§4980C Requirements for Issuers of Qualified Long-term Care Insurance Contracts

Summary

If a company that sells a qualified long-term care insurance policy fails to follow certain rules, it must pay a tax. The tax is $100 for each insured person for each day the rule is broken. The Secretary may cancel some or all of the tax if the failure was for a reasonable reason and not willful neglect and if the tax would be too large for the mistake. The company must follow parts of the official model regulation and model Act, including rules about applications and replacement coverage; reporting (including at least yearly the percentage of claims denied by class, except denials for missing the waiting period or for preexisting conditions); marketing filings and standards (with two small subparts excepted); suitability of recommended purchases; the standard outline of coverage; and giving a shopper’s guide. The right-to-return rule must also cover denied applications and any refund must be made within 30 days of the return or denial. If an application is approved, the company must deliver the policy or certificate within 30 days. If a claim is denied, the company must, within 60 days of a written request from the policyholder (or their representative), give a written reason and all information used in the denial. The policy and its outline must say the plan is meant to be a qualified long-term care insurance contract under section 7702B(b). “Qualified long-term care insurance contract,” “model regulation,” and “model Act” are defined by section 7702B and its related provisions. If a State’s rule is stricter than these federal rules, meeting the State rule counts as meeting the federal rule.