H. B. 2491
(By Mr. Speaker, Mr. Chambers, and Delegate Ashley)
[By Request of the Executive]
[Introduced February 15, 1995; referred to the
Committee on Banking and Insurance then
Government Organization.]
A BILL to amend and reenact sections one-a, two, four and five,
article fifteen, chapter thirty-three of the code of West
Virginia, one thousand nine hundred thirty-one, as amended;
to further amend said article by adding thereto a new
section, designated section one-b; to amend and reenact
section three, article sixteen of said chapter; and to amend
and reenact sections five and twelve, article sixteen-d of
said chapter, all relating to accident and sickness
insurance, increasing the minimum anticipated loss ratio for
any individual accident and sickness policy premium rate
increase request beginning on the first day of July, one
thousand nine thousand ninety-five, requiring the guarantee of renewability for individual accident and sickness
policies, limiting the time period for preexisting condition
requirements on individual policies, establishing rate
criteria for individual major medical policies, deleting an
optional relation of earnings to insurance proviso,
increasing the continuation of benefits after termination on
group policies from eighteen to thirty-six months,
increasing the minimum anticipated loss ratio to
seventy-five percent on small employer group policies, and
lowering the time period for preexisting condition
limitations from twelve months to six months on small
employer policies.
Be it enacted by the Legislature of West Virginia:
That sections one-a, two, four and five, article fifteen,
chapter thirty-three of the code of West Virginia, one thousand
nine hundred thirty-one, as amended, be amended and reenacted;
that said article be further amended by adding thereto a new
section, designated section one-b; that section three, article
sixteen of said chapter be amended and reenacted; and that
sections five and twelve, article sixteen-d of said chapter be
amended and reenacted, all to read as follows:
ARTICLE 15. ACCIDENT AND SICKNESS INSURANCE.
§33-15-1a. Premium rate increase requests; loss ratio
requirement.
To be eligible to make a premium rate increase request after
the first day of July, one thousand nine hundred ninety-four
ninety-five, any insurer issuing offering or which has in force
accident and sickness insurance policies which are subject to the
provisions of this article shall have a minimum anticipated loss
ratio of sixty-five sixty-eight percent as to such policy form.
In calculating its minimum anticipated loss ratio, an insurer
shall include in its actual incurred claims the amount of premium
taxes for the same experience period which are attributable to
the policy forms affected by this section and which were paid to
the state of West Virginia pursuant to the provisions of article
three of this chapter.
§33-15-1b. Rates, individual major medical policies.
(a) No individual major medical coverage policy may be
approved by the commissioner for use in this state unless:
(1) The premium rates for the policy, after adjustment for
any difference in policy benefits, do not exceed by more than
thirty percent the premium rates charged by the same insurer on
any and all other individual major medical policies which the insurer has had approved by the commissioner within a five-year
period preceding the date of the new policy filing by the
insurer;
(2) The insurer files with the commissioner the opinion of
a qualified actuary or other person acceptable to the
commissioner which states:
(A) That the policy premium rate is in compliance with
subdivision (1), subsection (a) of this section; and
(B) That the anticipated loss ratio for the combined
experience of the policy taken together with all other individual
major medical coverage policies which the insurer has had
approved by the commissioner within a five-year period preceding
the date of the new policy filing is equal to or greater than the
loss ratio requirements set forth in section one-a of this
article.
(b) An initial individual major medical policy form may be
disapproved by the commissioner if the commissioner determines
that the rates proposed by the insurer for the policy form are
set at a level substantially less than rates charged by other
insurers for comparable insurance coverage.
(c) Nothing contained in this section may be construed to prevent the use of age, sex, area, industry, occupational, and
avocational factors in setting premium rates or to prevent the
use of different rates after approval by the commissioner for
smokers and nonsmokers or for any other habit or habits of an
insured person which have a statistically proven effect on the
health of the person. Nothing contained in this section shall
preclude the establishment of a substandard classification based
upon the health condition of the insured: Provided, That the
initial classification may not be changed adversely to the
insured after the initial issuance of the policy.
(d) The commissioner has the right, upon application by an
insurer, and for good cause shown, to grant relief from any
requirement of this section.
§33-15-2. Scope and format of policy.
No policy of accident and sickness insurance shall be
delivered or issued for delivery to any person in this state
unless:
(a) The entire money and other considerations therefor are
expressed therein; and
(b) The time at which the insurance takes effect and
terminates is expressed therein; and
(c) It purports to insure only one person, except that a
policy may insure, originally or by subsequent amendment upon the
application of an adult member of a family who shall be deemed
the policyholder, any two or more eligible members of that
family, including husband, wife, dependent children or any
children under a specified age which shall not exceed nineteen
years and any other person dependent upon the policyholder; and
(d) The policy is guaranteed to be renewable by the insured
unless there is fraud, nonpayment of premium, or material
misrepresentation by the insured in the application for insurance
and the misrepresentation has been acted upon by the insurer
within two years from the date of the issuance of the policy.
(d) (e) The style, arrangement and over-all appearance of
the policy give no undue prominence to any portion of the text,
and unless every printed portion of the text of the policy and of
any endorsements or attached papers is 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 lowercase
unspaced alphabet length not less than one hundred and
twenty-point (the "text" shall include all printed matter except
the name and address of the insurer, name or title of the policy, the brief description, if any, and captions and subcaptions), the
policy shall clearly indicate on the first page its optionally
renewable nature the conditions of renewability; and
(e) (f) The exceptions and reductions of indemnity are set
forth in the policy and, except those which are set forth in
sections four and five of this article, 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 policy, a statement of such exception
or reduction shall be included with the benefit provision to
which it applies; and
(f) (g) Each such form, including riders and endorsements,
shall be identified by a form number in the lower left-hand
corner of the first part thereof; and
(g) (h) It contains no provision purporting to make any
portion of the charter, rules, Constitution, or bylaws of the
insurer a part of the policy unless such portion is set forth in
full in the policy, 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 commissioner.
§33-15-4. Required policy provisions.
Except as provided in section six of this article, each such
policy delivered or issued for delivery to any person in this
state shall contain the provisions specified in this section in
the words in which the same appear in this section: Provided,
however, That the insurer may, at its option, substitute for one
or more of such provisions corresponding provisions of different
wording approved by the commissioner which are in each instance
not less favorable in any respect to the insured or the
beneficiary. Such provisions shall be preceded individually by
the caption appearing in this section or, at the option of the
insurer, by such appropriate individual or group captions or
subcaptions as the commissioner may approve.
(a) A provision as follows:
"Entire Contract; Changes: This policy, including the
endorsements and the attached papers, if any, constitutes the
entire contract of insurance. No change in this policy shall be
valid until approved by an executive officer of the insurer and
unless such approval be endorsed hereon or attached hereto. No
agent has authority to change this policy or to waive any of its provisions."
(b) A provision as follows:
"Time Limit on Certain Defenses: (1) After two years from
the date of issue of this policy no misstatements, except
fraudulent misstatements, made by the applicant in the
application for such policy shall be used to void the policy or
to deny a claim for loss incurred or disability (as defined in
the policy) commencing after the expiration of such two-year
period."
The foregoing policy provision shall not be so construed as
to affect any legal requirement for avoidance of a policy or
denial of a claim during such initial two-year period, nor to
limit the application of subdivisions (a), (b), (c), (d) and (e)
of section five of this article in the event of misstatement with
respect to age or occupation or other insurance. A policy which
the insured has the right to continue in force subject to its
terms by the timely payment of premium (i) until at least age
fifty, or (ii) in the case of a policy issued after age
forty-four, for at least five years from its date of issue, may
contain in lieu of the foregoing the following provision (from
which the clause in parentheses may be omitted at the insurer's option) under the caption "Incontestable" :
"After this policy has been in force for a period of two
years during the lifetime of the insured (excluding any period
during which the insured is disabled), it shall become
incontestable as to the statements contained in the application.
(2) No claim for loss incurred or disability (as defined in
the policy) commencing after six months two years from the date
of issue of this policy shall be reduced or denied on the ground
that a disease or physical condition not excluded from coverage
by name or specific description effective on the date of loss had
existed prior to the effective date of coverage of this policy."
(c) A provision as follows:
"Grace Period: A grace period of __________________ (insert
a number not less than `7' for weekly premium policies, `10' for
monthly premium policies and `31' for all other policies) days
will be granted for the payment of each premium falling due after
the first premium, during which grace period the policy shall
continue in force."
A policy in which the insurer reserves the right to refuse
renewal shall have at the beginning of the above provision,
"Unless not less than thirty days prior to the premium due date the insurer has delivered to the insured or has mailed to his
last address as shown by the records of the insurer written
notice of its intention not to renew this policy beyond the
period for which the premium has been accepted. . . "
(d) A provision as follows:
"Reinstatement: If any renewal premium be not paid within
the time granted the insured for payment, as subsequent
acceptance of premium by the insurer or by any agent duly
authorized by the insurer to accept such premium, without
requiring in connection therewith an application for
reinstatement, shall reinstate the policy: Provided, however,
That if the insurer or such agent requires an application for
reinstatement and issues a conditional receipt for the premium
tendered, the policy will be reinstated upon approval of such
application by the insurer, or lacking such approval, upon the
forty-fifth day following the date of such conditional receipt
unless the insurer has previously notified the insured in writing
of its disapproval of such application. The reinstated policy
shall cover only loss resulting from such accidental injury as
may be sustained after the date of reinstatement and loss due to
such sickness as may begin more than ten days after such date. In all other respects the insured and insurer shall have the same
rights thereunder as they had under the policy immediately before
the due date of the defaulted premium, subject to any provisions
endorsed hereon or attached hereto in connection with the
reinstatement." Any premium accepted in connection with a
reinstatement shall be applied to a period for which premium has
not been previously paid, but not to any period more than sixty
days prior to the date of reinstatement
The last sentence of the above provision may be omitted from
any policy which the insured has the right to continue in force
subject to its terms by the timely payment of premiums (1) until
at least age fifty, or, (2) in the case of a policy issued after
age forty-four, for at least five years from its date of issue.
(e) A provision as follows:
"Notice of Claim: Written notice of claim must be given to
the insurer within twenty days after the occurrence or
commencement of any loss covered by the policy, or as soon
thereafter as is reasonably possible. Notice given by or on
behalf of the insured or the beneficiary to the insurer at
____________________ (insert the location of such office as the
insurer may designate for the purpose), or to any authorized agent of the insurer, with information sufficient to identify
the insured, shall be deemed notice to the insurer."
In a policy providing a loss-of-time benefit which may be
payable for at least two years, an insurer may at its option
insert the following between the first and second sentences of
the above provision:
"Subject to the qualifications set forth below, if the
insured suffers loss of time on account of disability for which
indemnity may be payable for at least two years, he shall, at
least once in every six months after having given notice of claim
give to the insurer notice of continuance of said disability,
except in the event of legal incapacity. The period of six
months following any filing of proof by the insured or any
payment by the insurer on account of such claim or any denial of
liability, in whole or in part, by the insurer shall be excluded
in applying this provision. Delay in the giving of such notice
shall not impair the insured's right to any indemnity which would
otherwise have accrued during the period of six months preceding
the date on which such notice is actually given."
(f) A provision as follows:
"Claim Forms: The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually
furnished by it for filing proofs of loss. If such forms are not
furnished within fifteen days after the giving of such notice the
claimant shall be deemed to have complied with the requirements
of this policy as to proof of loss upon submitting, within the
time fixed in the policy for filing proofs of loss, written proof
covering the occurrence, the character and the extent of the loss
for which claim is made."
(g) A provision as follows:
"Proof of Loss: Written proof of loss must be furnished to
the insurer at its said office in case of claim for loss for
which this policy provides any periodic payment contingent upon
continuing loss within ninety days after the termination of the
period for which the insurer is liable and in case of claim for
any other loss within ninety days after the date of such loss.
Failure to furnish such proof within the time required shall not
invalidate nor reduce any claim if it was not reasonably possible
to give 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, later than one year from the time
proof is otherwise required."
(h) A provision as follows:
"Time of Payment of Claims: Indemnities payable under this
policy for any loss other than loss for which this policy
provides any periodic payment will be paid immediately upon
receipt of due written proof of such loss. Subject to due
written proof of loss, all accrued indemnities for loss for which
this policy provides periodic payment will be paid _____________
(insert period for payment which must not be less frequently than
monthly) and any balance remaining unpaid upon the termination of
liability will be paid immediately upon receipt of due written
proof."
(i) A provision as follows:
"Payment of Claims: Indemnity for loss of life will be
payable in accordance with the beneficiary designation and the
provisions respecting such payment which may be prescribed herein
and effective at the time of payment. If no such designation or
provision is then effective, such indemnity shall be payable to
the estate of the insured. Any other accrued indemnities unpaid
at the insured's death may, at the option of the insurer, be paid
either to such beneficiary or to such estate. All other
indemnities will be payable to the insured."
The following provisions, or either of them, may be included
with the foregoing provisions at the option of the insurer:
"If any indemnity of this policy shall be payable to the
estate of the insured, or to an insured or beneficiary who is a
minor or otherwise not competent to give a valid release, the
insurer may pay such indemnity, up to an amount not exceeding
$_________ (insert an amount which shall not exceed one thousand
dollars), to any relative by blood or connection by marriage of
the insured or beneficiary who is deemed by the insurer to be
equitably entitled thereto. Any payment made by the insurer in
good faith pursuant to this provision shall fully discharge the
insurer to the extent of such payment."
"Subject to any written direction of the insured in the
application or otherwise all or a portion of any indemnities
provided by this policy on account of hospital nursing, medical,
or surgical services may, at the insurer's option and unless the
insured requests otherwise in writing not later than the time of
filing proofs of such loss, be paid directly to the hospital or
person rendering such services; but it is not required that the
service be rendered by a particular hospital or person."
(j) A provision as follows:
"Physical Examinations and Autopsy: The insurer at its own
expense shall have the right and opportunity to examine the
person of the insured when and as often as it may reasonably
require during the pendency of a claim hereunder and to make an
autopsy in case of death where it is not forbidden by law."
(k) A provision as follows:
"Legal Actions: No action at law or in equity shall be
brought to recover on this policy prior to the expiration of
sixty days after written proof of loss has been furnished in
accordance with the requirements of this policy. No such action
shall be brought after the expiration of three years after the
time written proof of loss is required to be furnished."
(l) A provision as follows:
"Change of Beneficiary: Unless the insured makes an
irrevocable designation of beneficiary, the right to change of
beneficiary is reserved to the insured and the consent of the
beneficiary or beneficiaries shall not be requisite to surrender
or assignment of this policy or to any change of beneficiary or
beneficiaries, or to any other changes in this policy."
The first clause of this provision, relating to the
irrevocable designation of beneficiary, may be omitted at the insurer's option.
(m) In addition each policy, except accident insurance only
policies, in which the insurer reserves the right to refuse
renewal on an individual basis shall provide, in substance, in a
provision thereof or in an endorsement thereon or in a rider
attached thereto (entitled "Renewability" ), that subject to the
right to terminate the policy upon nonpayment of premiums when
due, such right to refuse renewal shall not be exercised before
the renewal date occurring on, or after and nearest, each
anniversary, or in the case of lapse and reinstatement at the
renewal date occurring on, or after and nearest, each anniversary
of the last reinstatement, and that any refusal of renewal shall
be without prejudice to any claim originating while the policy is
in force.
§33-15-5. Optional policy provisions.
Except as provided in section six of this article, no such
policy delivered or issued for delivery to any person in this
state shall contain provisions respecting the matters set forth
below unless such provisions are in the words in which the same
appear in this section: Provided, That the insurer may, at its
option, use in lieu of any such provision a corresponding provision of different wording approved by the commissioner which
is not less favorable in any respect to the insured or the
beneficiary. Any such provision contained in the policy shall be
preceded individually by the appropriate caption appearing in
this section or, at the option of the insurer, by such
appropriate individual or group captions or subcaptions as the
commissioner may approve.
(a) A provision as follows:
"Change of Occupation: If the insured be injured or
contract sickness after having changed his occupation to one
classified by the insurer as more hazardous than that stated in
this policy or while doing for compensation anything pertaining
to an occupation so classified, the insurer will pay only such
portion of the indemnities provided in this policy as the premium
paid would have purchased at the rates and within the limits
fixed by the insurer for such more hazardous occupation. If the
insured changes his occupation to one classified by the insurer
as less hazardous than that stated in this policy, the insurer,
upon receipt of proof of such change of occupation, will reduce
the premium rate accordingly, and will return the excess pro rata
unearned premium from the date of change of occupation or from the policy anniversary date immediately preceding receipt of such
proof, whichever is the more recent. In applying this provision,
the classification of occupational risk and the premium rates
shall be such as have been last filed by the insurer prior to the
occurrence of the loss for which the insurer is liable or prior
to date of proof of change in occupation with the state official
having supervision of insurance in the state where the insured
resided at the time this policy was issued; but if such filing
was not required, then the classification of occupational risk
and the premium rates shall be those last made effective by the
insurer in such state prior to the occurrence of the loss or
prior to the date of proof of change in occupation."
(b) A provision as follows:
"Misstatement of Age: If the age of the insured has been
misstated, all amounts payable under this policy shall be such as
the premium paid would have purchased at the correct age."
(c) A provision as follows:
"Other Insurance in This Insurer: If an accident or
sickness or accident and sickness policy or policies previously
issued by the insurer to the insured be in force concurrently
herewith, making the aggregate indemnity for ____________ (insert type of coverage or coverages) in excess of $____________ (insert
maximum limit of indemnity or indemnities) the excess insurance
shall be void and all premiums paid for such excess shall be
returned to the insured or to his estate."
Or, in lieu thereof:
"Insurance effective at any one time on the insured under a
like policy or policies in this insurer is limited to the one
such policy elected by the insured, his beneficiary or his
estate, as the case may be, and the insurer will return all
premiums paid for all other such policies."
Provided that no policy hereafter issued for delivery in
this state which provides, with or without other benefits, for
the payment of benefits or reimbursement for expenses with
respect to hospitalization, nursing care, medical or surgical
examination or treatment, or ambulance transportation shall
contain any provision for a reduction of such benefits or
reimbursement, or any provision for avoidance of the policy, on
account of other insurance of such nature carried by the same
insured with the same or another insurer.
(d) A provision as follows:
"Insurance with Other Insurers: If there be other valid coverage, not with this insurer, providing benefits for the same
loss on other than an expense incurred basis and of which this
insurer has not been given written notice prior to the occurrence
or commencement of loss, the only liability for such benefits
under this policy shall be for such proportion of the indemnities
otherwise provided hereunder for such loss as the like
indemnities of which the insurer had notice (including the
indemnities under this policy) bear to the total amount of all
like indemnities for such loss, and for the return of such
portion of the premium paid as shall exceed the pro rata portion
for the indemnities thus determined."
The insurer may, at its option, include in this provision a
definition of "other valid coverage," approved as to form by the
commissioner, which definitions shall be limited in subject
matter to coverage provided by organizations subject to
regulations by insurance law or by insurance authorities of this
or any other state of the United States or any province of
Canada, and to any other coverage the inclusion of which may be
approved by the commissioner. In the absence of such definition
such term shall not include group insurance, or benefits provided
by union welfare plans or by employer or employee benefit organizations. For the purpose of applying the foregoing policy
provisions with respect to any insured any amount of benefit
provided for such insured pursuant to any compulsory benefit
statute (including any workers' compensation or employer's
liability statute) whether provided by a governmental agency or
otherwise shall in all cases be deemed to be "other valid
coverage" of which the insurer has had notice. In applying the
foregoing policy provision no third party liability coverage
shall be included as "other valid coverage."
(e) A provision as follows:
"Relation of Earnings to Insurance: If the total monthly
amount of loss of time benefits promised for the same loss under
all valid loss of time coverage upon the insured, whether payable
on a weekly or monthly basis, shall exceed the monthly earnings
of the insured at the time disability commenced or his average
monthly earnings for the period of two years immediately
preceding a disability for which claim is made, whichever is the
greater, the insurer will be liable only for such proportionate
amount of such benefits under this policy as the amount of such
monthly earnings or such average monthly earnings of the insured
bears to the total amount of monthly benefits for the same loss under all such coverage upon the insured at the time such
disability commences and for the return of such part of the
premiums paid during such two years as shall exceed the pro rata
amount of the premiums for the benefits actually paid hereunder;
but this shall not operate to reduce the total monthly amount of
benefits payable under all such coverage upon the insured below
the sum of two hundred dollars or the sum of the monthly benefits
specified in such coverages, whichever is the lesser, nor shall
it operate to reduce benefits other than those payable for loss
of time."
The foregoing policy provision may be inserted only in a
policy which the insured has the right to continue in force
subject to its terms by the timely payment of premiums (1) until
at least age fifty or, (2) in the case of a policy issued after
age forty-four, for at least five years from its date of issue.
The insurer may, at its option, include in this provision a
definition of "valid loss of time coverage," approved as to form
by the commissioner, which definition shall be limited in subject
matter to coverage provided by governmental agencies or by
organizations subject to regulation by insurance law or by
insurance authorities of this or any other state of the United States or any province of Canada, or to any other coverage the
inclusion of which may be approved by the commissioner or any
combination of such coverages. In the absence of such definition
such term shall not include any coverage provided for such
insured pursuant to any compulsory benefit statute (including any
workers' compensation or employer's liability statute), or
benefits provided by union welfare plans or by employer or
employee benefit organizations.
(f) A provision as follows:
"Unpaid Premium: Upon the payment of a claim under this
policy, any premiums then due and unpaid or covered by any note
or written order may be deducted therefrom."
(g) A provision as follows:
"Return of Premium on Cancellation: If the insured cancels
this policy, the earned premium shall be computed by the use of
the short-rate table last filed with the state official having
supervision of insurance in the state where the insured resided
when the policy was issued. Cancellation shall be without
prejudice to any claim originating prior to the effective date of
cancellation."
(h) A provision as follows:
"Conformity with State Statutes: Any provision of this
policy which, on its effective date, is in conflict with the
statutes of the state in which the insured resides on such date
is hereby amended to conform to the minimum requirements of such
statutes."
(i) A provision as follows:
"Illegal Occupation: The insurer shall not be liable for
any loss to which a contributing cause was the insured's
commission of or attempt to commit a felony or to which a
contributing cause was the insured's being engaged in an illegal
occupation."
(j) A provision as follows:
"Intoxicants and Narcotics: The insurer shall not be liable
for any loss sustained or contracted in consequence of the
insured's being intoxicated or under the influence of any
narcotic unless administered on the advice of a physician."
ARTICLE 16. GROUP ACCIDENT AND SICKNESS INSURANCE.
§33-16-3. Required policy provisions.
Each such policy hereafter delivered or issued for delivery
in this state shall contain in substance the following
provisions:
(a) A provision that the policy, the application of the
policyholder, a copy of which shall be attached to such policy,
and the individual applications, if any, submitted in connection
with such policy by the employees or members, shall constitute
the entire contract between the parties, and that all statements
made by any applicant or applicants shall be deemed
representations and not warranties, and that no such statement
shall void the insurance or reduce benefits thereunder unless
contained in a written application.
(b) A provision that the insurer will furnish to the
policyholder, for delivery to each employee or member of the
insured group, an individual certificate setting forth in
substance the essential features of the insurance coverage of
such employee or member and to whom benefits thereunder are
payable. If dependents are included in the coverage, only one
certificate need be issued for each family unit.
(c) A provision that all new employees or members, as the
case may be, in the groups or classes eligible for insurance,
shall from time to time be added to such groups or classes
eligible to obtain such insurance in accordance with the terms of
the policy.
(d) No provision relative to notice or proof of loss or the
time for paying benefits or the time within which suit may be
brought upon the policy shall be less favorable to the insured
than would be permitted in the case of an individual policy by
the provisions set forth in article fifteen of this chapter.
(e) A provision that all members in groups or classes
eligible for insurance provided through an employee's group plan
shall be permitted to pay the premiums at the same group rate and
receive the same coverages for a period not to exceed eighteen
thirty-six months when they are involuntarily laid off or
voluntarily terminated from work.
(f) Such further provisions establishing group accident and
sickness minimum policy coverage standards as the commissioner
shall promulgate by rule pursuant to chapter twenty-nine-a of
this code.
ARTICLE 16D. MARKETING AND RATE PRACTICES FOR SMALL EMPLOYER
ACCIDENT AND SICKNESS INSURANCE POLICIES.
§33-16D-5. Premium rates for small employers; classes; maximum
rates; eligibility for rate increases.
(a) Premium rates for health benefit plans subject to this
article shall be subject to the following provisions:
(1) The index rate for a rating period for any class of business shall not exceed the index rate for any other class of
business by more than twenty percent: Provided, That this
subdivision shall not apply to a class of business if all of the
following apply:
(A) The class of business is one for which the carrier does
not reject, and never has rejected, small employers included
within the definition of employers eligible for the class of
business or otherwise eligible employees and dependents who
enroll on a timely basis, based upon their claim experience or
health status;
(B) The carrier does not involuntarily transfer, and never
has involuntarily transferred, a health benefits plan into or out
of the class of business; and
(C) The class of business is currently available for
purchase.
(2) For a class of business, the premium rates charged
during a rating period to small employers with similar case
characteristics for the same or similar coverage, or the rates
which could be charged to such employers under the rating system
for that class of business, shall not vary from the index rate by
more than twenty-five percent of the index rate.
(3) The percentage increase in the premium rate charged to
a small employer for a new rating period may not exceed the sum
of the following:
(A) The percentage change in the new business premium rate
measured from the first day of the prior rating period to the
first day of the new rating period. In the case of a class of
business for which the small employer carrier is not issuing new
policies, the carrier shall use the percentage change in the base
premium rate;
(B) An adjustment, not to exceed fifteen percent annually
and adjusted pro rata for rating periods of less than one year,
due to the claim experience, health status or duration of
coverage of the employees or dependents of the small employers as
determined from the carrier's rate manual for the class of
business; and
(C) Any adjustment due to change in coverage or change in
the case characteristics of the small employer as determined from
the carrier's rate manual for the class of business.
(4) In the case of health benefit plans issued prior to the
effective date of this article, a premium rate for a rating
period may exceed the ranges described in subdivision (1) or (2) of this subsection for a period of five years following the
effective date of this article. In that case, the percentage
increases in the premium rate charged to a small employer in such
a class of business for a new rating period may not exceed the
sum of the following:
(A) The percentage change in the new business premium rate
measured from the first day of the prior rating period to the
first day of the new rating period. In the case of a class of
business for which the small employer carrier is not issuing new
policies, the carrier shall use the percentage change in the base
premium rate; and
(B) Any adjustment due to change in coverage or change in
the case characteristics of the small employer as determined from
the carrier's rate manual for the class of business.
(b) Nothing in this section is intended to affect the use by
a small employer carrier of legitimate rating factors other than
claim experience, health status or duration of coverage in the
determination of premium rates. Small employer carriers shall
apply rating factors, including case characteristics,
consistently with respect to all small employers in a class of
business.
(c) Adjustments in rates for claim experience, health status
and duration of coverage may not be charged to individual
employees or dependents. Any such adjustment shall be applied
uniformly to the rates charged for all employees and dependents
of the small employer.
(d) A small employer carrier shall utilize industry as a
case characteristic in establishing premium rates: Provided,
That the highest rate factor associated with any industry
classification shall not exceed the lowest rate factor associated
with any industry classification by more than fifteen percent.
(e) Small employer carriers shall apply rating factors,
including case characteristics, consistently with respect to all
small employers in a class of business. Rating factors shall
produce premiums for identical groups which differ only by
amounts attributable to plan design and do not reflect
differences due to the nature of the groups assumed to select
particular health benefit plans.
(f) A small employer carrier may not involuntarily transfer
a small employer into or out of a class of business. A small
employer carrier may not offer to transfer a small employer into
or out of a class of business unless such offer is made to transfer all small employers in the class of business without
regard to case characteristics, claim experience, health status
or duration since issue.
(g) To be eligible to make a rate increase request after the
first day of July, one thousand nine hundred ninety-three, a
carrier shall have a minimum anticipated loss ratio of
seventy-three seventy-five percent. In calculating its minimum
anticipated loss ratio, an insurer shall include in its actual
incurred claims the amount of premium taxes for the same
experience period which are attributable to the policy forms or
certificates affected by this section and which were paid to the
state of West Virginia pursuant to the provisions of article
three of this chapter.
(h) All insurers carriers subject to this article, effective
the first day of July, one thousand nine hundred ninety-three,
shall be prohibited from distinguishing more than four classes of
business within its small group insurance coverage.
(i) If any health benefit plan is provided by a carrier
through an association of small employers not in the business of
selling insurance and with not fewer than two hundred cumulative
employees, and if such association is rated on the basis of the number of employees and not on the basis of the individual small
employers, such association or group is exempt from the
provisions of this article.
§33-16D-12. Equality of terms; preexisting conditions;
continuous coverage restrictions.
Health benefit plans and, to the extent permitted by the
federal Employee Retirement Income Security Act (ERISA), other
benefit arrangements covering small employers shall be subject to
the following provisions:
(a) Preexisting conditions provisions may not exclude
coverage for a period beyond twelve six months following an
individual's effective date of coverage and may only relate to
conditions which had, during the twelve six months immediately
preceding the effective date of coverage, manifested themselves
in such a manner as would cause an ordinarily prudent person to
seek medical advice, diagnosis, care or treatment or for which
medical advice, diagnosis, care or treatment was recommended or
received, or as to a pregnancy existing on the effective day of
coverage.
(b) In determining whether a preexisting condition
limitation provisions applies to an eligible employee or dependent, all health benefit plans shall credit the time such
person was covered under a previous employer-based health benefit
plan, a comparable individual health benefit plan, or a
self-insured plan if the previous coverage was continuous to a
date not more than thirty days prior to the effective date of the
new coverage, exclusive of any applicable waiting period under
such plan.
(c) Subject to subsections (a) and (b) of this section, when
a small group employer converts its health benefit plan from one
health benefit plan to another health benefit plan or from one
carrier to another carrier, all eligible employees who at the
time of conversion are covered by the health benefit plan shall
be offered health benefits coverage under the subsequent plan,
and no employee who at the time of conversion is covered by a
health benefit plan offered by said employer may be treated any
differently relative to other covered employees under the new
health benefit plan than he or she is treated under the current
health benefit plan.
NOTE: The purpose of this bill is to strengthen health insurance laws such that health insurance consumers are treated
more fairly and health insurance benefits paid out by health
insurers are reasonable in relation to the premium paid by the
consumer. The bill: Raises the loss ratios which an insurer
must show on individual accident and sickness policies in order
to be eligible to receive a premium rate increase; makes
individual accident and sickness policies guaranteed renewable;
creates rate deviation standards which individual major medical
policies must meet; extends the mandatory period during which an
employee must be given the opportunity to purchase converted
group health insurance coverage after separation from employment;
raises the loss ratios which a small group health insurer must
show to be eligible to receive a rate increase; and reduces the
period during which small employer group insurers may deny
coverage of a preexisting medical condition of the insured.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.
§33-15-1b is new; therefore, strike-throughs and
underscoring have been omitted.