28 TAC §3.3806
The Texas Department of Insurance proposes new §3.3806
concerning the initial and subsequent conditions of eligibility for individuals
who may become covered under a long-term care insurance policy and/or certificate.
This new section is necessary to implement legislation enacted by the 76th
Legislature in House Bill 1586, which amended Article 3.70-12, standards for
long-term care insurance. Proposed new §3.3806 sets forth individuals
eligible for long-term care coverage, including the statutory language that
clarified that parents of the insured and parents of the insured's spouse
are eligible for coverage and requires inclusion of a provision stating the
conditions under which the long-term care coverage will become effective for
an individual who becomes insured subsequent to the issuance of the policy
and/or certificate. Section 2(c) of HB 1586 applied the amendment of Article
3.70-12 to policies delivered, issued for delivery, or renewed on or after
April 1, 2000.
Ana Smith-Daley, deputy commissioner of Life/Health Division has determined
that for each year of the first five years the proposed section will be in
effect, there will be no fiscal impact to state and local governments as a
result of the enforcement or administration of the rule. There will be no
effect on local employment or the local economy as a result of the proposal.
Ms. Smith-Daley has determined that for each year of the first five years
the proposed section is in effect, the anticipated public benefits as a result
of the proposed section will be: clarification of the individuals eligible
for long-term care coverage, an increased availability of long-term care coverage,
and greater flexibility and innovation in the development and marketing of
long-term care coverage. The proposed section clarifies that an insurer could
offer long-term care coverage to a greater number of an individual's family
members or other individuals. The proposed section does not require an insurer
to offer long-term care coverage to every individual included in the proposed
section but instead provides guidance and direction to an insurer as to the
individuals it could offer coverage to in a particular policy and/or certificate.
An insurer offering a long-term care product will not incur additional expenses
due to the proposed section since eligibility provisions are standard provisions
that are already required in health products as set forth by other statutes
and regulations. The proposed section will have no adverse economic effect
on small businesses or micro-businesses. Any insurer that qualifies as a small
business or micro-business will have the same opportunity as a large business
to offer to provide coverage to any of the individuals listed in the proposed
section. The total cost to entities is not dependent upon the size of the
business, but rather is dependent upon the decision of the business to offer
to provide coverage to the various individuals included in the proposed section.
Therefore, the department does not believe it legal or feasible to waive the
requirements of the proposed section for small businesses or micro-businesses.
To be considered, written comments on the proposal must be submitted no
later than 5:00 p.m. on July 3, 2000 to Lynda H. Nesenholtz, General Counsel
and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P. O. Box
149104, Austin, Texas 78714-9104. An additional copy of the comment must be
simultaneously submitted to Diane Moellenberg, Chief Director of Regulatory
Development, Mail Code 107-2A, Texas Department of Insurance, P.O. Box 149104,
Austin, Texas 78714-9104. Any requests for a public hearing should be submitted
separately to the Office of the Chief Clerk.
The section is proposed under the Insurance Code Articles 3.70-12,
3.70-1 and §36.001. Articles 3.70-12 and 3.70-1 provide that the Commissioner
of Insurance by rule shall establish standards for long-term care policies
and/or certificates. Section 36.001 provides that the Commissioner of Insurance
may adopt rules and regulations to execute the duties and functions of the
Texas Department of Insurance only as authorized by statute.
Insurance Code Articles 3.70-12 and 3.70-1
§3.3806.Initial and Subsequent Conditions of Eligibility.
A long-term care insurance policy and/or certificate shall contain
a provision which sets forth the individuals eligible to be covered under
the policy and/or certificate and which specifies the conditions applicable
to an individual who may become covered under the policy and/or certificate
by subsequent addition.
(1)
Eligible individuals may include:
(A)
for group coverage:
(i)
the prospective certificate holder (the individual whose
employment or other membership status, except for family dependency, is the
basis for eligibility for enrollment under the group policy);
(ii)
the certificate holder's spouse;
(iii)
the certificate holder's children;
(iv)
the certificate holder's spouse's children;
(v)
the certificate holder's parents;
(vi)
the certificate holder's spouse's parents; and
(vii)
any other individual included as an eligible individual
under a long-term care policy.
(B)
For individual coverage:
(i)
the prospective policyholder;
(ii)
the policyholder's spouse;
(iii)
the policyholder's children;
(iv)
the policyholder's spouse's children;
(v)
the policyholder's parents;
(vi)
the policyholder's spouse's parents; and
(vii)
any other individual included as an eligible individual
under a long-term care policy.
(2)
The provision shall state the conditions
under which coverage will become effective for an individual who becomes insured
subsequent to policy and/or certificate issuance. Such conditions shall include:
(A)
any requirements relating to evidence of insurability;
(B)
any requirements relating to the necessity of application
or notice from the individual;
(C)
any requirements relating to the payment of premiums as
to such addition; and
(D)
the time within which any action is to be taken by the
individual.
This agency hereby certifies that the proposal
has been reviewed by legal counsel and found to be within the agency's legal
authority to adopt.
Filed with the Office of
the Secretary of State, on May 22, 2000.
TRD-200003584
Lynda Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: July 2, 2000
For further information, please call: (512) 463-6327