SENATE AMENDED
PRIOR PRINTER'S NOS. 725, 2233 PRINTER'S NO. 2865
No. 646 Session of 1975
INTRODUCED BY MESSRS. A. K. HUTCHINSON, STAHL, SCHMITT,
MRS. GILLETTE, MESSRS. BARBER, TRELLO, MRS. TOLL, AND
MR. COHEN, MARCH 4, 1975
SENATOR HANKINS, INSURANCE, IN SENATE, AS AMENDED, MARCH 8, 1976
AN ACT
1 To provide reasonable standardization and simplification of
2 terms and coverages of individual accident and health
3 insurance policies and subscriber contracts of health plan
4 corporations, nonprofit health service plans and certificates
5 issued by fraternal benefit societies to facilitate public
6 understanding and comparison, to eliminate provisions
7 contained in individual accident and health insurance
8 policies and subscriber contracts of health plan corporations
9 and nonprofit health service plans and certificates issued by
10 fraternal benefit societies which may be misleading or
11 unreasonably confusing in connection either with the purchase
12 of such coverages or with the settlement of claims, and to
13 provide for full disclosure in the sale of accident and
14 health coverages.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. Short Title.--This act shall be known and may be
18 cited as the "Individual Accident and Sickness Insurance Minimum
19 Standards Act."
20 Section 2. Definitions.--(a) As used in this act:
21 "Accident and health insurance" means insurance written under
22 section 202(a)(1) and (2) (other than life insurance and
23 annuities) and section 202(c)(2) of The Insurance Company Law of
1 1921 and 40 Pa. C.S. § 6526, other than credit accident and
2 health insurance.
3 "Forms" means policies, contracts, riders, endorsements, and
4 applications subject to approval by the Insurance Commissioner,
5 under section 354 of The Insurance Company Law of 1921 or
6 section 11 of the Voluntary Nonprofit Health Service Act of
7 1972, or 40 Pa. C.S. §§ 6124 and 6329.
8 "Policy" means the entire contract between the insurer and
9 the insured, including the policy, riders, endorsements and the
10 application, if attached, and also includes subscriber contracts
11 issued by health plan corporations, nonprofit health service
12 plans and certificates issued by fraternal benefit societies.
13 (b) Health plan corporations, nonprofit health service plans
14 and fraternal benefit societies shall be deemed to be engaged in
15 the business of insurance.
16 Section 3. Standards for Policy Provisions.--(a) The
17 Insurance Commissioner shall issue regulations to establish
18 specific standards, including standards of full and fair
19 disclosure, that set forth the manner, content and required
20 disclosures for their sale for individual policies of accident
21 and health insurance and subscriber contracts of health plan
22 corporations and nonprofit health service plans and certificates
23 issued by fraternal benefit societies and required disclosures
24 for their sale. These regulations shall be in addition to
25 applicable laws of this Commonwealth and may cover but shall not
26 be limited to:
27 (1) terms of renewability;
28 (2) initial and subsequent conditions of eligibility;
29 (3) non-duplication of coverage provisions;
30 (4) coverage of dependents;
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1 (5) pre-existing conditions;
2 (6) termination of insurance;
3 (7) probationary periods;
4 (8) limitations;
5 (9) exceptions;
6 (10) reductions;
7 (11) elimination periods;
8 (12) requirements for replacement;
9 (13) recurrent conditions; and
10 (14) the definition of terms, including but not limited to,
11 the following: "hospital," "accident," "sickness," "injury,"
12 "physician," "accidental means," "total disability," partial
13 disability," "nervous disorder," "guaranteed renewable," and
14 "non-cancellable."
15 (b) The Insurance Commissioner may issue regulations that
16 specify prohibited policy provisions not otherwise specifically
17 prohibited by statute which in the opinion of the Insurance
18 Commissioner are unjust, unfair, or unfairly discriminatory to
19 the policyholder, SUBSCRIBER, any person insured under the <--
20 policy, or beneficiary.
21 Section 4. Minimum Standards for Benefits.--(a) The
22 Insurance Commissioner shall issue regulations to establish
23 minimum standards for benefits under each of the following
24 categories of coverage in individual policies of accident and
25 health insurance and subscriber contracts of health plan
26 corporations and nonprofit health service plans and certificates
27 issued by fraternal benefit societies:
28 (1) basic hospital expense coverage;
29 (2) basic medical-surgical expense coverage;
30 (3) hospital confinement indemnity coverage;
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1 (4) major medical expense coverage;
2 (5) disability income protection coverage;
3 (6) accident only coverage;
4 (7) specified disease or specified accident coverage; and
5 (8) supplemental coverage shall be permitted for all
6 preceding categories of coverages with the exception of
7 paragraph (7).
8 (b) Nothing in this section shall preclude the issuance of
9 any policy or contract which combines two or more of the
10 categories of coverage enumerated in paragraphs (1) through (7)
11 of subsection (a).
12 (c) No policy or contract shall be delivered or issued for
13 delivery in this State which does not meet the prescribed
14 minimum standards for the THOSE categories of coverage listed in <--
15 paragraphs (1) through (8) of subsection (a) which are contained
16 within the policy or contract unless the Insurance Commissioner
17 finds THAT such policy or contract will be in the public <--
18 interest and such policy or contract provides benefits that are
19 reasonable in relation to the premium charged. NOT BE UNJUST, <--
20 UNFAIR OR UNFAIRLY DISCRIMINATORY TO THE POLICYHOLDER,
21 SUBSCRIBER, ANY PERSON INSURED UNDER THE POLICY, OR BENEFICIARY.
22 CHANGES TO A POLICY OR CONTRACT REQUIRED BY REGULATIONS
23 PROMULGATED PURSUANT TO THIS ACT, INCLUDING CHANGES TO PREMIUM
24 RATES APPLICABLE THERETO, SHALL BE PERMITTED BY ENDORSEMENT OR
25 RIDER UNLESS THE COMMISSIONER SHALL DETERMINE THAT SUCH CHANGE
26 OR CHANGES SUBSTANTIALLY ALTERS THE POLICY OR CONTRACT.
27 (D) NOTWITHSTANDING ANY OTHER PROVISION OF THIS ACT OR
28 REGULATIONS PROMULGATED HEREUNDER, ANY POLICY OR CONTRACT
29 SUBMITTED FOR APPROVAL WHICH DOES NOT MEET THE PRESCRIBED
30 MINIMUM STANDARDS FOR THOSE CATEGORIES OF COVERAGE LISTED IN
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1 PARAGRAPHS (1) THROUGH (8) OF SUBSECTION (A) WHICH ARE CONTAINED
2 WITHIN THE POLICY OR CONTRACT MAY BE APPROVED IF, IN THE OPINION
3 OF THE INSURANCE COMMISSIONER, SUCH POLICY OR CONTRACT IS NOT
4 UNJUST, UNFAIR, OR UNFAIRLY DISCRIMINATORY TO THE POLICYHOLDER,
5 SUBSCRIBER, ANY PERSON INSURED UNDER THE POLICY OR BENEFICIARY.
6 (d) (E) The Insurance Commissioner shall issue regulations <--
7 prescribing the method of identification of policies and
8 contracts based upon coverages provided.
9 Section 5. Outline of Coverage.--(a) In order to provide for
10 full and fair disclosure in the sale of individual accident and
11 health insurance policies or subscriber contracts of a health
12 plan corporation or a nonprofit health service plan or
13 certificates issued by fraternal benefit societies, EXCEPT FOR <--
14 SUPPLEMENTAL POLICIES SOLD ON THE DEBIT PLAN, AND EXCEPT FOR
15 RIDERS OR AMENDMENTS TO POLICIES OR CONTRACTS, no such policy or
16 contract shall be delivered or issued for delivery in this State
17 unless the outline of coverage described in subsection (b)
18 either accompanies the policy or is delivered to the applicant
19 at the time application is made. and an acknowledgment of <--
20 receipt or certificate of delivery of such outline is provided
21 the insurer. In the event the policy is issued on a basis other
22 than that applied for, an amended outline of coverage properly
23 describing the policy or contract must accompany the policy or
24 contract when it is delivered. The amended outline of coverage
25 must prominently state that it is not the policy or contract for
26 which application was made.
27 (b) The Insurance Commissioner shall issue regulations
28 prescribing the format and contents of the outline of coverage
29 required by subsection (a). "Format" means style, arrangement,
30 and overall appearance, including such items as the size, color
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1 and prominence of type and the arrangement of text and captions.
2 The outline of coverage shall include, in a form understandable
3 to a person of average intelligence and education:
4 (1) a statement identifying the applicable category or
5 categories of coverage provided by the policy or contract as
6 prescribed in section 4;
7 (2) a description of the principal benefits and coverage
8 provided in the policy or contract;
9 (3) a statement of the exceptions, reductions and
10 limitations contained in the policy or contract;
11 (4) a statement of the renewal provisions including any
12 reservation by the insurer of a right to change premiums; and
13 (5) a statement that the outline is a summary of the policy
14 or contract issued or applied for and that the policy or
15 contract should be consulted to determine governing contractual
16 provisions.
17 Section 6. Pre-existing Conditions.--(a) Notwithstanding the
18 provisions of section 618(A)(2) of The Insurance Company Law of
19 1921, if an insurer elects to use a simplified application form,
20 with or without a question as to the applicant's health at the
21 time of application, but without any questions concerning the
22 insured's health history or medical treatment history, the
23 policy must cover any loss occurring after 12 months from any
24 pre-existing condition not specifically excluded from coverage
25 by terms of the policy, and, except as so provided, the policy
26 or contract shall not include wording that would permit a
27 defense based upon pre-existing conditions. CHANGES TO POLICIES <--
28 OR CONTRACTS REQUIRED UNDER THIS SECTION, INCLUDING CHANGES TO
29 PREMIUM RATES APPLICABLE THERETO, SHALL BE PERMITTED BY
30 ENDORSEMENT OR RIDER.
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1 Section 7. Effective Dates of Regulations.--Regulations <--
2 promulgated under the act shall specify an effective date
3 applicable to policy and benefit riders delivered or issued for
4 delivery in this Commonwealth on and after said effective date
5 which shall not be less than 180 days after the adoption or
6 promulgation.
7 SECTION 7. EFFECTIVE DATES OF REGULATIONS; HEARINGS.--ALL <--
8 REGULATIONS PROMULGATED UNDER THIS ACT, INCLUDING THOSE RELATING
9 TO SECTION 4(C), SHALL SPECIFY AN EFFECTIVE DATE APPLICABLE TO
10 POLICIES OR BENEFIT RIDERS DELIVERED OR ISSUED FOR DELIVERY IN
11 THIS COMMONWEALTH ON OR AFTER SAID EFFECTIVE DATE WHICH SHALL
12 NOT BE LESS THAN 365 DAYS AFTER THEIR ADOPTION OR PROMULGATION.
13 ALL REGULATIONS PROMULGATED PURSUANT TO THIS ACT SHALL BE ISSUED
14 IN ACCORDANCE WITH THE APPLICABLE PROVISIONS OF THE ACT OF JULY
15 31, 1968 (P.L.769, NO.240), KNOWN AS THE "COMMONWEALTH DOCUMENTS
16 LAW." PUBLIC HEARINGS SHALL BE HELD PRIOR TO THE PROMULGATION OF
17 ANY SUCH REGULATION, INCLUDING A VERBATIM TRANSCRIPT AND CROSS-
18 EXAMINATION OF ALL WITNESSES IN ACCORDANCE WITH APPLICABLE RULES
19 OF PROCEDURE, UNLESS SUCH REGULATION OR AMENDMENT IS
20 INSUBSTANTIAL. THE ORDER PROMULGATING ANY SUCH REGULATION SHALL
21 CONTAIN FINDINGS AND THE REASONS FOR THE REGULATION; PROVIDED
22 THAT THIS SECTION SHALL NOT CREATE OR PERMIT ANY RIGHT OF ACTION
23 AT LAW OR EQUITY NOT OTHERWISE AUTHORIZED OR PERMITTED UNDER THE
24 LAW OF THE COMMONWEALTH. COPIES OF SUCH ORDERS SHALL BE MAILED
25 TO THOSE APPEARING OF RECORD AT THE HEARING.
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