Reprinted
January 30, 2002
HOUSE BILL No. 1163
_____
DIGEST OF HB 1163
(Updated January 29, 2002 5:31 PM - DI 97)
Citations Affected: IC 27-8; noncode.
Synopsis: Waiver of preexisting conditions. Provides that an individual
policy of accident and sickness insurance or a group policy of accident
and sickness insurance under which a certificate of coverage is issued
to an individual member of a non-employer based association or
discretionary group may contain a waiver of coverage for a specified
condition under certain circumstances. Specifies that an offer of
coverage under a policy that includes a waiver does not preclude
eligibility for a comprehensive health insurance association policy.
Requires reporting by insurers to the state department of insurance.
Effective: July 1, 2002.
Crooks
, Adams T
, Bischoff
, Torr
,
Frizzell
January 9, 2002, read first time and referred to Committee on Insurance, Corporations and
Small Business.
January 23, 2002, amended, reported _ Do Pass.
January 29, 2002, read second time, amended, ordered engrossed.
Reprinted
January 30, 2002
Second Regular Session 112th General Assembly (2002)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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HOUSE BILL No. 1163
A BILL FOR AN ACT to amend the Indiana Code concerning
insurance.
Be it enacted by the General Assembly of the State of Indiana:
SOURCE: IC 27-8-5-2.5; (02)HB1163.2.1. -->
SECTION 1. IC 27-8-5-2.5 IS AMENDED TO READ AS
FOLLOWS [EFFECTIVE JULY 1, 2002]: Sec. 2.5. (a) As used in this
section, the term "policy of accident and sickness insurance" does not
include the following:
(1) Accident only, credit, dental, vision, Medicare supplement,
long term care, or disability income insurance.
(2) Coverage issued as a supplement to liability insurance.
(3) Automobile medical payment insurance.
(4) A specified disease policy issued as an individual policy.
(5) A limited benefit health insurance policy issued as an
individual policy.
(6) A short term insurance plan that:
(A) may not be renewed; and
(B) has a duration of not more than six (6) months.
(7) A policy that provides a stipulated daily, weekly, or monthly
payment to an insured during hospital confinement, without
regard to the actual expense of the confinement.
(8) Worker's compensation or similar insurance.
(9) A student health insurance policy.
(b) The benefits provided by an individual policy of accident and
sickness insurance may not be excluded, limited, or denied for more
than twelve (12) months after the effective date of the coverage
because of a preexisting condition of the individual.
(c) An individual policy of accident and sickness insurance may not
define a preexisting condition, a rider, or an endorsement more
restrictively than as:
(1) a condition that would have caused an ordinarily prudent
person to seek medical advice, diagnosis, care, or treatment
during the twelve (12) months immediately preceding the
effective date of enrollment in the plan;
(2) a condition for which medical advice, diagnosis, care, or
treatment was recommended or received during the twelve (12)
months immediately preceding the effective date of enrollment in
the plan; or
(3) a pregnancy existing on the effective date of enrollment in the
plan.
(d) An insurer shall reduce the period allowed for a preexisting
condition exclusion described in subsection (b) by the amount of time
the individual has continuously served under a preexisting condition
clause for a policy of accident and sickness insurance issued under
IC 27-8-15 if the individual applies for a policy under this chapter not
more than thirty (30) days after coverage under a policy of accident and
sickness insurance issued under IC 27-8-15 expires.
(e) Notwithstanding subsections (b) and (c), an individual policy
of accident and sickness insurance may contain a waiver of
coverage for a specified condition and complications that arise
from the specified condition if:
(1) the period for which the exemption would be in effect does
not exceed five (5) years; and
(2) all of the following conditions are met:
(A) The insurer provides to the applicant before issuance
of the policy a written notice explaining the waiver of
coverage for the specified condition and complications
arising from the specified condition, including a specific
description of each condition, complication, service, and
treatment for which coverage is being waived.
(B) The:
(i) offer of coverage; and
(ii) policy;
include the waiver in a separate section stating in bold
print that the applicant is receiving coverage with an
exception for the waived condition and specifying each
related condition, complication, service, and treatment for
which coverage is waived.
(C) The:
(i) offer of coverage; and
(ii) policy;
do not include more than two (2) waivers.
(D) The waiver period is concurrent with and not in
addition to any applicable preexisting condition limitation
or exclusionary period.
(E) The insurer agrees to:
(i) review the underwriting basis for the waiver upon
request one (1) time per year; and
(ii) remove the waiver if the insurer determines that
evidence of insurability is satisfactory.
(F) The insurer discloses to the applicant that the applicant
may decline the offer of coverage and apply for a policy
issued by the Indiana comprehensive health insurance
association under IC 27-8-10.
(G) The waiver of coverage does not apply to coverage
required under state law.
The insurer shall require an applicant to initial the written notice
provided under subdivision (2)(A) and the waiver included in the
offer of coverage and in the policy under subdivision (2)(B) to
acknowledge acceptance of the waiver of coverage. An offer of
coverage under a policy that includes a waiver under this
subsection does not preclude eligibility for an Indiana
comprehensive health insurance association policy under
IC 27-8-10-5.1.
(f) An insurer shall not, on the basis of a waiver contained in a
policy as provided in subsection (e), deny coverage for any
condition, complication, service, or treatment that is not specified
as required in the:
(1) written notice under subsection (e)(2)(A); and
(2) offer of coverage and policy under subsection (e)(2)(B).
(g) An individual who is covered under a policy that includes a
waiver under subsection (e) may directly appeal a denial of
coverage based on the waiver by filing a request for an external
grievance review under IC 27-8-29 without pursuing a grievance
under IC 27-8-28.
(h) Notwithstanding subsection (e), an individual policy of
accident and sickness insurance may not contain a waiver of
coverage for a mental health condition.
SOURCE: IC 27-8-5-19.2; (02)HB1163.2.2. -->
SECTION 2. IC 27-8-5-19.2 IS ADDED TO THE INDIANA CODE
AS A
NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
1, 2002]:
Sec. 19.2. (a) This section applies to a group policy of
accident and sickness insurance:
(1) that is not employer based;
(2) that covers the members of an association or discretionary
group; and
(3) under which a certificate of coverage is issued to an
individual member of the association or discretionary group.
(b) Notwithstanding section 19 of this chapter, a policy
described in subsection (a) may contain a waiver of coverage for a
specified condition and complications that arise from the specified
condition if:
(1) the period for which the exemption would be in effect does
not exceed five (5) years; and
(2) all of the following conditions are met:
(A) The insurer provides to the applicant before issuance
of the policy a written notice explaining the waiver of
coverage for the specified condition and complications
arising from the specified condition, including a specific
description of each condition, complication, service, and
treatment for which coverage is being waived.
(B) The:
(i) offer of coverage; and
(ii) certificate of coverage;
include the waiver in a separate section stating in bold
print that the applicant is receiving coverage with an
exception for the waived condition and specifying each
related condition, complication, service, and treatment for
which coverage is waived.
(C) The:
(i) offer of coverage; and
(ii) certificate of coverage;
do not include more than two (2) waivers.
(D) The waiver period is concurrent with and not in
addition to any applicable preexisting condition limitation
or exclusionary period.
(E) The insurer agrees to:
(i) review the underwriting basis for the waiver upon
request one (1) time per year; and
(ii) remove the waiver if the insurer determines that
evidence of insurability is satisfactory.
(F) The insurer discloses to the applicant that the applicant
may decline the offer of coverage, and any individual to
whom the waiver would have applied may apply for a
policy issued by the Indiana comprehensive health
insurance association under IC 27-8-10.
(G) The waiver of coverage does not apply to coverage
required under state law.
(c) The insurer shall require an applicant to initial the written
notice provided under subsection (b)(2)(A) and the waiver included
in the offer of coverage and in the certificate of coverage under
subsection (b)(2)(B) to acknowledge acceptance of the waiver of
coverage.
(d) An insurer shall not, on the basis of a waiver contained in a
policy as provided in this section, deny coverage for any condition,
complication, service, or treatment that is not specified as required
in the:
(1) written notice under subsection (b)(2)(A); and
(2) offer of coverage and certificate of coverage under
subsection (b)(2)(B).
(e) An individual who is covered under a policy that includes a
waiver under this section may directly appeal a denial of coverage
based on the waiver by filing a request for an external grievance
review under IC 27-8-29 without pursuing a grievance under
IC 27-8-28.
(f) An offer of coverage under a policy that includes a waiver
under this section does not preclude eligibility for an Indiana
comprehensive health insurance association policy under
IC 27-8-10-5.1.
(g) Notwithstanding subsection (b), a policy described in
subsection (a) may not contain a waiver of coverage for a mental
health condition.
SOURCE: IC 27-8-10-5.1; (02)HB1163.2.3. -->
SECTION 3. IC 27-8-10-5.1, AS AMENDED BY P.L.233-1999,
SECTION 11, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2002]: Sec. 5.1. (a) Except as provided in subsections (b) and
(c), a person is not eligible for an association policy if, at the effective
date of coverage, the person has or is eligible for coverage under any
insurance plan that equals or exceeds the minimum requirements for
accident and sickness insurance policies issued in Indiana as set forth
in IC 27.
However, an offer of coverage described in
IC 27-8-5-2.5(e) or IC 27-8-5-19.2(b) does not affect an individual's
eligibility for an association policy under this subsection. Coverage
under any association policy is in excess of, and may not duplicate,
coverage under any other form of health insurance.
(b) Except as provided in IC 27-13-16-4, a person is eligible for an
association policy upon a showing that:
(1) the person has been rejected by one (1) carrier for coverage
under any insurance plan that equals or exceeds the minimum
requirements for accident and sickness insurance policies issued
in Indiana, as set forth in IC 27, without material underwriting
restrictions;
(2) an insurer has refused to issue insurance except at a rate
exceeding the association plan rate; or
(3) the person is a federally eligible individual.
For the purposes of this subsection, eligibility for Medicare coverage
does not disqualify a person who is less than sixty-five (65) years of
age from eligibility for an association policy.
(c) The board of directors may establish procedures that would
permit:
(1) an association policy to be issued to persons who are covered
by a group insurance arrangement when that person or a
dependent's health condition is such that the group's coverage is
in jeopardy of termination or material rate increases because of
that person's or dependent's medical claims experience; and
(2) an association policy to be issued without any limitation on
preexisting conditions to a person who is covered by a health
insurance arrangement when that person's coverage is scheduled
to terminate for any reason beyond the person's control.
(d) An association policy must provide that coverage of a dependent
unmarried child terminates when the child becomes nineteen (19) years
of age (or twenty-five (25) years of age if the child is enrolled full-time
in an accredited educational institution). The policy must also provide
in substance that attainment of the limiting age does not operate to
terminate a dependent unmarried child's coverage while the dependent
is and continues to be both:
(1) incapable of self-sustaining employment by reason of mental
retardation or mental or physical disability; and
(2) chiefly dependent upon the person in whose name the contract
is issued for support and maintenance.
However, proof of such incapacity and dependency must be furnished
to the carrier within one hundred twenty (120) days of the child's
attainment of the limiting age, and subsequently as may be required by
the carrier, but not more frequently than annually after the two (2) year
period following the child's attainment of the limiting age.
(e) An association policy that provides coverage for a family
member of the person in whose name the contract is issued must, as to
the family member's coverage, also provide that the health insurance
benefits applicable for children are payable with respect to a newly
born child of the person in whose name the contract is issued from the
moment of birth. The coverage for newly born children must consist of
coverage of injury or illness, including the necessary care and treatment
of medically diagnosed congenital defects and birth abnormalities. If
payment of a specific premium is required to provide coverage for the
child, the contract may require that notification of the birth of a child
and payment of the required premium must be furnished to the carrier
within thirty-one (31) days after the date of birth in order to have the
coverage continued beyond the thirty-one (31) day period.
(f) Except as provided in subsection (g), an association policy may
contain provisions under which coverage is excluded during a period
of three (3) months following the effective date of coverage as to a
given covered individual for preexisting conditions, as long as medical
advice or treatment was recommended or received within a period of
three (3) months before the effective date of coverage. This subsection
may not be construed to prohibit preexisting condition provisions in an
insurance policy that are more favorable to the insured.
(g) If a person applies for an association policy within six (6)
months after termination of the person's coverage under a health
insurance arrangement and the person meets the eligibility
requirements of subsection (b), then an association policy may not
contain provisions under which:
(1) coverage as to a given individual is delayed to a date after the
effective date or excluded from the policy; or
(2) coverage as to a given condition is denied;
on the basis of a preexisting health condition. This subsection may not
be construed to prohibit preexisting condition provisions in an
insurance policy that are more favorable to the insured.
(h) For purposes of this section, coverage under a health insurance
arrangement includes, but is not limited to, coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985.
SOURCE: IC 27-8-29-6; (02)HB1163.2.4. -->
SECTION 4. IC 27-8-29-6, AS ADDED BY P.L.203-2001,
SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2002]: Sec. 6. As used in this chapter, "external grievance"
means the independent review under this chapter of a:
(1) grievance filed under IC 27-8-28; or
(2) denial of coverage based on a waiver described in
IC 27-8-5-2.5 or IC 27-8-5-19.2.
SOURCE: IC 27-8-29-12; (02)HB1163.2.5. -->
SECTION 5. IC 27-8-29-12, AS ADDED BY P.L.203-2001,
SECTION 14, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
JULY 1, 2002]: Sec. 12. An insurer shall establish and maintain an
external grievance procedure for the resolution of external grievances
regarding:
(1) an adverse determination of appropriateness;
(2) an adverse determination of medical necessity; or
(3) a determination that a proposed service is experimental or
investigational; or
(4) a denial of coverage based on a waiver described in
IC 27-8-5-2.5 or IC 27-8-5-19.2;
made by an insurer or an agent of an insurer regarding a service
proposed by the treating health care provider.
SOURCE: IC 27-8-29-13; (02)HB1163.2.6. -->
SECTION 6. IC 27-8-29-13, AS ADDED BY P.L.66-2001,
SECTION 3, AND AS ADDED BY P.L.203-2001, SECTION 14, IS
AMENDED AND CORRECTED TO READ AS FOLLOWS
[EFFECTIVE JULY 1, 2002]: Sec. 13. (a) An external grievance
procedure established under section 12 of this chapter must:
(1) allow a covered individual or a covered individual's
representative to file a written request with the insurer for an
external grievance review of the insurer's:
(A) appeal resolution under IC 27-8-28-17;
or
(B) denial of coverage based on a waiver described in
IC 27-8-5-2.5 or IC 27-8-5-19.2;
not more than forty-five (45) days after the covered individual is
notified of the resolution; and
(2) provide for:
(A) an expedited external grievance review for a grievance
related to an illness,
a disease,
a condition,
an injury, or a
disability if the time frame for a standard review would
seriously jeopardize the covered individual's:
(i) life or health; or
(ii) ability to reach and maintain maximum function; or
(B) a standard external grievance review for a grievance not
described in clause (A).
A covered individual may file not more than one (1) external grievance
of an insurer's appeal resolution under this chapter.
(b) Subject to the requirements of subsection (d), when a request is
filed under subsection (a), the insurer shall:
(1) select a different independent review organization for each
external grievance filed under this chapter from the list of
independent review organizations that are certified by the
department under section 19 of this chapter; and
(2) rotate the choice of an independent review organization
among all certified independent review organizations before
repeating a selection.
(c) The independent review organization chosen under subsection
(b) shall assign a medical review professional who is board certified in
the applicable specialty for resolution of an external grievance.
(d) The independent review organization and the medical review
professional conducting the external review under this chapter may not
have a material professional, familial, financial, or other affiliation with
any of the following:
(1) The insurer.
(2) Any officer, director, or management employee of the insurer.
(3) The health care provider or the health care provider's medical
group that is proposing the service.
(4) The facility at which the service would be provided.
(5) The development or manufacture of the principal drug, device,
procedure, or other therapy that is proposed for use by the treating
health care provider.
(6) The covered individual requesting the external grievance
review.
However, the medical review professional may have an affiliation
under which the medical review professional provides health care
services to covered individuals of the insurer and may have an
affiliation that is limited to staff privileges at the health facility, if the
affiliation is disclosed to the covered individual and the insurer before
commencing the review and neither the covered individual nor the
insurer objects.
(e) A covered individual may be required to pay not more than
twenty-five dollars ($25) of the costs associated with the services of an
independent review organization under this chapter. All additional
costs must be paid by the insurer.
SOURCE: ; (02)HB1163.2.7. -->
SECTION 7. [EFFECTIVE JULY 1, 2002] IC 27-8-5-2.5, as
amended by this act, and IC 27-8-5-19.2, as added by this act, apply
to a policy of accident and sickness insurance that is issued,
delivered, amended, or renewed after June 30, 2002.
SOURCE: ; (02)HB1163.2.8. -->
SECTION 8. [EFFECTIVE JULY 1, 2002]
(a) An insurer that
issues a policy of accident and sickness insurance that contains a
waiver under IC 27-8-5-2.5(e) or IC 27-8-5-19.2, both as added by
this act, shall submit to the commissioner of the department of
insurance the following information for the reporting periods
specified under subsection (b) on a form prescribed by the
commissioner:
(1) The number of policies that the insurer issued with a
waiver.
(2) A list of specified conditions that the insurer waived.
(3) The number of waivers issued for each specified condition
listed under subdivision (2).
(4) The number of waivers issued categorized by the period of
time for which coverage of a specified condition was waived.
(5) The number of applicants who were denied insurance
coverage by the insurer because of a specified condition.
(b) An insurer shall submit the information required under
subsection (a) as follows:
(1) Not later than September 1, 2003, for the reporting period
July 1, 2002, through June 30, 2003.
(2) Not later than September 1, 2004, for the reporting period
July 1, 2003, through June 30, 2004.
(c) The commissioner of the department of insurance shall
compile the information submitted under subsection (b) and, not
later than November 1, 2004, report the information to the senate
insurance and financial institutions committee and the house
insurance, corporations, and small business committee.
(d) This SECTION expires June 30, 2005.