Section R590-285-22 - Nonforfeiture Benefit Requirement(1) To comply with the option to offer a nonforfeiture benefit pursuant to the provisions of Section 31A-22-2005:(a) a policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers, and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the benefit described in Subsection R590-285-22(4); and(b) the offer shall be in writing if the nonforfeiture benefit is not otherwise described in the outline of coverage or other materials given to the prospective policyholder.(2) Should the offer made under Section 31A-22-2005 be rejected, the insurer shall provide the contingent benefit upon lapse described in this section. Even if this offer is accepted for a policy with a fixed or limited premium paying period, the contingent benefit on lapse in Subsection R590-285-22(3)(d) shall still apply.(3)(a) After rejection of the offer made under Section 31A-22-2005, for individual and group policies without nonforfeiture benefits, the insurer shall provide a contingent benefit upon lapse.(b) In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificateholder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.(c) A contingent benefit on lapse shall be triggered every time an insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding 50% of the insured's initial annual premium. Unless otherwise required, policyholders shall be notified at least 45 days prior to the due date of the premium reflecting the rate increase.(d) On or before the effective date of a substantial premium increase as defined in R590-285-22(3)(c), the insurer shall:(i) offer to reduce policy benefits provided by the current coverage consistent with the requirements of Section R590-285-21 so that required premium payments are not increased;(ii) offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of Subsection R590-285-22(4). This option may be elected at any time during the 45-day period referenced in Subsection R590-285-22(3)(c); and(iii) notify the policyholder or certificateholder that a default or lapse at any time during the 45-day period referenced in Subsection R590-285-22(3)(c) shall be deemed to be the election of the offer to convert in Subsection R590-285-22(3)(d)(ii).(4) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with Subsection R590-285-22(3)(c), are described in this subsection. (a) For purposes of this subsection, the nonforfeiture benefit shall be of a shortened benefit period providing paid-up limited long-term care insurance coverage after lapse. The same benefits, amounts, and frequency in effect at the time of lapse but not increased thereafter, will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in Subsection R590-285-22(4)(c).(b) 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 insurer 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. In either event, the calculation of the nonforfeiture credit is subject to the limitation of Subsection R590-285-22(5).(c) The nonforfeiture benefit shall begin no 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.(d) Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate.(5) All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid-up status will not exceed the maximum benefits that would be payable if the policy or certificate had remained in premium paying status.(6) There shall be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies.(7) To determine whether contingent nonforfeiture upon lapse provisions are triggered under Subsection R590-285-22(3)(c) or (d), a replacing insurer that purchased or otherwise assumed a block or blocks of limited long-term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer.Utah Admin. Code R590-285-22
Adopted by Utah State Bulletin Number 2021-05, effective 2/23/2021