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CHAPTER 20:06:21

LONG-TERM CARE INSURANCE

Section

20:06:21:01 Definitions.

20:06:21:01.01 Nature of care -- How defined.

20:06:21:01.02 Service providers -- How defined.

20:06:21:01.03 Long-term care insurance.

20:06:21:01.04 Similar policy forms.

20:06:21:01.05 Treatment of accelerated benefits in life insurance.

20:06:21:01.06 Claim and clean claim -- Defined.

20:06:21:02 Minimum standards for long-term care insurance policies.

20:06:21:02.01 Annuity policies with long-term care benefits subject to waiting period.

20:06:21:03 Renewability of group policies -- Required disclosures.

20:06:21:04 Permissible exclusions from coverage.

20:06:21:05 Loss ratios.

20:06:21:05.01 Relation of benefits to premium for accelerated death benefit on life insurance.

20:06:21:06 Cost-of-living adjustments -- Basis.

20:06:21:06.01 Cost-of-living adjustments -- Minimum standards.

20:06:21:06.02 Group cost-of-living adjustments -- Exceptions.

20:06:21:06.03 Cost-of-living adjustments -- Continuation of benefit increases.

20:06:21:06.04 Cost-of-living adjustments -- Automatic increases -- Conspicuous offer of constant premium.

20:06:21:06.05 Cost-of-living adjustments -- Rejection by policyholder.

20:06:21:07 Applicability of rules to long-term care insurance riders.

20:06:21:08 \"Medically necessary\" defined.

20:06:21:09 Basis for conversion of coverage from group defined.

20:06:21:10 Converted policy from group defined.

20:06:21:11 Converted policy from group -- Time allowed for written application.

20:06:21:12 Converted policy from group -- Calculation of policy premium.

20:06:21:13 Continuation or conversion is mandatory -- Exceptions.

20:06:21:14 Converted policy from group to individual -- Reduction of benefits -- Exception.

20:06:21:15 Converted policy from group -- Benefits payable.

20:06:21:16 Converted policy from group -- Eligibility for coverage of relatives.

20:06:21:17 Converted policy from group -- Managed care plan defined.

20:06:21:18 Discontinuance and replacement of a group policy.

20:06:21:19 Premium increase prohibitions.

20:06:21:20 Lapse or termination notice required.

20:06:21:21 Lapse or termination for payment through payroll or pension deduction plan.

20:06:21:22 Lapse or termination for nonpayment of premium.

20:06:21:23 Disclosure of renewability.

20:06:21:24 Disclosure of payment of benefits based on certain standards.

20:06:21:25 Disclosure of limitations on preexisting conditions.

20:06:21:26 Disclosure of other limitations or conditions on eligibility for benefits.

20:06:21:26.01 Notice to claimants -- Temporary leave.

20:06:21:27 Outline of coverage.

20:06:21:28 Outline of coverage -- Standard format.

20:06:21:28.01 Applications -- Questions about replacement.

20:06:21:29 Replacement notices.

20:06:21:30 Filing requirements for advertising -- Exemption.

20:06:21:31 Standards for marketing -- Requirements.

20:06:21:32 Standards for marketing -- Prohibited practices.

20:06:21:33 Standards for marketing -- Associations.

20:06:21:34 Extension of benefits.

20:06:21:35 Basis for continuation or conversion from group coverage required.

20:06:21:36 Basis for continuation of coverage from group defined.

20:06:21:37 Reinstatement.

20:06:21:38 Disclosure of riders and endorsements.

20:06:21:39 Disclosure of tax consequences.

20:06:21:40 Applications -- Health and medication questions.

20:06:21:41 Applications -- Notice about incorrect answers.

20:06:21:42 Policies -- Notice about incorrect answers on applications.

20:06:21:43 Elderly applicants -- Required information.

20:06:21:44 Applications -- Delivery.

20:06:21:44.01 Repealed.

20:06:21:45 Records of rescissions -- Maintaining and filing records.

20:06:21:46 Minimum standards for home health and community care benefits.

20:06:21:47 Policy summary for individual life insurance policy containing long-term care benefits.

20:06:21:48 Monthly report to policyholder.

20:06:21:49 Incontestability period.

20:06:21:50 Assisted living center or facility defined.

20:06:21:51 Assisted living centers -- Minimum benefit standards.

20:06:21:52 Reporting requirements for insurers.

20:06:21:53 Appropriateness of recommended purchase or replacement.

20:06:21:53.01 Suitability standards.

20:06:21:53.02 Suitability -- Long-term care insurance personal worksheet.

20:06:21:53.03 Suitability -- Response letter.

20:06:21:53.04 Suitability -- Policies not included.

20:06:21:53.05 Suitability -- Overinsurance.

20:06:21:54 Requirement to deliver shopper's guide.

20:06:21:55 Standards for benefit triggers.

20:06:21:56 Additional standards for benefit triggers for qualified long-term care insurance contracts.

20:06:21:57 Nonforfeiture benefits.

20:06:21:58 Nonforfeiture benefit requirement.

20:06:21:59 Electronic enrollment for group policies.

20:06:21:60 Required disclosure of rating practices to consumers -- Rate stabilization.

20:06:21:61 Initial filing requirements.

20:06:21:62 Reserve standards.

20:06:21:63 Premium rate schedule increases -- Notice of pending increase.

20:06:21:64 Premium rate schedule increase requirements.

20:06:21:65 Premium rate schedule increases -- Review by the director

20:06:21:66 Premium rate schedule increases -- Adverse lapsation.

20:06:21:67 Premium rate schedule increases -- Policies to which does not apply.

20:06:21:68 Premium rate schedule increases -- Group insurance policies.

20:06:21:69 Premium rate schedule increases -- Adoption of rules.

20:06:21:70 Premium rate schedule increases -- Exceptional increases.

20:06:21:71 Permitted compensation arrangements.

20:06:21:72 Disclosure to applicant for a claim denial.

20:06:21:73 Providers in a different state.

20:06:21:74 Producer training required to market long-term care plans.

20:06:21:74.01 Long-term care plan training topics for producers.

20:06:21:75 Insurers required to verify agent training and maintain records.

20:06:21:76 Long-term care partnership policies -- Inflation protection requirements.

20:06:21:77 Long-term care partnership policies -- Required policy disclosures.

20:06:21:78 Long-term care partnership policies -- Filing requirements.

20:06:21:79 Long-term care -- Minimum benefit requirements.

20:06:21:80 Long-term care partnership policies -- Policy amendments.

20:06:21:81 Long-term care policies -- Policy amendments.

20:06:21:82 Availability of new services or providers.

20:06:21:83 Policies issued considered exchanges.

20:06:21:84 Policies offered through employers, labor unions, and associations.

20:06:21:85 Applicability of new provider or service requirements.

20:06:21:86 Right to reduce coverage and lower premiums.

20:06:21:87 Authorized representative.

20:06:21:88 Notice to insured.

20:06:21:89 Internal appeal.

20:06:21:90 Internal appeal notice requirements.

20:06:21:91 Independent review of benefit trigger determination.

20:06:21:92 Independent review process.

20:06:21:93 Additional appeal information.

20:06:21:94 Independent review notification.

20:06:21:95 Independent review organization selection.

20:06:21:96 Review of information.

20:06:21:97 Additional information to independent review.

20:06:21:98 Process if determination overturned.

20:06:21:99 Review decision requirements.

20:06:21:100 Acceptance of state certification.

20:06:21:101 Certification of long-term care insurance independent review organizations.

20:06:21:102 Maintenance of records and reporting obligations by independent review organizations.

20:06:21:103 Additional rights.

20:06:21:104 Applicability.

20:06:21:105 Payment of clean claim.

20:06:21:106 Claim timeframes.

20:06:21:107 Unpaid claims.

20:06:21:108 Violations.

Appendix A Outline of Coverage.

Appendix B Replacement of Individual Accident and Sickness or Long-Term Care Coverage.

Appendix C Replacement of Accident and Sickness or Long-Term Care Coverage.

Appendix D Rescission Reporting Form.

Appendix E Personal Worksheet.

Appendix F Disclosure Form.

Appendix G Response Letter.

Appendix H Sample Claims Denial Format.

Appendix I Potential Rate Increase Disclosure Form.

Appendix J Replacement and Lapse Reporting Form.

Appendix K Partnership Disclosure Form.

Appendix L Partnership Certification Form.

Appendix M Guidelines for Long-Term Care Independent Review Entities.

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

OUTLINE OF COVERAGE

Chapter 20:06:21

APPENDIX A

SEE: § 20:06:21:28

Source: 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002.

‎Appendix A. Outline of Coverage. Note: A slant mark indicates alternatives. Parentheses indicate instructions or blanks to be filled in. The remaining language is intended to be used verbatim.

The caution statement referred to in § 20:06:21:28 must appear as follows in the outline of coverage:

Caution: The issuance of this long-term care insurance policy/certificate is based upon your responses to the questions on your application. A copy of your application/enrollment form is enclosed/was retained by you when you applied. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: (insert address).

(1) This policy is an individual policy of insurance/a group policy which was issued in (indicate the jurisdiction in which the group policy was issued).

(2) Purpose of outline of coverage. This outline of coverage provides a very brief description of the important features of the policy. You should compare this outline of coverage to outlines of coverage for other policies available to you. This is not an insurance contract, but only a summary of coverage. Only the individual or group policy contains governing contractual provisions. This means that the policy or group policy sets forth in detail the rights and obligations of both you and the insurance company. Therefore, if you purchase this coverage, or any other coverage, it is important that you READ YOUR POLICY OR CERTIFICATE CAREFULLY!

(3) Federal tax consequences.

This [POLICY] [CERTIFICATE] is intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended.

Federal Tax Implications of this [POLICY] [CERTIFICATE]. This [POLICY] [CERTIFICATE] is not intended to be a federally tax-qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986 as amended. Benefits received under the [POLICY] [CERTIFICATE] may be taxable as income.

(4) Terms under which the policy or certificate may be continued in force or discontinued.

(a) (For long-term care health insurance policies or certificates describe one of the following permissible policy renewability provisions:)

(i) (Policies and certificates that are guaranteed renewable shall contain the following statement:) RENEWABILITY: THIS POLICY OR CERTIFICATE IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your policy or certificate to continue this policy as long as you pay your premiums on time. (Company Name) cannot change any of the terms of your policy on its own, except that, in the future, IT MAY INCREASE THE PREMIUM YOU PAY.

(ii) (Policies and certificates that are noncancelable shall contain the following statement:) RENEWABILITY: THIS POLICY OR CERTIFICATE IS NONCANCELABLE. This means that you have the right, subject to the terms of your policy, to continue this policy as long as you pay your premiums on time. (Company Name) cannot change any of the terms of your policy on its own and cannot change the premium you currently pay. However, if your policy contains an inflation protection feature where you choose to increase your benefits, (Company Name) may increase your premium at that time for those additional benefits.

(b) (For group coverage, specifically describe continuation/conversion provisions applicable to the certificate and group policy.)

(5) Terms under which the company may change premiums.

[In bold type larger than the maximum type required to be used for the other provisions of the outline of coverage, state whether or not the company has a right to change the premium, and if a right exists, describe clearly and concisely each circumstance under which the premium may change.]

(6) Terms under which the policy or certificate may be returned and premium refunded:

(a) (Provide a brief description of the right to return/\"freelook\" provision of the policy.)

(b) (Include a statement that the policy either does or does not contain provisions providing for a refund or partial refund of premium upon the death of an insured or surrender of the policy or certificate. If the policy contains such provisions, include a description of them.)

(7) This is not Medicare supplement coverage. If you are eligible for Medicare, review the Medicare Supplement Buyer's Guide available from the insurance company.

(a) (For agents,) neither (insert company name) nor its agents represent Medicare, the federal government, or any state government.

(b) (For direct response,) (insert company name) is not representing Medicare, the federal government, or any state government.

(8) Long-term care coverage. Policies of this category are designed to provide coverage for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital, such as in a nursing home, in the community, or in the home.

This policy provides coverage in the form of a fixed dollar indemnity benefit for covered long-term care expenses, subject to policy limitations/waiting periods and coinsurance requirements. (Modify this paragraph if the policy is not an indemnity policy.)

(9) Benefits provided by this policy:

(a) (List covered services, related deductibles, waiting periods, elimination periods, and benefit maximums.)

(b) (List institutional benefits, by skill level.)

(Any additional benefit screens must also be explained in this section. A benefit screen is a provision in a policy or certificate that an insured must meet to qualify for benefits. If these screens differ for different benefits, explanation of the screen should accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this must be specified. If activities of daily living (ADLs) and cognitive impairment are used to measure an insured's need for long-term care, these qualifying criteria or screens must be explained and described as part of the outline of coverage.)

(10) Limitations and exclusions. (Describe the following:)

(a) Preexisting conditions.

(b) Ineligible facilities/provider.

(d) Exclusions/exceptions.

(e) Limitations.

(This section should provide a brief specific description of any policy provisions which limit, exclude, restrict, reduce, delay, or in any other manner operate to qualify payment of the benefits described in subdivision (9) above.)

THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.

(11) Relationship of cost of care and benefits. Because the costs of long-term care services will likely increase over time, you should consider whether and how the benefits of this plan may be adjusted, (As applicable, indicate the following:

(a) That the benefit level will not increase over time;

(b) Any automatic benefit adjustment provisions;

(c) Whether the insured will be guaranteed the option to buy additional benefits and the basis upon which benefits will be increased over time if not by a specified amount or percentage;

(d) If there is such a guarantee, include whether additional underwriting or health screening will be required, the frequency and amounts of the upgrade options, and any significant restrictions or limitations; and

(e) Describe whether there will be any additional premium charge imposed and how it is to be calculated.)

(12) Alzheimer's disease and other organic brain disorders.

(State that the policy provides coverage for insureds clinically diagnosed as having Alzheimer's disease or related degenerative and dementing illnesses. Specifically describe each benefit screen or other policy provision which provides preconditions to the availability of policy benefits for such an insured.)

(13) Premium.

(a) (State the total annual premium for the policy.)

(b) (If the premium varies with an applicant's choice among benefit options, indicate the portion of annual premium which corresponds to each benefit option.)

(14) Additional features.

(a) (Indicate if medical underwriting is used.)

(b) (Describe other important features.)

(15) CONTACT THE STATE SENIOR HEALTH INSURANCE ASSISTANCE PROGRAM IF YOU HAVE GENERAL QUESTIONS REGARDING LONG-TERM CARE INSURANCE. CONTACT THE INSURANCE COMPANY IF YOU HAVE SPECIFIC QUESTIONS REGARDING YOUR LONG-TERM CARE INSURANCE POLICY OR CERTIFICATE.

‎

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

REPLACEMENT OF INDIVIDUAL ACCIDENT AND

SICKNESS OR LONG-TERM CARE COVERAGE

Chapter 20:06:21

APPENDIX B

SEE: § 20:06:21:29

Source: 22 SDR 97, effective December 18, 1995.

‎Appendix B.

NOTICE TO APPLICANT REGARDING REPLACEMENT OF

INDIVIDUAL ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

(Insurance Company's Name and Address)

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with an individual long-term care insurance policy to be issued by (company name) Insurance Company. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

You should review this new coverage carefully, comparing it with all accident and sickness or long-term care insurance coverage you now have, and terminate your present policy only if, after due consideration, you find that purchase of this long-term care coverage is a wise decision.

STATEMENT TO APPLICANT BY AGENT (BROKER OR OTHER REPRESENTATIVE):

(Use additional sheets, as necessary.)

I have reviewed your current medical or health insurance coverage. I believe the replacement of insurance involved in this transaction materially improves your position. My conclusion has taken into account the following considerations, which I call to your attention:

1) Health conditions which you may presently have (preexisting conditions), may not be immediately or fully covered under the new policy. This could result in denial or delay in payment of benefits under the new policy, whereas a similar claim might have been payable under your present policy.

2) State law provides that your replacement policy or certificate may not contain new preexisting conditions or probationary periods. The insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.

3) If you are replacing existing long-term care insurance coverage, you may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present policy. This is not only your right, but it is also in your best interest to make sure you understand all the relevant factors involved in replacing your present coverage.

4) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy had never been in force. After the application has been completed and before you sign it, reread it carefully to be certain that all information has been properly recorded.

___________________________________________________

(Signature of Agent, Broker or Other Representative)

(Type Name and Address of Agent or Broker)

The above \"Notice to Applicant\" was delivered to me on: ___________

(Date)

_________________________

(Applicant's Signature)

‎

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

REPLACEMENT OF ACCIDENT AND SICKNESS

OR LONG-TERM CARE COVERAGE

Chapter 20:06:21

APPENDIX C

SEE: § 20:06:21:29

Source: 22 SDR 97, effective December 18, 1995.

‎Appendix C

NOTICE TO APPLICANT REGARDING REPLACEMENT OF

ACCIDENT AND SICKNESS OR LONG-TERM CARE INSURANCE

(Insurance Company's Name and Address)

SAVE THIS NOTICE! IT MAY BE IMPORTANT TO YOU IN THE FUTURE.

According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing accident and sickness or long-term care insurance and replace it with the long-term care insurance policy delivered herewith issued by (company name) Insurance Company. Your new policy provides thirty (30) days within which you may decide, without cost, whether you desire to keep the policy. For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new policy.

2) State law provides that your replacement policy or certificate may not contain new preexisting or probationary periods. The insurer will waive any time periods applicable to preexisting conditions or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.

4) (To be included only if the application is attached to the policy.) If, after due consideration, you still wish to terminate your present policy and replace it with new coverage, read the copy of the application attached to your new policy and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to (company name and address) within thirty (30) days if any information is not correct and complete, or if any past medical history has been left out of the application.

__________________________

(Company Name)

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

RESCISSION REPORTING FORM

Chapter 20:06:21

APPENDIX D

SEE: § 20:06:21:45

Source: 23 SDR 55, effective October 20, 1996.

‎Model Regulation Service--April 1995

RESCISSION REPORTING FORM FOR

LONG-TERM CARE POLICIES

FOR THE STATE OF ______________

FOR THE REPORTING YEAR 19____

Company Name: __________________________________________

Address: __________________________________________

__________________________________________

Phone Number: ___________________________________________

Due: March 1 annually

Instructions:

The purpose of this form is to report all rescissions of long-term insurance policies or certificates. Those rescissions voluntarily effectuated by an insured are not required to be included in this report. Please furnish one form per rescission.

Date of Date/s

Policy Policy and Name of Policy Claim/s Date of

Form # Certificate # Insured Issuance Submitted Rescission

_______________________________________________________________________________

Detailed reason for rescission: ______________________________________________________

_______________________________________________________________________________

_________________________________

Signature

_________________________________

Name and Title (please type)

_________________________________

Date

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

PERSONAL WORKSHEET

Chapter 20:06:21

APPENDIX E

SEE: § 20:06:21:53.02

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.

‎Long-Term Care Insurance

Personal Worksheet

Drafting Note: Companies shall at a minimum provide all of the information shown below and in the same order. The company may include additional information related to this long-term care insurance coverage in relevant and readable language. Bracketed statements indicate the companies should choose the applicable statement, are allowed flexibility in inserting numerical ranges, etc.

Long-Term Care Insurance Personal Worksheet

This worksheet will help you understand some important information about this type of insurance. State law requires companies issuing this [policy] [certificate] [rider] to give you some important facts about premiums and premium increases and to ask you some important questions to help you and the company decide if you should buy this [policy] [certificate] [rider]. Long-term care insurance can be expensive and it may not be right for everyone.

Premium Information

The premium for the coverage you are considering will be [$____ per [insert payment interval] or a total of

[$______ per year] [a one-time single premium of $_______].

The premium quoted in this worksheet is not guaranteed and may change during the underwriting process and in the future while this [policy] [certificate] [rider] is in force.

Drafting Note: Companies will insert payment interval - monthly, quarterly, etc. and the appropriate dollar amount.

Type of Policy & The Company's Right to Increase Premiums on the Coverage You Choose:

[Noncancellable - The company cannot increase your premiums on this [policy] [certificate] [rider]].

[Guaranteed renewable - The company can increase your premiums on this [policy] [certificate] [rider] in the future if it increases the premiums for all [policies] [certificates] [riders] like yours in this state.]

[Paid-up - This [policy] [certificate] [rider] will be paid-up after you have paid all of the premiums specified in your [policy] [certificate] [rider]].

Drafting Note: Companies will insert the appropriate policy type and the associated bracketed statement. Premium guarantees shall not be shown on this form.

Premium Increase History

[Name of company] has sold long-tenn care insurance since [year] and has sold this [policy] [certificate] [rider] since [year].

[The company has never increased its premiums for any long-term care [policy] [certificate] [rider] it has sold in this state or any other state.]

[The company has not increased its premiums for this [policy] [certificate] [rider] or similar [policies] [certificates] [riders] in this state or any other state in the last 10 years.]

[The company has increased its premiums on this [policy] [certificate] [rider] or similar [policies] [certificates] [riders] in the last 10 years. A summary of those premium increases follows.

Drafting Note: If the summary of premium increases is extensive, the company may disclose the required premium increase history via an addendum attached to this worksheet. The company may substitute the language below for the last sentence in the paragraph above and include the full summary as an attachment to this worksheet.

\"Over the past 3 years, the company has increased premiums by ___%.\" A summary of premium increases in the last 10 years is attached to this worksheet\".

Companies that have increased premiums by 30% or more in the last ten years must include the following statement: \"There was a 30% or greater premium increase in [insert year].\" \"A summary of premium increases in the last 10 years is attached to this worksheet.\"

Questions About Your Income

You do not have to answer the questions that follow. They are intended to make sure you have thought about how you'll pay premiums and the cost of care your insurance does not cover. If you do not want to answer these questions, you should understand that the company might refuse to insure you.

What resources will you use to pay your premium?

О Current income from employment O Current income from investments O Other current income O Savings O Sell investments O Sell other assets O Money from my family O Other____

lf you will be paying premiums with money received only from your own income, a rule of thumb is that you may not be able to afford this [policy] [certificate] [rider] if the premiums will be more than 7% of your income.

Could you afford to keep this [policy] [certificate] [rider] if your spouse or partner dies first?

O Yes O No O Had not thought about it O Do not know O Does not apply

[What would you do if the premiums went up, for example, by 50%?

O Pay the higher premium O Call the company/agent O Reduce benefits O Drop the [policy] [certificate] [rider] O Do not know]

Drafting Note: The company is not required to use the bracketed question above if the coverage is fully paid up or is noncancellable.

What is your household annual income from all sources? (check one)

O [Less than $10,000] O $[10,000-19,999] O $[20,000-29,999] O $[30,000-50,000] O [More

than $50,000]

Drafting Note: The companies may choose the income ranges to put in the brackets to fit its suitability standards.

Do you expect your income to change over the next 10 years?

(check one)

O No O Yes, expect increase O Yes, expect decrease

If you plan to pay premiums from your income, have you thought about how a change in your income would affect your ability to continue to pay the premium?

O Yes O No O Do not know

Will you buy inflation protection?

(check one) O Yes O No

Inflation may increase the cost of long-term care in the future.

If you do not buy inflation protection, how will you pay for the difference between future costs and your daily benefit amount?

O From my income O From savings O From investments O Sell other assets O Money from my family O Other

The national average annual cost of long-term care in [insert vear]·was [insert $ amount], but this figure varies across the country. In ten years the national average annual cost would be about [insert $ amount] if costs increase 5% annually.

Drafting Note: The projected cost can be based on federal estimates in a current year. This figure should also be used when calculating the cost of long-term care in the \"approximate cost $____ for that period of care\" question found below. In the above statement, the second figure will equal 163% of the first figure.

What [elimination period] [waiting period] [cash deductible] are you considering?

[Number of days _____ in [elimination period][ waiting period]

Approximate cost of care for this period: $______

($xxx per day times number of days in [elimination period] [waiting period], where \"xxx\" represents the most recent estimate of the national daily average cost of long-term care)]

[Cash Deductible $_______.

How do you plan to pay for your care during the [elimination period] [waiting period] [deductible period]? (check all that apply)

O From my income O From my savings/investments O My family will pay

Questions About Your Savings and Investments

Not counting your home, about how much are all of your assets (your savings and investments) worth? ( check one)

O [Less than $20,000] O [$20,000 -$29,999 ] O [$30,000 -$49,999] O [More than $50,000]

Drafting Note: Companies may choose the asset ranges to put in the brackets to fit its suitability standards.

Do you expect the value of your assets to change over the next ten years? (check one)

O No O Yes, expect to increase O Yes, expect to decrease

If you're buying this [policy] [certificate] [rider] to protect your assets and your assets are less than $50,000, experts suggest you think about other ways to pay for your long-term care.

Disclosure Statement

O The answers to the questions above describe my financial situation.

O I choose not to complete this information. (Check one.)

O I agree that the company and/or its agent (below) has reviewed this worksheet with me including the premium, premium increase history and potential for premium increases in the future. I understand the information contained in this worksheet. (This box must be checked.)

Drafting Note: For direct mail situations, the lead sentence should be changed to \"I agree that I have reviewed this worksheet including the premium...\"

Signed

________________________________________

(Applicant) (Date)

[O] I explained to the applicant the importance of answering these questions.

Signed: ________________________________________

(Agent) (Date)

Agent's Printed Name: _____________________________]

[In order for us to process your application, please return this signed worksheet to [name of company], along with your application.]

[My agent has advised me that this long-term care insurance [policy] [certificate] [rider] does not seem to be suitable for me. However, I still want the company to consider my application.

Signed: _____________________________________.]

(Applicant) (Date)

Drafting Note: Choose the appropriate sentences depending on whether this is a direct mail or agent sale.

Someone from the company may contact you to discuss your answers and the suitability of this [policy] [certificate] [rider] for you.

Drafting Note: When the Long-Term Care Insurance Personal Worksheet is furnished to employees and their spouses under employer group policies, the text from the heading \"Disclosure Statement\" to the end may be removed.

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

DISCLOSURE FORM

THINGS YOU SHOULD KNOW BEFORE YOU BUY LONG-TERM CARE INSURANCE

Chapter 20:06:21

APPENDIX F

SEE: § 20:06:21:53.02

Source: 28 SDR 157, effective May 19, 2002; 33 SDR 230, effective July 2, 2007.

‎Things You Should Know Before You Buy

Long-Term Care Insurance

Long-Term	• A long-term care insurance policy may pay most of the costs for your care in
Care	a nursing home. Many policies also pay for care at home or other community
Insurance	settings. Since policies can vary in coverage, you should read this policy and
	make sure you understand what it covers before you buy it.

	• [You should not buy this insurance policy unless you can afford to pay the
	premiums every year.] [Remember that the company can increase premiums
	in the future.]

	• The personal worksheet includes questions designed to help you and the
	company determine whether this policy is suitable for your needs.

Medicare	• Medicare does not pay for most long-term care.

Medicaid	• Medicaid will generally pay for long-term care if you have very little income
	and few assets. You probably should not buy this policy if you are now
	eligible for Medicaid.

	• Many people become eligible for Medicaid after they have used up their
	own financial resources by paying for long-term care services.

	• When Medicaid pays your spouse's nursing home bills, you are allowed to
	keep your house and furniture, a living allowance, and some of your joint
	assets.

	• Your choice of long-term care services may be limited if you are receiving
	Medicaid. To learn more about Medicaid, contact your local or state
	Medicaid agency.

Shopper's	• Make sure the insurance company or agent gives you a copy of a book called
Guide	the National Association of Insurance Commissioners' \"Shopper's Guide to
	Long-Term Care Insurance.\" Read it carefully. If you have decided to apply
	for long-term care insurance, you have the right to return the policy within
	30 days and get back any premium you have paid if you are dissatisfied for
	any reason or choose not to purchase the policy

Counseling	• Free counseling and additional information about long-term care insurance
	are available through your state's insurance counseling program. Contact
	your state insurance department or department on aging for more informa-
	tion about the senior health insurance counseling program in your state.

Facilities	• Some long-term care insurance contracts provide for benefit payments in
	certain facilities only if they are licensed or certified, such as in assisted
	living centers. However, not all states regulate these facilities in the same
	way. Also, many people move to a different state from where they purchased
	their long-term care insurance policy. Read the policy carefully to determine
	what types of facilities qualify for benefit payments, and to determine that
	payment for a covered service will be made if you move to a state that has a
	different licensing scheme for facilities than the one in which you purchased
	the policy.

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

RESPONSE LETTER

LONG-TERM CARE INSURANCE SUITABILITY LETTER

Chapter 20:06:21

APPENDIX G

SEE: § 20:06:21:53.03

Source: 28 SDR 157, effective May 19, 2002.

‎

Long-Term Care Insurance Suitability Letter

Dear [Applicant]:

Your recent application for long-term care insurance included a \"personal worksheet,\" which asked questions about your finances and your reasons for buying long-term care insurance. For your protection, state law requires us to consider this information when we review your application, to avoid selling a policy to those who may not need coverage.

[Your answers indicate that long-term care insurance may not meet your financial needs. We suggest that you review the information provided along with your application, including the booklet \"Shopper's Guide to Long-Term Care Insurance\" and the page titled \"Things You Should Know Before Buying Long-Term Care Insurance.\" Your state insurance department also has information about long-term care insurance and may be able to refer you to a counselor free of charge who can help you decide whether to buy this policy.]

[You chose not to provide any financial information for us to review.]

We have suspended our final review of your application. If, after careful consideration, you still believe this policy is what you want, check the appropriate box below and return this letter to us within the next 60 days. We will then continue reviewing your application and issue a policy if you meet our medical standards.

If we do not hear from you within the next 60 days, we will close your file and not issue you a policy. You should understand that you will not have any coverage until we hear back from you, approve your application, and issue you a policy.

Please check one box and return in the enclosed envelope.

□ Yes, [although my worksheet indicates that long-term care insurance may not be a suitable purchase,] I wish to purchase this coverage. Please resume review of my application.

□ No. I have decided not to buy a policy at his time.

__________________________________________ ______________________________

APPLICANT'S SIGNATURE DATE

Please return to [issuer] at [address] by [date].

‎

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

CLAIMS DENIAL REPORTING FORM FOR

LONG-TERM CARE INSURANCE POLICIES

Chapter 20:06:21

APPENDIX H

SEE: § 20:06:21:52

Source: 28 SDR 157, effective May 19, 2002; 36 SDR 209, effective July 1, 2010.

‎Claims Denial Reporting Form

Long-Term Care Insurance

For the State of ____________________

For the Reporting Year of ____________

Company Name: ______________________________________________ Due: June 30 annually

Company

Address: _______________________________________________________________________

_______________________________________________________________________________

Company NAIC

Number: _______________________________________________________________________

Contact Person: _____________________________________ Phone Number: ______________

Line of Business: Individual Group

Instructions

The purpose of this form is to report all long-term care claim denials under in force long-term care insurance policies.

Indicate the manner of reporting by checking one of the boxes below:

□ Per Claimant -- counts each individual who makes one or a series of claim requests.

□ Per Transaction -- counts each claim payment request.

\"Denied\" means a claim that is not paid for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition. It does not include a request for payment that is in excess of the applicable contractual limits.

Inforce Data

State

Data

Nationwide Data

Total Number of Inforce Policies [Certificates] as of December 31

Claims & Denial Data

		State Data	Nationwide Data¹
1	Total Number of Long-Term Care Claims Reported
2	Total Number of Long-Term Care Claims Denied/Not Paid
3	Number of Claims Not Paid due to Preexisting Condition
	Exclusion
4	Number of Claims Not Paid due to Waiting (Elimination) Period
	Not Met
5	Net Number of Long-Term Care Claims Denied for Reporting
	Purposes (Line 2 Minus Line 3 Minus Line 4)
6	Percentage of Long-Term Care Claims Denied of Those
	Reported (Line 5 Divided By Line 1)
7	Number of Long-Term Care Claims Denied due to:
8	• Long-Term Care Services Not Covered under the Policy²
9	• Provider/Facility Not Qualified under the Policy³
10	• Benefit Eligibility Criteria Not Met⁴
11	• Other

1.	The nationwide data may be viewed as a more representative and credible indicator
	where the data for claims reported and denied for your state are small in number.
2.	Example─home health care claim filed under a nursing home only policy.
3.	Example─a facility that does not meet the minimum level of care requirements or the
	licensing requirements as outlined in the policy.
4.	Examples─a benefit trigger not met, certification by a licensed health care practitioner
	not provided, no plan of care.

‎

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

POTENTIAL RATE INCREASE DISCLOSURE FORM

Chapter 20:06:21

APPENDIX I

SEE: § 20:06:21:60

Source: 28 SDR 157, effective May 19, 2002; 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.

‎Instructions: Insurers shall provide all of the following information to the applicant regarding premium, premium adjustments, potential premium increases, and policyholder options in the event of a premium increase except as noted below. This form does not need to be provided in the event the policy does not reserve the right to increase rates.

As used in this Appendix:

\"Policy,\" is a policy, certificate, or rider, as applicable.

\"Premium,\" includes premium schedules, as applicable.

Companies may substitute whichever term is appropriate to reflect the long-term care insurance for which the applicant is applying.

Long-Term Care Insurance

Potential Premium Increase Disclosure Form

Important Notice: Your long-term care insurance company may increase the premium for your policy every year. You have certain rights and it's important that you understand them before you buy a long-term care insurance policy. Please read this information and be sure you understand it before you buy a policy.

This policy is guaranteed renewable. Companies can increase the premiums for guaranteed renewable policies in the future. The company cannot increase your premiums because you are older or your health declines. It can increase premiums based on the experience of all individuals with a policy like yours.

1. What Is Your Premium?

The agent/company has quoted you a premium of [$_____] for this policy. This is not a final premium. The premium might change during the underwriting process or if you choose different benefits. The premium you'll be required to pay for your policy will be [shown on the schedule page of] [will be attached to] your policy.

2. How Will I Know If My Premium Is Changing?

The company will send you a notice. The notice will include the new premium and when you will start paying it. It also will give you ways you could avoid paying a higher premium. One likely choice will be to keep your insurance policy, but with fewer or lower benefits than you bought. Another choice may be to stop paying premiums and have a \"paid-up\" policy with fewer or lower benefits than the policy you bought. You may have other choices.

* Contingent Nonforfeiture

If the premium rate for your policy goes up in the future and you didn't buy a nonforfeiture option, you may be eligible for contingent nonforfeiture. Here's how to tell if you are eligible:

You will keep some long-term care insurance coverage, if:

Your premium after the increase exceeds your original premium by the percentage shown (or more) in the following table; and

You lapse (not pay more premiums) within 120 days of the increase.

The amount of coverage (i.e., new lifetime maximum benefit amount) you will keep will equal the total amount of premiums you've paid since your policy was first issued. If you have already received benefits under the policy, so that the remaining maximum benefit amount is less than the total amount of premiums you've paid, the amount of coverage will be that remaining amount.

Except for this reduced lifetime maximum benefit amount, all other policy benefits will remain at the levels attained at the time of the lapse and will not increase thereafter.

Should you choose this Contingent Nonforfeiture option, your policy, with this reduced maximum benefit amount, will be considered \"paid-up\" with no further premiums due.

Example:

You bought the policy at age 65 and paid the $1,000 annual premium for 10 years, so you have paid a total of $10,000 in premium.

In the eleventh year, you receive a rate increase of 50%, or $500 for a new annual premium of $1,500, and you decide to lapse the policy (not pay any more premiums).

Your \"paid-up\" policy benefits are $10,000 (provided you have at least $10,000 of benefits remaining under your policy).

Contingent Nonforfeiture
Cumulative Premium Increase over Initial Premium
That Qualifies for Contingent Nonforfeiture

(Percentage increase is cumulative from date of original issue. It does NOT represent a one-time 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%

[The following contingent nonforfeiture disclosure need only be included for those limited pay policies to which §§ 20:06:21:58(4)(d) and 20:06:21:58(4)(f) are applicable.]

In addition to the contingent nonforfeiture benefits described above, the following reduced \"paid-up\" contingent nonforfeiture benefit is an option in all policies that have a fixed or limited premium payment period, even if you selected a nonforfeiture benefit when you bought your policy. If both the reduced \"paid up\" benefit AND the contingent benefit described above are triggered by the same rate increase, you can choose either of the two benefits.

You are eligible for the reduced \"paid-up\" contingent nonforfeiture benefit if all three conditions shown below are met:

1. The premium you are required to pay after the increase exceeds your original premium by the same percentage or more shown in the chart below:

Triggers for a Substantial Premium Increase
Issue Age	Percent Increase Over Initial Premium

Under 65	50%
65-80	30%
Over 80	10%

2. You stop paying your premiums within 120 days of when the premium increase took effect; AND

3. The ratio of the number of months you already paid premiums is 40% or more than the number of months you originally agreed to pay.

If you exercise this option your coverage will be converted to reduced \"paid-up\" status. That means there will be no additional premiums required. Your benefits will change in the following ways:

a. The total lifetime amount of benefits your reduced paid up policy will provide can be determined by multiplying 90% of the lifetime benefit amount at the time the policy becomes paid up by the ratio of the number of months you already paid premiums to the number of months you agreed to pay them.

b. The daily benefit amounts you purchased will also be adjusted by the same ratio.

If you purchased lifetime benefits, only the daily benefit amounts you purchased will be adjusted by the applicable ratio.

Example:

You bought the policy at age 65 with an annual premium payable for 10 years.

In the sixth year, you receive a rate increase of 35% and you decide to stop paying premiums.

Because you have already paid 50% of your total premium payments and that is more than the 40% ratio, your \"paid-up\" policy benefits are .45 (.90 times .50) times the total benefit amount that was in effect when you stopped paying your premiums. If you purchased inflation protection, it will not continue to apply to the benefits in the reduced \"paid-up\" policy.

‎

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

REPLACEMENT AND LAPSE REPORTING FORM

Chapter 20:06:21

APPENDIX J

SEE: § 20:06:21:52

Source: 28 SDR 157, effective May 19, 2002.

‎

Long-Term Care Insurance

Replacement and Lapse Reporting Form

For the State of _____________________ For the Reporting Year of __________

Company Name: __________________________ Due: June 30 annually

Company Address: __________________________ Company NAIC Number: _________

Contact Person: __________________________ Phone Number: (____)___________

Instructions

The purpose of this form is to report on a statewide basis information regarding long-term care insurance policy replacements and lapses. Specifically, every insurer shall maintain records for each agent on that agent's amount of long-term care insurance replacement sales as a percent of the agent's total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent's total annual sales. The tables below should be used to report the ten percent (10%) of the insurer's agents with the greatest percentage of replacements and lapses.

Listing of the 10% of Agents with the Greatest Percentage of Replacements

Agent's Name	Number of Policies Sold By This Agent	Number of Policies Replaced by This Agent	Number of Replacements As % of Number Sold By This Agent

Listing of the 10% of Agents with the Greatest Percentage of Lapses

Agent's Name	Number of Policies Sold By This Agent	Number of Policies Lapsed By This Agent	Number of Lapses As % of Number Sold By This Agent

Company Totals

Percentage of Replacement Policies Sold to Total Annual Sales _____%

Percentage of Replacement Policies Sold to Policies in Force (as of the end of the preceding calendar year) _____%

Percentage of Lapsed Policies to Total Annual Sales _____%

Percentage of Lapsed Policies to Policies In Force (as of the end of the preceding calendar year) _____%

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

PARTNERSHIP DISCLOSURE FORM

Chapter 20:06:21

APPENDIX K

SEE: § 20:06:21:78

Source: 33 SDR 230, effective July 2, 2007.

‎Partnership Program Notice

Important Consumer Information Regarding the South Dakota Long-Term Care Insurance Partnership Program

Some long-term care insurance policies [certificates] sold in South Dakota may qualify for the South Dakota Long-Term Care Insurance Partnership Program (the Partnership Program). The Partnership Program is a partnership between state government and private insurance companies to assist individuals in planning their long-term care needs. Insurance companies voluntarily agree to participate in the Partnership Program by offering long-term care insurance coverage that meets certain State and Federal requirements. Long-term care insurance policies [certificates] that qualify as Partnership Policies [Certificates] may protect the policyholder's [certificateholder's] assets through a feature known as \"Asset Disregard\" under South Dakota's Medicaid program.

Asset Disregard means that an amount of the policyholder's [certificateholder's] assets equal to the amount of long-term care insurance benefits received under a qualified Partnership Policy [Certificate] will be disregarded for the purpose of determining the insured's eligibility for Medicaid. This generally allows a person to keep assets equal to the insurance benefits received under a qualified Partnership Policy [Certificate] without affecting the person's eligibility for Medicaid. All other Medicaid eligibility criteria will apply and special rules may apply to persons whose home equity exceeds $500,000. Asset Disregard is not available under a long-term care insurance policy [certificate] that is not a Partnership Policy [Certificate]. Therefore, you should consider if Asset Disregard is important to you, and whether a Partnership Policy meets your needs. The purchase of a Partnership Policy does not automatically qualify you for Medicaid.

What are the Requirements for a Partnership Policy [Certificate]? In order for a policy [certificate] to qualify as a Partnership Policy [Certificate], it must, among other requirements:

Be issued to or exchanged by an individual after July 1, 2007;

Cover an individual who is a State of South Dakota resident when coverage first becomes effective under the policy;

Be a tax-qualified policy under § 7702(B)(b) of the Internal Revenue Code of 1986;

Meet stringent consumer protection standards; and

Meet the following inflation requirements:

For ages 60 or younger -- provides compound annual inflation protection;

For ages 61 to 75 -- provides some level of inflation protection;

For ages 76 and older -- no purchase of inflation protection is required.

If you apply and are approved for long-term care insurance coverage, [carrier name] will provide you with written documentation as to whether or not your policy [certificate] qualifies as a Partnership Policy [Certificate]. If it is a Partnership Policy it will be clearly labeled as such on the schedule page of your policy [Certificate].

What Could Disqualify a Policy [Certificate] as a Partnership Policy? Certain types of changes to a Partnership Policy [Certificate] could affect whether or not such policy [certificate] continues to be a Partnership Policy [Certificate]. If you purchase a Partnership Policy [Certificate] and later decide to make any changes, you should first consult with [carrier name] to determine the effect of a proposed change. In addition, if you move to a state that does not maintain a Partnership Program or does not recognize your policy [certificate] as a Partnership Policy [Certificate], you would not receive beneficial treatment of your policy [certificate] under the Medicaid program of that state. The information contained in this disclosure is based on current South Dakota and Federal laws. These laws may be subject to change. Any change in law could reduce or eliminate the beneficial treatment of your policy [certificate] under South Dakota's Medicaid program.

Additional Information. If you have questions regarding long-term care insurance policies [certificates] please contact [carrier name]. If you have questions regarding current laws governing Medicaid eligibility, you should contact the South Dakota Department of Social Services.

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

PARTNERSHIP CERTIFICATION FORM

Chapter 20:06:21

APPENDIX L

SEE: § 20:06:21:78

Source: 33 SDR 230, effective July 2, 2007.

‎LONG-TERM CARE PARTNERSHIP

CERTIFICATION FORM

Note: This Form must be completed and submitted with each long-term care policy or certificate form for which the insurer is seeking partnership qualification. A separate form must be completed for each policy form and a specimen copy of the form, including all riders and endorsements, must be attached. A long-term care policy or certificate form may not be issued in South Dakota as a partnership policy or certificate unless and until this form has been submitted to and approved by the Division of Insurance.

Under section 1917(b)(5)(B)(iii) of the Social Security Act (42 U.S.C. 1396p(b)(5)(iii)) and in accordance with applicable South Dakota requirements, the insurer hereby submits information relating to policy or certificate form _____________ (form number) to substantiate that the form includes all required consumer protection requirements set forth in section 1917(b)(5)(A) of the Social Security Act (42 U.S.C. 1396p(b)(5)(A)) and that it includes certain specified provisions of the Long-Term Care Insurance Model Regulation and Long-Term Care Insurance Model Act promulgated by the National Association of Insurance Commissioners (adopted as of October 2000) (referred to herein as the \"2000 Model Regulation\" and \"2000 Model Act,\" respectively).

Part I:

Name of Insurer ___________________________________________

Company NAIC # ___________________________________________

Address ___________________________________________

___________________________________________

Telephone ___________________________________________

Company Contact

Name ___________________________________________

Title ___________________________________________

Telephone ___________________________________________

E-Mail ___________________________________________

Part II:

2000 NAIC MODEL REGULATION AND 2000 NAIC MODEL ACT

Note to Insurer: Identify the page and/or provision within the policy or certificate form that addresses each requirement, or, if inapplicable, use the space identified to explain.

Policy/Certificate form ________________ meets the following requirements of the 2000 NAIC Model Long-Term Care Regulation and/or 2000 NAIC Model Long-Term Care Act, as indicated below:

NAIC Model Regulation Requirement	Identify Policy Page # and Provision OR use this space to explain if requirement is inapplicable
Section 6A (relating to guaranteed renewal or noncancellability), other than paragraph (5) thereof, and the requirements of section 6B of the 2000 Model Act relating to such section 6A.
Section 6B (relating to prohibitions on limitations and exclusions) other than paragraph (7) thereof.
Section 6C (relating to extension of benefits).
Section 6D (relating to continuation or conversion of coverage).
Section 6E (relating to discontinuance and replacement of policies).
Section 7 (relating to unintentional lapse).
Section 8 (relating to disclosure), other than sections 8F, 8G, 8H, and 8I thereof.
Section 9 (relating to required disclosure of rating practices to consumer).
Section 11 (relating to prohibitions against post-claims underwriting).
Section 12 (relating to minimum standards).
Section 14 (relating to application forms and replacement coverage).
Section 15 (relating to reporting requirements).
Section 22 (relating to filing requirements for marketing).
Section 23 (relating to standards for marketing, including inaccurate completion of medical histories, other than paragraphs (1), (6), and (9) of section 23C).
Section 24 (relating to suitability).
Section 25 (relating to prohibition against preexisting conditions and probationary periods in replacement policies or certificates).
Section 26 (relating to contingent nonforfeiture benefits, if the policyholder declines the offer of a nonforfeiture provision described in section 7702B(g)(4) of the Internal Revenue Code of 1986 (26 U.S.C. 7702B(g)(4)).
Section 29 (relating to standard format outline of coverage).
Section 30 (relating to requirement to deliver shopper's guide).

NAIC Model Act Requirement	Identify Policy Page # and Provision OR use this space to explain if requirement is inapplicable
Section 6C (relating to preexisting conditions).
Section 6D (relating to prior hospitalization).
Section 8 (relating to contingent nonforfeiture benefits).
Section 6F (relating to right to return).
Section 6G (relating to outline of coverage).
Section 6H (relating to requirements for certificates under group plans).
Section 6J (relating to policy summary).
Section 6K (relating to monthly reports on accelerated death benefits).
Section 7 (relating to incontestability period).

Part III. INFLATION PROTECTON

Identify the policy provision or provide form number of endorsement or amendment form (and date of approval) for inflation protection coverage in compliance with ARSD 20:06:21:76:

_______________________________________________________________________________

Part IV. CERTIFICATION

I hereby certify that the answers, accompanying documents, and other information set forth herein are, to the best of my knowledge and belief, true, correct, and complete and the policy [certificate] satisfies the requirements necessary for a qualified state long-term care insurance partnership policy in the State of South Dakota.

________________________ _____________________________________

Date Name and title of officer of the Insurer

________________________ _____________________________________

Date Signature of officer of the Insurer

‎

DEPARTMENT OF LABOR AND REGULATION

DIVISION OF INSURANCE

GUIDELINES FOR LONG-TERM INDEPENDENT REVIEW ENTITIES

Chapter 20:06:21

APPENDIX M

SEE: § 20:06:21:100

Source: 36 SDR 209, effective July 1, 2010.

‎Guidelines for Long-Term Care Independent Review Entities

In order for an organization to qualify as an independent review organization for long-term care insurance benefit trigger decisions, the organization shall comply with all of the following:

The independent review organization shall ensure that all health care professionals on its staff and with whom it contracts to provide benefit trigger determination reviews hold a current unrestricted license or certification to practice a health care profession in the United States.

The independent review organization shall ensure that any health care professional on its staff and with whom it contracts to provide benefit trigger determination reviews who is a physician holds a current certification by a recognized American medical specialty board in a specialty appropriate for determining an insured's functional or cognitive impairment.

The independent review organization shall ensure that any health care professional on its staff and with whom it contracts to provide benefit trigger determination reviews who is not a physician holds a current certification in the specialty in which that person is licensed, by a recognized American specialty board in a specialty appropriate for determining an insured's functional or cognitive impairment.

The independent review organization shall ensure that all health care professionals on its staff and with whom it contracts to provide benefit trigger determination reviews have no history of disciplinary actions or sanctions including the loss of staff privileges or any participation restriction taken or pending by any hospital or state or federal government regulatory agency.

The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed health care professionals utilized for benefit trigger determination reviews receives compensation of any type that is dependent on the outcome of the review.

The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed health care professionals it utilizes for benefit trigger determination reviews are in any manner related to, employed by, or affiliated with the insurer, insured, or with any person who previously provided medical care or long-term care services to the insured.

The independent review organization shall provide a description of the qualifications of the reviewers retained to conduct independent review of long-term care insurance benefit trigger decisions, including the reviewer's current and past employment history, practice affiliations and a description of past experience with decisions relating to long-term care, functional capacity, dependency in activities of daily living, or in assessing cognitive impairment. Specifically, with regard to reviews of tax qualified long-term care insurance contracts, the organization must demonstrate the ability to assess the severity or cognitive impairment requiring substantial supervision to protect the individual from harm, or with assessing deficits in the ability to perform without substantial assistance from another person at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity.

The independent review organization shall provide a description of the procedures employed to ensure that reviewers conducting independent reviews are appropriately licensed, registered, or certified; trained in the principles, procedures, and standards of the independent review organization; and knowledgeable about the functional or cognitive impairments associated with the diagnosis and disease staging processes, including expected duration of such impairment, which is the subject of the independent review.

The independent review organization shall provide the number of reviewers retained by the independent review organization and a description of the areas of expertise available from such reviewers and the types of cases such reviewers are qualified to review (e.g., assessment of cognitive impairment or inability to perform activities of daily living due to a loss of functional capacity).

The independent review organization shall provide a description of the policies and procedures employed to protect confidentiality of protected health information, in accordance with federal and state law.

The independent review organization shall provide a description of its quality assurance program.

The independent review organization shall provide the names of all corporations and organizations owned or controlled by the independent review organization or which own or control the organization, and the nature and extent of any such ownership or control.

The independent review organization shall ensure that neither it, nor any of its employees, agents, or licensed health care professionals utilized are not a subsidiary of, or owned or controlled by, an insurer or by a trade association of insurers of which the insured is a member.

The independent review organization shall provide the names and resumes of all directors, officers, and executives of the independent review organization.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4

Law Implemented: SDCL 58-17B-4.

20:06:21:01. Definitions. Terms used in this chapter mean:

(1) \"Activities of daily living,\" bathing, dressing, eating, maintaining continence, toileting, and transferring;

(2) \"Acute condition,\" a medically unstable condition that requires frequent monitoring of an individual by medical professionals, such as physicians and registered nurses;

(3) \"Adult day care,\" a program of social and health-related services provided for six or more individuals during the day in a community group setting for the purpose of supporting frail, impaired elderly or other adults with disabilities who can benefit from care in a group setting outside the home;

(4) \"Bathing,\" washing oneself by sponge bath or in a tub or shower, including the task of getting into or out of the tub or shower;

(5) \"Chronically ill individual,\" any individual who has been certified by a licensed health care practitioner as:

(a) Being unable to perform (without substantial assistance from another individual) at least two activities of daily living for a period of at least 90 days due to a loss of functional capacity; or

(b) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

The term, chronically ill individual, does not include an individual otherwise meeting these requirements unless within the preceding twelve-month period a licensed health care practitioner has certified that the individual meets these requirements;

(6) \"Cognitive impairment,\" a deficiency in a person's short- or long-term memory; orientation as to person, place, and time; deductive or abstract reasoning; or judgment as it relates to awareness of safety;

(7) \"Continence,\" the ability to maintain control of bowel or bladder function or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene, including caring for a catheter or colostomy bag;

(8) \"Dressing,\" putting on and taking off all items of clothing and any necessary braces, fasteners, or artificial limbs;

(9) \"Eating,\" feeding oneself by getting food into the body from a receptacle such as a plate, cup, or table, by a feeding tube, or intravenously;

(10) \"Exceptional increase,\" only those increases filed by an insurer as exceptional for which the director determines the need for the premium rate increase is justified:

(a) Due to changes in laws or rules applicable to long-term care coverage in this state; or

(b) Due to increased and unexpected utilization that affects the majority of insurers of similar products;

(11) \"Hands-on assistance,\" the physical assistance, minimal, moderate, or maximal, without which the individual would not be able to perform the activities of daily living;

(12) \"Home health care services,\" medical and nonmedical services provided to ill, disabled, or infirm persons in their residences, including homemaker services, as defined in § 67:40:07:01, assistance with activities of daily living, and respite care services;

(13) \"Incidental,\" as used in § 20:06:21:67, the value of the long-term care benefits provided is less than ten percent of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue;

(14) \"Independent review organization,\" an organization that conducts independent reviews of long-term care benefit trigger decisions;

(15) \"Licensed health care practitioner,\" a physician, as defined in Section 1861(r)(1) of the Social Security Act, if approved by the director, a registered professional nurse, licensed social worker, or other individual who meets requirements prescribed by the Secretary of the Treasury;

(16) \"Licensed health care professional,\" an individual qualified by education and experience in an appropriate field, to determine, by record review, an insured's actual functional or cognitive impairment;

(17) \"Long-term care partnership policy,\" a long-term care insurance policy, which is designed to meet the requirements for asset disregard, as referenced in the state plan amendment effective July 1, 2007, under Medical Assistance and which meets the requirements of SDCL chapter 58-17B and this chapter, and which includes inflation protection consistent with the provisions of § 20:06:21:76;

(18) \"Maintenance or personal care services,\" any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual (including the protection from threats to health and safety due to severe cognitive impairment);

(19) \"Medicare,\" the federal program of health insurance for older persons provided under Title XVIII of the Social Security Amendments of 1965 and as amended through December 31, 1991, which is The Health Insurance for the Aged Act, amended (Title I, Part I of Pub. L. No. 89-97);

(20) \"Mental or nervous disorder,\" a neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder;

(21) \"Personal care,\" the provision of hands-on service to assist an individual with activities of daily living;

(22) \"Qualified actuary,\" a member in good standing of the American Academy of Actuaries;

(23) \"Qualified long-term care insurance contract\" or \"federally tax-qualified long-term care insurance contract\":

(a) An individual or group insurance contract that meets the requirements of Section 7702B(b) of the Internal Revenue Code of 1986, as amended as of January 1, 2002, as follows:

(i) The only insurance protection provided under the contract is coverage of qualified long-term care services. A contract does not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate;

(ii) The contract does not pay or reimburse expenses incurred for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act, as amended as of January 1, 2002, or would be so reimbursable but for the application of a deductible or coinsurance amount. The requirements of this subparagraph do not apply to expenses that are reimbursable under Title XVIII of the Social Security Act only as a secondary payor. A contract does not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate;

(iii) The contract is guaranteed renewable, within the meaning of section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended as of January 1, 2002;

(iv) The contract does not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed except as provided in subsection 20:06:21:01(22)(v);

(v) All refunds of premiums, and all policyholder dividends or similar amounts, under the contract are to be applied as a reduction in future premiums or to increase future benefits, except that a refund on the event of death of the insured or a complete surrender or cancellation of the contract cannot exceed the aggregate premiums paid under the contract; and

(vi) The contract meets the consumer protection provisions set forth in Section 7702B(g) of the Internal Revenue Code of 1986, as amended as of January 1, 2002; or

(b) The portion of a life insurance contract that provides long-term care insurance coverage by rider or as part of the contract and that satisfies the requirements of Sections 7702(B)(b) and (e) of the Internal Revenue Code of 1986, as amended as of January 1, 2002;

(24) \"Qualified long-term care services,\" services that meet the requirements of Section 7702(c)(1) of the Internal Revenue Code of 1986, as amended as of January 1, 2002, as follows: necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation, and rehabilitative services, and maintenance or personal care services which are required by a chronically ill individual, and are provided pursuant to a plan of care prescribed by a licensed health care practitioner;

(25) \"Respite care services,\" care given to provide temporary relief for primary care given to a dependent person;

(26) \"Severe cognitive impairment,\" a loss or deterioration in intellectual capacity that is comparable to, and includes, Alzheimer's disease and similar forms of irreversible dementia, and is measured by clinical evidence and standardized tests that reliably measure impairment of an individual in the following areas:

(a) Short-term or long-term memory;

(b) Orientation as to people, places, or time; and

(27) \"Toileting,\" getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene;

(28) \"Transferring,\" moving into or out of a bed, chair, or wheelchair.

Source: 16 SDR 208, effective June 3, 1990; 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002; 31 SDR 21, effective August 23, 2004; 33 SDR 230, effective July 2, 2007; 34 SDR 88, effective September 10, 2007; 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.

Law Implemented: SDCL 58-17B-2, 58-17B-4.

20:06:21:01.01. Nature of care -- How defined. The policy or certificate shall contain definitions for the terms, skilled nursing care, personal care, specialized care, assisted living care, home care, and other services, in relation to the level of skill required, the nature of the care, and the setting in which care must be delivered.

Source: 22 SDR 97, effective December 18, 1995; 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-2, 58-17B-4.

20:06:21:01.02. Service providers -- How defined. The policy or certificate shall contain definitions for all providers of services, including skilled nursing facilities, extended care facilities, convalescent nursing homes, personal care facilities, specialized care providers, assisted living facilities, and home health care agencies in relation to the services and facilities required to be available and the licensure, certification, or registration or degree status of those providing or supervising the services. When the definition requires that the provider be appropriately licensed, certified, or registered, it shall also state what requirements a provider must meet in lieu of licensure, certification or registration when the state in which the service is to be furnished does not require a provider of these services to be licensed, certified or registered, or when the other state licenses, certifies, or registers the provider of services under another classification.

Source: 22 SDR 97, effective December 18, 1995; 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38(6), 58-17B-2, 58-17B-4.

20:06:21:01.03. Long-term care insurance. The term, long-term care insurance, includes group and individual annuities and life insurance policies or riders that provide direct coverage or supplement long-term care insurance. The term also includes a policy or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. The term also includes qualified long-term care insurance contracts. Long-term care insurance does not include any insurance policy that is offered primarily to provide hospital confinement indemnity coverage, major medical expense coverage, or disability income or related asset-protection coverage. With regard to life insurance, this term does not include life insurance policies that accelerate the death benefit specifically for one or more of the qualifying events of terminal illness, medical conditions requiring extraordinary medical intervention, or permanent institutional confinement, and that provide the option of a lump-sum payment for those benefits, and where neither the benefits nor the eligibility for the benefits is conditioned upon the receipt of long-term care. However, any rider to a life insurance policy that accelerates benefits and:

(1) the amount of the accelerated benefit is unrelated to the reimbursement of long-term care services;

(2) contains no separate premium for the rider; and

(3) is not marketed as long-term care insurance

is not subject to the requirements for long-term care insurance.

Notwithstanding any other provision of SDCL chapter 58-17B, any product advertised, marketed, or offered as long-term care insurance or as an alternative to long-term care or nursing home insurance that conditions benefits based upon activities of daily living (ADLs) is subject to the provisions of chapter 20:06:21.

Source: 28 SDR 157, effective May 19, 2002; 32 SDR 203, effective June 5, 2006.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-2.

20:06:21:01.04. Similar policy forms. For purposes of this chapter, similar policy forms, are all of the long-term care insurance policies and certificates issued by an insurer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in SDCL 58-17B-2(4)(a) are not considered similar to certificates or policies otherwise issued as long-term care insurance, but are similar to other comparable certificates with the same long-term care benefit classifications. For purposes of determining similar policy forms, long-term care benefit classifications are defined as follows: institutional long-term care benefits only, non-institutional long-term care benefits only, or comprehensive long-term care benefits.

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-2.

20:06:21:01.05. Treatment of accelerated benefits in life insurance. Accelerated benefits payable under a life insurance contract:

(1) To a policyowner or certificateholder, during the lifetime of the insured, in anticipation of death or upon the occurrence of specified life-threatening or catastrophic conditions as defined by the policy or rider; and

(2) That reduce the death benefit otherwise payable under the life insurance contract; and

(3) That are payable upon the occurrence of a single qualifying event that results in the payment of a benefit amount determined at the time of acceleration

are not considered to be charging a separate premium pursuant to § 20:06:21:01.03.

Source: 32 SDR 203, effective June 5, 2006.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-2.

20:06:21:01.06. Claim and clean claim -- Defined. For purposes of §§ 20:06:21:104 to 20:06:21:108, inclusive, terms used mean:

(1) \"Claim,\" a request for payment of benefits under an in-force policy, regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;

(2) \"Clean claim,\" a claim that has no defect or impropriety, including any lack of required substantiating documentation, such as satisfactory evidence of expenses incurred, or particular circumstance requiring special treatment that prevents timely payment from being made on the claim.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:02. Minimum standards for long-term care insurance policies. Long-term care insurance policies shall contain benefits that are reasonable in relation to the premium charged. Long-term care insurance policies that require prior hospitalization or institutionalization as a condition of coverage may not require that the present hospitalization or institutionalization be for the same condition for which the insured was previously hospitalized or institutionalized. Long-term care insurance policies may not require, as a condition of coverage, that rehabilitation received by the insured demonstrably improve the insured's condition. The elimination period for any one confinement may not exceed 100 days for a long-term care insurance policy or one year for a long-term care insurance rider.

An insurer may make application for an elimination period in excess of 100 days, provided that specific suitability criteria or underwriting procedures are filed with the application. If the director finds that the procedures or criteria provide adequate protection for consumers, the director may approve the application.

Long-term care policies which condition payment of benefits on the inability to perform activities of daily living (ADLs) may not be so restrictive that they exclude coverage of services provided at least at the level of intermediate care and may not be used to restrict coverage for organic brain disorders, including Alzheimer's disease and senile dementia. This paragraph also applies to policies basing benefits on functional incapacity. Long-term care policies or portions thereof that condition the receipt of benefits on ADLs or functional incapacity may not also condition benefits on a certain level of care.

Source: 16 SDR 208, effective June 3, 1990; 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.

Law Implemented: SDCL 58-17B-3, 58-17B-6, 58-17B-7.

Cross-Reference: Intermediate care services, § 67:16:04:18.

20:06:21:02.01. Annuity policies with long-term care benefits subject to waiting period. An annuity policy that provides long-term care benefits may contain a waiting period before long-term care benefits are payable in addition to an elimination period. The waiting period may not exceed two years and may only be issued to applicants who are determined to be able to self fund the long-term care benefit during the waiting period pursuant to suitability guidelines as approved by the director. Any waiting periods or any other limitations on the use of annuity proceeds to fund long-term care must be prominently disclosed in advertising and solicitation materials.

Source: 34 SDR 88, effective September 10, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:03. Renewability of group policies -- Required disclosures. Group long-term care insurance policies that are issued in this state or filed for approval pursuant to SDCL 58-17B-14 and that are neither guaranteed renewable or noncancelable shall prominently state on the front page of each certificate that the coverage is conditionally renewable and shall state in clear and concise language the conditions for nonrenewal.

Source: 16 SDR 208, effective June 3, 1990.

General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.

Law Implemented: SDCL 58-17B-3, 58-17B-12.

20:06:21:04. Permissible exclusions from coverage. A long-term care insurance policy may exclude or limit coverage for the following:

(1) Declared or undeclared war;

(2) Suicide or self-inflicted injuries;

(3) Alcoholism or drug abuse. This subdivision does not permit an exclusion or limitation for long-term care services due to the insured's alcoholism or drug abuse, other than for the treatment of alcoholism or drug abuse;

(4) Mental or emotional disorder;

(5) Pre-existing conditions;

(6) Participation in a felony, riot, or insurrection;

(7) Treatment in a government facility at no charge to the insured or that portion of any treatment which is paid by a government plan;

(8) Limitations based on territory;

(9) Mental or nervous disorders. This subdivision does not permit exclusion or limitation of benefits because of Alzheimer's disease;

(10) Aviation. This exclusion applies only to passengers who have not paid fares;

(11) Workers' compensation. Work-related injuries or illnesses if benefits are paid under workers' compensation or other similar laws;

(12) Service or care provided by a family member unless:

(a) The family member is a regular employee of the service or care provider furnishing the service or care;

(b) The service or care provider receives the payment for the service or care; and

(c) The family member receives no compensation other than the normal compensation for an employee in his or her job category; or

(13) For group coverage issued on a guaranteed issue basis an inability to perform activities of daily living or a severe cognitive impairment that predated the coverage and was continuous in determining whether the benefit triggers have been met. An inability to perform an activity of daily living that pre-dated coverage is considered continuous unless the insured demonstrates that the insured has regained the ability to perform that activity of daily living based on the same standards that are applied as benefit triggers under the policy.

Source: 16 SDR 208, effective June 3, 1990; 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002; 29 SDR 107, effective February 5, 2003; 31 SDR 21, effective August 23, 2004.

General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.

Law Implemented: SDCL 58-17B-11.

20:06:21:05. Loss ratios. This section applies to all long-term care insurance policies or certificates except those covered under § 20:06:21:61 and §§ 20:06:21:63 to 20:06:21:69, inclusive.

A long-term care insurance policy sold in this state shall meet or exceed the minimum loss ratio. The minimum loss ratio for an individual policy is 60 percent. The minimum loss ratio for a group policy is 65 percent. Long-term care insurance coverage sold through the mail or mass media advertising is considered an individual policy and not a group policy. The loss ratio shall be calculated based on earned premium and incurred loss in the aggregate. The premium shall be designed to develop at least the minimum loss ratio over the lifetime of the policy. An anticipated loss ratio shall be based on generally accepted actuarial principles and practices as published in the Actuarial Standards of Practice.

All filings of rates and rating schedules shall demonstrate that actual and expected losses, in relation to premiums, comply with the requirements of this section.

Loss ratio requirements do not apply to long-term care riders attached to or provisions included in life insurance policies.

In evaluating the expected loss ratio, consideration shall be given to all relevant factors, including:

(1) Statistical credibility of incurred claims experience and earned premiums;

(2) The period for which rates are computed to provide coverage;

(3) Experienced and projected trends;

(4) Concentration of experience within early policy duration;

(5) Expected claim fluctuation;

(6) Experience refunds, adjustments, or dividends;

(7) Renewability features;

(8) All appropriate expense factors;

(9) Interest;

(10) Experimental nature of the coverage;

(11) Policy reserves;

(12) Mix of business by risk classification; and

(13) Product features such as long elimination periods, high deductibles, and high maximum limits.

Source: 16 SDR 208, effective June 3, 1990; 22 SDR 106, effective February 18, 1996; 25 SDR 13, effective August 9, 1998; 26 SDR 26, effective September 1, 1999; 27 SDR 54, effective December 4, 2000; 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.

General Authority: SDCL 58-17B-8.

Law Implemented: SDCL 58-17B-8.

Reference: Actuarial Standards of Practice, American Academy of Actuaries. Copies may be obtained free of charge on the website: http:/www.actuarialstandardsboard.org/asops.htm.

20:06:21:05.01. Relation of benefits to premium for accelerated death benefit on life insurance. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:

(1) The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy;

(2) The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of SDCL 58-15-31;

(3) The policy meets the disclosure requirements of §§ 20:06:21:44.01, 20:06:21:47, and 20:06:21:48;

(4) Any policy illustration that meets the applicable requirements of chapter 20:06:38; and

(5) An actuarial memorandum is filed with the Division of Insurance that includes:

(a) A description of the basis on which the long-term care rates were determined;

(b) A description of the basis for the reserves;

(d) A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

(e) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

(f) The estimated average annual premium per policy and the average issue age;

(g) A statement as to whether underwriting is performed at the time of application. If underwriting is used the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

(h) A description of the effect of the long-term policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-8.

Law Implemented: SDCL 58-17B-8.

20:06:21:06. Cost-of-living adjustments -- Basis. The annual cost-of-living adjustment may be based on either the medical care component of the federal consumer price index or may be based on a fixed percentage increase of not less than five percent or more than ten percent. The adjustment period must continue for at least ten years or to age 85, whichever is sooner. The maximum lifetime benefit, if any, must be increased by the same percentage as the daily benefit. Annual adjustments must continue during the entire adjustment period regardless of the claims status of the policy.

An insurer may offer periodic adjustments in lieu of annual adjustments if the adjustments offered are at intervals of no more than three years. If the periodic adjustment is based on a fixed percentage, the adjustment must be at a rate which complies with the annual fixed percentage total over the period used.

If a company already offers a cost-of-living adjustment endorsement that meets the requirements of this section, other adjustment endorsements may be offered if the director determines that the endorsements are in the public interest.

If a policy states the maximum policy limit as a time interval, the maximum policy limit is not required to be adjusted. The daily benefit is required to be adjusted.

Notwithstanding any other provision, an insurer may not be required to increase its maximum lifetime benefit beyond $500,000.

Source: 16 SDR 208, effective June 3, 1990; 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4, 58-17B-13.1.

Law Implemented: SDCL 58-17B-13.

20:06:21:06.01. Cost-of-living adjustments -- Minimum standards. An insurer may not offer a long-term care insurance policy unless the insurer also offers to the policyholder, in addition to any other inflation protection, the option to purchase a policy that provides for benefit levels along with benefit maximums to increase. The timing of increases in benefits must be related to reasonably anticipated increases in the costs of long-term care services covered by the policy. Insurers must offer to each policy holder, at the time of purchase, the option to purchase a policy with an inflation protection feature no less favorable than one of the following:

(1) An option which guarantees the insured individual the right to periodically increase benefit levels without providing evidence of insurability or health status if the option for the previous period was not declined. The amount of the additional benefit must be no less than the difference between the existing policy benefit and that benefit compounded annually at a rate of at least five percent for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made;

(2) An option which covers a specified percentage of actual or customary and reasonable charges and does not include a maximum specified indemnity amount or limit; or

(3) An option which increases benefit levels annually in a manner so that the increases are compounded annually at a rate not less than five percent;

(4) The offer may not be required of life insurance policies or riders containing accelerated long-term care benefits.

Source: 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4, 58-17B-13.1.

Law Implemented: SDCL 58-17B-13, 58-17B-13.1.

20:06:21:06.02. Group cost-of-living adjustments -- Exceptions. If the policy is issued to a group, the offer required in SDCL 58-17B-13 and 58-17B-13.1 and in § 20:06:21:06.01 shall be made to the group policyholder. However, if the policy is issued to a group as defined in SDCL 58-17B-2(4)(d), other than a continuing care retirement community, the offering shall be made to each proposed certificateholder.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-13.1.

Law Implemented: SDCL 58-17B-13.

20:06:21:06.03. Cost-of-living adjustments -- Continuation of benefit increases. Inflation protection benefit increases under a policy which contains such 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.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-13.1.

Law Implemented: SDCL 58-17B-13.

20:06:21:06.04. Cost-of-living adjustments -- Automatic increases -- Conspicuous offer of constant premium. An offer of inflation protection which provides for automatic benefit increases shall include an offer of a premium which the insurer expects to remain constant. The offer must disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-13.1.

Law Implemented: SDCL 58-17B-13.

20:06:21:06.05. Cost-of-living adjustments -- Rejection by policyholder. Inflation protection as provided in §§ 20:06:21:06 to 20:06:21:06.04, inclusive, shall be included in a long-term care insurance policy unless an insurer obtains a rejection of inflation protection signed by the policyholder. The rejection shall be considered a part of the application and 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 Plans (identify the plans) and I reject inflation protection.\"

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-13.1.

Law Implemented: SDCL 58-17B-13.

20:06:21:07. Applicability of rules to long-term care insurance riders. Long-term care riders attached to or included in life insurance policies must comply with the long-term care rules in this chapter unless specifically excluded.

Source: 16 SDR 208, effective June 3, 1990.

General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.

Law Implemented: SDCL 58-17B-2, 58-17B-4.

20:06:21:08. \"Medically necessary\" defined. When \"medically necessary\" is used as a condition to qualify for benefits, it may not be defined more restrictively than as requiring the certification of the insured's physician.

If a policy does not have a prior hospitalization requirement, then the following definition of medical necessity may be used: Treatment that is appropriate and consistent with the diagnosed condition. This is treatment, that, in accordance with accepted medical standards, could not have been omitted without adversely affecting the patient's condition. This definition of medical necessity may not be used for policies which condition benefits on inability to perform ADLs or functional incapacity.

Source: 16 SDR 208, effective June 3, 1990.

General Authority: SDCL 58-4-1, 58-17B-4, 58-17B-15.

Law Implemented: SDCL 58-17B-4.

20:06:21:09. Basis for conversion of coverage from group defined. For the purposes of §§ 20:06:21:09 to 20:06:21:17, inclusive, a basis for conversion of coverage means a policy provision that entitles an individual, under the following conditions, to the issuance, without evidence of insurability, of a converted policy by the insurer under whose group policy the insured is covered:

(1) The individual's coverage under the group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or for an insured class; and

(2) The individual has been continuously insured under the group policy and any group policy that it replaced, for at least six months immediately preceding termination.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:10. Converted policy from group defined. For the purposes of §§ 20:06:21:09 to 21:06:21:17, inclusive, a converted policy from group is an individual policy of long-term care insurance providing benefits identical to or benefits determined by the director to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made.

If the group policy from which conversion is made restricts provision of benefits and services to, or contains incentives to use, certain providers or facilities, the director, in determining the substantial equivalence of benefits, shall take into consideration the differences between managed care and nonmanaged care plans, including provider system arrangements; service availability; benefit levels; and administrative complexity.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:11. Converted policy from group -- Time allowed for written application. The individual, or someone acting on the individual's behalf, must apply for the converted policy in writing and must pay the first premium due, if any, as directed by the insurer not later than 31 days after termination of coverage under the group policy. The insurer shall issue the converted policy effective on the day following the termination of coverage under the group policy. The converted policy must be renewable annually.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:12. Converted policy from group -- Calculation of policy premium. Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of coverage under the group policy from which conversion is made. If the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured's age at inception of the insured's coverage under the previous group policy.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:13. Continuation or conversion is mandatory -- Exceptions. Continuation of coverage or issuance of a converted policy is mandatory, except as follows:

(1) Termination of group coverage resulted from an individual's failure to make a required payment of premium or contribution when due; or

(2) The terminating coverage is replaced not later than 31 days after termination by group coverage which is effective on the day following the termination of coverage and meets the following requirements:

(a) The replacement coverage provides benefits identical to or benefits determined by the director to be substantially equivalent to or in excess of those provided by the terminating coverage; and

(b) The premium for the replacement coverage is calculated in a manner consistent with the requirements of § 20:06:21:12.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:14. Converted policy from group to individual -- Reduction of benefits -- Exception. Notwithstanding any other provision of §§ 20:06:21:09 to 20:06:21:17, inclusive, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy which provides benefits on the basis of incurred expenses may contain a provision which results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100 percent of incurred expenses. The provision may only be included in the converted policy if the converted policy also provides for a premium decrease or refund which reflects the reduction in benefits payable.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:15. Converted policy from group -- Benefits payable. The converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, may not exceed those that would have been payable had the individual's coverage under the group policy remained in force.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:16. Converted policy from group -- Eligibility for coverage of relatives. Notwithstanding any other provision of § 20:06:21:17, any insured individual whose eligibility for group long-term care coverage is based upon a relationship to another person is entitled to continuation of coverage under the group policy on termination of the qualifying relationship by death or dissolution of marriage.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:17. Converted policy from group -- Managed care plan defined. For the purposes of §§ 20:06:21:09 to 20:06:21:16, inclusive, a managed-care plan is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management, or use of specific provider networks.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:18. Discontinuance and replacement of a group policy. If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the insurer and premiums charged to persons under the new group policy may not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced and may not vary or otherwise depend on the individual's health or disability status, claim experience, or use of long-term care services.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5, 58-17B-5.1, 58-17B-6.

20:06:21:19. Premium increase prohibitions. The premiums charged to an insured for long-term care insurance may not increase due to either the increasing age of the insured at ages beyond 65 or the duration the insured has been covered under the policy.

(1) The purchase of additional coverage may not be considered a premium rate increase, but for purposes of the calculation required under § 20:06:21:58, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.

(2) A reduction in benefits may not be considered a premium change, but for purpose of the calculation required under § 20:06:21:58, the initial annual premium shall be based on the reduced benefits.

Source: 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 18, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-1, 58-17B-4.

20:06:21:20. Lapse or termination notice required. An individual long-term care policy or certificate may not be issued until the insurer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium or a written waiver dated and signed by the applicant electing not to designate additional persons to receive notice. The applicant may designate at least one person who is to receive the notice of termination, in addition to the insured. Designation does not constitute acceptance by the third party of any liability for services provided to the insured.

The form used for the written designation must provide space clearly designated for listing at least one person. The designation shall include each person's full name and home address.

If an applicant elects not to designate an additional person, the waiver shall state: \"Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until 30 days after a premium is due and unpaid. I elect NOT to designate any person to receive such a notice.\"

The insurer shall notify the insured of the right to change the written designation at least once every two years.

When soliciting a long-term care insurance application an agent must affirmatively offer lapse designation as provided for by this section and may not encourage or influence an applicant not to designate another person to receive notice of lapse or termination. An agent will be presumed to either have not offered or to have encouraged or influenced a person not to designate another person for lapse designation if at least one-half of the applications for that agent submitted during any year's period of time fail to list a lapse or termination designee. This presumption may be rebutted by a preponderance of evidence showing that the agent both offered the lapse designation and did not encourage or influence the person not to designate another person for notice of lapse or termination.

Source: 22 SDR 97, effective December 18, 1995; 34 SDR 88, effective September 10, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.

20:06:21:21. Lapse or termination for payment through payroll or pension deduction plan. If the policyholder or certificateholder pays the premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in § 20:06:21:20 need not be met until 60 days after the policyholder or certificateholder is no longer on such a payment plan. The application or enrollment form for the policies or certificates shall clearly indicate the payment plan selected by the applicant.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.

20:06:21:22. Lapse or termination for nonpayment of premium. An individual long-term care policy or certificate may not lapse or be terminated for nonpayment of premium unless the insurer, at least 30 days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated pursuant to § 20:06:21:20 at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice shall be given by first class United States mail, postage prepaid. Notice may not be given until 30 days after a premium is due and unpaid. Notice is considered given five days after the date of mailing.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.

20:06:21:23. Disclosure of renewability. Individual long-term care insurance policies shall contain a renewability provision. The provision must be captioned, must appear on the first page of the policy, and must clearly state that the coverage is guaranteed renewable or noncancellable.

This section does not apply to policies under which the right to nonrenew is reserved solely to the policyholder and which do not contain a renewability provision. This paragraph applies to long-term care policies which are part of or combined with life insurance policies which do not contain renewability provisions.

Source: 22 SDR 97, effective December 18, 1995; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-10.

20:06:21:24. Disclosure of payment of benefits based on certain standards. A long-term care insurance policy which provides for the payment of benefits based on standards described as \"usual and customary,\" \"reasonable and customary,\" or similar words must include a definition of the terms and an explanation of the terms in its accompanying outline of coverage.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-10.

20:06:21:25. Disclosure of limitations on preexisting conditions. If a long-term care insurance policy or certificate contains any limitations on preexisting conditions, the limitations must appear as a separate paragraph of the policy or certificate and must be labeled as \"Preexisting Condition Limitations.\"

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-10.

20:06:21:26. Disclosure of other limitations or conditions on eligibility for benefits. A long-term care insurance policy or certificate containing any limitations or conditions for eligibility other than those prohibited in SDCL 58-17B-7 must contain a description of the limitations or conditions, including any required number of days of confinement in a separate paragraph of the policy or certificate, and shall clearly label the paragraph.

Source: 22 SDR 97, effective December 18, 1995; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-7, 58-17B-10.

20:06:21:26.01. Notice to claimants -- Temporary leave. Within 30 days of receiving a claim or other written notice that an insured has entered a nursing home or assisted living center, the insurer must provide notice to the insured of the applicable policy or certificate provisions that would apply should the insured temporarily leave the nursing home or assisted living center. If benefits are provided through a bed reservation benefit or other policy provision, the notice must explain the extent of such coverage. If benefits are excluded, the notice must advise the insured of the scope of the exclusion and identify any applicable policy or certificate provision. If a temporary absence from the nursing home or assisted living center affects other policy or certificate benefits or conditions such as waiver of premium, that effect must also be explained in the notice. If, as of the effective date of this rule, an insured had been in a nursing home or assisted living center for 30 or more days and the insurer had received notice of the nursing home or assisted living center stay, the notice required pursuant to this section must be provided to that insured. An insurer may satisfy the requirements of this section by including the notice requirements in other written communications, including claim communications, sent to the insured. No filing of the notice to the director is required. The provisions of this section will be effective October 1, 2005.

The following sample language of notices may be used by insurers to comply with the notice requirements of this section provided that it is consistent with the provisions of the policy or contract:

(1) Your [policy] has a bed reservation benefit. If you leave the nursing home or assisted living center for a period of not more than [X] days during a 12-month period, those days are payable subject to other [policy] limitations that may apply.

(2) Your [policy] does not contain bed reservation benefits. If you leave the nursing home or assisted living center and are not provided care by that facility, you will not be covered for the days that your were absent from the facility. The absence [will/will not] result in your having to again satisfy the waiver of premium waiting period.

Source: 31 SDR 214, adopted June 16, 2005, effective October 1, 2005.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:27. Outline of coverage. Insurers 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 over the policy period with a policy that does not increase benefits. The graphic comparison must show benefit levels over at least a 20-year period; and

(2) Any expected premium increases or additional premiums to pay for automatic or optional benefit increases.

An insurer may use a reasonable hypothetical or a graphic demonstration for the purposes of this disclosure.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-10.

20:06:21:28. Outline of coverage -- Standard format. The outline of coverage shall be a freestanding document, using no smaller than ten-point type. Text that is capitalized or underscored in the standard format outline or coverage may be emphasized by other means that provide prominence equivalent to the capitalization or underscoring. Use of the text and sequence of text of the standard format outline of coverage is mandatory, unless otherwise specifically indicated. The outline of coverage shall contain no material of an advertising nature. The standard format for an outline of coverage complying with SDCL 58-17B-10 is as follows:

(1) Company name;

(2) Address - city and state.

(3) Telephone number;

(4) Designate the product as long-term care insurance;

(5) Outline of coverage; and

(6) Policy number or group master policy and certificate number.

Except for policies or certificates which are guaranteed issue, a caution statement as set forth in Appendix A at the end of this chapter, or language substantially similar, must appear in the outline of coverage.

Source: 22 SDR 97, effective December 18, 1995; 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-10.

20:06:21:28.01. Applications -- Questions about replacement. Application forms shall include questions designed to elicit information as to whether, as of the date of the application, the applicant has another long-term care insurance policy or certificate in force or whether a long-term care policy or certificate is intended to replace any other accident and sickness or long-term care policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and the agent, if any, containing the questions may be used. Unless coverage is direct marketed, the agent must ask and record the answers to all questions on the forms.

An insurer may complete or make contractual arrangements for persons other than agents to complete the appropriate application questions. The requirements of chapter 20:06:45 apply to such arrangements. If an insurer uses a contractor or performs the service of completing the application, the contractor or person performing the service must ask the applicant the appropriate application questions and such persons must record the applicant's responses to the questions in the application. While assisting the applicant in completing the application, a contractor is prohibited from attempting to sell or to interest the applicant in purchasing any product. The insurer is responsible for any failure to ask and accurately record the applicant's responses.

Nothing in this section in any way modifies the requirement for a person to hold an insurance agent license if that person sells, solicits, or negotiates insurance.

If the policy is a replacement policy issued to a group defined by SDCL 58-17A-1(6), the required questions may be modified only to the extent necessary to elicit information about health or long-term care insurance policies other than the group policy being replaced, provided that the certificateholders have been notified of the replacement.

The questions required by this section are as follows:

(1) Do you have another long-term care insurance policy or certificate in force (including a health care service contract or a health maintenance organization contract)?

(2) Did you have another long-term care insurance policy or certificate in force during the last 12 months?

(a) If so, with which company?

(b) What is the expiration or \"paid-to\" date of that policy?

(3) Are you covered by Medicaid? and

(4) Do you intend to replace any of your medical or health insurance coverage with this policy (certificate)?

Agents must list any other health insurance policies they have sold to the applicant which are still in force and policies sold in the past five years which are no longer in force.

An insurer may delete the question in subdivision (2)(b) of this section from the application if the insurer either obtains the same information by means of a suitability form to be completed by the agent or obtains this information during the underwriting process.

Source: 23 SDR 55, effective October 20, 1996; 37 SDR 215, effective May 31, 2011; 39 SDR 10, effective August 1, 2012; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-5.1.

20:06:21:29. Replacement notices. Upon determining that a sale will involve replacement, an insurer, other than an insurer using direct response solicitation methods or its agent, shall furnish the applicant, before issuance or delivery of the individual long-term care insurance policy, a notice regarding replacement of accident and sickness or long-term care coverage. The applicant shall retain one copy of the notice and the insurer shall retain an additional copy signed by the applicant. The notice must be substantially the same as the notice published in Appendix B at the end of this chapter.

Insurers using direct response solicitation methods shall deliver a notice regarding replacement of accident and sickness or long-term care coverage to the applicant upon issuance of the policy. The notice must be substantially the same as the notice published in Appendix C at the end of this chapter.

If replacement is intended, the replacing insurer shall notify, in writing, the existing insurer of the proposed replacement. The existing policy shall be identified by the insurer, name of the insured and policy number, and address, including zip code. The notice shall be made within five working days from the date the application is received by the insurer or the date the policy is issued, whichever is sooner.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-5.1.

20:06:21:30. Filing requirements for advertising -- Exemption. Each insurer, health care service plan, or other entity providing long-term care insurance or benefits in this state shall provide a copy of any long-term care insurance advertisement intended for use in this state, whether through written, radio, or television medium, to the director for review within 30 days of its use. In addition, all advertisements shall be retained by the insurer, health care service plan, or other entity for at least five years from the date the advertisement was first used. The director may exempt from the requirements in this section any advertising form or material if, in the director's opinion, any requirement may not be reasonably applied.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-12.

20:06:21:31. Standards for marketing -- Requirements. Each insurer, health care service plan, or other entity marketing long-term care insurance coverage in this state, directly or through its producers, shall:

(1) Establish marketing procedures and agent training requirements to assure that any comparison of policies by its agents or other producers will be fair and accurate;

(2) Establish marketing procedures and agent training requirements to assure that excessive insurance is not sold or issued;

(3) Display prominently by type, stamp, or other means, on the first page of the outline of coverage and policy the following: \"Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations\";

(4) Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of any such insurance, except in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance is not required;

(5) Establish auditable procedures for verifying compliance with this section; and

(6) Provide an explanation of contingent benefit upon lapse provided for in subdivision 20:06:21:58(4)(c) and, if applicable, the additional contingent benefit upon lapse provided to policies with fixed or limited premium paying periods in subdivision 20:06:21:58(4)(d).

If the state in which the policy or certificate is to be delivered or issued for delivery has a senior insurance counseling program approved by the director in the state in which the certificate was issued, the insurer shall, at solicitation, provide written notice to the prospective policyholder or certificateholder that such a program is available and the name, address, and telephone number of the program.

Source: 22 SDR 97, effective December 18, 1995; 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-12.

20:06:21:32. Standards for marketing -- Prohibited practices. In addition to the practices prohibited in SDCL chapter 58-33, the following practices are prohibited:

(1) Twisting. Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing or tending to induce a person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert an insurance policy or to take out a policy of insurance with another insurer;

(2) High pressure tactics. Employing any method of marketing inducing, having the effect of inducing, or tending to induce the purchase of insurance through force, fright, explicit or implied threat, or undue pressure to purchase or recommend the purchase of insurance;

(3) Cold lead advertising. Making use directly or indirectly of a method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company; and

(4) Misrepresentation. Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.

Source: 22 SDR 97, effective December 18, 1995; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-1, 58-17B-12.

20:06:21:33. Standards for marketing -- Associations. If an association, as defined in SDCL 58-17B-2(4)(c), endorses or sells long-term care insurance, the primary responsibility of the association regarding the obligations set forth in this section is to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by it to ensure that members of the association receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold. The obligations are as follows:

(1) The insurer shall file with the division the following material:

(a) The policy and certificate;

(b) A corresponding outline of coverage; and

(2) The association shall disclose the following in any long-term care insurance solicitation:

(a) The specific nature and amount of the compensation arrangements, including all fees, commissions, administrative fees, and other forms of financial support, that the association receives from endorsement or sale of the policy or certificate to its members; and

(b) A brief description of the process under which such policies and the insurer issuing such policies were selected;

(3) If the association and the insurer have interlocking directorates or trustee arrangements, the association shall disclose that fact to its members;

(4) The board of directors of an association selling or endorsing long-term care insurance policies or certificates shall review and approve the insurance policies as well as the compensation arrangements made with the insurer;

(5) At the time of the association's decision to endorse, the association shall engage the services of a person with expertise in long-term care insurance who is not affiliated with the insurer to conduct an examination of the policies, including benefits, features, and rates, and shall update the examination thereafter if material change occurs;

(6) The association shall actively monitor the marketing efforts of the insurer and its agents;

(7) The association shall review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policies or certificates.

A group long-term care insurance policy or certificate may not be issued to an association unless the insurer files with the division the information required in this section. The insurer may not issue a long-term care policy or certificate to an association or continue to market such a policy or certificate unless the insurer certifies annually that the association has complied with the requirements in this section.

Failure to comply with the filing and certification requirements of this section constitutes an unfair trade practice within the meaning of SDCL 58-33-38.

Source: 22 SDR 97, effective December 18, 1995.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-2(4)(c).

20:06:21:34. Extension of benefits. Termination of long-term care insurance is without prejudice to any benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. Extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of any benefit period or to payment of the maximum benefits and may be subject to any policy waiting period and all other applicable provisions of the policy.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:35. Basis for continuation or conversion from group coverage required. Group long-term care insurance issued in this state after October 19, 1996, must provide covered individuals with a basis for continuation or conversion of coverage.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:36. Basis for continuation of coverage from group defined. For the purposes of §§ 20:06:21:09 to 20:06:21:17, inclusive, § 20:06:21:35, and this section, a basis for continuation of coverage means a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate and that is subject only to the continued timely payment of premiums when due.

Group policies which restrict provision of benefits and services to, or contain incentives to use, certain providers or facilities may provide continuation benefits which are substantially equivalent to the benefits of the existing group policy. The director shall determine the substantial equivalence of benefits. In determining substantial equivalence, the director shall take into consideration the differences between managed care and nonmanaged care plans, including provider system arrangements; service availability; benefit levels; and administrative complexity.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:37. Reinstatement. In addition to the notice requirement in § 20:06:21:20, a long-term care insurance policy or certificate must include a provision for reinstatement of coverage in the event of lapse if the insurer is provided proof of cognitive impairment or the loss of functional capacity. This option must be available to the insured if it is requested within five months after termination and must allow for the collection of any past due premium. The standard of proof of cognitive impairment or loss of functional capacity may not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity, if any, contained in the policy or certificate.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:38. Disclosure of riders and endorsements. Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after the date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy must have a signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing and signed by the insured unless the increased benefits or coverage are required by law. If a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge must be specified in the policy, rider, or endorsement.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-10.

20:06:21:39. Disclosure of tax consequences. Life insurance policies which provide an accelerated benefit for long-term care must have a disclosure statement at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable and that assistance should be sought from a personal tax advisor. The disclosure statement must be prominently displayed on the first page of the policy or rider and any other related documents.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-10.

20:06:21:40. Applications -- Health and medication questions. All applications for long-term care insurance policies or certificates, except those which are guaranteed issue, must contain clear and unambiguous questions designed to ascertain the health condition of the applicant. If an application for long-term care insurance contains a question which asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the medication that has been prescribed. If the medications listed in the application were known, or should have been known, by the insurer at the time of application to be directly related to a medical condition for which coverage would otherwise be denied, the policy or certificate may not be rescinded for that condition.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-6.

20:06:21:41. Applications -- Notice about incorrect answers. Except for policies or certificates which are guaranteed issue, the following language must be set out conspicuously and in close conjunction with the applicant's signature block on an application for a long-term care insurance policy or certificate:

Caution: If your answers on this application are incorrect or untrue, (company) has the right to deny benefits or rescind your policy.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-6.

20:06:21:42. Policies -- Notice about incorrect answers on applications. Except for policies or certificates which are guaranteed issue, the following language must be set out conspicuously on the long-term care insurance policy or certificate:

Caution: The issuance of this long-term care insurance [policy[ [certificate[ is based upon your response to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address].

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-6.

20:06:21:43. Elderly applicants -- Required information. Before issuance of a long-term care policy or certificate to an applicant age 80 or older, the insurer must obtain one of the following:

(1) A report of a physical examination;

(2) An assessment of functional capacity;

(3) An attending physician's statement; or

(4) Copies of medical records.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-6.

20:06:21:44. Applications -- Delivery. A copy of the completed application or enrollment form, as applicable, must be delivered to the insured no later than at the time of delivery of the policy or certificate unless it was retained by the applicant at the time of application. If an application for a long-term care insurance contract or certificate is approved, the issuer shall deliver the contract or certificate of insurance to the applicant no later than 30 days after the date of approval.

Source: 23 SDR 55, effective October 20, 1996; 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-6.

20:06:21:44.01. Applications -- Delivery upon approval. Repealed.

Source: 28 SDR 157, effective May 19, 2002; repealed, 30 SDR 89, effective December 9, 2003.

20:06:21:45. Records of rescissions -- Maintaining and filing records. Each insurer or other entity selling or issuing long-term care insurance benefits must maintain a record of all policy or certificate rescissions, both state and countrywide, except those which the insured voluntarily effectuated and must annually furnish this information to the director in the format prescribed in Appendix D at the end of this chapter.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-6.

20:06:21:46. Minimum standards for home health and community care benefits. The following minimum standards for home health and community care benefits must be complied with for long-term care policies, as well as for any policies or certificates that contain stand-alone home health care benefits or home health care benefits issued in conjunction with coverage for long-term care services, other than institutional based long-term care:

(1) If it provides benefits for home health care or community care services, a long-term care insurance policy or certificate may not limit or exclude benefits in any of the following ways:

(a) By requiring that the insured or claimant would need care in a skilled nursing facility if home health care services were not provided;

(b) By requiring that the insured or claimant first or simultaneously receive nursing, therapeutic services, or both, in a home, community, or institutional setting before home health care services are covered;

(d) By requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide or other licensed or certified home care worker acting within the scope of licensure or certification;

(e) By excluding coverage for personal care services provided by a home health aide;

(f) By requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the service eligible for coverage;

(g) By requiring that the insured or claimant have an acute condition before home health care services are covered;

(h) By limiting benefits to services provided by Medicare-certified agencies or providers; or

(i) By excluding coverage for adult day care services;

(2) If it provides benefits for home health care or community care services, a long-term care insurance policy or certificate, must provide total home health or community care coverage that is equivalent in dollars to at least one-half of one year's coverage available for nursing home benefits under the policy or certificate at the time covered home health or community care services are being received. This requirement does not apply to policies or certificates issued to residents of continuing care retirement communities;

(3) Home health care coverage may be applied to the maximum health care benefits provided in the policy or certificate when determining maximum coverage under the terms of the policy or certificate;

(4) If home health coverage is provided, the coverage must provide benefits for at least one year in daily amounts not less than half of the daily benefit for nursing facilities. If the daily benefit for home health care is less than that for nursing facilities, the insurer may only deduct the pro-rata difference from the lifetime maximum;

(5) The home health care benefit must contain at least 365 benefit days and at least a $25 daily maximum benefit. This subdivision does not apply to long-term care benefits which are provided through a life insurance policy or certificate.

Source: 23 SDR 55, effective October 20, 1996; 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:47. Policy summary for individual life insurance policy containing long-term care benefits. At the time an insurer delivers an individual life insurance policy which provides long-term care benefits within the policy or by rider, the insurer must deliver a policy summary. If the policy is the result of direct response solicitation, the insurer must deliver the policy summary upon the applicant's request, but no later than the time of policy delivery. The summary must also include:

(1) An explanation of how the long-term care benefit interacts with other components of the policy, including deductions from death benefits;

(2) An illustration of the amount of benefits, the length of benefits, and the guaranteed lifetime benefits, if any, for each covered person;

(3) Any exclusions, reductions, and limitations on benefits of long-term care; and

(4) If applicable to the policy type, the summary must also include:

(a) A disclosure of the effects of exercising other rights under the policy;

(b) A disclosure of the premiums attributable to the long-term care component of the policy or certificate;

(d) A disclosure of guarantees related to long-term care costs of insurance charges.

(5) A statement that any long-term care inflation protection option required by §§ 20:06:21:06.01 to 20:06:21:06.05, inclusive, is not available under this policy.

The provisions of the policy summary listed above may be incorporated into a basic illustration required to be delivered in accordance with §§ 20:06:38:04 to 20:06:38:11, inclusive, or into the life insurance policy summary which is required to be delivered in accordance with § 20:06:14:04.

Source: 23 SDR 55, effective October 20, 1996; 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:48. Monthly report to policyholder. If a long-term care benefit funded through a life insurance vehicle by the acceleration of the death benefit is in benefit payment status, the insurer must provide a monthly report to the policyholder. The report must include:

(1) Any long-term care benefits paid out during the month;

(2) An explanation of any changes in the policy, e.g., death benefits or cash values, caused by long-term care benefits being paid out; and

(3) The amount of long-term care benefits existing or remaining.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:49. Incontestability period. The following incontestability periods must be complied with for long-term care policies:

(1) For a policy or certificate that has been in force for less than six months, an insurer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim upon a showing of misrepresentation that is material to the acceptance for coverage;

(2) For a policy or certificate that has been in force for at least six months but less than two years, an insurer may rescind a long-term care insurance policy or certificate or deny an otherwise valid long-term care insurance claim upon a showing of misrepresentation that is both material to the acceptance for coverage and which pertains to the condition for which benefits are sought;

(3) After a policy or certificate has been in force for two years, it is not contestable upon the grounds of misrepresentation alone; the policy or certificate may be contested only upon a showing that the insured knowingly and intentionally misrepresented relevant facts relating to the insured's health;

(4) A long-term care insurance policy or certificate may be field-issued if the compensation to the field issuer is not based on the number of policies or certificates issued. For purposes of this section, field-issued means a policy or certificate issued by an agent or a third-party administrator pursuant to the underwriting authority granted to the agent or third party administrator by an insurer and using the insurer's underwriting guidelines;

(5) If an insurer has paid benefits under the long-term care insurance policy or certificate, the benefit payments may not be recovered by the insurer if the policy or certificate is rescinded.

Source: 23 SDR 55, effective October 20, 1996; 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:50. Assisted living center or facility defined. An assisted living center or facility is any institution, place, building, or agency licensed by the state if such a license is required, which is maintained and operated to provide to five or more individuals personal care and services which meet some basic need beyond provisions of food, shelter, and laundry, in accordance with the following criteria:

(1) Provides 24-hour-a-day care and services sufficient to support needs resulting from an inability to perform activities of daily living or from cognitive impairment;

(2) Has an employee on duty at all times who is awake, trained, and ready to provide care;

(3) Provides three meals a day, including special dietary requirements;

(4) Has formal arrangements for the services of a doctor or nurse to furnish medical care in the event of an emergency; and

(5) Is authorized to administer medication to patients on the order of a doctor.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

Cross-Reference: License required to operate institution, SDCL 34-12-2.

20:06:21:51. Assisted living centers -- Minimum benefit standards. An insurer offering long-term care coverage to any person in this state must include benefits for assisted living centers. If coverage for assisted living centers is provided, the coverage must provide benefits for at least one year in daily amounts not less than half of the daily benefit for nursing facilities. If the daily benefit for assisted living centers is less than that for nursing facilities, the insurer may only deduct the pro-rata difference from the lifetime maximum.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:52. Reporting requirements for insurers. Each insurer must comply with the following reporting requirements for long-term care policies:

(1) The insurer must maintain records for each agent of that agent's amount of replacement sales as a percent of the agent's total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent's total annual sales;

(2) The insurer must report to the director annually by June 30 the ten percent of its agents with the greatest percentages of lapses and replacements as measured by subdivision (1) of this section (Appendix J);

(3) The insurer must report to the director annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year (Appendix J);

(4) The insurer must report to the director annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year (Appendix J); and

(5) Every insurer shall report to the director annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied (Appendix H).

No finding by the director of a violation of insurance laws may be based solely upon reported replacement and lapse rates.

For the purposes of this section, \"policy\" means only long-term care insurance, \"claim\" means a request for payment of benefits under an in force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met, \"denied\" means the insurer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition, and \"report\" means on a statewide basis.

Source: 23 SDR 55, effective October 20, 1996; 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:53. Appropriateness of recommended purchase or replacement. In recommending the purchase or replacement of a long-term care insurance policy or certificate, an agent must make a reasonable effort to determine the appropriateness of a recommended purchase or replacement. The provisions of §§ 20:06:13:43.01 and 20:06:13:43.02 apply to this chapter.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-5.1.

20:06:21:53.01. Suitability standards. Every insurer, health care service plan or other entity marketing long-term care insurance, all referred to as the \"issuer\", shall:

(1) Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant;

(2) Train its agents in the use of its suitability standards; and

(3) Maintain a copy of its suitability standards and make them available for inspection upon request by the director.

To determine if the applicant meets the suitability standards developed by the issuer, as required by this section, the agent and issuer shall develop procedures that consider the following:

(1) The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

(2) The applicant's goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and

(3) The values, benefits, and costs of the applicant's existing insurance, if any, when compared to the values, benefits, and costs of the recommended purchase or replacement.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:53.02. Suitability - Long-term care insurance personal worksheet. The issuer, and when an agent is involved, the agent, shall make reasonable efforts to obtain the information set out in § 20:06:21:53.01. The efforts must include presentation to the applicant, at or prior to application, the \"Long-Term Care Insurance Personal Worksheet.\" The personal worksheet used by the issuer must contain, at a minimum, the information in the format contained in Appendix E, in not less than 12 point type. The issuer may request the applicant to provide additional information to comply with its suitability standards. A copy of the issuer's personal worksheet shall be filed with the director.

A completed personal worksheet shall be returned to the issuer prior to the issuer's consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses. The sale or dissemination outside the company or agency by the issuer or agent of information obtained through the personal worksheet in Appendix E is prohibited.

The issuer shall use the suitability standards it has developed pursuant to § 20:06:21:53.01 in determining whether issuing long-term care insurance coverage to an applicant is appropriate. Agents shall use the suitability standards developed by the issuer in marketing long-term care insurance. At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled \"Things You Should Know Before You Buy Long-Term Care Insurance\" shall be provided. The form must be in the format contained in Appendix F in not less than 12 point type.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:53.03. Suitability -- Response letter. If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer shall send the applicant a response letter similar to Appendix G. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant's intent. Either the applicant's returned letter or a record of the alternative method of verification shall be made part of the applicant's file. The return of the response letter by an applicant indicating a desire to purchase the coverage, does not constitute a defense for any producer for any violation of the insurance laws and rules of this state.

The commission or compensation, for the sale of a long-term care policy or certificate on which the issuer has determined that the applicant does not meet its financial suitability standards, shall be no greater than the renewal compensation.

The issuer shall report annually by June 30 to the director the total number of applicants received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter.

Source: 28 SDR 157, effective May 19, 2002; 31 SDR 67, effective November 14, 2004.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:53.04. Suitability -- Policies not included. Sections 20:06:21:53.01 to 20:06:21:53.03, inclusive, do not apply to life insurance policies that accelerate benefits for long-term care.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:53.05. Suitability -- Overinsurance. A long-term care insurance policy issued to an individual who already possesses insurance substantially covering the same risk and paying for the same coverage may be deemed to be overinsurance by the director. The issuance of a long-term care policy or certificate to an applicant who has long-term coverage in force and does not intend to replace the current coverage does not per se constitute overinsurance. Overinsurance does not exist unless the benefits of the policies and/or certificates when combined exceed the insured's present or reasonably expected future long-term care needs. In making a determination of whether overinsurance exists, the director shall take into consideration the carrier's overinsurance standards and whether the existing contract does or does not have a cost of living adjustment feature. If the director determines that overinsurance exists, the duplicating insurer must adjust the dates of coverage for any period of time in which overinsurance resulted to remove the duplication and refund or credit premiums toward future coverage accordingly as the duplicating insurer is liable for a full refund less benefits paid. The duplicating policy is void as of the date of issue until such time as the prior coverage terminated. The provisions of this section do not apply to life insurance policies that accelerate benefits for long-term care.

Source: 31 SDR 214, effective July 6, 2005.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:54. Requirement to deliver shopper's guide. A long-term care insurance shopper's guide in the format as published by the National Association of Insurance Commissioners or a similar guide developed or approved by the director, must be provided to all prospective applicants of a long-term care insurance policy or certificate.

If the policy is solicited by an agent, the agent must deliver the shopper's guide before presenting an application or enrollment form to the prospective applicant. The shopper's guide must be presented in conjunction with any application or enrollment form if the policy is a direct response solicitation. Life insurance policies or riders containing accelerated long-term care benefits are not required to furnish the shopper's guide, but must furnish the policy summary required by § 20:06:21:47.

Source: 23 SDR 55, effective October 20, 1996; 25 SDR 13, effective August 9, 1998; 31 SDR 214, effective July 6, 2005; 42 SDR 52, effective October 13, 2015.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4, 58-17B-10.

Reference: \"A Shopper's Guide to Long-Term Care Insurance,\" revised 2005, National Association of Insurance Commissioners. Free copies may be obtained from the South Dakota Division of Insurance, 124 South Euclid Avenue, 2^nd Floor, Pierre, SD 57501, (605) 773-3563.

20:06:21:55. Standards for benefit triggers. Long-term care policies must comply with the following standards for benefit triggers:

(1) A long-term care policy may require a recommendation by a physician that the services are necessary because of illness, injury, or infirmity, but may not condition benefits on medical necessity. If a long-term care policy provides for medical necessity as an additional mechanism to qualify for benefits, the policy may condition benefits for that additional benefit trigger based on medical necessity;

(2) Long-term care insurance policies must condition the payment of benefits on an assessment of the insured's ability to perform activities of daily living or on cognitive impairment. Activities of daily living included in a policy must include at least the six activities of daily living listed in subdivision 20:06:21:01(1) and as defined in § 20:06:21:01. Insurers may use activities of daily living to trigger covered benefits in addition to those contained in subdivision 20:06:21:01(1) if they are consistent with or no more restrictive than those contained in subdivision (1) of this section and this subdivision. A determination of impairment may not be more restrictive than requiring either a deficiency in the ability to perform three of the activities of daily living or the presence of cognitive impairment;

(3) An insurer may use additional provisions to determine when benefits are payable under a policy or certificate; however, the provisions may not restrict and may not be in lieu of the requirements contained in subdivisions (1) and (2) of this section;

(4) For purposes of this section, the determination of a deficiency may not be more restrictive than requiring the hands-on assistance of another person to perform the prescribed activities of daily living, or, if the deficiency is due to the presence of a cognitive impairment, needing the supervision or verbal cueing by another person to protect the insured or others;

(5) Assessments of activities of daily living and cognitive impairment must be performed by appropriately credentialed, experienced, trained professionals, such as physicians, registered nurses, or licensed social workers; and

(6) Long-term care insurance policies which condition the payment of benefits on an assessment of the insured's ability to perform activities of daily living or on cognitive impairment must include a clear and understandable description of the method for resolving grievances of the insured, including the process for appealing and resolving benefit determinations.

Source: 23 SDR 55, effective October 20, 1996.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:56. Additional standards for benefit triggers for qualified long-term care insurance contracts. A qualified long-term care insurance contract shall pay only for qualified long-term care services received a chronically ill individual provided pursuant to a plan of care prescribed by a licensed health care practitioner. A qualified long-term care insurance contract must condition the payment of benefits on a determination of the insured's inability to perform activities of daily living for an expected period of at least 90 days due to a loss of functional capacity or to severe cognitive impairment.

Certification regarding activities of daily living and cognitive impairment required pursuant to this section shall be performed by the following licensed or certified professionals: physicians, registered professional nurses, licensed social workers, or other individuals who meet requirements prescribed by the Secretary of the Treasury, if approved by the director. Certifications required pursuant to this section may be performed by any licensed health care professional, or, at the insured's option, a licensed health care professional at the direction of the carrier, as is reasonably necessary with respect to a specific claim, except that when a licensed health care practitioner has certified that an insured is unable to perform activities of daily living for an expected period of at least 90 days due to a loss of functional capacity and the insured is in claim status, the certification may not be rescinded and additional certifications may not be performed until after the expiration of the 90-day period.

Qualified long-term care insurance contracts must include a clear description of the process for appealing and resolving disputes with respect to benefit determinations.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:57. Nonforfeiture benefits.

(1) Except as provided in subdivision 20:06:21:57(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 certificateholder 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.

(2) When a group long-term care insurance policy is issued, the offer required in subdivision 20:06:21:57(1) shall be made to the group policyholder. However, if the policy is issued as group long-term care insurance as defined in SDCL 58-17B-2(4)(d), other than to a continuing care retirement community or other similar entity, the offering shall be made to each proposed certificateholder.

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:58. Nonforfeiture benefit requirement.

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

(2) To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of § 20:06:21:57:

(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 subdivision (5) of this section; and

(b) The offer must be in writing if the nonforfeiture benefit is not otherwise described in the Outline of Coverage or other materials given to the prospective policyholder;

(3) If the offer required to be made under § 20:06:21:57 is rejected, the insurer shall provide the contingent benefit upon lapse described in this section. Even if this offer is accepted for a policy with a fixed or limited premium paying period, the contingent benefit on lapse in subdivision (4)(d) still applies;

(4)(a) After rejection of the offer required under § 20:06:21:57, for individual and group policies without nonforfeiture benefits issued after May 19, 2002, 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 certificateholder, a certificate must provide either the nonforfeiture benefit or the contingent benefit upon lapse;

(c) The contingent benefit on lapse is 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
	Percent Increase Over
Issue Age	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) A contingent benefit on lapse is also triggered for policies with a fixed or limited premium paying period every time an insurer increases the premium rates to a level that 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 insurer's issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased, and the ratio in subdivision (4)(f)(ii) is 40 percent or more. 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
	Percent Increase
Issue Age	Over Initial Premium

Under 65	50%
65-80	30%
Over 80	10%

This provision is in addition to the contingent benefit lapse provided by subdivision (4)(c) and if both are triggered, the benefit provided shall be at the option of the insured;

(e) On or before the effective date of a substantial premium increase as defined in subdivision (4)(c) of this section, the insurer shall:

(i) Offer to reduce policy benefits provided by the current coverage consistent with the requirements of § 20:06:21:86 so that required premium payments are not increased;

(ii) Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of subdivision (5) of this section. This option may be elected at any time during the 120-day period referenced in subdivision (4)(c) of this section; and

(iii) Notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in subdivision (4)(c) of this section is deemed to be the election of the offer to convert in subdivision (4)(d)(ii) of this section unless the automatic option in subdivision (4)(f)(iii) applies;

(f) On or before the effective date of a substantial premium increase as defined in subdivision (4)(d), the insurer shall;

(i) Offer to reduce policy benefits provided by the current coverage consistent with the requirements of § 20:06:21:86 so that required premium payments are not increased;

(ii) Offer to convert the coverage to a paid-up status where the amount payable for each benefit is 90 percent of the amount payable in effect immediately prior to lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period. This option may be elected at any time during the 120-day period referenced in subdivision (4)(d); and

(iii) Notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in subdivision (4)(d) shall be deemed to be the election of the offer to convert in subdivision (4)(f)(ii) if the ratio is 40 percent or more;

(g) For any long-term care policy issued in this state, in the event the policy or certificate was issued at least twenty (20) years prior to the effective date of the increase, a value of 0% shall be used in place of all values in the above table, and values above 100% in the table in subdivision (4)(c) shall be reduced to 100%;

(5) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with subdivision (4)(c) but not subdivision (4)(d) of this section, are described in this subdivision:

(a) For purposes of subdivision (5), attained age rating is defined as a schedule of premiums starting from the issue date which increases age at least one percent per year prior to age 50, and at least three percent per year beyond age 50;

(b) For purposes of subdivision (5), 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 subdivision (5)(c) of this section;

(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 may 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 subdivision (6) of this section;

(d) (i) 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;

(ii) Notwithstanding subdivision (5)(d)(i) of this section, for a 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;

(6) All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid up status will not exceed the maximum benefits which would be payable if the policy or certificate had remained in premium paying status;

(7) There may be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies;

(8) The requirements set forth in this section shall become effective 12 months after adoption of this provision and shall apply as follows:

(a) Except as provided in subdivisions (8)(b) and (8)(c) of this section, the provisions of this section apply to any long-term care policy issued in this state on or after the effective date of this amended regulation;

(b) For certificates issued on or after May 19, 2002, pursuant to a group long-term care insurance policy as defined in SDCL 58-17B-2(4)(a), which policy was in force at the time this amended regulation became effective, the provisions of this section shall not apply;

(c) The provisions of subdivision (3) relative to acceptance of an offer and subdivisions (4)(d) and (4)(f) apply to any long-term care insurance policy or certificate issued in this state after December 31, 2007, except for new certificates on a group policy as defined in subdivision (5)(a), for which the provisions apply after June 30, 2008;

(9) Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse are subject to the loss ratio requirements of § 20:06:21:05 or §§ 20:06:21:63 to 20:06:21:68, inclusive, whichever is applicable, treating the policy as a whole;

(10) To determine whether contingent nonforfeiture upon lapse provisions are triggered pursuat to subdivision (4)(c) or subdivision (4)(d), 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;

(11) 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 director for the same contract form; and

(i) Reduced paid-up insurance;

(ii) Extended term insurance;

(iii) Shortened benefit period; or

(iv) Other similar offerings approved by the director.

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003; 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:59. Electronic enrollment for group policies. In the case of a group defined in SDCL 58-17B-2(4)(a), any requirement that a signature of an insured be obtained by an agent or insurer is deemed satisfied if:

(1) The consent is obtained by telephonic or electronic enrollment by the group policyholder or insurer. A verification of enrollment information shall be provided to the enrollee;

(2) The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention, and prompt retrieval of records; and

(3) The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure that the confidentiality of individually identifiable information and \"privileged information.\"

The insurer shall make available, upon request of the director, records that will demonstrate the insurer's ability to confirm enrollment and coverage amounts.

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:60. Required disclosure of rating practices to consumers -- Rate stabilization.

(1) This subdivision applies as follows:

(a) Except as provided in subdivision (1)(b) of this section, this subdivision applies to any long-term care policy or certificate issued in this state on or after November 1, 2002;

(b) For certificates issued on or after May 19, 2002, under a group long-term care insurance policy as defined in SDCL 58-17B-2(4)(a), which policy was in force at the time this rule became effective, the provisions of this subdivision applies on the policy anniversary on or after May 1, 2003;

(2) Other than policies for which no applicable premium rate or rate schedule increases can be made, insurers shall provide all of the information listed in this section to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time. In such a case, an insurer shall provide all of the information listed in this subdivision to the applicant no later than at the time of delivery of the policy or certificate:

(a) A statement that the policy may be subject to rate increases in the future;

(b) An explanation of potential future premium rate revisions, and the policyholder's or certificateholder's option in the event of a premium rate revision;

(c) The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase;

(d) A general explanation for applying premium rate or rate schedule adjustments that must include:

(i) A description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.); and

(ii) The right to a revised premium rate or rate schedule as provided in subdivision (2)(b) of this section if the premium rate or rate schedule is changed;

(e) (i) Information regarding each premium rate increase on this policy form or similar policy forms over the past ten years for this state or any other state that, at a minimum, identifies:

(1) The policy forms for which premium rates have been increased;

(2) The calendar years when the form was available for purchase; and

(3) The amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics;

(ii) The insurer may, in a fair manner, provide additional explanatory information related to the rate increases;

(iii) An insurer shall have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated insurers or the long-term care policies acquired from other nonaffiliated insurers when those increases occurred prior to the acquisition;

(iv) If an acquiring insurer files for a rate increase on a long-term care policy form acquired from nonaffiliated insurers or a block of policy forms acquired from nonaffiliated insurers on or before the later of May 19, 2002, or the end of a 24-month period following the acquisition of the block or policies, the acquiring insurer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with subdivision (2)(e)(i) of this section;

(v) If the acquiring insurer in subdivision (2)(e)(iv) of this section files for a subsequent rate increase, even within the 24-month period, on the same policy form acquired from nonaffiliated insurers or block of policy forms acquired from nonaffiliated insurers referenced in subsection (2)(e)(iv) of this section, the acquiring insurer shall make all disclosures required by subdivision (2)(e) of this section, including disclosure of the earlier rate increase referenced in subdivision (2)(e)(iv) of this section;

(3) An applicant shall sign an acknowledgement at the time of application, unless the method of application does not allow for signature at that time, that the insurer made the disclosure required under subdivision (2)(a) and (e) of this section. If due to the method of application the applicant cannot sign an acknowledgement at the time of application, the applicant shall sign no later than at the time of delivery of the policy or certificate;

(4) An insurer shall use the forms in Appendices E and I to comply with the requirements of subdivisions (1) and (2) of this section;

(5) An insurer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificateholders, if applicable, at least 45 days prior to the implementation of the premium rate schedule increase by the insurer. The notice shall include the information required by subdivision (2) of this section when the rate increase is implemented.

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:61. Initial filing requirements.

(1) This section applies to any long-term care policy issued in this state on or after November 1, 2002;

(2) An insurer shall provide the information listed in this section to the director 30 days prior to making a long-term care insurance form available for sale:

(a) A copy of the disclosure documents required in § 20:06:21:60; and

(b) An actuarial certification consisting of at least the following:

(i) A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;

(ii) A statement that the policy design and coverage provided have been reviewed and taken into consideration;

(iii) A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;

(iv) A complete description of the basis for contract reserves that are anticipated to be held under the form, to include:

(I) Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held;

(II) A statement that the assumptions used for reserves contain reasonable margins for adverse experience;

(III) A statement that the net valuation premium for renewal years does not increase (except for attained-age rating where permitted); and

(IV) A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or if such a statement cannot be made, a complete description of the situations where this does not occur;

(A) An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship;

(B) If the gross premiums for certain age groups appear to be inconsistent with this requirement, the director may request a demonstration under subdivision (3) of this section based on a standard age distribution; and

(v)(I) A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or

(II) A comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences;

(vi) A statement that the premiums contain at least the minimum margin for moderately adverse experience defined in subdivision (2)(b)(vi)(I) or the specification of and justification for a lower margin as required by subdivision (2)(b)(vi)(II);

(I) A composite margin shall not be less than 10% of lifetime claims;

(II) A composite margin that is less than 10% may be justified in uncommon circumstances. The proposed amount, full justification of the proposed amount, and methods to monitor developing experience that would be the bases for withdrawal of approval for such lower margins must be submitted;

(III) A composite margin lower than otherwise considered appropriate for the stand-alone long-term care policy may be justified for long-term care benefits provided through a life policy or an annuity contract. This lower composite margin, if utilized, shall be justified by the appropriate actuarial demonstration addressing margins and volatility when considering the entirety of the product;

(IV) A greater margin may be appropriate in circumstances where the company has less credible experience to support its assumptions used to determine the premium rate;

(c) An actuarial memorandum prepared, dated and signed by a member of the Academy of Actuaries shall be included and shall address and support each specific item required as part of the actuarial certification and provide at least the following information:

(i) An explanation of the review performed by the actuary prior to making the statements in subdivisions (2)(b)(ii) and (iii);

(ii) A complete description of pricing assumptions;

(iii) Sources and levels of margins incorporated into the gross premiums that are the basis for the statement in subdivision (2)(b)(i) of the actuarial certification and an explanation of the analysis and testing performed in determining the sufficiency of the margins. Deviations in margins between ages, sexes, plans or states shall be clearly described. Deviations in margins required to be described are other than those produced utilizing generally accepted actuarial methods for smoothing and interpolating gross premium sales; and

(iv) A demonstration that the gross premiums include the minimum composite margin specified in subdivision (2)(b)(vi);

(3) In any review of the actuarial certification and actuarial memorandum, the director may request review by an actuary with experience in long-term care pricing who is independent of the company. In the event the director asks for additional information as a result of any review, the period in subdivision (1) of this section does not include the period during which the insurer is preparing the requested information.

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:62. Reserve standards.

(1) When long-term care benefits are provided through the acceleration of benefits under group or individual life policies or riders to such policies, policy reserves for the benefits shall be determined in accordance with accepted actuarial practices. Claim reserves shall also be established in the case when the policy or rider is in claim status.

Reserves for policies and riders subject to this section must be based on the multiple decrement model utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event may the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.

In the development and calculation of reserves for policies and riders subject to this section, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures, and all other considerations which have an impact on projected claim costs, including, but not limited to, the following:

(a) Definition of insured events;

(b) Covered long-term care facilities;

(d) Definition of facilities;

(e) Existence or absence of barriers to eligibility;

(f) Premium waiver provision;

(g) Renewability;

(h) Ability to raise premiums;

(i) Marketing method;

(j) Underwriting procedures;

(k) Claims adjustment procedures;

(l) Waiting period;

(m) Maximum benefit;

(n) Availability of eligible facilities;

(o) Margins in claim costs;

(p) Optional nature of benefit;

(q) Delay in eligibility for benefit;

(r) Inflation protection provisions; and

(s) Guaranteed insurability option.

Any applicable valuation morbidity table shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries.

(2) When long-term care benefits are provided other than as in subdivision (1) of this section, reserves shall be determined in accordance with SDCL 58-6-75.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4, 58-26-30.

Law Implemented: SDCL 58-6-75, 58-26-30.

20:06:21:63. Premium rate schedule increases -- Notice of pending increase. An insurer shall provide notice of a pending premium rate schedule increase, including an exceptional increase, to the director at least 30 days prior to the notice to the policyholders, and shall include:

(1) Information required by § 20:06:21:60;

(2) Certification by a qualified actuary that:

(a) If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated;

(b) The premium rate filing is in compliance with the provisions of this section;

(c) The insurer may request a premium rate schedule increase less than what is required under this section and the director may approve such premium rate schedule increase, without submission of the certification in subdivision (2)(a), if the actuarial memorandum discloses the premium rate schedule increase necessary to make the certification required pursuant to subdivision (2)(a), the premium rate schedule increase filing satisfies all other requirements of this section, and is, in the opinion of the director, in the best interest of the policyholders;

(3) An actuarial memorandum justifying the rate schedule change request that includes:

(a) Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale;

(i) Annual values for the five years preceding the three years following the valuation date shall be provided separately;

(ii) The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;

(iii) The projections shall demonstrate compliance with § 20:06:21:64; and

(iv) For exceptional increases:

(I) The projected experience must be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and

(II) In the event the director determines as provided in § 20:06:21:70 that offsets may exist, the insurer shall use appropriate net projected experience;

(b) Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse;

(c) Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary;

(d) A statement that policy design, underwriting, and claims adjudication practices have been taken into consideration; and

(e) In the event that it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer will need to file composite rates reflecting projections of new certificates;

(f) A demonstration that actual and projected costs exceed costs anticipated at the time of initial pricing under moderately adverse experience and that the composite margin specified in subdivision 20:06:21:61(2)(b)(iv) is projected to be exhausted;

(4) A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the director; and

(5) Sufficient information for review and approval of the premium rate schedule increase by the director.

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:64. Premium rate schedule increase requirements. All premium rate schedule increases shall be determined in accordance with the following requirements:

(1) Exceptional increases shall provide that 70% of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

(2) Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:

(a) The accumulated value of the initial earned premium times 58%;

(b) 85% of the accumulated value of prior premium rate schedule increases on an earned basis;

(d) 85% of the present value of future projected premiums not in subdivision (2)(c) of this section on an earned basis;

(3) In the event that a policy form has both exceptional and other increases, the values in subdivisions (2)(b) and (d) of this section will also include 70% for exceptional rate increase amounts; and

(4) All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in SDCL 58-26-71 and 58-26-75. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages;

(5) After December 31, 2018, expected claims shall be calculated based on the original filing assumptions assumed until new assumptions are filed as part of a rate increase. New assumptions shall be used for all periods beyond each requested effective date of a rate increase. Expected claims are calculated for each calendar year based on the in-force at the beginning of the calendar year. Expected claims shall include margins for moderately adverse experience, either amounts included in the claims that were used to determine the lifetime loss ration consistent with the original filing or as modified in any rate increase filing.

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:65. Premium rate schedule increases - Review by the director. For each rate increase that is implemented, the insurer shall file for approval by the director updated projections, as defined in subdivision 20:06:21:63(3)(a), annually for the next three years and include a comparison of actual results to projected values. The director may extend the period to greater than three (3) years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in § 20:06:21:68, the projections required by this chapter shall be provided to the policyholder in lieu of filing with the director.

(1) If any premium rate in the revised premium rate schedule is greater than 200 percent of the comparable rate in the initial premium schedule, lifetime projections, as defined in subdivision 20:06:21:63(3)(a), shall be filed for approval by the director every five years following the end of the required period in the above paragraph. For group insurance policies that meet the conditions in § 20:06:21:68, the projections required by this subdivision shall be provided to the policyholder in lieu of filing with the director;

(2)(a) If the director has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in § 20:06:21:64, the director may require the insurer to implement any of the following:

(i) Premium rate schedule adjustments; or

(ii) Other measures to reduce the difference between the projected and actual experience;

(b) In determining whether the actual experience adequately matches the projected experience, consideration must be given to subdivision 20:06:21:63(3)(e), if applicable;

(3) If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file:

(a) A plan, subject to director approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the director may impose the condition in subdivisions 20:06:21:66(1) and (2); and

(b) The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to § 20:06:21:64 had the greater of the original anticipated lifetime loss ratio or 58% been used in the calculations described in subdivisions 20:06:21:64(2)(a) and (c).

After December 31, 2018, subdivision 3(b) is no longer applicable.

Source: 28 SDR 157, effective May 19, 2002; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:66. Premium rate schedule increases -- Adverse lapsation.

(1) For a rate increase filing that meets the following criteria, the director shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the 12 months following each increase to determine if significant adverse lapsation has occurred or is anticipated:

(a) The rate increase is not the first rate increase requested for the specific policy form or forms;

(b) The rate increase is not an exceptional increase; and

(c) The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse;

(2) In the event significant adverse lapsation has occurred, is anticipated in the filing, or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the director may determine that a rate spiral exists. Following the determination that a rate spiral exists, the director may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates:

(a) The offer shall:

(i) Be subject to the approval of the director;

(ii) Be based on actuarially sound principles, but not be based on attained age; and

(iii) Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy;

(b) The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:

(i) The maximum rate increase determined based on the combined experience; and

(ii) The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent;

(3) If the director determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the director may, in addition to the provisions of subdivisions (1) and (2) of this section, prohibit the insurer from either of the following:

(a) Filing and marketing comparable coverage for a period of up to five years; or

(b) Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:67. Premium rate schedule increases - Policies to which does not apply. Sections 20:06:21:63 to 20:06:21:66, inclusive, shall not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in subdivision 20:06:21:01(13), if the policy complies with all of the following provisions:

(2) The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in SDCL 58-15-31 and 58-15-72, and for variable annuities those nonforfeiture requirements as may be approved by the director;

(3) The policy meets the disclosure requirements of §§ 20:06:21:44, 20:06:21:47, and 20:06:21:48;

(4) The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:

(a) Policy illustrations as required by chapter 20:06:38;

(b) If long-term care benefits are funded through an annuity, the disclosure requirements are:

(i) The insurer must provide to all prospective purchasers a Buyer's Guide to Annuities and a Contract Summary, prior to accepting the applicants initial consideration, unless the annuity contract or associated life insurance policy provides for an unconditional refund period of at least ten days or unless the Contract Summary contains an unconditional refund offer;

(ii) The insurer shall provide a Buyer's Guide to Annuities and a Contract Summary to any prospective purchaser upon request;

(iii) A preneed funeral contract or prearrangement which is funded by an annuity contract shall be adequately disclosed at the time of application, prior to accepting the initial consideration. All relevant information shall be disclosed, including but not limited to merchandise, services, penalties or restrictions, impact of any changes in the annuity contract, relationship among agent(s), provider, and administrator; and

(5) An actuarial memorandum is filed with the insurance department that includes:

(a) A description of the basis on which the long-term care rates were determined;

(b) A description of the basis for the reserves;

(d) A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

(e) A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

(f) The estimated average annual premium per policy and the average issue age;

(g) A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and

(h) A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status.

Source: 28 SDR 157, effective May 19, 2002; 36 SDR 209, effective July 1, 2010; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:68. Premium rate schedule increases -- Group insurance policies. Subdivisions 20:06:21:65(2) and 20:06:21:66(1) and (2) shall not apply to group insurance policies as defined in SDCL 58-17B-2(4)(a) where:

(1) The policies insure 250 or more persons and the policyholder has 5,000 or more eligible employees of a single employer; or

(2) The policyholder, and not the certificateholders, pays a material portion of the premium, which shall not be less than twenty percent (20%) of the total premium for the group in the calendar year prior to the year a rate increase is filed.

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:69. Premium rate schedule increases -- Adoption of rules.

(1) Except as provided in subdivision (2) of this section, §§ 20:06:21:63 to 20:06:21:69, inclusive, applies to any long-term care policy or certificate issued in this state on or after November 1, 2002;

(2) For certificates issued on or after May 19, 2002, under a group long-term care insurance policy as defined in SDCL 58-17B-2(4)(a), which policy was in force on May 19, 2002, the provisions of §§ 20:06:21:63 to 20:06:21:69, inclusive, shall apply on the policy anniversary following May 1, 2003.

Source: 28 SDR 157, effective May 19, 2002; 30 SDR 39, effective September 28, 2003.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:70. Premium rate schedule increases -- Exceptional increases. Except as provided in §§ 20:06:21:63 to 20:06:21:69, inclusive, exceptional increases are subject to the same requirements as other premium rate schedule increases.

The director may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase.

The director, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:71. Permitted compensation arrangements. No insurer or other entity may provide commission or other compensation greater than the renewal compensation, to a producer or other representative, for the sale of a long-term care insurance policy or certificate which replaces an existing long-term care insurance policy or certificate, unless the replacing policy contains clearly and substantially greater benefits than the replaced policy provided. The commission or other compensation provided in subsequent renewal years must be the same as that provided in the second year or period and must be provided for a reasonable number of renewal years.

Unless prohibited in this section or § 20:06:21:53.03, the first year commission or other compensation provided may be greater than the renewal commission.

For purposes of this section, \"compensation\" includes pecuniary or nonpecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate, including but not limited to bonuses, gifts, prizes, awards, and finders fees.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:72. Disclosure to applicant for a claim denial. If a claim under a long-term care insurance contract is denied, the issuer shall, within 60 days of the date of a written request by the policyholder or certificateholder, or a representative thereof:

(1) Provide a written explanation of the reasons for the denial; and

(2) Make available all information directly related to the denial.

Source: 28 SDR 157, effective May 19, 2002.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:73. Providers in a different state. No long-term care issuer may deny a claim because services are provided in a state other than the state of policy issue if the following conditions are met:

(1) If the state other than the state of policy issue does not have the provider licensing, certification, or registration required in the policy, but the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification, or registration; or

(2) If the state other than the state of policy issue licenses, certifies, or registers the provider under another classification.

For purposes of this section, \"state of policy issue\" means the state in which the individual policy or certificate was originally issued.

Source: 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:74. Producer training required to market long-term care plans. An individual may not sell, solicit, or negotiate long-term care insurance unless the individual:

(1) Is licensed as a health or life producer;

(2) Has completed a one-time, eight-hour training course prior to selling, soliciting, or negotiating long-term care insurance; and

(3) Completes four hours of ongoing training within every twenty-four-month license renewal period.

Source: 33 SDR 230, effective July 2, 2007; 51 SDR 66, effective January 1, 2025.

General Authority: SDCL 58-30-117.

Law Implemented: SDCL 58-30-117, 58-30-118.

20:06:21:74.01. Long-term care plan training topics for producers. The training required under § 20:06:21:74 must consist of the following topics related to long-term care insurance and services, and, if applicable, qualified state long-term care insurance partnership programs:

(1) State and federal requirements and the relationship between qualified state long-term care insurance partnership programs and other public and private coverage of long-term care services, including medicaid;

(2) Available long-term care services and providers;

(3) Changes or improvements in long-term care services or providers;

(4) Alternatives to the purchase of private long-term care insurance;

(5) The effect of inflation on benefits and the importance of inflation protection; and

(6) Consumer suitability standards and guidelines.

The training required in this section may not include subject matter that is prohibited by § 20:06:18:07. A course meeting the training requirements of § 20:06:21:74 and this section may be approved as a continuing education course pursuant to § 20:06:18:06.

Source: 51 SDR 66, effective January 1, 2025.

General Authority: SDCL 58-30-117.

Law Implemented: SDCL 58-30-117, 58-30-118.

20:06:21:75. Insurers required to verify agent training and maintain records. Any insurer subject to this chapter shall obtain verification that its agent receives training required by § 20:06:21:74 before the agent is permitted to sell, solicit, or negotiate the insurer's long-term care insurance products, maintain records subject to the state's record retention requirements, and make that verification available to the director upon request.

Any insurer that markets long-term care partnership plans shall maintain records with respect to the training of its agents concerning the distribution of its partnership policies that will allow the director to provide assurance to the state Medicaid agency that the insurer's agents have received the training contained in § 20:06:21:74 and that the insurer's agents have demonstrated an understanding of the partnership policies and their relationship to public and private coverage of long-term care, including Medicaid, in this state. These records shall be maintained in accordance with the state's record retention requirements and shall be made available to the director upon request.

The satisfaction of these training requirements in any state shall be deemed to satisfy the training requirements in this state.

Source: 33 SDR 230, effective July 2, 2007; 34 SDR 200, effective January 28, 2008.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38, 58-17B-4.

20:06:21:76. Long-term care partnership policies -- Inflation protection requirements. An insurer may not issue a policy intended to qualify as a partnership policy unless in addition to the requirements of §§ 20:06:21:06 to 20:06:21:06.05, inclusive, the policy includes the following inflation protection:

(1) For a person who is less than 61 years of age as of the date of purchase, the policy provides compound annual inflation protection; and

(2) For a person who is at least 61 years of age but less than 76 years of age, the policy provides some level of inflation protection that may not be less than one percent per year or a rate equal to the Consumer Price Index.

Inflation protection as required by this section may not be less than one percent per year or a rate equal to the Consumer Price Index. For any person who has attained the age of 76, inflation protection may be provided but is not required.

Source: 33 SDR 230, effective July 2, 2007; 34 SDR 88, effective September 10, 2007; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38(6), 58-17B-4.

20:06:21:77. Long-term care partnership policies -- Required policy disclosures. A policy, certificate, or contract designed or marketed as a long-term care partnership policy must prominently disclose on the schedule page the following:

(1) The [policy, certificate, or contract] is intended to meet the standards for the long-term care partnership program in this state;

(2) Nothing in this [policy, certificate, or contract] is a guarantee of Medicaid eligibility nor is it a guarantee of any ability to disregard assets for purposes of Medicaid eligibility. This notice is required by the State of South Dakota.

Any policy, certificate, or contract that is not designed or marketed as a long-term care partnership policy must prominently disclose that it is not a long-term care partnership policy. The disclosures required by this section must also be included in a separate disclosure document. Appendix K is a sample of an acceptable disclosure document.

Source: 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 28-6-38, 58-17B-2, 58-17B-4.

Law Implemented: SDCL 28-6-38, 58-17B-4.

20:06:21:78. Long-term care partnership policies -- Filing requirements. Schedule pages issued in compliance with § 20:06:21:77 are not required to be re-filed for approval. An informational filing notifying the division that the language specified in § 20:06:21:78 will be used meets the requirements of this section. The informational filing may be included with the insurer's certification of forms that meet partnership standards and are intended to be used for the issuance of partnership policies in this state.

A partnership policy issued or issued for delivery in the State of South Dakota shall be accompanied by a Partnership Disclosure Notice, explaining the benefits associated with a partnership policy and indicating that at the time issued, the policy is a qualified state long-term care insurance partnership policy. If the company uses Appendix K, the company is not required to file it for approval by the division. If the company makes changes to the form, the company must file the form for approval by the director. The Partnership Disclosure Notice shall also include a statement indicating that by purchasing such partnership policy, the insured does not automatically qualify for Medicaid.

Any policy submitted for approval as a partnership policy shall be accompanied by a Partnership Certification Form.

Insurers requesting to make use of a previously approved policy form as a qualified state long-term care partnership policy shall submit to the director a Partnership Certification Form signed by an officer of the company. The Partnership Certification Form shall be accompanied by a copy of the policy or certificate form listed, the approval date, and a bookmark for each of the requirements listed in sections II and III of the form. A Partnership Certification Form shall be required for each policy form submitted for partnership qualification. Appendix L is a sample of a Partnership Certification Form that meets the requirements of this section.

Source: 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38, 58-17B-4.

20:06:21:79. Long-term care -- Minimum benefit requirements. Any long-term care policy, certificate, or contract issued in this state must contain at least one year of nursing facility coverage. A daily benefit of not less than $100 per day must be included in the policy, certificate, or contract unless one of the following are met:

(1) A suitability form is completed showing that a lesser amount per day is suitable for the applicant and both of the following:

(a) The commissions paid to the agent are renewal commissions only; and

(b) The applicant acknowledges in writing that the applicant understands the daily benefits are less than the minimum otherwise required and are not sufficient to fund the per day costs in nursing homes based upon current data available;

(2) The agent has submitted the suitability form and accompanying documentation to the division and the division determines that the benefits as applied for are suitable;

(3) If the policy, certificate, or contract is issued with at least $100 per day in daily benefits and the insured requests to decrease the daily benefit below $100 per day, the suitability forms and disclosure required by subdivision (1) are provided to the insured;

(4) A new policy, certificate, or contract with a daily benefit of less than $100 per day when combined with any existing long-term care coverage, the combined total of the daily benefits equals or exceeds $100. All long-term care policies in force covering the insured must be considered in determining whether the benefit meets the $100 per day minimum standard; or

(5) Except for policies subject to § 58-17B-2(4)(d), the long-term care policy is a group plan for which an employer or labor union contributes part or all of the premium for the long-term care policy.

A policy, certificate, or contract issued with a minimum of $100 per day or issued in compliance with subdivisions one through five may be issued as a long-term care partnership policy.

Source: 33 SDR 230, effective July 2, 2007; 34 SDR 88, effective September 10, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38, 58-17B-4.

20:06:21:80. Long-term care partnership policies -- Policy amendments. Any amendment to the policy that alters the status of a partnership policy so that it no longer meets the applicable partnership standards must affirmatively disclose that fact and include an amended schedule page that removes the references to the long-term care partnership program.

Source: 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38, 58-17B-4.

20:06:21:81. Long-term care policies -- Policy amendments. No long-term care policy, certificate, or contract may be amended or benefits reduced pursuant to § 20:06:21:86 to:

(1) Reduce the nursing home benefit to less than one year;

(2) Reduce or delete benefits for assisted living in a manner not consistent with §§ 20:06:21:50 and 20:06:21:51; or

(3) Reduce or delete benefits for home health care in a manner not consistent with § 20:06:21:46.

A policy, certificate, or contract issued prior to July 1, 2007, may be exchanged by amendment or endorsement to become a long-term care partnership policy provided that the requirements of this chapter are met with the endorsed or amended policy. The endorsements or amendments must identify the policy, certificate, or contract as required by §§ 20:06:21:77 and 20:06:21:78.

Source: 33 SDR 230, effective July 2, 2007; 34 SDR 88, effective September 10, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38, 58-17B-4.

20:06:21:82. Availability of new services or providers. An insurer shall notify policyholders of the availability of a new long-term care policy series that provides coverage for new long-term care services or providers material in nature and not previously available through the insurer to the general public. The notice shall be provided within 12 months of the date the new policy series is made available for sale in this state.

Notification is not required for any policy issued prior to July 1, 2007, or to any policyholder or certificateholder who is currently eligible for benefits, within an elimination period or on claim, or who previously has been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

The insurer shall make the new coverage available in one of the following ways:

(1) By adding a rider to the existing policy and charging a separate premium for the new rider based on the insured's attained age;

(2) By exchanging the existing policy or certificate for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate. The premium credits shall be based on premiums paid or reserves held for the prior policy or certificate;

(3) By exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status shall be recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged. The cost for the new policy or certificate may recognize the difference in reserves between the new policy or certificate and the original policy or certificate; or

(4) By an alternative program developed by the insurer that meets the intent of this section if the program is filed with and approved by the director.

An insurer is not required to notify policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this section, the phrase, limited distribution channel, means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public. Policyholders that purchased such a proprietary policy shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers material in nature is made available to that limited distributed channel.

Source: 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:83. Policies issued considered exchanges. Policies issued pursuant to § 20:06:21:82 are considered exchanges and not replacements. These exchanges are not subject to §§ 20:06:21:28.01, 20:06:21:53.01 to 20:06:21:53.04, inclusive, and the reporting requirements of § 20:06:21:52.

Source: 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38, 58-17B-4.

20:06:21:84. Policies offered through employers, labor unions, and associations. If the policy is offered through an employer, a labor organization, or a professional, trade, or occupational association, the required notification in § 20:06:21:82 shall be made to the offering entity. However, if the policy is issued to a group defined in SDCL 58-17B-2(4)(d), the notification shall be made to each certificateholder.

Source: 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:85. Applicability of new provider or service requirements. Nothing in §§ 20:06:21:82 to 20:06:21:84, inclusive, prohibits an insurer from offering any policy, rider, certificate, or coverage change to any policyholder or certificateholder. However, upon request any policyholder may apply for currently available coverage that includes the new services or providers. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers.

Nothing in §§ 20:06:21:82 to 20:06:21:84, inclusive, applies to life insurance policies or riders containing accelerated long-term care benefits.

Source: 33 SDR 230, effective July 2, 2007.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 28-6-38, 58-17B-4.

20:06:21:86. Right to reduce coverage and lower premiums. Each long-term care insurance policy and certificate shall include a provision that allows the policyholder or certificateholder to reduce coverage and lower the policy or certificate premium in at least one of the following ways:

(1) Reducing the maximum benefit; or

(2) Reducing the daily, weekly, or monthly benefit amount.

The insurer may also offer other reduction options that are consistent with the policy or certificate design or the carrier's administrative processes. In the event the reduction in coverage involves the reduction or elimination of the inflation protection provision, the insurer shall allow the policyholder to continue the benefit amount in effect at the time of the reduction. The provision shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage.

The premium for the reduced coverage shall be based on the same age and underwriting class used to determine the premium for the coverage currently in force and be consistent with the approved rate table.

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. If a policy or certificate is about to lapse, the insurer shall provide a written reminder to the policyholder or certificateholder of his or her right to reduce coverage and premiums in the notice required by § 20:06:21:22.

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

A premium increased notice required by subdivision 20:06:21:60(5) shall include:

(1) An offer to reduce policy benefits provided by the current coverage consistent with the requirements of this section;

(2) A disclosure stating that all options available to the policyholder may not be of equal value; and

(3) In the case of a partnership policy, a disclosure that some benefit reduction options may result in a loss in partnership status that may reduce policyholder protections.

Source: 33 SDR 230, effective July 2, 2007; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:87. Authorized representative. For purposes of §§ 20:06:21:87 to 20:06:21:104, inclusive, an authorized representative is a person authorized to act as the covered person's personal representative within the meaning of 45 CFR 164.502(g) promulgated by the Secretary under the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act and means the following:

(1) A person to whom a covered person has given express written consent to represent the covered person in an external review;

(2) A person authorized by law to provide substituted consent for a covered person; or

(3) A family member of the covered person or the covered person's treating health care professional if the covered person is unable to provide consent.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:88. Notice to insured. If an insurer determines that the benefit trigger of a long-term care insurance policy has not been met, the insurer shall provide a clear, written notice to the insured and the insured's authorized representative, if applicable, of all of the following:

(1) The reason that the insurer determined that the insured's benefit trigger has not been met;

(2) The insured's right to internal appeal in accordance with § 20:06:21:89, and the right to submit new or additional information relating to the benefit trigger denial with the appeal request; and

(3) The insured's right, after exhaustion of the insurer's internal appeal process, to have the benefit trigger determination reviewed under the independent review process in accordance with §§ 20:06:21:91 to 20:06:21:100, inclusive.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:89. Internal appeal. The insured or the insured's authorized representative may appeal the insurer's adverse benefit trigger determination by sending a written request to the insurer, along with any additional supporting information, within 120 calendar days after the insured and the insured's authorized representative, if applicable, receives the insurer's benefit determination notice. The internal appeal shall be considered by an individual or group of individuals designated by the insurer. However, no individual involved in making the initial benefit determination may be involved in making the internal appeal decision. The internal appeal shall be completed and written notice of the internal appeal decision shall be sent to the insured and the insured's authorized representative, if applicable, within 30 calendar days of the insurer's receipt of all necessary information upon which a final determination can be made.

A rebuttable presumption that the notice was received by the insured within five days of mailing exists if the insurer can provide proof of actual properly addressed mailing or proof of standard office practice or procedure designed to ensure that items are properly addressed and mailed. If no proof of actual mailing or proof of standard office practice or procedure is provided, there is no presumption of receipt by the insured.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:90. Internal appeal notice requirements. If the insurer's original determination is upheld upon internal appeal, the notice of the internal appeal decision shall describe any additional internal appeal rights offered by the insurer. Nothing in this chapter requires the insurer to offer any internal appeal rights other than those described in §§ 20:06:21:89 and 20:06:21:90.

If the insurer's original determination is upheld after the internal appeal process has been exhausted, and new or additional information has not been provided to the insurer, the insurer shall provide a written description of the insured's right to request an independent review of the benefit determination as described in §§ 20:06:21:91 to 20:06:21:100, inclusive, to the insured and the insured's authorized representative, if applicable.

As part of the written description of the insured's right to request an independent review, an insurer shall include the following, or substantially equivalent, language:

\"We have determined that the benefit eligibility criteria (\"benefit trigger\") of your [policy] [certificate] has not been met. You have the right to an independent review of our decision conducted by long-term care professionals who are not associated with us. Please send a written request for independent review to us at [address]. You must inform us, in writing, of your election to have this decision reviewed within 120 days of receipt of this letter. Listed below are the names and contact information of the independent review organizations approved or certified by the director to conduct long-term care insurance benefit eligibility reviews. If you wish to request an independent review, please choose one of the listed organizations and include its name with your request for independent review. If you elect independent review, but do not choose an independent review organization with your request, we will choose one of the independent review organizations for you and refer the request for independent review to that organization.\"

If the insurer does not believe the benefit trigger decision is eligible for independent review, the insurer shall inform the insured and the insured's authorized representative, if applicable, and the director in writing and include in the notice the reasons for its determination of independent review ineligibility.

The appeal process described in §§ 20:06:21:89 and 20:06:21:90 is not deemed to be a new service or provider as referenced in § 20:06:21:82; and therefore does not trigger the notice requirements of that section.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:91. Independent review of benefit trigger determination. The insured or the insured's authorized representative may request an independent review of the insurer's benefit trigger determination after the internal appeal process outlined in §§ 20:06:21:89 and 20:06:21:90 has been exhausted. A written request for independent review may be made by the insured or the insured's authorized representative to the insurer within 120 calendar days after the insurer's written notice of the final internal appeal decision is received by the insured and insured's authorized representative, if applicable.

The cost of the independent review shall be borne by the insurer.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:92. Independent review process. Within five business days of receiving a written request for independent review, the insurer shall refer the request to the independent review organization that the insured or the insured's authorized representative has chosen from the list of organizations the insurer has provided to the insured. If the insured or the insured's authorized representative does not choose an approved independent review organization to perform the review, the insurer shall choose an independent review organization approved or certified by the director. The insurer shall vary its selection of authorized independent review organizations on a rotating basis.

The insurer shall refer the request for independent review of a benefit trigger determination to an independent review organization, subject to the following:

(1) The independent review organization shall be on a list of certified or approved independent review organizations that satisfy the requirements of a qualified long-term care insurance independent review organization contained in §§ 20:06:21:87 to 20:06:21:104, inclusive;

(2) The independent review organization may not have any conflicts of interest with the insured, the insured's authorized representative, if applicable, or the insurer; and

(3) Such review shall be limited to the information or documentation provided to and considered by the insurer in making its determination, including any information or documentation considered as part of the internal appeal process.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:93. Additional appeal information. If the insured or the insured's authorized representative has new or additional information not previously provided to the insurer, whether submitted to the insurer or the independent review organization, such information shall first be considered in the internal review process, as set forth in § 20:06:21:89. While this information is being reviewed by the insurer, the independent review organization shall suspend its review and the time period for review is suspended until the insurer completes its review.

The insurer shall complete its review of the information and provide written notice of the results of the review to the insured and the insured's authorized representative, if applicable, and the independent review organization within five business days of the insurer's receipt of such new or additional information.

If the insurer maintains its denial after such review, the independent review organization shall continue its review, and render its decision within the time period specified in § 20:06:21:99. If the insurer overturns its decision following its review, the independent review request shall be considered withdrawn.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:94. Independent review notification. The insurer shall acknowledge in writing to the insured and the insured's authorized representative, if applicable, and the director that the request for independent review has been received, accepted, and forwarded to an independent review organization for review. Such notice shall include the name and address of the independent review organization.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:95. Independent review organization selection. Within five business days of receipt of the request for independent review, the independent review organization assigned pursuant to this section shall notify the insured and the insured's authorized representative, if applicable, the insurer and the director that it has accepted the independent review request and identify the type of licensed health care professional assigned to the review. The assigned independent review organization shall include in the notice a statement that the insured or the insured's authorized representative may submit in writing to the independent review organization within seven days following the date of receipt of the notice additional information and supporting documentation that the independent review organization should consider when conducting its review.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:96. Review of information. The independent review organization shall review all of the information and documents received pursuant to § 20:06:21:95 that have been provided to the independent review organization. The independent review organization shall provide copies of any documentation or information provided by the insured or the insured's authorized representative to the insurer for its review, if it is not part of the information or documentation submitted by the insurer to the independent review organization. The insurer shall review the information and provide its analysis of the new information in accordance with §§ 20:06:21:97 and 20:06:21:98.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:97. Additional information to independent review. The insured or the insured's authorized representative may submit, at any time, new or additional information not previously provided to the insurer but pertinent to the benefit trigger denial. The insurer shall consider such information and affirm or overturn its benefit trigger determination. If the insurer affirms its benefit trigger determination, the insurer shall promptly provide such new or additional information to the independent review organization for its review, along with the insurer's analysis of such information.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:98. Process if determination overturned. If the insurer overturns its benefit trigger determination:

(1) The insurer shall provide notice to the independent review organization and the insured and the insured's authorized representative, if applicable, and the director of its decision; and

(2) The independent review process shall immediately cease.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:99. Review decision requirements. The independent review organization shall provide the insured and the insured's authorized representative, if applicable, the insurer, and the director written notice of its decision, within 30 calendar days from receipt of the referral to the independent review organization by the insurer pursuant to § 20:06:21:92. If the independent review organization overturns the insurer's decision, the independent review organization shall:

(1) Establish the precise date within the specific period of time under review that the benefit trigger was deemed to have been met;

(2) Specify the specific period of time under review for which the insurer declined eligibility, but during which the independent review organization deemed the benefit trigger to have been met; and

(3) For tax-qualified long-term care insurance contracts, provide a certification made by a licensed health care practitioner as defined by subdivision 20:06:21:01(21) that the insured is a chronically ill individual.

The independent review organization's determination shall be used solely to establish liability for benefit trigger decisions, and is intended to be admissible in any proceeding only to the extent it establishes the eligibility of benefits payable. Nothing in §§ 20:06:21:87 to 20:06:21:104, inclusive, restricts the insured's right to submit a new request for benefit trigger determination after the independent review decision, if the independent review organization upholds the insurer's decision.

The decision of the independent review organization with respect to whether the insured met the benefit trigger will be final and binding on the insurer, except to the extent the insurer has other remedies available under applicable state or federal law. However, if the decision of the independent review organization is that a benefit trigger has been met and the insurer has sought other applicable state or federal remedies in lieu of accepting the decision of the independent review organization, then the insurer shall provide notice to the director within 30 days of that decision. Nothing in this section prevents the director upon receipt of notice from initiating administrative proceedings pursuant to § 20:06:21:108, SDCL 58-6-46, 58-6-47, or 58-33-67.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:100. Acceptance of state certification. The director shall accept another state's certification of an independent review organization, if the state requires the independent review organization to meet substantially similar qualifications as those contained in Appendix M and as such state requires as provided § 20:06:21:102.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:101. Certification of long-term care insurance independent review organizations. The director shall consider a long-term care insurance independent review organization to be qualified in this state, if the independent review organization demonstrates that it is unbiased and has either been certified by another state with substantially similar qualifications as contained in Appendix M or meets the following qualifications:

(1) Have on staff, or contract with, a qualified and licensed health care professional in an appropriate field for determining an insured's functional or cognitive impairment (e.g. physical therapy, occupational therapy, neurology, physical medicine, and rehabilitation) to conduct the review;

(2) Neither it nor any of its licensed health care professionals may, in any manner, be related to or affiliated with an entity that previously provided medical care to the insured;

(3) Utilize a licensed health care professional who is not an employee of the insurer or related in any manner to the insured;

(4) Neither it nor its licensed health care professional who conducts the reviews may receive compensation of any type that is dependent on the outcome of the review;

(5) Be state-approved or certified to conduct such reviews if the state requires such approvals or certifications;

(6) Provide a description of the fees to be charged by it for independent reviews of a long-term care insurance benefit trigger decision. Such fees shall be reasonable and customary for the type of long-term care insurance benefit trigger decision under review;

(7) Provide the name of the medical director or health care professional responsible for the supervision and oversight of the independent review procedure; and

(8) Have on staff or contract with a licensed health care practitioner as defined in subdivision 20:06:21:01(21), who is qualified to certify that an individual is chronically ill for purposes of a qualified long-term care insurance contract.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:102. Maintenance of records and reporting obligations by independent review organizations. Each insurer contracting with an independent review organization doing business in this state shall contractually ensure that the independent review organization complies with the following:

(1) Maintain written documentation establishing the date it receives a request for independent review, the date each review is conducted, the resolution, the date such resolution was communicated to the insurer and the insured, the name and professional status of the reviewer conducting such review in an easily accessible and retrievable format for the year in which it received the information, plus two calendar years;

(2) Be able to document measures taken to appropriately safeguard the confidentiality of such records and prevent unauthorized use and disclosures in accordance with applicable federal and state law;

(3) Report annually to the director, by June 1, in the aggregate and for each long-term care insurer all of the following:

(a) The total number of requests received for independent review of long-term care benefit trigger decisions;

(b) The total number of reviews conducted and the resolution of such reviews (i.e., the number of reviews which upheld or overturned the long-term care insurer's determination that the benefit trigger was not met);

(d) The percentage of reviews conducted within the prescribed timeframe set forth in § 20:06:21:99; and

(e) Such other information the director may require.

(4) Report immediately to the director any change in its status which would cause it to cease meeting any of the qualifications required of an independent review organization performing independent reviews of long-term care benefit trigger decisions.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:103. Additional rights. Nothing contained in §§ 20:06:21:87 to 20:06:21:104, inclusive, limits the ability of an insurer to assert any rights an insurer may have under the policy related to:

(1) An insured's misrepresentation;

(2) Changes in the insured's benefit eligibility; and

(3) Terms, conditions, and exclusions of the policy, other than failure to meet the benefit trigger.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:104. Applicability. The requirements of §§ 20:06:21:87 to 20:06:21:103, inclusive, apply to a benefit trigger request made after December 31, 2010, under a long-term care insurance policy.

As used for purposes of independent review, a benefit trigger is a contractual provision in the insured's long-term care insurance conditioning the payment of benefits on a determination of the insured's ability to perform activities of daily living and on cognitive impairment. For purposes of a tax-qualified long term care insurance contract as defined in Section 7702B of the Internal Revenue Code of 1986, as amended, a benefit trigger shall include a determination by a licensed health care practitioner that an insured is a chronically ill individual.

Source: 36 SDR 209, effective July 1, 2010; 44 SDR 184, effective June 25, 2018.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:105. Payment of a clean claim. Within 30 business days after receipt of a claim for benefits under a long-term care insurance policy or certificate, an insurer shall pay such claim if it is a clean claim, or send a written notice acknowledging the date of receipt of the claim and one of the following:

(1) The insurer is declining to pay all or part of the claim and each specific reason for the denial; or

(2) That additional information is necessary to determine if all or any part of the claim is payable and the specific additional information that is necessary.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:106. Claim timeframes. Within 30 business days after receipt of all the requested additional information, an insurer shall pay a claim for benefits under a long-term care insurance policy or certificate if it is a clean claim, or send a written notice that the insurer is declining to pay all or part of the claim, and the specific reason or reasons for denial.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:107. Unpaid claims. If an insurer fails to comply with § 20:06:21:105 or 20:06:21:106, the insurer shall pay interest at the rate of one percent per month on the amount of the claim that should have been paid but that remains unpaid 45 business days after the receipt of the claim with respect to § 20:06:21:105 or all requested additional information with respect to § 20:06:21:106. The interest payable pursuant to this section shall be included in any late reimbursement without requiring the person who filed the original claim to make any additional claim for such interest.

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

20:06:21:108. Violations. The provisions of §§ 20:06:21:105 to 20:06:21:107, inclusive, do not apply if the insurer has a reasonable basis supported by specific information that such claim was fraudulently submitted.

Any violation of §§ 20:06:21:105 to 20:06:21:107, inclusive, by an insurer if committed flagrantly and in conscious disregard of provisions of §§ 20:06:21:87 to 20:06:21:107, inclusive, or with such frequency as to constitute a general business practice shall be considered a violation of SDCL 58-6-47(3).

Source: 36 SDR 209, effective July 1, 2010.

General Authority: SDCL 58-17B-4.

Law Implemented: SDCL 58-17B-4.

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‎Long-Term Care Insurance

Personal Worksheet

Nationwide

Percent Increase Over Initial Premium

Percent Increase Over

Initial Premium