California Insurance Code 10237-10237.6

10237. This article applies to all long-term care insurance policies delivered or issued for delivery in this state on or after January 1, 1991. 10237.1. No insurer may deliver or issue for delivery a long-term care insurance policy or certificate in this state unless the insurer offers to each policyholder and certificate holder, in addition to any other inflation protection, the option to purchase a long-term care insurance policy or certificate that provides for benefit levels and benefit maximums to increase to account for reasonably anticipated increases in the costs of long-term care services covered by the policy. Insurers shall offer to each policyholder and certificate holder, at the time of purchase, the option to purchase a long-term care insurance policy or certificate containing an inflation protection feature which is no less favorable than one that does one or more of the following: (a) Increases benefit levels annually in a manner so that the increases are compounded annually at a rate of not less than 5 percent. (b) Guarantees the insured individual the right to periodically increase benefit levels without providing evidence of insurability or health status and without regard to claim status or history so long as the option for the previous period has not been declined. The amount of the additional benefit shall be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least 5 percent for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made. (c) Covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount limit. (d) The insurer of a group long-term care insurance policy as defined in subdivision (a), (b), or (c) of Section 10231.6, shall offer the holder of the group policy the opportunity to have the inflation protection pursuant to this section extended to existing certificate holders, but the insurer is relieved of the obligations imposed by this section if the holder of the group policy declines the insurer's offer. 10237.2. If the policy is issued to a group, the required offering in Section 10237.1 shall be made to the group policyholder; except that if the policy is issued to a group as defined in subdivision (d) of Section 10231.6, other than to a continuing care retirement community, the offering shall be made to each proposed certificate holder. 10237.3. The offer in Section 10237.1 shall not be required of any of the following: (a) Life insurance policies or riders containing accelerated long-term care benefits. (b) Expense incurred long-term care insurance policies. For purposes of this subdivision, "expense incurred" does not include policies paying a certain percentage of reasonable and customary charges up to a specified, indemnity-type maximum amount. 10237.4. (a) Inflation protection benefit increases under a policy that contains these benefits shall continue without regard to an insured's age, claim status or claim history, or the length of time the person has been insured under the policy. (b) An offer of inflation protection that provides for automatic benefit increases shall include an offer of a premium which the insurer expects to remain constant. The offer shall disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant. (c) The inflation protection benefit increases under a policy or certificate that contains an inflation protection feature shall not be reduced due to the payment of claims. 10237.5. (a) An inflation protection provision that increases benefit levels annually in a manner so that the increases are compounded annually at a rate not less than 5 percent shall be included in a long-term care insurance policy unless an insurer obtains a rejection of inflation protection signed by the policyholder. (b) The rejection, to be included in the application or on a separate form, shall state: "I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this policy with and without inflation protection. Specifically, I have reviewed the plan, and I reject 5 percent annual compound inflation protection. _______________________________ __________________ Signature of Applicant Date" 10237.6. (a) An insurer shall include the following information in or with the outline of coverage: (1) A graphic comparison of the benefit levels of a policy that increases benefits at a compounded annual rate of not less than 5 percent over the policy period with a policy that does not increase benefits. The graphic comparison shall show benefit levels over at least a 20-year period. (2) Any expected premium increases or additional premiums to pay for automatic or optional benefit increases. (b) An insurer may use a reasonable hypothetical or graphic demonstration for purposes of this disclosure.