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PA Bulletin, Doc. No. 16-1628


Long Term Care Partnership Program Revised Guidance Announcement; Notice 2016-11

[46 Pa.B. 5986]
[Saturday, September 17, 2016]

 This notice provides guidance that supersedes paragraph C of Notice 2008-05, published at 38 Pa.B. 1907 (April 19, 2008), regarding inflation protection for Qualified Partnership Policies, and shall remain in effect until a subsequent notice is published in the Pennsylvania Bulletin.

 As explained in Notice 2008-05, as of July 1, 2007, the Commonwealth has had a qualified long-term care insurance partnership (Qualified Partnership) in accord with the Deficit Reduction Act of 2005 (Pub.L. No. 109-171) (DRA). As explained in Notice 2008-05, Qualified Partnership Policies (Qualified Partnership Policy) may provide valuable protections to purchasers of Qualified State Long Term Care Insurance policies. Qualified Partnership Policies permit individuals to protect certain resources if eligibility under the Medical Assistance Program is ever needed. The protection of resources when determining an individual's eligibility for Pennsylvania's Medical Assistance—Long Term Care Program permits the disregard of specific resources equal to the amount of insurance benefits that were paid from a Qualified Partnership Policy. If those specific resources are still in existence at the time of the individual's death and become part of the decedent's probate estate, they will not be recoverable under Pennsylvania's Medical Assistance Estate Recovery program.

 Since the Qualified Partnership has been in place, it has become clear that additional flexibility in the levels of inflation protection necessary under the DRA would benefit consumers by allowing more affordable coverage options while still providing meaningful inflation protection to consumers. Therefore, the Department hereby revises its guidance to insurers and insurance producers in paragraph C of Notice 2008-05 concerning inflation protection for Qualified Partnership policies:

 C. Inflation Protection. The DRA, at 42 U.S.C.A. § 1396p(b)(1)(A)(iii)(IV), requires that Qualified Partnership Policies provide certain levels of inflation protection based on the age of the individual as of the date of policy purchase. Pennsylvania will certify inflation protection options as meeting the DRA requirements subject to the following:

 1) ''Compound annual inflation protection'' means compound coverage that automatically increases annually at a rate equal to the Consumer Price Index (CPI) or at a fixed rate of not less than 1%. Note that 31 Pa. Code § 89a.112 (relating to requirement to offer inflation protection) requires an offer of 5% compound annual inflation protection be made on all long term care policies offered in Pennsylvania.

 2) ''Some level of inflation protection'' means either compound or simple inflation protection at a rate equal to the CPI or at a fixed rate of not less than 1%.

 3) A future or guaranteed purchase option for inflation protection does not meet the requirements of the DRA.

 4) Inflation protection options with a limited term (that is, 10 years or 20 years) do not meet the requirements of the DRA.

 5) Inflation protection options that reduce the level of inflation protection as the individual ages are permitted only insofar as they are consistent with the age-specific inflation protection levels outlined in the DRA.

 6) The inflation protection level of an individual's policy that is in effect as of the month of application for Medical Assistance is determinative of whether the policy is consistent with the inflation protection levels outlined in the DRA.

 Finally, the Department has modified Attachment C, the Policyholder Notification of Policy Status, to reflect the fact that the level of inflation protection on a policy may change from the level at the time of issuance to a lower level that still is consistent with the inflation protection levels outlined in the DRA. The Insurance Department requests that issuers provide a notification regarding the status of any Qualified Partnership Policy against which claims have been made, upon request of the policyholder, policyholder representative, or the Department of Human Services.

 The remainder of Notice 2008-05 remains as published therein.

 Interested parties are invited to submit written comments, suggestions or objections to Bureau of Life, Accident and Health, Office of Insurance Product Regulation, 1326 Strawberry Square, Harrisburg, PA 17120,, within 30 days after publication of this notice in the Pennsylvania Bulletin.

Insurance Commissioner

Revised Attachment C

Policyholder Long Term Care Partnership (LTCP) Program Status Form

[Issuer Letterhead]


1. Name of insured                          ____

2. Policy/certificate number                       ____

3. Effective date of coverage                      ____

4. The policy/certificate was issued in the state of             ____

5. Issue age of the insured at the time the coverage was issued      ____

6. The policy/certificate was issued [  ] With [  ] Without inflation coverage

7. The inflation coverage at the time of issuance was [  ] Simple Inflation [  ] Compound Inflation [  ] None

8. The inflation coverage currently in effect on the coverage is [  ] Simple Inflation [  ] Compound Inflation [  ] None

9. The policy meets the standards of a tax qualified long-term care policy [  ] Yes [  ] No

10. The cumulative dollar amount of insurance benefits paid $____
(Note: The indicated amount does not include any payments for cash surrender, return of premium death benefits, or waiver of premium, and if joint coverage, the amount is for the indicated insured only)

11. The total dollar amount of insurance benefits remaining available under the policy $____

12. Date this form was completed ____

13. The name, phone number and email address of the person completing this form

Name and Title

Phone Number

Email Address

I hereby certify that the above information is true and accurate to the best of my knowledge at the time of this certification.

___________________________      Date: ______

[Pa.B. Doc. No. 16-1628. Filed for public inspection September 16, 2016, 9:00 a.m.]

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