PA 07-226—HB 7283

Insurance and Real Estate Committee


SUMMARY: This act changes the elimination period under a long-term care (LTC) insurance policy. Prior law required an LTC policy to contain a “reasonable” elimination period (i. e. , a waiting period after the onset of the injury, illness, or function loss during which no benefits are payable). The act instead requires an elimination period that is (1) up to 100 days of confinement or (2) between 100 days and two years of confinement if an irrevocable trust is in place that is estimated to be sufficient to cover the person's confinement costs during this period.

The act requires that the trust (1) pay the health care provider directly and (2) create an unconditional duty to pay only confinement costs during the elimination period. It specifies that the (1) state, grantor, or person acting on the grantor's behalf may enforce this duty and (2) trust remains subject to taxes and any trustee charges allowed by law.

For LTC policies that offer the elimination period trust option, the act requires an insurer to include, (1) in rate filings it submits to the insurance commissioner, how it estimated trust values and (2) on the policy application and face page, a clear and conspicuous statement that the trust may be insufficient to cover all costs incurred during the elimination period.

EFFECTIVE DATE: October 1, 2007


Long-Term Care Policy

An LTC policy is an individual health insurance policy that provides expense-incurred, indemnity, or pre-paid benefits for the necessary care or treatment of an injury, illness, or loss of functional capacity provided by a certified or licensed health care provider in a setting other than an acute care hospital, including a nursing home and an insured's own home, for at least one year after an elimination period. It excludes policies that primarily provide Medicare supplement, basic medical-surgical expense, hospital confinement indemnity, major medical expense, disability income protection, accident only, specified accident, and limited benefit health coverage.

Related Act

PA 07-28 requires an insurer to offer an optional nonforfeiture benefit during the long-term care policy solicitation or application process.

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