HOUSE BILL NO. 311
AN ACT TO AMEND TITLE 18 OF THE DELAWARE CODE BY ESTABLISHING MINIMUM STANDARDS FOR INDIVIDUAL HEALTH INSURANCE.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Title 18 of the Delaware Code by adding thereto a new Chapter 36, which shall read as follows:
"Chapter 36. Individual Health Insurance Minimum Standards
§3601. Purpose and Scope.
(a) The purpose of this Chapter shall be to provide reasonable standardization and simplification of terms and coverages of Individual health insurance policies and subscriber contracts of health service corporations to facilitate public understanding and comparison, to eliminate provisions contained in individual health insurance policies and subscriber contracts of health service corporations which may be misleading or unreasonably confusing in connection either with the purchase of such coverages or with the settlement of claims, and to provide for full disclosure in the sale of health insurance coverages.
(b) The provisions of this Chapter notwithstanding, medicare supplement coverage shall be governed by the provisions of Chapter 34, Medicare Supplement Insurance Minimum Standards, of this Title.
As used in this Chapter:
(1) "Form" means policies, contracts, riders, endorsements, and applications required to be filed with the Commissioner pursuant to Sections 2712 and 8306 of this title.
(2) "Health Insurance" means insurance permitted to be written to accordance with Section 903, other than credit health insurance, and coverages written under Chapter 83, Health Service Corporations. For purposes of this Act, health service corporations shall be deemed to be engaged in the business of insurance.
(3) "Policy" means the entire contract between the insurer and the insured, including the policy riders, endorsements, and the application, if attached, and also includes subscriber contracts issued by health service corporations.
§3603. Standards for Policy Provisions.
(a) The Commissioner shall issue reasonable regulations to establish specific standards, including standards of full and fair disclosure, that set forth the manner, content, and required disclosure for the sale of individual policies of health insurance and subscriber contracts of health service corporations, other than conversion policies issued pursuant to a contractual conversion privilege under a group or individual policy of health insurance, when such group or individual contract contains provisions which are inconsistent with the requirements of this Chapter or any regulation issued pursuant to this Chapter, or to policies being issued to employees or members being added to franchise plans in existence on the effective date of this Chapter or any regulation issued pursuant to this Chapter which shall be in addition to and in accordance with applicable laws of this state including the applicable statutory provisions set forth in §3303 - 3335 of this title which may cover but shall not be limited to:
(1) Terms of renewability,
(2) Initial and subsequent conditions of eligibility,
(3) Nonduplication of coverage provisions,
(1) Coverage of dependents,
(2) Pre-existing conditions,
(6) Termination of insurance,
(7) Probationary periods,
(3) Elimination periods,
(4) Requirements for replacements,
(5) Recurrent eonditons, and
(6) The definition of terms including but not limited to the following: hospital, accident, sickness, injury, physician, accidental means, total disability, partial disability, nervous disorder, guaranteed renewable, and noncancellable.
(b) Subsection- (a) authorizes the Commissioner to establish specific standards for policy provisions which will facilitate public understanding of such provisions. The subsection does not alter the requirements of the §3303 - 3335 (Uniform Health Policy Provisions Law), or other specifically applicable state laws dealing with individual policy provisions. Regulations adopted under the subsection should be consistent with §3303 - 3335, and other applicable state laws relating to the subject mat ter.
(c) The Commissioner may issue reasonable regulations that specify prohibited policies or policy provisions not otherwise specifically authorized by statute which in the opinion of the Commissioner, are unjust, unfair, or unfairly discriminatory to the policyholder, any person insured under the policy or beneficiary.
§3604. Minimum Standards for Benefits.
(a) The Commissioner may issue regulations to establish minimum standards for benefits under each of the following categories of coverage in individual policies, other than conversion policies issued pursuant to a contractual conversion privilege under group or individual policy, when such group or Individual contract contains provisions which are inconsistent with the requirements of this chapter or any regulation issued pursuant to this chapter or to policies being Issued to employees or members being added to franchise plans in existence on the effective date of this chapter or any regulation issued pursuant to this chapter, of health insurance and subscriber contracts of health service corporations:
(1) Basic hospital expense coverage;
(2) Basic medical-surgical expense coverage;
(3) Hospital confinement indemnity coverage;
(4) Major medical expense coverage;
(5) Disability income protection coverage;
(6) Accident only coverage;
(7) Specified disease or specified accident coverage; and
(8) Limited benefit health coverage.
(b) Nothing in this section shall preclude the issuance of any policy or contract which combines two or more of the categories of coverage enumerated in Paragraph (a)(1) through (a)(6) of this Section.
(c) No policy or contract shall be delivered or issued for delivery In this state which does not meet the prescribed minimum standards for the categories of coverage listed in Paragraphs (aX1) through (aX8) of this Section, or which does not meet the other applicable requirements for such coverages as prescribed by this Title.
(d) The Commissioner shall prescribe the method of identification of policies and contracts based upon coverages provided.
§3605. Disclosure Requirements.
(a) in order to provide for full and fair disclosure in the sale of individual health insurance policies or subscriber contracts of a health service corporation, no such policy or contract shall be delivered or issued for delivery in this state unless the outline of coverage described in subsection (b) of this section either accompanies the policy or is delivered to the applicant at the time of application is made and an acknowledgement of receipt or certificate of delivery of such outlines is provided the Insurer. In the event the policy is issued on a basis other than that applied for, the outline of coverage properly describing the policy or contract must accompany the policy or contract when it is not the policy or contract for which application was made.
(b) The Commissioner shall prescribe by regulation the format and content of the outline of coverage required by subsection 3685 (a). "Format" means style, arrangement, 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 statement identifying the applicable category or categories of coverage provided by the policy or contract as prescribed in section 3604 of this Chapter.
(2) A description of the principal benefits and coverage provided in the policy or contract;
(3) A statement of the exceptions, reductions and limitations contained in the policy or contract;
(4) A statement of the renewal provisions including any reservation by the insurer or health service corporation of a right to change prernium
(5) A statement that the outline is a summary of the policy or contract issued or applied for and that the policy or contract should be consulted to determine governing contractual provisions.
(c) The outline of coverage shall not be considered to be part of the policy or subscriber contract for insurance.
§3606. Pre-Existing Condtions.
(a) Nothwithstanding the provisions of S3306, if an insurer or a health service corporation elects to use a simplified application form, with or without a question as to the applicant's health at the time of application, but without any questions concerning the insurer's health history or medical treatment history, the policy must cover any loss occurring after twelve months from any pre-existing condition not specifically excluded from coverage by terms of the policy, and, except as so provided, the policy or contract shall not include wording that would permit a defense based upon pre-existing conditions.
(b) Notwithstanding the provisions of subsection 3606(a) and the provision of S3306 an insurer or a health service corporation which issues a Specified Disease policy, regardless of whether such policy Is issued on the basis of a detailed application form, a simplified application form, a simplified application form or an enrollment form, may not deny a claim for any covered loss that begins after the policy has been in force for at least six months, unless such loss results from a pre-existing condition which first manifests itself within six months prior to the effective date of the policy or contract or was diagnosed by a physician at any time prior to such date. Except for rescission for misrepresentation, no other defenses based upon pre-existing conditions are permitted."
Section 2. Amend Section 3306, Title 18, Delaware Code by striking the Section M its entirety and substituting in lieu thereof a new Section 3306 which shall read as follows:
"§3306. Time Limit on Certain Defenses.
(a) There shall be a. provision as follows:
'Time Limit on Certain Defenses:
(1) After 2 years from the date of issue of this policy, no misstatements, except fraudulent misstatements, made by the applicant in the application for such policy shall be used to void the policy or deny a claim for loss incurred as disability (as defined in the policy) commencing after the expiration of such 2 year period.
(2) No claim for loss incurred as disability (as defined in the policy) commencing 2 years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy.,
(b) The policy provision required by subsection (a)(1) above shall not be so construed as to affect any legal avoidance of a policy or denial of a claim during such initial 2 year period, nor to limit the application of SS3318 through 3320 of this Chapter in the event of misstatement with respect to age or occupation or other insurance.
(c) A policy which the insured has the right to continue in force subject to its terms by the timely payment of premium (i) until at least age 50, or (Ii) in the case of a policy Issued after age 44, for at least 5 years from its date of issue, may contain in lieu of the foregoing the following provision (from which the clause in parentheses may be omitted at the Insurer's option) under the caption 'Incontestable':
'After this policy has been in force for a period of two years during the lifetime of the Insured (excluding any period during which the insured is disabled), it shall become incontestable as to any statements, other than fraudulent statements, contained in the application."
Section 3. Amend Section 6309, Title 18 of the Delaware Code by adding a new paragraph to the section, to be known and referred to es paragraph (7), which shall read as follows:
"(7) Chapter 36 (Individual Health Insurance Minimum Standards)"
Section 4. This Act shall not apply to any individual health insurance policies entered into or issued before the effective date of this Act nor to any extensions, renewals, modifications or amendments to such policies, whenever made.
Section 5. This Act shall become effective six months after Its enactment into law.
Approved July 12, 1983.