Pennsylvania Act 1976-54 — INDIVIDUAL ACCIDENT AND SICKNESS INSURANCE MINIMUM STANDARDS ACT

Act text

INDIVIDUAL ACCIDENT AND SICKNESS INSURANCE MINIMUM STANDARDS ACT
                  Act of May 18, 1976, P.L. 123, No. 54               Cl. 40
                                  AN ACT

     To provide reasonable standardization and simplification of
        terms and coverages of individual accident and health
        insurance policies and subscriber contracts of health plan
        corporations, nonprofit health service plans and certificates
        issued by fraternal benefit societies to facilitate public
        understanding and comparison, to eliminate provisions
        contained in individual accident and health insurance
        policies and subscriber contracts of health plan corporations
        and nonprofit health service plans and certificates issued by
        fraternal benefit societies which may be misleading or
        unreasonably 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 accident and
        health coverages.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Short Title.--This act shall be known and may be
     cited as the "Individual Accident and Sickness Insurance Minimum
     Standards Act."
        Section 2.  Definitions.--(a) As used in this act:
        "Accident and health insurance" means insurance written under
     section 202(a)(1) and (2) (other than life insurance and
     annuities) and section 202(c)(2) of The Insurance Company Law of
     1921 and 40 Pa. C.S. § 6526, other than credit accident and
     health insurance.
        "Forms" means policies, contracts, riders, endorsements, and
     applications subject to approval by the Insurance Commissioner,
     under section 354 of The Insurance Company Law of 1921 or
     section 11 of the Voluntary Nonprofit Health Service Act of
     1972, or 40 Pa. C.S. §§ 6124 and 6329.
        "Policy" means the entire contract between the insurer and
     the insured, including the policy, riders, endorsements and the
     application, if attached, and also includes subscriber contracts
     issued by health plan corporations, nonprofit health service
     plans and certificates issued by fraternal benefit societies.
        (b)  Health plan corporations, nonprofit health service plans
     and fraternal benefit societies shall be deemed to be engaged in
     the business of insurance.
        Section 3.  Standards for Policy Provisions.--(a) The
     Insurance Commissioner shall issue regulations to establish
     specific standards, including standards of full and fair
     disclosure, that set forth the manner, content and required
     disclosures for their sale for individual policies of accident
     and health insurance and subscriber contracts of health plan
     corporations and nonprofit health service plans and certificates
     issued by fraternal benefit societies and required disclosures
     for their sale. These regulations shall be in addition to
     applicable laws of this Commonwealth and may cover but shall not
     be limited to:
         (1)  terms of renewability;
         (2)  initial and subsequent conditions of eligibility;
         (3)  non-duplication of coverage provisions;
         (4)  coverage of dependents;
         (5)  pre-existing conditions;
         (6)  termination of insurance;
         (7)  probationary periods;
         (8)  limitations;
         (9)  exceptions;
        (10)  reductions;
        (11)  elimination periods;
        (12)  requirements for replacement;
        (13)  recurrent conditions; and
        (14)  the definition of terms, including but not limited to,
     the following:  "hospital," "accident," "sickness," "injury,"
     "physician," "accidental means," "total disability," partial
     disability," "nervous disorder," "guaranteed renewable," and
     "non-cancellable."
        (b)  The Insurance Commissioner may issue regulations that
     specify prohibited policy provisions not otherwise specifically
     prohibited by statute which in the opinion of the Insurance
     Commissioner are unjust, unfair, or unfairly discriminatory to
     the policyholder, subscriber, any person insured under the
     policy, or beneficiary.
        Section 4.  Minimum Standards for Benefits.--(a) The
     Insurance Commissioner shall issue regulations to establish
     minimum standards for benefits under each of the following
     categories of coverage in individual policies of accident and
     health insurance and subscriber contracts of health plan
     corporations and nonprofit health service plans and certificates
     issued by fraternal benefit societies:
        (1)  basic hospital expense coverage;
        (2)  basic medical-surgical expense coverage;
        (3)  hospital confinement indemnity coverage;
        (4)  major medical expense coverage;
        (5)  disability income protection coverage;
        (6)  accident only coverage;
        (7)  specified disease or specified accident coverage; and
        (8)  supplemental coverage shall be permitted for all
     preceding categories of coverages with the exception of
     paragraph (7).
        (b)  Nothing in this section shall preclude the issuance of
     any policy or contract which combines two or more of the
     categories of coverage enumerated in paragraphs (1) through (7)
     of subsection (a).
        (c)  No policy or contract shall be delivered or issued for
     delivery in this State which does not meet the prescribed
     minimum standards for those categories of coverage listed in
     paragraphs (1) through (8) of subsection (a) which are contained
     within the policy or contract unless the Insurance Commissioner
     finds that such policy or contract will not be unjust, unfair or
     unfairly discriminatory to the policyholder, subscriber, any
     person insured under the policy, or beneficiary. Changes to a
     policy or contract required by regulations promulgated pursuant
     to this act, including changes to premium rates applicable
     thereto, shall be permitted by endorsement or rider unless the
     commissioner shall determine that such change or changes
     substantially alters the policy or contract.
        (d)  Notwithstanding any other provision of this act or
     regulations promulgated hereunder, any policy or contract
     submitted for approval which does not meet the prescribed
     minimum standards for those categories of coverage listed in
     paragraphs (1) through (8) of subsection (a) which are contained
     within the policy or contract may be approved if, in the opinion
     of the Insurance Commissioner, such policy or contract is not
     unjust, unfair, or unfairly discriminatory to the policyholder,
     subscriber, any person insured under the policy or beneficiary.
        (e)  The Insurance Commissioner shall issue regulations
     prescribing the method of identification of policies and
     contracts based upon coverages provided.
        Section 5.  Outline of Coverage.--(a) In order to provide for
     full and fair disclosure in the sale of individual accident and
     health insurance policies or subscriber contracts of a health
     plan corporation or a nonprofit health service plan or
     certificates issued by fraternal benefit societies, except for
     supplemental policies sold on the debit plan, and except for
     riders or amendments to policies or contracts, no such policy or
     contract shall be delivered or issued for delivery in this State
     unless the outline of coverage described in subsection (b)
     either accompanies the policy or is delivered to the applicant
     at the time application is made.
        (b)  The Insurance Commissioner shall issue regulations
     prescribing the format and contents of the outline of coverage
     required by subsection (a). "Format" means style, arrangement,
     and overall appearance, including such items as the size, color
     and prominence of type and the arrangement of text and captions.
     The outline of coverage shall include, in a form understandable
     to a person of average intelligence and education:
        (1)  a statement identifying the applicable category or
     categories of coverage provided by the policy or contract as
     prescribed in section 4;
        (2)  a description of the principal benefits and coverage
     provided in the policy or contract;
        (3)  a statement of the exceptions, reductions and
     limitations contained in the policy or contract;
        (4)  a statement of the renewal provisions including any
     reservation by the insurer of a right to change premiums; and
        (5)  a statement that the outline is a summary of the policy
     or contract issued or applied for and that the policy or
     contract should be consulted to determine governing contractual
     provisions.
        Section 6.  Pre-existing Conditions.--(a) Notwithstanding the
     provisions of section 618(A)(2) of The Insurance Company Law of
     1921, if an insurer elects to use a simplified application form,
     with or without a question as to the applicant's health at the
     time of application, but without any questions concerning the
     insured's health history or medical treatment history, the
     policy must cover any loss occurring after 12 months from any
     pre-existing condition not specifically excluded from coverage
     by terms of the policy, and, except as so provided, the policy
     or contract shall not include wording that would permit a
     defense based upon pre-existing conditions. Changes to policies
     or contracts required under this section, including changes to
     premium rates applicable thereto, shall be permitted by
     endorsement or rider.
        Section 7.  Effective Dates of Regulations; Hearings.--All
     regulations promulgated under this act, including those relating
     to section 4(c), shall specify an effective date applicable to
     policies or benefit riders delivered or issued for delivery in
     this Commonwealth on or after said effective date which shall
     not be less than 365 days after their adoption or promulgation.
     All regulations promulgated pursuant to this act shall be issued
     in accordance with the applicable provisions of the act of July
     31, 1968 (P.L.769, No.240), known as the "Commonwealth Documents
     Law." Public hearings shall be held prior to the promulgation of
     any such regulation, including a verbatim transcript and cross-
     examination of all witnesses in accordance with applicable rules
     of procedure, unless such regulation or amendment is
     insubstantial. The order promulgating any such regulation shall
     contain findings and the reasons for the regulation; provided
     that this section shall not create or permit any right of action
     at law or equity not otherwise authorized or permitted under the
     law of the Commonwealth. Copies of such orders shall be mailed
     to those appearing of record at the hearing.