Policy Approval Criteria

PURPOSE: This rule specifies the criteria that must be found in policies of accident and health insurance before the director will approve these policies for use in this state. This rule is adopted pursuant to the provisions of section 374.045, RSMo and implements and defines sections 375.936, 376.405, 376.775 and 376.777, RSMo. (1) Application. From the effective date of this rule, application forms, policies, riders and endorsements to policies of health and accident insurance will not be approved for use in this state unless they conform to the criteria stated. This disapproval shall meet the statutory procedural requirements of sections 376.405 and 376.777, RSMo. (2) Definitions in Policy Submittals. (A) Alcoholism treatment facility shall be substantially defined in policies as a residential or nonresidential facility certified by the Department of Mental Health for treatment of alcoholism. (B) Hospital shall be substantially defined in policies as a legally constituted institution (or an institution which operates pursuant to law) having organized facilities for the care and treatment of sick and injured persons on a resident or inpatient basis, including facilities for diagnosis and surgery under the supervision of a staff of one (1) or more licensed physicians and which provides twenty-four (24)-hour nursing service by registered nurses on duty or call. It does not mean convalescent, nursing, rest or extended care facilities or facilities operated exclusively for treatment of the aged, drug addict or alcoholic, even though the facilities are operated as a separate institution by a hospital. Notwithstanding any other language in this rule, the definition of hospital contained in this rule shall not apply to Medicare supplement policies. (C) Intensive care unit shall be substantially defined in policies as that part of a hospital service specifically designed as an intensive care unit permanently equipped and staffed to provide more extensive care for critically ill or injured patients than available in other hospital rooms or wards, the care to include close observation by trained and qualified personnel whose duties are primarily confined to the part of the hospital for which an additional charge is made. (3) Elements of Coverage Required. (A) If individual benefits are not actually provided for those insured who have joined the military, the contract must contain a phrase or wording advising same and substantially indicating that—“Upon notice to the company of entry into such service, the pro rata unearned premiums shall be refunded.” Companies, as an optional provision, may utilize a military suspension clause permitting the insured to reinstate his/her policy after discharge from the military without showing evidence of insurability. (B) If benefits under any individual contract of accident or sickness are reduced or reducible because of the insured’s age, the policy must so state in conspicuous print in a conspicuous location in the policy. (C) No application form will be approved containing such statements as “No information acquired by any representative of the company shall be binding upon the company unless written herein.” The company may specifically disclaim any insurance producer’s authority to waive a complete answer to any question in the application, pass on insurability, make or alter any contract or waive any of the company’s other rights or requirements. (D) No hospital reimbursement policy may exclude payment for services rendered in a government or state hospital if the insured is legally required to pay for the services or charges in the absence of insurance. Any exclusion subsequently approved must therefore state “unless the insured is legally required to pay in the absence of insurance.” This provision AND INSURANCE does not apply to hospital or cash indemnity contracts subject to 20 CSR 400-2.020. (E) In calculating benefits payable, the policy or certificate deductible first shall be applied to the allowable expenses covered by the policy or certificate prior to applying any applicable coinsurance factor. (F) Any policy or certificate of accident or health insurance or any accidental death or dismemberment benefit provided in or supplemental to a policy or certificate of accident or health insurance shall not include any language which requires that accidental bodily injury be effected solely through external, violent and accidental means. Any policy or certificate of accident or health insurance, or any benefit for accidental death or dismemberment provided in or supplemental to, a policy or certificate of accident or health insurance shall not exclude payment of benefits for any covered loss, as provided in the contract, due to suicide or any attempt at suicide while insane; unintentional or nonvoluntary inhalation of gas or taking of poisons; pyogenic infections which result from an accidental bodily injury; bacterial infections which result from the accidental ingestion of contaminated substances; or the insured’s being under the influence of drugs if these drugs were taken as prescribed by a physician. (G) All group health insurance policies providing coverage on an expense-incurred basis, all group service or indemnity contracts issued by a not-for-profit health service corporation, all self-insured group health benefit plans, of any type or description and all these health plans or policies that are individually underwritten or provide for coverage for specific individuals and the members of their families as nongroup policies, which provide for hospital treatment, shall provide coverage while confined in a hospital or alcoholism treatment facility, for the treatment of alcoholism on the same basis as coverage for any other illness, except that coverage may be limited to thirty (30) days in any policy or contract benefit period. (4) Essential Conditions to be Contained. (A) If a certificate or coverage booklet used in lieu of a certificate is to be delivered to a member of a group insured under a master contract, the certificate or coverage booklet must be submitted for approval with the master contract. This also shall apply to blanket policies. (B) Provisions in master contracts for group plans which are necessarily unique to each particular group policyholder, such as eligibility requirements, benefit amounts and time or waiting periods, may be filed as being variable with appropriate examples. This must be accompanied by a statement describing the nature and scope of the variations. Other less variable language, such as inclusion or exclusion of certain clauses, must be submitted with all variations. (C) The definition of total disability may be no more restrictive than the following: Total disability means the insured’s inability, because of sickness or injury, to perform the material and substantial duties of the insured’s occupation for a period of at least twelve (12) months, unless the total benefit period is less than twelve (12) months. After the initial benefit period, total disability shall mean the insured’s inability to perform the material and substantial duties of any occupation for which the insured is qualified by education, training or experience. In a policy that also provides benefits for residual disability, however, the definition of total disability may require that the insured not be gainfully employed in any occupation. (D) Residual disability shall be defined in relation to the insured’s reduction in earnings and may be related either to the insured’s inability to perform some part of the material and substantial duties of employment or to perform all usual business duties for as much time as is usually required. A policy which provides residual disability benefits may require a qualification period, during which the insured must be continuously, totally disabled before residual disability benefits are payable. The qualification period for residual benefits may be longer than the elimination period for total disability. In lieu of the term residual disability, an insurer may use proportionate disability or other term of similar import which in the opinion of the director adequately and fairly describes the benefit. (E) Each company, within sixty (60) days of home office receipt of the application for an individually underwritten health or accident insurance contract, shall notify a prospective insured as to whether or not the application has been accepted or else give the prospective insured the reason for any further delay. (F) No policy may exclude coverage for self-inflicted injuries resulting from attempted suicide while insane. Exclusions or exemptions which presently exclude coverage for death or injury arising out of a suicide or any attempt suicide while sane or insane or which exclude coverage for intentionally self-inflicted injuries shall delete the words . . . or insane and provide for payment for self-inflicted injuries while insane. A policy may exclude coverage for intentionally self-inflicted injury obviously not an attempted suicide. (G) Policy language intended to exclude coverage for occupational injuries or illnesses may exclude injuries or illnesses arising out of or in the course of employment or an occupation for wage, profit or gain. More restrictive provisions which exclude coverage for duties performed on an occasional or sporadic basis will not be permitted. (5) Benefit Reduction Clauses. (A) No disability insurance policy forms may provide for reduction in the amount of benefits payable to the insured under the insurance policy due to eligibility for disability or retirement benefits under the Social Security program or any partially or wholly employer-funded plans unless— 1. The policy provides a minimum amount payable regardless of the reduction of fifteen percent (15%) of the benefits specified in the contract or fifty dollars ($50) per month, whichever is greater; 2. The amount of the reduction is not increased with any increase in the level of Social Security benefits payable which becomes effective after the first day for which the insurance disability benefits become payable; and 3. In no event shall a reduction in the benefits be made due to eligibility or receipt of retirement benefits resulting from employment other than employment through which the disability insurance benefits were made available. (B) All group disability income policies delivered or issued for delivery after June 15, 1982 shall comply with its provisions upon delivery or issue. All existing group policies shall be amended to comply on the next renewal anniversary date following June 15, 1982. (6) Ambulatory Surgical Centers. (A) No individual or group accident and sickness insurance policy will be approved by the director which does not provide coverage for all services performed at a duly licensed ambulatory surgical center which are covered as a hospital inpatient benefit, are within the scope of the license of the ambulatory surgical center and would normally require hospital rather than office or clinic care. In keeping with the essential purpose of ambulatory surgical centers, this rule in no way shall be construed to require the same level or dollar amount of benefits to be paid for services performed in an ambulatory surgical center as is paid to a hospital or on account of inpatient hospital treatment. (B) Any policy not in compliance with this rule shall be deemed to provide equal benefits in scope and amount for ambulatory surgical center services as for inpatient hospital care until amended or replaced by an approved policy form. (7) Variable Deductible. (A) The variable deductible provision may be stated in substance as to basic deductible (a stated dollar amount) or the other coverage deductible (stated as the amount of benefits payable under other valid coverage for the same loss) whichever is greater. A variable deductible may not be stated as the aggregate of the basic deductible plus the other coverage deductible. (B) All policies forms utilizing a variable deductible shall contain a prominent notice (printed, stamped or attached to their policy face page or schedule page) stating that the actual deductible amount for each claim may vary depending on other medical expense insurance the insured may have. (C) Other valid coverage shall include only benefits actually provided for the same loss by medical expense coverage by any other group or individual hospital, surgical or medical insurance policy or medical practice or other prepayment plan or any other plan or program whether insured or uninsured or by reason of state or federal law. Other valid coverage may also include automobile medical payment coverage provided that this inclusion is clearly disclosed in the policy. (D) If at the time a claim arises the variable deductible results in the imposition of a deductible amount greater than the stated basic deductible, the disposition of the claim shall include a clear written statement to the insured explaining how benefits were calculated and the effect of the variable deductible. This written notice shall advise the insured, as follows: 1. To review his/her insurance needs because of other coverage; 2. S/he may request an increased basic deductible if the present basic deductible is not the highest available through the insurer, at an appropriate reduction in premium rate in accordance with the applicable rates on file by the insurer; and 3. If appropriate, any subsequent request to decrease the basic deductible will require evidence of insurability acceptable to the insurer. (E) Variable deductible may be contained only in insurance policies or certificates which are individually underwritten. (F) If more than one (1) policy containing a variable deductible provides benefits for medical expenses incurred due to a loss by one (1) individual, the amount of benefits payable by each company shall be determined as follows: 1. After applying benefits payable under any plan(s) not containing variable deductibles, each variable deductible plan shall share remaining expenses on a pro rata basis; and 2. Each variable deductible plan’s pro rata share of expenses shall be that portion of the total remaining expenses as each plan’s benefits bears to the total benefits payable under all variable deductible plans. AUTHORITY: sections 374.045, 375.936, 376.405, 376.775 and 376.777, RSMo 2000*. This rule was previously filed as 4 CSR 19014.090. Original rule filed Feb. 26, 1975, effective March 15, 1975. Amended: Filed Dec. 23, 1975, effective March 1, 1976. Amended: Filed Aug. 16, 1979, effective Nov. 15, 1979. Amended: Filed Feb. 17, 1982, effective June 15, 1982. Amended: Filed May 13, 1983, effective Nov. 11, 1983. Amended: Filed Sept. 12, 1984, effective March 11, 1985. Amended: Filed May 13, 1985, effective Aug. 26, 1985. Amended: Filed July 12, 2002, effective Jan. 30, 2003. *Original authority: 374.045, RSMo 1967, amended 1993, 1995; 375.936, RSMo 1959, amended 1967, 1969, 1971, 1976, 1978, 1983, 1991; 376.405, RSMo 1959, amended 1984; 376.775, RSMo 1959; and 376.777, RSMo 1959, amended 1984. Op. Atty. Gen. No. 112, Edmiston, 6-21-76. Insurance companies are required to pay a filing fee pursuant to section 374.230(6), RSMo for documents filed with the director of the Division of Insurance pursuant to sections 376.405, 376.675, 376.777, RSMo (1969) and section 379.321, RSMo (Supp. 1975). The filing fee imposed by section 374.230(6) is for each document and not each page of each document. The filing fee paid pursuant to section 374.230(6) is not, pursuant to section 148.400, RSMo, deductible from the premium taxpayable by such companies.