NAC687B.076. Offer to purchase protection from inflation required.

     1. An insurer shall not offer a long-term care insurance contract unless the insurer also offers to the policyholder, in addition to any other protection from inflation, the option to purchase a long-term care insurance contract that provides for increasing levels of benefits and increasing maximum benefits at reasonable durations which account for reasonably anticipated increases in the costs of services related to long-term care covered by the long-term care insurance contract. An insurer shall offer to each policyholder, at the time of purchase, the option to purchase a long-term care insurance contract with a feature to protect against inflation that is no less favorable than one of the following:

     (a) Increases levels of benefits annually in a manner so that the increases are compounded annually at a rate not less than 5 percent;

     (b) Guarantees the insured the right to periodically increase levels of benefits without providing evidence of insurability or status of health so long as the option for the previous period has not been declined. The amount of the additional benefit must be no less than the difference between the existing benefit and that benefit compounded annually at a rate of at least 5 percent for the period beginning with the purchase of the existing benefit and extending until the year in which the offer is made; or

     (c) Covers a specified percentage of actual or reasonable charges and does not include a maximum specified amount or limit of indemnity.

     2. Except as otherwise provided in subsection 3, if the long-term care insurance contract is issued to a group, the insurer shall make the offer required by subsection 1 to the group policyholder.

     3. If the long-term care insurance contract is issued to a group described in subsection 4 of NAC 687B.025, other than to a retirement community which provides continuing care, the insurer shall make the offer required pursuant to subsection 1 to each proposed certificate holder.

     4. An insurer offering a long-term care insurance contract shall include the following information in or with the outline of coverage:

     (a) A comparison of each level of benefits offered with a long-term care insurance contract that increases benefits over the contract period with a long-term care insurance contract that does not increase benefits. The comparison must be made through the use of graphs and must show the levels of benefits over a period of at least 20 years. All assumptions used to produce the graphs must be disclosed.

     (b) Any expected increases in premiums or additional premiums to pay for automatic or optional increases in benefits.

Ê An insurer may use a reasonable hypothetical for the purpose of complying with the requirements of this subsection.

     5. Increases in benefits under a long-term care insurance contract which provides for increased benefits to protect against inflation must continue without regard to an insured’s age, status regarding claims or history of claims or the length of time the person has been insured under the long-term care insurance contract.

     6. An offer of protection against inflation which provides for automatic increases in benefits must include an offer of a premium which the insurer expects to remain constant and must disclose in a conspicuous manner that the premium may change in the future unless the premium is guaranteed to remain constant.

     7. A long-term care insurance contract or certificate must include protection against inflation as provided in subsection 1 unless the insurer obtains a rejection of protection against inflation signed by the policyholder. A rejection must be included as a part of the application and must state:

I have reviewed the outline of coverage and the graphs that compare the benefits and premiums of this contract with and without protection against inflation. Specifically, I have reviewed Plans ........., and I reject protection against inflation.

     8. In addition to the other requirements of this section for protection against inflation, a partnership contract must also:

     (a) For a purchaser who has not attained 61 years of age as of the date of purchase, increase levels of benefits annually in a manner so that the increases are compounded annually at a rate:

          (1) Of not less than 3 percent; or

          (2) Based on changes in the Consumer Price Index for All Urban Consumers, U.S. City Average (All Items) published by the United States Department of Labor for the calendar year ending on July 31 of the immediately preceding year;

     (b) For a purchaser who has attained 61 years of age but has not attained 76 years of age as of the date of purchase, contain some level of protection against inflation, such as simple inflation protection; and

     (c) For a purchaser who has attained 76 years of age as of the date of purchase, give the purchaser an option for some level of protection against inflation.

     9. A person who purchases a partnership contract may adjust the level of protection against inflation, and such a contract will maintain partnership status if the new level of protection against inflation meets the minimum requirement set forth in subsection 8 for the policyholder’s age at the time of adjustment.

     10. The provisions of this section do not apply to a policy of life insurance or a rider or endorsement to a policy of life insurance that contains accelerated benefits for long-term care.

     (Added to NAC by Comm’r of Insurance, eff. 12-15-94; A by R028-10, 12-16-2010, eff. 10-1-2011)