PA 10-65—sSB 141

Insurance and Real Estate Committee

AN ACT REQUIRING DISCLOSURE OF OFFSETS IN GROUP LONG-TERM DISABILITY INSURANCE POLICIES

SUMMARY: Group long-term disability (LTD) policies usually include a “benefit offset. ” State law prohibits an insurer that issues, delivers, renews, or amends a group LTD policy in Connecticut from including an “offset proviso. ” A “benefit offset” is a policy provision that reduces the amount of benefits available under the policy if benefits are also available from other sources (e. g. , Social Security). An “offset proviso” is a policy provision that allows the insurer to reduce its liability by any increase in benefits available from the other sources that occurs after a claim begins under the policy. This act specifies that the increase in other benefits is limited to cost of living increases.

The act requires an insurer, for each group LTD policy that contains a benefit offset, to disclose specified information to the policyholder. The act requires each policyholder to provide the disclosed information to each individual eligible for LTD benefits.

The act also extends its provisions to group LTD policies continued in Connecticut and makes technical changes.

EFFECTIVE DATE: January 1, 2011

REQUIRED DISCLOSURE

For each group LTD policy with an offset, the insurer must disclose, in a conspicuous manner in at least 14-point bold face type in a separate document:

1. that the policy contains an offset;

2. that the offset functions to limit payments to a person insured under the policy, taking into account benefits the person may receive from other sources, including Social Security disability benefits;

3. what other categories of benefits the policy offsets;

4. the income percentage the policy covers and any maximum dollar limit;

5. at least one example of how the offset works; and

6. that an eligible individual who does not want an offset may contact an insurance agent or company for an individual policy.

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