H. B. 2439
(By Delegates Phillips, L. White, Carper, Tribett,
Dempsey and Vest)
[Introduced March 2, 1993; referred to the
Committee on Banking and Insurance.]
A BILL to amend and reenact section three-d, article sixteen,
chapter thirty-three of the code of West Virginia,
one thousand nine hundred thirty-one, as amended; and to
amend and reenact section five-b, article twenty-eight of
said chapter, all relating to medicare supplement insurance;
revising the definition of "medicare supplement policy";
requiring disclosure in a medicare supplement policy of any
automatic renewal premium increases based on a
policyholder's age; increasing the free examination period
from ten to thirty days for a medicare supplement policy
issued other than by direct response solicitation; requiring
that any premium refund requested pursuant to a free
examination of such a policy be paid directly to the policy
applicant in a timely manner; and making technical
corrections.
Be it enacted by the Legislature of West Virginia:
That section three-d, article sixteen, chapter thirty-threeof the code of West Virginia, one thousand nine hundred thirty-
one, as amended, be amended and reenacted; and that section
five-b, article twenty-eight of said chapter be amended and
reenacted, all to read as follows:
ARTICLE 16. GROUP ACCIDENT AND SICKNESS INSURANCE.
§33-16-3d. Medicare supplement insurance.
(a) Definitions:
(1) "Applicant" means, in the case of a group medicare
supplement policy or subscriber contract, the proposed
certificate holder.
(2) "Certificate" means, for the purposes of this section,
any certificate issued under a group medicare supplement policy,
which policy has been delivered or issued for delivery in this
state.
(3) "Medicare supplement policy" means a group policy of
accident and sickness insurance or a subscriber contract (of
hospital and medical service associations corporations or health
maintenance organizations), other than a policy issued pursuant
to a contract under section 1876 or section 1833 of the federal
Social Security Act (42 U.S.C. section 1395 et seq.), or an
issued policy under a demonstration project authorized pursuant
to amendments to the federal Social Security Act, which is
advertised, marketed or designed primarily as a supplement to
reimbursements under medicare for the hospital, medical or
surgical expenses of persons eligible for medicare. Such term
does not include:
(A) A policy or contract of one or more employers or labor
organizations, or of the trustees of a fund established by one or
more employers or labor organizations, or a combination thereof,
for employees or former employees, or combination thereof, or for
members or former members, or combination thereof, of the labor
organizations, or
(B) A policy or contract of any professional, trade or
occupational association for its members or former or retired
members, or combination thereof, if such association is composed
of individuals all of whom are actively engaged in the same
profession, trade or occupation; has been maintained in good
faith for purposes other than obtaining insurance; and has been
in existence for at least two years prior to the date of its
initial offering of such policy or plan to its members.
(C) Individual policies or contracts issued pursuant to a
conversion privilege under a policy or contract of group or
individual insurance when such group or individual policy or
contract includes provisions which are inconsistent with the
requirements of this section.
(4) "Medicare" means the Health Insurance for the Aged Act,
Title XVIII of the Social Security Amendments of 1965, as then
constituted or later amended.
(b) Standards for policy provisions:
(1) The commissioner shall issue reasonable rules to
establish specific standards for policy provisions of medicare
supplement policies. Such standards shall be in addition to andin accordance with the applicable laws of this state and may
cover, but shall not be limited to:
(A) Terms of renewability;
(B) Initial and subsequent conditions of eligibility;
(C) Nonduplication of coverage;
(D) Probationary period;
(E) Benefit limitations, exceptions and reductions;
(F) Elimination period;
(G) Requirements for replacement;
(H) Recurrent conditions; and
(I) Definitions of terms.
(2) The commissioner may issue reasonable rules that specify
prohibited policy provisions not otherwise specifically
authorized by statute which, in the opinion of the commissioner,
are unjust, unfair or unfairly discriminatory to any person
insured or proposed for coverage under a medicare supplement
policy.
(3) Notwithstanding any other provisions of the law, a
medicare supplement policy may not deny a claim for losses
incurred more than six months from the effective date of coverage
for a preexisting condition. The policy may not define a
preexisting condition more restrictively than a condition for
which medical advice was given or treatment was recommended by or
received from a physician within six months before the effective
date of coverage.
(c) Minimum standards for benefits.
The commissioner shall issue reasonable rules to establish
minimum standards for benefits under medicare supplement
policies.
(d) Loss ratio standards.
Medicare supplement policies shall be expected to return to
policyholders benefits which are reasonable in relation to the
premium charge. The commissioner shall issue reasonable rules to
establish minimum standards for loss ratios and for medicare
supplement policies on the basis of incurred claims experience
and earned premiums for the entire period for which rates are
computed to provide coverage and in accordance with accepted
actuarial principles and practices. For purposes of rules issued
pursuant to this paragraph subsection, medicare supplement
policies issued as a result of solicitations of individuals
through the mail or mass media advertising, including both print
and broadcast advertising, shall be treated as individual
policies.
(e) Disclosure standards:
(1) In order to provide for full and fair disclosure in the
sale of accident and sickness policies, to persons eligible for
medicare, the commissioner may require by rule that no policy of
accident and sickness insurance may be issued for delivery in
this state and no certificate may be delivered pursuant to such
a policy unless an outline of coverage is delivered to the
applicant at the time application is made.
(2) The commissioner shall prescribe the format and contentof the outline of coverage required by paragraph (1) of this
subsection subdivision (1) above. For purposes of this paragraph
subdivision, "format" means style, arrangements and overall
appearance, including such items as size, color and prominence of
type and the arrangement of text and captions. Such outline of
coverage shall include:
(A) A description of the principal benefits and coverage
provided in the policy;
(B) A statement of the exceptions, reductions and
limitations contained in the policy;
(C) A statement of the renewal provisions including any
reservation by the insurer of the right to change premiums and
disclosure of the existence of any automatic renewal premium
increases based on the policyholder's age;
(D) A statement that the outline of coverage is a summary of
the policy issued or applied for and that the policy should be
consulted to determine governing contractual provisions.
(3) The commissioner may prescribe by rule a standard form
and the contents of an informational brochure for persons
eligible for medicare, which is intended to improve the buyer's
ability to select the most appropriate coverage and improve the
buyer's understanding of medicare. Except in the case of direct
response insurance policies, the commissioner may require by rule
that the information brochure be provided to any prospective
insureds eligible for medicare concurrently with delivery of the
outline of coverage. With respect to direct response insurancepolicies, the commissioner may require by rule that the
prescribed brochure be provided upon request to any prospective
insureds eligible for medicare, but in no event later than the
time of policy delivery.
(4) The commissioner may further promulgate reasonable rules
to govern the full and fair disclosure of the information in
connection with the replacement of accident and sickness
policies, subscriber contracts or certificates by persons
eligible for medicare.
(f) Notice of free examination.
Medicare supplement policies or certificates, other than
those issued pursuant to direct response solicitation, shall have
a notice prominently printed on the first page of the policy or
attached thereto stating in substance that the applicant shall
have the right to return the policy of or certificate within ten
thirty days from its delivery and have the premium refunded if,
after examination of the policy or certificate, the applicant is
not satisfied for any reason. Any refund made pursuant to this
section shall be paid directly to the applicant by the issuer in
a timely manner. Medicare supplement policies or certificates
issued pursuant to a direct response solicitation to persons
eligible for medicare shall have a notice prominently printed on
the first page or attached thereto stating in substance that the
applicant shall have the right to return the policy or
certificate within thirty days of its delivery and to have the
premium refunded if, after examination, the applicant is notsatisfied for any reason. Any refund made pursuant to this
section shall be paid directly to the applicant by the issuer in
a timely manner.
(g) Administrative procedures.
Rules promulgated pursuant to this section shall be subject
to the provisions of chapter twenty-nine-a (the West Virginia
Administrative Procedures Act) of this code.
(h) Separability Severability.
If any provision of this section or the application thereof
to any person or circumstance is for any reason held to be
invalid, the remainder of the section and the application of such
provision to other persons or circumstances shall not be affected
thereby.
ARTICLE 28. INDIVIDUAL ACCIDENT AND SICKNESS INSURANCE MINIMUM
STANDARDS.
§33-28-5b. Medicare supplement insurance.
(a) Definitions:
(1) "Applicant" means, in the case of an individual medicare
supplement policy or subscriber contract, the person who seeks to
contract for insurance benefits.
(2) "Medicare supplement policy" means an individual policy
of accident and sickness insurance or a subscriber contract (of
hospital and medical service associations corporations or health
maintenance organizations), other than a policy issued pursuant
to a contract under section 1876 or section 1833 of the federal
Social Security Act (42 U.S.C. section 1395 et seq.), or anissued policy under a demonstration project authorized pursuant
to amendments to the federal Social Security Act, which is
advertised, marketed or designed primarily as a supplement to
reimbursements under medicare for the hospital, medical or
surgical expenses of persons eligible for medicare. Such term
does not include:
(A) A policy or contract of one or more employers or labor
organizations, or of the trustees of a fund established by one or
more employers or labor organizations, or a combination thereof,
for employees or former employees, or combination thereof, or for
members or former members, or combination thereof, of the labor
organizations, or
(B) A policy or contract of any professional, trade or
occupational association for its members or former or retired
members, or combination thereof, if such association is composed
of individuals all of whom are actively engaged in the same
profession, trade or occupation; has been maintained in good
faith for purposes other than obtaining insurance; and has been
in existence for at least two years prior to the date of its
initial offering of such policy or plan to its members.
(C) Individual policies or contracts issued pursuant to a
conversion privilege under a policy or contract of group or
individual insurance when such group or individual policy or
contract includes provisions which are inconsistent with the
requirements of this section.
(3) "Medicare" means the Health Insurance for the Aged Act,Title XVIII of the Social Security Amendments of 1965, as then
constituted or later amended.
(b) Standards for policy provisions:
(1) The commissioner shall issue reasonable rules to
establish specific standards for policy provisions of medicare
supplement policies. Such standards shall be in addition to and
in accordance with the applicable laws of this state and may
cover, but shall not be limited to:
(A) Terms of renewability;
(B) Initial and subsequent conditions of eligibility;
(C) Nonduplication of coverage;
(D) Probationary period;
(E) Benefit limitations, exceptions and reductions;
(F) Elimination period;
(G) Requirements for replacement;
(H) Recurrent conditions; and
(I) Definitions of terms.
(2) The commissioner may issue reasonable rules that specify
prohibited policy provisions not otherwise specifically
authorized by statute which, in the opinion of the commissioner,
are unjust, unfair or unfairly discriminatory to any person
insured or proposed for coverage under a medicare supplement
policy.
(3) Notwithstanding any other provisions of the law, a
medicare supplement policy may not deny a claim for losses
incurred more than six months from the effective date of coveragefor a preexisting condition. The policy may not define a
preexisting condition more restrictively than a condition for
which medical advice was given or treatment was recommended by or
received from a physician within six months before the effective
date of coverage.
(c) Minimum standards for benefits.
The commissioner shall issue reasonable rules to establish
minimum standards for benefits under medicare supplement
policies.
(d) Loss ratio standards.
Medicare supplement policies shall be expected to return to
policyholders benefits which are reasonable in relation to the
premium charge. The commissioner shall issue reasonable rules to
establish minimum standards for loss ratios and for medicare
supplement policies on the basis of incurred claims experience
and earned premiums for the entire period for which rates are
computed to provide coverage and in accordance with accepted
actuarial principles and practices. For purposes of rules issued
pursuant to this paragraph subsection, medicare supplement
policies issued as a result of solicitations of individuals
through the mail or mass media advertising, including both print
and broadcast advertising, shall be treated as individual
policies.
(e) Disclosure standards:
(1) In order to provide for full and fair disclosure in the
sale of accident and sickness policies, to persons eligible formedicare, the commissioner may require by rule that no policy of
accident and sickness insurance may be issued for delivery in
this state and no certificate may be delivered pursuant to such
a policy unless an outline of coverage is delivered to the
applicant at the time application is made.
(2) The commissioner shall prescribe the format and content
of the outline of coverage required by paragraph subdivision (1)
above. For purposes of this paragraph subdivision, "format"
means style, arrangements and overall appearance, including such
items as size, color and prominence of type and the arrangement
of text and captions. Such outline of coverage shall include:
(A) A description of the principal benefits and coverage
provided in the policy;
(B) A statement of the exceptions, reductions and
limitations contained in the policy;
(C) A statement of the renewal provisions including any
reservation by the insurer of the right to change premiums and
disclosure of the existence of any automatic renewal premium
increases based on the policyholder's age;
(D) A statement that the outline of coverage is a summary of
the policy issued or applied for and that the policy should be
consulted to determine governing contractual provisions.
(3) The commissioner may prescribe by rule a standard form
and the contents of an informational brochure for persons
eligible for medicare, which is intended to improve the buyer's
ability to select the most appropriate coverage and improve thebuyer's understanding of medicare. Except in the case of direct
response insurance policies, the commissioner may require by rule
that the information brochure be provided to any prospective
insureds eligible for medicare concurrently with delivery of the
outline of coverage. With respect to direct response insurance
policies, the commissioner may require by rule that the
prescribed brochure be provided upon request to any prospective
insureds eligible for medicare, but in no event later than the
time of policy delivery.
(4) The commissioner may further promulgate reasonable rules
to govern the full and fair disclosure of the information in
connection with the replacement of accident and sickness
policies, subscriber contracts or certificates by persons
eligible for medicare.
(f) Notice of free examination.
Medicare supplement policies or certificates, other than
those issued pursuant to direct response solicitation, shall have
a notice prominently printed on the first page of the policy or
attached thereto stating in substance that the applicant shall
have the right to return the policy of or certificate within ten
thirty days from its delivery and have the premium refunded if,
after examination of the policy or certificate, the applicant is
not satisfied for any reason. Any refund made pursuant to this
section shall be paid directly to the applicant by the issuer in
a timely manner. Medicare supplement policies or certificates
issued pursuant to a direct response solicitation to personseligible for medicare shall have a notice prominently printed on
the first page or attached thereto stating in substance that the
applicant shall have the right to return the policy or
certificate within thirty days of its delivery and to have the
premium refunded if, after examination, the applicant is not
satisfied for any reason. Any refund made pursuant to this
section shall be paid directly to the applicant by the issuer in
a timely manner.
(g) Administrative procedures.
Rules promulgated pursuant to this section shall be subject
to the provisions of chapter twenty-nine-a (the West Virginia
Administrative Procedures Act) of this code.
(h) Separability Severability.
If any provision of this section or the application thereof
to any person or circumstance is for any reason held to be
invalid, the remainder of the section and the application of such
provision to other persons or circumstances shall not be affected
thereby.
NOTE: The purpose of this bill is to amend West Virginia's
existing Medicare supplement insurance statutes to meet the
requirements of the federal Omnibus Budget Reconciliation Act of
1990 (OBRA '90). The federal Health Care Financing
Administration (HCFA), which oversees the Medicare program,
requires that these state statutory amendments be made.
Otherwise, HCFA may take over the regulation of Medicare
supplement insurance in West Virginia.
The bill revises the definition of "Medicare supplement
policy" to conform to federal statutory requirements. It
mandates disclosure in a Medicare supplement policy of anyautomatic renewal premium increases based on a policyholder's
age. The bill also increases the free examination period from
ten to thirty days for a Medicare supplement policy issued other
than by direct response solicitation. Furthermore, it requires
that any premium refund requested pursuant to a free examination
of such a policy be paid directly to the policy applicant in a
timely manner. The bill also makes technical corrections.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.