1. (1) General applicability. The provisions within s. Ins 3.46 regarding insurance transactions for long-term care and life insurance policies with long-term care provisions apply to insurance transactions described within this section.

2. (2) Definitions. The definitions contained in ss. Ins 3.455 and 3.46 also apply in this section. In addition, the following definitions apply in this section:

   1. (a) “Automatic exchange” means the issuance of a notice from an insurer informing an existing insured that the policy the insured purchased prior to January 1, 2009, from the insurer has been approved by the commissioner as a policy that meets the requirements of the state’s partnership program and, as such, the policy will be treated from the date of the notice as a qualifying partnership policy.
   2. (b) “Consumer price index” means the consumer price index for all urban consumers, U.S. city average, all items, as determined by the Bureau of Labor Statistics of the United States Department of Labor.
   3. (c) “Qualified long-term care insurance contract” or “federally tax-qualified long-term care insurance contract” means an individual or group insurance long-term care, nursing home or home health care contract that meets the requirements of section 7702B(b) of the Internal Revenue Code of 1986, as amended, or 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 sections 7702B(b) and (c) of the Internal Revenue Code of 1986, as amended.
   4. (d) “Qualifying partnership policy exchange” means the exchange of an existing long-term care insurance plan with an identical policy that on or after January 1, 2009 is certified by the insurer to meet the federal requirements established for the state’s partnership program or the exchange of an existing long-term care insurance policy with an identical policy except for the addition of a benefit or rider that, on or after January 1, 2009, is certified by the insurer to meet the federal requirements established for the state’s partnership program.
   5. (e) “Secretary” means the U. S. Secretary of the Department of Health and Human Services.

3. (3) Qualifying partnership policies.

   1. (a) This section applies to an insurer offering a long-term care policy that is intended to qualify an insured under the state’s partnership program and that is in compliance with the requirements of 42 U.S.C 1396p (b).

   2. (b) In order for a long-term care policy to qualify as a qualifying partnership policy, the policy shall comply with the requirements set forth in s. 49.45 (31), Stats., and the all of the following:

      1. 1. Be filed with and approved by the commissioner prior to use and contain the certification referenced in sub. (5) (a), and comply with s. 631.28, Stats.
      2. 2. Meet the requirements of a tax-qualified long-term care insurance contract as defined in section 7702B(b) of the Internal Revenue Code of 1986, as amended.
      3. 3. Meet all applicable requirements of this section and ss. Ins 3.455 and 3.46.
      4. 4. Be accompanied by a clear disclosure that the policy is intended to be a qualifying partnership policy. The disclosure shall be in the format contained in Appendix 1.
      5. 5. Provide inflation protection provisions in compliance with sub. (5).
      6. 6. Not base underwriting criteria upon whether or not the policy is a qualifying partnership policy.

4. (4) Form requirements for qualifying partnership policies. An insurer that offers a long-term care insurance policy that is intended to qualify an insured under the state’s partnership program shall comply with all of the following:

   1. (a) File the policy, outline of coverage, premium rates, and actuarial memorandum to the commissioner in accordance with s. 631.20, Stats., and s. Ins 3.455, and include the qualifying partnership policy certification form.

      Note: The qualifying partnership policy certification form (OCI No. 26-113) can be obtained from the Office of the Commissioner of Insurance at no cost from the OCI website http://oci.wi.gov or by writing to the State of Wisconsin Office of the Commissioner of Insurance 125 S. Webster, Madison, WI 53703.

   2. (b) Submit the qualifying partnership policy certification form to the commissioner, prior to use, for approval if an insurer intends to use a previously approved policy to qualify as a qualifying partnership policy.
   3. (c) File the endorsement or rider and submit the qualifying partnership policy certification form to the commissioner, prior to use, for approval if the insurer intends to amend a previously approved policy with an endorsement or rider, as needed, to qualify the policy as a qualifying partnership policy.

   4. (d) Certification shall be in the format specified by the commissioner and identified as OCI No. 26-113, and comply with the following:

      1. 1. The certification shall be made and signed by an officer of the insurer having the authority to bind the insurer and shall include full contact information for the certifying officer.
      2. 2. The certification for pars. (b) and (c) shall identify the policy by the original form number and approval date.

5. (5) Inflation protection requirements. An insurer offering a long-term care insurance policy that is intended to qualify an insured under the state partnership program shall comply with the following inflation protection provisions.

   1. (a) For a person who is less than 61 years of age as of the date of purchase of the policy, the policy shall provide compound annual inflation protection that complies with one of the following:

      1. 1. Provide and maintain a level premium that contains automatic annual compounded inflation increases at a rate that is at least 3%.
      2. 2. Provide and maintain a level premium that contains automatic annual compounded inflation increases at a rate based on changes in the consumer price index.

      3. 3. Provide for annual compounded inflation increases at a rate that is at least 3% and meet all of the following requirements:

         1. a. Each benefit increase occurs automatically, unless the insured specifically rejects an increase.
         2. b. The increases shall be provided until the insured has at least attained age 76 and each increase up to and including the increase that takes effect at age 76 may not be rejected by the insured in order to retain qualifying partnership policy status.
         3. c. Increases may end when the insured has attained age 76, rejected an offer of inflation increase, or becomes eligible for benefits on or after age 76.
         4. d. The additional premium for each increase under this feature may be based on the premium rates that apply to the insured’s attained age at the time of the increase.
         5. e. Rejection of an increase may not limit the coverage under the policy, except for the asset disregard feature of a qualified partnership policy, and from the insured receiving future premium increases as contemplated in s. Ins 3.455.
   2. (b) For a person who is at least 61 years of age but less than 76 years of age as of the date of purchase of the policy, the policy shall provide inflation protection that meets the requirements of par. (a) or an inflation protection feature that provides at least 3% annual simple inflation protection.
   3. (c) For a person who is at least 76 years of age as of the date of purchase of the policy, the policy may provide inflation protection with terms no less restrictive than those identified in pars. (a) and (b), but inflation protection is not required.

6. (6) Disclosure when soliciting. In addition to the requirements of s. Ins 3.46, an insurer issuing or marketing a policy that is intended to qualify an insured for the state’s partnership program shall explain at the time of solicitation the benefits associated with a qualifying partnership policy and comply with all of the following:

   1. (a)

      1. 1. An insurer or its intermediary shall provide to each prospective applicant all of the following:

         1. a. Qualifying partnership policy notices in the format contained in Appendix 1 and 2.
         2. b. The Guide to Long-term Care booklet.
         3. c. The Wisconsin Long-term Care Programs guide.
      2. 2. No insurer or intermediary shall be responsible for providing applicants the revised guides until 90 days after the insurer or intermediary has been given notice that the revised guides are available.
   2. (b) For a qualifying partnership policy issued to a group when an outline of coverage is not delivered, the insurer or intermediary shall deliver copies of the qualifying partnership policy disclosure notice, The Guide to Long-term Care booklet, and The Wisconsin Long-term Care Programs guide.
   3. (c) For a life insurance policy that offers long-term care insurance as a provision in the policy or in a rider that is intended to qualify an insured under the state’s partnership program, the insurer or intermediary at the time of solicitation shall deliver the disclosure notice (Appendix 1), the Guide to Long-term Care booklet, and the Wisconsin Long-term Care Programs guide.

7. (7) Other disclosures.

   1. (a) When an insurer is made aware that the insured or certificateholder initiated a policy change request or declined a benefit increase that will result in the loss of the status as a qualifying partnership policy, the insurer shall provide, in writing, an explanation of how such action impacts the insured. The insurer shall also advise the insured or certificateholder of how to retain the policy as a qualified partnership policy, if requested.
   2. (b) If a qualifying partnership policy no longer meets the requirements of the state’s partnership program, the insurer shall explain, in writing, to the policyholder or certificateholder the reason for the loss of status.
   3. (c) The insurer shall provide a completed qualifying partnership policy summary document in the format of OCI No. 26-114, when requested by the insured or the insured’s authorized representative.

8. (8) Exchange of long-term care insurance policy to a qualifying partnership policy.

   1. (a) Restrictions on exchange.

      1. 1. Insurers offering long-term care policies that are intended to qualify an insured under the state’s partnership program are subject to s. Ins 3.455 (9m).

      2. 2. Insurers issuing an automatic exchange shall comply with all of the following:

         1. a. Only a policy that requires no modifications or additions is eligible for an automatic exchange.
         2. b. The new policy may not be underwritten.
         3. c. The rate used in determining the premium charged for the new policy shall be determined using the original issue age and risk class of the insured that was used to determine the rate of the existing policy and may not contemplate that the new policy is a qualified partnership policy.
         4. d. Insurers issuing automatic exchanges shall provide insureds, at the time of notice of the automatic exchange, a copy of Appendix 1, the Guide to Long-Term Care booklet and the Wisconsin Long-Term Care Programs guide. After issuance of the notice for automatic exchange, if the insured does not decline the offer, the insurer shall provide the insured a copy of Appendix 2.
         5. e. Insurers issuing an automatic exchange shall offer to the insured, at the time of notice of the automatic exchange, the option to decline the automatic exchange and retain the existing policy if the insured responds within a period of time not less than 120 days.

      3. 3. An insurer offering an exchange as to a qualifying partnership policy with an actuarial value of benefits exceeding the actuarial value of benefits of the existing policy shall be subject to all of the following:

         1. a. The insurer shall treat the exchange as a replacement and comply with s. Ins 3.46, including suitability.
         2. b. The insurer shall apply its new business long-term care underwriting guidelines to the increased benefits only.
         3. c. The premium charged for the new policy shall be determined using the method in subd. 3. for existing benefits and the rate for the additional benefits using the then current age and risk class of the insured for the additional benefits only.
      4. 4. An insurer shall maintain documentation of the actuarial value analysis determination and shall provide the analysis to the commissioner upon request.

   2. (b) Offer of exchange. An insurer that submits and receives approval to offer a long-term care insurance policy that is intended to be a qualifying partnership policy in this state may, subject to the following requirements, offer an exchange:

      1. 1. Within one year from the date the insurer begins to advertise, market, offer, sell, or issue policies that are intended to be qualifying partnership policies, on a one-time basis in writing, offer to all existing policyholders or certificateholders that were issued long-term care coverage by the insurer with an issue date on or after February 8, 2006, the option to exchange their existing long-term care policy for a qualifying partnership policy. Insurers may offer the exchange option to policyholders or certificateholders with long-term care policies issued prior to February 8, 2006, pursuant to a plan filed with the commissioner.
      2. 2. The offer shall be made on a nondiscriminatory basis without regard to the age or health status of the insured.
      3. 3. The offer shall remain open for a minimum of 120 days from the date of the mailing by the insurer.
      4. 4. The effective date of the partnership plan policy shall be the date of the exchanged policy.
      5. 5. In the event of an exchange, the insured may not lose any rights that have accrued under the original policy including, but not limited to, rights established because of the lapse of time related to pre-existing condition exclusions, elimination periods, or incontestability clauses.
      6. 6. The written offer to exchange shall include the disclosure form contained in Appendix 2 and also shall include the Guide to Long-Term Care booklet and the Wisconsin Long-Term Care Programs guide. The insurer shall file with the commissioner, prior to use and for informational purposes, the exchange letter to be used in the exchange offer.

   3. (c) Exchanged policy requirements.

      1. 1. The new policy offered in an exchange or automatic exchange shall be of a form that is offered for sale by the insurer in the general market at the time of exchange.
      2. 2. A policy received in an exchange on or after January 1, 2009, is treated as newly issued and thus is eligible for partnership program status. For purposes of applying the Medicaid rules relating to the state partnership program, the addition of a rider, endorsement, or change in schedule page for a policy may be treated as giving rise to an exchange.

   4. (d) Exceptions and exemptions.

      1. 1. Insurers offering group long-term care policies are exempt from subs. (5) to (7) and (8) (a) to (c), if they comply with all of the following:

         1. a. The policy is issued to a local, municipal, county, or state public employee group.
         2. b. The group coverage was negotiated as part of a collective bargaining agreement.
         3. c. The group coverage is provided to all eligible employees on a guaranteed issue basis.
         4. d. The policy provides insureds with at least 5% compound annualized inflation protection.
         5. e. The policy meets the requirements of subs. (3) and (4).
         6. f. No later than one year from the date the insurer begins to advertise, market, offer, sell, or issue policies that are intended to be qualifying partnership policies, the insurer shall provide notice that the policy meets the requirements of a qualifying partnership plan and shall provide the insureds with Appendix 1, the Guide to Long-Term Care booklet and the Wisconsin Long-Term Care Programs guide. The insurer shall file with the commissioner, prior to use and for informational purposes, the exchange letter to be used in the exchange offer.
         7. g. To accomplish an automatic exchange the insurer shall apply the exchange to all group members.
         8. h. The effective date of the qualifying partnership policy shall be the date of the exchanged policy.
         9. i. In the event of an exchange, the insured and its certificateholders may not lose any rights that have accrued under the original policy including, but not limited to, rights established because of the lapse of time related to pre-existing condition exclusions, elimination periods, or incontestability clauses.

      2. 2. Notwithstanding par. (b), an insurer is not required to offer an exchange to an individual who is eligible for benefits or within an elimination period or who is, or who has been in, claim status on or after January 1, 2009, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The insurer may require that policyholders or certificateholders meet all eligibility requirements, including plan design, underwriting, if applicable, and payment of the required premium.

         Note: CR 08-032 first applies to policies or certificates issued on or after January 1, 2009 or on the first renewal date on or after January 1, 2009, but no later than January 1, 2010 for collectively bargained policies or certificates.

         Ins 3.465 APPENDIX 1

         PARTNERSHIP POLICY STATUS DISCLOSURE NOTICE

         Important Notice Regarding Your Policy’s Long-Term
         Care Insurance Partnership Plan Status

         (Please Keep This Notice With Your Policy or Certificate)

         The Wisconsin Long-Term Care Insurance Partnership Program (Wisconsin Partnership Program) is a partnership between the State of Wisconsin and private insurers of long-term care insurance policies [certificates]. The Wisconsin Partnership Program became effective on January 1, 2009. This Notice explains the Medicaid asset protection that you may receive being insured under a Partnership Policy [Certificate].

         Notice of Partnership Plan Policy Status. Your long-term care insurance policy [certificate] is intended to qualify as a Qualifying Partnership Policy [Certificate] under the Wisconsin Long-Term Care Insurance Partnership Program as of your policy’s [certificate’s] effective date.

         You should also be aware that insurers are required to provide personally identifying information, including your name, to the federal government to be entered into a federal data base to which state Medicaid departments will have access.

         Medicaid Asset Protection Provided by the State Medicaid Program. Long-term care insurance is one tool that helps individuals prepare for future long-term care needs. The purchase of a Qualifying Partnership Policy [certificate] does not automatically qualify you for Medicaid.

         In particular, such policies [certificates] may permit individuals to protect assets from spend-down requirements under Wisconsin’s Medicaid program if assistance under this program is ever needed and you otherwise qualify for Medicaid.

         Specifically, the asset eligibility and recovery provisions of the Wisconsin Medicaid program are applied by disregarding the amount of assets equal to the amount of insurance benefits you have received from your Qualifying Partnership Policy [Certificate]. The disregarded assets are also exempt from estate recovery. For example, if you receive $200,000 of insurance benefits from your Qualifying Partnership Policy [Certificate], you generally would be able to retain $200,000 of assets above and beyond the amount of assets normally permitted for Medicaid eligibility.

         Other Medicaid eligibility requirements apart from permissible assets shall be met, including special rules that may apply if the equity in your home exceeds [$750,000]. In addition, you shall meet the Medicaid program’s income requirements and may be required to contribute some of your income to the costs of your care once you become eligible for Medicaid. Medicaid eligibility requirements may vary by county and may change over time. Medicaid eligibility requirements may also be different from state to state.

         Additional Consumer Protections. In addition to providing Medicaid asset protection, your Partnership Policy [Certificate] has other important features. Under the rules governing Wisconsin’s Long-Term Care Insurance Partnership Program, your Qualifying Partnership Policy [Certificate] shall be a tax-qualified long-term care insurance contract under Federal tax law, and as such the insurance benefits you receive from the policy generally will not be subject to income tax. (Please note that a policy or certificate can be a qualified long-term care insurance contract under Federal and State income tax law, with the same income tax treatment, even if it is not a Qualifying Partnership Policy [Certificate].) In addition, if you were under age 76 when you purchased your Qualifying Partnership Policy [Certificate], it shall provide inflation protection to help protect against potential future increases in the cost of long-term care. (For older purchasers, only an offer of inflation protection is required.)

         What Could Disqualify Your Policy as a Partnership Policy [Certificate]. If you make any changes to your policy or certificate, such changes could affect whether your policy [certificate] continues to be a Qualifying Partnership Policy [Certificate]. Before you make any changes, you should consult with the [carrier’s name] to determine the effect of a proposed change. In addition, if you move to a state that does not maintain a Partnership Program or does not recognize your policy as a Qualifying Partnership Policy [Certificate], you would not receive Medicaid asset protection in that state. However, the coverage contained in your policy would not be affected. Also, changes in Federal or State law could modify, reduce or eliminate the Medicaid asset protection available with respect to your Qualifying Partnership Policy [Certificate] after you have purchased the policy.

         Additional information. If you would like further information about the Medicaid asset protection provided by your Qualifying Partnership Policy [Certificate] or the Wisconsin’s Long-Term Care Insurance Partnership Program, please contact State of Wisconsin Member Services at 1-800-362-3002.

         Ins 3.465 APPENDIX 2

         PARTNERSHIP PROGRAM NOTICE

         Important Consumer Information Regarding the Wisconsin
         Long-Term Care Insurance Partnership Program

         Some long-term care insurance policies [certificates] sold in Wisconsin may qualify for the Wisconsin Long-Term Care Insurance Partnership Program (the Partnership Program). The Partnership Program is a partnership between state government and private insurance companies to assist individuals in planning their long-term care needs. Insurance companies voluntarily agree to participate in the Partnership Program by offering long-term care insurance coverage that meets certain State and Federal requirements. Long-term care insurance policies [certificates] that qualify as Qualifying Partnership Policies [Certificates] may protect the policyholder’s [certificateholder’s] assets through a feature known as “Asset Disregard” under Wisconsin’s Medicaid program.

         Asset Disregard means that amount of the policyholder’s [certificateholder’s] assets equal to the amount of long-term care insurance benefits received under a Qualifying Partnership Policy [Certificate] will be disregarded for the purpose of determining the insured’s eligibility for Medicaid. This generally allows a person to keep assets equal to the insurance benefits received under a Qualifying Partnership Policy [Certificate] without affecting the person’s eligibility for Medicaid. The disregarded assets are also exempt from estate recovery. All other Medicaid eligibility criteria will apply and special rules may apply to persons whose home equity exceeds $750,000. Asset Disregard is available under a Qualifying Partnership Policy [Certificate]. Therefore, you should consider if Asset Disregard is important to you, and whether a Qualifying Partnership Policy meets your needs. The purchase of a Qualifying Partnership Policy does not automatically qualify you for Medicaid.

         What are the Requirements for a Partnership Policy [Certificate]? In order for a policy [certificate] to qualify as a Qualifying Partnership Policy [Certificate], it shall, among other requirements:

         •   Have an effective date on or after January 1, 2009;

         •   Be issued to an individual who was a Wisconsin resident when coverage first becomes effective under the policy;

         •   Be a tax-qualified policy under s. 7702(B)(b) of the Internal Revenue Code of 1986, as amended;

         •   Meet certain consumer protection standards; and,

         •   Meet the following inflation requirements:

         •   For persons age 60 or younger – provide compound annual inflation protection of at least 3%.

         •   For persons age 61-75 – provide annual inflation protection of at least 3% not compounded.

         •   For persons age 76 and older – there are no requirements for purchasing inflation protection.

         If you apply and are approved for long-term care insurance coverage, [carrier name] will provide you with written documentation as to whether or not your policy [certificate] is a Qualifying Partnership Policy.

         You should also be aware that insurers are required to provide personally identifying information, including your name, to the federal government to be entered into a federal data base to which state Medicaid departments will have access.

         What Could Disqualify a Policy [Certificate] from Continuing to be a Qualifying Partnership Policy? Certain types of changes to a Qualifying Partnership Policy [Certificate] could affect whether or not such policy [certificate]continues to be a Qualifying Partnership Policy [Certificate]. If you purchase a Qualifying Partnership Policy [Certificate] and later decide to make a change, you should first consult with [carrier name] to determine the effect of the proposed changes. In addition, if you move to a state that does not maintain a Partnership Program or does not recognize your policy [certificate] as a Qualifying Partnership Policy [Certificate], you would not receive treatment of you policy [certificate] under the Medicaid program of that state. However, the coverage under your policy will not be affected. The information contained in this disclosure is based upon current Wisconsin and Federal laws. These laws may be subject to change. Any change in law could modify, reduce or eliminate the treatment of your policy [certificate] under Wisconsin’s Medicaid program.

         Additional Information: If you have questions regarding long-term care insurance policies [certificates] please contact [carrier name]. If you have questions regarding current laws governing Wisconsin Medicaid eligibility, you should contact State of Wisconsin Member Services at 1-800-362-3002.

History

History: EmR0817: emerg. cr. eff. 6-3-08; CR 08-032: cr. Register October 2008 No. 634, eff. 11-1-08.