Health Policy Provisions, Clauses and Riders (Outline: Accident & Health General Knowledge II, Policy Provisions, Clauses and Riders, 15 items)

Outline headings covered: A. Mandatory and optional provisions (entire contract; time limit on certain defenses; grace period; reinstatement; notice of claim; claim forms; proof of loss; time of payment of claims; payment of claims; physical examination and autopsy; legal actions; change of beneficiary; misstatement of age or gender; change of occupation; illegal occupation; relation of earning to insurance); B. Other provisions and clauses (insuring clause; free look; consideration clause; probationary period; elimination period; waiver of premium; exclusions and limitations; preexisting conditions; coinsurance; deductibles; eligible expenses; copayments; pre-authorizations and prior approval; usual, reasonable and customary charges; lifetime, annual or per cause maximum benefit limits); C. Riders (impairment/exclusions; guaranteed insurability; future increase option); D. Rights of renewability (noncancelable; cancelable; guaranteed renewable). Printed weight: 15 of the 50 scoreable Accident & Health General Knowledge items.

Outline numbering quirk. In the combined exam the printed list under B jumps from "8. Preexisting conditions" to "16. Coinsurance"; numbers 9 to 15 are not printed (the A&H-only exam prints them). This chapter teaches coinsurance, deductibles, eligible expenses, copayments, pre-authorization, URC charges and benefit maximums (9.14) anyway, because a question can ask about any of them.

Individual health policies carry uniform provisions. Mandatory provisions must appear in the prescribed words (or in wording the Superintendent approves as not less favorable to the insured). Optional provisions may be used, but only in the prescribed words or approved equivalents. Maine's list is in Chapter 33 of Title 24-A. Group and blanket policies follow Chapter 35, with different time limits (9.17).

In Maine

• Mandatory. Each individual health policy must contain the provisions in 24-A MRSA ss. 2705 to 2716, each under its caption. The Superintendent may allow omission or modification of a provision that does not fit the coverage (24-A MRSA s. 2704).
• Optional. Sections 2719 to 2728: change of occupation, misstatement of age, overinsurance in accident policies, insurance with other insurers, relation of earnings to insurance, unpaid premium, conformity with state statutes, illegal occupation, and (restricted) intoxicants and narcotics (24-A MRSA s. 2718). Section 2721 is repealed.
• Format. The policy must state the entire consideration and when insurance takes effect and ends, insure one person (except a family policy), use type of at least ten points, carry a form number in the lower left corner of the first page, and not incorporate the insurer's charter or bylaws unless printed in full (24-A MRSA s. 2703).

9.1 Entire Contract (Outline: II.A.1)

The policy, with its endorsements and attached papers, is the entire contract. No change is valid unless an executive officer approves it in writing, and no agent can change the policy or waive a provision. This is why a producer's oral promise does not alter the contract.

In Maine

Required wording: 24-A MRSA s. 2705. Group policies add that no applicant statement avoids insurance unless it is in the signed written application, and that application statements are representations, not warranties (24-A MRSA ss. 2817, 2818).

9.2 Time Limit on Certain Defenses (Outline: II.A.2)

After the stated period, the insurer may not void the policy or deny a claim for a misstatement in the application, except a fraudulent one. The same clause governs preexisting condition defenses.

In Maine

• Three years. After 3 years from issue, no misstatement (other than fraudulent) in the application may void the policy or deny a claim for loss or disability beginning after the 3 years. Avoidance or denial during the first 3 years and the age and occupation adjustments are unaffected (24-A MRSA s. 2706(a)).
• "Incontestable" caption. A policy the insured can continue by timely premium until at least age 50 (or 5 years if issued after age 44) may instead say that after 3 years in force during the insured's lifetime, excluding disability periods, it is incontestable as to application statements (24-A MRSA s. 2706(a)(2)).
• Preexisting conditions. A claim for loss beginning more than 3 years after issue may not be reduced or denied because a disease or condition not excluded by name or specific description existed before the effective date (24-A MRSA s. 2706(b)).
• Shorter periods. With a simplified application that asks no health-history questions, the policy must cover loss after 12 months from any preexisting condition not specifically excluded (24-A MRSA s. 2696(1)). A specified disease policy may not deny a covered loss after 6 months in force unless the condition was diagnosed before application or first appeared in the 6 months before application (24-A MRSA s. 2696(2)).
• Fraud. A fraudulently undisclosed sickness that first appeared before the effective date may be used to void the policy or deny a claim at any time (Bureau Rule 755 s. 6(A)(14)).

9.3 Grace Period (Outline: II.A.3)

The grace period keeps the policy in force for a set number of days after a premium due date, so the premium may be paid without lapse. Its length depends on the premium mode.

In Maine

• Length. Not less than 7 days for weekly premium policies, 10 days for monthly premium policies and 31 days for all other policies, for each premium due after the first (24-A MRSA s. 2707). A policy that lets the insurer refuse renewal begins the clause with a statement that the grace applies unless the insurer delivered or mailed, at least 30 days before the due date, notice that it will not renew (24-A MRSA s. 2707).
• Nonpayment cancellation. The insurer must provide for notice to the insured and to another person the insured designates before cancelling for nonpayment. Within 90 days after cancellation, the policyholder or a representative may request reinstatement because the loss of coverage resulted from cognitive impairment or functional incapacity; if shown, the policy is reinstated, covers claims from the cancellation date, and unpaid premium is due within 15 days of the insurer's request (24-A MRSA s. 2707-A).
• Lapse notice. An individual policy (other than one renewable only with the insurer's consent or with premiums payable monthly or more often) may not lapse for nonpayment until 3 months after the due date unless the insurer mailed notice of the premium and due date 10 to 45 days before it. An action on a policy lapsed for nonpayment must begin within 2 years from the premium due date (24-A MRSA s. 2739).

9.4 Reinstatement (Outline: II.A.4)

In the standard provision, if the insurer accepts a late renewal premium without requiring an application, the policy is reinstated. If it requires an application and issues a conditional receipt, the policy is reinstated on approval or, lacking approval, after a fixed number of days unless the insurer has disapproved. The reinstated policy covers accidents after reinstatement and sickness that begins after a short interval.

In Maine

• Acceptance of premium without an application reinstates the policy. With an application and conditional receipt, the policy is reinstated on approval or on the 45th day after the receipt unless the insurer has disapproved in writing (24-A MRSA s. 2708(1)).
• The reinstated policy covers accidental injury after the reinstatement date and sickness beginning more than 10 days after it. Premium is applied to a period not yet paid, but not to a period more than 60 days before reinstatement (24-A MRSA s. 2708(1)).
• The limited-coverage sentence may be omitted from a policy the insured can continue to at least age 50, or for 5 years if issued after age 44 (24-A MRSA s. 2708(2)).

9.5 Notice of Claim (Outline: II.A.5)

The insured must tell the insurer of a loss within a stated time. Late notice does not defeat a claim if notice was given as soon as reasonably possible.

In Maine

• Individual: 20 days. Written notice within 20 days after the occurrence or start of the loss, or as soon after as reasonably possible. Notice to the insurer's designated office or to an authorized agent, with information that identifies the insured, is notice to the insurer (24-A MRSA s. 2709(1)).
• Continuing disability. Where a loss-of-time benefit may be payable at least 2 years, the insurer may require notice of continuance at least every 6 months; delay does not impair benefits accrued in the prior 6 months (24-A MRSA s. 2709(2)).
• Group: 30 days after the sickness or injury, with the same reasonable-possibility excuse (24-A MRSA s. 2823).

9.6 Claim Forms (Outline: II.A.6)

After notice, the insurer sends its usual proof-of-loss forms. If it does not send them in time, the claimant satisfies the proof requirement by submitting written proof of the occurrence, character and extent of the loss.

In Maine

The insurer has 15 days after notice to furnish forms (24-A MRSA s. 2710; group: s. 2825).

9.7 Proof of Loss (Outline: II.A.7)

Written proof is due within a stated time. Failure does not invalidate or reduce a claim if giving proof in time was not reasonably possible and proof follows as soon as reasonably possible, subject to an outer limit.

In Maine

• Individual. Within 90 days after the end of the period for which the insurer is liable (periodic payments contingent on continuing loss) and within 90 days after the date of loss for any other claim. Late proof is excused as above but, except for lack of legal capacity, no later than one year after it was otherwise due (24-A MRSA s. 2711).
• Group. For loss-of-time disability, within 30 days after the start of the period for which the insurer is liable, with later proofs of continuance as the insurer reasonably requires; for any other claim, within 90 days after the loss (24-A MRSA s. 2824).

9.8 Time of Payment of Claims (Outline: II.A.8)

Non-periodic benefits are paid on receipt of due written proof; periodic benefits at stated intervals, at least monthly.

In Maine

• Individual. Non-periodic indemnities are paid immediately on due written proof; accrued periodic indemnities at the stated interval, at least monthly (24-A MRSA s. 2712).
• Group. Non-loss-of-time benefits within 60 days after proof; accrued loss-of-time benefits at least every 30 days (24-A MRSA s. 2827).
• Overdue claims. A claim under a policy or certificate delivered in Maine (except that individual life insurance has 2 months and fire coverage 60 days) is payable within 30 days after proof of loss is received and the loss ascertained. An undisputed claim neither paid nor disputed within 30 days is overdue; if the insurer notifies the claimant in writing that more information is needed, it is not overdue until 30 days after receipt. An overdue undisputed claim bears interest at 1 1/2 percent per month, and a reasonable attorney's fee is payable if overdue benefits are recovered in an action or paid after notice of representation (24-A MRSA s. 2436). That section does not apply to long-term care claims (24-A MRSA s. 2436(6)).

9.9 Payment of Claims (Outline: II.A.9)

Death benefits go to the named beneficiary, or the estate if none. Other benefits go to the insured. The insurer may pay hospital, medical or surgical benefits directly to the provider unless the insured directs otherwise.

In Maine

• Loss-of-life indemnity follows the beneficiary designation, otherwise the estate; other indemnities accrued at death may go to either; all other indemnities are payable to the insured (24-A MRSA s. 2713(1)).
• An optional clause lets the insurer pay up to a stated amount, not above $1,000, to a relative when the benefit is payable to the estate or to a minor or incompetent. Another optional clause allows direct payment to the provider unless the insured requests otherwise in writing by the time proofs are filed; the insurer may offer incentives to use a provider but may not require a particular one (24-A MRSA s. 2713(2)).
• Policies paying medical or dental expenses on an expense-incurred basis must let the insured assign benefits to the provider (24-A MRSA s. 2755; group: s. 2827-A).

9.10 Physical Examination and Autopsy (Outline: II.A.10)

The insurer, at its own expense, may examine the insured as often as reasonably required while a claim is pending, and may make an autopsy where the law allows.

In Maine

Required wording: 24-A MRSA s. 2714 (group: s. 2826). The cost falls on the insurer.