The Office of General Counsel issued the following opinion on July 26, 2004, representing the position of the New York State Insurance Department.
Re: Long Term Care Insurance, History of Breast Cancer
Issue:
May an insurer underwrite long term care insurance and refuse to issue a policy of such insurance based upon the applicant having a history of breast cancer?
Conclusion:
Such insurance may be underwritten and if the insurer bases a rejection on sound actuarial principles or actual or reasonably anticipated experience, such a rejection would not be contrary to the New York Insurance Law (McKinney 2000 and 2003 Supplement).
Facts:
Since this is a general question, no facts were furnished.
Analysis:
Long term care insurance is authorized by New York Insurance Law § 1117 (McKinney 2000 and 2004 Supplement). While such insurance is not considered to be within the definition of accident & health insurance, as set forth in New York Insurance Law § 1113(a)(3) (McKinney 2000 and 2004 Supplement), because, in accordance with New York Insurance Law § 1117(a) it may only be written by insurers that may issue accident and health insurance policies, it is still considered a form of health insurance.
Because long term care insurance would not be considered to be health insurance in the absence of New York Insurance Law § 1117, it is the position of the Department that such insurance is not subject to the open enrollment requirements of either New York Insurance Law §§ 3231 (McKinney 2000 and 2004 Supplement) or 4317 (McKinney 2000 and 2004 Supplement). Accordingly, insurers may underwrite such coverage.
New York Insurance Law § 2613, added by 2003 N.Y. Laws 599 and effective March 28, 2004 provides:
(a) Unless its action is based upon sound actuarial principles or is related to actual or reasonably anticipated experience, no insurer shall refuse to issue any policy of . . . non-cancelable disability insurance, or cancel or decline to renew such policy because an individual has had any type of cancer, provided that the initial diagnosis of such disease has occurred at least three years prior to the date of application and that a physician has certified that the disease has not reoccurred in the applicant or the individual proposed for such insurance
(b) In the case of an adverse underwriting decision, the insurer shall notify the applicant or proposed insured of its specific reason or reasons for such decision.
Disability income insurance is needed during working years and replaces lost income. Long term care insurance is usually to provide for expenses attendant upon disability occasioned after withdrawal from the work force. Since long term care insurance is not a sub-set of disability insurance, applicants for long term care insurance would not be protected by New York Insurance Law § 2613.
However, New York Insurance Law § 4224(b) (McKinney 2000 and 2003 Supplement) provides:
No insurer doing in this state the business of accident and health insurance . . . shall: . . . (2) refuse to insure . . . solely because of the physical or mental disability, impairment or disease, or prior history thereof, of the insured or potential insured, except where the refusal, limitation or rate differential is permitted by law or regulation and is based on sound actuarial principles or is related to actual or reasonably anticipated experience . . . .
It is the position of the Department that, based upon New York Insurance Law § 4224(b), an insurer may not refuse to issue a long term care insurance policy solely because of a history of breast cancer. However, if the insurer's denial is based on sound actuarial principles or is related to actual or reasonably anticipated experience, it may utilize the previous history as a basis to deny issuance of a long term care policy. In addition, the insurer would have to utilize the same data for similarly situated applicants for that type of insurance.
For further information you may contact Principal Attorney Alan Rachlin at the New York City office.