HOUSE RILL NO. 547
AS AMENDED BY HOUSE AMENDMENT NO. 1
AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE BY ESTABLISHING MINIMUM STANDARDS FOR MEDICARE SUPPLEMENT INSURANCE.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. This Act shall be known and referred to as the "Medicare Supplement Insurance Minimum Standards Act."
Section 2. Amend Title 18 of the Delaware Code by adding thereto a new Chapter 34, which shall read as follows:
"CHAPTER 34. MEDICARE SUPPLEMENT INSURANCE MINIMUM STANDARDS
(a) 'Applicant' means:
(1) in the case of an individual Medicare supplement policy or subscriber contract, the person who seeks to contract for insurance benefits, rind
(2) in the case of a group Medicare supplement policy or subscriber contract, the proposed certificate holder.
(b) 'Certificate' ineans, for the purposes of this Act, any certificate issued under a group Medicare supplement policy which has been delivered or issued for delivery in this State.
(c) 'Medicare Supplement Policy' means n group or individual policy of accident and sickness insurance or a subscriber contract of hospital and health service corporations 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 by reason of age. Such term does not include:
(1) 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 Inbor organizations or a combination thereof, for employees or former employees or a combination thereof or for members or former members, or a combination thereof, of the labor organizations, or
(2) 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:
(i) is composed of individuals rill of whom are fictively engaged in the some profession, trade, or occupation;
(ii) has been maintained in good faith for purposes other than obtaining insurance; and
(iii) has been in existence for at least two (2) years prior to the date of its initial offering of such policy or plan to its members.
(3) 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 Chapter.
(d) 'Medicare' means the 'Health Insurance for the Aged Act', Title XVIII of the Social Security Amendments of 1965, as amended.
§3402. Standards for policy provisions
(a) The Commissioner shall issue reasonable regulations to establish specific standards for policy provisions of Medicare supplement policies. Such standards shall be in addition to and in accordance with applicable laws of this State, rind may cover, but shall not be limited tos
(I) terms of renewability;
(2) initial and subsequent conditions of eligibility;
(3) nonduplication of coverage;
(4) probationary periods;
(5) benefit limitaitons, exceptions and reductions;
(7) requirements for replacement;
(8) recurrent conditions; and
(9) definitions of terms.
(b) The Commissioner may issue reasonable regulations 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.
(c) Notwithstanding any other provision of law of this State, a Medicare supplement policy may not deny a claim for losses incurred more than six (6) 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 (6) months before the effective date of coverage.'
§3403. Minimum standards for benefits
The Commissioner shall issue reasonable regulations to establish minimum standards for benefits under Medicare supplement policies.
§3404. Loss ratio standards
Medicare supplement policies shall be expected to return to policyholders benefits which are reasonable in relation to the premium charged. The Commissioner shall issue reasonable regulations to establish minimum standards for loss ratios of 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 regulations issued pursuant to this Section, 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.
§3405. Disclosure standards
(a) In order to provide for full and fair disclosure in the sale of Nledicare supplement policies, no Medicare supplement policy shall be delivered or issued for delivery in this State, and no certificate shall he delivered pursuant to a group Medicare supplement policy delivered or issued for delivery in this State unless an outline of coverage is delivered to the applicant at the time application is made.
(b) The Commissioner shall prescribe the format and content of the outline of coverage required by subsection (a). For purposes of this section, 'format' means style, arrangements and overall appearance, including such items as the size, color and prominence of type and the arrangement of text and captions. Such outline of coverage shall include:
(1) a description of the principal benefits coverage provided in the policy:
(2) a statement of the exceptions, reductions and limitations contained in the policy;
(3) a statement of the renewal provisions, including any reservation by the insurer of a right to change premiums;
(4) 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.
(c) The Commissioner may prescribe by regulation a standard form and the contents of an informational brochure for persons eligible for Medicare by reason of age, 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 regulation 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 regulation that the prescribed brochure be provided upon request to any prospective insureds eligible for Medicare by reason of age, but in no event later than the time of policy delivery.
(d) The Commissioner may promulgate reasonable regulations for captions or notice requirements, determined to be in the public interest and designed to inform prospective insureds that particular insurance coverages are not Medicare supplement coverages, for all accident and sickness insurance policies sold to persons eligible for Medicare by reason of age.
(a) The Commissioner may further promulgate reasonable regulations to govern the full and fair disclosure of information in connection with the replacement of accident and sickness policies, subscriber contract, or certificates by persons eligible for Medicare by reason of age.
§3406. 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 certificate or attached thereto stating in substance that the applicant shall have the right to return the policy or certificate within ten (10) days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the applicant is not satisfied for any reason. Medicare supplement policies or certificates issued pursuant to a direct response solicitation to persons eligible for Medicare by reason of age 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 (30) days of its delivery and to have the premium refunded if, after examination, the the applicant is not satisfied for any reason.
Section 3. Amend Section 2502 of Title 18 of the Delaware Code by striking Subsection (a) (4) in its entirety and substituting In lieu thereof a new Subsection (a) (4) which shall read as follows'
"(a) (4). Health insurance, group health insurance, blanket health insurance, Medicare supplement insurance and health service corporations."
Section 4. Amend Chapter 63 of Title 18 of the Delaware Code, by adding a new paragraph to Section 6309, to be known and referred to as Subsection paragraph (6), which shall read as follows'
"(6) Chapter 34 (Medicare Supplement Insurance)."
Section 5. This Act shall become effective six (6) months after enactment into law.
Approved June 14, 1982.