Approval and solicitation of long-term care policies for continuing care retirement communities
July 1, 1994
Effective immediately, insurance companies are permitted to solicit group long-term care policies to Continuing Care Retirement Communities (CCRC's). Only those companies, which are interested in soliciting a group long-term care product to CCRC's, are subject to this Notice.
Pursuant to Section 621.2 (40 P.S. Section 756.2) of the Insurance Company Laws, CCRC's were not considered a valid group. However, by use of the Commissioner's discretionary powers allowed by Section 621.2(5) (40 P.S. Section 756.2), the Department now recognizes CCRC's as a group, and thus, an approved group long-term care policy may be issued to a CCRC.
For the filing of group long-term care policies and continued administration of these same policies, the policy must be an indemnity policy. Therefore, a coordination of benefits is not permitted, an assignment of benefits provision will not be permitted, and the payment of claims must go directly to the insured. Additionally, the product may be individually underwritten when sold to the residents, however underwriting is not permitted when sold to a Type A facility, and no commissions or compensations are permitted to be given to or requested by the CCRC for being the policyholder, for administrative services, or for endorsing the product.
The following shall he complied with for solicitation and issuance of a group long-term care policy to a CCRC:
When solicited and issued to a Type A facility (all-inclusive contracts), the group long-term care policy can only be issued to the facility for purposes of reducing the facility's risk of providing long-term care services and obtaining insurance on the universe of residents. No certificates will he issued to the residents.
When solicited and issued to a Type B facility (modified contracts), the policy should be issued as a supplement ("carve-out") to, but should not duplicate, the benefits provided under the CCRC contract. The benefits under the policy should provide continuous coverage when the services provided by the facility are exhausted. For example, if the facility provides 30 days of service, the group long-term care policy should provide a 30-day elimination period.
When solicited and issued to a Type C facility (fee-for-service), the policy should also be a supplement for out-of-pocket expenses incurred for benefits not provided under the CCRC contract. Generally, a Type C facility does not provide any services in relation to long term care; therefore, the policy would be administered as a "traditional" group long-term care policy.
When a company intends to solicit a group long-term care policy to a CCRC, it must be disclosed in the letter of submission that accompanies the form filing. The company must include separate insert pages for the policy form for each "type" of facility using the language contained in Attachment A.
Furthermore, the provisions of this Notice are intended it be strictly construed. The use of any other insert pages or noncompliance with the sections of this Notice will not be acceptable and hereunder constitutes a violation of Section 354 of The Insurance Company Law of 1921, Act of May 7, 1921, P.L. 682. Any question regarding this Notice should be addressed by contacting Roslyn Rhodes at (717) 783-2104.
Deputy Commissioner of Insurance