Certification and Disclosure of PQ Status
If a product developed by an insurance company meets all the requirements of the DRA and of a state partnership program, how does it become a partnership-qualified policy?
· The state insurance department reviews the product and certifies that it meets all requirements. Alternatively, an insurance department could establish a process for self-certification, such as a checklist.
· The insurer must prominently disclose to consumers whether or not a policy is partnership-qualified. This disclosure will most likely be made in a form provided by the state or developed by the insurer and included with the policy when it is delivered. This approach will facilitate the process for policies already in force that meet the PQ requirements -- instead of having to revise such policies simply to add the disclosure statement and re-file them, the insurer can simply issue the form to policyholders.
Insurance companies will have to report certain data on their PQ policies. There are two reasons for this requirement:
· A state Medicaid program needs to know whether an individual is covered by a PQ policy, and if so, how much (if any) she has received in benefits, so that this information can be taken into account if she applies for Medicaid.
· The states and the federal government need data for use in evaluating partnership programs and setting policy for them. Government agencies will want to know whether the asset protection offered by PQ policies does in fact lead consumers to buy them, what type of PQ policies consumers are buying, and what impact the program is having on Medicaid finances.
The DRA and CMS directives require each state insurance department to provide assurance to the state Medicaid program that any person who sells, solicits, or negotiates a PQ policy has received training in these policies and demonstrated an understanding of them and the part they play in the public and private financing of long-term care.
What will this mean in practice for insurance agents? In addition to the requirements they must meet to sell long-term care insurance in their states, there will be new training requirements for selling partnership LTCI policies. There may also be an examination to satisfy the requirement to demonstrate understanding.
States will of course vary in their exact requirements, but at its September 2006 meeting, the NAIC adopted a Model Bulletin that will likely be adopted (perhaps with some modifications) by many states. The requirements of the Model Bulletin are as follows:
· All LTCI agents in the state will receive training in PQ policies.
· There will be an initial training course of no less than eight hours. In addition, agents will be required to receive no less than four hours of ongoing training (continuing education) every 24 months thereafter. [This course satisfies the “ongoing” training requirement.]
· Topics covered in the training must include long-term care services, long-term care insurance, PQ policies, and the relationship between PQ policies and other public and private coverage of long-term care. All types of LTCI policies must be covered, with the advantages and disadvantages of PQ and non-PQ policies discussed. State or federal law may require the use of certain materials.
· The training cannot include any training that is specific to an insurance company or its products. It cannot include any sales or marketing information, materials, or training.
· The state's requirements for continuing education (such as those related to class attendance, the conduct and monitoring of examinations, self-study courses, and web-based training) must be adhered to.
· When a state establishes a partnership program, it will set a date at least one year after the effective date of the program, by which time all agents selling LTCI must have received the training. Until that date, any licensed and qualified LTCI agent may sell PQ policies.
· Insurance companies issuing PQ policies must require agents selling these policies to provide them with verification that they have received this training. The companies must maintain this verification on file and be able to provide it to the state insurance commissioner upon request. [ This course has been approved by Clear Cert — a clearinghouse for LTC insurers that verifies and records agent LTC continuing education credits.]
Keep in mind that some states may not adopt this model, and their training requirements may differ. And of course the four original state partnership programs will continue to operate differently.
It is the intention of the NAIC Model Bulletin that satisfaction of the training requirement in any state will be deemed to satisfy it in any other state. However, agents are advised not to assume reciprocity with any state but to seek confirmation with the state insurance department. In particular, states that do not adopt the NAIC training model might not be granted reciprocity by states that do.