N.J. Admin. Code § 11:4-34.4

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

Section 11:4-34.4 - Policy practices and provisions

(a) Renewability: The terms "guaranteed renewable" and "noncancellable" shall not be used in any individual long-term care insurance policy without further explanatory language in accordance with the disclosure requirements of N.J.A.C. 11:4-34.6 and 34.7.

1. A policy issued to an individual shall not contain renewal provisions other than "guaranteed renewable" or "noncancellable."

2. The term "guaranteed renewable" may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and when the carrier has no unilateral right to make any change in any provision of the policy while the insurance is in force, and cannot decline to renew, except that rates may be revised by the carrier on a class basis.

3. The term "noncancellable" may be used 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 carrier has no right to unilaterally make any change in any provision of the policy or in the premium rate.

4. The term "level premium" may only be used when the carrier does not have the right to change the premium.

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

(b) Limitations and Exclusions: A policy may not be delivered or issued for delivery in this State as long-term care insurance if the policy limits or excludes coverage for long-term care services by type of illness, treatment, medical condition or accident, except as follows:

1. Preexisting conditions or diseases: The policy or certificate shall not exclude coverage for a loss or confinement which is the result of a preexisting condition if that loss or confinement begins later than six months following the effective date of coverage of an insured person.

2. Mental or nervous disorders; however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer's Disease;

3. Alcoholism and drug addiction;

4. Illness, treatment or medical condition arising out of:

i. War or act of war (whether declared or undeclared) as permitted by N.J.A.C. 11:22-6;

ii. Participation in a riot or insurrection, or the commission of or attempt to commit a felony;

iii. Service in the armed forces or units auxiliary thereto as referenced in N.J.A.C. 11:22-6;

iv. Suicide (sane or insane), attempted suicide or intentionally self- inflicted injury; or

v. Aviation (this exclusion applies only to non-fare-paying passengers);

5. Treatment provided in a government facility (unless otherwise required by law), services for which benefits are available under Medicare or other governmental program (except Medicaid), any state or Federal workers' compensation, employer's liability or occupational disease law, or any motor vehicle no-fault law, services provided by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance;

6. 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; and

7. This subsection is not intended to prohibit exclusions and limitations for services provided outside of the United States.

(c) Extension of Benefits: Termination of long-term care insurance shall be without prejudice to any benefits payable for continuous loss which began while the long-term care insurance was in force and continues without interruption after termination of the long-term care insurance. Such extension of benefits beyond the period the long-term care insurance was in force may be predicated upon the insured's continuous inability to perform activities of daily living or cognitive impairment, and may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits, and may be subject to any policy waiting period, and all other applicable provisions of the policy.

(d) Continuation or Conversion: Group long-term care insurance issued in this State on or after December 19, 2005 shall provide covered individuals with a basis for continuation or conversion of coverage.

1. For the purposes of this section, "a basis for continuation of coverage" means a policy provision that maintains coverage under the existing in force group policy when the coverage would otherwise terminate and which is subject only to the continued timely payment of premiums and/or contributions when due.

2. For the purposes of this section, "a basis for conversion of coverage" means a policy provision that states that an individual whose coverage under the in force group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy (and any group policy which it replaced) for at least six months immediately prior to termination, shall be entitled to the issuance of a conversion policy by the carrier under whose group policy he or she is or was covered, without evidence of insurability.

3. For the purposes of this section, "conversion policy" means an individual policy of long-term care insurance providing benefits identical to or benefits determined by the Commissioner to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made.

4. Written application for the conversion policy shall be made and the first premium due, if any, shall be paid as directed by the carrier not later than 31 days after termination of coverage under the group policy. The conversion policy shall be issued effective on the day following the termination of coverage under the group policy, and shall be renewable annually.

5. Unless the group policy from which conversion is made replaced previous group coverage, the premium for the conversion policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. Where the group policy from which conversion is made replaced previous group coverage, the premium for the conversion policy shall be calculated on the basis of the insured's age at inception of coverage under the prior group policy.

6. Continuation of coverage or issuance of a conversion policy shall be mandatory, except where:

i. Termination of group coverage resulted from an individual's failure to make any required payment of premium or contribution when due; or

ii. The terminating coverage is replaced, not later than 31 days after termination, by group coverage effective on the day following the termination of coverage:

(1) Providing benefits identical to or benefits determined by the Commissioner to be substantially equivalent to or in excess of those provided by the terminating coverage; and

(2) The premium for which is calculated in a manner consistent with the requirements of (d)5 above.

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

8. Notwithstanding any other provision of this section, an 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 upon termination of the qualifying relationship by death or dissolution of marriage.

(e) Discontinuance and Replacement: If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding carrier shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the carrier and premiums charged to persons under the new group policy shall not:

1. Result in an exclusion for preexisting conditions that would have been covered under the group policy being replaced; and

2. Vary or otherwise depend on the individual's health or disability status, claim experience or use of long-term care services.

(f) The purchase of additional coverage shall not be considered a premium rate increase, but for purposes of the calculation required under N.J.A.C. 11:4-34.24, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium. A reduction in benefits shall not be considered a premium change, but for purposes of the calculation required under N.J.A.C. 11:4-34.24, the initial annual premium shall be based on the reduced benefits. The premium charged to an insured shall not increase due to either:

1. The increasing age of the insured at ages beyond 65; or

2. The duration the insured has been covered under the policy.

(g) A policy that provides coverage in addition to long-term care coverage shall separately identify the premium, rate or charge for the long-term care coverage. Where flexible premiums or charges can be applied to purchase long-term care or other coverage, the form must disclose how premiums will be applied, including any options the policyholder has for the application of these premiums and provisions for protection against unintentional lapse of one or the other coverage.

(h) Any long-term care benefit that is provided other than through acceleration of an annuity or life insurance benefit shall contain the required provisions described at N.J.S.A 17B:26-3. N.J.S.A. 17B:26-16 will also apply to provisions respecting the matters set forth therein that are contained in individual long-term care policies. Group long-term care insurance policies shall contain the standard provisions required by N.J.S.A. 17B:27-33. Group and individual annuities and life insurance policies or riders which provide directly or which supplement long-term care insurance shall apply the above cited provision only to the long-term care benefit.

(i) No long-term care policy or certificate shall:

1. Be cancelled, nonrenewed or otherwise terminated on the grounds of the age or the deterioration of the mental or physical health of the insured;

2. Require, for purposes of a restoration of benefits provision, that the period between confinements be more than six months; or

3. Contain a mandatory case management provision.

(j) Annuity contracts and life insurance policies that provide directly or which supplement long-term care insurance shall comply with the statutes and regulations governing individual life insurance, group life insurance, variable contracts and annuities, as applicable.

N.J. Admin. Code § 11:4-34.4

Administrative change, 47 N.J.R. 901(a).