191—39.29(514G) Nonforfeiture.
	39.29(1) Except as provided in subrule 39.29(2), a long-term care insurance policy may not be delivered or issued for delivery in this state unless the policyholder or certificate holder has been offered the option of purchasing a policy or certificate including a nonforfeiture benefit. The offer of a nonforfeiture benefit may be in the form of a rider that is attached to the policy. In the event the policyholder or certificate holder declines the nonforfeiture benefit, the insurer shall provide a contingent benefit upon lapse that shall be available for a specified period of time following a substantial increase in premium rates.
	39.29(2) When a group long-term care insurance policy is issued, the offer required in subrule 39.29(1) shall be made to the group policyholder. However, if the policy is issued as group long-term care insurance to a group as defined in Iowa Code section 514G.103(9)“d,” other than to a continuing care retirement community or other similar entity, the offering shall be made to each proposed certificate holder.
	39.29(3) This rule does not apply to life insurance policies or riders containing accelerated long-term care benefits.
	39.29(4) To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of subrule 39.29(1):
	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 subrule 39.29(7); 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.
	39.29(5) If the offer required to be made under subrule 39.29(1) is rejected, the insurer shall provide the contingent benefit upon lapse described in this rule.
	39.29(6) Benefit triggers.
	a. 	After rejection of the offer required under subrule 39.29(1), for individual and group policies without nonforfeiture benefits issued after February 1, 2003, 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 certificate holder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.
	c. 	The contingent benefit upon 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 the percentage of the insured’s initial annual premium set forth below based on the insured’s issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least 30 days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase	
Issue Age	 	Percent Increase
Over Initial Premium	
29 and under	 	200%	
30-34	 	190%	
35-39	 	170%	
40-44	 	150%	
45-49	 	130%	
50-54	 	110%	
55-59	 	90%	
60	 	70%	
61	 	66%	
62	 	62%	
63	 	58%	
64	 	54%	
65	 	50%	
66	 	48%	
67	 	46%	
68	 	44%	
69	 	42%	
70	 	40%	
71	 	38%	
72	 	36%	
73	 	34%	
74	 	32%	
75	 	30%	
76	 	28%	
77	 	26%	
78	 	24%	
79	 	22%	
80	 	20%	
81	 	19%	
82	 	18%	
83	 	17%	
84	 	16%	
85	 	15%	
86	 	14%	
87	 	13%	
88	 	12%	
89	 	11%	
90 and over	 	10%	
	d. 	On or before the effective date of a substantial premium increase as defined in paragraph 39.29(6)“c,” the insurer shall:
	(1)	Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;
	(2)	Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of subrule 39.29(7). This option may be elected at any time during the 120-day period referenced in paragraph 39.29(6)“c”; and
	(3)	Notify the policyholder or certificate holder that a default or lapse at any time during the 120-day period referenced in paragraph 39.29(6)“c” shall be deemed to be the election of the offer to convert in subparagraph (2) above.
	39.29(7) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse, are described in this subrule.
	a. 	For purposes of this subrule, attained age rating is defined as a schedule of premiums starting from the issue date which increases age at least 1 percent per year prior to age 50, and at least 3 percent per year beyond age 50.
	b. 	For purposes of this subrule, the nonforfeiture benefit shall be of a shortened benefit period providing paid-up 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 paragraph “c.”
	c. 	The standard nonforfeiture credit will be equal to 100 percent 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. However, the minimum nonforfeiture credit shall not be less than 30 times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of subrule 39.29(8).
	d. 	Benefit dates.
	(1)	The nonforfeiture benefit shall begin not 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.
	(2)	Notwithstanding subparagraph (1), for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of:
	1.	The end of the tenth year following the policy or certificate issue date; or
	2.	The end of the second year following the date the policy or certificate is no longer subject to attained age rating.
	e. 	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.
	39.29(8) All benefits paid by the insurer while the policy or certificate is in premium-paying status and in paid-up status will not exceed the maximum benefits which would be payable if the policy or certificate had remained in premium-paying status.
	39.29(9) There shall be no difference in the minimum nonforfeiture benefits as required under this rule for group and individual policies.
	39.29(10) The requirements set forth in this rule shall become effective July 1, 2003, and shall apply as follows:
	a. 	Except as provided in paragraph “b,” the provisions of this rule apply to any long-term care policy issued on or after February 1, 2003.
	b. 	For certificates issued on or after July 1, 2003, under a group long-term care insurance policy which policy was in force on February 1, 2003, the provisions of this rule shall not apply.
	39.29(11) Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse shall be subject to the loss ratio requirements of 39.13(2) or 191—39.28(514G), whichever applies, treating the policy as a whole.
	39.29(12) To determine whether contingent nonforfeiture upon lapse provisions are triggered under paragraph 39.29(6)“c,” a replacing insurer that purchased or otherwise assumed a block or blocks of 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.
	39.29(13) A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets the following requirements:
	a. 	The nonforfeiture provision shall be appropriately captioned;
	b. 	The nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency and interest as reflected in changes in rates for premium-paying contracts approved by the commissioner for the same contract form; and
	c. 	The nonforfeiture provision shall provide at least one of the following:
	(1)	Reduced paid-up insurance;
	(2)	Extended term insurance;
	(3)	Shortened benefit period; or
	(4)	Other similar offerings approved by the commissioner.
	39.29(14) Notwithstanding subrule 39.29(10), if an insurer requests a premium rate increase on any long-term care policy issued prior to February 1, 2003, the commissioner shall require as a condition of approval of such premium rate increase that the insurer provide notice to all affected policyholders and certificate holders that, in lieu of the requested premium rate increase, the insured may opt for one of the following:
	a. 	A reduced benefit. The insurer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable. The age used to determine the premium for the reduced coverage shall be based on the age used to determine the premiums for the coverage currently in force. The reduced benefit offered may include one or more of the following:
	(1)	A reduced daily, weekly, or monthly benefit;
	(2)	A longer waiting period;
	(3)	A reduced benefit period or a reduced maximum lifetime benefit; or
	(4)	Any other benefit or coverage reduction option consistent with the policy or certificate design or the carrier’s administrative processes.
	b. 	A contingent benefit upon lapse as described in subrules 39.29(7), 39.29(8), 39.29(9), and 39.29(12) if the requested premium rate increase results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured’s initial annual premium set forth in paragraph 39.29(6)“c.”
	c. 	Any other alternative mechanism filed by the insurer and approved by the commissioner.
[ARC 5598C, IAB 5/5/21, effective 6/9/21]