PRIOR PRINTER'S NO. 3378 PRINTER'S NO. 3445
No. 2586 Session of 1992
INTRODUCED BY MURPHY, DeWEESE, KUKOVICH, KOSINSKI, WAMBACH,
CAPPABIANCA, BLAUM, TIGUE, McHALE, KENNEY, DeLUCA, CARN,
LaGROTTA, FAJT, PESCI, JOSEPHS, STEIGHNER, VAN HORNE, CARONE,
HALUSKA, CLARK, SCRIMENTI, TANGRETTI, MELIO, HARPER,
F. TAYLOR, BUTKOVITZ, GAMBLE, HUGHES, FREEMAN, SALOOM, COY,
WOZNIAK, PISTELLA AND OLASZ, MARCH 31, 1992
AS REPORTED FROM COMMITTEE ON INSURANCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, APRIL 7, 1992
AN ACT
1 Amending Title 40 (Insurance) of the Pennsylvania Consolidated
2 Statutes, providing for health insurance reforms and
3 protections to consumers by limiting reasons of cancellation
4 of insurance, COVERAGE FOR DEPENDENT CHILDREN, <--
5 CONTESTABILITY, continuation of coverage of consumers in
6 instances of total disability, replacement of group coverage
7 by another insurer in continuity of coverage of the consumers
8 who change groups.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Part II of Title 40 of the Pennsylvania
12 Consolidated Statutes is amended by adding an article to read:
13 ARTICLE C
14 HEALTH INSURANCE
15 Chapter
16 73. Policy Requirements
17 CHAPTER 73
18 POLICY REQUIREMENTS
1 Sec.
2 7301. Short title of chapter.
3 7302. Definitions.
4 7303. Termination of insurance.
5 7304. Group health insurance agreements; successor
6 agreements.
7 7305. Continuation of coverage for individuals who change
8 groups.
9 7306. Prohibition of excluding any person in a group contract
10 based on that person's health history or genetic status.
11 7307. Extension of benefits for disabled persons.
12 7308. Preexisting condition exclusion.
13 7309. Coordination of benefits.
14 7310. Requirement of a receipt with ten day free look
15 provision.
16 7311. COVERAGE FOR DEPENDENT CHILDREN. <--
17 7312. CONTESTABILITY.
18 7311 7313. Penalties. <--
19 § 7301. Short title of chapter.
20 This chapter shall be known and may be cited as the Health
21 Insurance Consumer Bill of Rights Act.
22 § 7302. Definitions.
23 The following words and phrases when used in this chapter
24 shall have the meanings given to them in this section unless the
25 context clearly indicates otherwise:
26 "Department." The Insurance Department of the Commonwealth.
27 "Genetic status." The presence of a physical condition in an
28 individual which is a result of an inherited trait.
29 "Group health contract." A group health insurance agreement
30 issued by an insurer to cover employees of an employer, a trust
19920H2586B3445 - 2 -
1 fund established to cover employees of one or more employers and
2 an association of employees.
3 "Group health insurance agreement." A health insurance
4 agreement providing group health benefits.
5 "Health insurance agreement." An accident and health
6 insurance policy, contract or group insurance certificate issued
7 by an insurer.
8 "Insurer." Any insurance company, association or reciprocal,
9 nonprofit hospital company, nonprofit professional health
10 service plan, health maintenance organization, fraternal
11 benefits society or any risk-bearing PPO and nonrisk-bearing PPO
12 not governed and regulated under the Employee Retirement Income
13 Security Act of 1974 (Public Law 93-406, 29 U.S.C. § 1001 et
14 seq.).
15 "PPO." A preferred provider organization subject to the
16 provisions of section 630 of the act of May 17, 1921 (P.L.682,
17 No.284), known as The Insurance Company Law of 1921.
18 "Preexisting condition." A disease or physical condition for
19 which medical advise or treatment has been received within 90
20 days immediately prior to the effective date of coverage under a
21 group health contract.
22 "Terminate." Includes cancellation, renewal and rescission.
23 § 7303. Termination of insurance.
24 (a) Prohibition.--An insurer shall not terminate a health
25 insurance agreement for any reason except as permitted under
26 this section.
27 (b) Permissible termination.--An insurer may terminate a
28 health insurance agreement subsequent to the expiration of ten
29 days following the date of written notice to the insured if:
30 (1) the premium for the health insurance agreement is
19920H2586B3445 - 3 -
1 due and payable and remains unpaid beyond the date required
2 for payment;
3 (2) the applicant is a person convicted of fraud in
4 applying for insurance or making a claim for insurance
5 benefits; or
6 (3) an insurer is determined by the Insurance
7 Commissioner to be in jeopardy of insolvency, PROVIDED THAT <--
8 THE HEALTH INSURANCE AGREEMENT IS PLACED WITH ANOTHER INSURER
9 WITHOUT ANY PREEXISTING CONDITION EXCLUSION.
10 (c) Withdrawal and termination.--An insurer may terminate
11 all health insurance agreements only upon and subsequent to
12 complete withdrawal from the accident and health insurance
13 market in this Commonwealth by amendment of its certificate of
14 authority. Any termination under this provision for withdrawal
15 shall not occur sooner than the renewal date and only after the
16 expiration of not less than 30 days following the date of
17 written notice of termination to the insured.
18 (d) Construction.--This section shall not be construed to
19 prohibit the sale of a specific block of business by one insurer
20 to another insurer licensed in this Commonwealth.
21 (e) Review.--An insured or policyholder may request the
22 department to review in the manner provided for by law any
23 termination of a health insurance agreement. Except for
24 terminations occurring under the provisions of this section
25 relating to withdrawals, the insured's coverage under the health
26 insurance agreement shall not be terminated and shall continue
27 in full force and effect until the issuance of a finding by the
28 department that the termination was not unlawful.
29 § 7304. Group health insurance agreements; successor
30 agreements.
19920H2586B3445 - 4 -
1 (a) Continuation of coverage.--Except as otherwise provided
2 in this section, a person shall be entitled to and be provided
3 coverage and benefits under a group health insurance agreement
4 without regard to a preexisting condition exclusion period if:
5 (1) the group health insurance agreement is issued to
6 the policyholder as a replacement and successor to a prior
7 group health insurance agreement; and
8 (2) the person was covered under the prior group health
9 insurance agreement.
10 (b) Exception.--Any unexpired time period of a preexisting
11 condition exclusion period for any medical condition contained
12 in a prior group health insurance agreement may be applied to
13 any person who otherwise would qualify for coverage and benefits
14 under this section in the manner required by section 7308
15 (relating to preexisting condition exclusion).
16 (c) Applicability.--Long-term care benefits and disability
17 income benefits shall not be subject to this section.
18 § 7305. Continuation of coverage for individuals who change
19 groups.
20 (a) Continuation of coverage.--Except as otherwise provided
21 in this section, a person shall be entitled to and be provided
22 coverage and benefits under a group health contract without
23 regard to a preexisting condition exclusion period or a waiting
24 period if:
25 (1) the person was covered under a prior group health
26 contract for at least six months; and
27 (2) the insurer receives the application of the person
28 for coverage governed by this provision within three months
29 of the date of termination of coverage under a prior group
30 health contract.
19920H2586B3445 - 5 -
1 (b) Exception.--Any unexpired time period of a preexisting
2 condition exclusion period or waiting period contained in a
3 prior group health contract may be applied to any person who
4 otherwise would qualify for coverage and benefits under this
5 section in the manner required by section 7308 (relating to
6 preexisting condition exclusion).
7 (c) Construction.--Nothing in this section shall be
8 construed to require any employer or insurer to issue or provide
9 the same benefits or similar benefits or extent of coverage
10 contained in a prior group health contract.
11 (d) Applicability.--This section shall not apply to long-
12 term care benefits or to disability income benefits.
13 § 7306. Prohibition of excluding any person in a group contract
14 based on that person's health history or genetic
15 status.
16 (a) Prohibition.--No person shall be denied coverage under a
17 group health insurance agreement who is otherwise eligible for
18 coverage as a group member but for such person's health history,
19 genetic status or specific preexisting condition, except for a
20 preexisting condition permitted under section 7308 (relating to
21 preexisting condition exclusion).
22 (b) Applicability.--This section shall not apply to group
23 long-term care policies.
24 § 7307. Extension of benefits for disabled persons.
25 (a) Requirement.--Every group health insurance agreement
26 must provide an extension of benefits of at least six months for
27 a person, including a dependent child covered under such
28 agreement, who is totally disabled on the date such agreement
29 terminated or on the date coverage for a subgroup under such
30 agreement terminated. A person or dependent may not be charged
19920H2586B3445 - 6 -
1 during the period of extension. The benefits payable during any
2 period of extension are subject to the regular benefit limits
3 under the group health insurance agreement.
4 (b) Description and extent of benefits.--No group health
5 insurance agreement may be issued unless it contains a provision
6 providing for and describing the extension of benefits required
7 by this section.
8 (c) Liability after termination.--After termination of a
9 health insurance agreement, the insurer remains liable only to
10 the extent of its accrued liabilities and extensions of
11 benefits. The liability of the insurer is the same whether the
12 group policyholder or other entity secures replacement coverage
13 from an insurer or forgoes the provision of coverage.
14 (d) Applicability.--This section shall not apply to group
15 long-term care policies or group long-term disability policies
16 or group policies providing coverage only for dental expense
17 issued by insurers.
18 (e) Definition.--As used in this section, the term "total
19 disability" means the inability of the insured to perform all
20 the substantial and material duties of the insured's occupation.
21 § 7308. Preexisting condition exclusion.
22 A preexisting condition exclusion shall not exclude, limit or
23 reduce coverage or benefits in a group health insurance
24 agreement or a group health contract beyond six months from the
25 effective date of coverage.
26 § 7309. Coordination of benefits.
27 (a) Requirements.--Except as otherwise provided in this
28 section, every group health insurance agreement shall contain a
29 coordination of benefits provision which shall:
30 (1) Provide that no insured shall collect duplicative
19920H2586B3445 - 7 -
1 benefits under more than one group health insurance
2 agreement.
3 (2) State the priority for payment of benefits by a
4 primary insurer and other insurers.
5 (3) Limit payment of benefits to no more than 100% of
6 all covered health care benefits.
7 (4) Provide that an insured cannot be limited to an
8 amount in which the total reimbursement from all plans to the
9 amount one plan would have paid in absence of the insured's
10 other coverage.
11 (5) Include such other standards and requirements as the
12 Insurance Commissioner may promulgate by regulation.
13 (b) Applicability.--Group health insurance agreements which
14 provide coverage pursuant to a collective bargaining agreement
15 shall not be subject to this section.
16 § 7310. Requirement of a receipt with ten day free look
17 provision.
18 Where the insurer uses agents to effect delivery of a policy,
19 a delivery receipt shall be used. Such receipt must be in carbon
20 duplicate sets and state the date the policy was received by the
21 policyholder. The receipt date shall be the date on which the
22 policyholder and agent sign the delivery receipt and such date
23 shall commence the ten-day policy examination period. Copies of
24 the delivery receipt must be provided to the policyholder, on
25 the date of policy delivery, and to the issuing insurer.
26 § 7311. COVERAGE FOR DEPENDENT CHILDREN. <--
27 NO INSURER SHALL EXCLUDE ANY DEPENDENT CHILD FROM THE
28 PARENTS' HEALTH INSURANCE AGREEMENT BECAUSE THE CHILD DOES NOT
29 RESIDE IN THE PARENTS' HOUSEHOLD.
30 § 7312. CONTESTABILITY.
19920H2586B3445 - 8 -
1 AN INSURER SHALL NOT ISSUE A HEALTH INSURANCE AGREEMENT IN
2 THIS COMMONWEALTH WHICH CONTAINS A CONTESTABLE PERIOD OF GREATER
3 THAN TWO YEARS FROM THE DATE OF ISSUE.
4 § 7311 7313. Penalties. <--
5 Upon satisfactory evidence of a violation of this chapter by
6 an insurer, the Insurance Commissioner may:
7 (1) Order that the insurer cease and desist from the
8 violation.
9 (2) Impose a civil penalty of not more than $5,000 for
10 each violation.
11 Section 2. The provisions of this act are severable. If any
12 provision of this act or its application to any person or
13 circumstance is held invalid, the invalidity shall not affect
14 other provisions or applications of this act which can be given
15 effect without the invalid provision or application.
16 Section 3. All acts and parts of acts are repealed insofar
17 as they are inconsistent with this act.
18 Section 4. (a) This act shall apply to every individual
19 accident and health insurance policy or contract issued by an
20 insurer on or after the effective date of this act.
21 (b) This act shall apply to every group accident and health
22 insurance policy or contract or group insurance certificate
23 issued, reissued, renewed or amended by an insurer on or after
24 the effective date of this act.
25 Section 5. This act shall take effect in 90 days.
C13L40DGS/19920H2586B3445 - 9 -