Chapter Ins 3

Ins 3.455(9m)(a)3.e. e. If it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer shall file composite rates reflecting projections of new certificates.

Ins 3.455(9m)(a)4. 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 commissioner.

Ins 3.455(9m)(a)5. 5. Sufficient information for review of the premium rate schedule increase by the commissioner.

Ins 3.455(9m)(a)6. 6. For exceptional increases, the projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase. If the commissioner determines that offsets may exist, the insurer shall use appropriate net projected experience.

Ins 3.455(9m)(a)7. 7. The commissioner 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.

Ins 3.455(9m)(b) (b) All premium rate schedule increases shall be determined in accordance with all of the following requirements:

Ins 3.455(9m)(b)1. 1. The commissioner, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs.

Ins 3.455(9m)(b)2. 2. 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.

Ins 3.455(9m)(b)3. 3. 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:

Ins 3.455(9m)(b)3.a. a. The accumulated value of the initial earned premium times 58%.

Ins 3.455(9m)(b)3.b. b. Eighty-five percent of the accumulated value of prior premium rate schedule increases on an earned basis.

Ins 3.455(9m)(b)3.c. c. The present value of future projected initial earned premiums times 58%.

Ins 3.455(9m)(b)3.d. d. Eighty-five percent of the present value of future projected premiums not in this subd. 3. c. on an earned basis.

Ins 3.455(9m)(b)4. 4. If a policy form has both exceptional and other increases, the values in subd. 3. b. and d. shall also include 70% for exceptional rate increase amount.

Ins 3.455(9m)(b)5. 5. All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified in s. Ins 3.17. The actuary shall disclose, as part of the actuarial memorandum, the use of any appropriate averages.

Ins 3.455(9m)(c) (c) For each rate increase that is implemented, the insurer shall file for review by the commissioner updated projections as defined in par. (a) 3. a. annually for the next 3 years and include a comparison of actual results to projected values. The commissioner may extend the period to greater than 3 years if actual results are not consistent with projected values from prior projections.

Ins 3.455(9m)(d) (d) If any premium rate in the revised premium rate schedule is greater than 200% of the comparable rate in the initial premium schedule, lifetime projections, as defined in par. (a) 3. a., shall be filed for review by the commissioner every 5 years following the end of the required period in par. (c).

Ins 3.455(9m)(e) (e) If the commissioner 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 par. (b), the commissioner may require the insurer to make premium rate schedule adjustments or take other measures to reduce the difference between the projected and actual experience. In determining whether the actual experience adequately matches the projected experience, consideration should be given to par. (a) 3. e., if applicable.

Ins 3.455(9m)(f) (f) 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 all of the following:

Ins 3.455(9m)(f)1. 1. A plan, subject to commissioner 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 commissioner may impose the condition in par. (g).

Ins 3.455(9m)(f)2. 2. The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to par. (b) had the greater of the original anticipated lifetime loss ratio or 58% been used in the calculations described in par. (b) 3. a. and c.

Ins 3.455(9m)(g) (g)

Ins 3.455(9m)(g)1. 1. For a rate increase filing that meets the following criteria, the commissioner 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 when all of the following conditions occur:

Ins 3.455(9m)(g)1.a. a. The rate increase is not the first rate increase requested for the specific policy form or forms.

Ins 3.455(9m)(g)1.b. b. The rate increase is not an exceptional increase.

Ins 3.455(9m)(g)1.c. c. The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse.

Ins 3.455(9m)(g)2. 2. If 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 commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the commissioner 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.

Ins 3.455(9m)(g)3. 3. The offer described in subd. 2. shall be subject to the approval of the commissioner, be based on actuarially sound principles, but not be based on attained age, and shall provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.

Ins 3.455(9m)(g)4. 4. The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. If a rate increase on the policy form, the rate increase shall be limited to the maximum rate increase determined based on the combined experience or the maximum rate increase determined based only on the experience of the insureds originally issued the form plus 10%, whichever is less.

Ins 3.455(9m)(h) (h) If the commissioner determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care, nursing home, and home health care insurance, the commissioner may, in addition to the provisions of par. (g), either prohibit the insurer from filing and marketing comparable coverage for a period of up to 5 years, or prohibit the insurer from offering all other similar coverages and require the insurer to limit marketing of new applications to the products subject to recent premium rate schedule increases.

Ins 3.455(9m)(i) (i) Paragraphs (a) through (h) shall not apply to policies for which the benefits provided by the policy are incidental.

Ins 3.455(9m)(j) (j) Except as provided in pars. (k) and (L) the provisions of this subsection apply to any long-term care, nursing home or home health care policy or certificate issued in this state on or after January 1, 2002.

Ins 3.455(9m)(k) (k) For group long-term care insurance certificates issued to employer-sponsored groups or labor organizations in this state and in force on or after January 1, 2002 the provisions of this subsection shall apply on the first policy anniversary occurring at least 12 months after January 1, 2002.

Ins 3.455(9m)(L) (L) In lieu of filing the projections required by pars. (c) and (d) with the commissioner, an insurer may file projections with the employer if that employer has at least 5,000 eligible employees of whom at least 250 are covered under the policy or the employer pays at least 20% of the annual group premium in the year preceding the increase.

Ins 3.455(10) (10) Initial filing requirements.

Ins 3.455(10)(a) (a) This subsection applies to any long-term care, nursing home and home health care policy issued in this state on or after January 1, 2002.

Ins 3.455(10)(b) (b) An insurer shall file all of the following with the commissioner at least 30 days before making a long-term care insurance policy available for sale:

Ins 3.455(10)(b)1. 1. A copy of the disclosure documents as required by s. Ins 3.46 (9).

Ins 3.455(10)(b)2. 2. An actuarial certification consisting of all the following:

Ins 3.455(10)(b)2.a. a. 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.

Ins 3.455(10)(b)2.b. b. A statement that the policy design and coverage provided have been reviewed and taken into consideration.

Ins 3.455(10)(b)2.c. c. A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration.

Ins 3.455(10)(b)2.d. d. A complete description of the basis for contract reserves that are anticipated to be held under the form.

Ins 3.455(10)(b)2.e. e. Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held.

Ins 3.455(10)(b)2.f. f. A statement that the assumptions used for reserves contain reasonable margins for adverse experience.

Ins 3.455(10)(b)2.g. g. A statement that the net valuation premium for renewal years does not increase except for attained-age rating where permitted.

Ins 3.455(10)(b)2.h. h. 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. An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship. If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under subd. 3. based on a standard age distribution.

Ins 3.455(10)(b)2.i. 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 benefit or a comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences.

Ins 3.455(10)(b)3. 3. The commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and credible data from other studies, or both.

Ins 3.455(10)(b)4. 4. If the commissioner asks for additional information under this provision, the period in par. (b) does not include the period during which the insurer is preparing the requested information.

Ins 3.455 History History: Cr. Register, April, 1991, No. 424, eff. 6-1-91; cr. (9), Register, July, 1996, No. 487, eff. 8-1-96; CR 00-188: cr. (3) (c) to (g), (5) (b) 10. to 13., (d), (9m) and (10), am. (9) (e), r. and recr. (9) (f), Register July 2001, No. 547 eff. 1-1-02; EmR0817: emerg. r. and recr. (3), am. (7) (b) to (d), cr. (7) (e) to (j), eff. 6-3-08; CR 08-032: r. and recr. (3), am. (7) (b) to (d), cr. (7) (e) to (j) Register October 2008 No. 634, eff. 11-1-08; correction in (2) (b) 3. made under s. 13.92 (4) (b) 7., Stats., Register October 2008 No. 634.

Ins 3.455 Note Note: CR 08-032 first applies to policies or certificates issued on or after January 1, 2009 or on the first renewal date on or after January 1, 2009, but no later than January 1, 2010 for collectively bargained policies or certificates.

Ins 3.46 Ins 3.46 Standards for long-term care, nursing home and home health care insurance and life insurance-long-term care coverage.

Ins 3.46(1) (1) Findings. The findings under s. Ins 3.455 (1) are incorporated by reference. The commissioner finds that the adoption of minimum standards, compensation restrictions and disclosure requirements for long-term care and life insurance-long-term care coverage will reduce marketing abuses and will assist consumers in their attempts to understand the benefits offered and to compare different products. The commissioner finds that failure to comply with this section is misleading and deceptive under s. 628.34 (12), Stats., and constitutes an unfair trade practice.

Ins 3.46(2) (2) Applicability.

Ins 3.46(2)(b) (b) This section, except for sub. (10) (b) to (e), does not apply to an individual long-term care policy or life insurance-long-term care coverage, to a group long-term care policy or life insurance-long-term care coverage or a certificate under the group policy, or to a renewal policy or coverage or certificate, if:

Ins 3.46(2)(b)1. 1. The individual long-term care policy or life insurance-long-term care coverage was issued prior to June 1, 1991; or

Ins 3.46(2)(b)2. 2. The group policy is issued prior to June 1, 1991 and all certificates under the policy are issued prior to June 1, 1991.

Ins 3.46(2)(c) (c) Section Ins 3.46 in effect prior to June 1, 1991 and sub. (10) (b) to (e) apply to those policies, coverages or certificates which qualify for exemption under par. (b).

Ins 3.46(2)(d) (d) This section does not apply to an accelerated benefit coverage of a life insurance policy, rider or endorsement that:

Ins 3.46(2)(d)1. 1. Provides payments on the occurrence of a severe illness or injury without regard to the incurral of expenses for services relating to the illness or injury; and

Ins 3.46(2)(d)2. 2. Is not sold primarily for the purpose of providing coverage of nursing home or home health care, or both.

Ins 3.46(3) (3) Definitions. In this section:

Ins 3.46(3)(a) (a) “Assisted living facility” or “assisted living care facility” means a living arrangement in which people with special needs reside in a facility that provides supportive services to persons unable to live independently and requires supportive services, including, but not limited to, personal care and assistance taking medications, and that is in compliance with ch. DHS 89.

Ins 3.46(3)(b) (b) “Cognitive impairment” means a deficiency in a person’s short-term or long-term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.

Ins 3.46(3)(c) (c) “Compensation” means remuneration of any kind, including, but not limited to, pecuniary or non-pecuniary remuneration, commissions, bonuses, gifts, prizes, awards, finder’s fees, and policy fees.

Ins 3.46(3)(d) (d) “Department” means the Wisconsin department of health services.

Ins 3.46(3)(e) (e) “Group long-term care insurance” means a long-term care insurance policy that is delivered or issued for delivery in this state and issued to one or more employers or labor organizations or to a trust or to the trustees of a fund established by one or more employers or labor organizations, or both, for employees or former employees, or both, or for members or former members, or both, of the labor organizations; or a professional, trade or occupational association for its members or former or retired members, or both, if the association is composed of individuals all of whom are or were actively engaged in the same profession, trade or occupation and has been maintained in good faith for purposes other than obtaining insurance or an association or a trust or the trustees of a fund established, created or maintained for the benefit of members of one or more associations. Prior to advertising, marketing or offering the policy within this state the association or the insurer of the association shall demonstrate that at least 25% of its members are residents of this state.

Ins 3.46(3)(f) (f) “Guaranteed renewable for life” means an individual policy renewal provision that continues the insurance in force unless the premium is not paid on time, that prohibits the insurer from changing any provision of the policy, endorsement or rider while the insurance is in force without the express consent of the insured, and that requires the insurer to renew the policy, endorsement or rider for the life of the insured and to maintain the rates in effect for the policy, endorsement or rider at time of issuance, except the provision may permit the insurer to revise rates but on a class basis only.

Ins 3.46(3)(g) (g) “Guide to long-term care” means the booklet prescribed by the commissioner which provides information on long-term care, including insurance, and advice to consumers on the purchase of long-term care insurance.

Ins 3.46(3)(h) (h) “Home health care services” means medical and non-medical services, provided to ill, disabled or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily living and respite care services.

Ins 3.46(3)(i) (i) “Irreversible dementia” means deterioration or loss of intellectual faculties, reasoning power, memory, and will due to organic brain disease characterized by confusion, disorientation, apathy or stupor of varying degrees that is not capable of being reversed and from which recovery is impossible. Irreversible dementia includes, but is not limited to, Alzheimer’s disease.

Ins 3.46(3)(j) (j) “Life insurance-long-term care coverage” means coverage that includes all of the following:

Ins 3.46(3)(j)1. 1. Provides coverage for convalescent or custodial care or care for a chronic condition or terminal illness.

Ins 3.46(3)(j)2. 2. Is included in a life insurance policy or an endorsement or rider to a life insurance policy.

Ins 3.46(3)(k) (k) “Long-term care insurance” means any insurance policy or rider advertised, marketed, offered or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense incurred, indemnity, prepaid or other basis; 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. The term includes group and individual annuities and life insurance policies or riders that provide directly 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 includes qualifying partnership policies. Long-term care insurance may be issued by insurers; fraternal benefit societies; nonprofit health, hospital, and medical service corporations; prepaid health plans; health maintenance organizations or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long-term care insurance does not include an insurance policy that is offered primarily to provide basic Medicare supplement 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. Notwithstanding any other provision of this section, any product advertised, marketed or offered as long-term care insurance shall be subject to the provisions of this section.

Ins 3.46(3)(L) (L) “Long-term care insurance policy qualifying for the Wisconsin Long-Term Care Insurance Partnership Program” or “qualifying partnership policy” means a long-term care insurance policy that is intended to qualify an insured under the Wisconsin Long-Term Care Insurance Partnership Program, as defined at s. 49.45 (31) (a), Stats.

Ins 3.46(3)(m) (m) “Long-term care policy” means a disability insurance policy, or an endorsement or rider to a disability insurance policy, designed or intended primarily to be marketed to provide coverage for care that is convalescent or custodial care or care for a chronic condition or terminal illness. Long-term care policy includes, but is not limited to, a nursing home policy, endorsement or rider and a home health care policy, endorsement or rider. The term does not include any of the following:

Ins 3.46(3)(m)1. 1. A Medicare supplement policy, Medicare replacement policy, or an endorsement or rider to such a policy.

Ins 3.46(3)(m)2. 2. A continuing care contract, as defined in s. 647.01 (2), Stats.

Ins 3.46(3)(m)3. 3. A rider designed specifically to meet the requirements for coverage of skilled nursing care under s. 632.895 (3), Stats.

Ins 3.46(3)(m)4. 4. Life insurance-long-term care coverage.

Ins 3.46(3)(n) (n) “Medicaid” means the federal and state entitlement program that pays for medical assistance for certain individuals and families with low incomes and resources established by Title XIX, 42 U.S.C. 1396 to 1396r-3. The federal government provides matching funds to the state Medicaid programs.

Ins 3.46(3)(o) (o) “Medicare” means the hospital and medical insurance program established by Title XVIII, 42 U.S.C. 1395 to 1395ss, as amended.

Ins 3.46(3)(p) (p) “Medicare eligible persons” means persons who qualify for Medicare.

Ins 3.46(3)(q) (q) “Mental or nervous disorder” may not be defined to include more than neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder.

Ins 3.46(3)(r) (r) “Noncancellable” means an individual policy in which the insured has the right to continue the insurance in force by the timely payment of premiums during which period the insurer has no right to unilaterally make any change in any provision of the insurance or in the premium rate.

Ins 3.46(3)(s) (s) “Outline of coverage” means a document that gives a brief description of benefits in the format prescribed in Appendix 1 to this section and which complies with sub. (8).

Ins 3.46(3)(t) (t) “Personal care” means the provision of hands-on services to assist an individual with activities of daily living.