N.J. Admin. Code § 11:4-34.5

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

Section 11:4-34.5 - Unintentional lapse

(a) Each carrier offering long-term care insurance shall, as a protection against unintentional lapse, comply with the following:

1. Notice before lapse or termination.

i. No individual long-term care policy or group certificate shall be issued until the carrier has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium or required contribution, or a written waiver dated and signed by the applicant electing not to designate an additional person to receive notice. The applicant has the right to designate at least one person who is to receive the notice of termination, in addition to the insured. Designation shall not constitute acceptance of any liability by the third party for services provided to the insured. The form used for the written designation must provide space clearly earmarked for listing at least one person. The designation shall include each person's full name and home address. In the case of an applicant who elects not to designate an additional person, the waiver shall state: "Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance for non-payment of premium or required contribution. I understand that notice will not be given until 30 days after a premium is due and unpaid. I elect NOT to designate any person to receive this notice." The carrier shall notify the insured in writing in a clear and conspicuous manner of the right to change this written designation, no less often than once every two years for insureds who have not attained sixty-two and a half years and no less than annually for insureds who have attained age sixty-two and a half years of age.

ii. When the policyholder or certificate holder pays premium for long- term care insurance coverage through a payroll or pension deduction plan, the requirements contained in (a)1; above need not be met until 60 days after the policyholder or certificate holder is no longer on such a payment plan. The application or enrollment form for such policies or certificates shall clearly indicate the payment plan selected by the applicant.

2. Lapse or termination for non-payment of premium. No individual long-term care policy or group certificate shall lapse or be terminated for nonpayment of premium or required contribution unless the carrier, at least 30 days before the effective date of the lapse or termination, has given written notice to the insured and to those persons designated pursuant to (a)1 above, at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice shall be given by first class United States mail, postage prepaid; and notice may not be given until 30 days after a premium or contribution is due and unpaid. Notice shall be deemed to have been given as of five days after the date of mailing.

(b) Restoration of Coverage: In addition to the requirement in (a) above, a long-term care insurance policy or group certificate shall include a provision that provides for restoration of coverage in the event of lapse, if the carrier is provided proof that the policyholder or certificate holder was cognitively impaired or had a loss of functional capacity before a premium or contribution was required to be paid. This option shall be available to the insured if requested within five months after termination and shall allow for the collection of past due premium or contributions, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria for cognitive impairment or the loss of functional capacity contained in the policy and certificate.

N.J. Admin. Code § 11:4-34.5