BEFORE THE STATE AUDITOR AND COMMISSIONER OF INSURANCE

OF THE STATE OF MONTANA

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In the matter of the amendment of ARM 6.6.3101, 6.6.3102, 6.6.3103, 6.6.3104, 6.6.3104A, 6.6.3105, 6.6.3106, 6.6.3107, 6.6.3108, 6.6.3109, 6.6.3109A, 6.6.3109B, 6.6.3110, 6.6.3111, 6.6.3112, 6.6.3113, 6.6.3114, 6.6.3115, 6.6.3117, 6.6.3118, 6.6 3119, and 6.6.3120, the repeal of 6.6.3116, and the adoption of New Rules I through VI pertaining to Long-Term Care

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT, REPEAL, AND ADOPTION �

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TO: All Concerned Persons

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1. On March 6, 2008, at 10:00 a.m., the State Auditor and Commissioner of Insurance will hold a public hearing in the upstairs conference room of the State Auditor's Office, at Helena, Montana, to consider the proposed amendment, repeal, and adoption of the above-stated rules.

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2. The State Auditor's Office will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the department no later than 5:00 p.m., February 28, 2008, to advise us of the nature of the accommodation that you need. Please contact Darla Sautter, State Auditor's Office, 840 Helena Avenue, Helena, Montana 59601; telephone (406) 444-2726; TDD (406) 444-3246; fax (406) 444-3497; or e-mail [email protected].

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3. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:

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6.6.3101 PURPOSE, AND SCOPE, AND AUTHORITY (1) In accordance with 33-22-1101, et seq., MCA, the Commissioner of Insurance declares that the purpose of these rules is to implement Title 33, chapter 22, part 11, MCA, to promote the public interest, to promote the availability of long-term care insurance, as defined in ARM 6.6.3102(7), to protect the public from unfair or deceptive sales or enrollment practices, to facilitate public understanding and comparison of long-term care insurance coverages, and to facilitate flexibility and innovation in the development of long-term care insurance.

(2) Except as otherwise specifically provided, these rules apply to all long-term care insurance policies or certificates including qualified long-term care contracts and life insurance policies that accelerate benefits for long-term care delivered or issued for delivery in this state on or after January 1, 1991, by issuers;, fraternal benefit societies;, nonprofit health, hospital, and medical service corporations;, prepaid health plans;, health maintenance organizations, and all similar organizations. Certain provisions of these rules apply only to qualified long-term care insurance contracts, as noted.

(3) Group policies or certificates issued for delivery outside this state to Montana residents are subject to these rules and Title 33 of the Montana Code Annotated.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3102 DEFINITIONS (1) For the purposes of these rules, the following definitions terms apply: "long-term care insurance," "group long-term care insurance," "applicant," "policy," and "certificate" shall have the meanings provided under 33-22-1107, MCA.

(1) "Applicant" is defined in 33-22-1107(2), MCA.

(2) "Certificate" is defined in 33-22-1107(4), MCA.

(3) "Commissioner" means the Montana State Auditor and Ex Officio Commissioner of Insurance.

(4) "Exceptional increase" means a premium rate increase filed by an insurer as exceptional; and

(a) for which the commissioner determines the need for a rate increase to be justified;

(i) due to a change in laws or rules applicable to long-term care coverage in this state; and

(ii) due to increased and unexpected utilization that affects the majority of insurers of similar products.

(b) except as provided in [New Rule III], exceptional increases are subject to the same requirements as other premium rate increases;

(c) the commissioner may request professional actuarial review of the basis for an exceptional increase submitted for commissioner approval;

(d) the commissioner in determining whether there is a necessary basis for an exceptional increase shall also determine any potential offsets to higher claims costs.

(5) "Group long-term care insurance" is defined in 33-22-1107(5), MCA.

(6) "Incidental" means that the value of the long-term care benefits provided is less than 10% of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue.

(7) "Long-term care insurance" is defined in 33-22-107(6), MCA.

(8) "Policy" is defined in 33-22-1107(7), MCA.

(9) "Qualified actuary" means a member in good standing of the American Academy of Actuaries.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3103 POLICY DEFINITIONS (1) No long-term care insurance policy or certificate delivered or issued for delivery in Montana shall may use the terms set forth below, unless the terms are defined in the policy or certificate and the definitions satisfy the following requirements: as follows in this rule.

(2) "Activities of daily living" as defined in 33-22-1107(1), MCA.

(2) and (3) remain the same but are renumbered (3) and (4).

(4)(5) "Bathing" means washing oneself by sponge bath;, or in either a tub or shower, including the task of getting into or out of the tub or shower.

(5) through (14) remain the same but are renumbered (6) through (15).

(15)(16) "Skilled nursing care," "intermediate care," "personal care," "home care," "specialized care," "assisted living 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 must be delivered.

(16) and (17) remain the same but are renumbered (17) and (18).

(18)(19) All providers of services, including but not limited to "skilled nursing facility," "extended care facility," "intermediate care facility," "convalescent nursing home," "personal care facility," "specialized care providers," "assisted living facility," and "home care agency" shall be defined in relation to the services and facilities required to be available and the licensure, certification, registration, or degree status of those providing or supervising the services. TheWhen the definition may requires that the provider be appropriately licensed, or certified, or registered, it shall also state what requirements a provider must meet in lieu of licensure, certification, or registration when the state in which the service is to be furnished does not require a provider of these services to be licensed, certified, or registered, or when the state licenses, certifies, or registers the provider of services under another name.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3104 POLICY PRACTICES AND PROVISIONS (1) through (4) remain the same.

(5) The term "level premium" may only be used when the insurer does not have the right to change the premium.

(6) In addition to the other requirements of this rule, a qualified long-term care insurance contract shall be guaranteed renewable, within the meaning of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended.

(5)(7) NoA policy or certificate may not be delivered or issued for delivery in this state as long-term care insurance if such the policy or certificate limits or excludes coverage by type of illness, treatment, medical condition, or accident, except it may include exclusions or limits for:

(a) remains the same.

(b) mental or nervous disorders; however, this shall not permit exclusion of or limitation of benefits on the basis of Alzheimer's disease or irreversible dementia;

(c) through (d)(iv) remain the same.

(v) aviation, which provided this exclusion applies only to nonfare-paying passengers;.

(e) and (f) remain the same.

(g) services provided by a member of the insured's covered person's immediate family or and services for which no charge is normally made in the absence of insurance. ;

(h) expenses for services or items available or paid under another long-term care insurance or health insurance policy;

(i) in the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount;

(j) this rule is not intended to prohibit exclusions and limitations by type of provider; however:

(i) no long-term care issuer may deny a claim because services are provided in a state other than the state of policy issued, under the following conditions:

(A) when the state other than the state of policy issue does not have the provider licensing, certification, or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification, or registration; or

(B) when the state other than the state of policy issue issues licenses, certifies, or registers the provider under another name.

(ii) for purposes of this paragraph, "state of policy issue" means the state in which the individual policy or certificate was originally issued.

(h)(k) this section rule is not intended to prohibit exclusions or limitations by territorial limitations.

(6) through (7)(b) remain the same but are renumbered (8) through (9)(b).

(c) For the purposes of this section rule, "converted policy" means a policy or certificate of long-term care insurance providing benefits identical to or benefits determined by the Commissioner of Insurance to be substantially equivalent to or in excess of those provided under the group policy or certificate from which conversion is made. Where the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use certain health care providers or facilities, the Commissioner of Insurance, in making a determination as to the substantial equivalency of benefits, may take into consideration the differences between managed care and nonmanaged care plans, including, but not limited to, health care provider system arrangements, service availability, benefit levels, and administrative complexity.

(d) through (f)(ii)(A) remain the same.

(B) the premium for which is calculated in a manner consistent with the requirements of (9)(e) of this subsection.

(g) Notwithstanding any other provision of this rule, a converted policy or certificate issued to an individual who at the time of conversion is covered by another long-term care insurance policy or certificate which provides benefits on the basis of incurred expenses, may contain a provision which results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy or certificate, would result in payment of more than 100% of incurred expenses. Such The provision shall only be included in the converted policy or certificate if the converted policy or certificate also provides for a premium decrease or refund which reflects the reduction in benefits payable.

(h) The converted policy or certificate may provide that the benefits payable under the converted policy or certificate, together with the benefits payable under the group policy or certificate from which conversion is made, shall may not exceed those that would have been payable had the individual's coverage under the group policy or certificate remained in force and effect.

(i) Notwithstanding any other provision of this section these rules, any insured individual whose eligibility for group long-term care coverage is based upon his or her relationship to another person, shall be entitled to continuation of coverage under the group policy or certificate upon termination of the qualifying relationship by death or dissolution of marriage.

(j) For the purposes of this section these rules, a "managed-care plan" is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management, or use of specific health care provider networks.

(8) remains the same but is renumbered (10).

(11) The premium charged to an insured shall not increase due to either:

(a) the increasing age of the insured at ages beyond 65; or

(b) the duration the insured has been covered under the policy.

(9) remains the same but is renumbered (12).

(a) and (b) remain the same.

(c) The telephonic or electronic enrollment providing necessary and reasonable safeguards to assure that the confidentiality of individually identifiable information and "privileged information," as defined by 33-19-104(22)(24), MCA, is maintained.

(d) remains the same.

(10) remains the same but is renumbered (13).

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3104A UNINTENTIONAL LAPSE (1) through (2) remain the same.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1113, MCA

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6.6.3105 REQUIRED DISCLOSURE PROVISIONS (1) Individual long-term care insurance policies and certificates shall contain a renewability provision. Such provision shall be appropriately captioned, shall appear on the first page of the policy or certificate, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the policy or certificate is issued and for which it may be renewed. This provision shall not apply to policies which do not contain a renewability provision, and under which the right to nonrenew is reserved solely to the policyholder.

(a) The provision shall be appropriately captioned, shall appear on the first page of the policy or certificate, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the policy or certificate is issued and for which it may be renewed. This provision shall not apply to policies which do not contain a renewability provision, and under which the right to nonrenew is reserved solely to the policyholder; and

(b) A long-term care insurance policy, other than one where the insurer does not have the right to change the premium, shall include a statement that the premium rates may change.

(2) through (4) remain the same.

(5) A long-term care insurance policy or certificate containing any limitations or conditions for eligibility other than those prohibited in 33-22-1115(2)(1), MCA, shall set forth a description of such limitations or conditions, including any required number of days of confinement, in a separate paragraph of the policy or certificate and shall label such paragraph "limitations of or conditions on eligibility for benefits."

(6) With regard to life insurance policies that provide an accelerated benefit for long-term care, a disclosure statement is required at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable, and that assistance should be sought from a personal tax advisor. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents. This provision does not apply to qualified long-term care insurance contracts.

(7) Activities of daily living and cognitive impairment shall be used to measure an insured's need for long-term care and shall be described in the policy or certificate in a separate paragraph and shall be labeled "Eligibility for the Payment of Benefits." Any additional benefit triggers shall also be explained in this rule separate paragraph. If these triggers differ for different benefits, explanation of the trigger shall accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too shall be specified.

(8) A qualified long-term care insurance contract shall include a disclosure statement in the policy and/or certificate and in the outline of coverage that the policy is intended to be a qualified long-term care insurance contract under 7702B(b) of the Internal Revenue Code of 1986, as amended.

(9) A nonqualified long-term care insurance contract shall include a disclosure statement in the policy and in the outline of coverage as contained in ARM 6.6.3114(6) that the policy is not intended to be a qualified long-term care insurance contract.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3106 PROHIBITION AGAINST POST-CLAIMS UNDERWRITING

(1) and (2) remain the same.

(3) Except for policies or certificates which are guaranteed issue, the following language shall be set out conspicuously and in close conjunction with the applicant's signature block on an application for a long-term care insurance policy or certificate: Caution: If your answers on this application are incorrect or untrue, [company] has may have the right to deny benefits or rescind your [policy] [certificate], pursuant to ARM 6.6.3104(13).

(4) through (6) remain the same.

(7) Every issuer or other entity selling or issuing long-term care insurance benefits shall maintain a record of all policy or certificate rescissions, both state and countrywide, except those which the insured voluntarily effectuated and shall annually furnish this information to the Commissioner of Insurance in the format prescribed by the national association of insurance commissioners National Association of Insurance Commissioners in Appendix A ARM 6.6.3120, LTC Form A.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3107 MINIMUM STANDARDS FOR HOME HEALTH CARE BENEFITS IN LONG-TERM CARE INSURANCE POLICIES (1) through (1)(c) remain the same.

(d) by requiring that a nurse or therapist provide services covered by the policy or certificate that can be provided by a home health aide, or other licensed or certified home care worker acting withing within the scope of his or her licensure of certification;

(e) through (3) remain the same.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3108 REQUIREMENT TO OFFER INFLATION PROTECTION

(1) through (6) remain the same.

(7) Inflation protection as provided in (1)(a) of this section shall be included in a long-term care insurance policy or certificate unless an issuer obtains a rejection of inflation protection signed by the policyholder as required in this section rule. The rejection shall be considered a part of the application and shall state:

(a) I have received reviewed the outline of the coverage and the graphs that compare the benefits and premiums of this policy or certificate with and without inflation protection. Specifically, I have reviewed Plans__________, and I reject inflation protection.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3109 REQUIREMENTS FOR APPLICATION FORMS AND REPLACEMENT COVERAGE (1) through (6) remain the same.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3109A REPORTING REQUIREMENTS (1) remains the same.

(2) Every issuer shall report annually by June 30, on LTC Form G in ARM 6.6.3120(1)(g), the 10% of its producers with the greatest percentages of lapses and replacements as measured by (1) above.

(3) remains the same.

(4) Every issuer shall report annually by June 30, on LTC Form E in ARM 6.6.3120(1)(e), the number of lapsed policies as a percentage of its total annual sales and as a percentage of its total number of policies in force as of the end of the preceding calendar year.

(5) and (6) remain the same.

(7) For purposes of this rule:

(a) "policy" shall means only long-term care insurance and "report" means on a statewide basis.;

(b) subject to (7)(c) "claim" means a request for payment of benefits under an in-force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;

(c) "denied" means the insurer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition; and

(d) "report" means on a statewide basis.

(8) Reports required under this rule shall be filed with the commissioner on the applicable forms contained in ARM 6.6.3120.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1113, MCA

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6.6.3109B LICENSING (1) No A producer is authorized to may not market, sell, solicit, negotiate, or otherwise act as an insurance producer or otherwise contact a person for the purpose of marketing long-term care insurance unless the producer has demonstrated his or her knowledge of long-term care insurance and the appropriateness of such insurance by passing a test required by this state and maintaining appropriate licenses. with respect to long-term care insurance in this state except as authorized by Title 33, chapter 17, part 2, MCA. The producer must also meet the training requirements set forth in 33-22-1128, MCA.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-17-201, MCA

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6.6.3110 DISCRETIONARY POWERS OF COMMISSIONER OF INSURANCE (1) The Commissioner of Insurance may upon written request and after administrative hearing, issue an order to modify or suspend a specific provision or provisions of this these regulation rules with respect to a specific long-term care insurance policy or certificate upon a written finding that:

(a) and (b) remain the same.

(c) remains the same but is renumbered (i).

(i) and (ii) remain the same but are renumbered (ii) and (iii).

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3111 RESERVE STANDARDS (1) remains the same.

(2) Reserves for policies and riders subject to this subsection rule should be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event shall the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.

(3) In the development and calculation of reserves for policies and riders subject to this subsection rule, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including, but not limited to, the following:

(a) through (d) remain the same.

(e) existence of or absence of barriers to eligibility;

(f) through (5) remain the same.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3112 LOSS RATIO (1) remains the same.

(2) Section (1) This rule shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy or certificate that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy or certificate complies with all of the following provisions:

(a) and (b) remain the same.

(c) The policy or certificate meets the disclosure requirements of 33-20-127, and 33-20-128, and 33-22-1123, MCA;

(d) Any policy illustration that meets the applicable requirements of the NAIC Life Insurance Illustrations Model Regulation ARM 6.6.701 through 6.6.718; and

(e) An actuarial memorandum is filed with and reviewed by the insurance department Insurance Department of the state auditor's office State Auditor's Office that includes:

(i) through (viii) remain the same.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3113 FILING REQUIREMENT (1) and (2) remain the same.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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6.6.3114 STANDARD FORMAT OUTLINE OF COVERAGE (1) through (5) remain the same.

(6) Format for outline of coverage:

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[COMPANY NAME]

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[ADDRESS-CITY & STATE]

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[TELEPHONE NUMBER]

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LONG-TERM CARE INSURANCE

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OUTLINE OF COVERAGE

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[Policy Number of Group Master Policy and Certificate Number]

[Except for policies or certificates which are guaranteed issue, the following caution statement, or language substantially similar, must appear as follows in the outline of coverage.] Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application][enrollment form] [is enclosed][was retained by you when you applied]. If your answers are incorrect or untrue, the company has may have the right to deny benefits, or rescind your policy or certificate. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address]

1. This policy is [an individual policy of insurance] ([a group policy] which was issued in the [indicate jurisdiction in which group policy was issued]).

2. PURPOSE OF OUTLINE OF COVERAGE. This outline of coverage provides a very brief description of the important features of the policy. You should compare this outline of coverage to outlines of coverage for other policies available to you. This is not an insurance contract, but only a summary of coverage. Only the individual or group policy or certificate contains governing contractual provisions. This means that the policy or certificate or group policy sets forth in detail the rights and obligations of both you and the insurance company. Therefore, if you purchase this coverage, or any other coverage, it is important that you READ YOUR POLICY (OR CERTIFICATE) CAREFULLY!

3. TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.

(a) [Provide a brief description of the right to return--"free look" provision of the policy or certificate.]

(b) [include a statement that the policy or certificate either does or does not contain provisions providing for a refund or partial refund of premium upon the death of an insured or surrender of the policy or certificate. If the policy contains such provisions, include description of them.]

4. THIS IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare, review the Mmedicare Ssupplement buyer's guide available from the insurance company.

(a) [For producers] Neither [insert company name] nor its producers represent Mmedicare, the federal government or any state government.

(b) [For direct response] [insert company name] is not representing Mmedicare, the federal government or any state government.

5. LONG-TERM CARE COVERAGE. Policies of this category are designed to provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community or in the home. This policy or certificate provides coverage in the form of a fixed dollar indemnity benefit for covered long-term care expenses, subject to policy [limitations] [waiting periods] and [coinsurance] requirements. [Modify this paragraph if the policy is not an indemnity policy.]

6. BENEFITS PROVIDED BY THIS POLICY/CERTIFICATE.

(a) [Covered services, related deductible(s), waiting periods, elimination periods and benefit maximums.]

(b) [Institutional benefits, by skill level.]

(c) [Non-institutional benefits, by skill level.]

(d) [Activities of daily living and cognitive impairment shall be used to measure an insured's need for long-term care and must be defined and described as part of the outline of coverage.] [Any additional benefit triggers must also be explained. If these triggers differ for different benefits, explanation of the triggers should accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too must be specified.]

7. LIMITATIONS AND EXCLUSIONS

[Describe:

(a) Preexisting conditions;

(b) Non-eligible facilities/provider;

(c) Non-eligible levels of care (e.g., unlicensed providers, care or treatment provided by a family member, etc.)

(d) Exclusions/exceptions;

(e) Limitations.]

[This section should provide a brief specific description of any policy provisions which limit, exclude, restrict, reduce, delay, or in any other manner operate to qualify payment of the benefits described in (6) above.]

THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.

8. RELATIONSHIP OF COST OF CARE AND BENEFITS. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted. [As applicable, indicate the following:

(a) That the benefit level will not increase over time;

(b) Any automatic benefit adjustment provisions;

(c) Whether the insured will be guaranteed the option to buy additional benefits and the basis upon which benefits will be increased over time if not by a specified amount or percentage;

(d) If there is such a guarantee, include whether additional underwriting or health screening will be required, the frequency and amounts of the upgrade options, and any significant restrictions or limitations;

(e) And finally, describe whether there will be any additional premium charge imposed, and how that is to be calculated.]

9. TERMS UNDER WHICH THE POLICY (OR CERTIFICATE) MAY BE CONTINUED IN FORCE OR DISCONTINUED.

(a) [For long-term care health insurance policies or certificates, describe one of the following policy renewability provisions:

(i) Policies and certificates that are guaranteed renewable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your policy [certificate], to continue this policy [certificate] as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy [certificate] on its own, except that, in the future, it may increase the premium you pay.

(ii) [Policies and certificates that are noncancelable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS NONCANCELABLE. This means that you have the right, subject to the terms of your policy or certificate, to continue this policy as long as you pay your premiums on time. [Company Name] cannot change any of the terms of your policy on its own and cannot change the premium you currently pay. However, if your policy or certificate contains an inflation protection feature where you choose to increase your benefits, [Company Name] may increase your premium at that time for those additional benefits.

(b) For group coverage, specifically describe continuation conversion provisions applicable to the certificate and group policy;

(c) Describe waiver of premium provisions or state that there are not such provisions;

(d) State whether or not the company has a right to change premium, and if such a right exists, describe clearly and concisely each circumstance under which premium may change.]

10. ALZHEIMER'S DISEASE, IRREVERSIBLE DEMENTIA, AND OTHER ORGANIC BRAIN DISORDERS.

[State that the policy or certificate provides coverage for insured clinically diagnosed as having Alzheimer's disease, irreversible dementia, or related degenerative and dementing illnesses. Specifically describe each benefit screen or other policy provision which provides preconditions to the availability of policy benefits for such an insured.]

11. PREMIUM.

[(a) State the total annual premium for the policy or certificate;

(b) If the premium varies with an applicant's choice among benefit options, indicate the portion of annual premium which corresponds to each benefit option.]

12. ADDITIONAL FEATURES.

(a) QUALIFIED LONG-TERM CARE INSURANCE. Indicate whether or not the policy or certificate is intended to be a federally tax-qualified long-term care insurance contract.

[(b) Indicate if medical underwriting is used;

(c) Describe other important features.]

�

AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

�

6.6.3115 REQUIREMENT TO DELIVER SHOPPER'S GUIDE (1) through (2) remain the same.

�

AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

�

6.6.3117 STANDARDS FOR MARKETING (1) remains the same.

(a) Establish marketing procedures and producer training requirements to assure that:

(i) any marketing activities, including comparison of policies, by its producers

or other producers, will be fair and accurate;

(b) and (c) remain the same.

(d) Provide copies of the disclosures required in [New Rule I] on forms specified in ARM 6.6.3120(1)(b) and (f);

(d)(e) Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of any such insurance, except that in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance is not required;

(e) remains the same but is renumbered (f).

(f)(g) The issuer must at solicitation, provide written notice to the prospective policyholder and certificateholder that a senior insurance counseling program is available and the name, address, and telephone number of the program; and

(g)(h) For long-term care health insurance policies and certificates, use the terms "noncancelable" or "level premium" only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the issuer has no right to unilaterally make any change in any provision of the insurance or in the premium rate.; and

(i) Provide an explanation of contingent benefit upon lapse provided for in ARM 6.6.3119.

(2) and (2)(a) remain the same.

(b) High pressure tactics such as employing any method of marketing having the effect of, or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance; and

(c) Cold lead advertising such as making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance producer or insurance company.; and

(d) Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.

(3)(a) With respect to the obligations set forth in this subsection rule, the primary responsibility of an association, as defined in 33-22-1107, MCA, when endorsing long-term care insurance shall be:

(a) to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by such associations to ensure that members of such associations receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold.;

(b) through (f)(i) remain the same.

(ii) actively monitor the marketing efforts of the issuer and its producers; and

(iii) review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding such policies or certificates.; and

(iv) (3)(f)(i) through (3)(f)(iii) do not apply to qualified long-term care insurance contracts.

(g) No group long-term care insurance policy or certificate may be issued to an association unless the issuer files with the state insurance department the information required in this rule.

(h) The issuer shall not issue a long-term care policy or certificate to an association or continue to market such a policy or certificate unless the issuer certifies annually that the association has complied with the requirements set forth in this rule.

(i) remains the same.

�

AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

�

6.6.3118 APPROPRIATE SALE CRITERIA SUITABILITY STANDARDS

(1) remains the same.

(a) Ddevelop and use appropriate sale criteria suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;

(b) Ttrain its producers in the use of its appropriate sale criteria suitability standards; and

(c) Mmaintain a copy of its appropriate sale criteria suitability

standards and make them available for inspection upon request by the commissioner.

(2)(a) To determine whether the applicant meets the standards developed by the issuer, the issuer shall:

(a) develop procedures that take the following into consideration:

(i) through (iii) remain the same.

(3) To determine whether the applicant meets the standards developed by the issuer, the producer and issuer shall:

(a) develop procedures that take the following into consideration:

(i) the ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

(ii) the applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and

(iii) the values, benefits, and costs of the applicant's existing insurance, if any, when compared to the values, benefits, and costs of the recommended purchase or replacement.

(b)(4) To determine whether the applicant meets the standards developed by the The issuer, and where a producer is involved, the producer shall make reasonable efforts to obtain the information set out in (2)(a) above. The efforts shall include presentation to the applicant, at or prior to application, the "Long-Term Care Insurance Personal Worksheet." The personal worksheet used by the issuer shall contain, at a minimum, the information in the format contained in Appendix B ARM 6.6.3120(1)(b) in not less than 12 point type. The issuer may request the applicant to provide additional information to comply with its appropriate sale criteria suitability standards. A copy of the issuer's personal worksheet shall be filed with the commissioner.

(c)(a) A completed personal worksheet shall be returned to the issuer prior to the issuer's consideration of the applicant for coverage., except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses; and

(d)(b) The sale or dissemination outside the company or agency by the issuer or producer of information obtained through the personal worksheet in ARM 6.6.3120(1)(b), LTC Form B Appendix B is prohibited.

(3)(5) The issuer shall use the appropriate sale criteria suitability standards it has developed pursuant to this rule in determining whether issuing long-term care insurance coverage to an applicant is appropriate.

(4)(6) Producers shall use the appropriate sale criteria suitability standards developed by the issuer in marketing long-term care insurance.

(5)(7) At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled "Things You Should Know Before You Buy Long-Term Care Insurance" shall be provided. The form shall be in the format contained in ARM 6.6.3120(1)(c), LTC Form C Appendix C in not less than 12 point type.

(6)(8) If the issuer determines that the applicant does not meet its financial appropriate sale criteria suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer shall send the applicant a letter similar to ARM 6.6.3120(1)(d), LTC Form D Appendix D. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file.

(7)(9) The issuer shall report annually to the commissioner the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the appropriate sale criteria suitability standards, and the number of those who chose to confirm after receiving an appropriate sale criteria a suitability letter.

(8) remains the same but is renumbered (10).

�

AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

�

6.6.3119 NONFORFEITURE BENEFIT REQUIREMENT (1) through (2)(b) remain the same.

(3) If the offer of the long-term care insurance policy or certificate that includes nonforfeiture benefits is rejected, the issuer shall provide the contingent benefit upon lapse described in this rule. Even if this offer is accepted for a policy with a fixed or limited premium paying period, the contingent benefit upon lapse in (4)(c) still applies.

(4) and (4)(a) remain the same.

(b) The contingent benefit upon lapse shall be triggered every time an issuer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.

�

Triggers for Contingent Benefit Upon Lapse a Substantial Premium Increase

�

������������������������Substantial Percent

Issue Age���������Over Initial Premium

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29 and under�����200%

30-34��������������� 190%

35-39��������������� 170%

40-44��������������� 150%

45-49��������������� 130%

50-54��������������� 110%

55-59������������������90%

60���������������������� 70%

61�����������������������66%

62���������������������� 62%

63���������������������� 58%

64�����������������������54%

65���������������������� 50%

66���������������������� 48%

67���������������������� 46%

68�����������������������44%

69�����������������������42%

70���������������������� 40%

71���������������������� 38%

72���������������������� 36%

73���������������������� 34%

74���������������������� 32%

75���������������������� 30%

76���������������������� 28%

77���������������������� 26%

78�����������������������24%

79���������������������� 22%

80���������������������� 20%

81���������������������� 19%

82���������������������� 18%

83���������������������� 17%

84�����������������������16%

85�����������������������15%

86���������������������� 14%

87���������������������� 13%

88���������������������� 12%

89���������������������� 11%

90 and over�������� 10%

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(c) A contingent benefit on lapse shall also be triggered for policies with a fixed or limited premium paying period every time an issuer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured's initial annual premium set forth below based on the insured's issue age, the policy lapses within 120 days of the due date of the premium so increased, and the ratio in (4)(e)(ii), is 40% or more. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.

�

Triggers for a Substantial Premium Increase

�

Issue Age	Percent Increase Over Initial Premium
Under 65	50%
65-80	30%
Over 80	10%

�

This provision shall be in addition to the contingent benefit provided by (4)(c), and where both are triggered, the benefit provided shall be at the option of the insured.

(c) through (c)(ii) remain the same but are renumbered (d) through (d)(ii).

(iii) notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in (4)(b) shall be deemed to be the election of the offer to convert in (4)(c)(ii) above. , unless the automatic option in (4)(e)(iii) applies.

(e) On or before the effective date of a substantial premium increase as defined in (4)(c), the issuer shall:

(i) offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;

(ii) offer to convert the coverage to a paid-up status where the amount payable for each benefit is 90% of the amount payable, in effect immediately prior to lapse, times the ratio of the number of completed months of paid premiums, divided by the number of months in the premium paying period. This option may be elected at any time during the 120 day period referenced in (4)(d); and

(iii) notify the policyholder or certificateholder that a default or lapse at any time during the 120 day period referenced in (4)(c) shall be deemed to be the election of the offer to convert in (2), if the ratio is 40% or more.

(5) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with (4)(b), but not (4)(c), are described in this rule in (5)(a) through (e):

(a) and (b) remain the same.

(c) The standard nonforfeiture credit will be equal to 100% of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The issuer may offer additional shortened benefit period options, as long as the benefits for each duration equal or exceed the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than 30 times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of (5)(b) (6).

(d) The nonforfeiture benefit and the contingent benefit upon lapse shall begin:

(i) not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse shall be effective during the first three years as well as thereafter;

(ii) except that for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of:

(i) remains the same but is renumbered (A).

(ii) remains the same but is renumbered (B).

(e) through (8)(b) remain the same.

(c) The last sentence in (3) and (4)(c) and (4)(e) shall apply to any long-term insurance policy issued in Montana after six months after its adoption, except new certificates on a group policy as defined in 33-22-1107(5), MCA, one year after adoption.

(9) Premiums charged for a policy or certificate containing nonforfeiture benefits shall be subject to the loss ratio requirements of ARM 6.6.3112 or [New Rule III], whichever is applicable, treating the policy or certificate as a whole.

(10) The purchase of additional coverage shall not be considered a premium rate increase.

(a) For purposes of the calculation required under this section, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.

(b) A reduction in benefits shall not be considered a premium change, but for purpose of the calculation required under this section, the initial annual premium shall be based on the reduced benefits.

(11)(10) To determine whether contingent nonforfeiture upon lapse provisions are triggered under (4)(b) or (4)(c), a replacing issuer that purchased or otherwise assumed a block or blocks of long-term care insurance policies or certificates from another issuer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy or certificate was first purchased from the original issuer.

(11) A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets the following requirements:

(a) the nonforfeiture provisions shall be appropriately captioned;

(b) the nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts approved by the commissioner for the same contract form; and

(c) the nonforfeiture provision shall provide at least one of the following:

(i) reduced paid-up insurance;

(ii) extended term insurance;

(iii) shortened benefit period; and

(iv) other similar offerings approved by the commissioner.

(12) remains the same.

�

AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

�

6.6.3120 ADOPTION OF FORMS (1) The following forms hereinafter listed are hereby adopted and made a part of these rules for all purposes, and the same must be used as herein directed in giving notice. Copies of the forms may be obtained from the State Auditor upon request at Room 270, Mitchell Building, P.O. Box 4009, Helena, Montana 59604.

�

(a) Appendix LTC Form A������������������������� Rescission Reporting Form

LTC Form A

�

RESCISSION REPORTING FORM FOR

LONG-TERM CARE POLICIES

FOR THE STATE OF MONTANA

FOR THE REPORTING YEAR 20[ ]

�

�

Company Name: _________________________________________

�

Address: _______________________________________________

�

Phone Number: _____________________________________________

�

����������������� Due: March 1 annually

�

Instructions:

�

The purpose of this form is to report all rescissions of long-term care insurance policies. Those rescissions voluntarily effectuated by an insured are not required to be included in this report. Please furnish one form per rescission.�

�

����������������������������������������������� Date of���� Date/s

Policy���� Policy and��� Name of�� Policy������ Claim/s����� Date of

Form #�� Certificate # Insured��� Issuance�� Submitted�� Rescission

� �		�	�	�	�
� �	�	�	�	�	�

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Detailed reason for rescission: __________________________________

���������������������������������������������������������������������������������������������������������� �

������������������������������������������������������������������������������������������������������������

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������������������������������������������� ___________________________________

�������������������������������������������������������������Signature

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������������������������������������������� ___________________________________

������������������������������������������������������������ Name and Title (please type)

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������������������������������������������� ___________________________________

�������������������������������������������������������������Date

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(b) Appendix LTC Form B Long-Term Care Insurance

Personal Worksheet

LTC FORM B

Long-Term Care Insurance

Personal Worksheet

�

People buy long-term care insurance for many reasons. Some don't want to use their own assets to pay for long-term care. Some buy insurance to make sure they can choose the type of care they get. Others don't want their family to have to pay for care or don't want to go on Medicaid. But long-term care insurance may be expensive, and may not be right for everyone.

�

By state law, the insurance company must fill out part of the information on this worksheet and ask you to fill out the rest to help you and the company decide if you should buy this policy.

�

Premium Information

�

Policy Form Numbers

�

The premium for the coverage you are considering will be [$ per month, or

$ ____ per year,] [a one-time single premium of $ .]

�

Type of Policy (noncancelable/guaranteed renewable):___________________

�

The Company's Right to Increase Premiums:

�

[The company cannot raise your rates on this policy.] [The company has a right to increase premiums in the future provided it raises rates for all policies in the same class in this state .][Insurers shall use appropriate bracketed statement. Rate guarantees shall not be shown on this form.]

�

Rate Increase History

�

The company has sold long-term care insurance since [year] and has sold this policy since [year]. [The last rate increase for this policy in this state was in [year], when premiums went up by an average of %]. [The company has not raised its rates for this policy.] [The company has never raised its rates for any long-term care policy it has sold in this state or any other state.] [The company has not raised its rates for this policy form or similar policy forms in this state or any other state in the last 10 years.] [The company has raised its premium rates on this policy form or similar policy forms in the last 10 years. Following is a summary of the rate increases.]

�

Questions Related to Your Income

�

[�� Have you considered whether you could afford to keep this policy if the premiums were raised, for example, by 20%?]

�

How will you pay each year's premiums?

���From my Income��� From my Savings/Investments��� My Family Will Pay

�

Income

�

What is your annual income? (check one)��� Under $10,000 �� $10,000-20,000

���$20,000-30,000��� $30,000-50,000��� Over $50,000

�

How do you expect your income to change over the next 10 years? (check one)

���No change��� Increase��� Decrease

�

If you will be paying premiums with money received only from your own income, a rule of thumb is that you may not be able to afford this policy if the premiums will be more than 7% of your income.

�

Will you buy inflation protection: (check one) �� Yes �� No

�

If not, have you considered how you will pay for the difference between future costs and your daily benefit amount?

�

���From my Income��� From my Savings/Investments��� My Family Will Pay

�

The national average annual cost of care in [insert year] was [insert $ amount], but this figure varies across the country. In ten years the national average annual cost would be about [insert $ amount] if costs increase 5% annually.

�

What elimination period are you considering? Number of days ________

Approximate cost $_______ for that period of care.

�

How are you planning to pay for your care during the elimination period? (check one)

�� From my Income �� From my Savings/Investments �� My Family Will Pay

�

Questions Related to Your Savings and Investments

�

Not counting your home, about how much are all of your assets (your savings and investments) worth?

�

(check one)

�� Under $20,000 �� $20,000-$30,000 �� $30,000-$50,000 �� Over $50,000

�

How do you expect your assets to change over the next 10 years? (check one)

�� Stay about the same �� Increase �� Decrease

�

If you are buying this policy to protect your assets and your assets are less than $30,000, you may wish to consider other options for financing your long-term care.

Disclosure Statement

�

�� The answers to the questions above describe my financial situation. Or �� I choose not to complete this information. (Check one.)

�� I acknowledge that the carrier and/or its producer (below) has reviewed this form with me including the premium, premium rate increase history and potential for premium increases in the future. [For direct mail situations, use the following : I acknowledge that I have reviewed this form including the premium, premium rate increase history and potential for premium increases in the future.] I understand the above disclosures. I understand that the rates for this policy may increase in the future. (This box must be checked.)

�

�

�

Signed: _____________________________ ________________________

����������������������(Applicant)�������������������������������������� (Date)

�

[�� I explained to the applicant the importance of completing this information.]

�

Signed: _____________________________ ________________________

�������������������� (Applicant)��������������������������������������� (Date)

�

�

Producer's Printed Name: ____________________________________]

�

In order for us to process your application, please return this signed statement to [name of company], along with your application.]

�

[My agent has advised me that this policy does not seem to be suitable for me. However, I still want the company to consider my application.]

�

Signed: ___________________________ _____________________________

������������������������ (Applicant)����������������������������������������� (Date)

�

The company may contact you to verify your answers.

�

(c) Appendix LTC Form C Things You Should Know Before You Buy Long-Term Care Insurance

LTC FORM C

�

Things You Should Know Before You Buy

Long-Term Care Insurance

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Long-Term ▪ �	�	A long-term care insurance policy may pay most of the costs for your care in a nursing home. Many policies also pay for care at home or other community settings. Since policies can vary in coverage, you should read this policy and make sure you understand what it covers before you buy it.
________▪	�	[You should not buy this insurance policy unless you can afford to pay the premiums every year.] [Remember that the company can increase premiums in the future.]

____ ____▪ �	�	The personal worksheet includes questions designed to help you and the company determine whether this policy is suitable for your needs. �
Medicare ▪	�	Medicare does not pay for most long-term care.
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Medicaid ▪	�	Medicaid will generally pay for long-term care if you have very little income and few assets. You probably should not buy this policy if you are now eligible for Medicaid.
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_________▪	�	Many people become eligible for Medicaid after they have used up their own financial resources by paying for long-term care services.
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_________▪	�	When Medicaid pays your spouse's nursing home bills, you are allowed to keep your house and furniture, a living allowance, and some of your joint assets.
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_________▪	�	Your choice of long-term care services may be limited if you are receiving Medicaid. To learn more about Medicaid, contact your local or state Medicaid agency.
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Shopper's ▪ Guide	�	Make sure the insurance company or agent gives you a copy of a book called the National Association of Insurance Commissioners' "Shopper's Guide to Long-Term Care Insurance." Read it carefully. If you have decided to apply for long-term care insurance, you have the right to return the policy within 30 days and get back any premium you have paid if you are dissatisfied for any reason or choose not to purchase the policy.
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Counseling ▪	�	Free counseling and additional information about long-term care insurance are available through your state's insurance counseling program. Contact your state insurance department or department on aging for more information about the senior health insurance counseling program in your state.
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Facilities ▪	�	Some long-term care insurance contracts provide for benefit payments in certain facilities only if they are licensed or certified, such as in assisted living centers. However, not all states regulate these facilities in the same way. Also, many people move into a different state from where they purchased their long-term care insurance policy. Read the policy carefully to determine what types of facilities qualify for benefit payments, and to determine that payment for a covered service will be made if you move to a state that has a different licensing scheme for facilities than the one in which you purchased the policy.

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(d) LTC Form Appendix D Long-Term Care Insurance Appropriate Sale Suitability Criteria Letter

LTC FORM D

Long-Term Care Insurance Suitability Letter

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Dear [Applicant]:

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Your recent application for long-term care insurance included a "personal worksheet," which asked questions about your finances and your reasons for buying long-term care insurance. For your protection, state law requires us to consider this information when we review your application, to avoid selling a policy to those who may not need coverage.

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[Your answers indicate that long-term care insurance may not meet your financial needs. We suggest that you review the information provided along with your application, including the booklet "Shopper's Guide to Long-Term Care Insurance" and the page titled "Things You Should Know Before Buying Long-Term Care Insurance." Your state insurance department also has information about long-term care insurance and may be able to refer you to a counselor, free of charge, who can help you decide whether to buy this policy.]

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[You chose not to provide any financial information for us to review.]

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We have suspended our final review of your application. If, after careful consideration, you still believe this policy is what you want, check the appropriate box below and return this letter to us within the next 60 days. We will then continue reviewing your application and issue a policy if you meet our medical standards.

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If we do not hear from you within the next 60 days, we will close your file and not issue you a policy. You should understand that you will not have any coverage until we hear back from you, approve your application and issue you a policy.

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Please check one box and return in the enclosed envelope.

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�� Yes, [although my worksheet indicates that long-term care insurance may not be a suitable purchase.] I wish to purchase this coverage. Please resume review of my application.

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�� No, I have decided not to buy a policy at this time.

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APPLICANT'S SIGNATURE DATE_____________

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Please return to [issuer] at [address] by [date].

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(e) LTC Form E Claims Denial Reporting Form

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LTC FORM E

Claims Denial Reporting Form

Long-Term Care Insurance

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���������������������������� For the State of Montana

���������������������������� For the Reporting Year of __________

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Company Name : ___________________________ Due: June 30 annually

Company Address: _________________________

Company NAIC: ___________________________ Number:

Contact Person: _________________________ Phone Number: ___________

Line of Business:�������������� Individual����������������������� Group

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Instructions:

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The purposes of this form is to report all long-term care claim denials under in-force long-term care insurance policies. "Denied" means a claim that is not paid for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition.

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�	�	State Data	Nationwide Data
1	Total Number of Long-Term Care Claims Reported	�	�
2	Total Number of Long-Term Care Claims Denied/Not Paid	�	�
3	Number of Claims Not Paid due to Preexisting Condition Exclusion	�	�
4	Number of Claims Not Paid due to Waiting (Elimination) Period Not Met	�	�
5	Net Number of Long-Term Care Claims Denied for Reporting Purposes (Line 2 Minus Line 3 Minus Line 4)	�	�
6	Percentage of Long-Term Care Claims Denied of Those Reported (Line 5 Divided by Line 1)	�	�
7	Number of Long-Term Care Claims Denied due to:	�	�
8	▪ Long-Term Care Services �	�	�
9	▪ Provider/Facility Not Qualified under the Policy �	�	�
10	���� ▪ Benefit Eligibility Criteria Not Met �	�	�
11	▪ Other �	�	�

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1. The nationwide data may be viewed as a more representative and credible indicator where the data for claims reported and denied for your state are small in number.

2. Example-home health care claim filed under a nursing home only policy.

3. Example-a facility that does not meet the minimum level of care requirements or the licensing requirements as outlined in the policy.

4. Examples-a benefit trigger not met, certification by a licensed health care practitioner not provided, no plan of care.

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You are eligible for the reduced "paid-up" contingent nonforfeiture benefit when all three conditions shown below are met:

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1. The premium you are required to pay after the increase exceeds your original premium by the same percentage or more shown in the chart below:

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______Triggers for a Substantial Premium Increase__ _

������������������������������������������������������������������� Percent Increase

��������������������� ___Issue Age____����������__ Over Initial Premium_____

�������������������������� �Under 65���������������������������������� 50%

������������������������������65-80������������������������������������� 30%

��������������������������� Over 80������������������������������������ 10%

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2. You stop paying your premiums within 120 days of when the premium increase took effect; and

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3. The ratio of the number of months you already paid premiums is 40% or more than the number of months you originally agreed to pay.

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If you exercise this option your coverage will be converted to reduced "paid-up" status. That means there will be no additional premiums required. Your benefits will change in the following ways:

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a.�The total lifetime amount of benefits your reduced paid up policy will provide can be determined by multiplying 90% of the lifetime benefit amount at the time the policy becomes paid up by the ratio of the number of months you already paid premiums to the number of months you agreed to pay them.

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b. The daily benefit amounts you purchased will also be adjusted by the same ratio.

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If you purchased lifetime benefits, only the daily benefit amounts you purchased will

be adjusted by the applicable ratio.

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Example:

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▪ You bought the policy at age 65 with an annual premium payable for 10 years.

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▪ In the sixth year, you receive a rate increase of 35% and you decide to stop paying premiums.

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▪ Because you already paid 50% of your total premium payments and that is more than the 40% ratio, your "paid-up" policy benefits are .45 (.90 times .50) times the total benefit amount that was in effect when you stopped paying your premiums. If you purchased inflation protection, it will not continue to apply to the benefits in the reduced "paid-up" policy.

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(f) LTC Form F Potential Rate Increase Reporting Form

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LTC Form F

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Instructions:

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This form provides information to the applicant regarding premium rate schedules, rate schedule adjustments, potential rate revisions, and policy holder options in the event of a rate increase.

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Insurers shall provide all of the following information to the applicant:

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Long-Term Care Insurance

Potential Rate Increase Disclosure Form

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[Premium Rate][Premium Rate Schedules]: [Premium rate][Premium rate schedules] that [is][are] applicable to you and that will be in effect until a request is made and [filed][approved] for an increase [is][are][on the application][$_______]

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1. The [premium] [premium rate schedule] for this policy [will be shown on the schedule page of] [will be attached to] your policy.

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2. Rate Schedule Adjustments:

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The company will provide a description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.) (fill in the blank): ____________________________.

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3. Potential Rate Revisions:

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This policy is Guaranteed Renewable. This means that the rates for this product may be increased in the future. Your rates can NOT be increased due to your increasing age or declining health, but your rates may go up based on the experience of all policyholders with a policy similar to yours.

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If you receive a premium rate or premium rate schedule increase in the future, you will be notified of the new premium amount and you will be able to exercise at least one of the following options:

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$���� Pay the increased premium and continue your policy in force as is.

$���� Reduce your policy benefits to a level such that your premiums will not increase. (Subject to state law minimum standards.)

$���� Exercise your nonforfeiture option if purchased. (This option is available for purchase for an additional premium.)

$���� Exercise your contingent nonforfeiture rights.* (This option may be available if you do not purchase a separate nonforfeiture option.)

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Contingent Nonforfeiture

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If the premium rate for your policy goes up in the future and you didn't buy a nonforfeiture option, you may be eligible for contingent nonforfeiture. Here's how to tell if you are eligible:

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You will keep some long-term care insurance coverage, if:

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$���� Your premium after the increase exceeds your original premium by the percentage shown (or more) in the following table; and

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$���� You lapse (do not pay more premiums) within 120 days of the increase.

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The amount of coverage (i.e., new lifetime maximum benefit amount) you will keep will equal the total amount of premiums you've paid since your policy was first issued. If you have already received benefits under the policy, so that the remaining maximum benefit amount is less than the total amount of premiums you've paid, the amount of coverage will be that remaining amount.

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Except for this reduced lifetime maximum benefit amount, all other policy benefits will remain at the levels attained at the time of the lapse and will not increase thereafter.

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Should you choose this Contingent Nonforfeiture option, your policy, with this reduced maximum benefit amount, will be considered "paid-up" with no further premiums due.

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Example:

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$���� You bought the policy at age 65 and paid the $1,000 annual premium for 10 years, so you have paid a total of $10,000 in premium.

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$���� In the eleventh year, you receive a rate increase of 50%, or $500 for a new annual premium of $1,500, and you decide to lapse the policy (not pay any more premiums.)

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$���� Your "paid-up" policy benefits are $10,000 (provided you have at least $10,000 of benefits remaining under your policy.)

Contingent Nonforfeiture Cumulative Premium Increase over Initial Premium That Qualifies for Contingent Nonforfeiture � (Percentage increase is cumulative from date of original issue. It does NOT represent a one-time increase.)

Issue Age	Percent Increase Over Initial Premium
29 and under	200%
30-34	190%
35-39	170%
40-44	150%
45-49	130%
50-54	110%
55-59	90%
60	70%
61	66%
62	62%
63	58%
64	54%
65	50%
66	48%
67	46%
68	44%
69	42%
70	40%
71	38%
72	36%
73	34%
74	32%
75	30%
76	28%
77	26%
78	24%
79	22%
80	20%
81	19%
82	18%
83	17%
84	16%
85	15%
86	14%
87	13%
88	12%
89	11%
90 and over	10%

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[The following contingent nonforfeiture disclosure need only be included for those limited pay policies to which ARM 6.6.3119(4)(c) and (e) of the regulation are applicable].

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In addition to the contingent nonforfeiture benefits described above, the following reduced "paid-up" contingent nonforfeiture benefit is an option in all policies that have a fixed or limited premium payment period, even if you selected a nonforfeiture benefit when you bought your policy. If both the reduced "paid-up" benefit AND the contingent benefit described above are triggered by the same rate increase, you can chose either of the two benefits.

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������� (g) LTC Form G Replacement and Lapse Reporting Form

LTC Form G

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Long-Term Care Insurance

Replacement and Lapse Reporting Form

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For the State of Montana������������� For the Reporting Year of __________

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Company Name: ______________ Due: June 30 annually

Company Address: ___________________ Company NAIC # _______

Company NAIC Number: ____________________

Contact Person: ____________________________

Phone Number: __(___)______________________

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Instructions

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The purpose of this form is to report, on a statewide basis, information regarding long-term care insurance policy replacements and lapses. Specifically, every insurer shall maintain records for each agent on that agent's amount of long-term care insurance replacement sales as a percent of the agent's total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent's total annual sales. The tables below should be used to report the 10% of the insurer's agents with the greatest percentages of replacements and lapses.

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Listing of the 10% of Agents with the Greatest Percentage of Replacements

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Agent's Name

Number of Policies Sold by This Agent

Number of Policies Replaced by This Agent

Number of Replacements as % of Number Sold by this Agent

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Listing of the 10% of Agents with the Great Percentage of Lapses

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Agent's Name	Number of Policies Sold by This Agent	Number of Policies Lapsed by This Agent	Number of Lapses as % of Number Sold by This Agent
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Company Totals:

Percentage of Replacement Policies Sold to Total Sales _____%

Percentage of Replacement Policies Sold to Policies in Force (as of the end of the preceding calendar year) ____%

Percentage of Lapsed Policies to Total Annual Sales _____%

Percentage of Lapsed Policies to Policies in Force (as of the end of the preceding calendar year) _____%

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101 through 33-22-1121, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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4. The rule proposed for repeal is as follows:

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6.6.3116 EFFECTIVE DATE located at page 6-525, Administrative Rules of Montana.

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AUTH: 33-1-313, MCA

IMP: 33-22-1101 through 33-22-1121, MCA

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5. The rules as proposed to be adopted provide as follows:

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NEW RULE I REQUIRED DISCLOSURE OF RATING PRACTICES TO CONSUMERS (1) This rule shall apply as follows:

(a) except as provided in (2), this provision applies to any long-term care policy issued in Montana on or after July 1, 2008; and

(b) for certificates issued on or after the effective date of this amended rule under a group long-term care insurance policy as defined in 33-22-1107(5), MCA, which policy was in force at the time this amended rule became effective, the provisions of this rule shall apply on the policy anniversary following July 1, 2008.

(2) Other than policies for which no applicable premium rate or rate schedule increases can be made, issuers shall provide all of the information listed in this rule to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time. In such case, an issuer shall provide all of the information listed in this rule to the applicant no later than at the time of delivery of the policy:

(a) a statement that the policy may be subject to rate increases in the future;

(b) an explanation of potential future premium rate revisions, and the policyholder's or certificateholder's option in the event of a premium rate revision;

(c) the premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase; and

(d) a general explanation for applying premium rate or rate schedule adjustments that shall include:

(i) a description of when premium rate or rate schedule adjustments will be effective, e.g., next anniversary date, next billing date, etc.; and

(ii) the right to a revised premium rate or rate schedule as provided in (2)(c) if the premium rate or rate schedule is changed.

(e) information regarding each premium rate increase on this policy form or similar policy forms over the past ten years for this state or any other state that, at a minimum, identifies:

(i) the policy forms for which the premium rates have been increased;

(ii) the calendar years when the form was available for purchase; and

(iii) the amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics.

(f) the issuer may, in a fair manner, provide additional explanatory information related to the rate increases;

(g) an issuer shall have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated issuers or the long-term care policies acquired from other nonaffiliated issuers when those increases occurred prior to the acquisition;

(h) if an acquiring issuer files for a rate increase on a long-term care policy form acquired from nonaffiliated issuers or a block of policy forms acquired from nonaffiliated issuers on or before the later of the effective date of this rule or the end of a 24 month period following the acquisition of the block or policies, the acquiring issuer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with (2)(e); and

(i) if the acquiring issuer in (2)(h) files for a subsequent rate increase, even within the 24 month period, on the same policy form acquired from nonaffiliated issuers or block of policy forms acquired from nonaffiliated insurers referenced in (2)(h), the acquiring issuer shall make all disclosures required by (2)(e), including disclosure of the earlier rate increase referenced in (2)(h).

(3) An applicant shall sign an acknowledgment at the time of application, unless the method of application does not allow for signature at that time, that the issuer made the disclosure required under (2)(a) and (e). If due to the method of application the applicant cannot sign an acknowledgment at the time of application, the applicant shall sign no later than at the time of delivery of the policy.

(4) An issuer shall use the forms in ARM 6.6.3120(1)(b) and (f) to comply with the requirements of (2) and (3).

(5) An issuer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificateholders, if applicable, at least 45 days prior to the implementation of the premium rate schedule increase by the issuer. The notice shall include the information required by (2), when the rate increase is implemented.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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NEW RULE II INITIAL FILING REQUIREMENTS (1) This rule applies to any long-term care policy issued in this state on or after July 1, 2008.

(2) An insurer shall provide the information listed in this rule to the commissioner 30 days prior to making a long-term care insurance form available for sale:

(a) a copy of the disclosure documents required in [New Rule I]; and

(b) an actuarial certification consisting of at least the following:

(i) 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;

(ii) a statement that the policy design and coverage provided have been reviewed and taken into consideration;

(iii) a statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;

(iv) a complete description of the basis for contract reserves that are anticipated to be held under the form, to include:

(A) sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held;

(B) a statement that the assumptions used for reserves contain reasonable margins for adverse experience;

(C) a statement that the net valuation premium for renewal years does not increase, except for attained-age rating where permitted; and

(D) 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 such a statement cannot be made, a complete description of the situations where this does not occur:

(I) an aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship;

(II) if the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under (3), based on a standard age distribution.

(v) 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

(vi) a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.

(3) The commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums. The actuarial demonstration shall include:

(a) either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and credible data from other studies, or both; and

(b) in the event the commissioner asks for additional information under this provision, the period in (2), does not include the period during which the insurer is preparing the requested information.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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NEW RULE III PREMIUM RATE SCHEDULE INCREASES (1) Except as provided in (2), this rule applies to any long-term care policy issued in this state on or after July 1, 2008.

(2) For policies issued on or after the effective date of this amended rule under a group long-term care insurance policy as defined in 33-22-1107(5), MCA, which policy was in force at the time this amended rule became effective, the provisions of this rule shall apply on the policy anniversary following January 1, 2009.

(3) An issuer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the commissioner at least 30 days prior to the notice to policyholders and shall include:

(a) information required by [New Rule I];

(b) certification by a qualified actuary that:

(i) 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; and

(ii) the premium rate filing is in compliance with the provisions of this rule.

(c) an actuarial memorandum justifying the rate schedule change request that includes:

(i) 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, unless the rate increase is an exceptional increase;

(C) the projections shall demonstrate compliance with (4); and

(D) for exceptional increases the projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase;

(I) in the event the commissioner determines, as provided in ARM 6.6.3102(4)(d) that offsets may exist, the issuer shall use appropriate net projected experience;

(ii) disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;

(iii) 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;

(iv) a statement that policy design, underwriting, and claims adjudication practices have been taken into consideration;

(v) in the event that it is necessary to maintain consistent premium rates for new business premium rate schedules, except for differences attributable to benefits, unless sufficient justification is provided to the commissioner; and

(vi) sufficient information for review of the premium rate schedule increase by the commissioner.

(4) All premium rate schedule increases shall be determined in accordance with the following requirements:

(a) exceptional increases shall provide that 70% of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

(b) premium rate schedule increases shall be calculated so 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:

(i) the accumulated value of the initial earned premium times 58%;

(ii) 85% of the accumulated value of prior premium rate schedule increases on an earned basis;

(iii) the present value of future projected initial earned premiums times 58%; and

(iv) 85% of the present value of future projected premiums not in (4)(b)(iii) on an earned basis.

(c) in the event that a policy form has both exceptional and other increases, the values in (4)(b)(ii) and (4)(b)(iv), will also include 70% for exceptional rate increase amounts; and

(d) all present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in 33-2-514, MCA. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages.

(5) For each rate increase that is implemented, the issuer shall file for review by the commissioner updated projections, as defined in (3)(c)(i), 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 if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in (12), the projections required by this rule shall be provided to the policyholder in lieu of filing with the commissioner.

(6) If any premium rate in the revised premium rate schedule is greater than 200% of the comparable rate in the initial premium schedule, lifetime projections, as defined in (3)(c)(i), shall be filed for review by the commissioner every five years following the end of the required period in (5). For group insurance policies that meet the conditions in (12), the projections required by (6) shall be provided to the policyholder in lieu of filing with the commissioner.

(7) 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 (4), the commissioner may require the insurer to implement any of the following:

(a) premium rate schedule adjustments; or

(b) other measures to reduce the difference between the projected and actual experience.

(i) In determining whether the actual experience adequately matches the projected experience, consideration should be given to (3)(c)(v), if applicable.

(8) if the majority of the policies to which the increase is applicable are eligible for the contingent benefit upon lapse, the issuer shall file:

(a) a plan, subject to commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the commissioner may impose the condition in (9); and

(b) the original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to (4), had the greater of the original anticipated lifetime loss ratio or 58% been used in the calculations described in (4)(b)(i) and (iii).

(9) For a rate increase filing that meets the criteria in (9)(b)(i), (ii), and (iii), the commissioner shall review, for all policies included in the filing:

(a) the projected lapse rates and past lapse rates during the twelve months following each increase to determine if significant adverse lapsation has occurred or is anticipated.

(b) the following criteria triggers a lapsation review:

(i) the rate increase is not the first rate increase requested for the specific policy form or forms;

(ii) the rate increase is not an exceptional increase; and

(iii) the majority of the policies to which an increase is applicable are eligible for the contingent benefit upon lapse.

(c) in the event significant adverse lapsation has occurred, is anticipated in the filing or is evidenced in the actual results as presented in the updated projections provided by the issuer following the requested rate increase, the commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the commissioner may require the issuer to offer, without underwriting to all in force insureds subject to the rate increase, the option to replace existing coverage with one or more reasonably comparable products being offered by the issuer or its affiliates.

(i) The offer shall:

(A) be subject to the approval of the commissioner;

(B) be based on actuarially sound principles, but not be based on attained age; and

(C) provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.

(d) the issuer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:

(i) the maximum rate increase determined based on the combined experience; and

(ii) the maximum rate increase determined based only on the experience of the insureds originally issued the form plus 10%.

(10) If the commissioner determines that the issuer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the commissioner may, in addition to the provisions of (9), prohibit the issuer from either of the following:

(a) filing or marketing comparable coverage for a period of up to five years; or

(b) offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.

(11) Sections (1) through (10) shall not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in ARM 6.6.3102(6), if the policy complies with all of the following provisions:

(a) the interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

(b) the portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following:

(i) 30-20-201 et seq., MCA; and

(ii) 30-20-501 et seq., MCA.

(c) the policy meets the disclosure requirements of 33-22-1123 and 33-22-1124, MCA;

(d) the portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:

(i) policy illustrations as required by ARM 6.6.701 et seq.; and

(ii) disclosure requirements in ARM 6.6.805.

(e) an actuarial memorandum is filed with the insurance department that includes:

(i) a description of the basis on which the long-term care rates were determined;

(ii) a description of the basis for the reserves;

(iii) a summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

(iv) a description and a table of each actuarial assumption used. For expenses, an issuer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

(v) a description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

(vi) the estimated average annual premium per policy and the average issue age;

(vii) a statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

(viii) a description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.

(12) [New Rule III(7) and (9)] do not apply to group insurance policies defined in 33-22-1107(5), MCA, where:

(a) the policies insure 250 or more persons and the policyholder has 5,000 or more eligible employees of a single employer; or

(b) the policyholder, and not the certificateholder, pays a material portion of the premium that shall not be less than 20% of the total premium for the group in the calendar year prior to the year a rate increase is filed.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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NEW RULE IV PROHIBITION AGAINST PREEXISTING CONDITIONS AND PROBATIONARY PERIODS IN REPLACEMENT POLICIES (1) If a long-term care insurance policy replaces another long-term care policy, the replacing issuer shall waive any time periods applicable to preexisting conditions and probationary periods in the new long-term care policy for similar benefits to the extent that similar exclusions have been satisfied under the original policy.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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NEW RULE V AVAILABILITY OF NEW SERVICES OR PROVIDERS (1) An issuer shall notify policyholders of the availability of a new long-term policy series that provides coverage for new long-term care services or providers, material in nature, and not previously available through the issuer to the general public. The notice shall be provided within twelve months of the date the new policy series is made available for sale in Montana.

(2) Notwithstanding (1), notification is not required for any policy issued prior to the effective date of this rule or to any policy issued prior to the effective date of this rule or to any policyholder or certificateholder who is currently eligible for benefits within an elimination period or on a claim, or who previously had been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The issuer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

(3) The issuer shall make the new coverage available in one of the following ways:

(a) by adding a rider to the existing policy and charging a separate premium for the new rider based on the insured's attained age;

(b) by exchanging the existing policy for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy. The premium credits shall be based on premiums paid or reserves held for the prior policy;

(c) by exchanging the existing policy for a new policy in which consideration for past insured status shall be recognized by setting the premium for the new policy at the issue age of the policy being exchanged. The cost for the new policy may recognize the difference in reserves between the new policy and the original policy; or

(d) by an alternative program developed by the issuer that meets the intent of this rule if the program is filed with and approved by the commissioner.

(4) An issuer is not required to notify policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this section, "limited distribution channel" means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public. Policyholders that purchased such a new proprietary policy shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers, material in nature, is made available to that limited distribution channel.

(5) Policies issued pursuant to this rule shall be considered exchanges and not replacements. These exchanges shall not be subject to ARM 6.6.3109 and 6.6.3118, and the reporting requirements of ARM 6.6.3109A(1) through (5).

(6) Where the policy is offered through an employer, labor organization, professional, trade, or occupational association, the required notification in (1) shall be made to the offering entity. However, if the policy is issued to a group defined in 33-22-1107, MCA, the notification shall be made to each certificateholder.

(7) Nothing in this rule prohibits an issuer from offering any policy, rider, or coverage change to any policyholder or certificateholder. However, upon request, any policyholder may apply for currently available coverage that includes the new services or providers. The issuer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

(8) This rule does not apply to life insurance policies or riders containing accelerated long-term care benefits.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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NEW RULE VI RIGHT TO REDUCE COVERAGE AND LOWER PREMIUMS (1) Every long-term care insurance policy shall include:

(a) a provision that allows the policyholder or certificateholder to reduce coverage and lower the policy premium in at least one of the following ways:

(i) reducing the maximum benefit; or

(ii) reducing the daily, weekly, or monthly benefit amount.

(b) the issuer may also offer other reduction options that are consistent with the policy design or the carrier's administrative processes.

(2) The provision shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage.

(3) The age to determine the premium for the reduced coverage shall be based on the age used to determine the premiums for the coverage currently in force.

(4) The issuer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable.

(5) If a policy is about to lapse, the issuer shall provide a written reminder to the policyholder or certificateholder of his or her right to reduce coverage and premiums in the notice required by ARM 6.6.3104A(1)(c).

(6) This rule does not apply to life insurance policies or riders containing accelerated long-term care benefits.

(7) This rule applies to any long-term care policy issued in Montana on or after January 1, 2009.

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AUTH: 33-1-313, 33-22-1121, MCA

IMP: 33-22-1101, 33-22-1102, 33-22-1103, 33-22-1107, 33-22-1108, 33-22-1111, 33-22-1112, 33-22-1113, 33-22-1114, 33-22-1115, 33-22-1116, 33-22-1117, 33-22-1119, 33-22-1120, 33-22-1121, MCA

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STATEMENT OF REASONABLE NECESSITY: In 2006, the U.S. Congress passed the Deficit Reduction Act (DRA), which in part enabled the states to develop long-term care partnership programs that may be able to access federal Medicaid matching funds in a different way. In 2005, the Montana Legislature adopted a statute that enabled the Montana Department of Public Health and Human Services to implement a Long Term Care Partnership program. In order to move forward with a state plan amendment to be filed with the U.S. Department of Health, the DRA requires that a state must first adopt updated versions of the National Association of Insurance Commissioner's (NAIC) Long Term Care Insurance Model Act and Model Regulations. In 2007 the Montana Legislature adopted the changes to the Long Term Care Insurance Act in Title 33, chapter 22, part 11, Montana Code Annotated in conformity with the most current version of the NAIC Long Term Care Insurance Model Act. These amendments and additions to the Montana Long Term Care Insurance Rules reflect the most recent version of the NAIC Long Term Care Insurance model regulations. In addition, these changes to the rules allow Montana to be more uniform because most other states have already adopted the NAIC model regulations regarding Long Term Care Insurance. Therefore, Montana consumers will have the same protections as consumers in other states, and insurers will have uniform rules to follow.

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Changes and additions to ARM 6.6.3101 PURPOSE AND SCOPE, 6.6.3102 DEFINITIONS, 6.6.3103 POLICY DEFINITIONS, 6.6.3104 POLICY PRACTICES AND PROVISIONS reflect mainly technical additions and changes to the NAIC model regulations and incorporate new definitions and terms that are needed to support the New Rules proposed in this notice.�

Amendments to ARM 6.6.3104A UNINTENTIONAL LAPSE, 6.6.3106 PROHIBITION AGAINST POST-CLAIMS UNDERWRITING, 6.6.3107 MINIMUM STANDARDS FOR HOME HEALTH CARE BENEFITS IN LONG-TERM CARE INSURANCE POLICIES, 6.6.3108 REQUIREMENT TO OFFER INFLATION PROTECTION, 6.6.3109 REQUIREMENTS FOR APPLICATION FORMS AND REPLACEMENT COVERAGE, 6.6.3109B LICENSING, 6.6.3110 DISCRETIONARY POWERS OF COMMISSIONER OF INSURANCE, 6.6.3111 RESERVE STANDARDS, 6.6.3112 LOSS RATIO, 6.6.3113 FILING REQUIREMENT, 6.6.3114 STANDARD FORMAT OUTLINE OF COVERAGE, 6.6.3115 REQUIREMENT TO DELIVER SHOPPER'S GUIDE, and 6.6.3117 STANDARDS FOR MARKETING reflect minor additions, and corrections contained in the NAIC model act or changes in style required by the Montana Secretary of State.

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Additions to ARM 6.6.3105 REQUIRED DISCLOSURE PROVISIONS improve the disclosures required to be given to consumers who are purchasing long-term care insurance products and clarify disclosures required for qualified long-term care insurance products. Changes to ARM 6.6.3109A add definitions that clarify the reporting requirements. Additions to ARM 6.6.3118 SUITABILITY STANDARDS clarify that suitability standards must include an analysis of the consumer's ability to pay, goals and needs, and the value and benefit of any existing insurance. Additions and changes to ARM 6.6.3119 NONFORFEITURE BENEFIT REQUIREMENT detail additional circumstances that trigger when a consumer is entitled to the benefits of a contingent benefit on lapse, pursuant to the NAIC model regulation. Consumers need options when a substantial premium increase occurs. Substantial premium increase is defined in the changes. ARM 6.6.3120 ADOPTION OF FORMS was previously contained in an appendix to the rules and has now been incorporated into the rule itself.

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NEW RULE I REQUIRED DISCLOSURE OF RATING PRACTICES TO CONSUMERS is part of the current NAIC model regulation and is necessary to fully inform consumers at the time they purchase a new long-term care insurance policy of the rating practices of that insurer and also to provide information to the consumer concerning the amount of rate increases they may face in the future.

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NEW RULE II INITIAL FILING REQUIREMENTS is contained in the current NAIC model regulation and requires the insurer to file the disclosure statement contained in NEW RULE I and an actuarial certification attesting that the rates charged for a particular policy form are actuarially sound and detailing certain information that must be provided in order to justify to the rates.

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NEW RULE III PREMIUM RATE SCHEDULE INCREASES is contained in the current NAIC model regulation and requires the insurer to provide a notice of a pending premium increase to the commissioner at least 30 days prior to the notice to policyholders and details the information required to be included in that notice, including actuarial certification and justification. This rule protects consumers from unreasonable and unjustified premium increases.

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NEW RULE IV PROHIBITION AGAINST PREEXISTING CONDITIONS AND PROBATIONARY PERIODS IN REPLACEMENT POLICIES is contained in the current NAIC model regulation and prevents preexisting condition exclusions under certain circumstances when a consumer is replacing one long-term care policy with another long-term care policy.

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NEW RULE V AVAILABILITY OF NEW SERVICES OR PROVIDERS is contained in the current NAIC model regulation and requires the insurer to notify policyholders of the availability of new types of long-term care services or providers material in nature and not previously available to the general public within 12 months after the date the new policy series is made available for sale in Montana. It also details how the new coverage shall be made available to existing policyholders. This rule protects consumers by allowing them to update their previously purchased long-term care policies with more modern coverage.

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NEW RULE VI RIGHT TO REDUCE COVERAGE AND LOWER PREMIUMS is contained in the current NAIC model regulation and allows policyholders to reduce their coverage in order to lower their premiums. This option is available to consumers so that they will not lose their coverage entirely if their financial circumstances change or if the premium otherwise becomes too expensive.

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It is necessary to repeal ARM 6.6.3116 because a separate rule just to establish an effective date is not required.

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6. Concerned persons may submit their data, views, or arguments concerning the proposed actions either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to: Christina L. Goe, Chief Legal Counsel, State Auditor's Office, 840 Helena Ave., Helena, Montana 59601; telephone (406) 444-5237; fax (406) 444-3497; or e-mail [email protected], and must be received no later than 5:00 p.m., March 13, 2008.

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7. Christina L. Goe, Chief Legal Counsel, has been designated to preside over and conduct this hearing.

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8. The department maintains a list of concerned persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Such written request may be mailed or delivered to Darla Sautter, State Auditor's Office, 840 Helena Ave., Helena, Montana, 59601, or may be made by completing a request form at any rules hearing held by the department.

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9. An electronic copy of this Proposal Notice is available through the Secretary of State's web site at http://sos.mt.gov/ARM/Register. The Secretary of State strives to make the electronic copy of the Notice conform to the official version of the Notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the Notice and the electronic version of the Notice, only the official printed text will be considered. In addition, although the Secretary of State works to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

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10. The bill sponsor notice requirements of 2-4-302, MCA, apply and have been fulfilled. The bill sponsor was notified by letter dated January 25, 2008, sent postage prepaid by the USPS.

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/s/ Carol Roy����������������������������������������������� /s/ Christina L. Goe

Carol Roy��������������������������������������������������� Chief Legal Counsel

Rule Reviewer���������������������������������������������State Auditor's Office

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Certified to the Secretary of State February 4, 2008.