N.J. Admin. Code § 11:4-34.11

Current through Register Vol. 56, No. 24, December 18, 2024

Section 11:4-34.11 - Requirement to offer inflation protection

(a) No carrier may offer a long-term care insurance policy unless the carrier also offers to the policyholder, in addition to any other inflation protection, the option to purchase a policy that provides for benefit levels to increase with benefit maximums or reasonable durations which are meaningful to account for reasonably anticipated increases in the costs of long-term care services covered by the policy. Carriers must offer to each policyholder, or certificate holder where required, at the time of purchase, the option to purchase coverage with an inflation protection feature no less favorable than one of the following:

1. Benefit levels increase annually in a manner so that the increases are compounded annually at a rate not less than five percent;

2. Guarantees the insured individual the right to periodically increase benefit levels without providing evidence of insurability or health status so long as the option for the previous period has not been declined. The amount of the additional benefit shall be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least five percent for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made; or

3. Covers a specified percentage of actual or usual, customary and reasonable charges and does not include a maximum specified indemnity amount or limit.

(b) Where the policy is issued to a group, the required offer in subsection (a) above shall be made to the group policyholder; except, if the policy is issued to a group set forth in paragraph 2 of the definition of "group long-term care insurance," other than to a continuing care retirement community, the offering shall be made to each proposed certificateholder.

(c) The offer in (a) above shall not be required of life insurance policies, certificates and riders nor of annuity contracts and riders containing only accelerated long-term care benefits.

(d) Carriers shall include the following information in or with the outline of coverage:

1. A graphic comparison of the benefit levels of a policy that increases benefits over the policy period with a policy that does not increase benefits. The graphic comparison shall show benefit levels over at least a 20-year period; and

2. Any expected premium increases or additional premiums to pay for automatic or optional benefit increases. A carrier may use a reasonable hypothetical, or a graphic demonstration, for the purposes of this disclosure.

(e) Inflation protection benefit increases under a policy or certificate that contains these benefits shall continue without regard to an insured's age, claim status or claim history, or the length of time the person has been insured under the policy.

(f) An offer of inflation protection that provides for automatic benefit increases shall include an offer of a premium that the carrier expects to remain constant. The offer shall disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.

(g) Inflation protection as provided in (a) 1 above shall be included in a long-term care insurance policy unless a carrier obtains a rejection of inflation protection signed by the policyholder as required in this subsection. The rejection may be either in the application or on a separate form. The rejection shall be considered a part of the application and shall state: I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this [policy][certificate] with and without inflation protection. Specifically, I have reviewed Plans ______, and I reject inflation protection.

N.J. Admin. Code § 11:4-34.11