Life and Health News July 2011
The following is a brief review of selected items that may be of current interest to First Consulting & Administration, Inc. clients and friends. Please feel free to copy it for distribution to your staff. Contact us for more details about any item. We welcome your comments and suggestions on this letter. Please call our office.
ACTUARIAL OPINION AND MEMORANDUM
West Virginia amended its general requirements for submitting the statement of actuarial opinion. 114 CSR 41-4
CANCELLATION, NON-RENEWAL, PREMIUM OR COVERAGE CHANGES
Maryland enacted legislation authorizing the delivery of specified notices to an insured or policyholder by certain electronic means. Senate Bill No. 571
Illinois issued a bulletin providing guidance regarding compliance with The Religious Freedom Protection and Civil Union Act and informing insurers that parties to a civil union are entitled to the same legal protections as spouses. Bulletin 2011-06
Georgia enacted legislation providing that no agreement between an insurer and a dentist may require the dentist to accept an amount for dental care services not covered under a dental benefit plan. It prohibits a dental insurer from publishing discounts that are available for noncovered dental services. House Bill 189
DISASTER OR CATASTROPHIC EVENT
North Dakota issued a bulletin providing guidance to all insurers on claims handling, premium payments including a temporary suspension, and underwriting issues due to the flooding disaster. Bulletin 2011-1
South Dakota issued a bulletin to insurers providing guidance on the temporary suspension of cancellation and nonrenewals for displaced insureds due to recent flooding. Bulletin 11-05
Connecticut issued a bulletin identifying requirements for all health insurance rate filing submissions. Bulletin HC-81-2
New Hampshire amended its rule regarding requirements for accident and health insurance rate filings. Ins Rule 4100
Oklahoma issued a bulletin clarifying that every health benefit plan provider must file all group and individual initial rates and group and individual rate adjustments effective August 26, 2011. Bulletin No. LH 2010-02 is withdrawn effective June 6, 2011. Bulletin LH 2011-01
Massachusetts established a new regulation clarifying requirements for the submission of an annual comprehensive financial statement by accident and health insurers. Regulation 211 CMR 149.01+
Montana amended its standards used to determine whether an insurer is in a hazardous financial condition. The amended standards also address the Insurance Department's possible actions with regard to such insurers. Rule 6.6.3401+
New Hampshire adopted a rule amending the standards used by the Insurance Commissioner to determine if an insurer is in a hazardous financial condition. Ins Rule 2901.01+
Kansas enacted legislation, which among other things, removes group insurance minimum lives requirements and allows for policy premiums to be paid by the policyholder and the insured employee. House Bill 2075
Texas enacted legislation for group life insurance increasing dependent coverage age to over 25 regardless of marital status or federal tax dependent eligibility requirements. House Bill 2172
Oregon enacted legislation amending its law relating to the Oregon Life and Health Insurance Guaranty Association. House Bill 2087
HEALTH CARE COMPACT
Oklahoma enacted legislation regarding the health care compact and established the interstate advisory health care commission. It, among other things, provides for the effective date of the compact, declares certain power and state control, provides for membership of the Commission, permits the Commission to study certain issues and make recommendations, provides for certain responsibilities and duties and provides for withdrawal or dissolution of the compact. Senate Bill 722
HEALTH CARRIER EXTERNAL REVIEW ACT
Idaho issued a bulletin alerting health insurance carriers with single employer self-funded ERISA employee benefit plans about important changes to the Idaho Health Carrier External Review Act. Bulletin 2011-4
HEALTH MAINTENANCE ORGANIZATIONS
Maryland enacted legislation clarifying requirements for ambulance reimbursement for health insurers and health maintenance organizations. Senate Bill 154, House Bill 83
INSURANCE HOLDING COMPANY SYSTEMS
Rhode Island enacted legislation regulating transactions within an insurance holding company system such as payment of dividends, intercompany agreements, change in control, etc. It provides authority allowing the Commissioner to examine the enterprise risk of an insurance holding company system where the risk could impact the financial condition of a domestic insurer. It also requires certain statements relating to corporate governance within the holding company structure. House Bill 5730, Senate Bill 508
INTERSTATE INSURANCE PRODUCT REGULATION COMMISSION
Alabama enacted legislation becoming a member of the Interstate Insurance Product Regulation Commission. House Bill 75
Nevada enacted legislation joining the Interstate Insurance Product Regulation Commission (IIPRC), effective October 1. Nevada is opting out of uniform standards involving long-term care insurance. The legislation also requires the Commissioner to opt out of any IIPRC product standard providing less protection than that offered by the state. Assembly Bill 23
Georgia enacted legislation to revise requirements for continuing care providers and facilities, definitions, provisions relating to annual disclosure statements, and requirements for continuing care agreements. It provides enforcement powers of the Commissioner of Insurance, extensive requirements for disclosure statements, specific financial requirements and rehabilitation and liquidation of a continuing care provider facility. Senate Bill 166
Maine enacted legislation providing definitions and requirements, which among other things, includes notice, exchange and review request requirements for the long-term care partnership program. House Bill 472 (LD 642)
MEDICARE SUPPLEMENT INSURANCE
South Dakota enacted legislation regarding requirements concerning application forms and replacement coverage for Medicare supplement insurance. S.D. Admin. R. 20:06:13:32
Arizona issued a Regulatory Bulletin summarizing major, newly enacted legislation affecting the Department, its licensees, and insurance consumers. Regulatory Bulletin 2011-4
Idaho issued a bulletin replacing Bulletin 09-14 and notifying insurers of changes to rebating and inducement laws. Bulletin No. 11-03
Maine enacted legislation permitting insureds 65 and older to designate a third party to receive notice of cancellation of health insurance, life insurance, and long-term care policies. Senate Bill 93
Minnesota amended legislation modifying requirements pertaining to written signatures on certain insurance notices and authorizations to collect information. The amended statutes make clear that electronic and verbal signatures are allowed. House Bill 895
Puerto Rico issued a letter notifying insurers that belong to a holding company system that they must file annual registration Forms B and C before March 31 each year. The letter also states that in 2011 forms must be filed in their entirety on or before July 31, 2011. Ruling Letter 2011-126-AF
Puerto Rico issued a letter requiring insurers to establish a protocol for the prevention and detection of possible cases of financial exploitation of older persons or adults with disabilities. Circular Letter 2011-1814-IA
Texas enacted legislation relating to the prohibited use of discretionary clauses in certain health maintenance organization and insurance contracts. House Bill 3017
The District of Columbia issued a notice that alerts insurers of increased scrutiny of discretionary clauses and clarifies permissible and impermissible uses of discretionary clauses. Notice Dated June 14, 2011
MISCELLANEOUS - HEALTH
California issued a notice reminding insurers that California Department of Insurance (CDI) is committed to enforcing the provisions of the Insurance Code governing Independent Medical Review (IMR) of disputed health care services to ensure the full protection under the law of insureds with policies of health care insurance regulated by the CDI. Notice 5-17-2011
Colorado provided guidance to health insurance carriers regarding the notification to be provided to the Colorado Division for Developmental Disabilities when the individual or group health coverage of an eligible child has been terminated or cancelled. Bulletin B-4.39
Delaware issued a bulletin to health insurers that prohibits rescissions based on post-claims underwriting of any health insurance policies except in cases of fraud or intentional misrepresentation of material fact. Any carrier seeking to rescind a health insurance policy is required to complete the on-line application on Delaware's website. Domestic Foreign Insurers Bulletin 43
Georgia amended its Insurance Delivery Enhancement Act of 2011 by modifying the definition of the group accident and sickness insurance, amending the timely payment of health benefits and other general provisions among other things. It also adds a definition for limited benefit insurance. House Bill 167
Illinois issued a bulletin allowing insurers, health plans, and non-participating facility-based physicians or providers to enter into binding arbitration to determine payment for covered services. Bulletin 2011-07
Maryland enacted legislation requiring health insurers and health maintenance organizations to provide coverage for a refill of prescription eye drops under specified circumstances. House Bill 888, Senate Bill 701
Massachusetts issued a bulletin clarifying for health insurers and health maintenance organizations recent legislation regarding health benefit plans using limited, regional or tiered provider networks. Bulletin B-2011-10
Oklahoma amended its health insurance high risk pool plan, and among other things, modified definitions and the determination of certain rates. Senate Bill 563
Tennessee has mandated that group and individual insurance policies cover hearing aids for dependent children. House Bill 761
Texas enacted legislation relating to health benefit plan coverage requirements for orally administered anticancer medications. House Bill 438
Vermont enacted legislation, which requires health insurers to provide coverage for midwifery services and home births among other things. Senate Bill 15
Vermont issued a bulletin to clarify the Department's position on the effect on member payments when an exception to a pharmacy benefit program has occurred. Bulletin HCA 134
MISCELLANEOUS - LIFE
Colorado established the insurable interest act which provides requirements for insurable interest of life insurance policies. Senate Bill 182
Louisiana enacted legislation that requires an insurer send written notice to the insured and the assignee at the last known address of both prior to a life insurance policy lapsing. House Bill 398
Maine enacted legislation amending certain insurance provisions relating to variable annuity death benefits and multiple employer trusts. House Bill 648 (LD 881)
New Hampshire established standards for new disclosures to be provided at policy issue and annually upon renewal by all life insurers. The disclosures outline actions, including sale or transfer of a life insurance policy, which may have a negative financial, tax or other impact on the owner. Ins Rule 312.01+
Texas amended its family code laws applicable to child support requirements concerning life insurance policies and annuity contracts. House Bill 1674
Texas enacted legislation establishing limited purpose subsidiary (LPS) life insurance companies which are allowed to issue securities and access financial markets, but provides that a certificate of authority is needed for the LPS to enter reinsurance business. It also provides for capital and surplus requirements relative to reinsurance transactions among other things. House Bill 3161
Hawaii enacted legislation, which among other things, allows approval to be deemed after the sixtieth calendar day following the filing if the commissioner takes no action, updates holding company law in reference to reinsurance agreements, updates long-term care insurance advertisement review requirements, removes life settlement licensing fees, and addresses producer licensing fees. House Bill 1049
Hawaii enacted legislation, which among other things, defines benefit societies and health maintenance organizations, explains how risked based capital is determined, and explains requirements for mandatory control level events for benefit society or health maintenance organizations. Hawaii amended its law for confidentiality and prohibition on announcements, prohibition on use in ratemaking and supplemental provisions, rules and exceptions. House Bill 1045
Minnesota enacted legislation, which among other things, updates producer licensing and continuing education requirements, excludes hearing, dental, vision, accident-only and long-term care plans from certain prohibitions on subrogation provisions, amends provision relating to Medicare Select coverage, amends pre-existing condition limitations in comprehensive health plans, provides that combination policies can combine life coverage with certain health coverages and amends cancellations and nonrenewal requirements. Senate Bill 1045
New Hampshire enacted legislation, which among other things, requires an agent signature on life, accident and health insurance applications, clarifies that for purposes of signatures on group life and health, the certificate holder is not the applicant. The legislation also changes the date for the annual registration for variable annuity companies and agents and makes various other technical changes. House Bill 175
Texas enacted legislation relating to life settlements and the sale, exchange, or replacement of life insurance and annuity contracts. It among other things, establishes standards for agent product training, and agent training education requirement for annuities. It provides requirements for life settlement contract forms, disclosure forms, fraud, licensing requirements and advertisements. House Bill 2277
PATIENT PROTECTION AND AFFORDABLE CARE ACT
Connecticut issued bulletins to health insurers addressing the major issues regarding utilization review company responsibilities and the process and timeline requirements for revised internal and external review processes. Bulletin HC-84, Bulletin HC-83
Indiana enacted legislation to implement the Patient Protection and Affordable Care Act. It provides requirements and definitions and provides that residents are not required to purchase a health plan. Senate Bill 461
Oklahoma issued a bulletin related to the sale of child only coverage and the expansion of the eligibility requirements for the temporary high risk pool. Bulletin LH 2011-02
Washington amended its law for implementation of the Patient Protection and Affordable Care Act, which among other things, provides dependent coverage until the age of 26, revises preexisting condition requirements, defines adverse benefit determination, grandfathered health plan and emergency services. S.S.B. No. 5122
PREFERRED PROVIDER BENEFIT PLANS
Texas amended its laws regarding preferred provider benefit plans, which includes among other things, contracting requirements, availability of preferred providers requirements and the section regarding readability and mandatory disclosure requirements. 28 TAC § 3.3701, 28 TAC § 3.3703, 28 TAC § 3.3704, 28 TAC § 3.3705
Kentucky adopted a new regulation setting forth the standards for a reasonable collection fee to be retained by an insurance company as compensation for collecting local government premium tax from an insured. Regulation 806 KAR 2:150
New Hampshire adopted a regulation establishing procedures for contracts involving prearranged funeral contracts or burial plans. House Bill 246
Texas amended its law relating to prepaid funeral benefits contracts and the prepaid funeral contract guaranty fund. House Bill 3004
Arizona issued a bulletin reminding insurance producers that they are able to renew their license up to 90 days before expiration. Bulletin 2011-03
Massachusetts issued a bulletin notifying resident insurance producers of the Division’s review of their compliance with the Commonwealth’s continuing education (“CE”) requirements, and the implementation of a compliance program for those producers who are deficient in CE credits. Bulletin 2011-12
Oklahoma enacted legislation applicable to online renewal of permits and licenses. It allows electronic signature in the application process for licenses in certain instances. Senate Bill 541
Oklahoma enacted legislation modifying reexamination requirements, insurance producer license application requirements, license reinstatement requirements, educational requirements. It removes the provisional license requirement and certain provisional license fees and requires notification of email address changes. House Bill 1243
Pennsylvania issued a notice cautioning insurance producers selling life insurance or annuities to seniors not to use any professional designations that may be misleading to seniors and to comply with their obligations under Pennsylvania law. Notice 5-14-2011
Rhode Island enacted legislation eliminating mandatory prelicensing before a resident may obtain an insurance producer license. Senate Bill 510, House Bill 5566
Texas enacted legislation requiring resident agents to complete eight hours annually of annuity continuing education during the two-year licensing period and removing the requirement for the annual period to be based on an agent's license expiration date. House Bill 2154
Vermont issued a bulletin that cautions insurance producers against offering investment advice on the sale or purchase of a security without having appropriate securities registration. Bulletin 161
SMALL EMPLOYER HEALTH REINSURANCE PROGRAM
Oklahoma issued a bulletin regarding the termination of the Small Employer Health Reinsurance Program and the distribution of the funds that will take place in July. Bulletin LH 2011-03
Hawaii adopted the NAIC's annuity suitability model act and the senior designations model act. Senate Bill 1278
Kentucky adopted amendments to the suitability in annuity transactions regulation, which closely follows the NAIC model regulation. Regulation 806 KAR 12:120
Maryland issued a bulletin notifying life insurers of recent amendments to the suitability in annuity transaction regulations. The amendments to these regulations will have a deferred effective date of November 1, 2011 to give insurers time to comply with the changes. Bulletin 11-10
New Jersey amended its law regarding disclosure and suitability requirements for life insurance and annuities directly solicited to consumers. Rule 11:2-23.5, Rule 11:4-59.1+
Kentucky amended its sales and use tax provisions relating to the purchase of direct mail. House Bill 429
THIRD PARTY ADMINISTRATORS
Massachusetts established a new regulation applicable to registration and reporting requirements for third-party administrators. Regulation 211 CMR 148.00+
Stretching your Resources – Monitoring TPA’s
Working with TPA’s brings on regulatory requirements that may stretch your compliance resources beyond full.
One of our On-Line Research Services – Third Party Administrator Licensing Service – answers the questions about TPA Licensing.
This On-Line Research Service enables Insurers, as well as TPA’s, to find answers about:
- What is a TPA?
- What organizations need to be licensed?
- Where does a TPA need to be licensed?
- What forms are needed for licensing?
- What other requirements must be met?
For more details, including the opportunity to take a Virtual Tour of our On-Line Services, visit the First Consulting Website or, you can contact me.
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Customized Research Solutions
First Consulting’s monthly newsletter is probably one of the many resources you use to keep up to date on current legislative and regulatory changes. However, organizing and compiling this information in a user friendly manner can be a challenge. When a specific compliance issue arises, the information you need might not always be readily available.
First Consulting’s Custom Research Services can help by:
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Research will be customized to the issue you define and the states with which you are concerned. We will work with you to determine the format and presentation of information, in order to ensure that it meets your needs.
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