ENROLLED
Senate Bill No. 332
(By Senators Helmick and Ross)
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[Passed March 8, 1996; in effect ninety days from passage.]
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AN ACT to amend and reenact section five-b, article twenty-eight,
chapter thirty-three of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, relating to
medicare supplement insurance.
Be it enacted by the Legislature of West Virginia:
That section five-b, article twenty-eight, chapter thirty-
three of the code of West Virginia, one thousand nine hundred
thirty-one, as amended, be amended and reenacted to read as
follows:
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 corporations or health maintenance
organizations), other than a policy issued pursuant to a contract
under Section 1876 of the federal Social Security Act (42 U.S.C.
Section 1395 et seq.), or an issued policy under a demonstration
project specified in 42 U.S.C. §1395ss(g)1), 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; or
(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 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 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 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 content
of the outline of coverage required by subdivision (1) of this
subsection. For purposes of this 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 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 or certificate within 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 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)
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.