Senate Bill 1193*-Third Edition

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2009

S 3

SENATE BILL 1193*

Health Care Committee Substitute Adopted 6/3/10

House Committee Substitute Favorable 6/16/10

Short Title: Implement LTC Partnership Program.		(Public)
Sponsors:
Referred to:

May 18, 2010

A BILL TO BE ENTITLED

AN ACT to implement the Long-term care partnership program, to ensure that North Carolina's Long-term care insurance laws comport with the long-term Care Partnership Provisions in the federal deficit reduction act of 2005, and to authorize the sharing of confidential information between the north carolina department of insurance, entities that contract with the federal government, and other governmental agencies, as recommended by the North carolina study commission on aging.

The General Assembly of North Carolina enacts:

SECTION 1. Part 6, Article 2 of Chapter 108A of the General Statutes is amended by adding a new section to read:

"§ 108A-70.4. Long-Term Care Partnership Program.

(a) The following definitions apply in this section:

(1) Asset. - Resources and income.

(2) Department. - The Department of Health and Human Services.

(3) Division. - The Division of Medical Assistance.

(4) Estate recovery. - The placing of a statutory claim on the estate of a deceased Medicaid recipient, as provided by G.S. 108A-70.5.

(5) Medicaid. - The federal medical assistance program established under Title XIX of the Social Security Act.

(6) Qualified long-term care partnership policy. - A long-term care insurance policy approved for use in North Carolina and meeting all the requirements of the federal Deficit Reduction Act of 2005, P.L. 109-171.

(7) Resource. - Cash or its equivalent and/or real or personal property that is available to an applicant or recipient.

(8) Resource disregard. - The amount of resources owned by a long-term care Medicaid applicant that is equal to the amount of benefits paid to the applicant by a qualified long-term care partnership policy. This amount shall not be taken into consideration when determining the applicant's long-term care Medicaid eligibility.

(9) Resource protection. - An amount equal to the resource disregard given to a Medicaid recipient during the long-term care Medicaid eligibility determination process. This amount shall be deducted from the total value of the estate for estate recovery purposes.

(b) There is established the North Carolina Long-Term Care Partnership Program (Partnership Program) to be administered by the Division with assistance from the Department of Insurance. The Partnership Program shall:

(1) Provide a mechanism for individuals to qualify for coverage of the cost of their long-term care needs under Medicaid without first being required to substantially exhaust their resources.

(2) Provide counseling services to individuals planning for their long-term care needs.

(3) Reduce the financial burden on the State medical assistance program by encouraging the pursuit of private insurance.

(c) In the case of an individual who has received benefits under a qualified long-term care partnership policy, an equal amount of resources shall not be considered by the Department during the determination of the following:

(1) Eligibility for long-term care Medicaid.

(2) Any subsequent recovery by the State from a deceased recipient's estate for payment of Medicaid paid services.

(d) The Department shall adopt rules and amendments to the State Plan to allow for resource disregard at long-term care Medicaid eligibility determination and resource protection at estate recovery. To provide resource disregards for purchases of a qualified long-term care partnership policy, the Department shall count insurance benefits paid under the policy prior to the date of the first application for long-term care Medicaid made after the implementation of the Partnership Program toward resource disregard and resource protection to the extent the payments are for covered services under the qualified long-term care partnership policy.

(e) Effective January 1, 2011, or 60 days after approval of the Medicaid State Plan amendment, whichever is later, a qualified long-term care partnership policy shall be accompanied by a disclosure detailing in plain language the current law pertaining to the Partnership Program, resource disregard, and resource protection.

(f) The Department may enter into a reciprocal agreement with other states that enter into a national reciprocity agreement to extend the resource disregard and resource protection to residents of the State who purchased, or purchased and used, a qualified long-term care policy in another state.

(g) The Department and the Department of Insurance are authorized to adopt rules to implement the provisions of the Partnership Program and to provide for its administration.

(h) In the case of an individual who has received benefits under a qualified long-term care partnership policy, the provisions of G.S. 108A-70.5 remain in effect for purposes of estate recovery, with the exception of the definition of "estate" under G.S. 108A-70.5(b)(2). In accordance with Title XIX of the Social Security Act, 42 U.S.C. § 1396p(b)(4)(B), the definition of "estate" for an individual who has received benefits under a qualified long-term care partnership policy includes any other real or personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement."

SECTION 2. G.S. 108A-70.5 reads as rewritten:

"§ 108A-70.5. Medicaid Estate Recovery Plan.

(a) There is established in the Department of Health and Human Services, the Medicaid Estate Recovery Plan, as required by the Omnibus Budget Reconciliation Act of 1993, to recover from the estates of recipients of medical assistance an equitable amount of the State and federal shares of the cost paid for the recipient. The Department shall administer the program in accordance with applicable federal law and regulations, including those under Title XIX of the Social Security Act, 42 U.S.C. § 1396(p).

(b) ~~As used in this section:~~The following definitions apply in this section:

(1) ~~"Medical assistance" means medical~~ Medical assistance. - Medical care services paid for by the North Carolina Medicaid Program on behalf of the recipient:

a. If the recipient of any age is receiving medical care services as an inpatient in a nursing facility, intermediate care facility for the mentally retarded, or other medical institution, and cannot reasonably be expected to be discharged to return home; or

b. If the recipient is 55 years of age or older and is receiving one or more of the following medical care services:

1. Nursing facility services.

2. Home and community-based services.

3. Hospital care.

3a. Prescription drugs.

4. Personal care services.

5 through 9. Repealed by Session Laws 2007-442, s. 1, effective August 23, 2007.

(2) ~~"Estate" means all~~ Estate. - All the real and personal property considered assets of the estate available for the discharge of debt pursuant to G.S. 28A-15-1. For individuals who have received long-term care benefits as described in G.S. 108A-70.4, "estate" also includes any other real or personal property and other assets in which the individual had any legal title or interest at the time of death (to the extent of such interest), including assets conveyed to a survivor, heir, or assign of the deceased individual through joint tenancy, tenancy in common, survivorship, life estate, living trust, or other arrangement.

(3) Repealed by Session Laws 2007-442, s. 1, effective August 23, 2007.

(c) The amount the Department recovers from the estate of any recipient shall not exceed the amount of medical assistance made on behalf of the recipient and shall be recoverable only for medical care services prescribed in subsection (b) of this section. The Department is a fifth-class creditor, as prescribed in G.S. 28A-19-6, for purposes of determining the order of claims against an estate; provided, however, that judgments in favor of other fifth-class creditors docketed and in force before the Department seeks recovery for medical assistance shall be paid prior to recovery by the Department.

(d) The Department of Health and Human Services shall adopt rules pursuant to Chapter 150B of the General Statutes to implement the Plan, including rules to waive whole or partial recovery when this recovery would be inequitable because it would work an undue hardship or because it would not be administratively cost-effective and rules to ensure that all recipients are notified that their estates are subject to recovery at the time they become eligible to receive medical assistance.

(e) Repealed by Session Laws 2007-442, s. 1, effective August 23, 2007."

SECTION 3. Article 55 of Chapter 58 of the General Statutes is amended by designating G.S. 58-55-1 through G.S. 58-55-50 as "Part 1. General Provisions."

SECTION 4. Article 55 of Chapter 58 of the General Statutes is amended by adding a new Part to read:

"Part 2. Long-Term Care Partnership.

"§ 58-55-55. Definitions.

The following definitions apply in this section:

(1) Asset. - Resources and income.

(2) Estate recovery. - The placing of a statutory claim on the estate of a deceased Medicaid recipient, as provided by G.S. 108A-70.5.(3) Medicaid. - The federal medical assistance program established under Title XIX of the Social Security Act.

(4) Qualified long-term care partnership policy. - A long-term care insurance policy approved for use in North Carolina and meeting all the requirements of the federal Deficit Reduction Act of 2005, P.L. 109-171, that when issued is determined by the issuing insurance company to meet the qualifications for a partnership policy and includes the required disclosure of this qualification.

(5) Resource. - Cash or its equivalent and/or real or personal property that is available to an applicant or recipient.

(6) Resource disregard. - The amount of resources owned by a long-term care Medicaid applicant that is equal to the amount of benefits paid to the applicant by a qualified long-term care partnership policy. This amount shall not be taken into consideration when determining the applicant's long-term care Medicaid eligibility.

(7) Resource protection. - An amount equal to the resource disregard given to a Medicaid recipient during the long-term care Medicaid eligibility determination process. This amount shall be deducted from the total value of the estate for estate recovery purposes.

"§ 58-55-60. Qualified long-term care partnership policy.

A qualified long-term care partnership policy is a long-term care insurance policy or a certificate issued under a group long-term care insurance policy that satisfies all of the following requirements:

(1) The policy meets the requirements for a qualified long-term care insurance contract, as defined in section 7702B of the Internal Revenue Code of 1986 (26 U.S.C. § 7702B(b)).

(2) The effective date of the coverage is on or after January 1, 2011, or 60 days after approval of the Medicaid State Plan amendment, whichever is later.

(3) The policy covers an insured who was a resident of North Carolina or another reciprocal partnership state when coverage first became effective under the policy.

(4) The policy meets the federal consumer protection requirements of section 1917(b) of the Social Security Act as amended by section 6021(a) of the Deficit Reduction Act of 2005, P.L. 109-171 of the Social Security Act (42 U.S.C. § 1396p(b)(5)(A)).

(5) The policy is issued with and retains inflation protection coverage which meets the inflation standards based on the insured's then attained age as defined in sub-subdivisions a., b., and c. below:

a. Policies or certificates issued to an individual who is under 61 years old must provide compound annual inflation protection.

b. Policies or certificates issued to an individual who is 61 to 76 years old must provide some level of inflation protection. This may include simple interest or compound inflation protection.

c. For purchasers 76 years old or older, inflation protection may be offered but is not required.

Notwithstanding the above, purchasers of qualified long-term care insurance policies which meet partnership criteria may adjust their inflation protection as they age. However, their policies shall maintain partnership status as long as the inflation protection continues to meet the minimum requirements for the insured's attained age.

(6) The policy states that it is intended to be a qualified long-term care insurance policy as defined in section 7702B(b) of the Internal Revenue Code of 1986.

(7) A partnership policy issued, executed, and delivered in North Carolina shall be accompanied by a Partnership Disclosure Notice explaining the benefits associated with a partnership policy and indicating that at the time issued, the policy is a qualified long-term care insurance partnership policy in North Carolina. The Partnership Disclosure Notice shall also include a statement indicating that by purchasing this partnership policy, the insured does not automatically qualify for Medicaid. Notices providing additional information may be used in conjunction with the Partnership Disclosure Notice described in this section if filed and approved by the Commissioner. The Notice shall state the following in at least 12-point font:

"Partnership Policy Status: Your long-term care insurance policy is intended to qualify as a Partnership Policy under the North Carolina Long-Term Care Partnership Program as of your policy's effective date. For Medicaid applicants applying for help with the cost of long-term care, this means that an amount of your resources equal to the dollar amount of long-term care insurance benefits paid to you or on your behalf under this policy may be disregarded for purposes of determining your eligibility for long-term care Medicaid. The amount that may be disregarded at eligibility will be equal to the amount of the long-term care partnership benefits paid out prior to the time you apply for long-term care Medicaid. As a result, you may qualify for coverage of the cost of your long-term care needs under Medicaid without first being required to substantially exhaust your personal resources. If you are already a recipient of long-term care Medicaid, this policy will not allow a resource disregard or estate recovery resource protection. The purchase of a Partnership Policy does not automatically qualify you for Medicaid.

Please note that this policy may lose long-term care partnership program status if you move to a different state that does not recognize North Carolina's Long-Term Care Partnership Program or you modify this policy after issuance. This policy may also lose long-term care partnership program status due to changes in federal or state laws.

If you have questions regarding long-term care insurance and the North Carolina Long-Term Care Partnership Program, you may contact the Seniors' Health Insurance Information Program of the Department of Insurance at 1-800-443-9354."

In the case of a group insurance contract, this Notice shall be provided to the insured upon the issuance of the certificate. The insurer shall include in that Notice that the amount of the insured resources that may be disregarded at eligibility will be equal to the amount of qualified long-term care partnership policy benefits paid prior to the time the insured applied for long-term care Medicaid. The insurer shall also include in the notice a warning to the insured that the policy may lose long-term care partnership program status if the insured moves to another state that does not recognize North Carolina's Long-Term Care Partnership Program, or if the policy is modified after issuance.

(8) When the insured's remaining lifetime maximum benefit is equal to 90 times the current daily benefit, or three times the current monthly benefit, the insurer shall notify the insured in writing advising the insured to go to the local department of social services to apply for Medicaid if the insured had not already done so.

"§ 58-55-65. Compliance with federal regulations.

(a) The Commissioner may adopt rules to conform long-term care policies and certificates to the requirements of federal law and regulations, including any changes required by Congress or the U.S. Department of Health and Human Services, or any successor agencies.

(b) The tax-qualified long-term care provisions required of the Health Insurance Portability and Accountability Act of 1996, including subsequent amendments and editions, are hereby incorporated into Article 55 of Chapter 58 of the General Statutes.

(c) The long-term care partnership provisions required of the Deficit Reduction Act of 2005, including subsequent amendments and editions, are hereby incorporated into Article 55 of Chapter 58 of the General Statutes.

"§ 58-55-70. Disclosure notices.

(a) Prior to making a change requested by the policyholder to a policy that would result in the loss of long-term care partnership status, the insurer shall provide to the policyholder a written explanation within 30 calendar days of how this action would affect the insured and shall obtain the insured's signature indicating consent to the change.

(b) If a qualified long-term care partnership policy subsequently loses long-term care partnership status, the insurer shall explain in writing within 30 calendar days to the policyholders the reason for the loss of status.

(c) The disclosures required in this section shall be provided to any insured who exchanges a policy for a qualified long-term care partnership policy.

"§ 58-55-75. Exchange of long-term care policies for long-term care partnership policies.

An insurer shall offer, on a onetime basis, in writing, to all existing policyholders that were issued a long-term care policy on or after February 8, 2006, the option to exchange their existing long-term care coverage for coverage that is intended to qualify under North Carolina's Long-Term Care Partnership Program. The insurer shall provide notification of this onetime offer within 180 days from the date on which the company begins to offer partnership coverage in the State. The mandatory offer of an exchange shall only apply to products issued by the insurer that are comparable to the type of policy form, such as group policies and individual policies, and on the policy series that the company has certified as partnership qualified. This exchange may be subject to underwriting and premium adjustment. A policy received in an exchange after the effective date of North Carolina's Long-Term Care Partnership Program is treated as newly issued and is eligible for partnership policy status. For purposes of applying the Medicaid rules relating to qualified long-term care partnership policies, the addition of a rider, endorsement, or change in schedule page for a policy may be treated as giving rise to an exchange. The effective date of the long-term care partnership policy shall be the date the policy was exchanged."

SECTION 5. Article 55 of Chapter 58 of the General Statutes is amended by adding a new section under Part 2 to read:

"§ 58-55-80. Information sharing.

(a) In order to assist in the performance of the Commissioner's duties under the long-term care partnership program specified in the federal Deficit Reduction Act of 2005, the Commissioner may:

(1) Share information, including identifying information, related to the long-term care partnership program with other state and federal agencies, the National Association of Insurance Commissioners, and any entity contracting with the federal government under the program.

(2) Receive information, including identifying information, related to the long-term care partnership program from other state and federal agencies, the National Association of Insurance Commissioners, and any entity contracting with the federal government under the program, and shall maintain as confidential or privileged any identifying information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information.

(3) Enter into agreements governing sharing and use of information consistent with this section.

(b) No waiver of an existing privilege or claim of confidentiality in the identifying information shall occur as a result of disclosure to the Commissioner under this section or as a result of sharing as authorized in subsection (a) of this section.

(c) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this section shall be available and enforced in any proceeding in, and in any court of, this State.

(d) As used in this section, "identifying information" has the same meaning as in G.S. 14-113.20(b)."

SECTION 6. The Department of Health and Human Services and the Department of Insurance may adopt rules to implement the North Carolina Long-Term Care Partnership Program.

SECTION 7. The Department of Health and Human Services shall pursue a Medicaid State Plan amendment to allow the North Carolina Long-Term Care Partnership Program to operate.

SECTION 8. Sections 7 and 8 of this act are effective when they become law. The remainder of this act becomes effective January 1, 2011, or 60 days after approval of the Medicaid State Plan amendment, whichever is later.