Subchapter C. REQUIREMENTS FOR ACCIDENT AND
HEALTH INSURANCE
INDIVIDUAL POLICIES Sec.
89.71. General.
89.72. Applications.
89.73. Required statements in policies.
89.74. Renewability and cancellation of policies.
89.75. Use of certain words and terms.
89.76. Suspension and termination.
89.77. Exclusions.
89.78. Multiple benefits.
89.79. Accident policies not providing coverage for sickness.
89.80. Loss of time benefits.
89.81. Riders and endorsements.
89.82. Miscellaneous policy provisions.
89.83. Rates.
89.84. Discrimination prohibited.
89.85. Severability.
GROUP POLICIES
89.91. General filing requirements.
89.92. Use of certain words and terms.
89.93. Termination of policy.
89.94. Exclusions.
89.95. Loss of time benefits.
89.96. Certificates.
89.97. Miscellaneous policy provisions.
89.97a. Maternity benefits in group converted policies—statement of policy.
89.98. Major medical.
89.99. Student accident and sickness insurance.
Source The provisions of this Subchapter C amended August 1, 1975, effective August 2, 1975, 5 Pa.B. 1972, unless otherwise noted.
Cross References This subchapter cited in 31 Pa. Code § 89.102 (relating to guidelines for approval of forms).
INDIVIDUAL POLICIES
§ 89.71. General.
Submissions shall comply with sections 616—621 of the act (40 P. S. § § 751—756). The NAIC Official Guide for the Filing and Approval of A & H Contracts (3rd Edition) shall serve as a general guide for review in the Department, except to the extent that the guide is inconsistent with the laws of the Commonwealth.
§ 89.72. Applications.
(a) Opinion-type questions regarding the past or present health of the applicant should provide that the applicant is to answer to the best of his knowledge and belief.
(b) A provision may not be permitted in an application which changes the terms of the policy to which it is attached.
§ 89.73. Required statements in policies.
(a) There shall be imprinted on the face of the policy the ‘‘Notice of Insured’s Right to Examine Policy for Ten Days,’’ as required by section 617 of the act (40 P. S. § 752). The provision shall be worded that the insured is given the option for a full refund. On booklet-type policies this provision shall appear on the outside cover portion of the policy.
(b) The words ‘‘This Is An Assessable Policy’’ shall be printed prominently on the policy face and filing back, if any, of each assessable policy in at least 16-point type.
§ 89.74. Renewability and cancellation of policies.
(a) Provisions concerning renewability or cancellation by the insurer shall appear on the first page or reference shall be made thereto in a brief description on the face page and on the filing back, if any.
(b) Policies which are noncancellable and guaranteed renewable shall state clearly the period of time during which they are to be guaranteed renewable and shall provide that the company cannot cancel the policy and that the company cannot increase the premium.
(c) Nonrenewal of individual accident and health policies may not be based upon deterioration of physical or mental health.
(d) Policy nonrenewal should also be limited to the anniversary date.
§ 89.75. Use of certain words and terms.
(a) A policy containing, as part of its title, words such as ‘‘special’’ or ‘‘preferred’’ which are used in a misleading fashion, or words such as ‘‘Union,’’ ‘‘Labor,’’ ‘‘Miner,’’ and the like in its title which could associate it with a particular organization, association or business will not be approved.
(b) Policies which are to be issued to supplement or implement Medicare may not have policy titles or headings which could confuse them with the Federal Medicare Program.
§ 89.76. Suspension and termination.
(a) A policy may not contain a provision for its automatic termination upon the happening of any loss, except a loss which has exhausted all possible benefits under the policy.
(b) A policy which provides for a suspension of coverage while the insured is in military service the policy shall provide that upon written request the insurer will refund unearned premiums for the period of the suspension.
§ 89.77. Exclusions.
(a) The following is a list of the maximum applicable exclusions which shall be permitted in addition to those specified under section 618 of the act (40 P. S. § 753). The wording of the exclusions is illustrative and is intended to indicate the general intent of the Department. Alternate wording is permissible as long as the meaning preserves the general intent of the exclusions:
(1) General exclusions. General exclusions shall conform with the following:
(i) Loss sustained or expenses incurred while a member of the armed forces of any nation, or losses sustained or expenses incurred as a result of enemy action or act of war whether declared or undeclared.
(ii) Normal pregnancy, childbirth, miscarriage and abortion.
(iii) Suicide or intentionally self-inflicted injuries.
(iv) Sickness or injury covered by a workmen’s compensation act or occupational disease law or by United States Longshoreman’s and Harbor Worker’s Compensation Act.
(v) Mental or nervous or emotional disorders.
(vi) Exclusions which, in the opinion of the Commissioner, are justified by special circumstances or the unique character of the policy.
(2) Exclusions pertaining to hospital or basic coverage and major medical policies. Other exclusions shall include the following:
(i) Eye examinations, refractions, eye glasses, contact lenses or hearing aids or hearing examinations.
(ii) Services, use of a facility or supply which is not recommended or approved by a licensed medical practitioner practicing within the scope of his license.
(iii) Charges for services, use of facilities or supplies that neither the insured nor any other covered person is legally obligated to pay.
(iv) Routine physical examinations.
(v) Dentistry, dental x-rays or dental services, dental prosthetic appliances, except expenses otherwise covered on account of accidental bodily injury to sound natural teeth.
(vi) Expenses of a covered person for cosmetic surgery, except expenses otherwise covered which are necessary for repair of an accidental bodily injury.
(vii) Elective surgery not to exceed 6 months. The following is a list of surgical procedures which may be considered elective surgery:
(A) Cataract operations
(B) Strabismus operations
(C) Tonsilectomies, adenoidectomies
(D) Herniotomies
(E) Arthrotomies
(F) Hemorrhoidectomies
(G) Laminectomies
(H) Varicose veins
(I) Gall bladder
(J) Appendectomies concurrent with a gall bladder operation.
(viii) Expenses for transportation except local ambulance service for the insured or covered person.
(ix) Sickness or injuries to the extent that any covered person under the policy is indemnified by ‘‘Medicare’’ for the expenses incurred. This exclusion may include other specifically enumerated national, state or other governmental plans. It may not include or be interpreted to include plans which may possibly be enacted at some future time.
(x) Services performed by the insured’s spouse, child, parent, brother or sister or persons who ordinarily reside in the insured’s household.
(xi) Medical care of members of the armed forces in a United States Government facility.
(xii) Specified foot conditions.
(b) A policy which contains unusual limitations, reductions or conditions of a restrictive nature that the payment of benefits under the policies is limited in frequency or in amounts should carry the legend ‘‘This Is A Limited Policy—Read It Carefully’’ imprinted in not less than 18-point outline type of contrasting color diagonally across the face and filing back, if any, of the policy.
(c) A policy may not provide an exclusion for the use of alcohol and narcotics except as permitted by section 618(b)(11) of the act (40 P. S. § 753(b)(11)).
Notes of Decisions Applicability limited
The exclusions and other provisions of § 89.77 apply only to individual policies and not to group policies. Giangreco v. United States Life Ins. Co., 168 F. Supp. 2d 417 (E.D. Pa. 2001).
Sections 89.77(a)(2)(ix) and 89.97(c) evidence a public policy favoring the use of policy clauses to prevent overinsurance and avoid bonus recoveries. Weiss v. CNA, 468 F. Supp. 1291 (W.D. Pa. 1979).
§ 89.78. Multiple benefits.
(a) Policies which contain multiple benefits should not limit the payment of a specific benefit based on the fact that another benefit is paid under the same policy.
(b) Examples of the policies that the Department considers unacceptable are policies containing both disability income benefits and hospital or other medical care benefits in which payment of hospital or medical care benefits is excluded if disability income is payable, policies which contain accidental death benefits and medical care or disability benefits which limit the benefit payable to one of the two benefits, policies which contain lump sum dismemberment benefits which are paid in lieu of disability income or medical expenses benefits.
§ 89.79. Accident policies not providing coverage for sickness.
In accident only policies, continuous 24-hour coverage as well as all causes should be provided.
§ 89.80. Loss of time benefits.
(a) Loss of time policies may not require that the loss from accidental injury commence within less than 30 days after the date of an accident, nor may the accident policy which the insurer may cancel or refuse to renew require that it be in force at the time the loss commences.
(b) A policy of health and accident insurance will not be approved which contains a provision that the disability period shall be considered to commence with the date on which written notice is actually received by the company.
(c) Policies which limit benefits for loss of time to specified items, such as business overhead policies, shall provide for a premium refund in accordance with a short rate table in the event that none of the items to be indemnified exist at the time the policy is cancelled, for example, where a professional person discontinues his office, but only if the insured requests cancellation of the policy and gives timely notice. A premium refund may be limited to 1 year’s premium.
(d) The definition of total disability should be sufficiently clear so as not to confuse or mislead the insured. Wording in the definition of total disability should be that claim administration will be uniform as possible and the coverage is in the best interests of the insurance buying public.
(e) A provision for accidental death benefit may not contain a requirement that death must occur within a specific time period.
Source The provisions of this § 89.80 amended June 23, 1978, effective June 24, 1978, 8 Pa.B. 1678. Immediately preceding text appears at serial page (21915).
§ 89.81. Riders and endorsements.
Transfer riders which eliminate waiting periods in time limit on certain defenses or preexisting conditions may be approved for an exchange of policies within a company or affiliated companies but not in transfer from one company to another.
§ 89.82. Miscellaneous policy provisions.
(a) If the policy provides for a reduction in benefits because of the attainment of a specified age limit, reference thereto shall be set forth on the first or specifications page. For this purpose, a reduction in a benefit period is a reduction in benefits requiring such reference.
(b) Policies shall comply with section 617 of the act (40 P. S. § 752), providing for the continuation of coverage for mentally retarded and physically handicapped dependents.
(c) A policy which contains a disability income benefit or a similar type benefit may not require an insured person to be confined to his residence due to sickness or injury as a condition for the benefit, a change in the amount of the benefit or a change in duration of coverage of the benefit.
(d) A reduction of benefits by reason of a change in employment status or change in income of the insured may be permitted, unless clearly set forth in the policy under an appropriate caption.
(e) Dependency status may not be defined by sex.
§ 89.83. Rates.
(a) General. Accident and health insurance rate filings will be examined for actuarial adequacy, consistency and equity, including nondiscrimination aspects. Data required should be broken down by the type of filing as prescribed in subsections (b) and (c). The Department will consider in its rate review, along with other pertinent data, the loss ratios submitted by companies as anticipated to be accumulated over the entire period of coverage.
(b) New filings. New filings shall conform with all of the following:
(1) With regard to rates for policies which are initially filed for approval, the Department will not consider acceptable anticipated loss ratios which are lower than the following levels:
Type Percentage Industrial policies 45 All other policies 50
(2) The company shall maintain its records in a condition that loss ratios may be traced on a closed block basis for each calendar year, thus yielding durational loss ratios relative to a given calendar year of underwriting.
(3) New filings shall also conform with all of the following:
(i) An actuarial memorandum shall be submitted describing how premium rates were computed. The memorandum shall include suitable data indicating the basis for the rates, such as the expected claim costs, the tables or experience, if any, upon which the rates have been based, and an explanation of how the premium rates were obtained.
(ii) If modifications have been based on judgment, this should be indicated as well as any other relevant information which the company considers appropriate.
(iii) Rates shall be adequate but not excessive, provide for internal equity, and be consistent with rates for any concurrent coverage available.
(c) Revision of current rates. Revision of current rates shall conform with the following:
(1) With regard to rate revision, the following minimum loss ratios shall be used in establishing an appropriate level of rate increases:
Type Percentage Industrial policies 50 All other policies 60 (2) Where revision of current rates is involved, benefits should be described, a copy of the appropriate form should be attached and all of the following data shall be furnished:
(i) A statement as to the reason for the revision, the nature of the revision, the detailed areas revised, existing rates, revised rates, the percentage increase or decrease in each rating category and an estimate as to the expected average aggregate increase or decrease in premiums, the recent experience under existing rates showing premiums on both a written and earned basis and showing losses on both a paid and incurred basis.
(ii) If rate increases are not substantial in amount or percentage and there are no unusual re-rating features, the statement required by subsection (a) shall normally suffice in conjunction with completed rate sheets in dollar amounts for categories submitted in duplicate. If, however, rating revisions are substantial, the Department may request any or all of the following information:
(A) Details as to dollar amounts, percentage increases and the effective date of the last increase.
(B) Commission scales by duration and additional expense allocations which are available in the records of the company and are deemed appropriate for purposes of determining surplus strain.
(C) The following data for every rating category, both nationwide and for this Commonwealth:
(I) Premiums written and derivation of premiums earned from changes in unearned premiums and active life reserves. Explicit details as to the type of reserve and basis of its calculation should be supplied for any amounts designated as ‘‘held in reserve.’’ Whether these are accrued claim liabilities or active life reserves or contingency reserves should be specified and a general statement should be made as to the basis of calculation.
(II) Claims paid and derivation of claims incurred from accrued claim liabilities identifying reported and unreported accruals separately. Cash, incurred and supplemental loss ratios should be computed. A loss ratio analysis available by duration should be supplied. If separate figures for this Commonwealth are not available, estimates as to amounts applicable in this Commonwealth should be made.
(D) The Department will examine requests for rate increases on an individual basis as appropriate. It is realized that there are many factors relative to a determination of a reasonable loss ratio for a given coverage. Some of the factors are type of coverage, level of premiums, loss ratio trends, modal expenses, active life and claim reserves as they pertain to rate increases, statistical significance of experience figures in each rating category, previous history of dividend distribution and absolute size of the most recent loss ratios. A minimum experience period of 3 years will be required prior to the approval of a substantial rate increase.
(iii) Data submitted for rate revision should be in agreement with annual statement data filed with this Department.
(d) Filing procedure. Proposed rate sheets shall be filed in duplicate on 8 1/2 by 11-inch sheets with the name and address of the company appearing on the rate sheet, unless submitted in notebook form.
§ 89.84. Discrimination prohibited.
No discrimination in availability of policy forms or other restrictions or limitations in underwriting practices or eligibility standards are permitted on the basis of race, religion, nationality or ethnic group, age, sex, family size, occupation, place of residence or marital status in accordance with section 5(a)(7)(III) of the Unfair Insurance Practices Act (40 P. S. § 1171.5(a)(7)(III)) and PA. CONST. art. I, § 7.
§ 89.85. Severability.
If a provision of this chapter or the application thereof to a person is held invalid, the remainder of the chapter and the application of the provision to other persons will not be affected thereby.
GROUP POLICIES
§ 89.91. General filing requirements.
(a) Conformity to definition. A group life policy issued for delivery in this Commonwealth will not be approved by the Department which does not apply to a group filing within the definition of a group qualified for the insurance under the act of May 11, 1949 (P. L. 1210, No. 367) (40 P. S. § § 532.1—532.7a), known as the Group Life Insurance Policy Laws. If an element of doubt exists as to whether a particular group is one authorized by the statute, the question shall be referred to the Department for review in advance of filing.
(b) Identification of insured. Group life and annuity certificates filed with the Department shall provide for the identification of the insured. This may be accomplished by having the name of the insured stated on the certificate or a code which could be used in the identification of the certificate holder.
(c) Variations in policies. Group life policies, their certificates and the intended insert pages reflecting possible variations shall be accepted for approval, provided that the filing is accompanied by a statement showing the combinations of pages which shall be used for the different types of policies.
(d) Certificates. Certificates shall conform with all of the following:
(1) Certificates shall be issued to the policy owner within a reasonable period of time after issuance of the master policy for delivery to each person insured.
(2) Certifying language shall be used in certificates.
(3) Certificates should state the benefits applicable to the person insured or state the schedule of benefits applicable to the class to which he belongs.
§ 89.92. Use of certain words and terms.
Policies which are to be issued to supplement or implement Medicare may not have policy titles or headings which could confuse them with the Federal Medicare Program.
§ 89.93. Termination of policy.
(a) Master policies, riders and certificates shall contain a clear explanation as to continuance of that coverage after termination of the policy. In the case of maternity benefits, the policy shall clearly define the circumstances under which the coverage ceases and whether the insurer intends to include a pregnancy coverage for 9 months after the policy has expired or whether the coverage ceases with the expiration of the remainder of the policy.
(b) A group accident and health policy may not contain a provision for automatic termination of the coverage of an individual upon the happening of a loss, except a loss which has exhausted all possible benefits under the policy.
§ 89.94. Exclusions.
Exclusions which are ambiguous or unfairly discriminatory are not acceptable.
Notes of Decisions Ambiguous Provision
Insurer’s policy which excludes from coverage persons who are ‘‘totally disabled’’ is ambiguous, and, therefore, must be construed against insurer. Schneider v. UNUM Life Insurance Co. of America, 149 F. Supp.2d 169 (E.D. Pa. 2001).
Exclusions Limited
Only exclusions which are ambiguous or unfairly discriminatory are prohibited in group policies. Other limitations, which are barred from individual policies, do not apply to group policies. Giangreco v. United States Life Ins. Co., 168 F. Supp 2d 417 (E.D. Pa. 2001).
Construction
In the absence of any statutory language or administrative rulings which interpret the meaning of the term ‘‘ambiguous’’ in a regulation, the court looks to the plain meaning of the term. The meaning of the term ‘‘ambiguous’’ as defined in Northbrook Ins. Co. v. Kuljian Corp., 690 F. 2d 368, 372 (3d Cir. 1982), is consistent with the plain meaning of that term as set forth in 31 Pa. Code § 89.94. Schneider v. UNUM Life Insurance Co. of America, 149 F. Supp. 2d. 169 (Pa. 2001); declined to follow 162 F. Supp. 1119 (C. D. Cal. 2001).
Nonpreemption under ERISA
The State insurance regulation section which prohibits ambiguous or discriminatory policy provisions is a law which regulates insurance, thereby excluding that section from ERISA preemption. An insured may bring an action for violation of that section, even if the coverage is provided as part of an employee’s ERISA benefit plan. Schneider v. UNUM Life Insurance Co. of America, 149 F. Supp.2d 169 (E.D. Pa. 2001).
§ 89.95. Loss of time benefits.
Loss of time benefits for dependents are not acceptable.
§ 89.96. Certificates.
(a) Certifying language shall be used in certificates.
(b) Certificates shall be issued to the policy owner within a reasonable period of time after the effective date of the master policy for delivery to each person insured. Certificates should state the benefits applicable to the person insured or state the schedule of benefits applicable to the class to which he belongs.
§ 89.97. Miscellaneous policy provisions.
(a) Conformity with definition of a group. A group policy of insurance approved by the Department will not be issued for delivery in this Commonwealth by an insurer to a group which does not come within the definition of a group qualified for the insurance.
(b) Variations in policies. Because of the many variations possible in group accident and health policies, the policies, their certificates and the intended insert pages reflecting possible variations will be accepted for approval, provided that the filing is accompanied by a statement showing the combination of pages whichwill be used for different types of policies.
(c) Coordination with other plans. Nonduplication or coordination of benefit provisions for group medical expense insurance coverages may provide for nonduplication or coordination with a plan or State or Federal program providing benefits or services for or by reason of medical or dental care and treatment which benefits or services are provided by group insurance or another arrangement of coverage of persons in a group whether on an insured or uninsured basis. Policies with these provisions shall stipulate clearly how the provisions will be administered.
(d) Accidental death benefit. A provision for accidental death benefit may not contain a requirement that death must occur within a specific time period.
Source The provisions of this § 89.97 amended June 23, 1978, effective June 24, 1978, 8 Pa.B. 1678. Immediately preceding text appears at serial page (13326).
Notes of Decisions Public Policy
This section and § 89.77(a)(2)(ix) evidence a public policy favoring the use of policy clauses to prevent overinsurance and avoid bonus recoveries. Weiss v. CNA, 468 F. Supp. 1291 (W.D. Pa. 1979).
§ 89.97a. Maternity benefits in group converted policies—statement of policy.
(a) Section 621.2 of the act (40 P. S. § 756.2(d)) mandates that every group accident and sickness policy providing hospital, surgical or major medical expense coverage contain a conversion privilege. The converted policy may not contain provisions less favorable to the insured than the group policy.
(b) An insurer shall offer a converted policy which includes maternity coverage whenever the group policy contains the coverage. Insurers not offering maternity benefits in converted policies under these circumstances are in violation of Commonwealth law and shall make form and rate filings necessary to comply.
Source The provisions of this § 89.97a adopted April 9, 1982, effective April 10, 1982, 12 Pa.B. 1176.
§ 89.98. Major medical.
In the event of termination of insurance because of termination of active employment, a reasonable extended benefit should be provided during total disability, with respect to the sickness or injury which caused the disability, of at least 12 months subsequent to termination of insurance, unless coverage is afforded for total disability under another group plan.
§ 89.99. Student accident and sickness insurance.
(a) An application, enrollment form, policy, certificate or brochure used in lieu of a certificate, rider or endorsement may not be used, sold or issued until the forms of the same have been filed with and approved by the Insurance Commissioner.
(b) Applicable premium rates shall be filed with the Department.
(c) The insurer shall make known to every individual purchaser the applicable schedule of benefits, premium rates and claim filing procedures and advise where additional information and assistance relating to the benefits, rates and procedures may be obtained.
(d) Certificate or brochure used in lieu of a certificate shall set forth the essential features of the coverage, location of the claims office and instructions for filing claims and it shall be delivered or furnished for delivery to the individual purchaser.
(e) A provision excluding, limiting or coordinating benefits by reason of other insurance shall be set forth clearly in the policy, be accurately summarized in a certificate or brochure used in lieu of a certificate and in advertising material, and not be applied to the first $100 of any one claim.
(f) Prior to its initial use, material used in the direct solicitation of student accident insurance shall be submitted to the Department for review. Within 30 days from the date that the material is received by the Department, the insurer will be notified whether or not the Department has an objection to the same. Thereafter, amended material shall be promptly submitted to the Department; however, review prior to use will be required only in the event of substantial change.
(g) Advertising material and direct solicitation material prepared by an agent or broker shall be approved by the insurer prior to use. Material which differs substantially from that already submitted by the insurer to the Department for review shall be submitted under subsection (f).
(h) The insurer shall require an enrollment form to be signed by the parents, guardian or person in loco parentis of each student, except in the case of married or adult students, or where the participant is not required to make a premium contribution.
(i) An individual application or enrollment form shall clearly indicate that there is no obligation to purchase the insurance.
Source The provisions of this § 89.99 adopted October 23, 1970, effective October 24, 1970, 1 Pa.B. 435.
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