| (a) An outline of coverage must be delivered to an
applicant for an individual or group long-term care insurance policy
or certificate at the time of initial solicitation through means which
prominently direct the attention of the recipient to the document
and its purpose. In the case of agent solicitations, the outline of
coverage must be delivered prior to the presentation of an application
or enrollment form. In the case of direct-response solicitations,
the outline of coverage must be delivered in conjunction with any
application or enrollment form. The outline of coverage must comply
with the following standards and standard format. The contents of
the outline of coverage must include the following prescribed text.
(1) The outline of coverage must be a freestanding
document, in no smaller than 12-point type.
(2) The outline of coverage must contain no material
of an advertising nature.
(3) Text which is capitalized in the standard format
outline of coverage must be capitalized. Text which is underscored
in the standard format outline of coverage may be emphasized by boldfacing
or by other means which provide prominence equivalent to such underscoring.
(4) Use of text and sequence of text of the standard
format outline of coverage is mandatory, unless otherwise specifically
indicated.
(b) The outline of coverage must be in the following
format.
Attached Graphic
(1) POLICY DESIGNATION. This policy is (an individual
policy of insurance) (a group policy which was issued in (indicate
jurisdiction in which group policy was issued)).
(2) PURPOSE OF OUTLINE OF COVERAGE. This outline of
coverage provides a very brief description of some of the important
features of your policy. This is not the insurance contract and only
the actual policy provision will control the rights and obligations
of the parties to it. The policy itself sets forth in detail those
rights and obligations applicable to both you and your insurance company.
It is very important, therefore, 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" provisions of the policy. State that the person to whom the
policy is issued is permitted to return the policy within 30 days
(or more, if so provided for in the policy) of its delivery to that
person, and that in the instance of such return the premium will be
fully refunded.)
(B) (Include a statement that the policy 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 a
description of them.)
(4) MEDICARE SUPPLEMENT INSURANCE DISCLAIMER. THIS
IS NOT MEDICARE SUPPLEMENT COVERAGE. If you are eligible for Medicare,
review the Guide to Health Insurance for People with Medicare available
from the insurance company.
(A) (For agents) Neither (insert company name) nor
its agents represent Medicare, the federal government, or any state
government.
(B) (For direct response) (insert company name) is
not representing Medicare, the federal government, or any state government.
(5) LONG-TERM CARE COVERAGE. Long-term care insurance
is designed to provide coverage for necessary or medically necessary
diagnostic, preventive, therapeutic, curing, treating, mitigating,
and rehabilitative services, and 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. Coverage
is provided for the benefits outlined in paragraph (6) of this subsection.
The benefits described in paragraph (6) of this subsection may be
limited by the limitations and exclusions in paragraph (7) of this
subsection.
(6) BENEFITS PROVIDED BY THIS POLICY.
(A) (Describe covered services and benefits, related
deductible(s), waiting periods, elimination periods, and benefit maximums.)
(B) (Describe institutional benefits, by skill level.)
(C) (Describe noninstitutional benefits, by skill level.)
(D) Eligibility for Payment of Benefits (NOTE: This
portion of the outline of coverage must include an explanation of
any instance in which provision of benefits is predicated upon the
insured's having met a specific standard of eligibility for that benefit
under the terms of the policy. The procedural requirements must be
stated for such screening for the provision of benefits. The inability
to perform activities of daily living and the impairment of cognitive
ability must be used to measure an insured's eligibility for long-term
care and must be defined and described as part of the outline of coverage
in conformance with the provisions of §3.3804 of this title (relating
to Definitions). The outline of coverage also must specify when an
attending physician or other specified person must certify that the
insured has a certain level of functional dependency in order for
the insured to be eligible for benefits. If the policy or certificate
contains provisions allowing for additional benefits (such as waiver
of premiums, respite care, etc.) upon the occurrence of a certain
contingency or contingencies, this paragraph also must delineate each
such benefit and specify the criteria for eligibility for each benefit.
(7) LIMITATIONS AND EXCLUSIONS. (State the principal
exclusions, reductions, limitations, restrictions, or other qualifications
to the payments of benefits contained in the policy, including:
(A) preexisting conditions;
(B) noneligible facilities/providers;
(C) noneligible levels of care (e.g., unlicensed providers,
care or treatment provided by a family member, etc.);
(D) exclusions/exceptions; and
(E) limitations.) 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 such a guarantee is present, whether additional
underwriting or health screening will be required, the frequency and
amounts of the upgrade options, and any significant restrictions or
limitations; and
(E) whether any additional premium charge will be imposed,
and how that is to be calculated.)
(9) TERMS UNDER WHICH THE (POLICY) (CERTIFICATE) MAY
BE CONTINUED IN FORCE AND IS CONTINUED. (For long-term care insurance
policies or certificates, describe one of the following permissible
policy renewability provisions.)
(A) (Policies and certificates which are guaranteed
renewable must contain the following statement:)
(i) 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 as long as you
pay your premiums on time. (Company Name) cannot change any of the
terms of your policy on its own, except that, in the future, IT MAY
INCREASE THE PREMIUM YOU PAY.
(ii) (Policies and certificates that are noncancellable
must contain the following statement:) RENEWABILITY: THIS POLICY (CERTIFICATE)
IS NONCANCELLABLE. This means that you have the right, subject to
the terms of your policy, 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 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, a specific description of
continuation/ conversion provisions applicable to the certificate
and group policy); and
(C) (a description of waiver of premium provisions
or a statement that there are no such provisions.)
(10) ALZHEIMER'S DISEASE, OTHER ORGANIC BRAIN DISORDERS,
AND BIOLOGICALLY BASED BRAIN DISEASES/SERIOUS MENTAL ILLNESS. (State
that the policy provides coverage for insureds who meet the eligibility
requirements explained above in paragraph 6 of this subsection because
of a clinical diagnosis of Alzheimer's disease or related degenerative
illnesses and illnesses involving dementia, or due to biologically
based brain diseases/serious mental illnesses, including schizophrenia,
paranoid and other psychotic disorders, bipolar disorders (mixed,
manic, and depressive); major depressive disorders (single episode
or recurrent); and schizo-affective disorders (bipolar or depressive).
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.
In the event the total premium for the policy is different from the
annual premium, then the total premium also must be stated. Initial
policy fees must be stated separately.)
(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.)
(C) (This paragraph also must include a statement of
the policy grace period.)
(12) TEXAS DEPARTMENT OF INSURANCE'S CONSUMER HELP
LINE. An insurer must include notification that the prospective insured
may call the Texas Department of Insurance's Consumer Help Line at
1-800-252-3439 for agent, company, and any other insurance information,
and 1-800-599-SHOP to order publications related to long-term care
coverage, and the Texas Health and Human Services Commission at (1-800-252-9240
or current number if different) to receive counseling regarding the
purchase of long-term care or other health care coverage.
(13) DENIAL OF APPLICATION. A long-term care insurer
must state that within 30 days of denial of an application, it will
refund any premiums paid by a long-term care applicant.
(14) OFFER OF INFLATION PROTECTION. Insurers must include
the information set out in subparagraphs (A) and (B) of this paragraph
regarding the offer of inflation protection.
(A) A graphic comparison of the benefit levels of a
policy and certificate, if applicable, that increases benefits due
over the policy interval with a policy that does not increase benefits,
depicting benefit levels over at least a 20-year period, must be provided.
(B) A disclosure of any expected premium increases
or additional premiums to pay for automatic or optional benefit increases
must be made. If premium increases or additional premiums will be
based on the attained age of the applicant at the time of the increase,
the insurer must also disclose the magnitude of the potential premiums
the applicant would need to pay at ages 75 and 85 for benefit increases.
An insurer may use a reasonable hypothetical or a graphic demonstration
for the purposes of this disclosure.
(15) OFFER OF NONFORFEITURE BENEFITS. Insurers must
include the information set out in subparagraphs (A), (B), and (C)
of this paragraph regarding the offer of nonforfeiture benefits.
(A) A complete and clear explanation of each nonforfeiture
option being offered, including an actual numerical example.
Attached Graphic
(B) Disclosure of the premium and percentage increase
in premium associated with each of the nonforfeiture benefits offered.
(C) Disclosure that if the nonforfeiture offer is rejected
that a contingent benefit upon lapse will be provided and a description
of such benefit.
(16) DISCLOSURE REGARDING FEDERAL TAX TREATMENT OF
LONG-TERM CARE INSURANCE POLICY.
(A) Policies intended to be qualified long-term care
insurance policies. Include disclosure language substantially similar
to the following: "This policy is intended to be a qualified long-term
care contract as defined by the Internal Revenue Code of 1986, §7702B(b).
There may be tax consequences associated with the purchase of a qualified
long-term care insurance contract, such as the tax deductibility of
premiums and the exclusion from taxable income of benefits. The prospective
insured is urged to consult with a qualified tax advisor."
(B) Policies which are not intended to be a qualified
long-term care insurance contract. Include disclosure language substantially
similar to the following: "This policy is not intended to be a qualified
long-term care insurance contract as defined by the Internal Revenue
Code of 1986, §7702B(b). This policy will not qualify the insured
for the favorable tax treatment provided for in the Internal Revenue
Code of 1986, §7702B. The prospective insured is urged to consult
with a qualified tax advisor." Additionally, the insurer must disclose
the criteria which result in the policy or certificate not being classified
as a qualified long-term care insurance contract.
(17) ADDITIONAL FEATURES.
(A) (Indicate if medical underwriting is used.)
(B) (Describe other important features such as unintentional
lapse as provided by §3.3841 of this title (relating to Unintentional
Lapse and Reinstatement).
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