(A)
The insurer shall provide notice that the policyholder or certificate holder may cancel the loan by contacting the insurer at the insurer’s address or telephone number within the cancellation period and returning the loan payment.
(B)
At the time the loan is requested, the insurer shall provide an option to receive the statement before the loan request is finalized. If the policyholder or certificate holder elects this option, the loan request shall be deemed incomplete, and the insurer shall not approve the loan, until the statement has been provided and the policyholder or certificate holder submits a response that finalizes the request for the loan.
(3)
The statement shall be dated and shall include all of the following:
(A)
An explanation of changes to the policy that would occur as a result of the loan or withdrawal.
(B)
A numerical demonstration of the
estimated effect of the payment on
any applicable remaining policy values. The demonstration shall include, if applicable, impact to the death benefit, cash value or accumulation amount, policy loan value, outstanding policy loan amount, no-lapse guarantee, policy lien, premium payments or cost of insurance charges, daily, monthly, or lifetime long-term care benefits, and any other values impacted by the payment.
(C)
If a policyholder or certificate holder is initiating a request for a loan, a notice stating: “WARNING: Loans may reduce and potentially eliminate your death benefit and your long-term care benefits. Receipt of a loan may adversely affect your eligibility for Medicaid or other government entitlements, and loan proceeds may be taxable if the loan is not
repaid and the policy is surrendered or lapses. Please consult a financial advisor.”
(D)
If a policyholder or certificate holder is initiating a request for a withdrawal, a notice stating: “WARNING: Cash withdrawals may reduce and potentially eliminate your death benefit and your long-term care benefits. Receipt of a cash withdrawal may be taxable and may also adversely affect your eligibility for Medicaid or other government benefits or entitlements. Please consult a financial advisor.”
(E)
A description of circumstances in which a loan or withdrawal may result in or contribute to the lapse of the policy.
(F)
If applicable, a hypothetical demonstration of how loan repayment may be deducted from a future payment of an accelerated death benefit for long-term care.
(G)
If applicable, a notice explaining the rate at which the loan will accrue interest and stating the projected outstanding loan amount after five years, assuming that the interest rate does not change, no loan repayments are made, and no additional loans are taken.
(g)
The statements and notices required by this section shall be in at least 12-point type.
Cal. Insurance Code - INS § 10235.50. Section 10235.50.
(a)
A policy or certificate shall include a provision that gives the policyholder or certificate holder the right, exercisable any time after the first year, to retain the policy or certificate while reducing coverage and lowering the premium.
(1)
The policyholder or certificate holder shall have the option to reduce coverage and lower the premium in the following ways:
(A)
Reducing the lifetime maximum benefit.
(B)
Reducing the daily, weekly, or monthly benefit amounts.
(C)
Converting a “comprehensive long-term care”
policy or certificate to a “Nursing Facility and Residential Care Facility Only” or a “Home Care Only” policy or certificate, if the insurer issues those policies or certificates for sale in the state.
(D)
Reducing or eliminating the benefit adjustments provided by an inflation protection provision.
(2)
Subparagraph (D) of paragraph (1) shall apply to a policy issued or delivered on or after January 1, 2020.
(3)
The insurer may offer other reduction options in addition to those required by paragraph (1).
(4)
For a policy issued or delivered on or after January 1, 2020, the provision shall include a description of the process for requesting and implementing a
reduction in coverage. For a policy issued or delivered before January 1, 2020, an insurer shall notify the policyholder or certificate holder of the process to request and implement a reduction in coverage.
(b)
(1)
The premium for a policy or certificate that is reduced in coverage shall be both of the following:
(A)
Based on the issue age and underwriting class used to determine the premium for the coverage currently in force.
(B)
Consistent with the policy’s approved rate table.
(2)
This subdivision shall apply to any reduction in coverage, regardless of the original policy issue date.
(c)
(1)
If a policy or certificate contains an inflation protection provision, both of the following shall apply to a reduction in coverage:
(A)
If a policyholder or certificate holder chooses to reduce a daily, weekly, monthly, or lifetime benefit amount, then the policyholder or certificate holder shall be given the option to continue inflation protection benefit adjustments in the same manner and in the same amount as the contract in force before the reduction in coverage.
(B)
If a policyholder or certificate holder chooses to reduce or eliminate the benefit adjustments provided by an inflation protection provision, then the policyholder or certificate holder shall be given the option to continue the daily, weekly, monthly, and lifetime benefit
amounts in effect at the time of the reduction.
(2)
This subdivision shall apply to any reduction in coverage, regardless of the original policy issue date.
(d)
If a policy or certificate is about to lapse, the insurer shall provide written notice to the insured of the options in subdivision (a) to lower the premium by reducing coverage and of the premiums applicable to the reduced coverage options. The insurer may include in the notice additional options to those required in subdivision (a). The notice shall provide the insured at least 30 days in which to elect to reduce coverage and the policy shall be reinstated without underwriting if the insured elects the reduced coverage.
(e)
If a premium increases, the
policyholder or certificate holder shall have the right to retain the policy or certificate while reducing coverage and lowering the premium.
(1)
The policyholder or certificate holder shall be offered the option to reduce coverage as provided in subparagraphs (A), (B), and (D) of paragraph (1) of subdivision (a).
(A)
At least one option to reduce coverage shall allow the policyholder or certificate holder to retain the policy for a premium reasonably equivalent to the one that was in effect before the rate increase.
(B)
An insurer may offer other reduction options in addition to the option required by paragraph (1).
(C)
An insurer’s offer shall include a
disclosure stating that all of the reduction options may not be of equal value.
(D)
The policyholder or certificate holder of a policy or certificate offered under the California Partnership for Long-Term Care Program shall be offered options to reduce coverage that would maintain certification under the program, as described in subdivision (d) of Section 22005.1 of the Welfare and Institutions Code. The insurer may also offer other reduction options that may result in a loss of partnership status, but
shall disclose that the options may result in a loss of partnership status and explain that loss of partnership status may reduce or eliminate policyholder or certificate holder protections.
(2)
This subdivision shall apply to any premium rate increase, regardless of the original policy issue date.
Cal. Insurance Code - INS § 10235.51. Section 10235.51.
(a)
Every policy or certificate shall include a provision that gives the insured the option to elect, no less frequently than on each anniversary date after the policy or certificate is issued, to pay an extra premium for one or more riders that increase coverage in any of the following ways:
(1)
Increase the amount of the per diem benefits.
(2)
Increase the lifetime maximum benefit.
(3)
Increase the amount of both the nursing facility per diem benefit and the home- and community-based care benefits of a comprehensive long-term care insurance policy or certificate.
(b)
The premiums for the riders to increase coverage may be based on the attained age of the insured. The premium for the original policy or certificate will not be changed and will continue to be based on the insured’s age when the original policy or certificate was issued.
(c)
The insurer may require the insured to undergo new underwriting, in addition to the payment of an additional premium, to qualify for the additional coverage. The insurer may restrict the age for issuance of additional coverage and restrict the aggregate amount of additional coverage an insured may acquire to the maximum age and coverage the insurer allows when
issuing a new policy or certificate.
Cal. Insurance Code - INS § 10235.52. Section 10235.52.
(a)
Each policy shall contain a provision that, if the insurer develops new benefits or benefit eligibility or new policies with new benefits or benefit eligibility not included in the previously issued policy, the insurer shall grant current holders of its policies who are not in benefit or within the elimination period all of the following rights:
(1)
The insurer shall notify the policyholder of the availability of the new benefits or benefit eligibility or new policy within 12 months of the date that the new policy series is made available for sale in this state. The insurer shall file the notice with the department at the same time as the new policy or rider.
(2)
The insurer shall offer the
policyholder new benefits or benefit eligibility in one of the following ways:
(A)
By adding a rider to the existing policy and paying a separate premium for the new benefits or benefit eligibility based on the insured’s attained age. The premium for the existing policy shall remain unchanged based on the insured’s age at issuance.
(B)
By replacing the existing policy or certificate in accordance with Section 10234.87.
(C)
By replacing the existing policy or certificate with a new policy or certificate, in which case consideration for past insured status shall be recognized by setting the premium for the replacement policy or certificate at the issue age of the policy or certificate being replaced.
(b)
The insured may be required to undergo new
underwriting, but the underwriting can be no more restrictive than if the policyholder or certificate holder were applying for a new policy or certificate.
(c)
The insurer of a group policy as defined under subdivisions (a) to (c), inclusive, of Section 10231.6 shall offer the group policyholder the opportunity to have coverage for the new benefits and provisions extended to existing certificate holders, but the insurer is relieved of the obligations imposed by this section if the holder of the group policy declines the issuer’s offer.
(d)
For purposes of this section, new benefits means coverage for new long-term care services or providers that are material in nature. New benefits that are material in nature do not include changes to policy structure, benefits, or provisions that are minor in nature. Changes that are minor in nature include, but are not limited to, changes in
elimination periods, benefit periods, and benefit amounts.
Cal. Insurance Code - INS § 10235.91. Section 10235.91.
In the event a non-medicaid national or state long-term care program is created through public funding that substantially duplicates benefits covered by the policy or certificate, the policyholder or certificate holder will be entitled to select either a reduction in future premiums or an increase in future benefits. An actuarial method for determining the premium reductions and increases in future benefits will be mutually agreed upon by the department and insurers. The amount of the premium reductions and future benefit increases to be made by each insurer will
be based on the extent of the duplication of covered benefits, the amount of past premium payments, and claims experience. Each insurer’s premium reduction and benefit increase plans shall be filed and approved by the department.
Cal. Insurance Code - INS § 10235.94. Section 10235.94.
Every policy or certificate shall include a provision giving the policyholder or certificate holder the right to appeal decisions regarding benefit eligibility, care plans, services and providers, and reimbursement payments.
Cal. Insurance Code - INS § 10235.95. Section 10235.95.
(a)
Notwithstanding Section 10235, this section applies to all long-term care policies in force, regardless of their dates of issuance.
(b)
Interest shall accrue and shall be payable to the claimant at the rate of 10 percent per annum on the amount of any accepted claim beginning on the first calendar day after the day that the payment of the accepted claim is due pursuant to Section 2695.7 of Title 10 of the California Code of Regulations or any successor to that provision,
provided that the claim is accepted on or after December 1, 2008.
Cal. Insurance Code - INS § 10236. Section 10236.
Every individual and group long-term care policy and certificate under a group long-term care policy shall be either guaranteed renewable or noncancelable.
(a)
“Guaranteed renewable” means that the insured has the right to continue coverage in force if premiums are timely paid during which period the insurer may not unilaterally change the terms of coverage or decline to renew, except that the insurer may, in accordance with provisions in the policy, and in accordance with Section 10236.1, change
the premium rates to all insureds in the same class. The “class” is determined by the insurer for the purpose of setting rates at the time the policy is issued.
(b)
“Noncancelable” means the insured has the right to continue the coverage in force if premiums are timely paid during which period the insurer may not unilaterally change the terms of coverage, decline to renew, or change the premium rate.
(c)
Every long-term care policy and certificate shall contain an appropriately captioned renewability provision on page one, which shall clearly describe the initial term of coverage, the conditions for renewal, and, if guaranteed renewable, a description of the class and of each circumstance under which the insurer may change the premium amount.
Cal. Insurance Code - INS § 10236.1. Section 10236.1.
(a)
Benefits under individual long-term care insurance policies issued before new premium rate schedules are approved under Section 10236.11 shall be deemed reasonable in relation to premiums if the expected loss ratio is at least 60 percent, calculated in a manner that provides for adequate reserving of the long-term care insurance risk.
(b)
(1)
For individual long-term care insurance policies issued before new premium rate schedules are approved under Section 10236.11, and for which rate revisions are filed on or after January 1, 2010, benefits shall be deemed reasonable in relation to the premium if the premium rate schedules have a lifetime expected loss
ratio of at least 60 percent of the premium scale in effect on December 31, 2009, plus 70 percent of premium increases filed on or after January 1, 2010, calculated in a manner that provides for adequate reserving of the long-term care insurance risk. The lifetime expected loss ratio shall be calculated using the discount rate defined in paragraph (9) of subdivision (c).
(2)
However, if the premiums in any rate revision filing calculated in the manner provided in paragraph (1) produce a lifetime expected loss ratio that is less than the highest lifetime expected loss ratio for this policy form in the initial filing or that for requested premium rates in any filing made after January 1, 2013, the insurer shall reduce the premiums in the filing so that the current lifetime expected loss ratio is equal to or greater than the highest initially filed
loss ratio or that for requested premium rates filed after January 1, 2013. In the determination of a lifetime expected loss ratio, a margin may reflect changes in the manner in which risks are shared between the insurer and a block of policies due to changes in this law effective January 1, 2013, and that margin shall not be increased unless the manner in which risks are shared between the insurer and the block of policies is changed further by law or regulation. The determination of the lifetime expected loss ratio shall be based on the actual distribution of policies in force at the time of the first filing after January 1, 2013, and not any prior assumed distribution.
(c)
In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including the following:
(1)
Statistical credibility of incurred claims experience and earned premiums.
(2)
The period for which rates are computed to provide coverage.
(3)
Experienced and projected trends.
(4)
Concentration of experience within early policy duration.
(5)
Expected claim fluctuation.
(6)
Experience refunds, adjustments, or dividends.
(7)
Renewability features.
(8)
All appropriate expense factors.
(9)
The discount rate used
in the calculation of lifetime expected loss ratios. All present and accumulated values used to determine rate increases should use the maximum valuation interest rate for contract reserves. If one rate increase filing includes policy forms with different discount rates, separate projections for each discount rate should be prepared and then combined to create the total projection for the filings.
(10)
Experimental nature of the coverage.
(11)
Policy reserves.
(12)
Mix of business by risk classification.
(13)
Product features, such as long elimination periods, high deductibles, and high maximum limits.
(d)
Asset investment yield rate changes may not be used to justify a rate increase unless the insurer can demonstrate that its return on investments is lower than the maximum valuation interest rate for contract reserves for those policies or the commissioner determines that a change in interest rates is justified due to changes in laws or regulations that are retroactively applicable to long-term care insurance previously sold in this state.
(e)
The experience on all similar long-term care policy forms issued in this state by an insurer and its affiliates and retained within the affiliated group shall be pooled together and the combined experience shall be used as the basis for assumptions that satisfy the requirements in subdivisions (a) and (b). Those assumptions and requested rate increases may vary by policy form if
actuarially appropriate. Similar long-term care policy forms shall be classified into one of the following benefit classifications: nursing facility and residential care facility only, home care only, or comprehensive long-term care benefits.
(f)
Notwithstanding any other provision of this section, for rate revisions filed on or after January 1, 2010, the commissioner may approve an application for a rate revision based on less than a 70 percent loss ratio, but not less than a 60 percent loss ratio, for the portion attributable to the rate increase if an insurer can demonstrate that the rates are necessary to protect the financial condition of the insurer, including avoidance of further reductions in capital and surplus.
(g)
This section applies only to long-term care insurance policies
issued before the approval of rate schedules under Section 10236.11.
Cal. Insurance Code - INS § 10236.2. Section 10236.2.
Except where the provisions of a group contract provide otherwise, the provisions of subdivisions (d) and (e) of Section 10236.1 shall apply to all group long-term care insurance policies issued before the approval of premium rate schedules under Section 10236.11.
Cal. Insurance Code - INS § 10236.5. Section 10236.5.
(a)
Every certificate of group insurance issued or delivered in California shall provide for continuation or conversion coverage for the certificate holder if the group coverage terminates for any reason except the following reasons:
(1)
The termination of group coverage resulted from the insured’s failure to make any required payment of premium or contribution when due.
(2)
The terminating coverage is replaced not
later than 31 days after termination by new group coverage effective on the day following the termination and the replacement coverage meets both of the following criteria:
(A)
The replacement coverage provides benefits identical to, or benefits determined by the commissioner to be substantially equivalent to or in excess of, those provided by the terminating coverage.
(B)
The premium for the replacement coverage is calculated on the insured’s age at the time of issue of the group certificate for the coverage which is being replaced. If the coverage being replaced has itself replaced previous group coverage, the premium for the newest replacement coverage is calculated on the insured’s age at the time the previous group certificate was issued.
(b)
“Continuation coverage” means the maintenance of coverage under an
existing group policy when that coverage would be or has been terminated and which is subject only to continued timely payment of the premium.
Any insured individual whose eligibility for group coverage is based on his or her relationship to another person, shall be entitled to continuation coverage under the group policy if the qualifying relationship terminates by dissolution of marriage or death.
(c)
“Conversion coverage” means an individual policy of long-term care insurance, issued by the insurer of the terminating group coverage, without considering insurability, containing benefits which are identical, or which have been determined by the commissioner to be at least substantially equivalent, to the group coverage which would be or has been terminated for any reason.
In determining whether benefits are substantially equivalent, the commissioner shall
consider, if applicable, the relative advantages of managed care plans which use restricted provider networks, considering items such as service availability, benefit levels, and administrative complexity.
The premium for the converted policy shall be calculated on the insured’s age at the time the group certificate was issued. If the terminating group coverage replaced previous group coverage, the premium for the converted policy shall be calculated on the insured’s age at the time the previous group certificate was issued.
Before issuing conversion coverage, the insurer may require, if adequate notice is provided to certificate holders in the certificate, that:
(1)
The individual must have been continuously insured under the group policy, or any group policy which it replaced, for at least six months immediately prior to termination in order to be entitled
to conversion coverage.
(2)
The insured must submit written application for a conversion policy within a reasonable period after termination of the group coverage, and the premium paid as directed by the insurer, in order that the conversion policy be issued effective on the day following termination of group coverage.
(3)
The conversion policy contains a provision for a reduction of benefits if the insured has existing long-term care insurance, payable on an expense-incurred basis, which, together with the conversion policy, would result in payment of more than 100 percent of incurred expenses. This provision shall not be included in the conversion policy unless the reduction in benefits is reflected in a premium decrease or refund.
(4)
The conversion policy contains a provision limiting the payment for a single
claim, spell of illness, or benefit period occurring at the time of conversion, to the amount that would have been payable had the group coverage remained in effect.
Cal. Insurance Code - INS § 10236.8. Section 10236.8.
If a group long-term care policy is replaced by another policy to the same master policyholder issued, the replacing insurer shall do all of the following:
(a)
Provide benefits identical to the terminating coverage or benefits determined by the commissioner to be at least substantially equivalent to the terminating coverage. Lesser or greater benefits may be provided if the commissioner determines the replacement coverage is the most advantageous choice for the beneficiaries.
(b)
Calculate the premium on the insured’s age at the time of issue of the group certificate for the coverage which is being replaced. If the coverage being replaced has itself replaced previous group coverage, the premium for the newest replacement coverage shall be calculated on the insured’s age at the time the previous group certificate was issued. If the replacement coverage adds new or increased benefits, the premium for the new or increased benefits may be calculated on the insured’s age at the time of replacement.
(c)
Offer coverage to all persons covered under the replaced group policy on its date of termination.
(d)
Not exclude coverage for preexisting conditions if the terminating group coverage would provide benefits for those preexisting conditions.
(e)
Not require new waiting periods, elimination periods, probationary periods, or similar preconditions related to preexisting conditions. The insurer shall waive any such time periods applicable to preexisting conditions to the extent that similar preconditions have been satisfied under the terminating group coverage.
(f)
Not vary the benefits or the premium based on the insured’s health, disability status, claims experience, or use of long-term care services.
Cal. Insurance Code - INS § 10236.11. Section 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)
An approval for an initial premium schedule shall not 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
before 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 before 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)
(1)
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.
(2)
On and after January 1, 2021, a long-term care policy shall not be issued using a premium rate schedule that includes scheduled rate increases based on the attained age of the insured or the duration of the policy.
(3)
Notwithstanding paragraphs (1) and (2), this subdivision does not prohibit or impact the pricing of benefits that allow for the purchase of additional coverage if the cost of the additional coverage is based on the insured’s attained age at the time the additional coverage is
added.
Cal. Insurance Code - INS § 10236.12. Section 10236.12.
All actuaries used by the commissioner to review rate applications submitted by insurers pursuant to this chapter who are employees of the department shall be members of the American Academy of Actuaries, with at least five years’ relevant experience in long-term care insurance industry pricing or alternatively shall meet the professional requirements to issue a “statement of actuarial opinion” as required by subdivision (a) of
Section 10236.13.
If the department does not have sufficient employees who are actuaries meeting the requirements of this section to perform the volume of work required by this chapter, the commissioner may contract, as necessary, with independent actuaries who shall be members of the American Academy of Actuaries with at least five years’ relevant experience in long-term care insurance industry pricing.
If the department has employees who are actuaries, and independent actuaries under contract to the department, both meeting the requirements of this section to review rate applications, an insurer may generally choose between having the rate application reviewed by either employees or independent actuaries under contract to the department. The costs and expenses of reviews by independent actuaries under contract to the department shall be charged to the insurer. However, the department shall have the discretion to require a
review by independent actuaries.
Employees of the department who are actuaries and who are otherwise qualified to review rate applications but who do not meet the requirements of this section may assist an independent actuary under contract to the department.
If the commissioner contracts with independent actuaries for purposes of this section, the commissioner shall promulgate regulations to maintain the confidentiality of rate filings and proprietary insurer information and to avoid conflicts of interest.
Cal. Insurance Code - INS § 10236.13. Section 10236.13.
No insurer may increase the premium for an individual or group long-term care insurance policy or certificate approved for sale under this chapter unless the insurer has received prior approval for the increase from the commissioner.
The insurer shall submit to the commissioner for approval all proposed premium rate schedule increases, including at least all of the following information:
(a)
Certification by an actuary, who is a member of the American Academy of Actuaries and who meets the qualification standards of that organization, that:
(1)
If the requested premium rate schedule increase is implemented
and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated.
(2)
The premium rate filing is in compliance with the provisions of this section.
(b)
An actuarial memorandum justifying the rate schedule change request that includes all of the following:
(1)
Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase, and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale.
(A)
Annual
values for the five years preceding and the three years following the valuation date shall be provided separately.
(B)
The projections shall include the development of the lifetime loss ratio. The lifetime expected loss ratio shall be calculated using the discount rate provided by subdivision (c) of Section 10236.14.
(C)
For policies issued with premium rate schedules approved under Section 10236.11, the projections shall demonstrate compliance with subdivision (a) of Section 10236.14. For all other policies, the projections shall demonstrate compliance with Section 10236.1.
(D)
If the commissioner determines that a premium rate increase is justified due to changes in laws or regulations that are retroactively applicable
to long-term care insurance previously sold in this state, then:
(i)
The projected experience should be limited to the increases in claims expenses attributable to the changes in law or regulations.
(ii)
If the commissioner determines that potential offsets to higher claims costs may exist, the insurer shall be required to use appropriate net projected experience.
(2)
Disclosure of how reserves have been incorporated in this rate increase.
(3)
Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the
actuary.
(4)
A statement that policy design, underwriting, and claims adjudication practices have been taken into consideration.
(5)
A statement that asset investment yield rate changes have not been used to justify the rate increase unless the insurer can demonstrate that its return on investments is lower than the maximum valuation interest rate for contract reserves for those policies or the commissioner determines that a change in interest rates is justified due to changes in laws or regulations that are retroactively applicable to long-term care insurance previously sold in this state.
(6)
If it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer
shall file composite rates reflecting projections of new certificates.
(c)
A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the commissioner.
(d)
Sufficient information for approval of the premium rate schedule increase by the commissioner.
(e)
(1)
The insurer, at its discretion, may request a premium rate schedule increase that is lower than the rate increase necessary to provide the certification required by subdivision (a) or a series of premium rate schedule increases with a present value of not more than the rate increase necessary to provide the
certification required by subdivision (a). The commissioner may accept the premium rate schedule increase or series of increases without submission of the certification required by subdivision (a) if all of the following apply:
(A)
In the opinion of the commissioner, accepting the lower premium rate schedule increase or increases is in the best interest of California policyholders.
(B)
The actuarial memorandum discloses to the commissioner the rate increase necessary to provide the certification required by subdivision (a).
(C)
The rate increase filing satisfies all other requirements of this section.
(D)
The insurer discloses to policyholders affected
by the approved increases the filed increase, the approved premium rate schedule increase or increases, and the amount and timing of any subsequent rate schedule increases included in the rate increase filing whether those subsequent rate schedule increases are approved or not approved by the commissioner.
(2)
The commissioner may approve a lower requested premium rate schedule increase and may approve the initial increase or more than just the initial increase requested pursuant to paragraph (1).
(3)
If the amount of increase after all increases disclosed pursuant to subparagraph (D) of paragraph (1), whether the increase or increases are approved or not approved by the commissioner, triggers the contingent benefit upon lapse, the commissioner shall require the administration
by an insurer of the contingent benefit upon lapse as a condition of approval of a premium rate schedule increase that is lower than the amount necessary to provide the certification required by paragraph (1) of subdivision (a) or with the initial increase and each subsequent increase in a series of premium rate schedule increases. The commissioner may waive this condition of approval if an insurer demonstrates that the waiver is necessary to protect the financial condition of the insurer, including avoidance of further reductions in capital and surplus.
(4)
For purposes of paragraph (2) of subdivision (a) of Section 10236.14, the loss ratio calculation shall assume future premiums are based on the total filed rate schedule increase or series of increases disclosed pursuant to subparagraph (D) of paragraph (1), whether the increase or
increases are approved or not approved by the commissioner.
(5)
Premium rate schedule increases requested pursuant to paragraph (1) or approved as described in paragraph (2) shall comply with the provisions of Sections 10234.6 and 10234.95.
(f)
The provisions of this section are applicable to all individual and group policies issued in this state on or after July 1, 2002.
Cal. Insurance Code - INS § 10236.14. Section 10236.14.
Approval of all premium rate schedule increases shall be subject to the following requirements:
(a)
(1)
Premium rate schedule increases shall demonstrate that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:
(A)
The accumulated value of the initial earned premium times the maximum of both of the following:
(i)
58 percent.
(ii)
The lifetime expected loss ratio calculated using the initial pricing assumption, actual distribution of policies issued, and the discount rate provided by subdivision (c).
(B)
Eighty-five percent of the accumulated value of prior premium rate schedule increases on an earned basis.
(C)
The present value of future projected initial earned premiums times the maximum of both of the following:
(i)
58 percent.
(ii)
The lifetime expected loss ratio calculated using the initial pricing assumption, actual distribution of policies issued, and the discount rate provided by subdivision (c).
(D)
Eighty-five percent of the present value of future projected premiums not in subparagraph (C) on an earned basis.
(2)
However, if the premiums in any rate revision filing calculated in this manner produce a lifetime expected loss ratio that is less than the highest lifetime expected loss ratio for this policy form in the initial filing or that for requested premium rates in any filing made after January 1, 2013, the insurer shall reduce the premiums in the filing so that the current lifetime expected loss ratio is equal to or greater than the highest initially filed loss ratio or that for requested premium rates filed after January 1, 2013. In the determination of a lifetime expected loss ratio, the margin for moderately adverse experience shall be reflected and shall not be increased unless the manner in which risks are shared between
the insurer and block of policies has been changed by this law or any future law or regulation. The determination of the lifetime expected loss ratio shall be based on the actual distribution of policies issued and not any assumed distribution prior to actual sales.
(b)
In the event the commissioner determines that a premium rate increase is justified due to changes in laws or regulations that are retroactively applicable to long-term care insurance previously sold in this state, a premium rate schedule increase may be approved if the increase provides that 70 percent of the present value of projected additional premiums shall be returned to policyholders in benefits and the other requirements applicable to other premium rate schedule increases are met.
(c)
All present and
accumulated values used to determine rate increases should use the maximum valuation interest rate for contract reserves. If one rate increase filing includes policy forms with different discount rates, separate projections for each discount rate should be prepared and then combined to create the total projection for the filing.
(d)
No request for a rate increase on any policy form approved under Section 10236.11 shall be approved by the commissioner except as follows: the experience on all similar long-term care policy forms issued in this state by the insurer and its affiliates and retained by the affiliated group that have been approved either prior to approval under, or pursuant to, Section 10236.11 shall be pooled together and the combined experience shall be used as the basis for assumptions that satisfy the requirements in
subdivision (a). Those assumptions and requested rate increases may vary by policy form if actuarially appropriate. Similar long-term care policy forms shall be classified into one of the following benefit classifications: nursing facility and residential care facility only, home care only, or comprehensive long-term care benefits. An insurer is not precluded from filing requests for premium rate schedule increases on all of its policy forms if the combined experiences after pooling all applicable policy forms satisfies the requirements of subdivision (a).
(e)
Notwithstanding any other provision of this section, for applications for rate revisions filed on or after January 1, 2013, the commissioner may approve the application if an insurer demonstrates that the rates are necessary to protect the financial condition of the
insurer, including avoidance of further reductions in capital and surplus.
(f)
The provisions of this section are applicable to all individual and group policies issued in this state on or after July 1, 2002.
Cal. Insurance Code - INS § 10236.15. Section 10236.15.
Premium rate schedule increases that have been approved shall be subject to the following:
(a)
For each rate increase that is implemented, the insurer shall file for approval by the commissioner updated projections, as defined in paragraph (1) of subdivision (b) of Section 10236.13, annually for the next three years and include a comparison of actual results to projected values. The commissioner may extend the period to greater than three years.
(b)
(1)
If the commissioner has determined that the actual experience following a rate increase does not adequately match the projected
experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in subdivision (a), the commissioner may require the insurer to implement any of the following:
(A)
Premium rate schedule adjustments.
(B)
Other measures to reduce the difference between the projected and actual experience.
(2)
In determining whether the actual experience adequately matches the projected experience, consideration should be given to paragraph (6) of subdivision (b) of Section 10236.13, if applicable.
(c)
If the commissioner demonstrates, based upon credible evidence, that an
insurer has engaged in a persistent practice of filing inadequate premium schedules, the commissioner may, in addition to any other authority of the commissioner under this chapter, and after the insurer is afforded proper notice and due process, prohibit the insurer from filing and marketing comparable coverage for a period of up to five years or from offering all other similar coverages, and may limit marketing of new applications to the products subject to recent premium rate schedule increases.
(d)
This section shall not apply to life insurance policies and certificates that accelerate benefits for long-term care.
(e)
The provisions of this section are applicable to all individual and group policies issued in this state on or after July 1, 2002.
Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026