This bulletin is to remind insurers offering long-term care insurance in Texas of the requirements of the Texas Department of Insurance long-term care rules as amended, effective January 1, 2002. The amendments to 28 Texas Administrative Code (TAC) Chapter 3, Subchapter Y, §§ 3.3801-3.3844 require insurers offering long-term care insurance to take certain actions with regards to forms, disclosures and rates. The following summarizes the rule amendments that address changes in the forms and rates and require insurers offering long-term care insurance to review their forms and rates to ensure compliance for long-term care insurance products offered on or after July 1, 2002.
Policy Forms and Certificates:
Subchapter Y as amended requires all long-term care insurance policy forms and certificates issued on or after July 1, 2002, to contain a provision outlining the contingent nonforfeiture benefits addressed in 28 TAC §3.3844 and, as required by 28 TAC §3.3810, to only use the terms "level premium" or "noncancellable" when the insurer has no right to make any change in any provision of the insurance or in the premium rate.
All previously approved long-term care insurance policy forms and certificates to be issued on or after July 1, 2002, which do not contain the contingent nonforfeiture provision and are not in compliance with 28 TAC §3.3810 as amended, must be revised. Forms revised and filed in compliance with the amendments must be given a new unique form number. Such forms must be filed with the department as required by Texas Insurance Code Article 3.42 pertaining to Policy Form Approval and 28 TAC §§ 3.1- 3.20 pertaining to the requirements for filing forms. Insurers may expedite the approval process by following 28 TAC §3.5 pertaining to the Expedited Review Process. Approved forms that meet the requirements of the rules as amended January 1, 2002, would not have to be filed.
Disclosures:
All insurers offering long-term care insurance on or after July 1, 2002, are required to disclose their history of rate increases using the form prescribed by the department. Insurers may also file their own form provided that the required information is presented in the same order as set forth in 28 TAC §3.3829(b)(2). The form prescribed by the department is available on the department's web site at http://www.tdi.state.tx.us/company/indexlh.html#accident. Insurers must review their disclosure forms to ensure the information contained in the form follows the order as set forth in 28 TAC §3.3829(b)(2). Non-compliant forms must be amended, assigned a new unique form number and filed with the department.
Rates:
Rates used for long-term care insurance policies issued on or after July 1, 2002, are required to comply with the rating requirements outlined in 28 TAC §3.3831(b) rather than comply with the loss ratio requirements outlined in 28 TAC §3.3831(a). Insurers are required to review long-term care insurance rates to be used on or after July 1, 2002, and provide an actuarial certification or memorandum as outlined in 28 TAC §3.3831(b).
If you have any questions regarding this bulletin or the requirements of 28 TAC Chapter 3, Subchapter Y, please contact the Life/Health Division at 512-322-3401.
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Ana M. Smith-Daley
Deputy Commissioner
Life/Health Division