H. B. 4470
(By Delegates H. K. White, Beach, Houston,
Marshall, Kominar, Ron Thompson,
Iaquinta and G. White)
[Introduced February 9, 2006; referred to the
Committee on Banking and Insurance then the Judiciary.]
A BILL to amend and reenact §33-16-3d of the Code of West Virginia,
1931, as amended, relating to updating the definition of
"medicare supplement policy."
Be it enacted by the Legislature of West Virginia:
That §33-16-3d of the Code of West Virginia, 1931, as amended,
be amended and reenacted 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
or individual policy of accident and sickness insurance or a subscriber contract
(of hospital and medical service
corporations associations or
health maintenance organizations), other than a policy issued
pursuant to a contract under Section 1876
or 1833 of the federal
Social Security Act (42 U.S.C. Sections 1395 et seq.) or an issued
policy under a demonstration project
authorized specified pursuant
to amendments to the federal Social Security Act
in Section 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;
(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. "Medicare supplement policy" does
not include medicare advantage plans established under medicare
part C, outpatient prescription drug plans established under
medicare part D, or any health care prepayment plan (HCPP) that
provides benefits pursuant to an agreement under Section
1833(a)(1)(A) of the Social Security Act.
(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 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 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 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) above. 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.
NOTE: The purpose of this bill is to update the definition of
"Medicare supplement policy" in accordance with the uniform
definition developed by the National Association of Insurance
Commissioners.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.