The Florida Senate

627.94072  Mandatory offers.--

(1)(a)  An insurer that offers a long-term care insurance policy, certificate, or rider in this state must offer, in addition to any other inflation protection, the option to purchase a policy that provides that benefit levels increase with benefit maximums or reasonable durations, to account for reasonably anticipated increases in the costs of services covered by the policy. The inflation protection option required by this paragraph must be no less favorable to the policyholder than one of the following:

1.  A provision that increases benefits annually at a rate of not less than 5 percent, compounded annually.

2.  A provision that guarantees to the insured person the right to periodically increase benefit levels without providing evidence of insurability or health status, if the option for the preceding period has not been declined. The total amount of benefits provided under this option must be equal to or greater than the existing benefit level increased by 5 percent compounded annually for the period beginning with the purchase of the existing benefits and ending with the year in which the offer is accepted.

3.  A provision that covers a specified percentage of actual or reasonable charges and does not include a specified indemnity amount or limit.

(b)  The following information must be included in or with the outline of coverage:

1.  A graphic comparison of the benefit levels of a policy that increases benefits over the policy period and a policy that does not increase benefits, showing benefit levels over a period of at least 20 years.

2.  Any premium increases or additional premiums required for automatic or optional benefit increases. If the amount of premium increases or additional premiums depends on the age of the applicant at the time of the increase, the insurer must also disclose the amount of the increased premiums or additional premiums for benefit increases that would be required of the applicant at the ages of 75 and 85 years.

The insurer may use a reasonable hypothetical or a graphic demonstration for the purposes of the disclosures required by this paragraph.

(2)  An insurer that offers a long-term care insurance policy, certificate, or rider in this state must offer a nonforfeiture protection provision providing reduced paid-up insurance, extended term, shortened benefit period, or any other benefits approved by the department if all or part of a premium is not paid. Nonforfeiture benefits and any additional premium for such benefits must be computed in an actuarially sound manner, using a methodology that has been filed with and approved by the department.

(3)  For purposes of this section, the nonforfeiture protection provision providing a shortened benefit period shall, at a minimum, provide the following:

(a)  The same benefits, amounts, and frequency in effect at the time of lapse but not increased thereafter, must be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in paragraph (b).

(b)  The standard nonforfeiture credit must 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 subsection (5).

(c)  No policy or certificate shall begin a nonforfeiture benefit later than the end of the third year following the policy or certificate issue date.

(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.

(e)  All benefits paid by the insurer while the policy is in premium-paying status and in paid-up status may not exceed the maximum benefits which would have been payable if the policy or certificate had remained in premium-paying status.

(f)  There shall be no difference in the minimum nonforfeiture benefits as required under this subsection for group and individual policies.

(g)  The requirements set forth in this subsection shall become effective July 1, 1997, and shall apply as follows:

1.  Except as provided in subparagraph 2., the provisions of this subsection apply to any long-term care policy issued in this state on or after July 1, 1997.

2.  The provisions of this subsection shall not apply to certificates issued under a group long-term care insurance policy in force on July 1, 1997.

(h)  Premiums charged for a policy or certificate containing nonforfeiture benefits shall be subject to the loss ratio requirements of ¹s. 626.9407(6) treating the policy as a whole.

(i)  At the time of lapse, or upon request, the insurer must disclose to the insured the insured's then-accrued nonforfeiture values. At the time the policy is issued, the insurer must provide to the policyholder schedules demonstrating estimated values of nonforfeiture benefits; however, such schedules must state that the estimated values are not to be construed as guaranteed nonforfeiture values.

(4)  Any nonforfeiture protection provision authorized pursuant to subsection (2) that does not provide for a shortened benefit period must, at a minimum, provide a benefit that is actuarially equivalent to the minimum benefit required in subsection (3) for a shortened benefit period.

(5)  With respect to group policies, other than policies issued to groups specified in s. 627.555, s. 627.653, or s. 627.654, the insurer must make the offers required by subsections (1) and (2) to each proposed certificateholder, except that the insurer must make the offers to the policyholder in the case of a continuing care contract under chapter 651.

(6)  This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

History.--s. 148, ch. 92-33; s. 4, ch. 96-275; s. 19, ch. 97-179.

¹Note.--The cited provision does not exist; the correct reference may be to s. 627.9407(6), which relates to loss ratio and reserve standards.