California Long-Term Care - Infinity Schools

1 California 8-Hour long Term care Course 8 Hour California Insurance Continuing Education Course Published By: Training Solutions. Online, Anytime, Anywhere. 1 Did you know Infinity Schools offers Online Pre-License Training? Our online pre-license training system includes: 1. Online study lessons 2. Instructor led video training 3. Online practice exams 4. Practice final exam simulator Infinity Schools prepares thousands of individuals each year to prepare for and successfully pass the California State Insurance examination. If you or any of your staff would like to prepare to pass the state exam please visit our website or contact us directly. Publishers Note: care has been taken to ensure that the information in this course material is as accurate as possible.

2 Please be advised that applicable laws and procedures are subject to change and interpretation. Neither the authors nor the publisher accept any responsibility for any loss, injury, or inconvenience sustained by anyone using this guide. It is further understood that the course, the author nor the publisher is engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Copyright 2011 Infinity Schools Insurance Training Center All rights reserved. Printed in the United States of America. No part of this publication may be used for reproduced in any form or by any means, transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Infinity Schools .

3 Training Solutions. Online, Anytime, Anywhere. 1310 Esplanade #317-S Redondo Beach, CA 90277 Phone: 800-600-2550 Fax: 424-247-9050 2 TABLE OF CONTENTS Chapter One Introduction and Overview 1 Defining Long-Term care 1 Overview 1 Clinically 2 Per California 2 The Public Policy Issues Pertaining To LTC in California 2 Conditions Resulting in The Need For care 3 Acute vs. Chronic Conditions 4 The Services and Providers of care 4 Who Needs care and Why 4 How Services are Provided and Paid For 6 The Availability of LTC Services and Facilities 6 Continuum of care 8 LTC Services Available 8 Evolutionary Process Of Chronic Conditions 9 Obtaining Information On These Services 9 Location Where Formal care Is Provided 9 Nursing Homes 9 Residential care Facilities for the Elderly (RCFE)

4 10 Continuing care retirement Communities (CCRC/LCC 10 Types of Adult Day care Facilities 11 How and Where to Locate the Facilities 12 Licensing Requirements of all LTC Facilities 12 Board and care 13 Assisted Living 13 Change or Improvements to Services and Facilities 14 Home care Providers of Home Health care 14 Difference between home and home health care 16 Historical Development 16 1987 to 1992 Amendments 16 1993 -- California Long-Term care Insurance 17 1994 -- California Launches The Partnership Program 17 1996 -- The Health Insurance Portability and Accountability Act 17 1997 -- California Long-Term care Insurance -- SB 1052 (Vasconcelles) 17 Definition Of LTC Integrated Pool Of Money 19 Applicant 19 Certificate 19 Employer Group LTC insurance 19 Trade group 19 Association group 20 Discretionary Group 20 ERISA (Employee Retirement Income Security Act of 1974) 20 Policy 21 General Provisions 21 Products of out-of-state groups 21 3 Chapter Two Statutory Policy Provisions, Requirements, and Terminology 23 Agent Responsibilities 23 Requirements for Replacement Notice 23 Application Questions 24 Outline of Coverage (OOC))

5 25 Company Responsibilities 25 Freestanding Document, 10 point type 25 Minor Changes Are OK 25 No Advertising 25 Mandatory OOC Form 25 Consumer Protection 27 Insurers, Brokers, and Agents: Duty of Honesty, Good Faith and Fair Dealing 27 Replacement of Long-Term care Insurance Unnecessarily 28 Replacement Sales and Lapse Rates: Maintenance of Agent Records: Reports 28 Premium Credits Toward Replacement Policies or Certificates 28 Advertisements: Commissioner s review; Retention Period; Cold Lead Device; Disclosures to consumers 28 Responsibilities of Insurers Regarding Marketing Procedures, Unfair Trade Practices 29 Indemnity Contracts and Method of Payment 30 The Personal Worksheet 30 Suitability Standards 30 Replacement Coverage and Sales Commission 31 Group Policies Issued Before 1-1-97 31 Definition of Pre-existing Condition 31 Minimum Standards for Home care 32 Six Mandated Elements of Home care 32 Definitions of the Mandated Services 32 Prohibited Limitations 33 Home care Paid vs.

6 Daily Nursing Home Benefit 33 Nursing Facilities Benefit Must Cover Ancillary Supplies and Services 33 Insurer Tax Consequences and Material Modification 33 Nursing Facility Benefit Triggers 34 Insurers May Verify Necessity With Any Source of Independent Judgment 34 Benefits for LTC Contracts and Other Contract Benefit 34 Indemnity contracts/integrated contracts 35 Benefit Periods and Dollar Amounts 36 Elimination Periods 36 Case Management (TQ vs. NTQ) 37 Bed Reservation Benefit 38 Assisted Living Benefit Offering 39 Restoration of Benefit 39 Home modification 40 Caregiver Training 40 Return of Premium 40 Limited Pay Options 41 4 Waiver of Premium 41 Option Non-forfeiture Benefits 41 Company Responsibilities 42 terms and Conditions 42 Policy terms 42 Permitted Exclusions And Limitations 42 Permitted Pre-existing Condition 43 Claims Denial 43 Consumer/Policy Holder Right To Appeal 43 Renewability Provision in Individual Policies 43 Shortened Benefit Period 44 Begins after 10 years 44 Minimum Policy Benefits =3 mon.

7 Non-forfeiture Benefit 44 Amount & frequency same as original policy terms 44 Policy benefit may be reduced by claims paid 44 Prohibited: return of premium, reduced paid-up and extended term 44 Lifetime maximum amount increases proportionally to number of years of premium payment 44 Life riders accelerating benefits are exempt 44 Other Type Non-Forfeiture Benefits 44 Forgetfulness 44 Applicant may designate another to receive notice of lapse. The insurer must receive either: 44 Information on designee, or 44 Verbatim Waiver signed and Dated 44 Insurer must offer right to change designee, every two years 45 "Protection Against Unintended Lapse. 45 Payroll deduction plan 45 Insurer must mail notice 30 days before termination 45 Policy and certificate must include five-month reinstatement 45 Post Claims Underwriting Prohibited 45 Applications must ask yes or no health questions 45 Every Application shall include a checklist 45 Important notice regarding policies available 45 OOC 46 HICAP Notice 46 LTC Insurance CA Consumer Guide 46 Notice to Applicant Regarding Replacement 46 If medical underwriting not complete.

8 Insurer may rescind only for fraud or material misrepresentation 46 No field issue 46 Contestability period shortened to two years 46 Completed application must be delivered with policy, Insurers must file recessions annually 46 Eliminates Prior Hospital Stay Requirement 46 30-Day Free Look 46 Insurers Must Provide Residential care Facilities for the Elderly (RCFE) Coverage 47 All expenses incurred by insured must be covered up to (but not to exceed daily maximum) 47 5 Benefit eligibility 47 Flexible Benefit Mandated 47 Inflation Protection 47 Statutory Requirements (Illustrations) 47 Outline of Topics for Inflation Protection in 8-Hour Course Shall Include Illustrations 47 Applicant must be offered 5% annual compounded inflation adjustments in benefits 48 Applicant must sign statement refusing 5% annual compounded adjustments 48 Past Increases in California Long-Term care Costs Show annual increases in California nursing home rates for past 15 years (Office of Statewide Health Planning and Development, OSHPD, data) 48 Compare annual increases in nursing home rates with consumer price index (CPI)

9 49 Show that annual increases in recent years have trended downward toward 5%, but still exceed CPI 49 Cost of Nursing Home care Today 49 Current nursing home average daily rates in California 48 Current nursing home daily rates in various California communities Estimate Life Expectancy for Applicants at Different ages 50 Illustrate the average number of remaining years of life for different ages using California data 50 Point out half will live longer and half less than the average, but persons healthy enough to qualify for LTC insurance are expected to live longer than average 50 Project Future Nursing home Costs (NH) (for Daily Benefits / Average NH Stay of years) 50 Calculate future costs using 5% compounded annual increases for 14, 20 and 30 years (costs double every 14 years if increases are 5% compounded)

10 50 Illustrate daily and annual out-of-pocket expenditures between policies with a daily benefit equal to the average NH cost but without inflation protection and 5% compounded annual increases 50 Illustrate the daily and annual out-of-pocket expenditures between policies without inflation protection and 5% simple annual increases 50 Inflation Escalator and Benefit Increases 50 Insurer must offer Inflation Protection 50 5% compounded annually 50 Periodic Options to Increase 50 Percentage of Charges 50 Group Policy Offering 50 Implications to Clients on Fixed Incomes 50 Mandated offer goes to group policyholder 50 Accelerated benefits and Expenses incurred plans exempt 51 No Limits on Inflation Benefit Increase Due to Payment of Claims 51 Insurer must Provide 5% Compounded Unless Applicant Signs Rejection 51 Rejection, Verbatim 51 OOC Must Include 51 A 20-year graph contrasting IP with no IP 52 Expected Premium Increases to Pay For IP 52 Illustration Must Be Reasonable 52 6 Chapter Three Statutory Provisions, Disclosures, and Prohibitions 53 Outline of Coverage (OOC) 53 OOC delivered at Solicitation 51 Delivery Before Application (agents) 53 Deliv