HF 1768

1st Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to insurance; regulating loss ratios on 
  1.3             certain health care policies; modifying and 
  1.4             recodifying certain required provisions of disability 
  1.5             policies; requiring health plan companies to disclose 
  1.6             certain financial arrangements to enrollees; amending 
  1.7             Minnesota Statutes 1996, sections 62A.021, subdivision 
  1.8             1; and 62A.04, subdivisions 2 and 3; proposing coding 
  1.9             for new law in Minnesota Statutes, chapters 62A; and 
  1.10            62Q. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1996, section 62A.021, 
  1.13  subdivision 1, is amended to read: 
  1.14     Subdivision 1.  [LOSS RATIO STANDARDS.] (a) Notwithstanding 
  1.15  section 62A.02, subdivision 3, relating to loss ratios, health 
  1.16  care policies or certificates shall not be delivered or issued 
  1.17  for delivery to an individual or to a small employer as defined 
  1.18  in section 62L.02, unless the policies or certificates can be 
  1.19  expected, as estimated for the entire period for which rates are 
  1.20  computed to provide coverage, to return to Minnesota 
  1.21  policyholders and certificate holders in the form of aggregate 
  1.22  benefits not including anticipated refunds or credits, provided 
  1.23  under the policies or certificates, (1) at least 75 percent of 
  1.24  the aggregate amount of premiums earned in the case of policies 
  1.25  issued in the small employer market, as defined in section 
  1.26  62L.02, subdivision 27, calculated on an aggregate basis; and 
  1.27  (2) at least 65 percent of the aggregate amount of premiums 
  1.28  earned in the case of each policy form or certificate form 
  2.1   issued in the individual market; calculated on the basis of 
  2.2   incurred claims experience or incurred health care expenses 
  2.3   where coverage is provided by a health maintenance organization 
  2.4   on a service rather than reimbursement basis and earned premiums 
  2.5   for the period and according to accepted actuarial principles 
  2.6   and practices.  Assessments by the reinsurance association 
  2.7   created in chapter 62L and any all types of taxes, surcharges, 
  2.8   or assessments created by Laws 1992, chapter 549, or created on 
  2.9   or after April 23, 1992, are included in the calculation of 
  2.10  incurred claims experience or incurred health care expenses.  
  2.11  The applicable percentage for policies and certificates issued 
  2.12  in the small employer market, as defined in section 62L.02, 
  2.13  increases by one percentage point on July 1 of each year, 
  2.14  beginning on July 1, 1994, until an 82 percent loss ratio is 
  2.15  reached on July 1, 2000.  The applicable percentage for policy 
  2.16  forms and certificate forms issued in the individual market 
  2.17  increases by one percentage point on July 1 of each year, 
  2.18  beginning on July 1, 1994, until a 72 percent loss ratio is 
  2.19  reached on July 1, 2000.  A health carrier that enters a market 
  2.20  after July 1, 1993, does not start at the beginning of the 
  2.21  phase-in schedule and must instead comply with the loss ratio 
  2.22  requirements applicable to other health carriers in that market 
  2.23  for each time period.  Premiums earned and claims incurred in 
  2.24  markets other than the small employer and individual markets are 
  2.25  not relevant for purposes of this section. 
  2.26     Notwithstanding section 645.26, any act enacted at the 1992 
  2.27  regular legislative session that amends or repeals section 
  2.28  62A.135 or that otherwise changes the loss ratios provided in 
  2.29  that section is void. 
  2.30     (b) All filings of rates and rating schedules shall 
  2.31  demonstrate that actual expected claims in relation to premiums 
  2.32  comply with the requirements of this section when combined with 
  2.33  actual experience to date.  Filings of rate revisions shall also 
  2.34  demonstrate that the anticipated loss ratio over the entire 
  2.35  future period for which the revised rates are computed to 
  2.36  provide coverage can be expected to meet the appropriate loss 
  3.1   ratio standards, and aggregate loss ratio from inception of the 
  3.2   policy form or certificate form shall equal or exceed the 
  3.3   appropriate loss ratio standards. 
  3.4      (c) A health carrier that issues health care policies and 
  3.5   certificates to individuals or to small employers, as defined in 
  3.6   section 62L.02, in this state shall file annually its rates, 
  3.7   rating schedule, and supporting documentation including ratios 
  3.8   of incurred losses to earned premiums by policy form or 
  3.9   certificate form duration for approval by the commissioner 
  3.10  according to the filing requirements and procedures prescribed 
  3.11  by the commissioner.  The supporting documentation shall also 
  3.12  demonstrate in accordance with actuarial standards of practice 
  3.13  using reasonable assumptions that the appropriate loss ratio 
  3.14  standards can be expected to be met over the entire period for 
  3.15  which rates are computed.  The demonstration shall exclude 
  3.16  active life reserves.  If the data submitted does not confirm 
  3.17  that the health carrier has satisfied the loss ratio 
  3.18  requirements of this section, the commissioner shall notify the 
  3.19  health carrier in writing of the deficiency.  The health carrier 
  3.20  shall have 30 days from the date of the commissioner's notice to 
  3.21  file amended rates that comply with this section.  If the health 
  3.22  carrier fails to file amended rates within the prescribed time, 
  3.23  the commissioner shall order that the health carrier's filed 
  3.24  rates for the nonconforming policy form or certificate form be 
  3.25  reduced to an amount that would have resulted in a loss ratio 
  3.26  that complied with this section had it been in effect for the 
  3.27  reporting period of the supplement.  The health carrier's 
  3.28  failure to file amended rates within the specified time or the 
  3.29  issuance of the commissioner's order amending the rates does not 
  3.30  preclude the health carrier from filing an amendment of its 
  3.31  rates at a later time.  The commissioner shall annually make the 
  3.32  submitted data available to the public at a cost not to exceed 
  3.33  the cost of copying.  The data must be compiled in a form useful 
  3.34  for consumers who wish to compare premium charges and loss 
  3.35  ratios. 
  3.36     (d) Each sale of a policy or certificate that does not 
  4.1   comply with the loss ratio requirements of this section is an 
  4.2   unfair or deceptive act or practice in the business of insurance 
  4.3   and is subject to the penalties in sections 72A.17 to 72A.32. 
  4.4      (e)(1) For purposes of this section, the following shall be 
  4.5   treated as individual policies:  (i) health care policies issued 
  4.6   as a result of solicitations of individuals through the mail or 
  4.7   mass media advertising, including both print and broadcast 
  4.8   advertising, shall be treated as individual policies; and (ii) 
  4.9   health care policies issued to a group of no more than ten 
  4.10  employees.  
  4.11     (2) For purposes of this section, (1) (i) "health care 
  4.12  policy" or "health care certificate" is a health plan as defined 
  4.13  in section 62A.011; and (2) (ii) "health carrier" has the 
  4.14  meaning given in section 62A.011 and includes all health 
  4.15  carriers delivering or issuing for delivery health care policies 
  4.16  or certificates in this state or offering these policies or 
  4.17  certificates to residents of this state. 
  4.18     Sec. 2.  Minnesota Statutes 1996, section 62A.04, 
  4.19  subdivision 2, is amended to read: 
  4.20     Subd. 2.  [REQUIRED PROVISIONS.] Except as provided in 
  4.21  subdivision 4, each such policy of accident and sickness 
  4.22  insurance delivered or issued for delivery to any a person in 
  4.23  this state other than a policy that is limited to disability or 
  4.24  income protection coverage shall contain the provisions 
  4.25  specified in this subdivision in the words in which the same 
  4.26  appear in this section.  The insurer may, at its option, 
  4.27  substitute for one or more of such the provisions corresponding 
  4.28  provisions of different wording approved by the commissioner 
  4.29  which are in each instance not less favorable in any respect to 
  4.30  the insured or the beneficiary.  Such The provisions shall must 
  4.31  be preceded individually by the caption appearing in this 
  4.32  subdivision or, at the option of the insurer, by such 
  4.33  appropriate individual or group captions or subcaptions as the 
  4.34  commissioner may approve. 
  4.35     (1) A provision as follows: 
  4.36     ENTIRE CONTRACT; CHANGES:  This policy, including the 
  5.1   endorsements and the attached papers, if any, constitutes the 
  5.2   entire contract of insurance.  No change in this policy shall be 
  5.3   is valid until approved by an executive officer of the insurer 
  5.4   and unless such the approval be is endorsed hereon or attached 
  5.5   hereto.  No An agent has authority to may not change this 
  5.6   policy or to waive any of its provisions. 
  5.7      (2) A provision as follows: 
  5.8      TIME LIMIT ON CERTAIN DEFENSES:  (a) After two years from 
  5.9   the date of issue of this policy no misstatements, except 
  5.10  fraudulent misstatements, made by the applicant in the 
  5.11  application for such the policy shall may be used to void the 
  5.12  policy or to deny a claim for loss incurred or disability (as 
  5.13  defined in the policy) commencing after the expiration of such 
  5.14  the two-year period. 
  5.15     The foregoing policy provision shall not be so construed as 
  5.16  to affect any legal requirement for avoidance of a policy or 
  5.17  denial of a claim during such the initial two-year period, nor 
  5.18  to limit the application of clauses (1), (2), (3), (4) and (5), 
  5.19  in the event of misstatement with respect to age or occupation 
  5.20  or other insurance.  A policy which the insured has the right to 
  5.21  continue in force subject to its terms by the timely payment of 
  5.22  premium (1) until at least age 50 or, (2) in the case of a 
  5.23  policy issued after age 44, for at least five years from its 
  5.24  date of issue, may contain in lieu of the foregoing the 
  5.25  following provisions (from which the clause in parentheses may 
  5.26  be omitted at the insurer's option) under the caption 
  5.27  "INCONTESTABLE": 
  5.28     After this policy has been in force for a period of two 
  5.29  years during the lifetime of the insured (excluding any period 
  5.30  during which the insured is disabled), it shall become is 
  5.31  incontestable as to the statements contained in the application. 
  5.32     (b) No claim for loss incurred or disability (as defined in 
  5.33  the policy) commencing after two years from the date of issue of 
  5.34  this policy shall be reduced or denied on the ground that a 
  5.35  disease or physical condition not excluded from coverage by name 
  5.36  or specific description effective on the date of loss had 
  6.1   existed prior to the effective date of coverage of this policy. 
  6.2      (3) A provision as follows: 
  6.3      GRACE PERIOD:  A grace period of ..... (insert a number not 
  6.4   less than "7" for weekly premium policies, "10" for monthly 
  6.5   premium policies and "31" for all other policies) days will be 
  6.6   granted for the payment of each premium falling due after the 
  6.7   first premium, during which grace period the policy shall 
  6.8   continue in force. 
  6.9      A policy which contains a cancellation provision may add, 
  6.10  at the end of the above provision, 
  6.11     subject to the right of the insurer to cancel in accordance 
  6.12  with the cancellation provision hereof. 
  6.13     A policy in which the insurer reserves the right to refuse 
  6.14  any renewal shall have, at the beginning of the above provision, 
  6.15     Unless not less than five days prior to the premium due 
  6.16  date the insurer has delivered to the insured or has mailed to 
  6.17  the insured's last address as shown by the records of the 
  6.18  insurer written notice of its intention not to renew this policy 
  6.19  beyond the period for which the premium has been accepted. 
  6.20     (4) A provision as follows: 
  6.21     REINSTATEMENT:  If any a renewal premium be is not paid 
  6.22  within the time granted the insured for payment, a subsequent 
  6.23  acceptance of premium by the insurer or by any an agent duly 
  6.24  authorized by the insurer to accept such the premium, without 
  6.25  requiring in connection therewith an application for 
  6.26  reinstatement, shall reinstate reinstates the policy.  If the 
  6.27  insurer or such agent requires an application for reinstatement 
  6.28  and issues a conditional receipt for the premium tendered, the 
  6.29  policy will be is reinstated upon approval of such application 
  6.30  by when the insurer approves the application or, lacking such 
  6.31  without approval, upon on the forty-fifth day following the date 
  6.32  of such the conditional receipt unless the insurer has 
  6.33  previously notified the insured in writing of its disapproval of 
  6.34  such the application.  For health plans described in section 
  6.35  62A.011, subdivision 3, clause (10), an insurer must accept 
  6.36  payment of a renewal premium and reinstate the policy, if the 
  7.1   insured applies for reinstatement no later than 60 days after 
  7.2   the due date for the premium payment, unless: 
  7.3      (1) the insured has in the interim left the state or the 
  7.4   insurer's service area; or 
  7.5      (2) the insured has applied for reinstatement on two or 
  7.6   more prior occasions. 
  7.7      Coverage under the reinstated policy shall cover only is 
  7.8   limited to loss resulting from such accidental injury as may be 
  7.9   sustained after the date of reinstatement and loss due to such 
  7.10  sickness as may begin an illness that begins more than ten days 
  7.11  after such the reinstatement date.  In all other respects the 
  7.12  insured and insurer shall have the same rights thereunder as 
  7.13  they had under the policy immediately before the due date of the 
  7.14  defaulted premium, subject to any provisions endorsed hereon or 
  7.15  attached hereto in connection with the reinstatement.  Any 
  7.16  Premium accepted in connection with a reinstatement shall must 
  7.17  be applied to a period for which premium has not been previously 
  7.18  paid, but not to any a period more than 60 days prior to before 
  7.19  the date of reinstatement.  The last sentence of the above 
  7.20  provision may be omitted from any a policy which the insured has 
  7.21  the right to continue in force subject to its terms by the 
  7.22  timely payment of premiums (1) until at least age 50, or, (2) in 
  7.23  the case of a policy issued after age 44, for at least five 
  7.24  years from its date of issue. 
  7.25     (5) A provision as follows: 
  7.26     NOTICE OF CLAIM:  Written notice of claim must be given to 
  7.27  the insurer within 20 days after the occurrence or commencement 
  7.28  of any loss covered by the policy, or as soon thereafter as is 
  7.29  reasonably possible.  Notice given by or on behalf of the 
  7.30  insured or the beneficiary to the insurer at ..... (insert the 
  7.31  location of such the office as designated by the insurer may 
  7.32  designate for the purpose), or to any an authorized agent of the 
  7.33  insurer, with information sufficient to identify the 
  7.34  insured, shall be deemed constitutes notice to the insurer. 
  7.35     In a policy providing a loss-of-time benefit which may be 
  7.36  payable for at least two years, an insurer may at its option 
  8.1   insert the following between the first and second sentences of 
  8.2   the above provision: 
  8.3      Subject to the qualifications set forth below, if the 
  8.4   insured suffers loss of time on account of disability for which 
  8.5   indemnity may be payable for at least two years, the insured 
  8.6   shall, at least once in every six months after having given 
  8.7   notice of claim, give to the insurer notice of continuance of 
  8.8   said disability, except in the event of legal incapacity.  The 
  8.9   period of six months following any filing of proof by the 
  8.10  insured or any payment by the insurer on account of such claim 
  8.11  or any denial of liability in whole or in part by the insurer 
  8.12  shall be excluded in applying this provision.  Delay in the 
  8.13  giving of such notice shall not impair the insured's right to 
  8.14  any indemnity which would otherwise have accrued during the 
  8.15  period of six months preceding the date on which such notice is 
  8.16  actually given. 
  8.17     (6) A provision as follows: 
  8.18     CLAIM FORMS:  The insurer, upon receipt of a notice of 
  8.19  claim, will furnish must provide proof of loss forms to the 
  8.20  claimant such forms as are usually furnished by it for filing 
  8.21  proofs of loss.  If such the forms are not furnished within 15 
  8.22  days after the giving of such notice, the claimant shall be 
  8.23  deemed is considered to have complied with the requirements of 
  8.24  this policy as to proof of loss upon submitting, within the time 
  8.25  fixed specified in the policy for filing proofs of loss, written 
  8.26  proof covering the occurrence, and the character and the extent 
  8.27  of the loss for which the claim is made. 
  8.28     (7) A provision as follows: 
  8.29     PROOFS OF LOSS:  Written proof of loss must be furnished to 
  8.30  the insurer at its said office in case of claim for loss for 
  8.31  which this policy provides any a periodic payment contingent 
  8.32  upon continuing loss within 90 days after the termination of the 
  8.33  period for which the insurer is liable and in case of claim for 
  8.34  any other loss within 90 days after the date of such the loss.  
  8.35  Failure to furnish such proof within the time required shall not 
  8.36  invalidate nor reduce any a claim if it was not reasonably 
  9.1   possible to give proof within such the specified time, provided 
  9.2   such that proof is furnished as soon as reasonably possible and 
  9.3   in no event, except in the absence of legal capacity, later than 
  9.4   one year from the time proof is otherwise required. 
  9.5      (8) A provision as follows: 
  9.6      TIME OF PAYMENT OF CLAIMS:  Indemnities payable under this 
  9.7   policy for any a loss other than loss for which this policy 
  9.8   provides periodic payment will be paid immediately upon receipt 
  9.9   of due written proof of such the loss.  Subject to due written 
  9.10  proof of loss, all accrued indemnities for loss for which this 
  9.11  policy provides periodic payment will be paid ..... (insert 
  9.12  period for payment which must not be less frequently than 
  9.13  monthly) and any balance remaining unpaid upon the termination 
  9.14  of liability will be paid immediately upon receipt of due 
  9.15  written proof. 
  9.16     (9) A provision as follows: 
  9.17     PAYMENT OF CLAIMS:  Indemnity for loss of life will be is 
  9.18  payable in accordance with the beneficiary designation and the 
  9.19  policy provisions respecting such that apply to the payment 
  9.20  which may be prescribed herein and that are effective at the 
  9.21  time of payment.  If no such designation or provision is then 
  9.22  effective, such the indemnity shall be is payable to the estate 
  9.23  of the insured.  Any The insurer may pay other accrued 
  9.24  indemnities unpaid at the insured's death may, at the option of 
  9.25  the insurer, be paid to either to such the beneficiary or to 
  9.26  such the estate.  All other indemnities will be are payable to 
  9.27  the insured. 
  9.28     The insurer may include the following provisions, or either 
  9.29  of them, may be included with the foregoing provision at the 
  9.30  option of the insurer: 
  9.31     If any an indemnity of this policy shall be is payable to 
  9.32  the estate of the insured, or to an insured or beneficiary who 
  9.33  is a minor or otherwise not competent to give a valid release, 
  9.34  the insurer may pay such the indemnity, up to an amount not 
  9.35  exceeding $..... (insert an amount which shall not exceed 
  9.36  $1,000), to any a relative by blood or connection by marriage of 
 10.1   the insured or beneficiary who is deemed considered by the 
 10.2   insurer to be equitably entitled thereto.  Any A payment made by 
 10.3   the insurer in good faith pursuant to under this provision shall 
 10.4   fully discharge completely discharges the insurer to the extent 
 10.5   of such the payment. 
 10.6      Subject to any written direction of Unless otherwise 
 10.7   directed in writing by the insured in the application 
 10.8   or otherwise all or a portion of any indemnities no later than 
 10.9   the time of filing proofs of the loss, an insurer may pay an 
 10.10  indemnity provided by this policy on account of for hospital, 
 10.11  nursing, medical, or surgical services may, at the insurer's 
 10.12  option and unless the insured requests otherwise in writing not 
 10.13  later than the time of filing proofs of such loss, be paid 
 10.14  directly to the hospital or person rendering such services; but 
 10.15  it is not required that providing the service.  This provision 
 10.16  does not require the service to be rendered provided by a 
 10.17  particular hospital or person. 
 10.18     (10) A provision as follows: 
 10.19     PHYSICAL EXAMINATIONS AND AUTOPSY:  The insurer at its own 
 10.20  expense shall have the right and opportunity to may examine the 
 10.21  person of the insured when and as often as it may reasonably 
 10.22  require reasonable during the pendency of a claim hereunder and 
 10.23  to make may require an autopsy to be performed in case of death 
 10.24  where it is not forbidden by law. 
 10.25     (11) A provision as follows: 
 10.26     LEGAL ACTIONS:  No action at law or in equity shall may be 
 10.27  brought to recover on this policy prior to before the expiration 
 10.28  of 60 days after written proof of loss has been furnished in 
 10.29  accordance with the requirements of this policy.  No such action 
 10.30  shall may be brought after the expiration of three years after 
 10.31  the time written proof of loss is required to be furnished. 
 10.32     (12) A provision as follows: 
 10.33     CHANGE OF BENEFICIARY:  Unless the insured makes an 
 10.34  irrevocable designation of beneficiary, the right to change of 
 10.35  the beneficiary is reserved to the insured and the consent of 
 10.36  the beneficiary or beneficiaries shall not be requisite to is 
 11.1   not required for the surrender or assignment of this policy or 
 11.2   to any, a change of beneficiary or beneficiaries, or to any 
 11.3   other changes in this policy.  The insurer may omit the first 
 11.4   clause of this provision, relating to the irrevocable 
 11.5   designation of beneficiary, may be omitted at the insurer's 
 11.6   option. 
 11.7      Sec. 3.  Minnesota Statutes 1996, section 62A.04, 
 11.8   subdivision 3, is amended to read: 
 11.9      Subd. 3.  [OPTIONAL PROVISIONS.] Except as provided in 
 11.10  subdivision 4, no such policy of accident and sickness insurance 
 11.11  delivered or issued for delivery to any a person in this 
 11.12  state shall other than a policy that is limited to disability or 
 11.13  income protection coverage may contain provisions respecting the 
 11.14  matters set forth specified below unless such the provisions are 
 11.15  in the words in which the same appear provided in this section.  
 11.16  The insurer may, at its option, use in lieu of any such 
 11.17  provision a corresponding provision of different wording 
 11.18  approved by the commissioner which is not less favorable in any 
 11.19  respect to the insured or the beneficiary.  Any such A provision 
 11.20  contained in the policy shall must be preceded individually by 
 11.21  the appropriate caption appearing in this subdivision or, at the 
 11.22  option of.  The insurer, by such may use an appropriate 
 11.23  alternative individual or group captions or subcaptions 
 11.24  as caption if approved by the commissioner may approve. 
 11.25     (1) A provision as follows: 
 11.26     CHANGE OF OCCUPATION:  If the insured be is injured or 
 11.27  contract sickness contracts an illness after having changed 
 11.28  changing occupations to one classified by the insurer as more 
 11.29  hazardous than that stated in this policy or while doing for 
 11.30  compensation anything pertaining to an occupation so classified, 
 11.31  the insurer will pay only such the portion of the indemnities 
 11.32  provided in this policy as the premiums paid would have 
 11.33  purchased at the rates and within the limits fixed by the 
 11.34  insurer for such the more hazardous occupation.  If the insured 
 11.35  changes occupations to one classified by the insurer as less 
 11.36  hazardous than that stated in this policy, the insurer, upon 
 12.1   receipt of proof of such the change of occupation will reduce 
 12.2   the premium rate accordingly, and will return the excess pro 
 12.3   rata unearned premium from the date of change of occupation or 
 12.4   from the policy anniversary date immediately preceding receipt 
 12.5   of such the proof, whichever is the more recent.  In applying 
 12.6   this provision, The classification of occupational risk and the 
 12.7   premium rates shall be such as have been last filed by the 
 12.8   insurer prior to:  (a) before the occurrence of the loss for 
 12.9   which the insurer is liable; or prior to (b) before the date of 
 12.10  proof of change in occupation with the state official having 
 12.11  supervision of insurance in the state where the insured resided 
 12.12  at the time this policy was issued; but apply to this 
 12.13  provision.  If such filing was is not required, then the 
 12.14  classification of occupational risk and the premium rates shall 
 12.15  be those last made effective by the insurer in such the 
 12.16  state prior to before the occurrence of the loss or prior to 
 12.17  before the date of proof of change of occupation apply to this 
 12.18  provision. 
 12.19     (2) A provision as follows: 
 12.20     MISSTATEMENT OF AGE:  If the age of the insured has been 
 12.21  misstated, all amounts payable under this policy shall be such 
 12.22  are the same as the premium paid would have purchased at the 
 12.23  correct age. 
 12.24     (3) A provision as follows: 
 12.25     OTHER INSURANCE IN THIS INSURER:  If an accident or 
 12.26  sickness or accident and sickness policy or policies previously 
 12.27  issued by the insurer to the insured be is concurrently in force 
 12.28  concurrently herewith, making and the aggregate indemnity for 
 12.29  ..... (insert type of coverage or coverages) is in excess of 
 12.30  $..... (insert maximum limit of indemnity or indemnities) the 
 12.31  excess insurance shall be is void and all premiums paid for such 
 12.32  the excess shall must be returned to the insured or to the 
 12.33  insured's estate, or, in lieu thereof: insurance effective at 
 12.34  any one time on the insured under a like similar policy or 
 12.35  policies in of this insurer is limited to the one such policy 
 12.36  elected by the insured, or the insured's beneficiary or estate, 
 13.1   as the case may be, and the insurer will return all premiums 
 13.2   paid for all other such policies. 
 13.3      (4) A provision as follows: 
 13.4      INSURANCE WITH OTHER INSURERS:  If there be is other valid 
 13.5   coverage, not with this insurer, providing benefits for the same 
 13.6   loss on a provision of service basis or on an expense incurred 
 13.7   basis and of which this insurer has not been given written 
 13.8   notice prior to before the occurrence or commencement of loss, 
 13.9   the only liability under any expense incurred coverage of this 
 13.10  policy shall be is for such the proportion of the loss as the 
 13.11  amount which would otherwise have been payable hereunder under 
 13.12  the policy plus the total of the like amounts under all such 
 13.13  other valid coverages for the same loss of which this insurer 
 13.14  had notice bears to the total like amounts under all valid 
 13.15  coverages for such the loss, and for the return of such the 
 13.16  portion of the premiums paid as shall exceed that exceeds the 
 13.17  pro rata portion for the amount so determined.  For the purpose 
 13.18  of applying this provision when other coverage is on a provision 
 13.19  of service basis, the "like amount" of such the other 
 13.20  coverage shall be taken as is the amount which the services 
 13.21  rendered provided would have cost in the absence of such the 
 13.22  coverage. 
 13.23     If the foregoing policy provision clause (4) is included in 
 13.24  a policy which also contains the next following policy provision 
 13.25  there shall be added to the caption of the foregoing provision, 
 13.26  the phrase "EXPENSE INCURRED BENEFITS." must be added to the 
 13.27  caption specified under clause (4).  The insurer may, at its 
 13.28  option, include in this provision a definition of "other valid 
 13.29  coverage," approved as to in a form approved by the commissioner 
 13.30  , which.  The definition shall be is limited in subject matter 
 13.31  to coverage provided by organizations subject to regulation by 
 13.32  insurance law or by insurance authorities of this or any other 
 13.33  another state of the United States or any a province of Canada, 
 13.34  and by hospital or medical service organizations, and to any 
 13.35  other coverage the inclusion of which may be approved by the 
 13.36  commissioner.  In the absence of such a definition such, the 
 14.1   term shall does not include group insurance, automobile medical 
 14.2   payments insurance, or coverage provided by hospital or medical 
 14.3   service organizations or by union welfare plans or employer or 
 14.4   employee benefit organizations.  For the purpose of applying the 
 14.5   foregoing this policy provision with respect to any an insured, 
 14.6   any amount of benefit provided for such the insured pursuant to 
 14.7   any under a compulsory benefit statute (including any a workers' 
 14.8   compensation or employer's liability statute) whether provided 
 14.9   by a governmental agency or otherwise shall in all cases be 
 14.10  deemed is considered to be "other valid coverage" of which the 
 14.11  insurer has had notice.  In applying the foregoing this policy 
 14.12  provision no, third party liability coverage shall may not be 
 14.13  included as "other valid coverage." 
 14.14     (5) A provision as follows: 
 14.15     INSURANCE WITH OTHER INSURERS:  If there be is other valid 
 14.16  coverage, not with this insurer, providing benefits for the same 
 14.17  loss on other than an expense incurred basis and of which this 
 14.18  insurer has not been given written notice prior to before the 
 14.19  occurrence or commencement of loss, the only liability for such 
 14.20  the benefits under this policy shall be is for such the 
 14.21  proportion of the indemnities otherwise provided hereunder under 
 14.22  this policy for such the loss as the like indemnities of which 
 14.23  the insurer had notice (including the indemnities under this 
 14.24  policy) bear to the total amount of all like indemnities 
 14.25  for such the loss, and for the return of such the portion of the 
 14.26  premium paid as shall exceed that exceeds the pro rata portion 
 14.27  for the indemnities thus as determined under this provision. 
 14.28     If the foregoing policy provision clause (5) is included in 
 14.29  a policy which also contains the next preceding following policy 
 14.30  provision there shall be added to the caption of the foregoing 
 14.31  provision, the phrase -- "OTHER BENEFITS."  must be added to the 
 14.32  caption specified in clause (5).  The insurer may, at its 
 14.33  option, include in this provision a definition of "other valid 
 14.34  coverage," approved as to form by the commissioner, which.  The 
 14.35  definition shall be is limited in subject matter to coverage 
 14.36  provided by organizations subject to regulation by insurance law 
 15.1   or by insurance authorities of this or any other another state 
 15.2   of the United States or any a province of Canada, and to any 
 15.3   other coverage the inclusion of which may be approved by the 
 15.4   commissioner.  In the absence of such a definition such, the 
 15.5   term shall does not include group insurance, or benefits 
 15.6   provided by union welfare plans or by employer or employee 
 15.7   benefit organizations.  For the purpose of applying the 
 15.8   foregoing this policy provision with respect to any an insured, 
 15.9   any amount of benefit provided for such the insured pursuant to 
 15.10  any under a compulsory benefit statute (including any a workers' 
 15.11  compensation or employer's liability statute) whether provided 
 15.12  by a governmental agency or otherwise shall in all cases be 
 15.13  deemed is considered to be "other valid coverage" of which the 
 15.14  insurer has had notice.  In applying the foregoing this policy 
 15.15  provision no, third party liability coverage shall may not be 
 15.16  included as "other valid coverage." 
 15.17     (6) A provision as follows: 
 15.18     RELATION OF EARNINGS TO INSURANCE:  If the total monthly 
 15.19  amount of loss of time benefits promised for the same loss under 
 15.20  all valid loss of time coverage upon the insured, whether 
 15.21  payable on a weekly or monthly basis, shall exceed the monthly 
 15.22  earnings of the insured at the time disability commenced or the 
 15.23  insured's average monthly earnings for the period of two years 
 15.24  immediately preceding a disability for which claim is made, 
 15.25  whichever is the greater, the insurer will be liable only for 
 15.26  such proportionate amount of such benefits under this policy as 
 15.27  the amount of such monthly earnings or such average monthly 
 15.28  earnings of the insured bears to the total amount of monthly 
 15.29  benefits for the same loss under all such coverage upon the 
 15.30  insured at the time such disability commences and for the return 
 15.31  of such part of the premiums paid during such two years as shall 
 15.32  exceed the pro rata amount of the premiums for the benefits 
 15.33  actually paid hereunder; but this shall not operate to reduce 
 15.34  the total monthly amount of benefits payable under all such 
 15.35  coverage upon the insured below the sum of $200 or the sum of 
 15.36  the monthly benefits specified in such coverages, whichever is 
 16.1   the lesser, nor shall it operate to reduce benefits other than 
 16.2   those payable for loss of time. 
 16.3      The foregoing policy provision may be inserted only in a 
 16.4   policy which the insured has the right to continue in force 
 16.5   subject to its terms by the timely payment of premiums (1) until 
 16.6   at least age 50, or, (2) in the case of a policy issued after 
 16.7   age 44, for at least five years from its date of issue.  The 
 16.8   insurer may, at its option, include in this provision a 
 16.9   definition of "valid loss of time coverage," approved as to form 
 16.10  by the commissioner, which definition shall be limited in 
 16.11  subject matter to coverage provided by governmental agencies or 
 16.12  by organizations subject to regulation by insurance law or by 
 16.13  insurance authorities of this or any other state of the United 
 16.14  States or any province of Canada, or to any other coverage the 
 16.15  inclusion of which may be approved by the commissioner or any 
 16.16  combination of such coverages.  In the absence of such 
 16.17  definition such term shall not include any coverage provided for 
 16.18  such insured pursuant to any compulsory benefit statute 
 16.19  (including any workers' compensation or employer's liability 
 16.20  statute), or benefits provided by union welfare plans or by 
 16.21  employer or employee benefit organizations. 
 16.22     (7) A provision as follows: 
 16.23     UNPAID PREMIUM:  Upon the payment of a claim under this 
 16.24  policy, any Premium then that is due and unpaid or covered by 
 16.25  any a note or written order may be deducted therefrom from the 
 16.26  payment of a claim under this policy. 
 16.27     (8) (7) A provision as follows: 
 16.28     CANCELLATION:  The insurer may cancel this policy at any 
 16.29  time by written notice delivered to the insured or mailed to the 
 16.30  insured's last address as shown by the records of the insurer, 
 16.31  stating when, not less than five days thereafter, such the 
 16.32  cancellation shall be is effective; and after the policy has 
 16.33  been continued beyond its original term the insured may cancel 
 16.34  this policy at any time by written notice delivered or mailed to 
 16.35  the insurer, effective upon receipt or on such a later date as 
 16.36  may be specified in such the notice.  In the event of 
 17.1   cancellation, the insurer will must promptly return promptly the 
 17.2   unearned portion of any premium paid.  If the insured cancels, 
 17.3   the earned premium shall must be computed by the use of the 
 17.4   short-rate table last filed with the state official having 
 17.5   supervision of insurance in the state where the insured resided 
 17.6   when the policy was issued.  If the insurer cancels, the earned 
 17.7   premium shall must be computed pro rata.  Cancellation shall be 
 17.8   is without prejudice to any claim originating prior to before 
 17.9   the effective date of cancellation. 
 17.10     (9) (8) A provision as follows: 
 17.11     CONFORMITY WITH STATE STATUTES:  Any provision of this 
 17.12  policy which, on its effective date, is in conflict with the 
 17.13  statutes of the state in which the insured resides on such that 
 17.14  date is hereby amended to conform to the minimum requirements of 
 17.15  such the statutes. 
 17.16     (10) (9) A provision as follows: 
 17.17     ILLEGAL OCCUPATION:  The insurer shall is not be liable for 
 17.18  any loss to which a contributing cause was the insured's 
 17.19  commission of or attempt to commit a felony or to which a 
 17.20  contributing cause was the insured's being engaged in an illegal 
 17.21  occupation. 
 17.22     (11) (10) A provision as follows: 
 17.23     NARCOTICS:  The insurer shall is not be liable for any loss 
 17.24  sustained or contracted in consequence of the insured's being 
 17.25  under the influence of any narcotic unless administered on the 
 17.26  advice of a physician. 
 17.27     Sec. 4.  [62A.0405] [STANDARD PROVISIONS; DISABILITY 
 17.28  POLICIES.] 
 17.29     Subdivision 1.  [REQUIRED PROVISIONS.] Except as provided 
 17.30  in subdivision 3, each disability or income protection policy 
 17.31  delivered or issued for delivery to a person in this state shall 
 17.32  contain the provisions specified in this subdivision in the 
 17.33  words in which the same appear in this section.  The insurer may 
 17.34  substitute for one or more of the provisions corresponding 
 17.35  provisions of different wording approved by the commissioner 
 17.36  which are in each instance not less favorable in any respect to 
 18.1   the insured or the beneficiary.  The provisions must be preceded 
 18.2   individually by the caption appearing in this subdivision or, at 
 18.3   the option of the insurer, by appropriate individual or group 
 18.4   captions or subdivisions as the commissioner may approve. 
 18.5      (1) A provision as follows: 
 18.6      ENTIRE CONTRACT; CHANGES:  This policy, including the 
 18.7   endorsements and the attached papers, constitutes the entire 
 18.8   contract of insurance.  No change in this policy is valid until 
 18.9   approved by an executive officer of the insurer and unless the 
 18.10  approval is endorsed or attached.  An agent may not change this 
 18.11  policy or waive any of its provisions. 
 18.12     (2) A provision as follows: 
 18.13     TIME LIMIT ON CERTAIN DEFENSES:  (a) After two years from 
 18.14  the date of issue of this policy, no misstatements, except 
 18.15  fraudulent misstatements made by the applicant in the 
 18.16  application for the policy, may be used to void the policy or to 
 18.17  deny a claim for loss incurred or disability (as defined in the 
 18.18  policy) beginning after the expiration of the two-year period. 
 18.19     The foregoing policy provisions shall not be so construed 
 18.20  as to affect any legal requirement for avoidance of a policy or 
 18.21  denial of a claim during the initial two-year period, nor to 
 18.22  limit the application of clauses (1), (2), (3), (4), and (5), in 
 18.23  the event of misstatement with respect to age or occupation or 
 18.24  other insurance.  A policy which the insured has the right to 
 18.25  continue in force subject to its terms by the timely payment of 
 18.26  premium:  (1) until at least age 50; or (2) in the case of a 
 18.27  policy issued after age 44, for at least five years from its 
 18.28  date of issue, may contain in lieu of the foregoing the 
 18.29  following provisions (from which the clause in parentheses may 
 18.30  be omitted at the insurer's option) under the caption 
 18.31  "INCONTESTABLE": 
 18.32     After this policy has been in force for a period of two 
 18.33  years during the lifetime of the insured (excluding any period 
 18.34  during which the insured is disabled), it is incontestable as to 
 18.35  the statements contained in the application. 
 18.36     (b) No claim for loss incurred or disability (as defined in 
 19.1   the policy) that begins more than two years after the date of 
 19.2   issue of this policy shall be reduced or denied because a 
 19.3   disease or physical condition existed prior to the effective 
 19.4   date of coverage of this policy, unless excluded by name or 
 19.5   specific description in this contract. 
 19.6      (3) A provision as follows: 
 19.7      GRACE PERIOD:  A grace period of ..... (insert a number not 
 19.8   less than "7" for weekly premium policies, "10" for monthly 
 19.9   premium policies, and "31" for all other policies) days will be 
 19.10  granted for the payment of each premium falling due after the 
 19.11  first premium, during which grace period the policy shall 
 19.12  continue in force. 
 19.13     A policy which contains a cancellation provision may add, 
 19.14  at the end of the above provision, 
 19.15     subject to the right of the insurer to cancel in accordance 
 19.16  with the cancellation provision. 
 19.17     A policy in which the insurer reserves the right to refuse 
 19.18  any renewal shall have, at the beginning of the above provision, 
 19.19     Unless not less than five days prior to the premium due 
 19.20  date the insurer has delivered to the insured or has mailed to 
 19.21  the insured's last address as shown by the records of the 
 19.22  insurer written notice of its intention not to renew this policy 
 19.23  beyond the period for which the premium has been accepted. 
 19.24     (4) A provision as follows: 
 19.25     REINSTATEMENT:  If a renewal premium is not paid within the 
 19.26  time granted the insured for payment, a subsequent acceptance of 
 19.27  premium by the insurer or by an agent authorized by the insurer 
 19.28  to accept the premium, without requiring an application for 
 19.29  reinstatement, reinstates the policy.  If the insurer requires 
 19.30  an application for reinstatement and issues a conditional 
 19.31  receipt for the premium tendered, the policy is reinstated when 
 19.32  the insurer approves the application or, without approval, on 
 19.33  the forty-fifth day following the date of the conditional 
 19.34  receipt unless the insurer has previously notified the insured 
 19.35  in writing of its disapproval of the application. 
 19.36     Coverage under the reinstated policy is limited to loss 
 20.1   resulting from accidental injury sustained after the date of 
 20.2   reinstatement and loss due to an illness or disease that begins 
 20.3   more than ten days after the reinstatement date.  In all other 
 20.4   respects the insured and insurer have the same rights as they 
 20.5   had under the policy immediately before the due date of the 
 20.6   defaulted premium, subject to any provisions endorsed or 
 20.7   attached in connection with the reinstatement.  Premium accepted 
 20.8   in connection with a reinstatement must be applied to a period 
 20.9   for which premium has not been previously paid, but not to a 
 20.10  period more than 60 days before the date of reinstatement.  The 
 20.11  last sentence of the above provision may be omitted from a 
 20.12  policy which the insured has the right to continue in force 
 20.13  subject to its terms by the timely payment of premiums:  (1) 
 20.14  until at least age 50; or (2) in the case of a policy issued 
 20.15  after age 44, for at least five years from its date of issue. 
 20.16     (5) A provision as follows: 
 20.17     NOTICE OF CLAIM:  Written notice of claim must be given to 
 20.18  the insurer within 20 days after the occurrence or commencement 
 20.19  of loss covered by the policy, or as soon thereafter as is 
 20.20  reasonably possible.  Notice given by or on behalf of the 
 20.21  insured or the beneficiary to the insurer at ..... (insert the 
 20.22  location of the office designated by the insurer), or to an 
 20.23  authorized agent of the insurer, with information sufficient to 
 20.24  identify the insured, constitutes notice to the insurer. 
 20.25     In a policy providing a loss-of-time benefit which may be 
 20.26  payable for at least two years, an insurer may insert the 
 20.27  following between the first and second sentences of the above 
 20.28  provision: 
 20.29     Subject to the qualifications specified below, if the 
 20.30  insured suffers loss of time on account of disability for which 
 20.31  indemnity may be payable for at least two years, the insured 
 20.32  shall, at least once in every six months after having given 
 20.33  notice of claim, give to the insurer notice of continuance of 
 20.34  the disability, except in the event of legal incapacity.  This 
 20.35  provision does not apply to the six-month period following a 
 20.36  filing of proof by the insured, a payment by the insurer on the 
 21.1   claim, or a denial of liability in whole or in part by the 
 21.2   insurer.  Delay in providing notice does not impair the 
 21.3   insured's right to an indemnity which would otherwise have 
 21.4   accrued during the period of six months preceding the date on 
 21.5   which the notice is actually given. 
 21.6      (6) A provision as follows: 
 21.7      CLAIM FORMS:  The insurer, upon receipt of a notice of 
 21.8   claim, must provide proof of loss forms to the claimant.  If the 
 21.9   forms are not furnished within 15 days after the giving of 
 21.10  notice, the claimant is considered to have complied with the 
 21.11  requirements of this policy as to proof of loss upon submitting, 
 21.12  within the time specified in the policy for filing proofs of 
 21.13  loss, written proof covering the occurrence, and the character 
 21.14  and extent of the loss for which the claim is made. 
 21.15     (7) A provision as follows: 
 21.16     PROOFS OF LOSS:  Written proof of loss must be furnished to 
 21.17  the insurer at its office in case of claim for loss for which 
 21.18  this policy provides a periodic payment contingent upon 
 21.19  continuing loss within 90 days after the termination of the 
 21.20  period for which the insurer is liable and in case of claim for 
 21.21  any other loss within 90 days after the date of the loss.  
 21.22  Failure to furnish proof within the time required shall not 
 21.23  invalidate nor reduce a claim if it was not reasonably possible 
 21.24  to give proof within the specified time, provided that proof is 
 21.25  furnished as soon as reasonably possible and in no event, except 
 21.26  in the absence of legal capacity, later than one year from the 
 21.27  time proof is otherwise required. 
 21.28     (8) A provision as follows: 
 21.29     TIME OF PAYMENT OF CLAIMS:  Indemnities payable under this 
 21.30  policy for a loss other than loss for which this policy provides 
 21.31  periodic payment will be paid immediately upon receipt of due 
 21.32  written proof of the loss.  Subject to due written proof of 
 21.33  loss, all accrued indemnities for loss for which this policy 
 21.34  provides periodic payment will be paid ..... (insert period for 
 21.35  payment which must not be less frequently than monthly) and any 
 21.36  balance remaining unpaid upon the termination of liability will 
 22.1   be paid immediately upon receipt of due written proof. 
 22.2      (9) A provision as follows: 
 22.3      PAYMENT OF CLAIMS:  Indemnity for loss of life is payable 
 22.4   in accordance with the beneficiary designation and the policy 
 22.5   provisions that apply to the payment and that are effective at 
 22.6   the time of payment.  If no designation or provision is then 
 22.7   effective, the indemnity is payable to the estate of the 
 22.8   insured.  The insurer may pay other accrued indemnities unpaid 
 22.9   at the insured's death to either the beneficiary or the estate.  
 22.10  All other indemnities are payable to the insured. 
 22.11     The insurer may include the following provisions, or either 
 22.12  of them, with the foregoing provision: 
 22.13     If an indemnity of this policy is payable to the estate of 
 22.14  the insured, or to an insured or beneficiary who is a minor or 
 22.15  otherwise not competent to give a valid release, the insurer may 
 22.16  pay the indemnity, up to an amount not exceeding $..... (insert 
 22.17  an amount which shall not exceed $1,000), to a relative by blood 
 22.18  or connection by marriage of the insured or beneficiary who is 
 22.19  considered by the insurer to be equitably entitled.  A payment 
 22.20  made by the insurer in good faith under this provision 
 22.21  completely discharges the insurer to the extent of the payment. 
 22.22     (10) A provision as follows: 
 22.23     EXAMINATIONS AND AUTOPSY:  The insurer at its own expense 
 22.24  may examine the person of the insured when and as often as 
 22.25  reasonable during the pendency of a claim and may require an 
 22.26  autopsy to be performed in case of death where it is not 
 22.27  forbidden by law. 
 22.28     (11) A provision as follows: 
 22.29     LEGAL ACTIONS:  No action at law or in equity may be 
 22.30  brought to recover on this policy before the expiration of 60 
 22.31  days after written proof of loss has been furnished in 
 22.32  accordance with the requirements of this policy.  No action may 
 22.33  be brought after the expiration of three years after the time 
 22.34  written proof of loss is required to be furnished. 
 22.35     (12) A provision as follows: 
 22.36     CHANGE OF BENEFICIARY:  Unless the insured makes an 
 23.1   irrevocable designation of beneficiary, the right to change the 
 23.2   beneficiary is reserved to the insured and the consent of the 
 23.3   beneficiary is not required for the surrender or assignment of 
 23.4   this policy, a change of beneficiary, or other changes in this 
 23.5   policy.  The insurer may omit the first clause of this provision 
 23.6   relating to the irrevocable designation of beneficiary. 
 23.7      Subd. 2.  [OPTIONAL PROVISIONS.] Except as provided in 
 23.8   subdivision 3, no disability or income protection policy 
 23.9   delivered or issued for delivery to a person in this state may 
 23.10  contain provisions respecting the matters specified below unless 
 23.11  the provisions are in the words provided in this section.  The 
 23.12  insurer may use a corresponding provision of different wording 
 23.13  approved by the commissioner which is not less favorable in any 
 23.14  respect to the insured or the beneficiary.  A provision 
 23.15  contained in the policy must be preceded individually by the 
 23.16  appropriate caption appearing in this subdivision.  The insurer 
 23.17  may use an appropriate alternative individual or group caption 
 23.18  if approved by the commissioner. 
 23.19     (1) A provision as follows: 
 23.20     CHANGE OF OCCUPATION:  If the insured is injured or 
 23.21  contracts an illness after changing occupations to one 
 23.22  classified by the insurer as more hazardous than that stated in 
 23.23  this policy or while doing for compensation anything pertaining 
 23.24  to an occupation so classified, the insurer will pay only the 
 23.25  portion of the indemnities provided in this policy as the 
 23.26  premiums paid would have purchased at the rates and within the 
 23.27  limits fixed by the insurer for the more hazardous occupation.  
 23.28  If the insured changes occupations to one classified by the 
 23.29  insurer as less hazardous than that stated in this policy, the 
 23.30  insurer, upon receipt of proof of the change of occupation will 
 23.31  reduce the premium rate accordingly, and will return the excess 
 23.32  pro rata unearned premium from the date of change of occupation 
 23.33  or from the policy anniversary date immediately preceding 
 23.34  receipt of the proof, whichever is the more recent.  The 
 23.35  classification of occupational risk and the premium rates last 
 23.36  filed by the insurer:  (a) before the occurrence of the loss for 
 24.1   which the insurer is liable; or (b) before the date of proof of 
 24.2   change in occupation with the state official having supervision 
 24.3   of insurance in the state where the insured resided at the time 
 24.4   this policy was issued; apply to this provision.  If filing is 
 24.5   not required, then the classification of occupational risk and 
 24.6   the premium rates last made effective by the insurer in the 
 24.7   state before the occurrence of the loss or before the date of 
 24.8   proof of change of occupation apply to this provision. 
 24.9      (2) A provision as follows: 
 24.10     MISSTATEMENT OF AGE:  If the age of the insured has been 
 24.11  misstated, all amounts payable under this policy are the same as 
 24.12  the premium paid would have purchased at the correct age. 
 24.13     (3) A provision as follows: 
 24.14     RELATION OF EARNINGS TO INSURANCE:  If the total monthly 
 24.15  amount of loss of time benefits promised for the same loss under 
 24.16  all valid loss of time coverage upon the insured, whether 
 24.17  payable on a weekly or monthly basis, exceeds the monthly 
 24.18  earnings of the insured at the time disability commenced or the 
 24.19  insured's average monthly earnings for the period of two years 
 24.20  immediately preceding a disability for which claim is made, 
 24.21  whichever is the greater, the insurer is liable only for the 
 24.22  proportionate amount of the benefits under this policy as the 
 24.23  amount of the monthly earnings or average monthly earnings of 
 24.24  the insured bears to the total amount of monthly benefits for 
 24.25  the same loss under all coverage upon the insured at the time 
 24.26  the disability commences and for the return of the part of the 
 24.27  premiums paid during the two years that exceeds the pro rata 
 24.28  amount of the premiums for the benefits actually paid under the 
 24.29  policy.  This provision does not reduce the total monthly amount 
 24.30  of benefits payable under all coverage upon the insured below 
 24.31  the sum of $200 or the sum of the monthly benefits specified in 
 24.32  the coverages, whichever is the lesser, and does not reduce 
 24.33  benefits other than those payable for loss of time. 
 24.34     This policy provision may only be inserted in a policy 
 24.35  which the insured has the right to continue in force subject to 
 24.36  its terms by the timely payment of premiums:  (1) until at least 
 25.1   age 50; or (2) in the case of a policy issued after age 44, for 
 25.2   at least five years from its date of issue.  The insurer may 
 25.3   include in this provision a definition of "valid loss of time 
 25.4   coverage," in a form approved by the commissioner.  The 
 25.5   definition is limited in subject matter to coverage provided by 
 25.6   governmental agencies or by organizations subject to regulation 
 25.7   by insurance law or by insurance authorities of this or another 
 25.8   state of the United States or a province of Canada, or to any 
 25.9   other coverage the inclusion of which may be approved by the 
 25.10  commissioner or a combination of coverages.  In the absence of a 
 25.11  definition, the term does not include any coverage provided for 
 25.12  the insured under a compulsory benefit statute (including a 
 25.13  workers' compensation or employer's liability statute), or 
 25.14  benefits provided by union welfare plans or by employer or 
 25.15  employee benefit organizations. 
 25.16     (4) A provision as follows: 
 25.17     UNPAID PREMIUM:  Premium that is due and unpaid or covered 
 25.18  by a note or written order may be deducted from the payment of a 
 25.19  claim under this policy. 
 25.20     (5) A provision as follows: 
 25.21     CANCELLATION:  The insurer may cancel this policy at any 
 25.22  time by written notice delivered to the insured or mailed to the 
 25.23  insured's last address as shown by the records of the insurer, 
 25.24  stating when, not less than five days thereafter, the 
 25.25  cancellation is effective; and after the policy has been 
 25.26  continued beyond its original term the insured may cancel this 
 25.27  policy at any time by written notice delivered or mailed to the 
 25.28  insurer, effective upon receipt or on a later date as may be 
 25.29  specified in the notice.  In the event of cancellation, the 
 25.30  insurer must promptly return the unearned portion of any premium 
 25.31  paid.  If the insured cancels, the earned premium must be 
 25.32  computed by the use of the short-rate table last filed with the 
 25.33  state official having supervision of insurance in the state 
 25.34  where the insured resided when the policy was issued.  If the 
 25.35  insurer cancels, the earned premium must be computed pro rata. 
 25.36  Cancellation is without prejudice to any claim originating 
 26.1   before the effective date of cancellation. 
 26.2      (6) A provision as follows: 
 26.3      CONFORMITY WITH STATE STATUTES:  Any provision of this 
 26.4   policy which, on its effective date, is in conflict with the 
 26.5   statutes of the state in which the insured resides on that date 
 26.6   is amended to conform to the minimum requirements of the 
 26.7   statutes. 
 26.8      (7) A provision as follows: 
 26.9      ILLEGAL OCCUPATION:  The insurer is not liable for any loss 
 26.10  to which a contributing cause was the insured's commission of or 
 26.11  attempt to commit a felony or to which a contributing cause was 
 26.12  the insured's being engaged in an illegal occupation. 
 26.13     (8) A provision as follows:  
 26.14     NARCOTICS:  The insurer is not liable for any loss 
 26.15  sustained or contracted in consequence of the insured's being 
 26.16  under the influence of any narcotic unless administered on the 
 26.17  advice of a physician. 
 26.18     Subd. 3.  [COVERAGE INCONSISTENT.] If any provision of this 
 26.19  section is in whole or in part inapplicable to or inconsistent 
 26.20  with the coverage provided by a particular form of policy the 
 26.21  insurer, with the approval of the commissioner, shall omit from 
 26.22  such policy any inapplicable provision or part of a provision, 
 26.23  and shall modify any inconsistent provision or part of the 
 26.24  provision in such manner as to make the provision as contained 
 26.25  in the policy consistent with the coverage provided by the 
 26.26  policy. 
 26.27     Subd. 4.  [ORDER OF PROVISIONS.] The provisions which are 
 26.28  the subject of subdivisions 1 and 2, or any corresponding 
 26.29  provisions which are used in lieu thereof in accordance with 
 26.30  subdivisions 1 and 2, shall be printed in the consecutive order 
 26.31  of the provisions in subdivisions 1 and 2 or, at the option of 
 26.32  the insurer, any such provision may appear as a unit in any part 
 26.33  of the policy, with other provisions to which it may be 
 26.34  logically related, provided the resulting policy shall not be in 
 26.35  whole or in part unintelligible, uncertain, ambiguous, abstruse, 
 26.36  or likely to mislead a person to whom the policy is offered, 
 27.1   delivered, or issued. 
 27.2      Sec. 5.  [62Q.63] [DISCLOSURE OF CERTAIN FINANCIAL 
 27.3   ARRANGEMENTS.] 
 27.4      Subdivision 1.  [GENERAL REQUIREMENT.] No health plan 
 27.5   company as defined in section 62Q.01, subdivision 4, shall 
 27.6   offer, sell, issue, or renew a health plan, as defined in 
 27.7   section 62Q.01, subdivision 3, to an enrollee or prospective 
 27.8   enrollee without providing to the enrollee or prospective 
 27.9   enrollee a disclosure statement that meets the requirements of 
 27.10  subdivision 2.  The disclosure statement must be provided at 
 27.11  least annually.  
 27.12     Subd. 2.  [CONTENTS AND FORM OF DISCLOSURE.] (a) The 
 27.13  disclosure statement required in subdivision 1 must disclose and 
 27.14  explain clearly to the enrollee or prospective enrollee any 
 27.15  financial arrangements between the health plan company and any 
 27.16  health care provider that in any way make it advantageous for 
 27.17  the health care provider to minimize or restrict the health care 
 27.18  provided to enrollees under the health plan.  Financial 
 27.19  arrangements to which this section applies include, but are not 
 27.20  limited to, capitation, withhold arrangements, utilization 
 27.21  standards used to evaluate health care providers, arrangements 
 27.22  in which health care providers are subject to terms of 
 27.23  compensation or contract renewal in a future time period that 
 27.24  penalize the health care providers for providing care to 
 27.25  enrollees in the current time period, and any other arrangement 
 27.26  that may have the potential to create a conflict between the 
 27.27  best interest of the enrollee and the best interest of the 
 27.28  health care provider.  Financial arrangements with health care 
 27.29  providers who are employed by the health plan company, or by an 
 27.30  affiliate, are subject to this section.  
 27.31     (b) The disclosure statement must comply with the 
 27.32  Readability of Insurance Policies Act in chapter 72C and be 
 27.33  approved by the commissioner prior to its use.  A disclosure 
 27.34  statement that has been filed with the commissioner for approval 
 27.35  is deemed approved 30 days after the date of filing unless 
 27.36  approved or disapproved by the commissioner on or before the end 
 28.1   of that 30-day period. 
 28.2      (c) For purposes of this section 
 28.3      (1) "capitation" means a financial arrangement in which a 
 28.4   health plan company compensates a health care provider, 
 28.5   partially or entirely, through a fixed payment per time period 
 28.6   per enrollee served by that health care provider, without regard 
 28.7   to the services actually provided to enrollees by that health 
 28.8   care provider.  The services covered by the capitation may 
 28.9   include the health care providers' own services, referral 
 28.10  services, or all health care services; 
 28.11     (2) "financial arrangement" means an agreement between a 
 28.12  health plan company, or an affiliate of it, and a health care 
 28.13  provider, or an affiliate of it, that determines, or provides a 
 28.14  methodology for determining, the payments to be made by the 
 28.15  health plan company to the health care provider for providing 
 28.16  health care to the health plan company's enrollees; and 
 28.17     (3) "affiliate" has the meaning given in section 60D.15, 
 28.18  subdivision 2; and 
 28.19     (4) "withhold" means a financial arrangement in which a 
 28.20  health plan company deducts amounts from its payments to a 
 28.21  health care provider, where the deducted amounts or a portion of 
 28.22  them may eventually be paid to the health care provider at the 
 28.23  end of a specified time period, based upon specific 
 28.24  predetermined factors. 
 28.25     Subd. 3.  [EXEMPTION.] A health plan company that does not 
 28.26  use any arrangement described in subdivision 2 in connection 
 28.27  with a health plan may apply to the commissioner for an 
 28.28  exemption from subdivision 1 with respect to that health plan.  
 28.29  If the commissioner grants the exemption, the health plan 
 28.30  company need not provide a disclosure statement with respect to 
 28.31  that health plan. 
 28.32     Subd. 4.  [GROUP HEALTH PLANS.] With respect to group 
 28.33  health plans, the health plan company must comply with 
 28.34  subdivision 1 by providing the disclosure statement to the group 
 28.35  policyholder or prospective group policyholder and by requiring 
 28.36  the group policyholder to provide the disclosure statement to 
 29.1   each enrollee or prospective enrollee prior to initial 
 29.2   enrollment, at each renewal of the group health plan, and at 
 29.3   each open enrollment period.  Any literature prepared by the 
 29.4   health plan company for distribution to prospective enrollees 
 29.5   must contain the disclosure statement or state that it is 
 29.6   available from the health plan company or from the group 
 29.7   policyholder upon request.  The health plan company shall retain 
 29.8   in its files, for purposes of compliance audits, proof that the 
 29.9   health plan company and group policyholder complied with this 
 29.10  subdivision. 
 29.11     Subd. 5.  [FAMILY COVERAGE.] With respect to family 
 29.12  coverage, the disclosure statement required under this section 
 29.13  must be provided to the enrollee to whom the policy, contract, 
 29.14  or certificate is issued or is to be issued and need not be 
 29.15  provided to enrollees or prospective enrollees who are that 
 29.16  person's dependents. 
 29.17     Sec. 6.  [EFFECTIVE DATE.] 
 29.18     Section 1 is effective July 1, 1997.  Section 5 is 
 29.19  effective January 1, 1998.