The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:

Act—The Insurance Company Law of 1921 (40 P. S. § § 341—991.2361)

Applicant—The term as defined in section 1103 of the act (40 P. S. § 991.1103).

Certificate—The term as defined in section 1103 of the act.

Commissioner—The Insurance Commissioner of the Commonwealth.

Department—The Insurance Department of the Commonwealth.

Exceptional increase—Only those increases filed by an insurer as exceptional for which the Commissioner determines the need for the premium rate increase is justified.

1. (i) Increases due to changes in laws or regulations applicable to long-term care coverage in this Commonwealth or due to increased and unexpected utilization that affects the majority of insurers of similar products.
2. (ii) Except as provided in § 89a.118 (relating to premium rate schedule increases), exceptional increases are subject to the same requirements as other premium rate schedule increases.
3. (iii) 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.

4. (iv) The Commissioner, in determining that the necessary basis for an exceptional increase exists, will also determine potential offsets to higher claims costs.

   Functionally necessary—The term as defined in section 1103 of the act.

   Group long-term care insurance—The term as defined in section 1103 of the act.

   Incidental—As used in § 89a.118(j), means that the value of the long-term care benefits provided is less than 10% of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue.

   Long-term care insurance—The term as defined in section 1103 of the act.

   Medically necessary—The term as defined in section 1103 of the act.

   Policy—The term as defined in section 1103 of the act.

   Producer—An agent as defined in section 601 of the act (40 P. S. § 231), or a broker as defined in section 621 of the act (40 P. S. § 251).

   Qualified actuary—A member in good standing of the American Academy of Actuaries.

   Qualified long-term care insurance contract or Federally tax-qualified long-term care insurance contract—

5. (i) An individual or group insurance contract that meets all of the following requirements of section 7702B(b) of the Internal Revenue Code of 1986 (IRC) (26 U.S.C.A. § 77026B(b)):

   1. (A) The only insurance protection provided under the contract is coverage of qualified long-term care services. A contract may not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate.
   2. (B) The contract does not pay or reimburse expenses incurred for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act (42 U.S.C.A. § § 1395—1395ggg) or would be so reimbursable but for the application of a deductible or coinsurance amount. The requirements of this subparagraph do not apply to expenses that are reimbursable under Title XVIII of the Social Security Act only as a secondary payor. A contract may not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate.
   3. (C) The contract is guaranteed renewable, within the meaning of section 7702B(b)(1)(C) of the IRC.
   4. (D) The contract does not provide for a cash surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed.
   5. (E) All refunds of premiums and all policyholder dividends or similar amounts, under the contract are to be applied as a reduction in future premiums or to increase future benefits, except that a refund on the event of death of the insured or a complete surrender or cancellation of the contract cannot exceed the aggregate premiums paid under the contract.
   6. (F) The contract meets the consumer protection provisions in section 7702B(g) of the IRC.

6. (ii) The term also means the portion of a life insurance contract that provides long-term care insurance coverage by rider or as part of the contract and that satisfies the requirements of section 7702B(b) and (e) of the IRC.

   Similar policy forms—All of the long-term care insurance policies and certificates issued by an insurer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in section 1103 of the act (40 P. S. § 991.1103) are not considered similar to certificates or policies otherwise issued as long-term care insurance, but are similar to other comparable certificates with the same long-term care benefit classifications. For purposes of determining similar policy forms, long-term care benefit classifications are defined as follows:

7. (i) Institutional long-term care benefits only.
8. (ii) Noninstitutional long-term care benefits only.
9. (iii) Comprehensive long-term care benefits.

Cross References

This section cited in 31 Pa. Code § 89a.118 (relating to premium rate schedule increases).