(In some states, this provision is called the OOB (Outline of Benefits)). This section of the regulation implements, interprets and makes specific provisions in prescribing a standard format and the content of an Outline of Coverage.72
Format for Outline of Coverage:
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.
OR
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.
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:
(1) Policies and certificates that are guaranteed renewable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS GUARANTEED RENEWABLE. This means you have the right, subject to the terms of your policy, [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.
(2) [Policies and certificates that are noncancellable shall contain the following statement:] RENEWABILITY: THIS POLICY [CERTIFICATE] IS NONCANCELLABLE. 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;]
(c) [Describe waiver of premium provisions or state that there are not such provisions.]
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.]
TERMS UNDER WHICH THE POLICY OR CERTIFICATE MAY BE RETURNED AND PREMIUM REFUNDED.
(a) [Provide a brief description of the right to return–“free look” 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.]
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.
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.]
BENEFITS PROVIDED BY THIS POLICY.
(a) [Covered services, related deductibles, waiting periods, elimination periods and benefit maximums.]
(b) [Institutional benefits, by skill level.]
(c) [Non-institutional benefits, by skill level.]
(d) Eligibility for Payment of Benefits
[Activities of daily living and cognitive impairment must be used to measure an insured’s need for long-term care and must be defined and described as part of the Outline of Coverage.] [Any additional benefit triggers must also be explained. If these triggers differ for different benefits, explanation of the triggers 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 too must be specified.]
LIMITATIONS AND EXCLUSIONS.
[Describe:
(a) Preexisting conditions;
(b) Non-eligible facilities and provider;
(c) Non-eligible levels of care (e.g., unlicensed providers, care or treatment provided by a family member, etc.);
(d) Exclusions and 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 Number 6 above.]
THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.
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;
(e) And finally, describe whether there will be any additional premium charge imposed, and how that is to be calculated.]
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.]
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.]
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.
NOTE: The temptation may be to skim lightly over this “form,” however, one should be very familiar with this form if for no other reason than the OOC provides an abbreviated study of the most important points of a Long Term Care Insurance policy.
STUDY QUESTIONS
1. The Outline of Coverage must
A. be a free-standing document.
B. be part of the policy provisions.
C. appear on the Declaration Page of the policy.
D. be in 8-point type.
2. The Outline of Coverage (OOC) states that the policy is
A. only a non-tax-qualified policy.
B. only a tax-qualified policy.
C. neither a tax-qualified or non-tax-qualified policy
D. either a tax-qualified or non-tax-qualified policy.
3. The OOC also states
A. the policy may be considered as a Medicare Supplement policy.
B. that there is a “free look” provision and briefly describes such provision.
C. the insurance company many not change the premiums under any circumstances.
D. there is no refund in case of death or lapse.
4. The OOC states “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,
A. 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.”
B. that is provided only in a skilled nursing facility.”
C. excluding services provided in a skilled nursing facility.”
D. performed only in the home.”
5. The OOC states that
A. “ THIS POLICY WILL COVER ALL YOUR LONG-TERM CARE EXPENSES.”
B. “THIS POLICY IS NOT DESIGNED TO COVER ANY EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.”
C. “THIS POLICY MAY NOT COVER ALL THE EXPENSES ASSOCIATED WITH YOUR LONG-TERM CARE NEEDS.”
D. “THERE ARE NO COMMISSIONS PAID TO THE AGENT ON THIS POLICY.”
6. In respect to the Inflation Rider or Provision, the OOC
A. totally ignores the possibility of benefits being reduced because of inflation.
B. informs the policyholder of the dangers of inflation on the benefits and specifies what action is taken and to what degree.
C. states that the premium will always be adjusted to reflect a 5% compounded increase in daily benefits.
D. refers the applicant/policyholder to the company legal counsel for discussion and clarification of impact of inflation on benefits.
7. The OOC
A. totally ignores Alzheimer’s disease as benefits will not be paid for a policy holder that develops this disease.
B. specifies the total amount of premium only.
C. specified the total amount of premium and for options, the amount of premium used for each option.
D. states emphatically that under no circumstances will Medical underwriting be used.
ANSWERS TO STUDY QUESTIONS
1A 2D 3B 4A 5C 6B 7C