HB 1701 -- LONG-TERM CARE

CO-SPONSORS:  Luetkenhaus, Ward

COMMITTEE ACTION:  Voted "do pass by consent" by the Committee on
Insurance by a vote of 15 to 0.

This bill makes several changes to the Long-term Care Insurance
Act.  In its main provisions, the bill:

(1)  Clarifies that the term "long-term care insurance" includes
any insurance policy that meets the requirements of a "qualified
long-term care insurance contract," as defined in section 7702B
of the Internal Revenue Code;

(2)  Requires the issuer of a long-term care contract to state
clearly in its enrollment materials whether the contract is
intended to be tax-qualified, pursuant to section 7702B;

(3)  Requires the issuer to deliver the certificate of insurance
to the applicant within 30 days of approval;

(4)  Requires the policy summary to state whether it includes
cost inflation protection;

(5)  Requires issuers to provide a written explanation for a
denial of coverage within 60 days of receiving a written request
for an explanation from the applicant.  The issuer must provide
all information directly related to the denial;

(6)  Allows issuers to rescind long-term care contracts upon a
showing of misrepresentation.  The degree of misrepresentation
that must be proven will vary, depending on the length of time
the policy has been in effect;

(7)  Prohibits a long-term care contract to be field issued based
on health status;

(8)  Prohibits an issuer from recovering benefits paid to the
policyholder when the issuer rescinds the policy;

(9)  Requires issuers to offer a policy that includes a
nonforfeiture benefit.  If that benefit is declined, the issuer
must then offer a contingent benefit upon lapse.  The contingent
benefit must be available for a specified period of time if the
issuer increases the premium substantially;

(10)  Requires the Department of Insurance to promulgate rules
creating the standards for nonforfeiture benefits, contingent
benefits upon lapse, the length of time these benefits must run,
and the extent to which premiums may be increased.  The
department must also promulgate rules regarding marketing
practices, agent compensation, agent testing, penalties, and
reporting practices for long-term care insurance; and

(11)  Allows insurers or agents in violation of long-term care
insurance requirements to be fined $10,000 or three times the
commission paid for each policy involved, whichever is greater.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that the bill will allow seniors to
maintain affordable long-term care coverage, by preventing
insurers from charging deceptively low rates in the beginning to
get customers, with the intent of raising rates once the person
gets closer to the age when they may actually need the care.  The
language comes from the National Association of Insurance
Commissioners' model act.  Missouri currently uses an older
version of the NAIC's model act.  The bill merely updates it to
the current version.

Testifying for the bill were Representative Luetkenhaus; Scott
Lakin, Director, Department of Insurance; and AARP of Missouri.

OPPONENTS:  There was no opposition voiced to the committee.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
Last Updated October 11, 2002 at 9:02 am