(b) To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of Arkansas Code § 23-97-319:

1. (1)

   1. (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.
   2. (B) The nonforfeiture benefit included in the offer shall be the benefit described in subsection (e) of this section; and
2. (2) The offer shall be in writing if the nonforfeiture benefit is not otherwise described in the outline of coverage or other materials given to the prospective policyholder.

(c)

1. (1) If the offer required to be made under Arkansas Code § 23-97-319 is rejected, the insurer shall provide the contingent benefit upon lapse described in this section.
2. (2) Even if this offer is accepted for a policy with a fixed or limited premium payment period, the contingent benefit on lapse in subdivision (d)(4) of this section shall still apply.

(d)

1. (1) After rejection of the offer required under Arkansas Code § 23-97-319, for individual and group policies without nonforfeiture benefits issued after the effective date of this section, the insurer shall provide a contingent benefit upon lapse.
2. (2) In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificate holder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.

3. (3)

   1. (A) The contingent benefit on lapse shall be triggered every time:

(i) 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 insured’s issue age; and

1. (ii) The policy or certificate lapses within one hundred twenty (120) days of the due date of the premium so increased.

   1. (B) Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.

      Triggers for a Substantial Premium 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%

2. (4)

   1. (A) A contingent benefit on lapse shall also be triggered for policies with a fixed or limited premium paying period every time:

      1. (i) 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 insured’s issue age;
      2. (ii) The policy or certificate lapses within one hundred twenty (120) days of the due date of the premium so increased; and
      3. (iii) The ratio in subdivision (d)(6)(B) of this section is forty percent (40%) or more.
   2. (B) Unless otherwise required, policyholders shall be notified at least thirty (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%
   3. (C) This provision shall be in addition to the contingent benefit provided by subdivision (d)(3) of this section, and where both are triggered, the benefit provided shall be at the option of the insured.

3. (5) On or before the effective date of a substantial premium increase as defined in subdivision (d)(3) of this section the insurer shall:

   1. (A) Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;

   2. (B)

      1. (i) Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of subsection (e) of this section.
      2. (ii) This option may be elected at any time during the one hundred twenty-day period referenced in subdivision (d)(3) of this section; and
   3. (C) Notify the policyholder or certificate holder that a default or lapse at any time during the one hundred twenty-day period referenced in subdivision (d)(3) of this section shall be deemed to be the election of the offer to convert in subdivision (d)(5)(B) of this section unless the automatic option in subdivision (d)(6)(C) of this section applies.

4. (6) On or before the effective date of a substantial premium increase as defined in subdivision (d)(3) of this section, the insurer shall:

   1. (A) Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;

   2. (B)

      1. (i) Offer to convert the coverage to a paid-up status where the amount payable for each benefit is ninety percent (90%) 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.
      2. (ii) This option may be elected at any time during the one hundred twenty-day period referenced in subdivision (d)(4) of this section; and
   3. (C) Notify the policyholder or certificate holder that a default or lapse at any time during the one hundred twenty-day period referenced in subdivision (d)(4) of this section shall be deemed to be the election of the offer to convert in subdivision (d)(6)(B) of this section if the ratio is forty percent (40%) or more.

(e) Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with subdivision (d)(3) of this section, but not subdivision (d)(4) of this section, are described in this subsection:

1. (1) For purposes of this subsection, attained age rating is defined as a schedule of premiums starting from the issue date which increases with age at least:

   1. (A) One percent (1%) per year prior to age fifty (50); and
   2. (B) Three percent (3%) per year beyond age fifty (50);

2. (2)

   1. (A) For purposes of this subsection, the nonforfeiture benefit shall be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse.
   2. (B) 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 (e)(3) of this section;

3. (3)

   1. (A) The standard nonforfeiture credit will be equal to one hundred percent (100%) of the sum of all premiums paid, including the premiums paid prior to any changes in benefits.
   2. (B) 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.
   3. (C) However, the minimum nonforfeiture credit shall not be less than thirty (30) times the daily nursing home benefit at the time of lapse.
   4. (D) In either event, the calculation of the nonforfeiture credit is subject to the limitation of subsection (f) of this section;

4. (4)

   1. (A)

      1. (i) The nonforfeiture benefit shall begin not later than the end of the third year following the policy or certificate issue date.
      2. (ii) The contingent benefit upon lapse shall be effective during the first three (3) years as well as thereafter.

   2. (B) Notwithstanding subdivision (e)(4)(A) of this section, for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of:

      1. (i) The end of the tenth year following the policy or certificate issue date; or
      2. (ii) The end of the second year following the date the policy or certificate is no longer subject to attained age rating; and
5. (5) 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.

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

1. (1) Except as provided in subdivisions (h)(2) and (3) 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 part;
2. (2) For certificates issued on or after the effective date of this section, under a group long-term care insurance policy as defined in Arkansas Code § 23-97-304(6), which policy was in force at the time this amended part became effective, the provisions of this section shall not apply; and

3. (3) Subdivisions (c)(2), (d)(4), and (d)(6) of this section shall apply to any long-term care insurance policy or certificate issued in this state after January 1, 2009, except new certificates on a group policy as defined in Subsection 4E(1).

   1. (i) Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse shall be subject to the loss ratio requirements of 23 CAR § 84-118 or 23 CAR § 84-119 treating the policy as a whole.

(k) A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets the following requirements:

1. (1) The nonforfeiture provision shall be appropriately captioned;
2. (2) 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 Insurance Commissioner for the same contract form; and

3. (3) The nonforfeiture provision shall provide at least one (1) of the following:

   1. (A) Reduced paid-up insurance;
   2. (B) Extended term insurance;
   3. (C) Shortened benefit period; or
   4. (D) Other similar offerings approved by the commissioner.