230-RICR-20-30-1
230-RICR-20-30-1. Minimum Standards for Health Benefit Plans (version Technical Revision, 12/19/2001 to 01/04/2022)
1.1 Purpose and Scope
A. The purpose of this Part is
to:
1. Provide reasonable
standardization and simplification of coverages under health benefits
plans, as defined in R.I. Gen. Laws § 42-62-4;
2. Facilitate consumer
understanding and comparisons;
3. Eliminate provisions which
may be misleading or unreasonably confusing to the consumer in
connection with the purchase of such coverages or with the settlement
of claims;
4. Eliminate deceptive
practices in connection with the sale of such coverages;
5. Eliminate provisions which
may be contrary to the health needs of the public; to make available
qualified plans to persons residing in the state who apply therefor
regardless of age, sex, race, occupational status, or medical
condition;
6. Eliminate coverages which
are so limited in scope as to be of no substantial economic value to
the holders thereof; and
7. Add coverages, the sale of
which is required by the public interest to protect the health of
persons residing in the State.
B. This Part applies to all
health benefits plans issued, delivered or offered for sale in Rhode
Island to the extent that such plans cover Rhode Island residents and
is not limited to plans described under R.I. Gen. Laws § 42-62-10.
This Part does not apply to that portion of any such plans covering
participating employers, associations and/or their members located
outside this state. This Part applies to all advertisements for
health benefits plans intended for presentation, distribution or
dissemination in the state.
1.2 Authority
This Part is promulgated
pursuant to R.I. Gen. Laws § 42-62-12.
1.3 Definitions
A. "Accident and sickness
insurance" means Accident and sickness insurance as defined in
R.I. Gen. Laws Chapter 27-18.
B. "Agent" means an
insurance agent, broker or solicitor as defined in R.I. Gen. Laws
Chapters 27-2.4. 27-2.4 and 27-3 or any person who acts or aids in
negotiation for a Health Benefits Plan on behalf of an insurer, as
defined herein. Where this Part requires notices or printed
statements referring to "your agent," such notice may refer
to the agent as a "sales representative" or use other
appropriate terms.
C. "Approval by the
Director of Business Regulation" means personal approval by the
Director or approval by any duly authorized deputy acting on behalf
of the Director.
D. "Blanket health
benefit contract" means any health benefit contract which is
issued or intended to be issued in at least one of the following
manners:
1. Under any contract issued
to any railroad, steamship, motorbus or airplane carrier of
passengers, which shall be deemed the contractholder, to provide
health benefits for a group defined as all persons who become such
passengers, insuring them while being such passengers;
2. Under a contract issued to
an employer, who shall be deemed the contractholder, to provide
health benefits for any group of employees defined by reference to
exceptional hazards incident to such employment insuring such
employees with respect to such exceptional hazards;
3. Under a contract issued to
a college, school or other institution of learning, a school district
or districts, or school jurisdictional unit, or to the head,
principal or governing board of any such educational unit, who or
which shall be deemed the contractholder, covering students, teachers
or employees.
4. Under a contract issued to
any religious, charitable, recreational, educational, or civic
organization, or branch thereof, which shall be deemed the
contractholder, covering any group of members or participants defined
by reference to specified hazards incident to an activity or
activities or operations sponsored or supervised by such
contractholder.
5. Under a contract issued to
a sports team, camp or sponsor thereof, which shall be deemed the
contractholder, covering members, campers, employees, officials or
supervisors.
6. Under a contract issued to
any volunteer fire department, first aid, civil defense, or other
such volunteer organization, which shall be deemed the
contractholder, covering any group of members or participants defined
by reference to specified hazards incident to an activity or
activities or operations sponsored or supervised by such
contractholder.
7. Under a contract issued to
a newspaper or other publisher, which shall be deemed the
contractholder, covering its carriers.
8. Under a contract issued to
an association of persons having a common interest or calling which
shall have a constitution and bylaws and which has been organized and
is maintained in good faith for purposes other than that of obtaining
insurance and which shall be deemed the contractholder to provide
health benefits for such persons with respect to specific hazards
arising out of such common interest or calling.
E. "Director" means
the Director of Business Regulation.
F. "Direct response
insurance" means insurance issued to an applicant who has
himself completed the application and forwarded it directly to the
insurer in response to a solicitation coming into his possession by
any means of mass communication.
G. "Expense incurred
benefits" means a health benefit which promises to pay all or
part of the actual expenses incurred by a person insured for covered
services.
H. "Group health benefit
contract" means that form of health benefit contract covering
groups of persons in one of the manners described below, with or
without one or more members of their families or one or more
dependents, or covering one or more members of the families or one or
more dependents of such groups or persons:
1. Benefits are offered under
any contract issued to an employer or trustees of a fund established
by an employer, who shall be deemed the master contractholder,
insuring employees of such employer for the benefit of persons other
than the employer. The term "employees as used herein may
include the officers, managers, and employees of the employer, the
individual proprietor or partner if the employer is an individual
proprietor or partnership, the officers, managers, and employees of
subsidiary or affiliated corporations, the individual proprietors,
partners and employees of individuals and firms, if the business of
the employer and such individual or firm is under common control
through stock ownership, contract, or otherwise. The term "employees"
as used herein may include retired employees. The term "employees"
as used with respect to a contract issued to insure employees of a
public body may include elected or appointed officials. The term
"employees" may include the trustees or their employees, or
both, if their duties are principally connected with such
trusteeship.
2. Benefits are offered under
any contract issued to an association, including a labor union, which
shall have a constitution and bylaws insuring members, employees, or
employees of members of the association for the benefit of persons
other than the association or its officers or trustees. The term
"employees" as used herein may include retired employees.
3. Benefits are offered under
any contract issued to the trustees of a fund established by two or
more employers or by one or more labor unions or by one or more
employers and one or more labor unions or by an association as
defined in § 1.3(H)(2) of this Part which trustees shall be the
master contractholder, to insure employees of the employers or
members of the unions or of such association, or employees of members
of such association for the benefit of persons other than the
employers or the unions or such association. The term "employees"
as used herein may include the officers, managers and employees of
the employer, and the individual proprietor or partners if the
employer is an individual proprietor or partnership. The term
"employees" as used herein may include retired employees.
The term "employees" may include the trustees or their
employees, or both, if their duties are principally connected with
such trusteeship.
4. Benefits are offered under
any contract issued to cover any other group which in the Director's
judgment is substantially similar to those described in § 1.3(H)(1)
through (3) of this Part.
I. "Group-type basis"
means a health benefit plan, other than "salary budget"
plans utilizing individual contracts, which meets the following
conditions:
1. Coverage is provided
through health benefit contracts to classes of employees or members
defined in terms of conditions pertaining to employment or
membership.
2. The coverage is not
available to the general public and can be obtained and maintained
only because of the covered person's membership in or connection with
the particular organization or group.
3. There are arrangements for
bulk payment of premiums or subscription charges to the insurer.
4. There is sponsorship of the
plan by the employer, union or association.
J. "Health benefit
contract" means any policy or other contract issued, delivered
or available for issue or delivery in Rhode Island by an insurer, as
defined herein, which provides health benefits, as defined in R.I.
Gen. Laws § 42-62-4 including both contracts which determine
benefits in recognition of actual services or actual charges for
services and contracts which determine benefits based on the status
of hospitalization or receipt of medical treatment. Where this Part
requires notices or printed statements referring to "this
contract," such notice may refer to the contract as a "policy"
whenever such term appropriately describes such contract. "Health
benefit contract" shall also mean that portion of an accident
and sickness insurance policy or life and accident and sickness
insurance policy that provides health benefits, if such health
benefits account for one- third (1/3) or more of the pure premium
(i.e., that portion of the total premium needed for payment of
benefits, exclusive of all portions of the premium intended to pay
sales and administrative costs.) for accident and sickness insurance
in such policy.
K. "Health maintenance
organization" shall have the same meaning as that given such
term in R.I. Gen. Laws § 42-62-4(d).
L. "Indemnity basis"
means, with respect to Hospital Confinement Indemnity Coverage, that
basis for determining benefits which depends solely on the insured
person's being confined in a hospital and provides for payment of a
stated amount per day of hospital confinement without regard to
actual services rendered or expenses incurred during such
confinement.
M. "Individual health
benefit contract" means any health benefit contract that is not
a group health benefit contract or a blanket health benefit contract.
N. "Insured" means
any resident of the State of Rhode Island who is entitled to receive
benefits in the form of cash or services under a health benefit
contract.
O. "Insurance" means
the benefits provided by any health benefit contract, as defined
herein.
P. "Insurer" shall
have the same meaning as that given such term in R.I. Gen. Laws §
42- 62-4(c).
Q. "Premium" means
the consideration for any health benefit contract, including, but not
limited to, the premium for an accident and sickness insurance policy
and the subscription fee charged by a hospital service corporation,
physicians service corporation or health maintenance organization.
R. "Qualified plan"
means a qualified health program as defined in R.I. Gen. Laws §
42-62-10.
S. "Replacement"
means any transaction wherein a new health benefit contract is to be
purchased, and it is known to the agent or insurer at the time of
application that as part of the transaction, an existing health
benefit contract has been or is to be lapsed or the benefits thereof
substantially reduced.
T. "Service benefit"
means a health benefit which promises to defray the cost of health
services provided to a person insured but which reserves the right to
make payments directly to the provider and may reserve the right to
negotiate the amount of payment for such services with the provider.
1.4 Availability of Qualified
Plans
The Director shall from time
to time consider whether a sufficient number of qualified plans is
available to persons residing in the state regardless of age, sex,
race, occupational status or medical condition. If he determines
that a sufficient number of such plans is not available he may
promulgate regulations requiring all insurers or all of a class of
insurers to offer qualified plans as a condition of doing business in
the state.
1.5 Coverage of Newborn Children
A. All health benefit
contracts which provide coverage for a family member of the insured
or subscriber shall, as to such family member's coverage, also
provide that the health benefits applicable for children shall be
payable with respect to a newly born child of the insured or
subscriber from the moment of birth. In the event that no other
children are covered under the contract, benefits for the newborn
must be provided to the same extent as those provided to the insured.
B. The coverage for newly born
children shall consist of coverage of injury or sickness including
the necessary care and treatment of medically diagnosed congenital
defects and birth abnormalities. This provision is not intended to
imply, and should not be construed so as to imply, the inclusion of
coverages for routine well-baby care services.
C. If payment of a specific
premium is required to provide coverage for a child, the contract may
require that notification of birth of a newly born child and payment
of the required premium must be furnished to the insurer within
thirty-one (31) days after the date of birth in order to have the
coverage continue beyond such thirty-one (31) day period.
1.6 Statements in the Application
for Health Benefit Contracts
A. No application designed to
elicit information regarding the applicant's physical condition or
that of his dependents shall be used in this state in connection with
any health benefit contract which by its terms permits the insurer to
reduce or deny a claim or avoid the contract on the grounds that
misstatements were made by the insured in the application unless a
statement is made which satisfies the requirements of § 1.6(A)(1) or
(2) of this Part.
1. A statement contained in
the application to be signed by the applicant which states that he
has read or has had read to him all questions and answers contained
in the application and that any misstatements made by him may allow
the insurer to reduce or deny a claim or avoid the contract within
the contestable period.
a. The following statement is
acceptable:
(1) I hereby certify that I
have read the above statements or that they have been read to me and
that the above statements are true and complete to the best of my
knowledge and belief. I understand that any misrepresentation
contained herein relied on by the Company may be used to reduce or
deny a claim or void the contract within the contestable period if
such misrepresentation materially affects the acceptance of the risk.
b. The Director may approve
any other statement that clearly expresses the same intent as the
above statement.
2. A statement furnished to
the applicant, within ten (10) days of the issuance of a contract or
amendment of a contract, in the form of a sticker to be attached to
the first page of the contract, a letter or other form containing
substantially the following:
a. Please read the copy of the
application attached to this notice or to your contract. Omissions or
misstatements in the application could cause an otherwise valid claim
to be denied or cause your contract to be voided or reformed.
Carefully check the application and write to the insurer within ten
(10) days if any information shown on the application is not correct
and complete or if any medical history has not been included. The
application is part of the insurance contract. The insurance contract
was issued on the basis that the answers to all questions and any
other material information shown on the application are correct and
complete.
B. Each insurer shall instruct
its agents that such agents must ascertain whether each applicant is
able to read and understand the English language. When questions or
answers on such application are written in English and the applicant
is unable to read and/or understand English, the agent must read or
interpret or have someone else interpret all questions and answers in
such manner that they could reasonably be expected to be understood
by the applicant.
1. Each insurer shall file
with the Director a description of the procedure it will follow and
the form or forms it will use to meet the requirements of § 1.6 of
this Part.
1.7 Individual Health Benefit
Contracts
1.7.1 Purpose,
Applicability, and Definitions
A. The purpose of this part is
to provide reasonable standardization and simplification of terms and
coverages of individual health benefit contracts in order to
facilitate public understanding and comparison and to eliminate
provisions contained in individual health benefit contracts which may
be misleading or confusing in connection either with the purchase of
such coverages or with the settlement of claims and to provide for
full disclosure in the sale of such coverages.
B. This part shall apply to
all individual health benefit contracts delivered or issued for
delivery in this state on or after the effective date hereof, except
it shall not apply to individual health benefit contracts issued
pursuant to a conversion privilege under a group health benefit
contract or individual health benefit contract when such group or
individual contract includes provisions which are inconsistent with
the requirements of this Part, nor to health benefit contracts being
issued to employees or members as additions to franchise plans in
existence on the effective date of this Part. Neither shall this part
apply to health benefit contracts issued by a health maintenance
organization which has been certified as a health maintenance
organization by the United States Secretary of Health, Education and
Welfare for purposes of compliance with Section 1310 of Public Law
93-222 nor shall it apply to health benefit contracts issued by a
health maintenance organization which has been certified as a health
maintenance organization by the State of Rhode Island Director of
Health for purposes of compliance with R.I. Gen. Laws § 42-62-9. The
requirements contained in this Part shall be in addition to any other
applicable laws and regulations.
C. Except as provided
hereafter, no individual health benefit contract delivered or issued
for delivery to any person in this State shall contain definitions
respecting the matters set forth below unless such definitions comply
with the requirements of § 1.7.1 of this Part.
1. "Accident,"
"Accidental Injury," "Accidental Means," shall be
defined to employ "result" language and shall not include
words which establish an accidental means test or use words such as
"external, violent, visible wounds" or similar words of
description or characterization.
a. The definition shall not be
more restrictive than the following: Injury or injuries, for which
benefits are provided, means accidental bodily injury sustained by
the insured person which is the direct cause, independent of disease
or bodily infirmity or any other cause and occurs while the insurance
is in force.
b. Such definition may provide
that injuries shall not include injuries for which benefits are
provided under any workmen's compensation, employer's liability or
similar law, motor vehicle no fault plan, unless prohibited by law,
or injuries occurring while the insured person is engaged in any
activity pertaining to any trade, business, employment or occupation
for wage or profit.
2. "Convalescent Nursing
Home," "Extended Care Facility," or "Skilled
Nursing Facility" shall be defined in relation to its status,
facilities and available services and, only with respect to insurers
permitted to contract with convalescent nursing homes, extended care
facilities or skilled nursing facilities under R.I. Gen. Laws Chapter
27-19 such facilities may be defined to include only "contracting"
facilities with which the insurer or another insurer with similar
powers in another state has made a contract for the provision of
services to its subscribers.
a. A definition of such home
or facility shall not be more restrictive than one requiring that it:
(1) Be operated pursuant to
law and, with respect to insurers permitted to contract with such
facilities, be a contracting facility;
(2) Be approved for payment of
Medicare benefits or be qualified to receive such approval, if so
requested;
(3) Be primarily engaged in
providing, in addition to room and board accommodations, skilled
nursing care under the supervision of a duly licensed physician;
(4) Provide continuous
twenty-four (24) hour a day nursing service by or under the
supervision of a registered graduate professional nurse (R.N.);
(5) Maintain a daily medical
record of each patient.
b. The definition of such home
or facility may provide that such term shall not be inclusive of:
(1) Any home, facility or part
thereof used primarily for rest;
(2) A home of facility for the
aged or for the care of drug addicts or alcoholics; or
(3) A home or facility
primarily used for the care and treatment of mental diseases or
disorders or for custodial or educational care.
3. "Hospital" may be
defined in relation to its status, facilities and available services
or to reflect its accreditation by the Joint Commission on
Accreditation of Hospitals and, only with respect to insurers
permitted to contract with hospitals under R.I. Gen. Laws § 27-19-5
"hospital" may be defined to include only "contracting"
hospitals with which the insurer or another insurer with similar
powers in another state has made a contract for the provision of
services to its subscribers.
a. The definition of the term
"hospital" shall not be more restrictive than one requiring
that the hospital:
(1) Be an institution operated
pursuant to law and, with respect to insurers permitted to contract
with hospitals, be a contracting hospital; and
(2) Be primarily and
continuously engaged in providing or operating either on its premises
or in facilities available to the hospital on a prearranged basis and
under the supervision of a staff of duly licensed physicians,
medical, diagnostic and major surgical facilities for the medical
care and treatment of sick or injured persons on an in-patient basis
for which a charge is made; and
(3) Provide twenty-four (24)
hour nursing service by or under the supervision of registered
graduate professional nurses (R.N.'s).
b. The definition of the term
"hospital" may state that such term shall not be inclusive
of:
(1) Convalescent homes,
convalescent, rest or nursing facilities; or
(2) Facilities primarily
affording custodial, educational or rehabilitory care; or
(3) Facilities for the aged,
drug addicts, or alcoholics; or
(4) Any military or veterans
hospital or soldiers home or any hospital contracted for or operated
by any national government or agency thereof for the treatment of
members or ex-members of the armed forces, except for services
rendered on an emergency basis where a legal liability exists for
charges made to the individual for such services, except that, with
respect to "Hospital Confinement Indemnity Coverage," the
same benefits must be provided for the first thirty five (35) days of
any one confinement in any of the above government hospitals as is
provided for confinement in any other hospital. Benefits for
confinement in any of the above government hospitals may be reduced
after the 35th day of confinement to no less than 2/3 of the benefit
payable for confinement in any other hospital.
4. "Medicare" may be
substantially defined as "The Health Insurance for the Aged Act,
Title XVIII of the Social Security Amendments of 1965 as Then
Constituted or later Amended," or "Title I, Part I of
Public Laws 89- 97, as Enacted by the Eighty-Ninth Congress of the
United States of America and popularly known as the Health Insurance
for the Aged Act, as then constituted and any later amendments or
substitutes thereof" or words of similar import.
5. "Mental or Nervous
Disorders" shall not be defined more restrictively than a
definition including neurosis, psychoneurosis, psychopathy,
psychosis, or mental or emotional disease or disorder of any kind.
6. "Nurses" may be
defined so that the description of nurse is restricted to a type of
nurse, such as a registered graduate professional nurse (R.N.), a
licensed practical nurse (L.P.N.), or a licensed vocational nurse
(L.V.N.). If the words "nurse," "trained nurse,"
or "registered nurse" are used without specific
instruction, then the use of such terms requires the insurer to
recognize the services of any individual who qualifies under such
terminology in accordance with R.I. Gen. Laws Chapter 5-34 and any
administrative rules of the Board of Nursing Registration and Nursing
Education or in accordance with similar laws or rules of other
states.
7. "One period of
confinement" means consecutive days of in-hospital service
received as an in-patient, or successive confinements when discharge
from and readmission to the hospital occurs within a period of time
not more than ninety (90) days or three (3) times the maximum number
of days of in-hospital coverage provided by the policy to a maximum
of one hundred eighty (180) days.
8. "Physician" may
be defined by including words such as "legally qualified
physician" or "legally licensed physician." The use of
such terms requires an insurer to recognize and to accept, to the
extent of its obligation under the contract, all providers of medical
care and treatment when such services are within the scope of the
provider's licensed authority and are provided pursuant to applicable
laws, except to the extent provided to the contrary in R.I. Gen. Laws
Title 27.
9. "Pre-Existing
Condition" shall not be defined to be more restrictive than the
following: Pre-existing condition means the existence of symptoms
which would cause an ordinarily prudent person to seek diagnosis,
care or treatment within a thirty six (36) month period preceding the
effective date of the coverage of the insured person; or a condition
for which medical advice or treatment was recommended by a physician
or received from a physician within a thirty six (36) month period
preceding the effective date of coverage of the insured person.
a. This definition does not
prohibit an insurer, using an application form designed to elicit the
complete health history of a prospective insured and on the basis of
the answers on that application, from underwriting in accordance with
that insurer's established standards. It is assumed that an insurer
that elicits a complete health history of a prospective insured will
act on the information and if the review of the health history
results in a decision to exclude a condition, the policy will be
endorsed or amended by including the specific exclusion. This same
requirement of notice to the prospective insured of the specific
exclusion will also apply to insurers which elect to use simplified
application forms containing questions relating to the prospective
insured's health.
b. This definition does,
however, prohibit an insurer that elects to use a simplified
application, with or without a question as to the applicant's health
at the time of application, from reducing or denying a claim on the
basis of the existence of a pre-existing condition that is defined
more restrictively than above.
10. "Sickness" shall
not be defined to be more restrictive than the following: Sickness
means sickness or disease of an insured person which first manifests
itself after the effective date of the insurance and while the
insurance is in force. A definition of sickness may provide for a
probationary period which will not exceed thirty (30) days from the
effective date of the coverage of the insured person. The definition
may be further modified to exclude sickness or accident for which
benefits are provided under any workman's compensation, occupational
disease, employer's liability or similar law.
1.7.2 Prohibited Contract
Provisions
A. Except as provided in §
1.7.1(C)(10) of this Part, no contract shall contain provisions
establishing a probationary or waiting period during which no
coverage is provided under the contract subject to the further
exception that a contract may specify a probationary or waiting
period not to exceed six (6) months for losses resulting from hernia,
disorder of reproduction organs, varicose veins, adenoids, appendix
and tonsils. However, the permissible six (6) months exception shall
not be applicable where such specified diseases or conditions are
treated on an emergency basis. Accident contracts shall not contain
probationary or waiting periods.
B. No contract or rider for
additional coverage may be issued as a dividend unless an equivalent
cash payment is offered to the contractholder as an alternative to
such dividend contract or rider. No such dividend contract or rider
shall be issued for an initial term of less than six (6) months.
1. The initial renewal
subsequent to the issuance of any contract or rider as a dividend
shall clearly disclose that the contractholder is renewing the
coverage that was provided as a dividend for the previous term and
that such renewal is optional with the contractholder.
C. No contract shall exclude
coverage for a loss due to a pre-existing condition for a period
greater than twelve (12) months following contract issue where the
application for such insurance does not seek disclosure of prior
illness, disease or physical conditions or prior medical care and
treatment and such pre-existing condition is not specifically
excluded by the terms of the contract.
D. No contract shall limit or
exclude coverage by type of illness, accident, treatment or medical
condition, except as follows:
1. Pre-existing conditions or
diseases, except for congenital anomalies of a covered dependent
child; [This exclusion shall not be interpreted so as to reduce any
benefits required to be provided for newborn children in § 1.5 of
this Part]
2. Mental or emotional
disorders, alcoholism and drug addiction;
3. Pregnancy, except for
complications of pregnancy;
4. Illness, treatment or
medical condition arising out of:
a. war or act of war (whether
declared or undeclared); participation in a felony, riot or
insurrection; service in the armed forces or units auxiliary thereto,
b. suicide (sane or insane),
attempted suicide or intentionally self-inflicted injury,
c. aviation,
d. with respect to short-term
non-renewable contracts, interscholastic sports;
5. Cosmetic surgery, except
that "cosmetic surgery" shall not include reconstructive
surgery when such service is incidental to or follows surgery
resulting from trauma, infection or other diseases of the involved
part, and reconstructive surgery because of congenital disease or
anomaly of a covered dependent child which has resulted in a
functional defect;
6. Foot care in connection
with corns, calluses, flat feet, fallen arches, weak feet, chronic
foot strain, or symptomatic complaints of the feet;
7. Care in connection with the
detection and correction by manual or mechanical means of structural
imbalance, distortion, or subluxation in the human body for purposes
of removing nerve interference and the effects thereof where such
interference is the result of or related to distortion, misalignment
or subluxation of, or in the vertebral column;
8. Treatment provided in a
government hospital, however, contracts providing hospital
confinement indemnity coverage shall not contain provisions excluding
coverage because of confinement in a hospital operated by the Federal
Government; benefits provided under Medicare or other governmental
program (except Medicaid), any state or federal workmen's
compensation, employers liability or occupational disease law, or any
motor vehicle no-fault law; services rendered by employees of
hospitals, laboratories or other institution; services performed by a
member of the covered person's immediate family and services for
which no charge is normally made in the absence of insurance.
a. Benefits provided by R.I.
Gen. Laws Chapter 42-62, are, by their nature, supplemental to all
health benefit contracts and are not to be treated as benefits
provided under a governmental program for purposes of this exclusion.
9. Dental care or treatment;
10. Eye glasses, hearing aids
and examination for the prescription or fitting thereof;
11. Rest cures, custodial
care, transportation and routine physical examinations;
12. Territorial limitations.
E. Other provisions of § 1.7
of this Part shall not impair or limit the use of waivers to exclude,
limit or reduce coverage or benefits for specifically named or
described pre-existing diseases, physical condition or extra
hazardous activity. Where waivers are required as a condition of
issuance, renewal or reinstatement, signed acceptance by the insured
is required unless on initial issuance the full text of the waiver is
contained either on the first page or specification page of the
contract or unless notice of the waiver appears on the first page or
specification page.
F. Contract provisions
precluded in § 1.7.2 of this Part shall not be construed as a
limitation on the authority of the Director to disapprove other
contract provisions which, in the opinion of the Director, are
unjust, unfair or unfairly discriminatory to the contractholder,
beneficiary or any person insured under the contract; nor shall such
provisions be construed as a limitation on the authority of the
director to approve other exclusions which he finds to be in the
interest of the public.
1.7.3 Minimum Standards for
Benefits
A. The following minimum
standards for benefits are prescribed for the categories of coverage
noted in the following subsections. Except as provided in § 1.7.3(H)
of this Part no individual health benefit contract shall be delivered
or issued for delivery in this state which does not meet the required
minimum standards for the specified categories unless the Director
finds that such contracts are approvable as Limited Benefit Health
Contracts and the Outline of Coverage complies with the appropriate
outline in § 1.7.4 (H) of this Part.
B. Nothing in § 1.7.3 of this
Part shall preclude the issuance of any contract combining two (2) or
more categories of coverage defined in § 1.7.3 of this Part or
combining one (1) or more categories of coverage defined in § 1.7.3
of this Part with life insurance or with any form of policy of
Accident and Sickness insurance or health benefit contract that may
legally be issued in this State.
C. General Rules
1. A "non-cancelable,"
"guaranteed renewable" or "non-cancelable and
guaranteed renewable" contract shall not provide for termination
of coverage of the spouse solely because of the occurrence of an
event specified for termination of coverage of the insured, other
than nonpayment of premium. The contract shall provide that in the
event of the insured's death, the spouse of the insured, if covered
under the contract, shall become the insured.
2. The terms "non-cancelable,"
"guaranteed renewable" or "non-cancelable and
guaranteed renewable" shall not be used without further
explanatory language in accordance with the disclosure requirements
of § 1.7.4(A)(1) and (2) of this Part. The terms "non-cancelable"
or "Non-cancelable and guaranteed renewable" may be used
only in a health benefit contract which the insured has the right to
continue in force by the timely payment of premiums set forth in the
contract until the age of sixty-five (65) or to eligibility for
Medicare, during which period the insurer has no right to make
unilaterally any change in any provision of the contract while the
contract is in force. The term "guaranteed renewable" may
be used only in a contract which the insured has the right to
continue in force by the timely payment of premiums until the age of
sixty-five (65) or to eligibility for Medicare, during which period
the insurer has no right to make unilaterally any change in any
provision of the contract while the contract is in force, except that
the insurer may make changes in premium rates by classes.
3. In a family contract
covering both husband and wife, the age of the younger spouse must be
used as the basis for meeting the age and durational requirements of
the definitions of "non-cancelable" or "guaranteed
renewable." However, this requirement shall not prevent
termination of coverage of the older spouse upon attainment of the
stated age limit (e.g., age 65) so long as the contract may be
continued in force as to the younger spouse to the age or for the
duration period as specified in said definition.
4. If a contract contains a
status type military service exclusion or a provision which suspends
coverage during military service, the contract shall provide, upon
receipt of written request, for refund of premiums as applicable to
such person on a pro rata basis.
5. In the event the insurer
cancels or refuses to renew, contracts providing pregnancy benefits
shall provide for an extension of benefits as to pregnancy commencing
while the contract is in force and for which benefits would have been
payable had the contract remained in force.
6. Contracts providing
convalescent or extended care benefits following hospitalization
shall not condition such benefits upon admission to the convalescent
or extended care facility within a period of less than fourteen (14)
days after discharge from the hospital.
7. Family coverage shall
continue for any dependent child who is incapable of self-sustaining
employment due to mental retardation or physical handicap on the date
that such child's coverage would otherwise terminate under the
contract due to the attainment of a specified age limit for children
and is chiefly dependent on the insured for support and maintenance.
The contract may require that within thirty-one (31) days of such
date the insurer receive due proof of such incapacity in order for
the insured to elect to continue the contract in force with respect
to such child, or that a separate converted contract be issued at the
option of the insured or contractholder.
8. Any contract providing
coverage for the recipient in a transplant operation shall also
provide reimbursement of any medical expenses of a live donor to the
extent that benefits remain and are available under recipient's
contract, after benefits for the recipient's own expenses have been
paid.
9. A contract may contain a
provision relating to recurrent disabilities; provided however, that
no such provision shall specify that a recurrent disability be
separated by a period greater than six (6) months.
10. Any accident only contract
providing benefits which vary according to the type of accidental
cause shall prominently set forth in the outline of coverage the
circumstances under which benefits are payable which are lesser than
the maximum amount payable under the contract.
11. No contract that provides
in-hospital benefits only shall be represented in any manner to be a
supplement to Medicare unless it shall include in its provided
benefits the initial Part A Medicare deductible as established from
time to time by the Social Security Administration. Premiums may be
reduced or raised to correspond with changes in the covered
deductible, subject to approval by the Director of each proposed
reduction or increase.
12. Termination of the
contract shall be without prejudice to any continuous loss which
commenced while the contract was in force, but the extension of
benefits beyond the period the contract was in force may be
predicated upon the continuous disability of the insured, limited to
the duration of the benefit period, if any, or payment of the maximum
benefits.
D. Basic Hospital Expense
Coverage
1. "Basic Hospital
Expense Coverage" is a health benefit contract which provides
coverage for a period of not less than thirty-one (31) days during
any one period of confinement for each person insured under the
contract, for expense incurred for necessary treatment and services
rendered as a result of accident or sickness or which provides
service benefits of equivalent value to the insured for at least the
following:
a. Daily hospital room and
board in an amount not less than the lesser of:
(1) eighty percent (80%) of
the charges for semi-private room accommodations or
(2) fifty dollars ($50) per
day.
b. Miscellaneous hospital
services for expenses incurred for the charges made by the hospital
for services and supplies which are customarily rendered by the
hospital and provided for use during any period of confinement in an
amount not less than either eighty percent (80%) of the charges
incurred up to at least one thousand eight hundred ($1,800) or ten
times the daily hospital room and board benefits; and
c. Hospital outpatient
services consisting of (a) hospital services on the day surgery is
performed, and (b) hospital services rendered within 24 hours after
accidental injury, in an amount not less than nine hundred dollars
($900).
d. Benefits provided §
1.7.3(D)(1)(a) and (b) of this Part above may be provided subject to
a combined deductible amount not in excess of one hundred fifty
($150).
e. The above benefits may be
provided in the form of equivalent services in lieu of reimbursement
of actual expenses.
E. Basic Medical-Surgical
Expense Coverage
1. "Basic
Medical-Surgical Expense Coverage" is a health benefit contract
which provides coverage for each person insured under the contract
for the expenses incurred for the necessary services rendered by a
physician for treatment of an injury or sickness or which provides
service benefits of equivalent value to the insured for at least the
following:
a. Surgical services;
(1) In amounts not less than
those provided on a fee schedule based on the relative values
contained in the State of New York certified surgical fee schedule,
except that each relative value shall be multiplied by four dollars
and fifty cents ($4.50) instead of the two dollars and fifty cents
($2.50) specified in the New York certified fee schedule; or other
acceptable relative value scale of surgical procedures, up to a
maximum of at least nine hundred dollars ($900) for any one
procedure; or
(2) Not less than eighty
percent (80%) of the usual and customary charges.
b. Anesthesia services,
consisting of administration of necessary general anesthesia and
related procedures in connection with covered surgical service
rendered by a physician other than the physician (or his assistant)
performing the surgical services:
(1) In an amount not less than
eighty percent (80%) of the usual and customary charges; or
(2) fifteen percent (15%) of
the surgical service benefit.
c. In-hospital medical
services, consisting of physician services rendered to a person who
is a bed patient in a hospital for treatment of sickness or injury
other than that for which surgical care is required, in an amount not
less than eighty (80%) of the reasonable charges; or eight dollars
($8.00) per day for not less than twenty-one (21) days during one
continuous hospital confinement.
F. Hospital Confinement
Indemnity Coverage
1. "Hospital Confinement
Indemnity Coverage" is a health benefit contract which provides
daily benefits for hospital confinement on an indemnity basis in an
amount not less than fifty dollars ($50) per day and not less than
thirty-one (31) days during any one period of confinement for each
person insured under the contract.
G. Major Medical Expense
Coverage
1. "Major Medical Expense
Coverage" is a health benefit contract which provides hospital,
medical and surgical expense coverage, to an aggregate maximum of not
less than $10,000; copayment by the covered person not to exceed
twenty five percent (25%), fifty percent (50%) in the case of the
expense of diagnosis and treatment of mental and nervous disorders,
of covered charges, a deductible stated on a per person, per family,
per illness, per benefit period, or per year basis, or a combination
of such bases not to exceed five percent (5%) of the aggregate
maximum limit under the contract, unless the contract is written to
complement underlying hospital and medical insurance in which case
such deductible may be increased by the amount of the benefits
provided by such underlying insurance (In no event, however, may the
deduction of benefits of an underlying plan be applied to reduce the
aggregate maximum.), for each covered person for at least:
a. Daily hospital room and
board expense, prior to application of the co- payment percentages,
for not less than ninety dollars ($90) daily (or in lieu thereof the
average daily cost of semi-private room rate in the State of Rhode
Island) for a period of not less than thirty-one (31) days during
continuous hospital confinement;
b. Miscellaneous Hospital
Services, prior to application of co-payment percentage, for an
aggregate maximum of not less than two thousand six hundred dollars
($2,600) or fifteen (15) times the daily room and board rate if
specified in dollar amounts;
c. Surgical Services, prior to
application of co-payment percentage to a maximum of not less than
one thousand one hundred dollars ($1,100) for the most severe
operation with the amounts provided for other operations reasonably
related to such maximum amount;
d. Anesthesia Services, prior
to application of the co-payment percentage, for a maximum of not
less than fifteen percent (15%) of the covered surgical fees or,
alternatively, if the surgical schedule is based on relative values,
not less than the amount provided therein for anesthesia services at
the same unit value as used for the surgical schedule;
e. In-Hospital Medical
Services, prior to application of the co-payment percentage, as
defined in § 1.7.5(E)(1)(c) of this Part.
f. Out of Hospital Care, prior
to application of the co-payment percentage, consisting of usual and
customary charges for physicians' services rendered on an ambulatory
basis where coverage is not provided elsewhere in the contract, for
diagnosis and treatment of sickness or injury, and for diagnostic
x-ray, laboratory services, radiation therapy and hemodialysis
ordered by a physician; and
g. Not fewer than three of the
following additional benefits, prior to application of the co-payment
percentage, for an aggregate maximum of such covered charges of not
less than one thousand dollars ($1,000):
(1) In-hospital private duty
graduate registered nurse services.
(2) Convalescent nursing home
care.
(3) Diagnosis and treatment by
a radiologist or physiotherapist.
(4) Rental of special medical
equipment, as defined by the insurer in the contract.
(5) Artificial limbs or eyes;
casts, splints, trusses or braces.
(6) Treatment for functional
nervous disorders, and mental and emotional disorders.
(7) Out-of-hospital
prescription drugs and medications.
H. Limited Health Benefit
Coverage
"Limited Health Benefit
Coverage" is any contract which provides benefits that are less
than the minimum standards for benefits required under § 1.7.3(D),
(E), (F) and (G) of this Part or any other health benefit contract
which does not satisfy the requirements of § 1.7.3(D), (E), (F) and
(G) of this Part. Such policies or contracts may be issued or issued
for delivery in this state only if the outline of coverage required
by § 1.7.4(H) of this Part is completed and delivered as required by
§ 1.7.4(B) of this Part.
1.7.4 Required Disclosure
Provisions
A. General Rules
1. Each individual health
benefit contract shall include a renewal, continuation, or nonrenewal
provision. The language or specifications of such provision must be
consistent with the type of contract to be issued. Such provision
shall be appropriately captioned, and shall clearly state the
duration, where limited, of renewability and the duration of the term
of coverage for which the contract is issued and for which it may be
renewed.
2. No health benefit contract
shall be delivered or issued for delivery to any person in this state
unless provisions respecting renewability or cancellability by the
insurer shall appear on the first page of the contract or reference
shall be made thereto in a brief description of the first page. For
purposes of this requirement, the "first page" shall
include any parts of other pages which are visible at the same time
as the first page through a cut out section of the first page or
below a shortened first page.
3. The following texts for the
brief description are considered as among those which would be
acceptable:
a. Cancelable at Option of
Company
b. Renewal Subject to Consent
of Company
c. Renewal Subject to Company
Consent
d. Renewal at Option of
Company
4. A more general statement
such as the following is not acceptable:
a. SEE SPECIAL RENEWAL
PROVISION
b. The above captions are
recommended without prejudice to the right of an insurer to submit
another caption, subject to approval by the Director, which it
believes is equally clear or more definite as to the subject matter.
5. If a contract contains a
cancellation provision, the existence of the cancellation provisions
must be referred to in the renewal provision by a specific cross
reference to the cancellation provision in the Renewal Provision on
the first page of the contract.
6. Except for riders or
endorsements by which the insurer effectuates a request made in
writing by the contractholder or exercises a specifically reserved
right under the contract, all riders or endorsements added to a
contract after date of issue or at reinstatement or renewal which
reduce or eliminate benefits or coverage in the contract shall
require signed acceptance by the contractholder. After date of
contract issue, any rider or endorsement which increases benefits or
coverage with concomitant increase in premium during the contract
term must be agreed to in writing signed by the insured, unless the
increased benefit or coverage is required by law.
7. Where a separate additional
premium is charged for benefits provided in connection with riders or
endorsements, such premium charge shall be set forth in the contract.
8. A contract which provides
for the payment of benefits based on standards described as "usual
and customary," "reasonable and customary," or words
of similar import shall include a definition of such terms and an
explanation of such terms in its accompanying outline of coverage.
9. If a contract contains any
limitations with respect to pre-existing conditions such limitations
must appear as a separate paragraph of the contract and be labeled as
"Pre-existing Condition Limitation".
10. All accident only
contracts shall contain a prominent statement on the first page of
the contract or attached thereto in either contrasting color or in
boldface type at least equal to the size of type used for policy
captions, a prominent statement as follows: "This is an accident
only contract and it does not pay benefits for loss from sickness."
11. All contracts, except
single premium nonrenewable contracts, shall have a notice
prominently printed on the first page of the contract or attached
thereto stating in substance that the contractholder shall have the
right to return the contract within ten (10) days of its delivery and
to have the premium refunded if after examination of the contract the
contractholder is not satisfied for any reason.
12. If age is to be used as a
determining factor for reducing the maximum aggregate benefits made
available in the contract as originally issued, such fact must be
prominently set forth in the outline of coverage.
13. If a contract contains a
conversion privilege, it shall comply, in substance, with the
following: The caption of the provision shall be "Conversion
Privilege," or words of similar import. The provision shall
indicate the persons eligible for conversion, the circumstances
applicable to the conversion privilege, including any limitations on
the conversion, and the person by whom the conversion privilege may
be exercised. The provision shall specify the benefits to be provided
on conversion or may state that the converted coverage will be as
provided on a contract form then being used by the insurer for that
purpose.
B. Outline of Coverage
Requirements for Individual Coverages
1. No individual health
benefit contract subject to this Part shall be delivered or issued
for delivery in this State unless an appropriate outline of coverage,
as prescribed in § 1.7.4 (C) through (H) of this Part is completed
as to such contract; and
a. Is either delivered with
the contract; or
b. Delivered to the applicant
at the time application is made and acknowledgement of receipt or
certification of delivery of such outline of coverage is provided to
the insurer.
2. If an outline of coverage
was delivered at the time of application and the contract is issued
on a basis which would require revision of the outline, a substitute
outline of coverage properly describing the contract must accompany
the contract when it is delivered and contain the following
statement, in no less than twelve (12) point type, immediately above
the company name: "NOTICE: Read this outline of coverage
carefully. It is not identical to the outline of coverage provided
upon application and the coverage originally applied for has not been
issued."
3. The appropriate outline of
coverage for contracts providing hospital coverage which only meets
the standards of § 1.7.3(D) of this Part shall be that statement
contained in § 1.7.4(G) of this Part. The appropriate outline of
coverage for contracts providing coverage which meets the standards
of both § 1.7.3(D) and (E) of this Part shall be the statement
contained in § 1.7.4(E) of this Part. The appropriate outline of
coverage for contracts providing coverage which meets the standards
of both §§ 1.7.3(D) and (G) or § 1.7.3(D), (E) and (G) of this
Part shall be the statement contained in § 1.7.4(G) of this Part.
4. Appropriate changes in
terminology may be made in outlines of coverages in the case of
contracts of nonprofit hospital, medical, or dental service
corporations as defined in R.I. Gen. Laws Title 27. In any other case
where the prescribed outline of coverage is inappropriate for the
coverage provided by the contract, an alternate outline of coverage
shall be submitted to the Director for prior approval.
C. Basic Hospital Expense
Coverage (Outline of Coverage).
1. An outline of coverage, in
the form prescribed below, shall be issued in connection with
contracts meeting the standards of § 1.7.3(D) of this Part. The
items included in the outline of coverage must appear in the sequence
prescribed:
a. (INSURER'S NAME)
b. BASIC HOSPITAL EXPENSE
COVERAGE
c. OUTLINE OF COVERAGE
d. Read Your Contract
Carefully -- This outline of coverage provides a very brief
description of the important features of your contract. This is not
the insurance contract and only the actual contract provisions will
control.
(1) The contract itself sets
forth in detail the rights and obligations of both you and your
insurer. It is, therefore, important that you READ YOUR CONTRACT
CAREFULLY! (Instead of the word "contract," the word
"policy" may be used where appropriate).
e. Basic Hospital Expense
Coverage -- Contracts of this category are designed to provide to
persons insured coverage for hospital expenses incurred as a result
of a covered accident or sickness. Coverage is provided for daily
hospital room and board, miscellaneous hospital services, and
hospital out-patient services, subject to any limitations,
deductibles and co-payment requirements set forth in the contract.
Coverage is not provided for physicians or surgeons fees or unlimited
hospital expenses.
f. A brief specific
description of the benefits, including dollar amounts and number of
days duration where applicable, contained in this contract, in the
following order;
(1) Daily hospital room and
board;
(2) Miscellaneous hospital
services;
(3) Hospital outpatient
services; and
(4) Other benefits, if any.
(5) (Note: The above
description of benefits shall be stated clearly and concisely, and
shall include a description of any deductible or co-payment provision
applicable to the benefits described.)
g. (A description of any
contract provisions which exclude, eliminate, restrict, reduce,
limit, delay, or in any other manner operate to qualify payment of
the benefits described in § 1.7.4(C)(1)(f) of this Part.)
h. (A description of contract
provisions respecting renewability or continuation of coverage,
including age restrictions or any reservation of right to change
premiums.)
D. Basic Medical-Surgical
Expense Coverage (Outline of Coverage) -
1. An outline of coverage, in
the form prescribed below, shall be issued in connection with
contracts meeting the standards of § 1.7.3(E)of this Part. The items
included in the outline of coverage must appear in the sequence
prescribed:
a. (INSURER'S NAME)
b. BASIC MEDICAL-SURGICAL
EXPENSE COVERAGE
c. OUTLINE OF COVERAGE
d. Read Your Contract
Carefully -- This outline of coverage provides a very brief
description of the important features of your contract. This is not
the insurance contract and only the actual contract provisions will
control. The contract itself sets forth in detail the rights and
obligations of both you and your insurer. It is, therefore, important
that you READ YOUR CONTRACT CAREFULLY! (Instead of the word
"contract," the word "policy" may be used where
appropriate.)
e. Basic Medical-Surgical
Expense Coverage -- Contracts of this category are designed to
provide to persons insured coverage for medical-surgical expenses
incurred as a result of a covered accident or sickness. Coverage is
provided for surgical services, anesthesia services, and in-hospital
medical services, subject to limitations, deductibles and co-payment
requirements set forth in the contract. Coverage is not provided for
hospital expenses or unlimited medical surgical expenses.
f. A brief specific
description of the benefits, including dollar amounts and number of
days duration where applicable, contained in this contract in the
following order:
(1) Surgical services;
(2) Anesthesia services;
(3) In-hospital medical
services; and
(4) Other benefits, if any.
(5) (Note: The above
description of benefits shall be stated clearly and concisely, and
shall include a description of any deductible or co-payment provision
applicable to the benefits described.)
g. (A description of any
contract provisions which exclude, eliminate, restrict, reduce,
limit, delay, or in any other manner operate to qualify payment of
the benefits described in § 1.7.4(D)(1)(f) of this Part.)
h. (A description of contract
provisions respecting renewability or continuation of coverage,
including age restrictions or any reservation of right to change
premiums.)
E. Basic Hospital and Medical
Surgical Expense Coverage (Outline of Coverage) -
1. An outline of coverage, in
the form prescribed below, shall be issued in connection with
contracts meeting the standards of § 1.7.3(D) and (E) of this Part.
The items included in the outline of coverage must appear in the
sequence prescribed:
a. (INSURER'S NAME)
b. BASIC HOSPITAL AND MEDICAL
SURGICAL EXPENSE
c. COVERAGE OUTLINE OF
COVERAGE
d. Read Your Contract
Carefully -- This outline of coverage provides a very brief
description of the important features of your contract. This is not
the insurance contract and only the actual contract provisions will
control. The contract itself sets forth in detail the rights and
obligations of both you and your insurer. It is, therefore, important
that you READ YOUR CONTRACT CAREFULLY! (Instead of the word
"contract," the word "policy" may be used where
appropriate.)
e. Basic Hospital and Medical
Surgical Expense Coverage -- Contracts of this category are designed
to provide, to persons insured, coverage for hospital and
medical-surgical expenses incurred as a result of a covered accident
or sickness. Coverage is provided for daily hospital room and board,
miscellaneous hospital services, hospital outpatient services,
surgical services, anesthesia services, and in-hospital medical
services, subject to any limitations, deductibles and co-payment
requirements set forth in the contract. Coverage is not provided for
unlimited hospital or medical surgical expenses.
f. A brief specific
description of the benefits, including dollar amounts and number of
days duration where applicable, contained in this contract, in the
following order:
(1) Daily hospital room and
board;
(2) Miscellaneous hospital
services;
(3) Hospital outpatient
services;
(4) Surgical services;
(5) Anesthesia services;
(6) In-hospital medical
services; and
(7) Other benefits, if any.
g. (Note: The above
description of benefits shall be stated clearly and concisely, and
shall include a description of any deductible or co-payment provision
applicable to the benefits described.)
h. (A description of any
contract provisions which exclude, eliminate, restrict, reduce,
limit, delay, or in any other manner operate to qualify payment of
the benefits described in § 1.7.4(E)(1)(f) of this Part.)
i. (A description of contract
provisions respecting renewability or continuation of coverage,
including age restrictions or any reservation of right to change
premiums.)
F. Hospital Confinement
Indemnity Coverage (Outline of Coverage) -
1. An outline of coverage, in
the form prescribed below, shall be issued in connection with
contracts meeting the standards of § 1.7.3(F) of this Part. The
items included in the outline of coverage must appear in the sequence
prescribed:
a. (INSURER'S NAME)
b. HOSPITAL CONFINEMENT
INDEMNITY COVERAGE
c. OUTLINE OF COVERAGE
d. Read Your Contract
Carefully -- This outline of coverage provides a very brief
description of the important features of your contract. This is not
the insurance contract and only the actual contract provisions will
control. The contract itself sets forth in detail the rights and
obligations of both you and your insurer. It is, therefore, important
that you READ YOUR CONTRACT CAREFULLY! (Instead of the word
"contract," the word "policy" may be used where
appropriate.)
e. Hospital Confinement
Indemnity Coverage -- Contracts of this category are designed to
provide, to persons insured, coverage in the form of a fixed daily
benefit during periods of hospitalization resulting from a covered
accident or sickness and any additional benefit described below,
subject to any limitations set forth in the contract. Such contracts
do not provide any benefits other than the fixed daily indemnity for
hospital confinement and any additional benefit described below.
f. (A brief specific
description of the benefits in this contract, in the following order:
(1) Daily benefit payable
during hospital confinement; and
(2) Duration of benefit
described in (a).
(3) (Note: The above
description of benefits shall be stated clearly and concisely.)
g. (A description of any
contract provisions which exclude, eliminate, restrict, reduce,
limit, delay, or in any other manner operate to qualify payment of
the benefits described in § 1.7.4(F)(1)(f) of this Part.)
h. (A description of contract
provisions respecting renewability or continuation of coverage,
including age restrictions or any reservation of right to change
premiums.)
i. (Any benefits provided in
addition to the daily hospital benefit.)
G. Major Medical Expense
Coverage (Outline of Coverage) -
1. An outline of coverage, in
the form prescribed below, shall be issued in connection with
contracts meeting the standards of § 1.7.3(G) of this Part. The
items included in the outline of coverage must appear in the sequence
prescribed:
a. (INSURER'S NAME)
b. MAJOR MEDICAL EXPENSE
COVERAGE
c. OUTLINE OF COVERAGE
d. Read Your Contract
Carefully -- This outline of coverage provides a very brief
description of the important features of your contract. This is not
the insurance contract and only the actual contract provisions will
control. The contract itself sets forth in detail the rights and
obligations of both you and your insurer. It is, therefore, important
that you READ YOUR CONTRACT CAREFULLY! (Instead of the word
"contract," the word "policy" may be used where
appropriate.)
e. Major Medical Expense
Coverage -- Contracts of this category are designed to provide, to
persons insured, coverage for major hospital, medical, and surgical
expenses incurred as a result of a covered accident or sickness.
Coverage is provided for daily hospital room and board, miscellaneous
hospital services, surgical services, anesthesia services, in-
hospital medical services, and out of hospital care, subject to any
deductibles, co-payment provisions, or other limitations which may be
set forth in the contract. Basic hospital or basic medical insurance
coverage is not provided. (If, in accordance with § 1.7.4(B)(3) of
this Part this form of outline is used for coverage which meets the
standards of § 1.7.3(D) and (G) or § 1.7.3(D), (E) and (G) of this
Part the preceding sentence shall be omitted and an appropriate
description in accordance with §§ 1.7.4(C)(3) or (E)(3) of this
Part shall be included.)
f. (A brief specific
description of the benefits, including dollar amounts, contained in
this contract, in the following order:
(1) Daily hospital room and
board;
(2) Miscellaneous hospital
services;
(3) Surgical services;
(4) Anesthesia services;
(5) In-hospital medical
services;
(6) Out of hospital care;
(7) Maximum dollar amount for
covered charges; and
(8) Other benefits, if any.)
(9) (Note: The above
description of benefits shall be stated clearly and concisely, and
shall include a description of any deductible or co-payment provision
applicable to the benefits described.)
g. (A description of any
contract provisions which exclude, eliminate, restrict, reduce,
limit, delay, or in any other manner operate to qualify payment of
the benefits described in §1.7.4(G)(1)(f) of this Part above.)
h. (A description of contract
provisions respecting renewability or continuation of coverage,
including age restrictions or any reservation of right to change
premiums.)
H. Limited Benefit Health
Coverage (Outline of Coverage) -
1. An outline of coverage, in
the form prescribed below, shall be issued in connection with
contracts which do not meet the minimum standards of §1.7.4(D), (E),
(F) and (G) of this Part. The items included in the outline of
coverage must appear in the sequence prescribed:
a. (INSURER'S NAME)
b. LIMITED BENEFIT HEALTH
COVERAGE
c. OUTLINE OF COVERAGE
d. Read Your Contract
Carefully -- This outline of coverage provides a very brief
description of the important features of your contract. This is not
the insurance contract and only the actual contract provisions will
control. The contract itself sets forth in detail the rights and
obligations of both you and your insurance company. It is, therefore,
important that you READ YOUR CONTRACT CAREFULLY! (Instead of the word
"contract," the word "policy" may be used where
appropriate.)
e. Limited Benefit Health
Coverage -- Contracts of this category are designed to provide, to
persons insured, limited or supplemental coverage.
f. (A brief specific
description of the benefits, including dollar amounts, contained in
this policy.)
g. (Note: The above
description of benefits shall be stated clearly and concisely, and
shall include a description of any deductible or co-payment
provisions applicable to the benefits described. Proper disclosure of
benefits which vary according to accidental cause shall be made in
accordance with § 1.7.3(C)(10) of this Part.
h. (A description of any
contract provisions which exclude, eliminate, restrict, reduce,
limit, delay, or in any other manner operate to qualify payment of
the benefits described in in § 1.7.4(H)(1)(f) of this Part.)
i. (A description of contract
provisions respecting renewability or continuation of coverage,
including age restrictions or any reservation of right to change
premiums.)
1.7.5 Replacement of
Individual Health Benefit Contracts
A. Application forms, except
applications designed exclusively for use with accident only and
single premium non-renewable contracts, shall include a question
designed to elicit information as to whether the insurance to be
issued is intended to replace any health benefit contract presently
in force. A supplementary application or other form to be signed by
the applicant containing such a question may be used.
B. Upon determining that a
sale will involve replacement, an insurer, other than an insurer
offering direct response insurance or its agent shall furnish the
applicant, prior to issuance or delivery of the contract, the notice
described in § 1.7.5(C) of this Part. One (1) copy of such notice
shall be retained by the applicant and an additional copy signed by
the applicant shall be retained by the insurer. An insurer offering
direct response insurance shall deliver to the applicant upon
issuance of the contract, the notice described in § 1.7.5(D) of this
Part. In no event, however, will such a notice be required in the
solicitation of the following types of contracts: accident only and
single premium non-renewable contracts.
C. The notice required by §
1.7.5(B) of this Part for an insurer, other than an insurer offering
direct response insurance, shall provide, in substantially the
following form:
1. NOTICE TO APPLICANT
REGARDING REPLACEMENT OF HEALTH BENEFIT CONTRACTS
2. According to (your
application) (information you have furnished), you intend to lapse or
otherwise terminate existing health benefits and replace them with a
contract to be issued by (Insurer's Name). For your own information
and protection, you should be aware of and seriously consider certain
factors which may affect the insurance protection available to you
under the new contract.
a. Health conditions which you
may presently have, (pre-existing conditions) may not be immediately
or fully covered under the new contract. This could result in denial
or delay of a claim for benefits under the new contract, whereas a
similar claim might have been payable under your present contract.
b. You may wish to secure the
advice of your present insurer or its agent regarding the proposed
replacement of your present contract. This is not only your right,
but it is also in your best interests to make sure you understand all
the relevant factors involved in replacing your present coverage.
c. If, after due
consideration, you still wish to terminate your present contract and
replace it with new coverage, be certain to answer truthfully and
completely all questions on the application concerning your
medical/health history. Failure to include all material medical
information on an application may provide a basis for the company to
deny any future claims and to refund your premium as though your
contract had never been in force. After the application has been
completed and before you sign it, re-read it carefully to be certain
that all information has been properly recorded.
d. The above "Notice to
Applicant" was delivered to me on:
(1) (Date)
(2) (Applicant's Signature)
e. Note: The term "accident
and sickness insurance" may be used instead of "health
benefits" or "health benefit contracts." "Policy"
may be used instead of "contract.”
D. The notice required by §
1.7.5(B) of this Part for an insurer offering direct response
insurance shall be as follows:
1. NOTICE TO APPLICANT
REGARDING REPLACEMENT OF HEALTH BENEFIT CONTRACTS
2. According to (your
application) (information you have furnished) you intend to lapse or
otherwise terminate existing health benefits and replace them with
the contract delivered herewith issued by (Insurer's Name). Your new
contract provides 10 days within which you may decide without cost
whether you desire to keep the contract. For your own information and
protection you should be aware of and seriously consider certain
factors which may affect the insurance protection available to you
under the new contract.
a. Health conditions which you
may presently have, (pre-existing conditions) may not be immediately
or fully covered under the new contract. This could result in denial
or delay of a claim for benefits under the new contract, whereas a
similar claim might have been payable under your present contract.
b. You may wish to secure the
advice of your present insurer or its agent regarding the proposed
replacement of your present contract. This is not only your right,
but it is also in your best interests to make sure you understand all
the relevant factors involved in replacing your present contract.
c. (To be included only if the
application is attached to the contract.) If, after due
consideration, you still wish to terminate your present contract and
replace it with new coverage, read the copy of the application
attached to your new contract and be sure that all questions are
answered fully and correctly. Omissions or misstatements in the
application could cause an otherwise valid claim to be denied.
Carefully check the application and write to (Insurer's Name and
Address) within 10 days if any information is not correct and
complete, or if any past medical history has been left out of the
application.
d. (Insurer's Name)
e. Note: The term "accident
and sickness insurance" may be used instead of "health
benefits" or "health benefit contract." "Policy"
may be used instead of "contract."
1.7.6 Violation
Notwithstanding anything to
the contrary in R.I. Gen. Laws Chapters 27-19 and 27-20 a violation
of this section shall be prima facie evidence of a misrepresentation
for the purpose of inducing a person to purchase insurance. A person
guilty of such violation shall be subject to R.I. Gen. Laws §
27-29-4.
1.8 Group and Blanket Health
Benefit Contract Standard Provisions
1.8.1 General Provisions
A. No group or blanket health
benefit contract shall be delivered or issued for delivery in the
state unless it contains in substance the following provisions, or
provisions which in the opinion of the Director are more favorable to
the persons covered; or at least as favorable to the persons covered
and more favorable to the master contractholder. PROVIDED; HOWEVER,
that:
1. the standard provisions
required for individual health benefit contracts shall not apply to
group health benefit contracts;
2. if any provision of this
section is in whole or in part inapplicable to or inconsistent with
the coverage provided by a particular form of contract, the insurer,
with the approval of the Director, shall omit from such contract any
inapplicable provision or part of a provision, and shall modify any
inconsistent provision or part of a provision in such a manner as to
make the provision as contained in the contract consistent with the
coverage provided by the contract;
3. § 1.8.1(A)(6)(g) of this
Part, below, shall be optional with respect to blanket contracts;
4. if the group contract (but
not a blanket contract) provides hospital, surgical, or major medical
benefits or any combination of these coverages for other than
specified diseases or accidental injuries only, it shall also contain
a conversion privilege conforming to the requirements of § 1.8.2 of
this Part;
5. if a contract subject to
this section shall contain other benefits in addition to health
benefits, some or all of the provisions required in this section may
be restricted so as to apply to health benefits only, and other
appropriate provisions may be included which apply to non-health
benefit portions of the contract.
6. The text of all master
contract, certificate and subscriber contract forms, including any
riders or endorsements to be attached to such forms shall be plainly
printed in light-face type of a style in general use, the size of
which shall be uniform and not less than ten (10) point with a
lower-case unspaced alphabet length not less than one hundred and
twenty (120) point (the "text" shall include all printed
matter except the name and address of the insurer, any specific
information required by law or regulation to be in some other type,
the name or title of the contract, certificate, etc., and captions
and subcaptions). The effective date of this § 1.8 of this Part
shall be the same as that generally provided in § 1.11 of this Part
for filing of forms.
a. A provision that the master
contractholder is entitled to a grace period of thirty-one (31) days
or, at the option of the insurer, one month for the payment of any
premium due except the first, during which grace period the contract
shall continue in force, unless the master contractholder shall have
given the insurer written notice of discontinuance of the coverage in
advance of the date of discontinuance and in accordance with the
terms of the contract. The contract may provide that the master
contractholder shall be liable to the insurer for the payment of a
pro rata premium for the time the coverage was in force during such
grace period.
b. A provision that validity
of the contract shall not be contested, except for non-payment of
premiums, after it has been in force for two years from its date of
issue; and that no statement made for the purpose of effecting
insurance coverage under the contract with respect to a person shall
be used to avoid the insurance with respect to which such statement
was made or to reduce benefits thereunder after such insurance has
been in force for a period of two (2) years during such person's
lifetime, nor unless such statement is contained in a written
instrument signed by the person making such statement and a copy of
that instrument is or has been furnished to him.
c. A provision that a copy of
the application, if any, of the master contractholder shall be
attached to the master contract when issued, and that all statements
made by the master contractholder or by the persons covered shall be
deemed representations and not warranties.
d. A provision that no agent
has authority to change the contract or waive any of its provisions
and that no change in the contract shall be valid unless approved by
an officer of the insurer and evidenced by an endorsement on the
contract, or by rider or amendment to the contract signed by the
insurer, provided that any such amendment which reduces or eliminates
coverage was either requested in writing by the master contractholder
or signed by the master contractholder.
e. A provision specifying the
additional exclusions or limitations, if any, applicable under the
contract with respect to a disease or physical condition of a person,
not otherwise excluded from the person's coverage by name or specific
description effective on the date of the person's loss, which existed
prior to the effective date of the person's coverage under the
contract. Any such exclusion or limitation may only apply to a
disease or physical condition for which medical advice or treatment
was received by the person during the twelve (12) months prior to the
effective date of his coverage. In no event shall such exclusion or
limitation apply to loss incurred after the earlier of (a) the end of
a continuous period of twelve (12) months commencing on or after the
effective date of the person's coverage during all of which the
person has received no medical advice or treatment in connection with
such disease or physical condition and (b) the end of the two (2)
year period commencing on the effective date of the person's
coverage.
f. A provision specifying the
ages, if any, to which the insurance provided shall be limited; and
the ages, if any, for which additional restrictions are placed on
benefits, and the additional restrictions placed on the benefits at
such ages. If the premiums or benefits vary by age, there shall also
be a provision specifying an equitable adjustment of premiums or of
benefits, or both, to be made in the event the age of a covered
person has been misstated, such provision to contain a clear
statement of the method of adjustment to be used. In no event,
however, shall coverage be required for any person during any period
when, according to his correct age, coverage would otherwise not be
provided for him under the contract.
g. (Optional with respect to
blanket contracts) A provision that the insurer will issue to the
master contractholder for delivery to each person insured, a
certificate or subscriber contract, which may be in summary form,
setting forth the essential features of the coverage and to whom the
benefits are payable. If family members or dependents are included in
the coverage, only one certificate or subscriber contract need be
issued for each family unit.
h. A provision that written
notice of claim must be given to the insurer within twenty (20) days
after the occurrence or commencement of any loss covered by the
contract. Failure to give notice within such time shall not
invalidate nor reduce any claim if it shall be shown not to have been
reasonably possible to give such notice and that notice was given as
soon as was reasonably possible.
i. A provision that the
insurer will furnish to the person making the claim, or to the master
contractholder for delivery to such person, such forms as are usually
furnished by it for filing proof of loss. If such forms are not
furnished before the expiration of fifteen (15) days after the
insurer received notice of any claim under the contract, the person
making such claim shall be deemed to have complied with the
requirements of the contract as to proof of loss, upon submitting
within the time fixed in the contract for filing proof of loss,
written proof covering the occurrence, character and extent of the
loss for which claim is made.
j. A provision that, in the
case of claim for loss, written proof of such loss must be furnished
to the insurer within ninety (90) days after the date of such loss.
Failure to furnish such proof within such time shall not invalidate
nor reduce any claim if it was not reasonably possible to furnish
such proof within such time, provided such proof is furnished as soon
as reasonably possible and in no event, except in the absence of
legal capacity of the claimant, later than one (1) year from the time
proof is otherwise required.
k. A provision that all
benefits payable under the contract will be payable not more than
sixty (60) days after receipt of such proof.
l. A provision that all
indemnities of the contract are payable to the insured, except that
the master contract may provide that all or any portion of any
benefits on account of hospital, medical, surgical or other services
may, at the insurer's option, be paid directly to the hospital or
person rendering such services. Any payment made by the insurer in
good faith pursuant to the foregoing provisions shall discharge an
insurer's obligation with respect to the extent of such payment.
m. A provision that the
insurer shall have the right and opportunity to examine the person of
the individual for whom claim is made when and so often as it may
reasonably require during the pendency of claim under the contract.
n. A provision that no action
at law or in equity shall be brought to recover on the contract prior
to the expiration of sixty (60) days after proof of loss has been
filed in accordance with the requirements of the contract and that no
such action shall be brought at all unless brought within three (3)
years from the expiration of the time within which proof of loss is
required by the contract.
1.8.2 Conversion Privilege
A. A group health benefit
contract delivered or issued for delivery in the state which provides
hospital, surgical, or major medical expense benefits, or any
combination of these coverages, but not a contract which provides
benefits for specified disease or for accidental injuries only, shall
provide that an employee or member whose insurance under the group
contract has been terminated for any reason other than discontinuance
of the group contract in its entirety or with respect to an insured
class, and who has been continuously covered under the group contract
(and under any group contract providing similar benefits which it
replaces) for at least three months immediately prior to termination,
shall be entitled to have issued to him by the insurer a health
benefit contract (hereafter referred to as the converted contract).
B. An employee or member shall
not be entitled to have a converted contract issued to him if
termination of his insurance under the group contract occurred
because:
1. he failed to pay any
required contribution, or
2. any discontinued group
coverage was replaced by similar group coverage within thirty-one
days.
C. Issuance of a converted
contract shall be subject to the following conditions:
1. Written application for the
converted contract shall be made and the first premium therefor paid
to the insurer not later than thirty-one (31) days after such
termination.
2. The converted contract
shall be issued without evidence of insurability.
3. The premium for the
converted contract shall be determined in accordance with the
insurer's table of premium rates applicable to the age and class of
risk of each person to be covered under the converted contract and to
the type and amount of insurance provided.
4. The effective date of the
converted contract shall be the day following the termination of
coverage under the group contract.
5. The converted contract
shall cover the employee or member and his dependents who were
covered by the group contract on the date of termination of coverage.
At the option of the insurer, a separate converted contract may be
issued to cover any dependent.
6. The insurer shall not be
required to issue a converted contract covering any person if such
person is or could be covered by Medicare (Title XVIII of the United
States Social Security Act as added by the Social Security Amendments
of 1965 or as later amended or superseded).
a. Furthermore, the insurer
shall not be required to issue a converted contract covering any
person if
(1) such person is covered for
similar benefits by another hospital, surgical, medical or major
medical expense contract; or
(2) such person is eligible
for similar benefits (whether or not covered therefor) under any
arrangement of coverage for individuals in a group, whether on an
insured or uninsured basis, or
(3) similar benefits are
provided for or available to such person, pursuant to or in
accordance with the requirement of any state or federal law (benefits
under R.I. Gen. Laws § 42-62-6 shall not be deemed "similar
benefits" for purposes of this subsection), and
b. The benefits provided under
the sources referred to in § 1.8.2(C)(6)(a)(1) of this Part for such
person or benefits provided or available under the sources referred
to in §1.8.2(A)(6)(a)(2) and (3) of this Part for such person,
together with the benefits provided by the converted contract would
result in overinsurance according to the insurer's standards. The
insurer's standards must bear some relationship to actual health care
costs in the area in which the insured lives at the time of
conversion and must be filed with the Director of Business Regulation
prior to their use in denying coverage.
7. A converted contract may
include a provision whereby the insurer may request information in
advance of any premium due date of such contract of any person
covered thereunder as to whether:
a. he is covered for similar
benefits by another health benefit contract,
b. he is covered for similar
benefits under any arrangement of coverage for individuals in a
group, whether on an insured or uninsured basis or
c. similar benefits are
provided for or available to such person, pursuant to or in
accordance with the requirements of any state or federal law.
d. The converted contract may
provide that the insurer may refuse to renew the contract or the
coverage of any person insured thereunder for the following reasons
only:
(1) either the benefits
provided under the sources referred to in §§ 1.8.2(C)(7)(a) and (b)
of this Part above for such person or benefits provided or available
under the sources referred to in 1.8.2(C)(7)(c) of this Part above
for such person, together with the benefits provided by the converted
contract, would result in overinsurance according to the insurer's
standards on file with the Director of Business Regulation, or the
converted contractholder fails to provide the requested information.
(2) fraud or material
misrepresentation in applying for any benefits under the converted
contract;
(3) eligibility of the insured
person for coverage under Medicare (Title XVIII of the United States
Social Security Act as amended by the Social Security Amendments of
1965 or as later amended or superseded) or under any other state or
federal law providing for benefits similar to those provided by the
converted contract;
(4) other reasons approved by
the Director of Business Regulation.
8. An insurer shall not be
required to issue a converted contract which provides benefits in
excess of those provided under the group contract form which
conversion is made.
9. The converted contract
shall not exclude a pre-existing condition not excluded by the group
contract. However, the converted contract may provide that any
hospital, surgical or medical benefits payable thereunder may be
reduced by the amount of any such benefits payable under the group
contract after termination of the individual's insurance thereunder.
The converted contract may also include provisions so that during the
first contract year the benefits payable under the converted
contract, together with the benefits payable under the group
contract, shall not exceed those that would have been payable had the
individual's insurance under the group contract remained in force and
effect.
10. Subject to the provisions
and conditions of § 1.8 of this Part, if the group health benefit
contract from which conversion is made insured the employee or member
for basic hospital or surgical expense insurance, the employee or
member shall be entitled to obtain a converted contract providing, at
his option, coverage on an expense incurred basis or equivalent
service benefits under any one of the plans meeting the following
requirements:
a. Plan A
(1) hospital room and board
daily expense benefits in a maximum dollar amount approximately the
average semi-private rate charged in this state, for a maximum
duration of at least seventy days,
(2) miscellaneous hospital
expense benefits of a maximum amount of ten times the hospital room
and board daily expense benefits, or, at the insurer's option, full
benefits for ancillary services for the period covered §
1.8.2(C)(10)(a)(1) of this Part, and,
(3) surgical operation expense
benefits according to a surgical schedule consistent with those
customarily offered by the insurer under group or individual health
benefit contracts and providing a maximum benefit of nine hundred
dollars, or, at the insurer's option, full coverage of the usual and
customary fee for surgical operations, or
b. Plan B
(1) hospital room and board
daily expense benefits in a maximum amount equal to seventy five
percent (75%) of the maximum dollar amount determined for Plan A, for
a maximum duration of at least seventy (70) days,
(2) miscellaneous hospital
expense benefits of a maximum amount of ten times the hospital room
and board daily expense benefits, or, at the insurer's option,
benefits covering seventy five percent (75%) of the ancillary
services for the period covered by § 1.8.2(C)(10)(b)(1) of this
Part, and
(3) surgical operation expense
benefits according to a surgical schedule consistent with those
customarily offered by the insurer under group or individual health
benefit contracts and providing a maximum benefit of six hundred
seventy-five dollars, or, at the insurer's option, benefits
equivalent to 75% of the usual and customary fee for surgical
operations, or
c. Plan C
(1) hospital room and board
daily expense benefits in a maximum dollar amount equal to fifty
percent (50%) of the maximum dollar amount determined for Plan A, for
a maximum duration of at least seventy days,
(2) miscellaneous hospital
benefits of a maximum amount of ten times the hospital room and board
daily expense benefits, or, at the insurer's option, benefits
covering fifty percent (50%) of the ancillary services for the period
covered by § 1.8.2(C)(10)(c)(1) of this Part, and
(3) surgical operation expense
benefits according to a surgical schedule consistent with those
customarily offered by the insurer under group or individual health
benefit contracts and providing a maximum benefit of four hundred
fifty dollars, or at the insurer's option, benefits equivalent to
seventy five percent (75%) of the usual and customary fee for
surgical operations.
d. The maximum dollar amount
in Plan A shall be determined by the Director of Business Regulation
and may be redetermined by him from time to time as to converted
contracts issued subsequent to such redetermination. Such
redetermination shall not be made more often than once in three (3)
years. The maximum dollar amounts in Plans A, B and C shall be
rounded to the nearest multiple of ten dollars ($10).
(1) Note: As of December 14,
1978, it has been determined that the maximum dollar amounts, rounded
as required, are as follows:
(AA) Plan A $130.00
(BB) Plan B $100.00
(CC) Plan C $70.00
(2) This determination shall
be effective until October 9, 1981, and it shall remain in effect
thereafter until a redetermination shall be made by the Director.
11. Subject to the provisions
and conditions of § 1.8 of this Part, if the group health benefit
contract from which conversion is made insures the employee or member
for major medical expense insurance, the employee or member shall be
entitled to obtain a converted contract providing catastrophic or
major medical coverage under a plan meeting the following
requirements:
a. A maximum benefit at least
equal to either, at the option of the insurer, § 1.8.2(C)(11)(a)(1)
or (2) of this Part below:
(1) The smaller of the
following amounts:
(AA) The maximum benefit
provided under the group contract.
(BB) A maximum payment of ten
thousand dollars ($10,000) per covered person for all covered medical
expenses incurred during the covered person's lifetime.
(2) The smaller of the
following amounts:
(AA) The maximum benefit
provided under the group contract.
(BB) A maximum payment of ten
thousand dollars ($10,000) for each unrelated injury or sickness.
b. Payment of benefits at the
rate of eighty percent (80%) of covered medical expenses which are in
excess of the deductible. Payment of benefits for outpatient
treatment of mental illness, if provided in the converted contract,
may be at a lesser rate but not less than fifty percent (50%) and may
be subject to a maximum of no more than one thousand dollars ($1,000)
in any one benefit period.
c. A deductible for each
benefit period which, at the option of the insurer, shall be:
(1) the sum of the benefits
deductible and one hundred dollars ($100), or
(2) the corresponding
deductible in the group contract. The term "benefits
deductible," as used herein, means the value of any benefits
provided on an expense incurred or a service benefit basis which are
provided with respect to covered medical expenses by any other health
benefit contract, or any other plan or program whether on an insured
or uninsured basis, or in accordance with the requirements of any
state or federal law except that benefits provided under R.I. Gen.
Laws § 42-62-6 shall not be included in the "benefits
deductible", and, if pursuant to § 1.8.2(C)(12) of this Part,
the converted contract provides both basic hospital or surgical
coverage and major medical coverage, the value of such basic
benefits. If the maximum benefit is determined by §
1.8.2(C)(11)(a)(2) of this Part, the insurer may require that the
deductible be satisfied during a period of not less than three months
if the deductible is one hundred dollars ($100) or less, and not less
than six months if the deductible exceeds one hundred dollars ($100).
d. The benefit period shall be
each calendar year when the maximum benefit is determined by §
1.8.2(C)(11)(a)(1) of this Part or twenty-four months when the
maximum benefit is determined § 1.8.2(C)(11)(a)(2) of this Part.
e. The term "covered
medical expenses," as used above, shall include at least, in the
case of hospital room and board charges, the lesser of the dollar
amount in Plan A and the average semi-private room and board rate for
the hospital in which the individual is confined and twice such
amount for charges in an intensive care unit. Any surgical schedule
shall be consistent with those customarily offered by the insurer
under group or individual health insurance contracts and must provide
at least a one thousand two hundred dollar ($1,200) maximum benefit.
12. The conversion privilege
required by § 1.8 of this Part shall, if the group health benefit
contract insures the employee or member for basic hospital or
surgical expense insurance as well as major medical expense
insurance, make available the plans of benefits set forth in
conditions 10 and 11 hereof. At the option of the insurer, such plans
of benefits may be provided under one contract. Instead of the plans
of benefits set forth in § 1.8.2(C)(10) and (11) of this Part the
insurer may provide a contract of comprehensive benefits without
first-dollar coverage. Such a contract shall conform to the
requirements of § 1.8.2(C)(11), except that the maximum payment
shall be two hundred fifty thousand dollars ($250,000), where ten
thousand dollars ($10,000) is established in § 1.8.2(C)(11) of this
Part.
13. The insurer may, at its
option, also offer alternative plans for group health conversion in
addition to those required by § 1.8 of this Part.
14. In the event coverage
would be continued under the group contract on an employee following
his retirement prior to the time he is or could be covered by
Medicare, he may elect, in lieu of such continuation of group
insurance, to have the same conversion rights as would apply had his
insurance terminated by reason of termination of employment or
membership.
15. The converted contract may
provide for reduction of coverage on any person upon his eligibility
for coverage under Medicare (Title XVIII of the United States Social
Security Act as added by the Social Security Amendments of 1965 or as
later amended or superseded) or under any other state or federal law
providing for benefits similar to those provided by the converted
contract, except that benefits provided under R.I. Gen. Laws §
42-62-6 shall not be considered to be "similar" for
purposes of such reduction.
16. Subject to the conditions
set forth above, the conversion privilege shall also be available:
a. to the surviving spouse, if
any, at the death of the employee or member, with respect to the
spouse and such children whose coverage under the group contract
terminates by reason of such death, otherwise to each surviving child
whose coverage under the group contract terminates by reason of such
death, or, if the group contract provides for continuation of
dependents coverage following the employee's or members' death, at
the end of such continuation,
b. to the spouse of the
employee or member upon termination of coverage of the spouse, while
the employee or member remains covered under the group contract, by
reason of ceasing to be a qualified family member under the group
contract, with respect to the spouse and such children whose coverage
under the group contract terminates at the same time, or
c. to a child solely with
respect to himself upon termination of his coverage by reason of
ceasing to be a qualified family member under the group contract, if
a conversion privilege is not otherwise provided above with respect
to such termination.
17. If the benefit levels
required in § 1.8.2(C)(10) of this Part above exceed the benefit
levels provided under the group contract, the conversion may offer
benefits which are substantially similar to those provided under the
group contract in lieu of those required in § 1.8.2(C)(10) of this
Part.
18. The insurer may elect to
provide group insurance coverage in lieu of the issuance of a
converted individual contract.
19. A notification of the
conversion privilege shall be included in each certificate of
coverage or group subscriber contract.
20. The insurer may elect to
issue a converted contract itself, or it may arrange with another
appropriately licensed insurer for such other insurer to issue the
converted contract required by § 1.8 this Part.
21. A converted contract which
is delivered outside this state must be on a form which could be
delivered in such other jurisdiction as a converted contract had the
group contract been issued in that jurisdiction. Except for this
requirement, converted contracts issued outside this state shall not
be required to be in accordance with § 1.8.2 of this Part.
1.8.3 Notice of Group
Health Conversion
A. An employee or member who
is entitled to make application for a converted health benefit
contract in accordance with the provision of § 1.8.2 of this Part
shall be given written notice of the existence of the conversion
privilege at least fifteen (15) days prior to the expiration of the
thirty-one (31) day conversion period established by the group
contract. If the employee or member is not given notice of his
conversion rights as provided above, the employee or member shall
have an additional period within which to exercise such conversion
privilege. This additional period shall expire fifteen (15) days
after the employee or member has been given such notice, or ninety
(90) days after termination of his coverage under the group contract,
whichever comes earlier.
B. Written notice presented to
the employee or member by his employer, the master contractholder or
insurer or mailed by his employer, the master contractholder or
insurer to the last known address of the employee or member, as
furnished by the master contractholder, shall constitute the giving
of notice for the purpose of this provision. If an employee or member
is permitted an additional period for conversion, as provided herein,
and if written application for the converted contract, accompanied by
the initial premium, is made within the additional period, the
effective date of the converted contract shall be the day following
his termination of insurance under the group contract.
1.9 Group or "Group-Type"
Coverage Discontinuance and Replacement
1.9.1 Scope
§ 1.9 of this Part is
applicable to all health benefit contracts issued or provided by an
insurance company or a non-profit service corporation on a group or
group-type basis covering persons as employees of employers or as
members of unions or associations.
1.9.2 Effective Date of
Discontinuance for Non-Payment of Premium or Subscription Charges
A. If a contract subject to §
1.9 of this Part provides for automatic discontinuance of the
contract after a premium or subscription charge has remained unpaid
through the grace period allowed for such payment, the insurer shall
be liable for valid claims for covered losses incurred prior to the
end of the grace period.
B. If the actions of the
insurer after the end of the grace period indicate that it considers
the contract as continuing in force beyond the end of the grace
period (such as, by continuing to recognize claims subsequently
incurred except to the extent that specific limited coverage may be
provided after termination by the terms of the contract), the insurer
shall be liable for valid claims for losses beginning prior to the
effective date of written notice of discontinuance to the master
contractholder or other entity responsible for making payments or
submitting subscription charges to the insurer. The effective date of
discontinuance shall not be prior to midnight at the end of the third
scheduled work day after the date upon which the notice is delivered.
1.9.3 Requirements for
Notice of Discontinuance
A. Any notice of
discontinuance so given by the insurer, shall include a request to
the group master contractholder or other entity involved to notify
employees covered under the contract of the date as of which the
group contract will discontinue and to advise that, unless otherwise
provided in the contract, the insurer shall not be liable for claims
for losses incurred after such date. Such notice of discontinuance
shall also advise that, in any instance in which the plan involves
employee contributions, that if the master contractholder or other
entity continues to collect contributions for the coverage beyond the
date of discontinuance, the master contractholder or other entity may
be held solely liable for the benefits with respect to which the
contributions have been collected.
B. The insurer will prepare
and furnish to the master contractholder or other entity at the same
time a supply of notice forms to be distributed to the employees or
members concerned indicating such discontinuance and the effective
date thereof, and urging the employees or members to refer to their
certificates of contracts in order to determine what rights, if any,
are available to them upon such discontinuance. Instead of furnishing
such notice to the master contractholder, the insurer may mail such
notice to the employees or members.
1.9.4 Extension of Benefits
A. Every group contract
subject to § 1.9 of this Part hereafter issued, or under which the
level of benefits is hereafter altered, modified, or amended, must
provide a reasonable provision for extension of benefits in the event
of total disability at the date of discontinuance of the group
contract, as required by the following paragraphs of § 1.9.4 of this
Part.
B. In the case of a group plan
providing specific indemnity during hospital confinement,
discontinuance of the contract during a disability shall have no
effect on benefits payable for that confinement.
C. In the case of hospital or
medical expense coverages other than dental and maternity expense, a
reasonable extension of benefit or accrued liability provision is
required. Such a provision will be considered "reasonable"
if it provides an extension of at least twelve (12) months under
"major medical" and "comprehensive medical" type
coverages, and under other types of hospital or medical expense
coverages provides either an extension of at least ninety (90) days
or an accrued liability for expenses incurred during a period of
disability or during a period of at least ninety (90) days starting
with a specific event which occurred while coverage was in force
(e.g., an accident).
D. Any applicable extension of
benefits or accrued liability shall be described in any master
contract as well as in group insurance certificates or subscriber
contracts. The benefits payable during any period of extension or
accrued liability may be subject to the contract's regular benefits
limits (e.g., benefits ceasing at exhaustion of a benefit period or
of maximum benefits).
1.9.5 Continuance of
Coverage in Situations Involving Replacement of One Insurer by
Another
A. § 1.9.5 of this Part shall
indicate the insurer responsible for liability in those instances in
which one insurer's contract replaces a plan of similar benefits of
another.
B. Liability of Prior Insurer.
The prior insurer remains liable only to the extent of its accrued
liability and extensions of benefits. The position of the prior
insurer shall be the same whether the group master contractholder or
other entity secures replacement coverage from a new insurer,
self-insures, or foregoes the provision of coverage.
C. Liability of Succeeding
Insurer
1. Each person who is eligible
for coverage in accordance with the succeeding insurer's plan of
benefits (in respect of classes eligible and activity at work and
non-confinement rules) shall be covered by that insurer's plan of
benefits.
2. Each person not covered
under the succeeding insurer's plan of benefits in accordance with §
1.9.5(C)(1) of this Part, must nevertheless be covered by the
succeeding insurer in accordance with the following rules if such
individual was validly covered (including benefit extension) under
the prior plan on the date of discontinuance and if such individual
is a member of the class or classes of individuals eligible for
coverage under the succeeding insurer's plan. Any reference in the
following rules to an individual who was or was not totally disabled
is a reference to the individual's status immediately prior to the
date the succeeding insurer's coverage becomes effective.
a. The minimum level of
benefits to be provided by the succeeding insurer shall be the
applicable level of benefits of the prior insurer's plan reduced by
any benefits payable by the prior plan.
b. Coverage must be provided
by the succeeding insurer until at least the earliest of the
following dates:
(1) the date the individual
becomes eligible under the succeeding insurer's plan as described in
§ 1.9.5(C)(1) of this Part.
(2) for each type of coverage,
the date the individual's coverage would terminate in accordance with
the succeeding insurer's plan provisions applicable to individual
termination of coverage (e.g., at termination of employment or
ceasing to be an eligible dependent, as the case may be.)
(3) in the case of an
individual who was totally disabled, and in the case of a type of
coverage for which § 1.9.5 of this Part requires an extension of
accrued liability, the end of any period of extension or accrued
liability which is required of the prior insurer by § 1.9.5 of this
Part or, if the prior insurer's contract is not subject to § 1.9.5
of this Part, would have been required of that insurer had its
contract been subject to § 1.9.5 of this Part at the time the prior
plan was discontinued and replaced by the succeeding insurer's plan.
3. In the case of a
pre-existing conditions limitation included in the succeeding
insurer's plan, the level of benefits applicable to pre-existing
conditions of persons becoming covered by the succeeding insurer's
plan in accordance with this subsection during the period of time
this limitation applies under the new plan shall be the lesser of:
a. the benefits of the new
plan determined without application of the pre-existing conditions
limitation; and
b. the benefits of the prior
plan.
4. The succeeding insurer, in
applying any deductibles or waiting periods in its plan, shall give
credit for the satisfaction or partial satisfaction of the same or
similar provisions under a prior plan providing similar benefits. In
the case of deductible provisions, the credit shall apply for the
same or overlapping benefit periods and shall be given for expenses
actually incurred and applied against the deductible provisions of
the prior insurer's plan during the ninety (90) days preceding the
effective date of the succeeding insurer's plan but only to the
extent these expenses are recognized under the terms of the
succeeding insurer's plan and are subject to a similar deductible
provision.
5. In any situation where a
determination of the prior insurer's benefits is required by the
succeeding insurer, at the succeeding insurer's request the prior
insurer shall furnish a statement of the benefits available or
pertinent information, sufficient to permit verification of the
benefit determination or the determination itself by the succeeding
insurer. For the purpose of § 1.9.5 of this Part, benefits of the
prior plan will be determined in accordance with all of the
definitions, conditions, and covered expense provisions of the prior
plan rather than those of the succeeding plan. The benefit
determination will be made as if coverage has not been replaced by
the succeeding insurer.
1.10 Group Anti-Duplication
Provision
A. If a group health benefit
contract contains a provision restricting benefit payments on account
of the benefit paid by another plan, such provision shall be at least
as favorable to the insured as the following:
1. Provision for Co-Ordination
Between This Contract and Other Benefits
a. Benefits Subject to This
Program
(1) All of the benefits
provided under this contract are subject to this provision.
(2) (Note: When contract
provides both integrated Major Medical Expense Benefits and the
underlying Basic Benefits, but provision applies to Major Medical
only, use the following alternate wording: Only the Major Medical
Expense Benefits under this contract are subject to this provision).
b. Definitions
(1) (Note: Include here the
definition of a Plan, that is, the benefits, including those provided
by this contract, that are to be co-ordinated. The following
definition is illustrative only, except that “plan” may not be
defined to include individual health benefit contracts. If government
programs are excluded, language substantially equivalent to that at
(iv) must be used.)
(AA) “Plan” means any plan
providing benefits or services for or by reason of medical or dental
care or treatment, which benefits or services are provided by:
(i) group, blanket or
franchise insurance coverage,
(ii) Blue Cross, Blue Shield,
group practice, individual practice and other prepayment coverage,
(iii) any coverage under
labor-management trusteed plans, union welfare plans, employer
organization plans, or employee benefit organization plans, and
(iv) any coverage under
governmental programs, and any coverage required or provided by any
statute; except that “plan” shall not include benefits provided
under R.I. Gen. Laws §§ 42-62-5, 6, 7 and 8.
(BB) The term “plan” shall
be construed separately with respect to each contract or other
arrangement for benefits or services and separately with respect to
that portion of any such contract or other arrangement which reserves
the right to take the benefits or services of other Plans into
consideration in determining its benefits and that portion which does
not.
(2) “This Plan” means that
portion of this contract which provides the benefits that are subject
to this provision.
(3) “Allowable Expense”
means any necessary, reasonable, and customary item of expense at
least a portion of which is covered under at least one the Plans
covering the person for whom claim is made.
(AA) When a Plan provides
benefits in the form of services rather than cash payments, the
reasonable cash value of each service rendered shall be deemed to be
both an Allowable Expense and a benefit paid.
(4) “Claim Determination
Period” means (Note: Insert here an appropriate period of time such
as, “calendar year” or “Benefit Period as defined elsewhere in
this contract.”)
c. Effective on Benefits
(1) This provision shall apply
in determining the benefits as to a person covered under this Plan
for any Claim Determination Period if, for the Allowable Expenses
incurred as to such person during such period, the sum of
(AA) the benefits that would
be payable under this Plan in the absence of this provision, and
(BB) the benefits that would
be payable under all other Plans in the absence therein of provision
of similar purpose to this provision would exceed such Allowable
Expenses.
(2) As to any Claim
Determination Period with respect to which this provision is
applicable, the benefits that would be payable under this Plan in the
absence of this provision for the Allowable Expenses incurred as to
such person during such Claim Determination Period shall be reduced
to the extent necessary so that the sum of such reduced benefits and
all the benefits payable for such Allowable Expenses under all other
Plans except as provided in § 1.10(A)(1)(c)(3) of this Part, shall
not exceed the total of such Allowable Expenses. Benefits payable
under another Plan include the benefits that would have been payable
had claim been duly made therefor.
(3) If:
(AA) another Plan which is
involved in § 1.10(A)(1)(c)(2) of this Part and which contains a
provision co-ordinating its benefits with those of this Plan would,
according to its rules, determine its benefits after the benefits of
this Plan have been determined, and
(BB) the rules set forth in §
1.10(A)(1)(c)(4) of this Part would require this Plan to determine
its benefits before such other Plan which the benefits of such other
Plan will be ignored for the purposes of determining the benefits
under this Plan.
(4) For the purposes of item §
1.10(A)(1)(c)(3) of this Part, the rules establishing the order of
benefit determination are:
(AA) The benefits of Plan
which cover the person on whose expenses claim is based other than as
a dependent shall be determined before the benefits of a Plan which
covers such person as a dependent;
(BB) Dependent Child/Parents
Not separated or Divorced. Except as stated in §
1.10(A)(1)(c)((4))((BB))((iii)) of this Part below, when this Plan
and another Plan cover the same child as a dependent of different
persons, called “parents”:
(i) the benefits of the plan
of the parent whose birthday falls earlier in a year are determined
before those of the Plan of the parent whose birthday falls later in
that year; but
(ii) if both parents have the
same birthday, the benefits of the Plan which covered the parent
longer are determined before those of the Plan which covered the
other parent for a shorter period of time.
(iii) However, if the other
Plan does not have the rule described in §
1.10(A)(1)(c)((4))((BB))((i)) of this Part immediately above but
instead has a rule based upon the gender of the parents, and if, as a
result, the Plans do not agree on the order of benefits, the rule in
the other Plan will determine the order of benefits.
(CC) Dependent Child/Separated
or Divorced Parents, If two or more Plans cover a person as a
dependent child of divorced or separated parents, benefits for the
child are determined in this order;
(i) first, the Plan of the
parent with custody of the child;
(ii) then, the Plan of the
spouse of the parent with the custody of the child; and
(iii) finally, the plan of the
parent not having custody of the child.
(iv) However, if the specific
terms of a court decree state that one of the parents is responsible
for the health care expenses of the child, and the entity obligated
to pay or provide the benefits of the Plan of that parent has actual
knowledge of those terms, the benefits of that Plan are determined
first. This paragraph does not apply with respect to any Claim
Determination Period of plan year during which any benefits are
actually paid or provided before the entity has that actual knowledge
(DD) Active/Inactive Employee.
The benefits of a Plan which covers a person as an employee who is
neither laid off nor retired (or as that employee’s dependent) are
determined before those of a Plan which covers that person as a laid
off or retired employee (or as that employee’s dependent). If the
other Plan does not have this rule, and if, as a result, the Plans do
not agree on the order of benefits, this rule §
1.10(A)(1)(c)((4))((DD)) of this Part is ignored.
(EE) When rules §
1.10(A)(1)(c)((4))(AA) and (BB) of this Part do not establish an
order of benefits determination, the benefits of a Plan which has
covered the person on whose expenses claim is based for the longer
period of time shall be determined before the benefit of a Plan which
has covered such person the shorter period of time.
(FF) This amendment is
effective immediately. However, it shall apply to all claims incurred
on or after January 1, 1988.
(5) (Note: This item (5) may
be omitted if the Plan provides only one benefit. The wording shown
is illustrative.)
(AA) When this provision
operates to reduce the total amount of benefits otherwise payable as
to a person covered under this Plan during any Claim Determination
period, each benefit that would be payable in the absence of this
provision shall be reduced proportionately, and such reduced amount
shall be charges against any applicable benefit limit of this Plan.
d. Right to Receive and
Release Necessary Information
(1) For the purpose of
determining the applicability of and implementing the terms of this
provision of this Plan or any provision of similar purpose of any
other Plan, the insurer may, without the consent of or notice to any
person, release to or obtain from any other insurance company or
other organization or person any information, with respect to any
person, which the insurer deems to be necessary for such purposes.
Any person claiming benefits under this Plan shall furnish to the
insurer such information as may be necessary to implement this
provision.
e. Facility of Payment
(1) Whenever payment which
should have been made under this Plan is accordance with this
provision have been made under any other Plans, the insurer shall
have the right, exercisable alone and in its sole discretion, to pay
over to any organizations making such other payments any amounts it
shall determine to be warranted in order to satisfy the intent of
this provision, and amounts so paid shall be deemed to be benefits
paid under this Plan and, to the extent of such payments, the insurer
shall be fully discharged form liability under this Plan.
f. Right of Recovery
(1) Whenever payments have
been made by the insurer with respect to Allowable Expenses in a
total amount, in excess of the maximum amount or payment necessary at
that time to satisfy the intent of this provision, the insurer shall
have the right to recover such payments, to the extent of such
excess, from among one or more of the following, as the insurer shall
determine: any persons to or for or with respect to whom such
payments were made, any other insurers, any other organizations.
1.11 Filing of Forms and Rates
1.11.1 Approval of
Director
A. No health benefit contract
shall be issued or delivered to any person in this state nor shall
any application, rider, endorsement, individual certificate,
subscriber contract or group master contract to be used in connection
therewith be issued or delivered until a copy of the form thereof and
of the classification of risks and the premium rates or the rating
formula have been approved by the Director of Business Regulation.
This requirement shall take effect two hundred seventy (270) days
after promulgation of this Part, subject to the following conditions
and exceptions:
1. No forms submitted to the
Director for approval after the promulgation of this Part shall be
approved unless such forms are in compliance with this Part.
2. Forms filed and approved
under R.I. Gen. Laws Chapters 27-18 and 27-2 or otherwise approved in
writing by the Director of Business Regulation may be issued or
delivered without re-filing, provided that such forms are in
compliance with this Part.
3. Forms filed and approved
under R.I. Gen. Laws Chapter 27-18 or otherwise approved in writing
by the Director of Business Regulation but which are not in
compliance with this Part may be issued or delivered provided that
such forms are amended by appropriate riders or endorsements designed
to bring them into compliance. Such amendment forms must be approved
by the Director of Business Regulation prior to use.
4. Forms filed and approved
under R.I. Gen. Laws Chapter 27-18 or otherwise approved in writing
by the Director of Business Regulation may be issued or delivered for
up to three hundred sixty (360) days after promulgation of this Part
provided that appropriate riders endorsements or revisions designed
to bring such forms into compliance have been submitted to the
Director for approval within two hundred seventy (270) days after
promulgation of this Part.
5. Rates not previously
submitted for approval and rates "received for filing" and
not affirmatively approved by the Director may not be used in
connection with contracts issued or delivered and placed in force in
the state more than two hundred seventy (270) days after promulgation
of this Part.
6. Rates affirmatively
approved by the Director under R.I. Gen. Laws §§ 27-2-10, 27-19-6,
27-20-6, 27-20.1-3 or 42-16-13 remain approved without re-filing,
subject to the terms and conditions of such approval.
1.11.2 Filing and Approval
No such contract shall be
issued, nor shall any application, rider, endorsement, individual
certificate, subscriber contract, or group master contract be used in
connection therewith, until the expiration of sixty (60) days after
it has been so filed unless the Director of Business Regulation shall
sooner give his written approval thereto, except that with respect to
forms submitted within two hundred seventy (270) days after
promulgation of this Part, no such forms shall be issued until the
expiration of ninety (90) days unless the Director shall sooner give
his written approval.
1.11.3 Hearing
A. The Director of Business
Regulation may, with or without a public hearing as provided for in
R.I. Gen. Laws § 42-62-13, within sixty (60) days, except that
ninety (90) days shall apply to forms submitted for approval within
two hundred seventy (270) days after promulgation of this Part, after
filing of any such form disapprove such form:
1. if the benefits provided
therein are unreasonable in relation to the premium charged, or
2. if it contains a provision
or provisions which are unjust, unfair, inequitable, misleading,
deceptive or encourage misrepresentation of such contract. If the
Director of Business Regulation shall notify the insurer which has
filed any such form that it does not comply with all applicable laws
and regulations, it shall be unlawful thereafter for such insurer to
issue such form or use it in connection with any contract. In such
notice the Director of Business Regulation shall specify the reasons
for his disapproval.
1.11.4 Withdrawal of
Approval
The director of Business
Regulation may at any time, after a hearing of which not less than
twenty (20) days written notice shall have been given to the insurer,
withdraw his approval of any such form on any of the grounds stated §
1.11 of this Part. The insurer may not issue such form or use it in
connection with any contract after the effective date of such
withdrawal of approval.
1.11.5 Form of Contracts
A. The style, arrangement and
over-all appearance of the contract shall give no undue prominence to
any portion of the text, and every printed portion of the text of the
contract and of any endorsements or attached papers shall be plainly
printed in light-faced type of a style in general use, the size of
which shall be uniform and not less than ten-point with a lower-case
unspaced alphabet length not less than one hundred and twenty (120)
point (the "text" shall include all printed matter except
the name and address of the insurer, name or title of the contract,
the brief description if any, and captions and subcaptions); and
B. The exceptions and
reductions of indemnity shall be set forth in the contract and,
except those which are set forth in R.I. Gen. Laws §§ 27-18-3 to
27-18-10 inclusive, if such sections are applicable to such contract,
are printed at the insurer's option, either included with the benefit
provisions to which they apply, or under an appropriate caption such
as "EXCEPTIONS," or "EXCEPTIONS AND REDUCTIONS,"
provided that if an exception or reduction specifically applies only
to a particular benefit of the contract, a statement of such
exception or reduction shall be included with the benefit provision
to which it applies; and
C. Each form shall bear a
unique form number printed in the lower left-hand corner of such
form. All numbers, letters and other symbols appearing in the lower
left-hand corner shall together constitute the entire form number,
and any change in that number shall require filing as a separate
form.
D. Each form shall contain no
provision purporting to make any portion of the charter, rules,
constitution, or by-laws of the insurer a part of the contract unless
such portion is set forth in full in the contract, except in the case
of the incorporation of, or reference to a statement of rates or
classification of risks, or short-rate table filed with the insurance
commissioner.
1.11.6 Submission
Instructions
A. Forms submitted for
approval in accordance with § 1.11 of this Part must be submitted as
follows:
1. A letter in triplicate must
be included with each submission which:
a. specifies the form number
and title of each form being submitted;
b. generally describes the
purpose of each form;
c. states whether the form is
new or a replacement of any existing form and describes by title and
form number any forms being replaced;
d. with respect to
applications and other forms which have been previously approved and
are submitted in support of such filing, states the date(s) of
approval of such form(s).
2. One specimen copy of each
form in final printed form including a specimen of the application,
if any, to be used with such form, whether or not such application
has been previously approved (two copies if the insurer wishes to
have a stamped copy returned for its records) with all blanks in the
printed form filled in with hypothetical information, except that no
hypothetical information is required on application forms. With
respect to rider, endorsement or other amendment forms for use with
individual health benefit contracts, one specimen copy of each
contract form to which it will be attached, whether or not such
contract form has been previously approved.
3. One specimen copy of each
rate schedule or rating formula together with all required actuarial
data as outlined in § 1.11.7(A)(1) and (2) of this Part.
4. A stamped, self-addressed
envelope.
1.11.7 Rates
A. To the extent appropriate,
rates submitted in accordance with § 1.11 of this Part should be
submitted in duplicate, including complete rate schedules accompanied
by the following supporting data:
1. For rates applied to new
individual contract forms - A signed statement from an actuary giving
the methods and assumptions used to determine the proposed premium
rates including the formulas used to calculate gross premiums. The
statement as to the assumptions used should give the exact source of
the claim costs or other experience data on which the premium
calculations are based and the source of any multipliers or other
factors used to adjust such claim costs or other experience data to
reflect the benefits provided.
a. If published experience is
used, state the page and table number of the source. Unless
published, the basic experience data (for example, claim costs) and
adjustment factors should be included with such description. When the
basic claim costs or other data are shown for age groupings, for
example, quinquennial or decennial ages, state the method used to
obtain the required values at intermediate ages.
b. Indicate where judgment is
used to determine any adjustment factors applied to basic experience
data.
c. Indicate any modifications
used to reflect the effect of selection or to allow for future
increases in claim costs.
d. A statement as to the
contract termination rates used.
e. A statement of the methods
used to incorporate margins for profit and contingencies in the
premium rates.
f. If the contract is
participating, give a statement as to the methods used to determine
anticipated dividends.
g. A detailed statement of all
expense assumptions including commissions, taxes, claims handling,
and administrative expenses made in the premium calculations, and
indicating allowances for future increase in expenses.
h. A statement of the expected
benefit loss ratios at representative issue ages and an estimated
composite benefit loss ratio indicating the distribution of issue
ages for both males and females used to determine such composite loss
ratio.
i. A statement summarizing the
type of benefit provided, the range of benefits offered, and the
average size of the benefits assumed.
j. A statement as to how gross
premiums were calculated including the formula used.
2. For changes in rates that
apply to presently-approved individual contract forms;
a. A statement of all premiums
(both received and earned), and claims (both paid and incurred) and
expenses incurred for each of the previous five (5) years;
b. A statement of the actual
benefit loss ratio on both a cash basis and on an incurred claim to
earned premium basis;
c. A statement of the approval
date of the rate currently in use and the anticipated benefit loss
ratio at the time the rate was approved;
d. A statement of the total
number of contracts in force, to which the above rates will apply;
e. A statement of the total
number of contracts in force, to which the above rates will apply, in
Rhode Island.
f. A copy of the contract,
rider, and/or endorsements for which the rates apply.
g. A copy of the rate schedule
now in use and the rate schedule which reflects the proposed rate
increase.
3. For rates that apply to new
group and blanket contract forms and changes in rates that apply to
presently-approved group and blanket contract forms;
a. One copy of each rate
schedule, rating formula or formulas, or manual must be submitted.
Upon receipt of manuals, formulas, or rate schedules, the Director of
Business Regulation may request actuarial data and other pertinent
information.
b. An outline of the essential
benefits, coverages, limitations and exclusions to which such rates
shall apply.
4. The Director may approve,
disapprove or modify rates, with or without a public hearing, as
provided in R.I. Gen. Laws § 42-62-13.
5. With respect to insurers,
as defined in R.I. Gen. Laws § 42-62-4(c) that are not insurance
companies subject to R.I. Gen. Laws Chapter 27-1 and R.I. Gen. Laws
Chapter 27-2 the Director may waive any or all of the requirements of
§ 1.11.7 of this Part and establish, through written correspondence
or in the course of the review of filings and the conduct of public
hearings, other statements or exhibits which he deems more
appropriate to the review of rates proposed by such insurers.
1.12 Advertising Rules and
Guidelines for Interpretation
1.12.1 Purpose
A. The purpose of § 1.12 of
this Part is to assure truthful and adequate disclosure of all
material and relevant information in the advertising of health
benefits. This purpose is to be accomplished by the establishment of,
and adherence to, certain minimum standards and guidelines of conduct
in the advertising of health benefits in a manner which prevents
unfair competition among insurers and is conducive to the accurate
presentation and description to the public of such benefits offered
through various advertising media.
B. Guideline 1
1. Disclosure is one of the
principal objectives of these rules and § 1.12.1 of this Part states
specifically that the rules shall assure "truthful and adequate
disclosure of all material and relevant information". These
rules specifically prohibit some previous advertising techniques.
1.12.2 Applicability
A. § 1.12 of this Part shall
apply to any health benefits "advertisement," as that term
is hereinafter defined in § 1.12.3(A), (F), (G), (H) of this Part
unless otherwise specified in § 1.12 of this Part, intended for
presentation, distribution or dissemination in the State of Rhode
Island where such presentation, distribution or dissemination is made
either directly or indirectly by or on behalf of an insurer or agent,
as defined in this Part.
B. Guideline 2-A
1. These rules apply to any
"advertisement" as that term is defined in § 1.12.3(A),
(F), (G), (H) of this Part unless otherwise specified in the rules.
2. These rules apply to group
and blanket as well as individual health benefit contracts. Certain
distinctions, however, are applicable to these categories.
3. Among them is the level of
conversance with insurance, a factor which is covered by § 1.12.5(A)
of this Part.
C. Every insurer shall
establish and at all times maintain a system of control over the
content, form and method of dissemination of all advertisements of
its health benefit contracts. All such advertisements, regardless of
by whom written, created, designed, or presented, shall be the
responsibility of the insurer whose health benefit contracts are so
advertised.
D. Guideline 2-B
1. Advertising materials which
are reproduced in quantity shall be identified by form numbers or
other identifying means in the case of advertisements not subject to
the requirements of § 1.12.13 of this Part. Such identification
shall be sufficient to distinguish an advertisement from other
advertising materials, health benefit contracts, applications or
other materials used by the insurer.
1.12.3 Definitions
A. An advertisement for the
purpose of § 1.12 of this Part shall include:
1. printed and published
material, audio visual material, and descriptive literature of an
insurer used in direct mail, newspapers, magazines, radio scripts, TV
scripts, billboards, and similar displays;
2. descriptive literature and
sales aids of all kinds issued by an insurer or agent, as defined in
this Part for presentation to members of the insurance buying public,
including but not limited to circulars, leaflets, booklets,
depictions, illustrations, and form letters; and
3. prepared sales talks,
presentations, and material for use by agents and other sales
representatives.
B. Guideline 3-A
1. The scope of the term
"advertisement" extends to the use of all media for
communication to the general public § 1.12.3(A)(1) of this Part to
the use of all media for communication to specific members of the
general public § 1.12.3(A)(2) of this Part and to the use of all
media for communication by agents, brokers, and solicitors.
2. The definition of
"advertisement" includes advertising material included with
a contract when the contract is delivered and material used in the
solicitation of renewals and reinstatements.
3. The definition of
"advertisement" does not include:
a. material to be used solely
for the training and education of an insurer's employees, agents, or
brokers;
b. material in house organs or
insurers;
c. communications within an
insurer's own organization not intended for dissemination to the
public;
d. individual communications
of a personal nature with current contract holders other than
material urging such contract holders to increase or expand
coverages;
e. correspondence between a
prospective group or blanket contractholder and an insurer in the
course of negotiating a group or blanket contract;
f. court approved material
ordered by a court to be disseminated to contract holders; or
g. a general announcement from
a group or blanket contractholder to eligible individuals on an
employment or membership list that a contract or program has been
written or arranged; provided, the announcement clearly indicates
that it is preliminary to the issuance of a booklet.
C. "Exception" for
the purpose of § 1.12 of this Part means any provision in a contract
whereby coverage for a specified hazard is entirely eliminated; it is
a statement of a risk not assumed under the contract.
D. "Reduction" for
the purpose of § 1.12 of this Part means any provision which reduces
the amount of the benefit; a risk of loss is assumed but payment upon
the occurrence of such loss is limited to some amount or period less
than would be otherwise payable had such reduction not been used.
E. "Limitation" for
the purpose of § 1.12 of this Part means any provision which
restricts coverage under the contract other than an exception or a
reduction.
F. "Institutional
Advertisement" for the purpose of § 1.12 of this Part means an
advertisement having as its sole purpose the promotion of the
Reader's or viewer's interest in the concept of health benefits, or
the promotion of the insurer.
G. "Invitation to
Inquire" for the purpose of § 1.12 of this Part means an
advertisement having as its objective the creation of a desire to
inquire further about the product and which is limited to a brief
description of the loss for which the benefit is payable, and which
may contain:
1. The dollar amount of
benefit payable, and/or
2. The period of time during
which the benefit is payable, provided the advertisement does not
refer to cost. An advertisement which specifies either the dollar
amount of benefit payable or the period of time during which the
benefit is payable shall contain a provision in effect as follows:
a. "For costs and further
details of the coverage, including exclusions, any reductions or
limitations and the terms under which the health benefit contract may
be continued in force, see your agent or write to the company."
H. "Invitation to
Contract" for the purpose of § 1.12 of this Part means an
advertisement which is neither an invitation to inquire nor an
institutional advertisement.
1.12.4 Method of Disclosure
of Required Information
A. All information required to
be disclosed by § 1.12 of this Part shall be set out conspicuously
and in close conjunction with the statements to which such
information relates or under appropriate captions of such prominence
that it shall not be minimized, rendered obscure or presented in an
ambiguous fashion or intermingled with the context of the
advertisement so as to be confusing or misleading.
B. Guideline 4
1. This rule permits the use
of either of the following alternative methods of disclosure:
a. The first alternative
provides for the disclosure of exceptions, limitations, reductions
and other restrictions conspicuously and in close conjunction with
the statements to which such information relates. This may be
accomplished by disclosure in the description of the related benefits
or in a paragraph set out in close conjunction with the description
of contract benefits.
b. The second alternative
provides for the disclosure of exceptions, limitations, reductions
and other restrictions not in conjunction with the provisions
describing contract benefits but under appropriate captions of such
prominence that the information shall not be minimized, rendered
obscure or otherwise made to appear unimportant. The phrase "under
appropriate captions" means that the title must be accurately
descriptive of the captioned material. Appropriate captions include
the following: "Exceptions," "Conditions Not Covered,"
and "Exceptions and Reductions." The use of captions such
as, or similar to, the following are not acceptable because they do
not provide adequate notice of the significance of the material:
"Extent of Coverage," "Only These Exclusions," or
"Minimum Limitations".
c. In considering whether an
advertisement complies with the disclosure requirements of this rule,
the rule must be applied in conjunction with the form and content
standards contained in § 1.12.5 of this Part.
1.12.5 Form and Content of
Advertisements
A. The format and content of
an advertisement of a health benefit contract shall be sufficiently
complete and clear to avoid deception or the capacity or tendency to
mislead or deceive. Whether an advertisement has a capacity or
tendency to mislead or deceive shall be determined by the Director of
Business Regulation or his designee from the overall impression that
the advertisement may be reasonably expected to create upon a person
of average education or intelligence, within the segment of the
public to which it is directed.
1. Guideline 5-A
a. This rule must be applied
in conjunction with §§ 1.12.1 and 1.12.4 of the rules. This rule
refers specifically to "format and content" of the
advertisement and the "overall" impression created by the
advertisement. This involves factors such as, but not limited to, the
size, color and prominence of type used to describe benefits. The
word "format" means the arrangement of the text and the
captions.
b. This rule requires
distinctly different advertisements for publication in newspapers or
magazines of general circulation as compared to scholarly, technical
or business journals or newspapers. Where an advertisement consists
of more than one piece of material, each piece of material must,
independent of all other pieces of material, conform to the
disclosure requirements applicable to the appropriate form of
advertisement as defined in § 1.12.3(F) through (H) of this Part.
B. Advertisements shall be
truthful and not misleading in fact or in implication. Words or
phrases, the meaning of which is clear only by implication or by
familiarity with insurance terminology, shall not be used.
1. Guideline 5-B
a. This rule prohibits the use
of incomplete statements and words or phrases which have the tendency
or capacity to mislead or deceive because of the reader's
unfamiliarity with insurance terminology. Therefore, words, phrases
and illustrations used in an advertisement must be clear and
unambiguous and, if the advertisement uses insurance terminology,
sufficient description of a word, phrase or illustration shall be
provided by definition or description in the context of the
advertisement. As implied in § 1.12.5(A) of this Part, distinctly
different levels of comprehension may be anticipated of the
subscribers of various publications.
1.12.6 Advertisements of
Benefits Payable, Losses Covered or Premiums Payable
A. Deceptive Words, Phrases,
or Illustrations Prohibited.
1. No advertisement shall omit
information or use words, phrases, statements, references or
illustrations if the omission of such information or use of such
words, phrases, statements, references, or illustrations has the
capacity, tendency, or effect of misleading or deceiving purchasers
or prospective purchasers as to the nature or extent of any health
benefit payable, loss covered or premium payable. The fact that the
health benefit contract is made available to a prospective insured
for inspection prior to consummation of the sale or an offer is made
to refund the premium if the purchaser is not satisfied, does not
remedy misleading statements.
2. Guideline 6-A(1)
a. This rule prohibits words,
phrases or illustrations which create deception to the reader by
omission or commission. The following examples are illustrations of
the prohibitions created by the rule.
(1) An advertisement which
describes any benefits that vary by age must disclose that fact.
(2) An advertisement which
uses a phrase such as "no age limit," if benefits or
premiums vary by age or if age is an underwriting factor, must
disclose that fact.
(3) Advertisements,
applications, requests for additional information and similar
material are unacceptable if they state or imply that the recipient
has been individually selected to be offered insurance or has had his
eligibility for such insurance individually determined in advance
when the advertisement is directed to all persons in a group or to
all persons whose names appear on a mailing list.
(4) Advertisements which
indicate that a particular coverage or health benefit contract is
exclusively for "preferred risks" or a particular segment
of the population are acceptable risks, when such distinctions are
not maintained in the issuance of health benefit contracts, are not
acceptable.
(5) Advertisements for group
and franchise group plans which provide a common benefit or a common
combination of benefits shall not imply that the insurance coverage
is tailored or designed specifically for that group, unless such is
the fact.
(6) It is unacceptable to use
terms such as "enroll" or "join" to imply group
or blanket insurance coverage when such is not the fact.
(7) Any advertisement which
contains statements such as "anyone can apply," or "anyone
can join" other than with respect to a guaranteed issue health
benefit contract for which administrative procedures exist to assure
that the health benefit contract is issued within a reasonable period
of time after the application is received by the insurer is
unacceptable.
(8) An advertisement which
states or implies immediate coverage or guaranteed issuance of a
health benefit contract is unacceptable unless suitable
administrative procedures exists so that the health benefit contract
is issued within a reasonable period of time after the application is
received by the insurer.
(9) Any advertisement which
uses any phrase or term such as "here is all you do to apply,"
"simply" or "merely" to refer to the act of
applying for a health benefit contract which is not a guaranteed
issue health benefit contract is unacceptable, unless it refers to
the fact that the application is subject to acceptance or approval by
the insurer.
(10) Applications, request
forms for additional information and similar related materials are
unacceptable if they resemble paper currency, checks, bonds, stock
certificates, etc.
(11) No advertisement shall
employ devices which are designed to create undue fear or anxiety in
the minds of those to whom they are directed. Unacceptable examples
of such devices are:
(AA) The use of phrases such
as "cancer kills somebody every two minutes" and "total
number of accidents" without reference to the total population
from which such statistics are drawn. (As an example of a permissible
device, data prepared by the American Cancer Society are acceptable
provided their source is noted and they are not overemphasized),
(BB) The use of phrases such
as "the finest kind of treatment," implying that such
treatment would be unavailable without insurance;
(CC) The reproduction of
newspaper articles, etc., containing irrelevant facts and figures;
(DD) The use of illustrations
which unduly emphasize automobile accidents, crippled persons or
persons confined in beds who are in obvious distress or receiving
hospital or medical bills or persons being evicted from their homes
due to their inability to pay hospital bills;
(EE) The use of phrases such
as "financial disaster," "financial distress,"
"financial shock," or other phrases implying that financial
ruin is likely without insurance, where used in an advertisement
which comes within § 1.12.6(A)(2)(a)(7) of this Part relating to
contracts covering specified illnesses or specified accidents only.
(12) An advertisement which
uses the word "plan" without identifying it as an
"insurance plan" is not permissible unless such plan is in
fact, not an insurance plan or unless specific provisions in the
General Laws of Rhode Island declare that it is not an insurance
plan.
(13) An advertisement which
implies in any manner that the prospective insured may realize a
profit from obtaining hospital, medical, or surgical coverage is not
acceptable.
(14) An advertisement shall
not state or imply by word, phrase, or illustration that the benefits
being offered will supplement any other insurance policy,
insurance-type concept, or governmental plan if such is not the fact.
(15) An advertisement of a
hospital or other similar facility confinement benefit that makes
reference to the benefit being paid directly to the insured is
misleading unless, in making such a reference, the advertisement
includes a statement that the benefits may be paid directly to the
hospital or other health care facility if an assignment of benefits
is made by the insured. An advertisement of medical and surgical
expense benefits shall comply with this § 1.12 of Part in regard to
the disclosure of assignments of benefits to providers of services.
Phrases such as "you collect," "you get paid,"
"pays you," or other words or phrases of similar import are
acceptable so long as the advertisement indicates that it is payable
to the insured or someone designated by the insured.
(16) An advertisement which
refers to "hospitalization for injury or sickness" omitting
the word "covered" when the health benefit contract
excludes certain sicknesses or injuries is unacceptable. Continued
reference to "covered injury or sickness" is not necessary
where this fact has been prominently disclosed in the advertisement
and where the descriptions of sicknesses or injuries not covered are
prominently set forth.
(17) An advertisement which
refers to "whenever you are hospitalized" or "while
you are confined in the hospital" omitting the phrase "for
covered injury or sickness," if the health benefit contract
excludes certain injuries or sickness, is unacceptable. Continued
reference to "covered injury or sickness" is not necessary
where this fact has been prominently disclosed in the advertisement
and where the description of sicknesses or injuries not covered are
prominently set forth.
(18) Advertisements which
state that benefits are provided when "you go to the hospital"
are unacceptable unless the advertisement clearly sets forth the
extent of the coverage.
(19) An advertisement which
fails to disclose any waiting or elimination periods for specific
benefits is unacceptable.
(20) An advertisement for a
limited health benefit contract, or hospital indemnity contract, or a
plan of insurance which covers only certain causes of loss (such as
dread disease) or which covers only a certain type of loss (such as
hospital confinement) is unacceptable if:
(AA) the advertisement refers
to a total benefit maximum limit payable under the health benefit
contract in any headline, lead-in or caption without also in the same
headline, lead-in or caption specifying the applicable daily limits
and other internal limits;
(BB) the advertisement states
any total benefit limits without stating the periodic benefit
payment, if any, and the length of time the periodic benefit would be
payable to reach the total benefit limit;
(CC) the advertisement
prominently displays a total benefit limit which would not, as a
general rule, be payable under an average claim.
(21) Advertisements which
emphasize total amounts payable under hospital, medical, or surgical
coverage or other benefits in a health benefit contract, such as
benefits for private duty nursing, are unacceptable unless the actual
amounts payable per day for such indemnity or benefits are stated.
(22) Examples of what benefits
may be paid under the health benefit contract shall not disclose only
maximum benefits unless such maximum benefits are paid for loss from
common and probable illnesses or accidents rather than exceptional or
rare illnesses or accidents or periods of confinement for such
exceptional or rare accidents or illnesses.
(23) When a range of benefit
levels is set forth in an advertisement, it must be made clear that
the insured will receive only the benefit level written or printed in
the health contract selected and issued. Language which implies that
the insured may select the benefit level at the time of filing claims
is unacceptable.
(24) Advertisements for health
benefit contracts whose premiums are modest because of their limited
coverage or limited amount of benefits shall not describe premiums as
"low," "low cost," "budget," or use
qualifying words of similar import. § 1.12 of this Part also
prohibits the use of words such as "only" and "just"
in conjunction with statements of premium amounts when used to imply
a bargain.
(25) Advertisements which
state or imply that premiums will not be changed in the future are
not acceptable unless the advertised health benefit contracts so
provide.
(26) An advertisement which
does not require the premium to accompany the application must not
over-emphasize that fact and must make the effective date of the
coverage clear.
(27) An advertisement which
exaggerates the effect of statutorily mandated benefits or required
health benefit contract provisions or which implies that such
provisions are unique to the advertised health benefit contract is
unacceptable. For example, the phrase, "Money Back Guarantee"
is an exaggerated description of the ten-day right to examine the
health benefit contract and is not acceptable.
(28) An advertisement which
implies that a common type of health benefit contract or a
combination of common benefits is "new," "unique,"
"a bonus," "a break- through," or is otherwise
unusual is unacceptable. Also, the addition of a novel method of
premium payment to an otherwise common plan of insurance does not
render it "new."
(29) An advertisement which is
an invitation to contract which fails to disclose the amount of any
deductible and/or the percentage of any coinsurance factor is
unacceptable.
(30) An advertisement which
fails to state clearly the type of coverage being offered is not
acceptable.
(31) Language which states or
implies that each member under a "family" contract is
covered as to the maximum benefits advertised, where such is not the
fact, is unacceptable.
(32) The importance of
diseases rarely or seldom found in the class of person to whom the
health benefit contract is offered shall not be exaggerated in an
advertisement.
(33) A television, radio,
mail, or newspaper advertisement which is designed to produce leads
either by use of a coupon or a request to write to the company or a
subsequent advertisement prior to contact must include information
disclosing that an agent may contact the applicant if such is the
fact.
(34) Advertisements for health
benefit contracts designed to supplement Medicare or which are
otherwise designed for issue to the elderly shall not employ devices
which are designed to create undue anxiety in the minds of such
persons. Such phrases as "here is where most people over 65
learn about the gaps in Medicare," or "Medicare is great,
but…" or which otherwise exaggerate the gaps in Medicare
coverage are unacceptable. Phrases or devices which unduly excite
fear of dependence upon relatives or charity are unacceptable.
Phrases or devices which imply that long sicknesses or hospital stays
are common among the elderly are unacceptable.
(35) An advertisement implying
that the coverage is supplemental to Medicare, if it does not explain
the manner in which it is supplemental to Medicare coverage, is not
acceptable.
(36) An advertisement for a
health benefit contract designed to supplement benefits under
Medicare is unacceptable if the advertisement:
(AA) fails to disclose in
clear language which of the Medicare benefits the health benefit
contract is designed to supplement and which of the Medicare benefits
the health benefit contract is not designed to supplement or if it
otherwise implies that Medicare provides only those benefits which
the health benefit contract is designed to supplement;
(BB) describes the in-patient
hospital coverage of Medicare as "hospital Medicare" or
"Medicare Part AA" when the health benefit contract does
not supplement the non-hospital or the psychiatric hospital benefits
of Medicare Part A (phrases to the effect of "the in-hospital
portion of Medicare Part A" are acceptable);
(CC) fails to clearly describe
the operation of the Part of Parts of Medicare which the health
benefit contract is designed to supplement;
(DD) describes those Medicare
benefits not supplemented by the health benefit contract in such a
way as to minimize their importance relative to the Medicare benefits
which are supplemented.
3. No advertisement shall
contain or use words or phrases such as "all;" "full;"
"complete;" "comprehensive;" "unlimited;"
"up to;" "as high as;" "this policy will
help fill some of the gaps that Medicare and your present insurance
leave out;" or similar words and phrases, in a manner which
exaggerates any benefits beyond the terms of the health benefit
contract
4. Guideline 6-A(2)
a. This rule recognizes that
certain words and phrases in advertising may have a tendency to
mislead the public as to the extent of benefits under an advertised
contract. Consequently, such terms (and those specified in the rule
do not represent a comprehensive list but only examples) must be used
with caution to avoid any tendency to exaggerate benefits and must
not be used unless the statement is literally true in every instance.
The use of the following phrases based on such terms or having the
same effect must be similarly restricted: "pays hospital,
surgical, etc., bills," "pays dollars to offset the cost of
medical care," "safeguards your standard of living,"
"pays full coverage," "pays complete coverage,"
or "pays for financial needs." Other phrases may or may not
be acceptable depending upon the nature of the coverage being
advertised. For example, the phrase "this policy will help to
replace your income" is unacceptable in advertising for hospital
confinement (including "hospital indemnity") coverage.
b. This rule also prohibits
words or phrases which exaggerate the effect of benefit payment on
the insured's general well-being, such as "worryfree savings
plan," "guaranteed savings," "financial peace of
mind," and "you will never have to worry about hospital
bills again".
c. Advertisements for
contracts designed to supplement Medicare benefits are unacceptable
if they fail to disclose that no hospital confinement benefits will
be payable for that portion of a Medicare benefit period for which
Medicare pays all hospital confinement expenses, currently sixty (60)
days, other than the initial deductible if the contract so provides.
The length of said period must be stated in days.
5. An advertisement shall not
contain descriptions of a health benefit contract limitation,
exception, or reduction, worded in a positive manner to imply that it
is a benefit, such as, describing a waiting period as a "benefit
builder," or stating "even pre-existing conditions are
covered after two years." Words and phrases used in an
advertisement to describe such health benefit contract limitations,
exceptions and reductions shall fairly and accurately describe the
negative features of such limitations, exceptions, and reductions of
the health benefit contract offered.
6. Guideline 6-A(3)
a. Explanations must not
minimize nor describe restrictive provisions in a positive manner.
Negative features must be accurately set forth. Any limitations on
benefits precluding pre-existing conditions must also be restated
under a caption concerning exclusions or limitations, notwithstanding
that the pre-existing condition exclusion has been disclosed
elsewhere in the advertisement. (See Guideline 6-C(1) for additional
comments on pre-existing conditions.)
b. No advertisement of a
benefit for which payment is conditional upon confinement in a
hospital or similar facility shall use words or phrases such as "tax
free," "extra cash," "extra income," "extra
pay," or substantially similar words or phrases because such
words and phrases have the capacity, tendency or effect of misleading
the public into believing that the health benefit contract advertised
will, in some way, enable them to make a profit from being
hospitalized.
7. Guideline 6-A(4)
a. The words, phrases,
illustrations and concepts listed are illustrations of the words,
phrases, illustrations, and concepts prohibited by the rule which
create the impression of a profit or gain to be realized by the
insured when hospitalized.
b. Illustrations which depict
paper currency or checks showing an amount payable are deceptive and
misleading and are not permissible.
c. A hospital indemnity
advertisement shall not include language such as "pay for a trip
to Florida," "buy a new television," or otherwise
imply that the insured will make a profit on hospitalization.
d. An advertisement which uses
words such as "extra," "special," or "added"
to describe any benefit in the contract is unacceptable.
e. Although the rule prohibits
the use of the phrase "tax free," it does not prohibit the
use of complete and accurate terminology explaining the Internal
Revenue Service rules applicable to the taxation of accident and
sickness benefits. The IRS rules provide that the premiums paid for
and the benefits received from hospital indemnity policies are
subject to the same rules as loss of time premiums and benefits and
are not afforded the same favorable tax treatment as premiums for
expense incurred hospital, medical, and surgical benefit coverages.
(Rev. Rule. 68-451 and Rev. Rule. 69-154.) Prominence either to
caption, lead-in, boldface, or large type shall not be given in any
manner to any statements relating to the tax status of such benefits.
8. No advertisement of a
hospital or other similar facility confinement benefit shall
advertise that the amount of the benefit is payable on a monthly or
weekly basis when, in fact, the amount of the benefit payable is
based upon a daily pro rata basis relating to the number of days of
confinement. When the health benefit contract contains a limit on the
number of days of coverage provided, such limit must appear in the
advertisement.
9. Guideline 6-A(5)
a. This rule requires that
benefits payable on a daily basis be stated as such and not on the
basis of weekly or monthly equivalents. The rule also requires
disclosure of the period of coverage provided by the contract.
(1) No advertisement of a
health benefit contract covering only one disease or a list of
specified diseases shall imply coverage beyond the terms of the
health benefit contract. Synonymous terms shall not be used to refer
to any disease so as to imply broader coverage than is the fact.
(2) An advertisement for a
health benefit contract providing benefits for specified illnesses
only, such as cancer, or for specified accidents only, such as
automobile accidents, shall clearly and conspicuously, in prominent
type, state the limited nature of the health benefit contract. The
statement shall be worded in language identical to or substantially
similar to the following: "THIS IS A LIMITED CONTRACT;"
"THIS IS A CANCER ONLY CONTRACT;" "THIS IS AN
AUTOMOBILE ACCIDENT ONLY CONTRACT."
(3) An advertisement of a
direct response insurance product shall not imply that because "no
insurance agent will call and no commissions will be paid to agents
that it is "a low cost plan," or use other similar words or
phrases.
10. Guideline 6-A(8)
a. This rule should be applied
in conjunction with § 1.12.11 of this Part. Phrases such as "we
cut cost to the bone" or "we deal direct with you so our
costs are lower" shall not be used.
B. Exceptions, Reductions, and
Limitations.
1. When an advertisement which
is an invitation to contract refers to either a dollar amount, or a
period of time for which any benefit is payable, or the cost of the
health benefit contract, or specific health benefit, or the loss for
which such benefit is payable, it shall also disclose those
exceptions, reductions, and limitations affecting the basic
provisions of the health benefit contract without which the
advertisement would have the capacity or tendency to mislead or
deceive.
2. Guideline 6-B(1)
a. The extent of disclosure
required by this rule depends upon the type of advertisement. An
institutional advertisement as defined in § 1.12.3(F) of this Part
is not subject to this rule. An advertisement which is an invitation
to inquire as defined in § 1.12.3(G) of this Part which mentions
either the dollar amount of benefit payable or the period of time
during which the benefit is payable must include a reference to the
existence of exceptions, reductions, and limitations in the manner
required by § 1.12.3(G) of this Part. An advertisement which is an
invitation to contract as defined in § 1.12.3(H) of this Part must
recite the exceptions, reductions, and limitations as required by the
rule and in a manner consistent with § 1.12.4 of this Part.
b. If an exception, reduction,
or limitation is important enough to use in a contract, it is of
sufficient importance that its existence in the contract should be
referred to in the advertisement regardless of whether it may also be
subject matter of a provision of the Uniform Individual Accident and
Sickness Policy Provision Law.
c. Some Advertisements
disclose exceptions, reductions, and limitations as required, but the
advertisement is so lengthy as to obscure the disclosure. Where the
length of an advertisement has this effect, special emphasis must be
given by changing the format to show the restrictions in a manner
which does not minimize, render obscure or otherwise make them appear
unimportant.
3. When a health benefit
contract contains a waiting, elimination, probationary, or similar
time period between the effective date of the health benefit contract
and the effective date of coverage under the health benefit contract
or a time period between the date loss occurs and the date benefits
begin to accrue for such loss, an advertisement which is subject to
the requirements of the preceding paragraph shall disclose the
existence of such periods.
4. Guideline 6-B(2)
a. This rule imposes the same
disclosure standards as the preceding with respect to contract
provision providing for waiting, elimination, probationary, or
similar time periods, between the effective date of the contract and
the effective date of coverage under the contract or a time period
between the date a loss occurs and the date benefits begin to accrue
from such loss. The comments under § 1.12.6(B)(1) of this Part are
equally applicable to this Subsection. Where a contract has waiting,
elimination, probationary, or other such time periods, such
provisions must be stated in negative terms. This requirement is
comparable to that contemplated in § 1.12.6(A)(5) of this Part as to
exceptions, reductions, and limitations.
b. An advertisement for a
contract designed to supplement Medicare benefits is unacceptable if
it fails to disclose that no hospital confinement benefits will be
payable for that portion of a Medicare benefit period, currently 60
days, for which Medicare pays all hospital confinement expenses other
than the initial deductible, if the contract so provides. The length
of said period must be stated in days.
5. An advertisement shall not
use the words "only;" "just;" "merely;"
"minimum;" or similar words or phrases to describe the
applicability of any exceptions and reductions, such as: "This
contract is subject to the following minimum exceptions and
reductions”
6. Guideline 6-B (3)
a. This rule is similar to §
1.12.6(A)(5) of this Part and requires a fair and accurate
description of exceptions, limitations, and reductions in a manner
which does not minimize, render obscure or otherwise make them appear
unimportant.
b. Advertisements must state
exceptions, limitations, and reductions in the negative and must not
understate any exception, limitation, or reduction or qualify any
exception, limitation, or reduction to emphasize coverage described
elsewhere (e.g., "Does not pay for__________, however, Medicare
pays this" is not acceptable, nor is "Does not pay for the
first four days in hospital for sickness, but pays for accident from
first day"). (Underscoring indicates the manner in which
statements are sometimes emphasized.)
c. This rule prohibits the use
of any term, such as "just," "only," "merely,"
"necessary," or "minimum" to describe any
exclusion, limitation, reduction, or exception.
C. Pre-Existing Conditions.
1. An advertisement which is
subject to the requirements of Section 6(B) shall, in negative terms,
disclose the extent to which any loss is not covered if the cause of
such loss is traceable to a condition existing prior to the effective
date of the health benefit contract. The use of the term
"pre-existing condition" without an appropriate definition
or description shall not be used.
2. Guideline 6-C (1)
a. This rule imposes the same
disclosure standards with respect to pre-existing conditions
provisions as noted in § 1.12.6(B)(2) of this Part. The comments
under that Guideline are equally applicable to this subsection of the
rules since the pre- existing conditions provision is an exception
under the rules.
b. This rule implements the
objective of § 1.12.6(A)(3) of this Part by requiring in negative
terms a description of the effect of a pre-existing condition
exclusion because such an exclusion is a restriction on coverage. The
subdivision also prohibits the use of the phrase "pre-existing
condition" without an appropriate definition or description of
the term and prohibits stating a reduction in the statutory time
limit (such as a reduction from three years to two years or to one
year) as an affirmative benefit. The words "appropriate
definition or description" mean that the term "pre-existing
condition" must be defined as it is used by the company's claims
department.
3. When a health benefit
contract does not cover losses resulting from pre- existing
conditions, no advertisement of the health benefit contract shall
state or imply that the applicant's physical condition or medical
history will not affect the issuance of the health benefit contract
or payment of a claim thereunder. § 1.12 of this Part prohibits the
use of the phrase "no medical examination required" and
phrases of similar import, but does not prohibit explaining
"automatic issue." If an insurer requires a medical
examination for a specified health benefit contract, the
advertisement, if it is an invitation to contract, shall disclose
that a medical examination is required.
4. Guideline 6-C (2)
a. The phrase "no health
questions" or words of similar import shall not be used if the
contract excludes pre-existing conditions.
b. Use of a phrase such as
"guaranteed issue" or "automatic issue," if the
contract excludes pre-existing conditions for a certain period, must
be accompanied by a statement disclosing that fact in a manner which
does not minimize, render, obscure, or otherwise make it appear
unimportant and is otherwise consistent with § 1.12.4 of this Part.
5. When an advertisement
contains an application form to be completed by the applicant and
returned by mail for a direct response insurance product, such
application form shall contain a question or statement which reflects
the pre-existing condition provisions of the health benefit contract
immediately preceding the blank space for applicant's signature. For
example, such an application form shall contain a question or
statement substantially as follows:
a. Do you understand that this
health benefit contract will not pay benefits for any loss incurred
during the first ____ year(s) after the issue date for a disease or
physical condition which you now have or have had in the past? ____
YES.
b. Or substantially the
following statement:
(1) I understand that the
health benefit contract applied for will not pay benefits for any
loss incurred during the first ____ year(s) after the issue date on
account of disease or physical condition which I now have or have had
in the past.
1.12.7 Necessity for
Disclosing Health Benefit Contract Provisions Relating to
Renewability, Cancellability, and Termination
A. When an advertisement which
is an invitation to contract refers to either a dollar amount or a
period of time for which any benefit is payable, or the cost of the
health benefit contract, or specific health benefit contract benefit,
or the loss for which such benefit is payable, it shall disclose the
provisions relating to renewability, cancellability, and termination
and any modification of benefits, losses covered, or premiums because
of age or for other reasons, in a manner which shall not minimize or
render obscure the qualifying conditions.
1. Guideline 7
a. This rule imposes the same
disclosure standards with respect to contract provisions relating to
renewability, cancellability, and termination, modification of
benefits, losses or premiums because of age or otherwise as stated in
§ 1.12.6(B)(2) of this Part. The comments in that Guideline are
equally applicable to § 1.12.7 of this Part.
b. Advertisements of
cancelable contracts must state that the contract is cancelable or
renewable at the option of the company as the case may be. For
example, the following represent illustrations: A contract which is
cancelable shall be advertised in a manner similar to "This
contract can be cancelled by the company at any time"; A
contract which is renewable at the option of the insurance company
shall be advertised in a manner similar to "This contract is
renewable at the option of the company" or "The company has
the right to refuse renewal of this contract" or "Renewable
at the option of the insurer". Advertisements of such contracts
must indicate that the insurer has the right to increase premium
rates.
c. With respect to
non-cancelable contracts and guaranteed renewable contracts, the rule
requires that a summary of the contract provisions with respect to
renewability must be set forth and defined where appropriate. The
disclosure of provisions relating to renewability requires the use of
language such as "non- cancelable", "non-cancelable
and guaranteed renewable", or "guaranteed renewable".
Unless otherwise modified by law or regulation, the use of those
terms and the definitions provided shall be consistent with the
definitions of those terms adopted by the National Association of
Insurance Commissioners (1960 Proc. Vol. 1, P. 153).
d. The rule also requires a
statement of the qualifying conditions which constitute limitations
on the permanent nature of the coverage. These customarily fall into
three categories:
(1) age limits,
(2) reservation of a right to
increase premiums, and
(3) the establishment of
aggregate limits. For example, "non-cancelable and guaranteed
renewable" does not fulfill the requirement of the rule if the
contract contains a terminal age of 65. In such a case, a proper
statement would be "Non- cancelable and guaranteed renewable to
age 65". If a guaranteed renewable contract reserves the right
to increase premiums, the statement must be expanded into language
similar to "guaranteed renewable to age 65 but the company
reserves the right to increase premium rates on a class basis".
If the contract contains an aggregate limit after which no further
benefits are payable, the above statement must be amplified with the
phrase "subject to a maximum aggregate amount of $50,000"
or similar language. A contract may have one or more or the three
basic limitations and an advertisement must describe each of those
which the contract contains. The fact that a contract is guaranteed
renewable shall not be exaggerated.
e. This rule also requires the
disclosure of any modification of benefits or losses covered because
of age or for other reasons. Provisions for reduction of benefits at
stated ages must be set forth. For example, a contract may contain a
provision which reduces benefits fifty percent (50%) after age sixty
(60) although it is renewable to age sixty-five (65). Such a
reduction would have to be set forth.
f. Also, a provision for the
elimination of certain hazards at any specific ages or after the
contract has been in force for a specified time would have to be set
forth.
g. An advertisement for a
contract which provides for step-rated premium rates based upon the
contract year or the insured's attained age must disclose such rate
increases and the time or ages at which such premiums increase.
h. This rule requires that the
qualifying conditions of renewability must be disclosed in a manner
which does not minimize or render obscure the qualifying conditions
of renewal.
1.12.8 Testimonials or
Endorsements by Third Parties
A. Testimonials used in
advertisements must be genuine, represent the current opinion of the
author, be applicable to the health benefit contract advertised and
be accurately reproduced. The insurer, in using a testimonial, makes
as its own all of the statements contained therein, and the
advertisement, including such statement, is subject to all the
provisions of § 1.12 of this Part.
1. Guideline 8-A
a. This rule must be applied
in conjunction with § 1.12.9 of this Part and requires that all such
statements must be genuine and not fictitious. Under this rule, the
manufacturing, substantive editing or "doctoring up" of a
testimonial is clearly prohibited as being false and misleading to
the insurance-buying public. However, language which would be
unacceptable under these rules must be edited out of a testimonial.
b. A testimonial must also
represent the current opinion of the author. While an insurer is not
required in each instance to check with the author each time the
testimonial is used to ascertain that the views expressed have not
altered, a testimonial should be checked before use in those
instances when a change in views might be probable or reasonable to
assume. When a testimonial is used more than one year after it was
originally given, a confirmation must be obtained. The rule does not
prohibit testimonials of a general nature in which the author
expresses appreciation for courteous treatment received or prompt
payment of claims.
B. If the person making a
testimonial, an endorsement or an appraisal has a financial interest
in the insurer or a related entity, as a stockholder, director,
officer, employee, or otherwise, such fact shall be disclosed in the
advertisement. If a person is compensated for making a testimonial,
endorsement or appraisal, such fact shall be disclosed in the
advertisement by language substantially as follows: "Paid
Endorsement." This rule does not require disclosure of union
"scale" for TV or radio performances. The payment of
substantial amounts, directly or indirectly, for "travel and
entertainment" for filming or recording of TV or radio
advertisements removes the filming or recording from the category of
an unsolicited testimonial and requires disclosure of such
compensation. This rule does not apply to an institutional
advertisement which has as its sole purpose the promotion of the
insurer.
1. Guideline 8-B
a. This rule requires the
disclosure of any financial interest of a person making a
testimonial, endorsement, or appraisal. Any payment, direct or
indirect, whether specifically for the testimonial or endorsement or
for any other services or relationship, is required to be disclosed.
Reimbursement for substantial travel and entertainment expenses is
also required to be disclosed; however, union scale wages required by
union rules are not required to be disclosed. Travel away from the
home of the person giving the testimonial or endorsement to a distant
location involving transportation expenses, lodging expenses or
expenses for meals constitutes payment and must be reflected as a
paid endorsement. The requirement of disclosure may be fulfilled by
use of the phrase "Paid Endorsement" or words of similar
import in a type style and size that is identical to the endorser's
name. In the case of television or radio advertising, the paid nature
of the advertisement must be given prominence.
C. An advertisement shall not
state or imply that an insurer or a health benefit contract has been
approved or endorsed by any individual group of individuals, society,
association or other organizations, unless such is the fact, and
unless any proprietary relationship between an organization and the
insurer is disclosed. If the entity making the endorsement or
testimonial has been formed by the insurer or is owned or controlled
by the insurer or the person or persons who own or control the
insurer, such fact shall be disclosed in the advertisement.
1. Guideline 8-C
a. This rule requires both
that approval or endorsement of a contract by an individual, group of
individuals, society, association, or other organization be factual
and that any proprietary relationship between the sponsoring or
endorsing organization and the insurer be disclosed. For example, if
the dividend under an association group case is payable to the
association, disclosure of that fact is required. Also, if the
insurer or an officer of the insurer formed or controls the
association, that fact must be disclosed.
D. When a testimonial refers
to benefits received under a health benefit contract, the specific
claim data, including claim number, date of loss, and other pertinent
information shall be retained by the insurer for inspection for a
period of four years or until the filing of the next regular report
on examination of the insurer, whichever is the longer period of
time.
1. Guideline 8-D
a. This rule provides the
means to verify the authenticity of testimonials used in advertising
efforts.
b. The use of testimonials
which do not correctly reflect the present practices of the insurer
or which are not applicable to the contract or benefit being
advertised is not permissible.
1.12.9 Use of Statistics
A. An advertisement relating
to the dollar amount of claims paid, the number of persons insured,
or similar statistical information relating to any insurer or health
benefit contract shall not use irrelevant facts, and shall not be
used unless it accurately reflects all of the relevant facts. Such an
advertisement shall not imply that such statistics are derived from
the health benefit contract advertised unless such is the fact, and
when applicable to other health benefit contracts or plans, shall
specifically so state.
1. Guideline 9-A
a. This rule prohibits the use
of statistics in a manner which is misleading and deceptive. It
requires the disclosure of all relevant facts and prohibits the use
of irrelevant facts. An advertisement shall specifically identify the
contract to which statistics relate and, where statistics are given
which are applicable to a different contract; it must be stated
clearly that the data do not relate to the contract being advertised.
b. Statistics which describe
the insurer, such as assets, corporate structure, financial standing,
age, product lines or relative position in the insurance business,
may be irrelevant and, if used at all, must be used with extreme
caution because of their potential for misleading the public. As a
specific example, an advertisement for a health benefit contract
which refers to the amount of life insurance which the company has in
force or the amounts paid out in life insurance benefits is not
permissible unless the advertisement clearly indicates the amount
paid out for each line of insurance.
c. An advertisement which
states the dollar amount of claims paid must also indicate the period
over which such claims have been paid.
d. If the term "loss
ratio" is used, it shall be properly explained in the context of
the advertisement and, it shall be calculated on the basis of
premiums earned to losses incurred and shall not be on a yearly
run-off basis.
B. An advertisement shall not
represent or imply that claim settlements by the insurer are
"liberal" or "generous," or use words of similar
import, or that claim settlements are or will be beyond the actual
terms of the contract. An unusual amount paid for a unique claim for
the health benefit contract advertised is misleading and shall not be
used.
1. Guideline 9-B
a. This rule prohibits
deceptive or misleading statements in an advertisement regarding an
insurer's claim settlement practices. It also prohibits the use of an
unusual amount paid for a unique claim or an unusual claim whether
actual or hypothetical.
C. The source of any
statistics used in an advertisement shall be identified in such
advertisement.
1. Guideline 9-C
a. This rule requires any
advertisement which uses statistics to cite the source. The rule does
not require that statistics for a state be used since such statistics
as hospital charges and average stays may vary from state to state.
When nationwide statistics are used such fact should be noted unless
the statistics on the particular point are substantially the same in
a state to which the advertisement is directed. Statistics may be
used only if they are credible.
1.12.10 Identification of
Plan or Number of Health Benefit Contracts
A. When a choice of the amount
of benefits is referred to, an advertisement which is an invitation
to contract shall disclose that the amount of benefits provided
depends upon the plan selected and that the premium will vary with
the amount of the benefits selected.
B. When an advertisement which
is an invitation to contract refers to various benefits which may be
contained in two or more health benefit contracts, other than group
master health benefit contracts, the advertisement shall disclose
that such benefits are provided only through a combination of such
health benefit contracts.
1. Guideline 10
a. This rule imposes the same
disclosure standards as stated in § 1.12.6(B)(2) of this Part. The
comments in that Guideline are equally applicable to § 1.12.10 of
this Part.
1.12.11 Disparaging
Comparisons and Statements
A. An advertisement shall not
directly or indirectly make unfair or incomplete comparisons of
health benefit contracts or benefits or comparisons of noncomparable
health benefit contracts of other insurers, and shall not disparage
competitors, their health benefit contracts, services or business
methods, and shall not disparage or unfairly minimize competing
methods of marketing insurance.
1. Guideline 11
a. This rule prohibits unfair
or incomplete comparisons of products, insurers or business methods.
It specifically prohibits comparisons of noncomparable contracts and
provides that advertisements shall not unfairly minimize nor
disparage competing types of health benefit coverages or competing
methods of marketing health benefits.
b. An advertisement should not
contain statements such as "no red tape" or "here is
all you do to receive benefits".
c. Advertisements which state
or imply competing insurance contracts customarily contain certain
exceptions, reductions, or limitations not contained in the
advertised contracts are unacceptable unless such exceptions,
reductions, or limitations are contained in a substantial majority of
such competing contracts.
d. Advertisements which state
or imply that an insurer's premiums are lower or that its loss ratios
are higher because of its organizational structure differs from that
of competing insurers are unacceptable.
1.12.12 Jurisdictional
Licensing and Status of Insurer
A. An advertisement which is
intended to be seen or heard beyond the limits of the jurisdiction in
which the insurer is licensed shall not imply licensing beyond those
limits.
1. Guideline 12-A
a. This rule prohibits
advertisements which imply that an insurer is licensed beyond the
limits of those jurisdictions where it is actually licensed. An
advertisement which contains testimonials from persons who reside in
a state in which the insurer is not licensed or which refers to
claims of persons residing in states in which the insurer is not
licensed implies licensing in those states and therefore is in
violation of this rule unless the advertisement states that the
insurer is not licensed in those states.
B. An advertisement shall not
create the impression directly or indirectly that the insurer, its
financial condition or status, or the payment of its claims, or the
merits, desirability, or advisability of its contract forms or kinds
or plans of insurance are approved, endorsed, or accredited by any
division or agency of this State or the United States Government.
1. Guideline 12-B
a. This rule prohibits
advertisements implying that approval, endorsement, or accreditation
of contract forms or advertising has been granted by any division or
agency of the state or federal government. "Approval" of
either contract forms or advertising shall not be used by an insurer
to imply or state that a governmental agency has endorsed or
recommended the insurer, its contracts, advertising or its financial
condition.
b. Although the rule permits a
reference to an insurer being licensed in a state when the
advertisement appears, it does not allow exaggeration of the fact of
such licensing nor does it permit the suggestion that competing
insurers may not be so licensed because, in most states, an insurer
must be licensed in the state to which it directs its advertising.
c. Terms such as "official,"
or words of similar import, used to describe any contract or
application form are not permissible because of the potential for
deceiving or misleading the public.
1.12.13 Identity of Insurer
A. The name of the actual
insurer shall be stated in all of its advertisements. The form number
or numbers of the health benefit contract advertised shall be stated
in an advertisement which is an invitation to contract. An
advertisement shall not use a trade name, any insurance group
designation, name of the parent company of the insurer, name of the
particular division of the insurer, service mark, slogan, symbol or
other device which, without disclosing the name of the actual
insurer, would have the capacity and tendency to mislead or deceive
as to the true identity of the insurer.
B. No advertisement shall use
any combination of words, symbols, or physical materials which by
their content, phraseology, shape, color or characteristics are so
similar to any combination of words, symbols, or physical materials
used by agencies of the federal government or of this State, or
otherwise appear to be of such a nature that it tends to confuse or
mislead prospective insureds into believing that the solicitation is
in some manner connected with an agency of the municipal, state, or
federal government.
1. Guideline 13
a. This rule prohibits the use
of an advertisement which has the capacity or tendency to mislead or
deceive as to the true identity of the insurer. The rule recognizes
the existence of holding companies. The requirement that the
advertisement refer to the contract form number is applicable to
individual and franchise contracts only. However, the requirement of
the contract form number is not applicable to those advertisements
for individual and franchise contracts not required to disclose
information under §§1.12.6(B)(1) and 1.12.7 of this Part. §
1.12.13(A) and (B) of this Part prohibit misleading practices of
insurers in connection with the sale of insurance to supplement
federal Medicare benefits and confusion of insurance companies with
advertising material used by hospital service corporations or
pre-paid health plans.
b. This rule prohibits
advertisements, envelopes, or stationery which employ words, letters,
initials, symbols, or other devices which are so similar to those
used by governmental agencies or other insurers, including hospital
service corporations and pre-paid health plans, that the public may
be confused into believing:
(1) that the advertised
coverages are somehow provided by or are endorsed by such
governmental agencies or such other insurers;
(2) that the advertised
coverages are the same as those provided by such governmental
agencies or such other insurers;
(3) that the advertiser is the
same as, is connected with or is endorsed by such governmental
agencies or such other insurers.
c. It is unacceptable for an
advertisement to use the name of a state or a political subdivision
thereof in a contract name or description. For example, "XYZ
insurance company's (name of state) hospital confinement contract"
is unacceptable.
d. This rule prohibits an
insurer from using envelopes or stationery which have printed thereon
any name, service mark, slogan, symbol, or using any device in such a
manner that it implies that the insurer or the contract advertised is
connected with a governmental agency such as the Social Security
Administration or the Veterans Administration.
e. Contracts advertised to
supplement Medicare benefits are unacceptable if they incorporate the
word "Medicare" in the title of the contract being
advertised unless, wherever it appears, said word is qualified by
language differentiating it from Medicare. Such phrases as "Medicare
Insurance Supplement" or "insurance to supplement Medicare"
are acceptable. Such an advertisement, however, shall not use the
phrase "Medicare Department of the XYZ Insurance Company,"
or language of similar import.
f. Advertisements for
contracts designed to supplement Medicare benefits are unacceptable
if they fail to contain a disclaimer to the effect of "Not
connected with or endorsed by the U.S. Government or the federal
Medicare program".
g. This rule prohibits an
advertisement which implies that the reader may lose a right,
privilege or benefit under federal, state or local law if he fails to
respond to the advertisement.
h. If the use of letters,
initials, or symbols of the corporate name or trademark would have
the capacity or tendency to mislead or deceive the public as to the
true identity of the insurer, § 1.12.13 of this Part prohibits the
use of such letters, initials, or symbols without disclosing in a
close conjunction the true and correct complete name of the insurer
which will issue the contract.
i. This rule prohibits the use
of the name of an agency or "_______ Underwriters" or
"______ Plan" in type, size, and location so as to have the
capacity and tendency to mislead or deceive as to the true identity
of the insurer and also prohibits an insurer from using an address so
as to mislead or deceive as to its true identity, location, or
licensing status.
1.12.14 Group or
Quasi-Group Implications
A. An advertisement of a
particular health benefit contract shall not state or imply that
prospective insureds become group or quasi-group members covered
under a group health benefit contract and as such enjoy special rates
or underwriting privileges, unless such is the fact.
1. Guideline 14
a. This rule prohibits the use
of representations to any segment of the population that a particular
contract or coverage is available only to that or similar segments of
the population as preferred risks when actually such contract or
coverage is available to members of the public at large at the same
rates. This rule prohibits an advertisement labeled "Now for
Readers of X Magazine".
b. This rule prohibits the
solicitation of a particular class, such as governmental employees,
by use of advertisements which state or imply that their occupational
status entitles them to reduced rates on a group or other basis when,
in fact, the contract being advertised is sold only on an individual
basis at regular rates.
1.12.15 Introductory,
Initial, or Special Offers
A. An advertisement of an
individual health benefit contract shall not directly or by
implication represent that a contract or combination of contracts is
an introductory, initial, or special offer, or that applicants will
receive substantial advantages not available at a later date, or that
the offer is available only to a specified group of individuals,
unless such is the fact. An advertisement shall not contain phrases
describing an enrollment period as "special," "limited,"
or similar words or phrases when the insurer uses such enrollment
periods as the usual method of advertising health benefits.
1. Guideline 15-A (1)
a. This rule prohibits
advertising representing that a product is offered on an
introductory, initial, special offer basis or otherwise which:
(1) will not be available
later; or
(2) is available only to
certain individuals unless such is the fact.
b. This rule prohibits
repetitive use of such advertisements. Where an insurer uses
enrollment periods as the usual method of advertising these
contracts, the rule prohibits describing an enrollment period as a
special opportunity or offer for the applicant.
B. An enrollment period during
which a particular insurance product may be purchased on an
individual basis shall not be offered within this State unless there
has been a lapse of not less than 6 months between the close of the
immediately preceding enrollment for the same product and the opening
of the new enrollment period. The advertisement shall indicate the
date by which the applicant must mail the application, which shall
not be less than ten days and not more than forty days from the date
that such enrollment period is advertised for the first time. This
rule applies to all advertising media, i.e., mail, newspapers, radio,
television, magazines, and periodicals, by any one insurer. The
phrase "any one insurer" includes all the affiliated
companies of a group of insurers under common management or control.
1. Guideline 15-A (2)
a. This rule restricts the
repetitive use of enrollment periods. The requirement of reasonable
closing dates and waiting periods between enrollment periods was
adopted to eliminate the abuses which formerly existed. This rule
does not limit just the use of enrollment periods. It requires that a
particular insurance product offered in an enrollment period through
any advertising media, including the prepared presentations of
agents, cannot be offered again in the entire state until 6 months
from the close of the enrollment period have expired. Thus, an
insurer must choose whether to use enrollment period or open
enrollment for a product. (See § 1.12.15(D) of this Part for
definition of "a particular insurance product".)
b. This rule does not prohibit
multiple advertising during an enrollment period through any and all
media published or transmitted within this state as long as the
enrollment periods for all such advertisements have the same
expiration date.
c. This rule does not prohibit
the solicitation of members of a group or association for the same
product even though there has not been a lapse of 6 months since the
close of a preceding enrollment period which was open to the general
public for the same product.
d. This rule does not require
separation by 6 months of enrollment periods for the same insurance
product in this state if the advertising material is directed by an
admitted insurer to persons by direct mail on the basis that a common
relationship exists with an entity, such as a bank and its
depositors, a department store to its charge account customers or an
oil company to its credit card holders, and more than one of such
organizations is sponsoring such insurance product at different times
if providing such insurance under such a method is not otherwise
prohibited by law; provided, however, the 6 month rule does not apply
to one specific sponsor to the same persons in this state on the
basis of their status as customers of that one specific entity only.
C. § 1.12 of this Part
prohibits any statement or implication to the effect that only a
specific number of health benefit contracts will be sold or that a
time is fixed for the discontinuance of the sale of the particular
health benefit contract advertised because of the special advantages
available in the health benefit contract, unless such is the fact.
D. The phrase "a
particular insurance product" in § 1.12.15(B) of this Part
means a health benefit contract which provides substantially
different benefits than those contained in any other health benefit
contract. Different terms of renewability; an increase or decrease in
the dollar amounts of benefits; an increase or decrease in any
elimination period or waiting period from those available during an
enrollment period for another health benefit contract shall not be
sufficient to constitute the product being offered as a different
product eligible for concurrent or overlapping enrollment periods.
1. Guideline 15-A (4)
a. This rule defines the
meaning of "a particular insurance product" in §
1.12.15(B) of this Part and prohibits advertising of products having
minor variations, such as different elimination periods or different
amounts of daily hospital indemnity benefits, in a succession of
enrollment periods.
E. An advertisement shall not
offer a health benefit contract which utilizes a reduced initial
premium rate in a manner which overemphasizes the availability and
the amounts of the initial reduced premium. When an insurer charges
an initial premium that differs in amount from the amount of the
renewal premium payable on the same mode, the advertisement shall not
display the amount of the reduced initial premium either more
frequently or more prominently than the renewal premium, and both the
initial reduced premium and the renewal premium must be stated in
juxtaposition in each portion of the advertisement where the initial
reduced premium appears.
1. Guideline 15-B
a. This rule prohibits
advertising which over-emphasizes an initial premium. The rule
requires the renewal premium to appear as frequently as, as
prominently as and in juxtaposition with the initial reduced premium
wherever and as often as it appears. The term "juxtaposition"
means side by side or immediately above or below.
F. Special awards, such as a
"safe drivers' award" shall not be used in connection with
advertisements of health benefits.
1. Guideline 15-C
a. This rule prohibits the use
in advertisements of so-called awards as an inducement to the
purchase of insurance.
1.12.16 Statements About an
Insurer
A. An advertisement shall not
contain statements which are untrue in fact, or by implication
misleading, with respect to the assets, corporate structure,
financial standing, age or relative position of the insurer in the
insurance business. An advertisement shall not contain a
recommendation by any commercial rating system unless it clearly
indicates the purpose of the recommendation and the limitations of
the scope and extent of the recommendations.
1. Guideline 16
a. This rule is closely
related to the requirements of § 1.12.9 of this Part concerning the
use of statistics. The rule prohibits insurers which have been
organized for only a brief period of time advertising that they are
"old" and also prohibits the use of illustrations of a
"home office" building in a manner which is misleading with
respect to the actual size and magnitude of the insurer. Also, the
occupations of the persons comprising the insurer's board of
directors or the public's familiarity with their names or reputations
is irrelevant and must not be emphasized. The preponderance of a
particular occupation or profession among the board of directors of
an insurer does not justify the advertisement of a plan of insurance
offered to the general public as insurance designed or recommended by
members of that occupation or profession. For example, it is
unacceptable for an insurance company to advertise a policy offered
to the general public as "the physicians' policy" or "the
doctors' plan" simply because there is a preponderance of
physicians or doctors on the board of directors of the insurer. The
rule prohibits the use of a recommendation of a commercial rating
system unless the purpose, meaning and limitations of the
recommendation are clearly indicated.
1.12.17 Enforcement
Procedures
A. Advertising File. Each
insurer shall maintain at its home or principal office a complete
file containing every printed, published, or prepared advertisement
of its individual health benefit contracts and typical printed,
published, or prepared advertisements of its blanket and group
contracts and contracts on a "group-type" basis as defined
in § 1.3 of this Part thereafter disseminated in this or any other
state, whether or not licensed in such other state, with a notation
attached to each such advertisement which shall indicate the manner
and extent of distribution and the form number of any health benefit
contract advertised. Such file shall be subject to regular and
periodical inspection by the Director. All such advertisements shall
be maintained in said file for a period of either four years or until
the filing of the next regular report on examination of the insurer,
whichever is the longer period of time.
B. Certificate of Compliance.
Each insurer required to file an Annual Statement which is now or
which hereafter becomes subject to the provisions of § 1.12 of this
Part must file with the Director, with its Annual Statement, a
Certificate of Compliance executed by an authorized officer of the
insurer wherein it is stated that, to the best of his knowledge,
information and belief, the advertisements which were disseminated by
the insurer during the preceding statement year complied or were made
to comply in all respects with the provisions of § 1.12 of this Part
and the Laws of this State as implemented and interpreted by § 1.12
of this Part. With respect to the year in which this Part is
promulgated, such certification shall cover only that portion of the
year during which this Part is effective.
1.12.18 Filing for Prior
Review
The Director of Business
Regulation may, at his or her discretion, require the filing by any
insurer with this Department, for review prior to use, of all of its
advertisements or all of a class of its advertisements which the
Director shall describe which are printed or published "Invitations
to Contract" and all prepared sales presentations to be used by
agents, brokers and solicitors. Such advertising material must be
filed by the insurer with this Department not less than ninety (90)
days prior to the date the insurer desires to use the advertisement.
1.13 Review of Approvals or
Disapprovals
Notwithstanding anything to
the contrary in R.I. Gen. Laws Chapter 27-18 any request for a review
of any approval or disapproval by the Director under this Part shall
be treated as a contested case and shall be subject to the rules and
procedures set forth in R.I. Gen. Laws Chapter 42-35 for the handling
of contested cases and to all other rules and regulations appropriate
thereto.
1.14 Severability
If any provisions of this
Part, or the application thereof to any person or circumstance, is
held invalid, such invalidity shall not affect other provisions or
applications of this Part which can be given effect without the
invalid provision or application, and to that end the provisions of
this Part are severable.
1.15 Insurance Coverage for
Serious Mental Illness
1.15.1 Statutory Authority
This addition of § 1.15 of
this Part is promulgated pursuant to RI. Gen. Laws §§ 42-14-17 and
42-62-12 to implement R.I. Gen. Laws Chapter 27-38.2 (“Insurance
Coverage for Serious Mental Illness” referred to herein as the
"Act").
1.15.2 Definitions
A. Unless otherwise defined in
the Act, for purposes of the Act and this § 1.15 of this Part, the
following terms shall have the following meanings:
1. "Director" means
the Director of the Department.
2. "ERISA" means the
Employee Retirement Income Security Act of 1974 (including but not
limited to Section 514 thereof, 29 U.S.C. § 1144), as amended from
time to time.
3. "Health care insurers"
shall have the meaning given to "Health insurers" in R.I.
Gen. Laws § 27-38.2-2(a).
4. "Plan" means a
health benefits plan as defined in R.I. Gen. Laws § 42-62- 4(d)
provided, however, that the term does not include federal employee
health benefit programs or services provided to self-insured
employers subject to ERISA.
5. "Serious Mental
Illness" shall have the meaning given to "Serious Mental
Illness" in R.I. Gen. Laws § 27-38.2-2(b).
1.15.3 Department's
Jurisdiction -- Limits on Applicability
A. Certain Plans may:
1. be governed by contracts
formed under laws of other states or of the United States and may,
therefore, not be subject to the provisions of the Act or this §
1.15 of this Part; and
2. not be subject to the Act
or this § 1.15 of this Part because of the pre-exemption of all or a
portion of the Act and this § 1.15 of this Part by ERISA.
1.15.4 Time Limitation of
Coverage
R.I. Gen. Laws § 27-38.2-4
requires that "inpatient coverage in cases where continuous
hospitalization is medically necessary shall be limited to ninety
(90) consecutive days." As used in the Act, the phrase "ninety
(90) consecutive days" shall constitute a reference to a time
limit per hospitalization of the patient, and not to a lifetime or
annual time limit.
1.15.5 Enforcement and
Penalties
The Director shall have all
of the enforcement powers granted or described in R.I. Gen. Laws §
27-42-14 and this Part to enforce the provisions of the Act and this
§ 1.15 of this Part. The Director may consider as part of the
exercise of such enforcement powers any information the Director
deems relevant, including but not limited to, decisions, rulings or
orders of any agency of the State of Rhode Island.
1.15.6 Severability
If any section, term or
provision of this § 1.15 of this Part shall be adjudged invalid for
any reason, that judgment shall not affect, impair, or invalidate any
remaining section, term or provision, which shall remain in full
force and effect.