Senate File 2306 - Introduced



                                       SENATE FILE       
                                       BY  COMMITTEE ON COMMERCE

                                       (SUCCESSOR TO SSB 3173)


    Passed Senate, Date               Passed House,  Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act relating to long=term care insurance, and providing for
  2    penalties, an applicability date, repeals, and an
  3    appropriation and providing an effective date.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  5 TLSB 5433SV 82
  6 av/nh/8

PAG LIN



  1  1    Section 1.  Section 505.8, Code Supplement 2007, is amended
  1  2 by adding the following new subsection:
  1  3    NEW SUBSECTION.  15.  The commissioner shall utilize the
  1  4 senior health insurance information program to assist in the
  1  5 dissemination of objective and noncommercial educational
  1  6 material and to raise awareness of prudent consumer choices in
  1  7 considering the purchase of various insurance products
  1  8 designed for the health care needs of older Iowans.
  1  9    Sec. 2.  NEW SECTION.  514G.101  TITLE AND PURPOSE.
  1 10    This chapter may be known and cited as the "Long=term Care
  1 11 Insurance Act".  The purpose of this chapter is to promote the
  1 12 public interest, to promote the availability of long=term care
  1 13 insurance, to protect applicants for long=term care insurance
  1 14 from unfair or deceptive sales or enrollment practices, to
  1 15 establish standards for long=term care insurance, to
  1 16 facilitate public understanding and comparison of long=term
  1 17 care insurance policies, and to facilitate flexibility and
  1 18 innovation in the development of long=term care insurance
  1 19 coverage.
  1 20    Sec. 3.  NEW SECTION.  514G.102  SCOPE.
  1 21    The requirements of this chapter apply to policies
  1 22 delivered or issued for delivery in this state on or after
  1 23 July 1, 2008.  This chapter is not intended to supersede the
  1 24 obligations of entities subject to this chapter to comply with
  1 25 the substance of other applicable insurance laws not in
  1 26 conflict with this chapter, except that laws and regulations
  1 27 designed and intended to apply to Medicare supplement
  1 28 insurance policies shall not be applied to long=term care
  1 29 insurance.
  1 30    Sec. 4.  NEW SECTION.  514G.103  DEFINITIONS.
  1 31    As used in this chapter, unless the context requires
  1 32 otherwise:
  1 33    1.  "Activities of daily living" means at least bathing,
  1 34 continence, dressing, eating, toileting, and transferring.
  1 35    2.  "Applicant" means either of the following:
  2  1    a.  In the case of an individual long=term care insurance
  2  2 policy, the person who seeks to contract for benefits.
  2  3    b.  In the case of a group long=term care insurance policy,
  2  4 the proposed certificate holder.
  2  5    3.  "Benefit trigger" means a contractual provision in a
  2  6 policy of long=term care insurance that conditions the payment
  2  7 of benefits on a determination of the insured's ability to
  2  8 perform activities of daily living and on cognitive
  2  9 impairment, or on other conditions of the insured as specified
  2 10 in the policy.  For purposes of a qualified long=term care
  2 11 insurance contract, "benefit trigger" means a determination by
  2 12 a licensed health care practitioner that an insured is a
  2 13 chronically ill individual.  For purposes of this definition,
  2 14 "licensed health care practitioner" means the same as defined
  2 15 in section 7702B(c)(4) of the Internal Revenue Code.
  2 16    4.  "Certificate" means any certificate issued under a
  2 17 group long=term care insurance policy, which policy has been
  2 18 delivered or issued for delivery in this state.
  2 19    5.  "Chronically ill individual" means the same as defined
  2 20 in section 7702B(c)(2) of the Internal Revenue Code.
  2 21    6.  "Claim" means a request for payment of benefits under
  2 22 an in=force long=term care insurance policy, regardless of
  2 23 whether the benefit claimed is covered under the policy or any
  2 24 terms or conditions of the policy have been met.
  2 25    7.  "Cognitive impairment" means a deficiency in a person's
  2 26 short=term or long=term memory; orientation as to person,
  2 27 place, and time; deductive or abstract reasoning; or judgment
  2 28 as it relates to safety awareness.
  2 29    8.  "Commissioner" means the commissioner of insurance.
  2 30    9.  "Group long=term care insurance" means a long=term care
  2 31 insurance policy that is delivered or issued for delivery in
  2 32 this state to any of the following:
  2 33    a.  One or more employers or labor organizations, or to a
  2 34 trust or to the trustee or trustees of a fund established,
  2 35 created, or maintained by one or more employers or labor
  3  1 organizations or a combination thereof, for the benefit of
  3  2 employees or former employees or a combination thereof, or for
  3  3 members or former members or a combination thereof, of the
  3  4 employers or labor organizations.
  3  5    b.  Any professional, trade, or occupational association
  3  6 for its members or former or retired members, or a combination
  3  7 thereof, if the association meets both of the following
  3  8 requirements:
  3  9    (1)  Is composed of individuals all of whom are or were
  3 10 actively engaged in the same profession, trade, or occupation.
  3 11    (2)  Has been maintained in good faith for purposes other
  3 12 than obtaining insurance.
  3 13    c.  An association or associations, or to a trust or to the
  3 14 trustee or trustees of a fund established, created, or
  3 15 maintained for the benefit of members of one or more
  3 16 associations, which files evidence with the commissioner prior
  3 17 to advertising, marketing, or offering a policy within this
  3 18 state by the association or associations, or their insurer,
  3 19 that the following organizational requirements have been met:
  3 20    (1)  At the outset, there are a minimum of one hundred
  3 21 members of the association or associations.
  3 22    (2)  The association or associations have been organized
  3 23 and maintained in good faith for purposes other than that of
  3 24 obtaining insurance.
  3 25    (3)  The association or associations have been in active
  3 26 existence for at least one year at the time of filing.
  3 27    (4)  The association or associations have a constitution
  3 28 and bylaws that require all of the following:
  3 29    (a)  The association or associations have regular meetings,
  3 30 not less than annually, to further the purposes of the
  3 31 members.
  3 32    (b)  Except for credit unions, the association or
  3 33 associations collect dues or solicit contributions from
  3 34 members.
  3 35    (c)  The members have voting privileges and representation
  4  1 on a governing board and committees.
  4  2    Thirty days after the required evidentiary filings have
  4  3 been made, the association or associations shall be deemed to
  4  4 satisfy the organizational requirements, unless the
  4  5 commissioner makes a finding that the association or
  4  6 associations do not satisfy those requirements.
  4  7    d.  A group other than those described in paragraphs "a"
  4  8 through "c", subject to a finding by the commissioner that all
  4  9 of the following are true:
  4 10    (1)  The issuance of the group policy is not contrary to
  4 11 the best interests of the public.
  4 12    (2)  The issuance of the group policy would result in
  4 13 economies of acquisition or administration.
  4 14    (3)  The benefits are reasonable in relation to the
  4 15 premiums charged.
  4 16    10.  "Independent review entity" means a review entity
  4 17 certified by the commissioner pursuant to section 514G.110,
  4 18 subsection 5.
  4 19    11.  "Insurer" means an entity qualified and licensed by
  4 20 the insurance division to transact the business of insurance
  4 21 in this state by a certificate issued pursuant to chapter 508,
  4 22 512B, 514, or 514B.
  4 23    12.  "Licensed health care professional" means a qualified
  4 24 professional in an appropriate field for determining an
  4 25 insured's functional or cognitive impairment as it relates to
  4 26 the insured's specific diagnosis.  Licensed health care
  4 27 professionals include but are not limited to physical
  4 28 therapists, occupational therapists, neurologists, physical
  4 29 medicine specialists, and rehabilitation medicine specialists.
  4 30    13.  "Long=term care insurance" means any insurance policy
  4 31 or rider advertised, marketed, offered, or designed to provide
  4 32 coverage for not less than twelve consecutive months for each
  4 33 covered person on an expense=incurred, indemnity, prepaid, or
  4 34 other basis, for one or more necessary or medically necessary
  4 35 diagnostic, preventive, therapeutic, rehabilitative,
  5  1 maintenance, or personal care services that are provided in a
  5  2 setting other than an acute care unit of a hospital.
  5  3 "Long=term care insurance" includes group and individual
  5  4 annuities and life insurance policies or riders that directly
  5  5 provide or supplement long=term care insurance.  The term also
  5  6 includes a policy or rider that provides for payment of
  5  7 benefits based upon cognitive impairment or the loss of
  5  8 functional capacity.  The term also includes a qualified
  5  9 long=term care insurance contract.  Long=term care insurance
  5 10 may be issued by an insurer.  "Long=term care insurance" does
  5 11 not include any insurance policy that is offered primarily to
  5 12 provide basic Medicare supplement coverage, basic hospital
  5 13 expense coverage, basic medical=surgical expense coverage,
  5 14 hospital confinement indemnity coverage, major medical expense
  5 15 coverage, disability income or related asset=protection
  5 16 coverage, accident=only coverage, specified disease or
  5 17 specified accident coverage, or limited benefit health
  5 18 coverage.  With regard to life insurance, "long=term care
  5 19 insurance" does not include life insurance policies that
  5 20 accelerate the death benefit specifically for one or more of
  5 21 the qualifying events of terminal illness, medical conditions
  5 22 requiring extraordinary medical intervention or permanent
  5 23 institutional confinement, and that provide the option of a
  5 24 lump=sum payment for those benefits, where neither the
  5 25 benefits nor the eligibility for the benefits is conditioned
  5 26 upon the receipt of long=term care.  Notwithstanding any other
  5 27 provision of this chapter, any product advertised, marketed,
  5 28 or offered as long=term care insurance shall be subject to the
  5 29 provisions of this chapter.
  5 30    14.  "Policy" means any policy, contract, subscriber
  5 31 agreement, rider, or endorsement delivered or issued for
  5 32 delivery in this state by an insurer; fraternal benefit
  5 33 society; nonprofit health, hospital, or medical service
  5 34 corporation; prepaid health plan; or health maintenance
  5 35 organization or any similar organization.
  6  1    15.  "Preexisting condition" means a condition for which
  6  2 medical advice or treatment was recommended by, or received
  6  3 from, a provider of health care services within six months
  6  4 preceding the effective date of coverage of an individual.
  6  5    16.  "Qualified long=term care insurance contract" or
  6  6 "federally tax=qualified long=term care insurance contract"
  6  7 means any of the following:
  6  8    a.  An individual or group insurance contract that meets
  6  9 the requirements of section 7702B(b) of the Internal Revenue
  6 10 Code, as follows:
  6 11    (1)  The only insurance protection provided under the
  6 12 contract is coverage of qualified long=term care services.  A
  6 13 contract does not fail to satisfy the requirements of this
  6 14 subparagraph because payments are made on a per diem or other
  6 15 periodic basis without regard to the expenses incurred during
  6 16 the period to which the payments relate.
  6 17    (2)  The contract does not pay or reimburse expenses
  6 18 incurred for services or items to the extent that the expenses
  6 19 are reimbursable under Title XVIII of the federal Social
  6 20 Security Act, as amended, or would be reimbursable but for the
  6 21 application of a deductible or coinsurance amount.  The
  6 22 requirements of this subparagraph do not apply to expenses
  6 23 that are reimbursable under Title XVIII of the federal Social
  6 24 Security Act only as a secondary payor.  A contract does not
  6 25 fail to satisfy the requirements of this subparagraph because
  6 26 payments are made on a per diem or other periodic basis
  6 27 without regard to the expenses incurred during the period to
  6 28 which the payments relate.
  6 29    (3)  The contract is guaranteed renewable within the
  6 30 meaning of section 7702B(b)(1)(C) of the Internal Revenue
  6 31 Code.
  6 32    (4)  The contract does not provide for a cash surrender
  6 33 value or for other money that can be paid, assigned or pledged
  6 34 as collateral for a loan, or borrowed except as provided in
  6 35 subparagraph (5).
  7  1    (5)  All refunds of premiums and all policyholder dividends
  7  2 or similar accounts under the contract are to be applied as a
  7  3 reduction in future premiums or to increase future benefits,
  7  4 except that a refund in the event of the death of the insured
  7  5 or a complete surrender or cancellation of the contract shall
  7  6 not exceed the aggregate premiums paid under the contract.
  7  7    (6)  The contract meets the consumer protection provisions
  7  8 set forth in section 7702B(g) of the Internal Revenue Code.
  7  9    b.  The portion of a life insurance contract that provides
  7 10 long=term care insurance coverage by rider or as part of the
  7 11 contract and that satisfies the requirements of section
  7 12 7702B(b) and (e) of the Internal Revenue Code.
  7 13    Sec. 5.  NEW SECTION.  514G.104  EXTRATERRITORIAL
  7 14 JURISDICTION == GROUP LONG=TERM CARE INSURANCE.
  7 15    Group long=term care insurance coverage shall not be
  7 16 offered to a resident of this state under a group policy
  7 17 issued in another state unless either this state or another
  7 18 state with statutory and regulatory requirements for long=term
  7 19 care insurance that are substantially similar to those adopted
  7 20 in this state has made a determination that the group to which
  7 21 the policy is issued meets the requirements of section
  7 22 514G.103, subsection 9.
  7 23    Sec. 6.  NEW SECTION.  514G.105  DISCLOSURE AND PERFORMANCE
  7 24 STANDARDS FOR LONG=TERM CARE INSURANCE.
  7 25    1.  PROHIBITED POLICY PRACTICES.  A long=term care
  7 26 insurance policy shall not:
  7 27    a.  Be canceled, nonrenewed, or otherwise terminated on the
  7 28 grounds of the age or deterioration of the mental or physical
  7 29 health of the insured individual or certificate holder.
  7 30    b.  Contain a provision establishing a new waiting period
  7 31 in the event that existing coverage is converted to or
  7 32 replaced by a new or other policy form within the same
  7 33 company, except with respect to an increase in benefits
  7 34 voluntarily selected by the insured individual, the
  7 35 certificate holder, or the group policyholder.
  8  1    c.  Provide coverage for skilled nursing care only, or
  8  2 provide significantly more coverage for skilled care in a
  8  3 facility than coverage for lower levels of care.
  8  4    2.  PREEXISTING CONDITIONS.
  8  5    a.  A long=term care insurance policy or certificate, other
  8  6 than a policy or certificate issued to a group as described in
  8  7 section 514G.103, subsection 9, shall not use a definition of
  8  8 "preexisting condition" that is more restrictive than the
  8  9 definition contained in section 514G.103, subsection 15.
  8 10    b.  A long=term care insurance policy or certificate, other
  8 11 than a policy or certificate issued to a group as described in
  8 12 section 514G.103, subsection 9, shall not exclude coverage for
  8 13 a loss or confinement that is the result of a preexisting
  8 14 condition unless the loss or confinement begins within six
  8 15 months following the effective date of coverage of an insured
  8 16 individual.
  8 17    c.  The commissioner may extend the limitation periods set
  8 18 forth in paragraphs "a" and "b" as to specific age group
  8 19 categories in specific policy forms upon finding that such an
  8 20 extension is in the best interest of the public.
  8 21    d.  The requirements of paragraph "a" do not prohibit an
  8 22 insurer from using an application form designed to elicit the
  8 23 complete health history of an applicant, and on the basis of
  8 24 the answers on that application, underwriting in accordance
  8 25 with that insurer's established underwriting standards.
  8 26 Unless otherwise provided in the policy or certificate, a
  8 27 preexisting condition, regardless of whether it is disclosed
  8 28 on the application, is not required to be covered until the
  8 29 waiting period described in paragraph "b" expires.  A
  8 30 long=term care insurance policy or certificate shall not
  8 31 exclude, or use waivers or riders of any kind to exclude,
  8 32 limit, or reduce coverage or benefits for specifically named
  8 33 or described preexisting diseases or physical conditions
  8 34 beyond the waiting period described in paragraph "b".
  8 35    3.  PRIOR HOSPITALIZATION OR INSTITUTIONALIZATION.
  9  1    a.  A long=term care insurance policy shall not be
  9  2 delivered or issued for delivery in this state if the policy
  9  3 does any of the following:
  9  4    (1)  Conditions eligibility for any benefits on a prior
  9  5 hospitalization requirement.
  9  6    (2)  Conditions eligibility for any benefits provided in an
  9  7 institutional care setting on the receipt of a higher level of
  9  8 institutional care.
  9  9    (3)  Conditions eligibility for any benefits other than
  9 10 waiver of premium, post=confinement, post=acute care, or
  9 11 recuperative benefits on a prior institutionalization
  9 12 requirement.
  9 13    b.  A long=term care insurance policy that contains
  9 14 post=confinement, post=acute care, or recuperative benefits
  9 15 shall contain, in a clearly visible, separate paragraph or the
  9 16 policy or certificate entitled "limitations or conditions on
  9 17 eligibility for benefits", a description of such limitations
  9 18 or conditions, including any required number of days of
  9 19 confinement.
  9 20    c.  A long=term care insurance policy or rider that
  9 21 conditions eligibility for noninstitutional benefits on the
  9 22 prior receipt of institutional care shall not require a prior
  9 23 institutional stay of more than thirty days.
  9 24    d.  A long=term care insurance policy or rider that
  9 25 provides benefits only following institutionalization shall
  9 26 not condition such benefits upon admission to a facility for
  9 27 the same or related conditions within a period of less than
  9 28 thirty days after discharge from the institution.
  9 29    4.  RIGHT TO RETURN == FREE LOOK == REFUND.
  9 30    a.  A long=term care insurance applicant shall have the
  9 31 right to return the long=term care insurance policy or
  9 32 certificate within thirty days of its delivery and to have the
  9 33 premium refunded if, after examination of the policy or
  9 34 certificate, the applicant is not satisfied for any reason.
  9 35    b.  A long=term care insurance policy or certificate
 10  1 delivered or issued for delivery in this state shall have a
 10  2 notice prominently displayed on the first page of the policy
 10  3 or certificate, or attached thereto, which states in substance
 10  4 that the applicant has the right to return the policy or
 10  5 certificate within thirty days of its delivery and to have the
 10  6 premium refunded if, after examination of the policy or
 10  7 certificate, other than a certificate issued pursuant to a
 10  8 policy issued to a group as described in section 514G.103,
 10  9 subsection 9, paragraph "a", the applicant is not satisfied
 10 10 for any reason.
 10 11    c.  Any premium refund shall be made to the applicant
 10 12 within thirty days of the return.
 10 13    5.  DENIALS == REFUND.  If an application is denied by an
 10 14 insurer, any premium refund shall be made to the applicant
 10 15 within thirty days of the denial.
 10 16    6.  OUTLINE OF COVERAGE.
 10 17    a.  A written outline of coverage shall be delivered to a
 10 18 prospective applicant for long=term care insurance at the time
 10 19 of the initial solicitation for coverage which prominently
 10 20 directs the attention of the applicant to the document and its
 10 21 purpose.
 10 22    b.  The commissioner shall prescribe, by rule, a standard
 10 23 format, including style, arrangement, and overall appearance,
 10 24 and content of the outline of coverage.
 10 25    c.  In the case of producer solicitations, a producer shall
 10 26 deliver the outline of coverage to a prospective applicant
 10 27 prior to the presentation of an application or enrollment
 10 28 form.
 10 29    d.  In the case of direct response solicitations, the
 10 30 outline of coverage shall be presented in conjunction with any
 10 31 application or enrollment form.
 10 32    e.  In the case of a policy issued to a group as described
 10 33 in section 514G.103, subsection 9, paragraph "a", an outline
 10 34 of coverage is not required to be delivered to the applicant,
 10 35 provided that the information described in subsection 7 of
 11  1 this section, paragraphs "a" through "f", is contained in
 11  2 other enrollment materials provided.  Upon request, such other
 11  3 enrollment materials shall be made available to the
 11  4 commissioner.
 11  5    7.  CONTENTS OF OUTLINE OF COVERAGE.  An outline of
 11  6 coverage of long=term care insurance shall include all of the
 11  7 following:
 11  8    a.  A description of the principal benefits and coverage
 11  9 provided in the policy.
 11 10    b.  A statement of the principal exclusions, reductions,
 11 11 and limitations contained in the policy.
 11 12    c.  A statement of the terms under which the policy or
 11 13 certificate, or both, may be continued in force or
 11 14 discontinued, including any reservation in the policy of a
 11 15 right to change the premium.  Continuation or conversion
 11 16 provisions of group coverage shall be specifically described.
 11 17    d.  A statement that the outline of coverage is a summary
 11 18 of coverage only, not a contract of insurance, and that the
 11 19 policy or group master policy contains governing contractual
 11 20 provisions.
 11 21    e.  A description of the terms under which the policy or
 11 22 certificate may be returned and the premium refunded.
 11 23    f.  A brief description of the relationship of cost of care
 11 24 and benefits.
 11 25    g.  A statement that discloses to the policyholder or
 11 26 certificate holder whether the policy is intended to be a
 11 27 federally tax=qualified long=term care insurance contract
 11 28 under section 7702B(b) of the Internal Revenue Code.
 11 29    8.  CONTENTS OF GROUP CERTIFICATE.  A certificate issued
 11 30 pursuant to a group long=term care insurance policy which
 11 31 policy is delivered or issued for delivery in this state shall
 11 32 include all of the following:
 11 33    a.  A description of the principal benefits and coverage
 11 34 provided in the policy.
 11 35    b.  A statement of the principal exclusions, reductions,
 12  1 and limitations contained in the policy.
 12  2    c.  A statement that the group master policy determines
 12  3 governing contractual provisions.
 12  4    9.  TIME FOR DELIVERY.  If an application for a long=term
 12  5 care insurance policy or certificate is approved, the issuer
 12  6 shall deliver the policy or certificate of insurance to the
 12  7 applicant no later than thirty days after the date of
 12  8 approval.
 12  9    10.  INDIVIDUAL LIFE INSURANCE == POLICY SUMMARY.
 12 10    a.  A written policy summary shall accompany the delivery
 12 11 of an individual life insurance policy that provides long=term
 12 12 care benefits within the policy or by rider.  In the case of
 12 13 direct response solicitations, the insurer shall deliver a
 12 14 policy summary upon the applicant's request or at the time of
 12 15 policy delivery, whichever occurs first.
 12 16    b.  A policy summary shall include all of the following:
 12 17    (1)  An explanation of how the long=term care benefit
 12 18 interacts with other components of the policy, including
 12 19 deductions from death benefits.
 12 20    (2)  An illustration of the amount of benefits, the length
 12 21 of benefits, and the guaranteed lifetime benefits if any, for
 12 22 each covered person.
 12 23    (3)  Any exclusions, reductions, or limitations on
 12 24 long=term care benefits.
 12 25    (4)  A statement that a long=term care inflation protection
 12 26 option required by 191 IAC 39.10 is not available under this
 12 27 policy.
 12 28    (5)  If applicable to the policy type, the summary shall
 12 29 also include all of the following:
 12 30    (a)  A disclosure of the effect of exercising other rights
 12 31 under the policy.
 12 32    (b)  A disclosure of guarantees related to long=term care
 12 33 costs of insurance charges.
 12 34    (c)  Current and projected maximum lifetime benefits.
 12 35    c.  The requirements of a policy summary set forth in
 13  1 paragraph "b" may be incorporated into the basic illustration
 13  2 required to be delivered in accordance with 191 IAC 14, or
 13  3 into the life insurance policy summary required to be
 13  4 delivered in accordance with 191 IAC 15.4.
 13  5    11.  MONTHLY REPORT.  If a long=term care benefit, funded
 13  6 through a life insurance vehicle by the acceleration of the
 13  7 death benefit, is in benefit payment status, a monthly report
 13  8 shall be provided to the policyholder.  The report shall
 13  9 include all of the following:
 13 10    a.  Any long=term care benefits paid out during the month.
 13 11    b.  An explanation of any changes in the policy, including
 13 12 but not limited to changes in death benefits or cash values
 13 13 due to long=term care benefits being paid out.
 13 14    c.  The amount of long=term care benefits existing or
 13 15 remaining.
 13 16    12.  CLAIM DENIAL.  If a claim made under a long=term care
 13 17 insurance policy is denied, the issuer, within sixty days of
 13 18 the date of receipt of a written request by the policyholder,
 13 19 certificate holder, or a representative thereof, shall provide
 13 20 a written explanation of the reasons for the denial, and shall
 13 21 make all information directly related to the denial available
 13 22 to the requestor.
 13 23    13.  COMPLIANCE.  Any policy or rider advertised, marketed,
 13 24 or offered as long=term care insurance or nursing home
 13 25 insurance shall comply with the provisions of this chapter.
 13 26    Sec. 7.  NEW SECTION.  514G.106  INCONTESTABILITY PERIOD.
 13 27    1.  An insurer may rescind a long=term care insurance
 13 28 policy or certificate or deny an otherwise valid long=term
 13 29 care insurance claim if the policy or certificate has been in
 13 30 force for less than six months upon a showing of
 13 31 misrepresentation that is material to the insurer's acceptance
 13 32 for coverage.
 13 33    2.  An insurer may rescind a long=term care insurance
 13 34 policy or certificate or deny an otherwise valid long=term
 13 35 care insurance claim if the policy or certificate has been in
 14  1 force for at least six months but less than two years, upon a
 14  2 showing of misrepresentation that is both material to the
 14  3 acceptance for coverage and pertains to the condition for
 14  4 which benefits are sought.
 14  5    3.  An insurer shall not contest a long=term care insurance
 14  6 policy or certificate that has been in force for two or more
 14  7 years solely upon the grounds of misrepresentation.  Such a
 14  8 policy or certificate may be contested only upon a showing
 14  9 that the insured knowingly and intentionally misrepresented
 14 10 relevant facts relating to the insured's health.
 14 11    4.  A long=term care insurance policy or certificate may be
 14 12 field=issued if the compensation paid to the field issuer is
 14 13 not based on the number of policies or certificates issued.
 14 14 For the purposes of this subsection, a "field=issued" policy
 14 15 means a policy or certificate issued by a producer or
 14 16 third=party administrator pursuant to the underwriting
 14 17 authority granted to the producer or third=party administrator
 14 18 by an insurer and using the insurer's underwriting guidelines.
 14 19    5.  An insurer that has paid benefits under a long=term
 14 20 care insurance policy or certificate shall not recover such
 14 21 benefit payments if the policy or certificate is rescinded.
 14 22    6.  The provisions of this section are applicable to life
 14 23 insurance policies or certificates that accelerate benefits
 14 24 for long=term care.  However, if an insured dies, the
 14 25 remaining death benefits of a life insurance policy that
 14 26 accelerates benefits for long=term care are not governed by
 14 27 this section but by the provisions of section 508.28.  In all
 14 28 other situations, this section shall apply to life insurance
 14 29 policies that accelerate benefits for long=term care.
 14 30    Sec. 8.  NEW SECTION.  514G.107  NONFORFEITURE BENEFITS.
 14 31    1.  Except as otherwise provided in subsection 2, a
 14 32 long=term care insurance policy or certificate shall not be
 14 33 delivered or issued for delivery in this state unless the
 14 34 policyholder or certificate holder has been offered the option
 14 35 of purchasing a policy or certificate that includes a
 15  1 nonforfeiture benefit.  A nonforfeiture benefit may be offered
 15  2 in the form of a rider that is attached to the policy or
 15  3 certificate.  If the policyholder or certificate holder
 15  4 declines the nonforfeiture benefit, the insurer shall provide
 15  5 a contingent benefit upon lapse that is available for a
 15  6 specified period of time following a substantial increase in
 15  7 premium rates.
 15  8    2.  When a group long=term care insurance policy or
 15  9 certificate is delivered or issued for delivery in this state,
 15 10 an offer of benefits shall be made to the group policyholder
 15 11 that meets the requirements of subsection 1.  However, if the
 15 12 policy is delivered or issued for delivery to a group as
 15 13 described in section 514G.103, subsection 9, paragraph "d",
 15 14 that is not a continuing care retirement community or other
 15 15 similar entity, the offer of benefits shall be made to each
 15 16 proposed certificate holder.
 15 17    3.  The commissioner shall, by rule, specify the type or
 15 18 types of nonforfeiture benefits to be offered as part of
 15 19 long=term care insurance policies and certificates, the
 15 20 standards for such nonforfeiture benefits, and the standards
 15 21 for contingent benefit upon lapse including a specified period
 15 22 of time during which a contingent benefit upon lapse will be
 15 23 available and what constitutes a substantial premium rate
 15 24 increase that will trigger a contingent benefit upon lapse as
 15 25 provided in subsection 1.
 15 26    Sec. 9.  NEW SECTION.  514G.108  PROMPT PAYMENT OF CLAIMS
 15 27 == REQUIREMENTS.
 15 28    1.  An insurer providing long=term care insurance under
 15 29 this chapter and subject to state insurance regulation shall
 15 30 either accept and pay or deny a clean claim.  For the purposes
 15 31 of this section, "clean claim" means a properly completed
 15 32 paper or electronic request for payment that contains all
 15 33 necessary information for the insurer to timely adjudicate and
 15 34 pay claims for long=term care benefits under the policy, does
 15 35 not involve coordination of benefits for third=party liability
 16  1 or subrogation, and does not involve the existence of
 16  2 particular circumstances requiring special treatment that
 16  3 prevents a prompt payment from being made.
 16  4    2.  The commissioner shall adopt rules establishing
 16  5 processes for timely adjudication and payment of claims for
 16  6 long=term care benefits by insurers.
 16  7    3.  Payment of a clean claim shall include interest at the
 16  8 rate of ten percent per annum when an insurer or other entity
 16  9 that administers or processes claims on behalf of the insurer
 16 10 fails to timely pay a clean claim.
 16 11    Sec. 10.  NEW SECTION.  514G.109  BENEFIT TRIGGER
 16 12 DETERMINATIONS == NOTICE == APPEALS.
 16 13    1.  NOTICE.  When a long=term care insurer determines that
 16 14 the benefit trigger in an insured's long=term care insurance
 16 15 policy has not been met, the insurer shall provide a clear,
 16 16 written notice to the insured of all of the following:
 16 17    a.  The reason that the insurer determined that the
 16 18 insured's benefit trigger has not been met.
 16 19    b.  The insurer's internal appeal process provided under
 16 20 the insured's long=term care insurance policy.
 16 21    c.  The insured's right, after exhaustion of the insurer's
 16 22 internal appeal process, to have the benefit trigger
 16 23 determination reviewed under the independent review process
 16 24 set forth in section 514G.110.
 16 25    2.  INTERNAL APPEAL.
 16 26    a.  An insured may request an internal appeal of a benefit
 16 27 trigger determination by sending a written request to the
 16 28 insurer, along with any additional supporting information,
 16 29 within sixty days after the insured receives the notice
 16 30 described in subsection 1.  The internal appeal shall be
 16 31 considered by an individual or group of individuals designated
 16 32 by the insurer, provided that the individual or individuals
 16 33 making the internal appeal decision shall not be the same
 16 34 individual or individuals who made the initial benefit trigger
 16 35 determination.  All internal appeals shall be completed and
 17  1 written notice of the internal appeal decision sent to the
 17  2 insured within sixty days of the insurer's receipt of all
 17  3 necessary information upon which a final determination can be
 17  4 made.
 17  5    b.  If the determination that the benefit trigger was not
 17  6 met is upheld upon internal appeal, the notice of the appeal
 17  7 decision shall describe additional internal appeal rights that
 17  8 are offered by the insurer, if any.  Nothing in this paragraph
 17  9 shall require an insurer to offer any internal appeal rights
 17 10 other than those described in paragraph "a".
 17 11    c.  If the determination that the benefit trigger was not
 17 12 met is upheld after the internal appeal process has been
 17 13 exhausted and there is no new information not previously
 17 14 provided to the insurer for consideration, the insurer shall
 17 15 provide the insured with a written description of the
 17 16 insured's right to request an independent review of the
 17 17 benefit trigger determination.
 17 18    3.  RECEIPT OF NOTICE.  Notices required by this section
 17 19 shall be deemed received within five days after the date of
 17 20 mailing.
 17 21    Sec. 11.  NEW SECTION.  514G.110  INDEPENDENT REVIEW OF
 17 22 BENEFIT TRIGGER DETERMINATIONS.
 17 23    1.  REQUEST.  An insured may file a written request for
 17 24 independent review of a benefit trigger determination with the
 17 25 commissioner after the internal appeal process has been
 17 26 exhausted.  The request shall be filed within sixty days after
 17 27 the insured receives written notice of the insurer's internal
 17 28 appeal decision.
 17 29    2.  FEE.  A request for independent review shall be
 17 30 accompanied by a twenty=five dollar filing fee.  The
 17 31 commissioner may waive the filing fee for good cause.  The
 17 32 filing fee shall be refunded if the insured prevails in the
 17 33 independent review process.
 17 34    3.  ELIGIBILITY FOR REVIEW.  The commissioner shall certify
 17 35 that the request is eligible for independent review if all of
 18  1 the following criteria are satisfied:
 18  2    a.  The insured was covered by a long=term care insurance
 18  3 policy issued by the insurer at the time the benefit trigger
 18  4 determination was made.
 18  5    b.  The sole reason for requesting an independent review is
 18  6 to review the insurer's determination that the benefit trigger
 18  7 was not met.
 18  8    c.  The insured has exhausted all internal appeal
 18  9 procedures provided under the insured's long=term care
 18 10 insurance policy.
 18 11    d.  The written request for independent review was filed by
 18 12 the insured within sixty days from the date of receipt of the
 18 13 insurer's internal appeal decision.
 18 14    4.  NOTICE OF ELIGIBILITY.  The commissioner shall provide
 18 15 written notice regarding eligibility of a request for
 18 16 independent review to the insured and the insurer within two
 18 17 business days from the date of receipt of the request.
 18 18    a.  If the commissioner decides that the request is not
 18 19 eligible for independent review, the written notice shall
 18 20 indicate the reasons for that decision.
 18 21    b.  If the commissioner certifies that the request is
 18 22 eligible for independent review, the insurer may appeal that
 18 23 certification by filing a written notice of appeal with the
 18 24 commissioner within three business days from the date of
 18 25 receipt of the notice of certification.  If upon further
 18 26 review, the commissioner upholds the certification, the
 18 27 commissioner shall promptly notify the insured and the insurer
 18 28 in writing of the reasons for that decision.
 18 29    5.  QUALIFICATIONS OF INDEPENDENT REVIEW ENTITIES.  The
 18 30 commissioner shall maintain a list of qualified independent
 18 31 review entities that are certified by the commissioner.
 18 32 Independent review entities shall be recertified by the
 18 33 commissioner every two years in order to remain on the list.
 18 34 In order to be certified, an independent review entity shall
 18 35 meet all of the following criteria:
 19  1    a.  Have on staff, or contract with, a qualified, licensed
 19  2 health care professional in an appropriate field for
 19  3 determining an insured's functional or cognitive impairment
 19  4 who can conduct an independent review.
 19  5    (1)  In order to be qualified, a licensed health care
 19  6 professional who is a physician shall hold a current
 19  7 certification by a recognized American medical specialty board
 19  8 in a specialty appropriate for determining an insured's
 19  9 functional or cognitive impairment.
 19 10    (2)  In order to be qualified, a licensed health care
 19 11 professional who is not a physician shall hold a current
 19 12 certification in the specialty in which that person is
 19 13 licensed, by a recognized American specialty board in a
 19 14 specialty appropriate for determining an insured's functional
 19 15 or cognitive impairment.
 19 16    b.  Ensure that any licensed health care professional who
 19 17 conducts an independent review has no history of disciplinary
 19 18 actions or sanctions, including but not limited to the loss of
 19 19 staff privileges or any participation restrictions taken or
 19 20 pending by any hospital or state or federal government
 19 21 regulatory agency.
 19 22    c.  Ensure that the independent review entity or any of its
 19 23 employees, agents, or licensed health care professionals
 19 24 utilized does not receive compensation of any type that is
 19 25 dependent on the outcome of a review.
 19 26    d.  Ensure that the independent review entity or any of its
 19 27 employees, agents, or licensed health care professionals
 19 28 utilized are not in any manner related to, employed by, or
 19 29 affiliated with the insured or with a person who previously
 19 30 provided medical care to the insured.
 19 31    e.  Ensure that an independent review entity or any of its
 19 32 employees, agents, or licensed health care professionals
 19 33 utilized is not a subsidiary of, or owned or controlled by, an
 19 34 insurer or by a trade association of insurers of which the
 19 35 insurer is a member.
 20  1    f.  Have a quality assurance program on file with the
 20  2 commissioner that ensures the timeliness and quality of
 20  3 reviews performed, the qualifications and independence of the
 20  4 licensed health care professionals who perform the reviews,
 20  5 and the confidentiality of the review process.
 20  6    g.  Have on staff or contract with a licensed health care
 20  7 practitioner, as defined in section 514G.103, subsection 3,
 20  8 who is qualified to certify that an individual is chronically
 20  9 ill for purposes of a qualified long=term care insurance
 20 10 contract.
 20 11    6.  INDEPENDENT REVIEW PROCESS.  The independent review
 20 12 process shall be conducted as follows:
 20 13    a.  Within three business days of receiving a notice from
 20 14 the commissioner of the certification of a request for
 20 15 independent review or receipt of a denial of an insurer's
 20 16 appeal from such a certification, the insurer shall do all of
 20 17 the following:
 20 18    (1)  Select an independent review entity from the list
 20 19 certified by the commissioner and notify the insured in
 20 20 writing of the name, address, and telephone number of the
 20 21 independent review entity selected.  The independent review
 20 22 entity selected shall utilize a licensed health care
 20 23 professional with qualifications appropriate to the benefit
 20 24 trigger determination that is under review.
 20 25    (2)  Notify the independent review entity that it has been
 20 26 selected to conduct an independent review of a benefit trigger
 20 27 determination and provide sufficient descriptive information
 20 28 to enable the independent review entity to provide licensed
 20 29 health care professionals who will be qualified to conduct the
 20 30 review.
 20 31    (3)  Provide the commissioner with a copy of the notices
 20 32 sent to the insured and to the independent review entity
 20 33 selected.
 20 34    b.  Within three business days of receiving a notice from
 20 35 an insurer that it has been selected to conduct an independent
 21  1 review, the independent review entity shall do one of the
 21  2 following:
 21  3    (1)  Accept its selection as the independent review entity,
 21  4 designate a qualified licensed health care professional to
 21  5 perform the independent review, and provide notice of that
 21  6 designation to the insured and the insurer, including a brief
 21  7 description of the health care professional's qualifications
 21  8 and the reasons that person is qualified to determine whether
 21  9 the insured's benefit trigger has been met.  A copy of this
 21 10 notice shall be sent to the commissioner via facsimile.  The
 21 11 independent review entity is not required to disclose the name
 21 12 of the health care professional selected.
 21 13    (2)  Decline its selection as the independent review entity
 21 14 or, if the independent review entity does not have a licensed
 21 15 health care professional who is qualified to conduct the
 21 16 independent review available, request additional time from the
 21 17 commissioner to have a qualified licensed health care
 21 18 professional certified, and provide notice to the insured, the
 21 19 insurer, and the commissioner.  The commissioner shall notify
 21 20 the review entity, the insured, and the insurer of how to
 21 21 proceed within three business days of receipt of such notice
 21 22 from the independent review entity.
 21 23    c.  An insured may object to the independent review entity
 21 24 selected by the insurer or to the licensed health care
 21 25 professional designated by the independent review entity to
 21 26 conduct the review by filing a notice of objection along with
 21 27 reasons for the objection, with the commissioner within ten
 21 28 days of receipt of a notice sent by the independent review
 21 29 entity pursuant to paragraph "b".  The commissioner shall
 21 30 consider the insured's objection and shall notify the insured,
 21 31 the insurer, and the independent review entity of its decision
 21 32 to sustain or deny the objection within two business days of
 21 33 receipt of the objection.
 21 34    d.  Within five business days of receiving a notice from
 21 35 the independent review entity accepting its selection or
 22  1 within five business days of receiving a denial of an
 22  2 objection to the review entity selected, whichever is later,
 22  3 the insured may submit any information or documentation in
 22  4 support of the insured's claim to both the independent review
 22  5 entity and the insurer.
 22  6    e.  Within fifteen days of receiving a notice from the
 22  7 independent review entity accepting its selection or within
 22  8 three business days of receipt of a denial of an objection to
 22  9 the independent review entity selected, whichever is later, an
 22 10 insurer shall do all of the following:
 22 11    (1)  Provide the independent review entity with any
 22 12 information submitted to the insurer by the insured in support
 22 13 of the insured's internal appeal of the insurer's benefit
 22 14 trigger determination.
 22 15    (2)  Provide the independent review entity with any other
 22 16 relevant documents used by the insurer in making its benefit
 22 17 trigger determination.
 22 18    (3)  Provide the insured and the commissioner with
 22 19 confirmation that the information required under subparagraphs
 22 20 (1) and (2) has been provided to the independent review
 22 21 entity, including the date the information was provided.
 22 22    f.  The independent review entity shall not commence its
 22 23 review until fifteen days after the selection of the
 22 24 independent review entity is final including the resolution of
 22 25 any objection made pursuant to paragraph "c".  During this
 22 26 time period, the insurer may consider any information provided
 22 27 by the insured pursuant to paragraph "d" and overturn or
 22 28 affirm the insurer's benefit trigger determination based on
 22 29 such information.  If the insurer overturns its benefit
 22 30 trigger determination, the independent review process shall
 22 31 immediately cease.
 22 32    g.  In conducting a review, the independent review entity
 22 33 shall consider only the information and documentation provided
 22 34 to the independent review entity pursuant to paragraphs "d"
 22 35 and "e".
 23  1    h.  The independent review entity shall submit its decision
 23  2 as soon as possible, but not later than thirty days from the
 23  3 date the independent review entity receives the information
 23  4 required under paragraphs "d" and "e", whichever is received
 23  5 later.  The decision shall include a description of the basis
 23  6 for the decision and the date of the benefit trigger
 23  7 determination to which the decision relates.  The independent
 23  8 review entity, for good cause, may request an extension of
 23  9 time from the commissioner to file its decision.  A copy of
 23 10 the decision shall be mailed to the insured, the insurer, and
 23 11 the commissioner.
 23 12    i.  All medical records submitted for use by the
 23 13 independent review entity shall be maintained as confidential
 23 14 records as required by applicable state and federal laws.  The
 23 15 commissioner shall keep all information obtained during the
 23 16 independent review process confidential pursuant to section
 23 17 505.8, subsection 6, except that the commissioner may share
 23 18 some information obtained as provided under section 505.8,
 23 19 subsection 6, and as required by this chapter and rules
 23 20 adopted pursuant to this chapter.
 23 21    j.  If an insured dies before completion of the independent
 23 22 review, the review shall continue to completion if there is
 23 23 potential liability of an insurer to the estate of the insured
 23 24 or to a provider for rendering qualified long=term care
 23 25 services to the insured.
 23 26    7.  COSTS.  All reasonable fees and costs of the
 23 27 independent review entity incurred in conducting an
 23 28 independent review under this section shall be paid by the
 23 29 insurer.
 23 30    8.  IMMUNITY.  An independent review entity that conducts a
 23 31 review under this section is not liable for damages arising
 23 32 from determinations made during the review.  Immunity does not
 23 33 apply to any act or omission made by an independent review
 23 34 entity in bad faith or that involves gross negligence.
 23 35    9.  EFFECT OF INDEPENDENT REVIEW DECISION.
 24  1    a.  The review decision by the independent review entity
 24  2 conducting the review is binding on the insurer.
 24  3    b.  The independent review process set forth in this
 24  4 section shall not be considered a contested case under chapter
 24  5 17A.
 24  6    c.  An insured may appeal the review decision by the
 24  7 independent review entity conducting the review by filing a
 24  8 petition for judicial review in the district court in the
 24  9 county in which the insured resides.  The petition for
 24 10 judicial review shall be filed within fifteen business days
 24 11 after the issuance of the review decision.  The petition shall
 24 12 name the insured as the petitioner and the insurer as the
 24 13 respondent.  The petitioner shall not name the independent
 24 14 review entity as a party.  The commissioner shall not be named
 24 15 as a respondent unless the insured alleges action or inaction
 24 16 by the commissioner under the standards articulated under
 24 17 section 17A.19, subsection 10.  Allegations made against the
 24 18 commissioner under section 17A.19, subsection 10, must be
 24 19 stated with particularity.  The commissioner may, upon motion,
 24 20 intervene in a judicial review proceeding brought pursuant to
 24 21 this paragraph.  The findings of fact by the independent
 24 22 review entity conducting the review are conclusive and binding
 24 23 on appeal.
 24 24    d.  An insurer shall not be subject to any penalties,
 24 25 sanctions, or damages for complying in good faith with a
 24 26 review decision rendered by an independent review entity
 24 27 pursuant to this section.
 24 28    e.  Nothing contained in this section or in section
 24 29 514G.109 shall be construed to limit the right of an insurer
 24 30 to assert any rights an insurer may have under a long=term
 24 31 care insurance policy related to:
 24 32    (1)  An insured's misrepresentation.
 24 33    (2)  Changes in the insured's benefit eligibility.
 24 34    (3)  Terms, conditions, and exclusions contained in the
 24 35 policy, other than failure to meet the benefit trigger.
 25  1    f.  The requirements of this section and section 514G.109
 25  2 are not applicable to a group long=term care insurance policy
 25  3 that is governed by the federal Employee Retirement Income
 25  4 Security Act of 1974, as codified at 29 U.S.C. } 100 et seq.
 25  5    g.  The provisions of this section and section 514G.109 are
 25  6 in lieu of and supersede any other third=party review
 25  7 requirement contained in chapter 514J or in any other
 25  8 provision of law.
 25  9    h.  The insured may bring an action in the district court
 25 10 in the county in which the insured resides to enforce the
 25 11 review decision of the independent review entity conducting
 25 12 the review or the decision of the court on appeal.
 25 13    10.  RECEIPT OF NOTICE.  Notice required by this section
 25 14 shall be deemed received within five days after the date of
 25 15 mailing.
 25 16    Sec. 12.  NEW SECTION.  514G.111  AUTHORITY TO PROMULGATE
 25 17 RULES.
 25 18    The commissioner may adopt rules pursuant to chapter 17A
 25 19 related to long=term care insurance and to the administration
 25 20 and enforcement of this chapter, including but not limited to
 25 21 the following:
 25 22    1.  Promoting adequate premiums and protecting
 25 23 policyholders in the event of substantial rate increases.
 25 24    2.  Establishing minimum standards for producer education,
 25 25 compensation, and testing; marketing practices; reporting
 25 26 practices; and penalties related to the sale of long=term care
 25 27 insurance in this state.
 25 28    3.  Establishing loss ratio standards for long=term care
 25 29 insurance policies with specific reference to such policies.
 25 30    4.  Providing standards for full and fair disclosure by
 25 31 setting forth the manner and content of disclosures required
 25 32 for the sale of long=term care insurance policies including
 25 33 terms of renewability; initial and subsequent conditions of
 25 34 eligibility; nonduplication of coverage provisions; coverage
 25 35 of dependents; effect of preexisting conditions; termination,
 26  1 continuation, or conversion of policies; probationary periods;
 26  2 limitations, exceptions, and reductions; elimination periods;
 26  3 requirements for replacement; recurrent conditions; and
 26  4 definitions of terms.
 26  5    5.  Requiring certain remedial actions necessitated by
 26  6 changes in the long=term care insurance market to provide fair
 26  7 and reasonable protections for long=term care insurance
 26  8 purchasers and beneficiaries.
 26  9    6.  Ensuring the prompt payment of clean claims.
 26 10    7.  Administering the independent review process of
 26 11 insurers' benefit trigger determinations.
 26 12    Sec. 13.  NEW SECTION.  514G.112  SEVERABILITY.
 26 13    If any provision of this chapter or the application of this
 26 14 chapter to any person or circumstance is for any reason held
 26 15 to be invalid, the remainder of the chapter and the
 26 16 application of the provision to other persons or circumstances
 26 17 shall not be affected.
 26 18    Sec. 14.  NEW SECTION.  514G.113  PENALTIES.
 26 19    In addition to any other penalties provided by the laws of
 26 20 this state, any insurer or any producer found to have violated
 26 21 a provision of this chapter or any other requirement of this
 26 22 state relating to the regulation of long=term care insurance
 26 23 or the marketing of such insurance shall be subject to a fine
 26 24 of up to three times the amount of any commission paid for
 26 25 each policy involved in the violation, or up to ten thousand
 26 26 dollars, whichever is greater.
 26 27    Sec. 15.  Section 514H.1, subsection 3, Code 2007, is
 26 28 amended to read as follows:
 26 29    3.  "Long=term care insurance" means long=term care
 26 30 insurance as defined in section 514G.4 514G.103 and regulated
 26 31 in section 514G.7 514G.105.
 26 32    Sec. 16.  Sections 514G.1 through 514G.8 and section
 26 33 514G.10, Code 2007, are repealed.
 26 34    Sec. 17.  SENIOR HEALTH INSURANCE INFORMATION PROGRAM ==
 26 35 APPROPRIATION.  There is appropriated from the general fund of
 27  1 the state to the division of insurance of the department of
 27  2 commerce for the fiscal year beginning July 1, 2008, and
 27  3 ending June 30, 2009, the following amount, or so much thereof
 27  4 as is necessary, for the use of the senior health insurance
 27  5 information program:
 27  6 .................................................. $     60,000
 27  7 ............................................... FTEs       1.00
 27  8    Sec. 18.  EFFECTIVE DATE.  The provision of this
 27  9 Act enacting section 514G.109, subsection 2, paragraph
 27 10 "c", and the section of this Act enacting section
 27 11 514G.110 take effect on January 1, 2009.
 27 12                           EXPLANATION
 27 13    This bill repeals existing provisions regulating long=term
 27 14 care insurance and creates new ones, provides for penalties,
 27 15 repeals, and an appropriation.  The new provisions apply to
 27 16 policies delivered or issued for delivery in this state on or
 27 17 after July 1, 2008.
 27 18    DEFINITIONS == STANDARDS.  The bill includes new and
 27 19 additional definitions and expanded disclosure and performance
 27 20 standards for long=term care insurance.  These standards set
 27 21 forth prohibited policy practices and permissible treatment of
 27 22 preexisting conditions, prior hospitalizations, and
 27 23 institutionalizations.  The standards also allow applicants
 27 24 for such insurance the right to return a policy and to receive
 27 25 a refund.  The standards require an outline of coverage and
 27 26 specify contents of that outline and any group certificate
 27 27 that is issued.  Policies must be delivered within 30 days
 27 28 after an application is approved.  Individual life insurance
 27 29 policies which provide for long=term care benefits within the
 27 30 policy or by rider are required to provide a written policy
 27 31 summary.  If a long=term care benefit funded through life
 27 32 insurance is in benefit payment status, the policyholder is
 27 33 entitled to a monthly report.  Within 60 days of denying a
 27 34 claim under a long=term care insurance contract, an insurer
 27 35 must provide a written explanation of the denial.
 28  1    INCONTESTABILITY PERIOD.  The bill sets forth conditions
 28  2 under which an insurer is allowed to rescind a long=term care
 28  3 insurance policy or certificate or deny a claim thereunder.
 28  4    NONFORFEITURE BENEFITS.  The bill requires insurers to
 28  5 offer long=term care insurance policyholders and certificate
 28  6 holders the option to purchase a nonforfeiture benefit.
 28  7    PROMPT PAYMENT OF CLAIMS.  The bill contains requirements
 28  8 for prompt payment of claims when there are no circumstances
 28  9 which prevent prompt payment from being made.
 28 10    BENEFIT TRIGGER DETERMINATIONS.  The bill requires insurers
 28 11 to notify an insured making a claim under a long=term care
 28 12 insurance policy when the insurer denies the payment of
 28 13 benefits because the insured's benefit trigger has not been
 28 14 met.  The bill requires the insurer to provide an internal
 28 15 review process to the insured to appeal the insurer's initial
 28 16 benefit trigger determination.  If the internal appeal
 28 17 decision upholds the denial of benefits, the insurer must
 28 18 notify the insured of additional internal appeal rights, if
 28 19 any, and that the insured has the right to request an
 28 20 independent review of the benefit trigger determination.
 28 21    INDEPENDENT REVIEW.  The bill sets forth the process for an
 28 22 independent review of an insurer's benefit determination.  The
 28 23 commissioner is required to certify a list of qualified
 28 24 independent review entities that meet the specified criteria
 28 25 required to be a reviewer of an insurer's benefit trigger
 28 26 determination.
 28 27    RULES.  The commissioner is authorized to adopt rules
 28 28 pursuant to Code chapter 17A related to long=term care
 28 29 insurance and to the administration and enforcement of Code
 28 30 chapter 514G.
 28 31    SEVERABILITY.  If any of the provisions of the bill are
 28 32 found to be invalid, the remainder are not affected.
 28 33    PENALTIES.  If an insurer or insurance producer violates
 28 34 any requirements relating to long=term care insurance or the
 28 35 marketing of such insurance, that person is subject to a fine
 29  1 of up to three times the amount of any commission paid for
 29  2 each policy involved in the violation, or up to $10,000,
 29  3 whichever is greater.  This penalty is in addition to any
 29  4 other penalties provided for by state law.
 29  5    REPEALS.  Code sections 514G.1 through 514G.8 and section
 29  6 514G.10, which currently regulate long=term care insurance,
 29  7 are repealed on July 1, 2008.
 29  8    SENIOR HEALTH INSURANCE INFORMATION PROGRAM ==
 29  9 APPROPRIATION.  There is an appropriation of $60,000 from the
 29 10 state's general fund to fund one full=time position for the
 29 11 senior health insurance information program in the division of
 29 12 insurance.  The purpose of this program is to assist in the
 29 13 dissemination of objective and noncommercial educational
 29 14 material and to raise public awareness of prudent consumer
 29 15 choices in considering the purchase of various insurance
 29 16 products designed for the health care needs of older Iowans.
 29 17    EFFECTIVE DATE.  The provisions of the Act referring to and
 29 18 enacting the independent review process of benefit trigger
 29 19 determinations take effect January 1, 2009.
 29 20 LSB 5433SV 82
 29 21 av/nh/8