as introduced - 82nd Legislature (2001 - 2002) Posted on 12/15/2009 12:00am
1.1 A bill for an act 1.2 relating to insurance; regulating insurers, agents, 1.3 coverages and benefits, costs, claims, investments, 1.4 and notifications and disclosures; prescribing powers 1.5 and duties of the commissioner; eliminating the 1.6 regulation of nonprofit legal services plans; amending 1.7 Minnesota Statutes 2000, sections 60A.06, subdivision 1.8 3; 60A.08, subdivision 13; 60A.11, subdivision 10; 1.9 60A.129, subdivision 2; 60A.14, subdivision 1; 60A.16, 1.10 subdivision 1; 60A.23, subdivision 8; 60K.14, 1.11 subdivision 2; 61A.072, by adding subdivisions; 1.12 61A.08; 61A.09, subdivision 1; 62A.021, subdivision 3; 1.13 62A.023; 62A.04, subdivision 2; 62A.105, subdivision 1.14 2; 62A.17, subdivision 1; 62A.20, subdivision 1; 1.15 62A.21, subdivision 2a; 62A.30, subdivision 2; 1.16 62A.302; 62A.3093; 62A.31, subdivisions 1a, 1i, and 3; 1.17 62A.65, subdivision 8; 62E.04, subdivision 4; 62E.06, 1.18 subdivision 1; 62J.60, subdivision 3; 62L.05, 1.19 subdivisions 1 and 2; 62M.01, subdivision 2; 62M.02, 1.20 subdivisions 6, 12, 21, and by adding a subdivision; 1.21 62M.05, subdivision 5; 62Q.01, subdivision 6; 62Q.68, 1.22 subdivision 1; 62Q.72, subdivision 1; 62Q.73, 1.23 subdivision 3; 65A.01, subdivision 3b; 65A.29, 1.24 subdivision 7; 65A.30; 65B.04, subdivision 3; 65B.06, 1.25 subdivisions 1 and 4; 65B.16; 65B.19, subdivision 2; 1.26 65B.44, subdivision 3; 65B.49, subdivision 5a; 67A.20, 1.27 by adding a subdivision; 70A.07; 72A.125, subdivision 1.28 3; 72A.201, subdivision 3; 72C.06, subdivision 2; 1.29 79A.02, subdivision 1; 79A.03, subdivision 7; and 1.30 471.617, subdivision 1; proposing coding for new law 1.31 in Minnesota Statutes, chapter 62Q; repealing 1.32 Minnesota Statutes 2000, sections 13.7191, subdivision 1.33 11; 60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 1.34 62G.06; 62G.07; 62G.08; 62G.09; 62G.10; 62G.11; 1.35 62G.12; 62G.13; 62G.14; 62G.15; 62G.16; 62G.17; 1.36 62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 1.37 62G.24; and 62G.25. 1.38 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 1.39 Section 1. Minnesota Statutes 2000, section 60A.06, 1.40 subdivision 3, is amended to read: 1.41 Subd. 3. [LIMITATION ON COMBINATION POLICIES.] (a) Unless 2.1 specifically authorized by subdivision 1, clause (4), it is 2.2 unlawful to combine in one policy coverage permitted by 2.3 subdivision 1, clauses (4) and (5)(a). This subdivision does 2.4 not prohibit the simultaneous sale of these products, but the 2.5 sale must involve two separate and distinct policies. 2.6 (b) This subdivision does not apply to group policies. 2.7 (c) This subdivision does not apply to policies permitted 2.8 by subdivision 1, clause (4), that contain benefits providing 2.9 acceleration of life, endowment, or annuity benefits in advance 2.10 of the time they would otherwise be payable, or to long-term 2.11 care policies as defined in section 62A.46, subdivision 2, or 2.12 chapter 62S. 2.13 [EFFECTIVE DATE.] This section is effective the day 2.14 following final enactment. 2.15 Sec. 2. Minnesota Statutes 2000, section 60A.08, 2.16 subdivision 13, is amended to read: 2.17 Subd. 13. [REDUCTION OF LIMITS BY COSTS OF DEFENSE 2.18 PROHIBITED.] (a) No insurer shall issue or renew a policy of 2.19 liability insurance in this state that reduces the limits of 2.20 liability stated in the policy by the costs of legal defense. 2.21 (b) This subdivision does not apply to: 2.22 (1) professional liability insurance with annual aggregate 2.23 limits of liability greater than $100,000, including directors' 2.24 and officers' and errors and omissions liability insurance; 2.25 (2) environmental impairment liability insurance; 2.26 (3) insurance policies issued to large commercial risks; or 2.27 (4) coverages that the commissioner determines to be 2.28 appropriate which will be published in the manner prescribed for 2.29 surplus lines insurance in section 60A.201, subdivision 4. 2.30 (c) For purposes of this subdivision, "large commercial 2.31 risks" means an insured whose gross annual revenues in the 2.32 fiscal year preceding issuance of the policy were at least 2.33 $10,000,000. 2.34 [EFFECTIVE DATE.] This section is effective the day 2.35 following final enactment. 2.36 Sec. 3. Minnesota Statutes 2000, section 60A.11, 3.1 subdivision 10, is amended to read: 3.2 Subd. 10. [DEFINITIONS.] The following terms have the 3.3 meaning assigned in this subdivision for purposes of this 3.4 sectionand section 60A.111: 3.5 (a) "Adequate evidence" means a written confirmation, 3.6 advice, or other verification issued by a depository, issuer, or 3.7 custodian bank which shows that the investment is held for the 3.8 company; 3.9 (b) "Adequate security" means a letter of credit qualifying 3.10 under subdivision 11, paragraph (f), cash, or the pledge of an 3.11 investment authorized by any subdivision of this section; 3.12 (c) "Admitted assets," for purposes of computing percentage 3.13 limitations on particular types of investments, means the assets 3.14 as shown by the company's annual statement, required by section 3.15 60A.13, as of the December 31 immediately preceding the date the 3.16 company acquires the investment; 3.17 (d) "Clearing corporation" means The Depository Trust 3.18 Company or any other clearing agency registered with the 3.19 securities and exchange commission pursuant to the Securities 3.20 Exchange Act of 1934, section 17A, Euro-clear Clearance System 3.21 Limited and CEDEL S.A., and, with the approval of the 3.22 commissioner, any other clearing corporation as defined in 3.23 section 336.8-102; 3.24 (e) "Control" has the meaning assigned to that term in, and 3.25 must be determined in accordance with, section 60D.15, 3.26 subdivision 4; 3.27 (f) "Custodian bank" means a bank or trust company or a 3.28 branch of a bank or trust company that is acting as custodian 3.29 and is supervised and examined by state or federal authority 3.30 having supervision over the bank or trust company or with 3.31 respect to a company's foreign investments only by the 3.32 regulatory authority having supervision over banks or trust 3.33 companies in the jurisdiction in which the bank, trust company, 3.34 or branch is located, and any banking institutions qualifying as 3.35 an "Eligible Foreign Custodian" under the Code of Federal 3.36 Regulations, section 270.17f-5, adopted under section 17(f) of 4.1 the Investment Company Act of 1940, and specifically including 4.2 Euro-clear Clearance System Limited and CEDEL S.A., acting as 4.3 custodians; 4.4 (g) "Evergreen clause" means a provision that automatically 4.5 renews a letter of credit for a time certain if the issuer of 4.6 the letter of credit fails to affirmatively signify its 4.7 intention to nonrenew upon expiration; 4.8 (h) "Government obligations" means direct obligations for 4.9 the payment of money, or obligations for the payment of money to 4.10 the extent guaranteed as to the payment of principal and 4.11 interest by any governmental issuer where the obligations are 4.12 payable from ad valorem taxes or guaranteed by the full faith, 4.13 credit, and taxing power of the issuer and are not secured 4.14 solely by special assessments for local improvements; 4.15 (i) "Noninvestment grade obligations" means obligations 4.16 which, at the time of acquisition, were rated below Baa/BBB or 4.17 the equivalent by a securities rating agency or which, at the 4.18 time of acquisition, were not in one of the two highest 4.19 categories established by the securities valuation office of the 4.20 National Association of Insurance Commissioners; 4.21 (j) "Issuer" means the corporation, business trust, 4.22 governmental unit, partnership, association, individual, or 4.23 other entity which issues or on behalf of which is issued any 4.24 form of obligation; 4.25 (k) "Licensed real estate appraiser" means a person who 4.26 develops and communicates real estate appraisals and who holds a 4.27 current, valid license under chapter 82B or a substantially 4.28 similar licensing requirement in another jurisdiction; 4.29 (l) "Member bank" means a national bank, state bank or 4.30 trust company which is a member of the Federal Reserve System; 4.31 (m) "National securities exchange" means an exchange 4.32 registered under section 6 of the Securities Exchange Act of 4.33 1934 or an exchange regulated under the laws of the Dominion of 4.34 Canada; 4.35 (n) "NASDAQ" means the reporting system for securities 4.36 meeting the definition of National Market System security as 5.1 provided under Part I to Schedule D of the National Association 5.2 of Securities Dealers Incorporated bylaws; 5.3 (o) "Obligations" include bonds, notes, debentures, 5.4 transportation equipment certificates, repurchase agreements, 5.5 bank certificates of deposit, time deposits, bankers' 5.6 acceptances, and other obligations for the payment of money not 5.7 in default as to payments of principal and interest on the date 5.8 of investment, whether constituting general obligations of the 5.9 issuer or payable only out of certain revenues or certain funds 5.10 pledged or otherwise dedicated for payment. Leases are 5.11 considered obligations if the lease is assigned for the benefit 5.12 of the company and is nonterminable by the lessee or lessees 5.13 thereunder upon foreclosure of any lien upon the leased 5.14 property, and rental payments are sufficient to amortize the 5.15 investment over the primary lease term; 5.16 (p) "Qualified assets" means the sum of (1) all investments 5.17 qualified in accordance with this section other than investments 5.18 in affiliates and subsidiaries, (2) investments in obligations 5.19 of affiliates as defined in section 60D.15, subdivision 2, 5.20 secured by real or personal property sufficient to qualify the 5.21 investment under subdivision 19 or 23, (3) qualified investments 5.22 in subsidiaries, as defined in section 60D.15, subdivision 9, on 5.23 a consolidated basis with the insurance company without 5.24 allowance for goodwill or other intangible value, and (4) cash 5.25 on hand and on deposit, agent's balances or uncollected premiums 5.26 not due more than 90 days, assets held pursuant to section 5.27 60A.12, subdivision 2, investment income due and accrued, funds 5.28 due or on deposit or recoverable on loss payments under 5.29 contracts of reinsurance entered into pursuant to section 5.30 60A.09, premium bills and notes receivable, federal income taxes 5.31 recoverable, and equities and deposits in pools and 5.32 associations; 5.33 (q) "Qualified net earnings" means that the net earnings of 5.34 the issuer after elimination of extraordinary nonrecurring items 5.35 of income and expense and before income taxes and fixed charges 5.36 over the five immediately preceding completed fiscal years, or 6.1 its period of existence if less than five years, has averaged 6.2 not less than 1-1/4 times its average annual fixed charges 6.3 applicable to the period; 6.4 (r) "Required liabilities" means the sum of (1) total 6.5 liabilities as required to be reported in the company's most 6.6 recent annual report to the commissioner of commerce of this 6.7 state, (2) for companies operating under the stock plan, the 6.8 minimum paid-up capital and surplus required to be maintained 6.9 pursuant to section 60A.07, subdivision 5a, (3) for companies 6.10 operating under the mutual or reciprocal plan, the minimum 6.11 amount of surplus required to be maintained pursuant to section 6.12 60A.07, subdivision 5b, and (4) the amount, if any, by which the 6.13 company's loss and loss adjustment expense reserves exceed 350 6.14 percent of its surplus as it pertains to policyholders as of the 6.15 same date. The commissioner may waive the requirement in clause 6.16 (4) unless the company's written premiums exceed 300 percent of 6.17 its surplus as it pertains to policyholders as of the same 6.18 date. In addition to the required amounts pursuant to clauses 6.19 (1) to (4), the commissioner may require that the amount of any 6.20 apparent reserve deficiency that may be revealed by one to five 6.21 year loss and loss adjustment expense development analysis for 6.22 the five years reported in the company's most recent annual 6.23 statement to the commissioner be added to required liabilities; 6.24 (s) "Revenue obligations" means obligations for the payment 6.25 of money by a governmental issuer where the obligations are 6.26 payable from revenues, earnings, or special assessments on 6.27 properties benefited by local improvements of the issuer which 6.28 are specifically pledged therefor; 6.29 (t) "Security" has the meaning given in section 5 of the 6.30 Security Act of 1933 and specifically includes, but is not 6.31 limited to, stocks, stock equivalents, warrants, rights, 6.32 options, obligations, American Depository Receipts (ADR's), 6.33 repurchase agreements, and reverse repurchase agreements; and 6.34 (u) "Unrestricted surplus" means the amount by which 6.35 qualified assets exceed 110 percent of required liabilities. 6.36 [EFFECTIVE DATE.] This section is effective the day 7.1 following final enactment. 7.2 Sec. 4. Minnesota Statutes 2000, section 60A.129, 7.3 subdivision 2, is amended to read: 7.4 Subd. 2. [LOSS RESERVE CERTIFICATION.] (a) Each domestic 7.5 company engaged in providing the types of coverage described in 7.6 section 60A.06, subdivision 1, clause (1), (2), (3), (5)(b), 7.7 (6), (8), (9), (10), (11), (12), (13), or (14), must have its 7.8 loss reserves certified by a qualified actuary. The company 7.9 must file the certification with the commissioner within 30 days 7.10 of completion of the certification, but not later than June 1. 7.11 The actuary providing the certificationmust notmay be an 7.12 employee of the company but the commissioner may still require 7.13 an independent actuarial certification as described in 7.14 subdivision 1. This subdivision does not apply to township 7.15 mutual companies, or to other domestic insurers having less than 7.16 $1,000,000 of premiums written in any year and fewer than 1,000 7.17 policyholders. The commissioner may allow an exception to the 7.18 stand alone certification where it can be demonstrated that a 7.19 company in a group has a pooling or 100 percent reinsurance 7.20 agreement used in a group which substantially affects the 7.21 solvency and integrity of the reserves of the company, or where 7.22 it is only the parent company of a group which is licensed to do 7.23 business in Minnesota. If these circumstances exist, the 7.24 company may file a written request with the commissioner for an 7.25 exception. Companies writing reinsurance alone are not exempt 7.26 from this requirement. The certification must contain the 7.27 following statement: "The loss reserves and loss expense7.28reserves have been examined and found to be calculated in7.29accordance with generally accepted actuarial principles and7.30practicesIn my opinion, the reserves described in this 7.31 certification are consistent with reserves computed in 7.32 accordance with standards and principles established by the 7.33 Actuarial Standards Board and are fairly stated." 7.34 (b) Each foreign company engaged in providing the types of 7.35 coverage described in section 60A.06, subdivision 1, clause (1), 7.36 (2), (3), (5)(b), (6), (8), (9), (10), (11), (12), (13), or 8.1 (14), required by this section to file an annual audited 8.2 financial report, whose total net earned premium for Schedule P, 8.3 Part 1A to Part 1H plus Part 1R, (Schedule P, Part 1A to Part 1H 8.4 plus Part 1R, Column 4, current year premiums earned, from the 8.5 company's most currently filed annual statement) is equal to 8.6 one-third or more of the company's total net earned premium 8.7 (Underwriting and Investment Exhibit, Part 2, Column 4, total 8.8 line, of the annual statement) must have a reserve certification 8.9 by a qualified actuary at least every three years. In the year 8.10 that the certification is due, the company must file the 8.11 certification with the commissioner within 30 days of completion 8.12 of the certification, but not later than June 1. The actuary 8.13 providing the certification must not be an employee of the 8.14 company. Companies writing reinsurance alone are not exempt 8.15 from this requirement. The certification must contain the 8.16 following statement: "The loss reserves and loss expense 8.17 reserves have been examined and found to be calculated in 8.18 accordance with generally accepted actuarial principles and 8.19 practices and are fairly stated." 8.20 (c) Each company providing life and/or health insurance 8.21 coverages described in section 60A.06, subdivision 1, clause (4) 8.22 or (5)(a), required by this section to file an audited annual 8.23 financial report, whose premiums and annuity considerations (net 8.24 of reinsurance) from accident and health equal one-third or more 8.25 of the company's total premiums and annuity considerations (net 8.26 of reinsurance), as reported in the summary of operations, must 8.27 have its aggregate reserve for accident and health policies and 8.28 liability for policy and contract claims for accident and health 8.29 certified by a qualified actuary at least once every three 8.30 years. The actuary providing the certification must not be an 8.31 employee of the company. Companies writing reinsurance alone 8.32 are not exempt from this requirement. The certification must 8.33 contain the following statement: "The policy and contract 8.34 claims reserves for accident and health have been examined and 8.35 found to be calculated in accordance with generally accepted 8.36 actuarial principles and practices and are fairly stated." 9.1 [EFFECTIVE DATE.] This section is effective the day 9.2 following final enactment. 9.3 Sec. 5. Minnesota Statutes 2000, section 60A.14, 9.4 subdivision 1, is amended to read: 9.5 Subdivision 1. [FEES OTHER THAN EXAMINATION FEES.] In 9.6 addition to the fees and charges provided for examinations, the 9.7 following fees must be paid to the commissioner for deposit in 9.8 the general fund: 9.9 (a) by township mutual fire insurance companies: 9.10 (1) for filing certificate of incorporation $25 and 9.11 amendments thereto, $10; 9.12 (2) for filing annual statements, $15; 9.13 (3) for each annual certificate of authority, $15; 9.14 (4) for filing bylaws $25 and amendments thereto, $10. 9.15 (b) by other domestic and foreign companies including 9.16 fraternals and reciprocal exchanges: 9.17 (1) for filing certified copy of certificate of articles of 9.18 incorporation, $100; 9.19 (2) for filing annual statement, $225; 9.20 (3) for filing certified copy of amendment to certificate 9.21 or articles of incorporation, $100; 9.22 (4) for filing bylaws, $75 or amendments thereto, $75; 9.23 (5) for each company's certificate of authority, $575, 9.24 annually. 9.25 (c) the following general fees apply: 9.26 (1) for each certificate, including certified copy of 9.27 certificate of authority, renewal, valuation of life policies, 9.28 corporate condition or qualification, $25; 9.29 (2) for each copy of paper on file in the commissioner's 9.30 office 50 cents per page, and $2.50 for certifying the same; 9.31 (3) for license to procure insurance in unadmitted foreign 9.32 companies, $575; 9.33 (4) for valuing the policies of life insurance companies, 9.34 one cent per $1,000 of insurance so valued, provided that the 9.35 fee shall not exceed $13,000 per year for any company. The 9.36 commissioner may, in lieu of a valuation of the policies of any 10.1 foreign life insurance company admitted, or applying for 10.2 admission, to do business in this state, accept a certificate of 10.3 valuation from the company's own actuary or from the 10.4 commissioner of insurance of the state or territory in which the 10.5 company is domiciled; 10.6 (5) for receiving and filing certificates of policies by 10.7 the company's actuary, or by the commissioner of insurance of 10.8 any other state or territory, $50; 10.9 (6) for each appointment of an agent filed with the 10.10 commissioner, a domestic insurer shall remit $5 and all other 10.11 insurers shall remit $3; 10.12 (7) for filing forms and rates, $75 per filing, to be paid 10.13 on a quarterly basis in response to an invoice. Billing and 10.14 payment may be made electronically; 10.15 (8) for annual renewal of surplus lines insurer license, 10.16 $300. 10.17 The commissioner shall adopt rules to define filings that 10.18 are subject to a fee. 10.19 [EFFECTIVE DATE.] This section is effective July 1, 2001. 10.20 Sec. 6. Minnesota Statutes 2000, section 60A.16, 10.21 subdivision 1, is amended to read: 10.22 Subdivision 1. [SCOPE.] (1) [DOMESTIC INSURANCE 10.23 CORPORATIONS.] Any two or more domestic insurance corporations, 10.24 formed for any of the purposes for which stock, mutual, or stock 10.25 and mutual insurance corporations, or reciprocal or 10.26 interinsurance contract exchanges might be formed under the laws 10.27 of this state, may be 10.28 (a) merged into one of such domestic insurance 10.29 corporations, or 10.30 (b) consolidated into a new insurance corporation to be 10.31 formed under the laws of this state. 10.32 (2) [DOMESTIC AND FOREIGN INSURANCE CORPORATIONS.] Any such 10.33 domestic insurance corporations and any foreign insurance 10.34 corporations formed to carry on any insurance business for the 10.35 conduct of which an insurance corporation might be organized 10.36 under the laws of this state, may be 11.1 (a) merged into one of such domestic insurance 11.2 corporations, or 11.3 (b) merged into one of such foreign insurance corporations, 11.4 or 11.5 (c) consolidated into a new insurance corporation to be 11.6 formed under the laws of this state, or 11.7 (d) consolidated into a new insurance corporation to be 11.8 formed under the laws of the government under which one of such 11.9 foreign insurance corporations was formed, provided that each of 11.10 such foreign insurance corporations is authorized by the laws of 11.11 the government under which it was formed to effect such merger 11.12 or consolidation. 11.13 [EFFECTIVE DATE.] This section is effective the day 11.14 following final enactment. 11.15 Sec. 7. Minnesota Statutes 2000, section 60A.23, 11.16 subdivision 8, is amended to read: 11.17 Subd. 8. [SELF-INSURANCE OR INSURANCE PLAN ADMINISTRATORS 11.18 WHO ARE VENDORS OF RISK MANAGEMENT SERVICES.] (1) [SCOPE.] This 11.19 subdivision applies to any vendor of risk management services 11.20 and to any entity which administers, for compensation, a 11.21 self-insurance or insurance plan. This subdivision does not 11.22 apply (a) to an insurance company authorized to transact 11.23 insurance in this state, as defined by section 60A.06, 11.24 subdivision 1, clauses (4) and (5); (b) to a service plan 11.25 corporation, as defined by section 62C.02, subdivision 6; (c) to 11.26 a health maintenance organization, as defined by section 62D.02, 11.27 subdivision 4; (d) to an employer directly operating a 11.28 self-insurance plan for its employees' benefits; (e) to an 11.29 entity which administers a program of health benefits 11.30 established pursuant to a collective bargaining agreement 11.31 between an employer, or group or association of employers, and a 11.32 union or unions; or (f) to an entity which administers a 11.33 self-insurance or insurance plan if a licensed Minnesota insurer 11.34 is providing insurance to the plan and if the licensed insurer 11.35 has appointed the entity administering the plan as one of its 11.36 licensed agents within this state. 12.1 (2) [DEFINITIONS.] For purposes of this subdivision the 12.2 following terms have the meanings given them. 12.3 (a) "Administering a self-insurance or insurance plan" 12.4 means (i) processing, reviewing or paying claims, (ii) 12.5 establishing or operating funds and accounts, or (iii) otherwise 12.6 providing necessary administrative services in connection with 12.7 the operation of a self-insurance or insurance plan. 12.8 (b) "Employer" means an employer, as defined by section 12.9 62E.02, subdivision 2. 12.10 (c) "Entity" means any association, corporation, 12.11 partnership, sole proprietorship, trust, or other business 12.12 entity engaged in or transacting business in this state. 12.13 (d) "Self-insurance or insurance plan" means a plan 12.14 providing life, medical or hospital care, accident, sickness or 12.15 disability insurance for the benefit of employees or members of 12.16 an association, or a plan providing liability coverage for any 12.17 other risk or hazard, which is or is not directly insured or 12.18 provided by a licensed insurer, service plan corporation, or 12.19 health maintenance organization. 12.20 (e) "Vendor of risk management services" means an entity 12.21 providing for compensation actuarial, financial management, 12.22 accounting, legal or other services for the purpose of designing 12.23 and establishing a self-insurance or insurance plan for an 12.24 employer. 12.25 (3) [LICENSE.] No vendor of risk management services or 12.26 entity administering a self-insurance or insurance plan may 12.27 transact this business in this state unless it is licensed to do 12.28 so by the commissioner. An applicant for a license shall state 12.29 in writing the type of activities it seeks authorization to 12.30 engage in and the type of services it seeks authorization to 12.31 provide. The license may be granted only when the commissioner 12.32 is satisfied that the entity possesses the necessary 12.33 organization, background, expertise, and financial integrity to 12.34 supply the services sought to be offered. The commissioner may 12.35 issue a license subject to restrictions or limitations upon the 12.36 authorization, including the type of services which may be 13.1 supplied or the activities which may be engaged in. The license 13.2 fee is $1,000 for the initial application and $1,000 for each 13.3 two-year renewal. All licenses are for a period of two years. 13.4 (4) [REGULATORY RESTRICTIONS; POWERS OF THE COMMISSIONER.] 13.5 To assure that self-insurance or insurance plans are financially 13.6 solvent, are administered in a fair and equitable fashion, and 13.7 are processing claims and paying benefits in a prompt, fair, and 13.8 honest manner, vendors of risk management services and entities 13.9 administering insurance or self-insurance plans are subject to 13.10 the supervision and examination by the commissioner. Vendors of 13.11 risk management services, entities administering insurance or 13.12 self-insurance plans, and insurance or self-insurance plans 13.13 established or operated by them are subject to the trade 13.14 practice requirements of sections 72A.19 to 72A.30. In lieu of 13.15 an unlimited guarantee from a parent corporation for a vendor of 13.16 risk management services or an entity administering insurance or 13.17 self-insurance plans, the commissioner may accept a surety bond 13.18 in a form satisfactory to the commissioner in an amount equal to 13.19 120 percent of the total amount of claims handled by the 13.20 applicant in the prior year. If at any time the total amount of 13.21 claims handled during a year exceeds the amount upon which the 13.22 bond was calculated, the administrator shall immediately notify 13.23 the commissioner. The commissioner may require that the bond be 13.24 increased accordingly. 13.25 No contract entered into after July 1, 2001, between a 13.26 licensed vendor of risk management services and a group 13.27 authorized to self-insure for workers' compensation liabilities 13.28 under section 79A.03, subdivision 6, may take effect until it 13.29 has been filed with the commissioner, and either (1) the 13.30 commissioner has approved it or (2) 60 days have elapsed and the 13.31 commissioner has not disapproved it as misleading or violative 13.32 of public policy. 13.33 (5) [RULEMAKING AUTHORITY.] To carry out the purposes of 13.34 this subdivision, the commissioner may adopt rules pursuant to 13.35 sections 14.001 to 14.69. These rules may: 13.36 (a) establish reporting requirements for administrators of 14.1 insurance or self-insurance plans; 14.2 (b) establish standards and guidelines to assure the 14.3 adequacy of financing, reinsuring, and administration of 14.4 insurance or self-insurance plans; 14.5 (c) establish bonding requirements or other provisions 14.6 assuring the financial integrity of entities administering 14.7 insurance or self-insurance plans; or 14.8 (d) establish other reasonable requirements to further the 14.9 purposes of this subdivision. 14.10 [EFFECTIVE DATE.] This section is effective July 1, 2001. 14.11 Sec. 8. Minnesota Statutes 2000, section 60K.14, 14.12 subdivision 2, is amended to read: 14.13 Subd. 2. [FEES FOR SERVICES.] No person shall charge a fee 14.14 for any services rendered in connection with the solicitation, 14.15 negotiation, or servicing of any insurance contract unless: 14.16 (1) before rendering the services, a written statement is 14.17 provided disclosing: 14.18 (i) the services for which fees are charged; 14.19 (ii) the amount of the fees; 14.20 (iii) that the fees are charged in addition to premiums; 14.21 and 14.22 (iv) that premiums include a commission; and 14.23 (2) all fees charged are reasonable in relation to the 14.24 services rendered. 14.25 No person shall charge a fee in connection with the 14.26 submitting of a FAIR plan application. 14.27 [EFFECTIVE DATE.] This section is effective the day 14.28 following final enactment. 14.29 Sec. 9. Minnesota Statutes 2000, section 61A.072, is 14.30 amended by adding a subdivision to read: 14.31 Subd. 6. [ACCELERATED BENEFITS.] (a) "Accelerated benefits" 14.32 covered under this section are benefits payable under the life 14.33 insurance contract: 14.34 (1) to a policyholder or certificate holder, during the 14.35 lifetime of the insured, in anticipation of death upon the 14.36 occurrence of a specified life-threatening or catastrophic 15.1 condition as defined by the policy or rider; 15.2 (2) that reduce the death benefit otherwise payable under 15.3 the life insurance contract; and 15.4 (3) that are payable upon the occurrence of a single 15.5 qualifying event that results in the payment of a benefit amount 15.6 fixed at the time of acceleration. 15.7 (b) "Qualifying event" means one or more of the following: 15.8 (1) a medical condition that would result in a drastically 15.9 limited life span as specified in the contract; 15.10 (2) a medical condition that has required or requires 15.11 extraordinary medical intervention, such as, but not limited to, 15.12 major organ transplant or continuous artificial life support 15.13 without which the insured would die; or 15.14 (3) a condition that requires continuous confinement in an 15.15 eligible institution as defined in the contract if the insured 15.16 is expected to remain there for the rest of the insured's life. 15.17 [EFFECTIVE DATE.] This section is effective July 1, 2001. 15.18 Sec. 10. Minnesota Statutes 2000, section 61A.072, is 15.19 amended by adding a subdivision to read: 15.20 Subd. 7. [ADMINISTRATIVE COSTS.] Administrative costs must 15.21 be reasonable and not exceed $300. The insurer may charge 15.22 interest during the acceleration period, not to exceed the 15.23 policy's loan rate. 15.24 [EFFECTIVE DATE.] This section is effective July 1, 2001. 15.25 Sec. 11. Minnesota Statutes 2000, section 61A.08, is 15.26 amended to read: 15.27 61A.08 [EXCEPTIONS.] 15.28 Sections 61A.02, 61A.03, 61A.07, 61A.23, and 61A.25 shall 15.29 not, except as expressly provided in this chapter, apply to 15.30 industrialor group termpolicies, or to corporations or 15.31 associations operating on the assessment or fraternal plan, but 15.32 every contract issued prior to the operative date specified in 15.33 section 61A.245 containing a provision for a deferred annuity on 15.34 the life of the insured only, unless paid for by a single 15.35 premium, shall provide that, in event of the nonpayment of any 15.36 premium after three full years' premium shall have been paid, 16.1 the annuity shall automatically become converted into a paid-up 16.2 annuity for that proportion of the original annuity as the 16.3 number of completed years' premiums paid bears to the total 16.4 number of premiums required under the contract. 16.5 [EFFECTIVE DATE.] This section is effective the day 16.6 following final enactment. 16.7 Sec. 12. Minnesota Statutes 2000, section 61A.09, 16.8 subdivision 1, is amended to read: 16.9 Subdivision 1. No group life insurance policy or group 16.10 annuity shall be issued for delivery in this state until the 16.11 form thereof and the form of any certificates issued thereunder 16.12 have been filed in accordance with and subject to the provisions 16.13 of section 61A.02. Each person insured under such a group life 16.14 insurance policy (excepting policies which insure the lives of 16.15 debtors of a creditor or vendor to secure payment of 16.16 indebtedness) shall be furnished a certificate of insurance 16.17 issued by the insurer and containing the following: 16.18 (a) Name and location of the insurance company; 16.19 (b) A statement as to the insurance protection to which the 16.20 certificate holder is entitled, including any changes in such 16.21 protection depending on the age of the person whose life is 16.22 insured; 16.23 (c) Any and all provisions regarding the termination or 16.24 reduction of the certificate holder's insurance protection; 16.25 (d) A statement that the master group policy may be 16.26 examined at a reasonably accessible place; 16.27 (e) The maximum rate of contribution to be paid by the 16.28 certificate holder; 16.29 (f) Beneficiary and method required to change such 16.30 beneficiary; 16.31 (g) A statement that alternative methods for the payment of 16.32 group life policy proceeds of $15,000 or more must be offered to 16.33 beneficiaries in lieu of a lump sum distribution, at their 16.34 request. Alternative payment methods which must be offered at 16.35 the request of the beneficiaries must include, but are not 16.36 limited to, a life income option, an income option for fixed 17.1 amounts or fixed time periods, and the option to select an 17.2 interest-bearing account with the company with the right to 17.3 select another option at a later date; 17.4 (h) In the case of a group term insurance policy if the 17.5 policy provides that insurance of the certificate holder will 17.6 terminate, in case of a policy issued to an employer, by reason 17.7 of termination of the certificate holder's employment, or in 17.8 case of a policy issued to an organization of which the 17.9 certificate holder is a member, by reason of termination of 17.10 membership, a provision to the effect that in case of 17.11 termination of employment or membership, or in case of 17.12 termination of the group policy, the certificate holder shall be 17.13 entitled to have issued by the insurer, without evidence of 17.14 insurability, upon application made to the insurer within 31 17.15 days after the termination, and upon payment of the premium 17.16 applicable to the class of risk to which that person belongs and 17.17 to the form and amount of the policy at that person's then 17.18 attained age, a policy of life insurance only, in any one of the 17.19 forms customarily issued by the insurerexcept term insurance, 17.20 in an amount equal to the amount of the life insurance 17.21 protection under such group insurance policy at the time of such 17.22 termination; and shall contain a further provision to the effect 17.23 that upon the death of the certificate holder during such 31-day 17.24 period and before any such individual policy has become 17.25 effective, the amount of insurance for which the certificate 17.26 holder was entitled to make application shall be payable as a 17.27 death benefit by the insurer. Any policy offered in compliance 17.28 with the requirements of this paragraph must be guaranteed 17.29 renewable. 17.30 This section applies to a policy, certificate of insurance, 17.31 or similar evidence of coverage issued to a Minnesota resident 17.32 or issued to provide coverage to a Minnesota resident. This 17.33 section does not apply to a certificate of insurance or similar 17.34 evidence of coverage that meets the conditions of section 17.35 61A.093, subdivision 2. 17.36 [EFFECTIVE DATE.] This section is effective the day 18.1 following final enactment. 18.2 Sec. 13. Minnesota Statutes 2000, section 62A.021, 18.3 subdivision 3, is amended to read: 18.4 Subd. 3. [LOSS RATIO DISCLOSURE.] (a) Each health care 18.5 policy form or health care certificate form for which 18.6 subdivision 1 requires compliance with a loss ratio requirement 18.7 shall prominently display the disclosure provided in paragraph 18.8 (b) on its declarations sheet if it has one and, if not, on its 18.9 front page. The disclosure must also be prominently displayed 18.10 in any marketing materials used in connection with it. 18.11 (b) The disclosure must be in the following format: 18.12 Notice: This disclosure is required by Minnesota law. 18.13 This policy or certificate is expected to return on average 18.14 (fill in anticipated loss ratio approved by the commissioner) 18.15 percent of your premium dollar for health care. The lowest 18.16 percentage permitted by state law for this policy or certificate 18.17 is (fill in applicable minimum loss ratio). This means that, on 18.18 the average, policyholders may expect that $....... of each $100 18.19 in premiums will be returned as benefits to the policyholder. 18.20 (c) This subdivision applies to policies and certificates 18.21 issued on or after January 1, 1998. 18.22 [EFFECTIVE DATE.] This section is effective January 1, 2002. 18.23 Sec. 14. Minnesota Statutes 2000, section 62A.023, is 18.24 amended to read: 18.25 62A.023 [NOTICE OF RATE CHANGE.] 18.26 A healthinsurer or service plan corporationcarrier must 18.27 send written notice to its policyholders and contract holders at 18.28 their last known address at least 30 days in advance of the 18.29 effective date of a proposed rate change. The notice must 18.30 disclose the specific reasons for the rate change, including 18.31 medical cost inflation, statutory changes, losses, or other 18.32 reasons. This notice requirement does not apply to individual 18.33 certificate holders covered by group insurance policies or group 18.34 subscriber contracts. 18.35 [EFFECTIVE DATE.] This section is effective January 1, 2002. 18.36 Sec. 15. Minnesota Statutes 2000, section 62A.04, 19.1 subdivision 2, is amended to read: 19.2 Subd. 2. [REQUIRED PROVISIONS.] Except as provided in 19.3 subdivision 4 each such policy delivered or issued for delivery 19.4 to any person in this state shall contain the provisions 19.5 specified in this subdivision in the words in which the same 19.6 appear in this section. The insurer may, at its option, 19.7 substitute for one or more of such provisions corresponding 19.8 provisions of different wording approved by the commissioner 19.9 which are in each instance not less favorable in any respect to 19.10 the insured or the beneficiary. Such provisions shall be 19.11 preceded individually by the caption appearing in this 19.12 subdivision or, at the option of the insurer, by such 19.13 appropriate individual or group captions or subcaptions as the 19.14 commissioner may approve. 19.15 (1) A provision as follows: 19.16 ENTIRE CONTRACT; CHANGES: This policy, including the 19.17 endorsements and the attached papers, if any, constitutes the 19.18 entire contract of insurance. No change in this policy shall be 19.19 valid until approved by an executive officer of the insurer and 19.20 unless such approval be endorsed hereon or attached hereto. No 19.21 agent has authority to change this policy or to waive any of its 19.22 provisions. 19.23 (2) A provision as follows: 19.24 TIME LIMIT ON CERTAIN DEFENSES: (a) After two years from 19.25 the date of issue of this policy no misstatements, except 19.26 fraudulent misstatements, made by the applicant in the 19.27 application for such policy shall be used to void the policy or 19.28 to deny a claim for loss incurred or disability (as defined in 19.29 the policy) commencing after the expiration of such two year 19.30 period. 19.31 The foregoing policy provision shall not be so construed as 19.32 to affect any legal requirement for avoidance of a policy or 19.33 denial of a claim during such initial two year period, nor to 19.34 limit the application of clauses (1), (2), (3), (4) and (5), in 19.35 the event of misstatement with respect to age or occupation or 19.36 other insurance. A policy which the insured has the right to 20.1 continue in force subject to its terms by the timely payment of 20.2 premium (1) until at least age 50 or, (2) in the case of a 20.3 policy issued after age 44, for at least five years from its 20.4 date of issue, may contain in lieu of the foregoing the 20.5 following provisions (from which the clause in parentheses may 20.6 be omitted at the insurer's option) under the caption 20.7 "INCONTESTABLE": 20.8 After this policy has been in force for a period of two 20.9 years during the lifetime of the insured (excluding any period 20.10 during which the insured is disabled), it shall become 20.11 incontestable as to the statements contained in the application. 20.12 (b) No claim for loss incurred or disability (as defined in 20.13 the policy) commencing after two years from the date of issue of 20.14 this policy shall be reduced or denied on the ground that a 20.15 disease or physical condition not excluded from coverage by name 20.16 or specific description effective on the date of loss had 20.17 existed prior to the effective date of coverage of this policy. 20.18 All claims for loss incurred or disability beginning after 20.19 two years from the date of issue of the policy must be paid 20.20 unless excluded from coverage by name or specific description. 20.21 (3) A provision as follows: 20.22 GRACE PERIOD: A grace period of ..... (insert a number not 20.23 less than "7" for weekly premium policies, "10" for monthly 20.24 premium policies and "31" for all other policies) days will be 20.25 granted for the payment of each premium falling due after the 20.26 first premium, during which grace period the policy shall 20.27 continue in force. 20.28 A policy which contains a cancellation provision may add, 20.29 at the end of the above provision, 20.30 subject to the right of the insurer to cancel in accordance 20.31 with the cancellation provision hereof. 20.32 A policy in which the insurer reserves the right to refuse 20.33 any renewal shall have, at the beginning of the above provision, 20.34 Unless not less than five days prior to the premium due 20.35 date the insurer has delivered to the insured or has mailed to 20.36 the insured's last address as shown by the records of the 21.1 insurer written notice of its intention not to renew this policy 21.2 beyond the period for which the premium has been accepted. 21.3 (4) A provision as follows: 21.4 REINSTATEMENT: If any renewal premium be not paid within 21.5 the time granted the insured for payment, a subsequent 21.6 acceptance of premium by the insurer or by any agent duly 21.7 authorized by the insurer to accept such premium, without 21.8 requiring in connection therewith an application for 21.9 reinstatement, shall reinstate the policy. If the insurer or 21.10 such agent requires an application for reinstatement and issues 21.11 a conditional receipt for the premium tendered, the policy will 21.12 be reinstated upon approval of such application by the insurer 21.13 or, lacking such approval, upon the forty-fifth day following 21.14 the date of such conditional receipt unless the insurer has 21.15 previously notified the insured in writing of its disapproval of 21.16 such application. For health plans described in section 21.17 62A.011, subdivision 3, clause (10), an insurer must accept 21.18 payment of a renewal premium and reinstate the policy, if the 21.19 insured applies for reinstatement no later than 60 days after 21.20 the due date for the premium payment, unless: 21.21 (1) the insured has in the interim left the state or the 21.22 insurer's service area; or 21.23 (2) the insured has applied for reinstatement on two or 21.24 more prior occasions. 21.25 The reinstated policy shall cover only loss resulting from 21.26 such accidental injury as may be sustained after the date of 21.27 reinstatement and loss due to such sickness as may begin more 21.28 than ten days after such date. In all other respects the 21.29 insured and insurer shall have the same rights thereunder as 21.30 they had under the policy immediately before the due date of the 21.31 defaulted premium, subject to any provisions endorsed hereon or 21.32 attached hereto in connection with the reinstatement. Any 21.33 premium accepted in connection with a reinstatement shall be 21.34 applied to a period for which premium has not been previously 21.35 paid, but not to any period more than 60 days prior to the date 21.36 of reinstatement. The last sentence of the above provision may 22.1 be omitted from any policy which the insured has the right to 22.2 continue in force subject to its terms by the timely payment of 22.3 premiums (1) until at least age 50, or, (2) in the case of a 22.4 policy issued after age 44, for at least five years from its 22.5 date of issue. 22.6 (5) A provision as follows: 22.7 NOTICE OF CLAIM: Written notice of claim must be given to 22.8 the insurer within 20 days after the occurrence or commencement 22.9 of any loss covered by the policy, or as soon thereafter as is 22.10 reasonably possible. Notice given by or on behalf of the 22.11 insured or the beneficiary to the insurer at ..... (insert the 22.12 location of such office as the insurer may designate for the 22.13 purpose), or to any authorized agent of the insurer, with 22.14 information sufficient to identify the insured, shall be deemed 22.15 notice to the insurer. 22.16 In a policy providing a loss-of-time benefit which may be 22.17 payable for at least two years, an insurer may at its option 22.18 insert the following between the first and second sentences of 22.19 the above provision: 22.20 Subject to the qualifications set forth below, if the 22.21 insured suffers loss of time on account of disability for which 22.22 indemnity may be payable for at least two years, the insured 22.23 shall, at least once in every six months after having given 22.24 notice of claim, give to the insurer notice of continuance of 22.25 said disability, except in the event of legal incapacity. The 22.26 period of six months following any filing of proof by the 22.27 insured or any payment by the insurer on account of such claim 22.28 or any denial of liability in whole or in part by the insurer 22.29 shall be excluded in applying this provision. Delay in the 22.30 giving of such notice shall not impair the insured's right to 22.31 any indemnity which would otherwise have accrued during the 22.32 period of six months preceding the date on which such notice is 22.33 actually given. 22.34 (6) A provision as follows: 22.35 CLAIM FORMS: The insurer, upon receipt of a notice of 22.36 claim, will furnish to the claimant such forms as are usually 23.1 furnished by it for filing proofs of loss. If such forms are 23.2 not furnished within 15 days after the giving of such notice the 23.3 claimant shall be deemed to have complied with the requirements 23.4 of this policy as to proof of loss upon submitting, within the 23.5 time fixed in the policy for filing proofs of loss, written 23.6 proof covering the occurrence, the character and the extent of 23.7 the loss for which claim is made. 23.8 (7) A provision as follows: 23.9 PROOFS OF LOSS: Written proof of loss must be furnished to 23.10 the insurer at its said office in case of claim for loss for 23.11 which this policy provides any periodic payment contingent upon 23.12 continuing loss within 90 days after the termination of the 23.13 period for which the insurer is liable and in case of claim for 23.14 any other loss within 90 days after the date of such loss. 23.15 Failure to furnish such proof within the time required shall not 23.16 invalidate nor reduce any claim if it was not reasonably 23.17 possible to give proof within such time, provided such proof is 23.18 furnished as soon as reasonably possible and in no event, except 23.19 in the absence of legal capacity, later than one year from the 23.20 time proof is otherwise required. 23.21 (8) A provision as follows: 23.22 TIME OF PAYMENT OF CLAIMS: Indemnities payable under this 23.23 policy for any loss other than loss for which this policy 23.24 provides periodic payment will be paid immediately upon receipt 23.25 of due written proof of such loss. Subject to due written proof 23.26 of loss, all accrued indemnities for loss for which this policy 23.27 provides periodic payment will be paid ..... (insert period for 23.28 payment which must not be less frequently than monthly) and any 23.29 balance remaining unpaid upon the termination of liability will 23.30 be paid immediately upon receipt of due written proof. 23.31 (9) A provision as follows: 23.32 PAYMENT OF CLAIMS: Indemnity for loss of life will be 23.33 payable in accordance with the beneficiary designation and the 23.34 provisions respecting such payment which may be prescribed 23.35 herein and effective at the time of payment. If no such 23.36 designation or provision is then effective, such indemnity shall 24.1 be payable to the estate of the insured. Any other accrued 24.2 indemnities unpaid at the insured's death may, at the option of 24.3 the insurer, be paid either to such beneficiary or to such 24.4 estate. All other indemnities will be payable to the insured. 24.5 The following provisions, or either of them, may be 24.6 included with the foregoing provision at the option of the 24.7 insurer: 24.8 If any indemnity of this policy shall be payable to the 24.9 estate of the insured, or to an insured or beneficiary who is a 24.10 minor or otherwise not competent to give a valid release, the 24.11 insurer may pay such indemnity, up to an amount not exceeding 24.12 $..... (insert an amount which shall not exceed $1,000), to any 24.13 relative by blood or connection by marriage of the insured or 24.14 beneficiary who is deemed by the insurer to be equitably 24.15 entitled thereto. Any payment made by the insurer in good faith 24.16 pursuant to this provision shall fully discharge the insurer to 24.17 the extent of such payment. 24.18 Subject to any written direction of the insured in the 24.19 application or otherwise all or a portion of any indemnities 24.20 provided by this policy on account of hospital, nursing, 24.21 medical, or surgical services may, at the insurer's option and 24.22 unless the insured requests otherwise in writing not later than 24.23 the time of filing proofs of such loss, be paid directly to the 24.24 hospital or person rendering such services; but it is not 24.25 required that the service be rendered by a particular hospital 24.26 or person. 24.27 (10) A provision as follows: 24.28 PHYSICAL EXAMINATIONS AND AUTOPSY: The insurer at its own 24.29 expense shall have the right and opportunity to examine the 24.30 person of the insured when and as often as it may reasonably 24.31 require during the pendency of a claim hereunder and to make an 24.32 autopsy in case of death where it is not forbidden by law. 24.33 (11) A provision as follows: 24.34 LEGAL ACTIONS: No action at law or in equity shall be 24.35 brought to recover on this policy prior to the expiration of 60 24.36 days after written proof of loss has been furnished in 25.1 accordance with the requirements of this policy. No such action 25.2 shall be brought after the expiration of three years after the 25.3 time written proof of loss is required to be furnished. 25.4 (12) A provision as follows: 25.5 CHANGE OF BENEFICIARY: Unless the insured makes an 25.6 irrevocable designation of beneficiary, the right to change of 25.7 beneficiary is reserved to the insured and the consent of the 25.8 beneficiary or beneficiaries shall not be requisite to surrender 25.9 or assignment of this policy or to any change of beneficiary or 25.10 beneficiaries, or to any other changes in this policy. The 25.11 first clause of this provision, relating to the irrevocable 25.12 designation of beneficiary, may be omitted at the insurer's 25.13 option. 25.14 [EFFECTIVE DATE.] This section is effective the day 25.15 following final enactment. 25.16 Sec. 16. Minnesota Statutes 2000, section 62A.105, 25.17 subdivision 2, is amended to read: 25.18 Subd. 2. [REQUIREMENT.] If an issuer of policies or plans 25.19 referred to in subdivision 1 ceases to offer a particular policy 25.20 or subscriber contract to the general public or otherwise stops 25.21 adding new insureds to the group of covered persons, the issuer 25.22 shall allow any covered person to transfer to another 25.23 substantially similar policy or contract currently being sold by 25.24 the issuer. The issuer shall notify each covered person when 25.25 the issuer stops adding new insureds to the group of covered 25.26 persons, and explain how any covered person can transfer to a 25.27 similar policy or contract. The issuer shall permit the 25.28 transfer without any preexisting condition limitation, waiting 25.29 period, or other restriction of any type other than those which 25.30 applied to the insured under the prior policy or contract. This 25.31 section does not apply to persons who were covered under an 25.32 individual policy or contract prior to July 1, 1994. 25.33 Sec. 17. Minnesota Statutes 2000, section 62A.17, 25.34 subdivision 1, is amended to read: 25.35 Subdivision 1. [CONTINUATION OF COVERAGE.] Every group 25.36 insurance policy, group subscriber contract, and health care 26.1 plan included within the provisions of section 62A.16, except 26.2 policies, contracts, or health care plans covering employees of 26.3 an agency of the federal government, shall contain a provision 26.4 which permits every covered employee who is voluntarily or 26.5 involuntarily terminated or laid off from employment, if the 26.6 policy, contract, or health care plan remains in force for 26.7 active employees of the employer, to elect to continue the 26.8 coverage for the employee and dependents. 26.9 An employee shall be considered to be laid off from 26.10 employment if there is a reduction in hours to the point where 26.11 the employee is no longer eligible under the policy, contract, 26.12 or health care plan. Termination shall not include discharge 26.13 for gross misconduct. 26.14 Upon request by the terminated or laid off employee, a 26.15 health carrier must provide the forms and instructions necessary 26.16 to enable the employee to elect continuation of coverage. 26.17 [EFFECTIVE DATE.] This section is effective the day 26.18 following final enactment. 26.19 Sec. 18. Minnesota Statutes 2000, section 62A.20, 26.20 subdivision 1, is amended to read: 26.21 Subdivision 1. [REQUIREMENT.] Every policy of accident and 26.22 health insurance providing coverage of hospital or medical 26.23 expense on either an expense-incurred basis or other than an 26.24 expense-incurred basis, which in addition to covering the 26.25 insured also provides coverage to the spouse and dependent 26.26 children of the insured shall contain: 26.27 (1) a provision whichpermitsallows the spouse and 26.28 dependent children to elect to continue coverage when the 26.29 insured becomes enrolled for benefits under Title XVIII of the 26.30 Social Security Act (Medicare); and 26.31 (2) a provision whichpermitsallows the dependent children 26.32 to continue coverage when they cease to be dependent children 26.33 under the generally applicable requirement of the plan. 26.34 Upon request by the insured or the insured's spouse or 26.35 dependent child, a health carrier must provide the forms and 26.36 instructions necessary to enable the spouse or child to elect 27.1 continuation of coverage. 27.2 [EFFECTIVE DATE.] This section is effective the day 27.3 following final enactment. 27.4 Sec. 19. Minnesota Statutes 2000, section 62A.21, 27.5 subdivision 2a, is amended to read: 27.6 Subd. 2a. [CONTINUATION PRIVILEGE.] Every policy described 27.7 in subdivision 1 shall contain a provision which permits 27.8 continuation of coverage under the policy for the insured's 27.9 former spouse and dependent children upon entry of a valid 27.10 decree of dissolution of marriage. The coverage shall be 27.11 continued until the earlier of the following dates: 27.12 (a) the date the insured's former spouse becomes covered 27.13 under any other group health plan; or 27.14 (b) the date coverage would otherwise terminate under the 27.15 policy. 27.16 If the coverage is provided under a group policy, any 27.17 required premium contributions for the coverage shall be paid by 27.18 the insured on a monthly basis to the group policyholder for 27.19 remittance to the insurer. The policy must require the group 27.20 policyholder to, upon request, provide the insured with written 27.21 verification from the insurer of the cost of this coverage 27.22 promptly at the time of eligibility for this coverage and at any 27.23 time during the continuation period. In no event shall the 27.24 amount of premium charged exceed 102 percent of the cost to the 27.25 plan for such period of coverage for other similarly situated 27.26 spouses and dependent children with respect to whom the marital 27.27 relationship has not dissolved, without regard to whether such 27.28 cost is paid by the employer or employee. 27.29 Upon request by the insured's former spouse or dependent 27.30 child, a health carrier must provide the forms and instructions 27.31 necessary to enable the child or former spouse to elect 27.32 continuation of coverage. 27.33 [EFFECTIVE DATE.] This section is effective the day 27.34 following final enactment. 27.35 Sec. 20. Minnesota Statutes 2000, section 62A.30, 27.36 subdivision 2, is amended to read: 28.1 Subd. 2. [REQUIRED COVERAGE.] Every policy, plan, 28.2 certificate, or contract referred to in subdivision 1 issued or 28.3 renewed after August 1, 1988, that provides coverage to a 28.4 Minnesota resident must provide coverage for routine screening 28.5 procedures for cancer, including mammograms and pap smears, when 28.6 ordered or provided by a physician in accordance with the 28.7 standard practice of medicine. This coverage includes the cost 28.8 of the office visit during which the screening procedures are 28.9 performed. 28.10 [EFFECTIVE DATE.] This section is effective the day 28.11 following final enactment. 28.12 Sec. 21. Minnesota Statutes 2000, section 62A.302, is 28.13 amended to read: 28.14 62A.302 [COVERAGE OF DEPENDENTS.] 28.15 Subdivision 1. [SCOPE OF COVERAGE.] This section applies 28.16 toall health plans as defined in section 62A.011: 28.17 (1) a health plan as defined in section 62A.011; 28.18 (2) coverage described in section 62A.011, subdivision 3, 28.19 clauses (4), (6), (7), (8), (9), and (10); and 28.20 (3) a policy, contract, or certificate issued by a 28.21 community integrated service network licensed under chapter 62N. 28.22 Subd. 2. [REQUIRED COVERAGE.] Every health plan included 28.23 in subdivision 1 that provides dependent coverage must define 28.24 "dependent" no more restrictively than the definition provided 28.25 in section 62L.02. 28.26 Sec. 22. Minnesota Statutes 2000, section 62A.3093, is 28.27 amended to read: 28.28 62A.3093 [COVERAGE FOR DIABETES.] 28.29 A health plan, including a plan providing the coverage 28.30 specified in section 62A.011, subdivision 3, clause (10), must 28.31 provide coverage for: (1) all physician prescribed medically 28.32 appropriate and necessary equipment and supplies used in the 28.33 management and treatment of diabetes; (2) insulin and any and 28.34 all prescription drugs used in the treatment of diabetes; and 28.35(2)(3) diabetes outpatient self-management training and 28.36 education, including medical nutrition therapy, that is provided 29.1 by a certified, registered, or licensed health care professional 29.2 working in a program consistent with the national standards of 29.3 diabetes self-management education as established by the 29.4 American Diabetes Association. Coverage must include persons 29.5 with gestational, type I or type II diabetes. Coverage required 29.6 under this section is subject to the same deductible or 29.7 coinsurance provisions applicable to the plan's hospital, 29.8 medical expense, medical equipment, or prescription drug 29.9 benefits. A health carrier may not reduce or eliminate coverage 29.10 due to this requirement. 29.11 [EFFECTIVE DATE.] This section is effective the day 29.12 following final enactment. 29.13 Sec. 23. Minnesota Statutes 2000, section 62A.31, 29.14 subdivision 1a, is amended to read: 29.15 Subd. 1a. [MINIMUM COVERAGE.] The policy must provide a 29.16 minimum of the coverage set out in subdivision 2 and for an 29.17 extended basic plan, the additional requirements of section 29.18 62E.07. 29.19 [EFFECTIVE DATE.] This section is effective the day 29.20 following final enactment. 29.21 Sec. 24. Minnesota Statutes 2000, section 62A.31, 29.22 subdivision 1i, is amended to read: 29.23 Subd. 1i. [REPLACEMENT COVERAGE.] If a Medicare supplement 29.24 policy or certificate replaces another Medicare supplement 29.25 policy or certificate, the issuer of the replacing policy or 29.26 certificate shall waive any time periods applicable to 29.27 preexisting conditions, waiting periods, elimination periods, 29.28 and probationary periods in the new Medicare supplement policy 29.29 or certificate for benefits to the extent the time was spent 29.30 under the original policy or certificate. For purposes of this 29.31 subdivision, "Medicare supplement policy or certificate" means 29.32 all coverage described in section 62A.011, subdivision43, 29.33 clause (10). 29.34 [EFFECTIVE DATE.] This section is effective the day 29.35 following final enactment. 29.36 Sec. 25. Minnesota Statutes 2000, section 62A.31, 30.1 subdivision 3, is amended to read: 30.2 Subd. 3. [DEFINITIONS.] (a) The definitions provided in 30.3 this subdivision apply to sections 62A.31 to 62A.44. 30.4 (b) "Accident," "accidental injury," or "accidental means" 30.5 means to employ "result" language and does not include words 30.6 that establish an accidental means test or use words such as 30.7 "external," "violent," "visible wounds," or similar words of 30.8 description or characterization. 30.9 (1) The definition shall not be more restrictive than the 30.10 following: "Injury or injuries for which benefits are provided 30.11 means accidental bodily injury sustained by the insured person 30.12 which is the direct result of an accident, independent of 30.13 disease or bodily infirmity or any other cause, and occurs while 30.14 insurance coverage is in force." 30.15 (2) The definition may provide that injuries shall not 30.16 include injuries for which benefits are provided or available 30.17 under a workers' compensation, employer's liability or similar 30.18 law, or motor vehicle no-fault plan, unless prohibited by law. 30.19 (c) "Applicant" means: 30.20 (1) in the case of an individual Medicare supplement policy 30.21 or certificate, the person who seeks to contract for insurance 30.22 benefits; and 30.23 (2) in the case of a group Medicare supplement policy or 30.24 certificate, the proposed certificate holder. 30.25 (d) "Bankruptcy" means a situation in which a 30.26 Medicare+Choice organization that is not an issuer has filed, or 30.27 has had filed against it, a petition for declaration of 30.28 bankruptcy and has ceased doing business in the state. 30.29 (e) "Benefit period" or "Medicare benefit period" shall not 30.30 be defined more restrictively than as defined in the Medicare 30.31 program. 30.32 (f) "Certificate" means a certificate delivered or issued 30.33 for delivery in this state or offered to a resident of this 30.34 state under a group Medicare supplement policy or certificate. 30.35 (g) "Certificate form" means the form on which the 30.36 certificate is delivered or issued for delivery by the issuer. 31.1 (h) "Convalescent nursing home," "extended care facility," 31.2 or "skilled nursing facility" shall not be defined more 31.3 restrictively than as defined in the Medicare program. 31.4 (i) "Employee welfare benefit plan" means a plan, fund, or 31.5 program of employee benefits as defined in United States Code, 31.6 title 29, section 1002 (Employee Retirement Income Security Act). 31.7 (j) "Health care expenses" means expenses of health 31.8 maintenance organizations associated with the delivery of health 31.9 care services which are analogous to incurred losses of 31.10 insurers. The expenses shall not include: 31.11 (1) home office and overhead costs; 31.12 (2) advertising costs; 31.13 (3) commissions and other acquisition costs; 31.14 (4) taxes; 31.15 (5) capital costs; 31.16 (6) administrative costs; and 31.17 (7) claims processing costs. 31.18 (k) "Hospital" may be defined in relation to its status, 31.19 facilities, and available services or to reflect its 31.20 accreditation by the joint commission on accreditation of 31.21 hospitals, but not more restrictively than as defined in the 31.22 Medicare program. 31.23 (l) "Insolvency" means a situation in which an issuer, 31.24 licensed to transact the business of insurance in this state, 31.25 including the right to transact business as any type of issuer, 31.26 has had a final order of liquidation entered against it with a 31.27 finding of insolvency by a court of competent jurisdiction in 31.28 the issuer's state of domicile. 31.29 (m) "Issuer" includes insurance companies, fraternal 31.30 benefit societies, health service plan corporations, health 31.31 maintenance organizations, and any other entity delivering or 31.32 issuing for delivery Medicare supplement policies or 31.33 certificates in this state or offering these policies or 31.34 certificates to residents of this state. 31.35 (n) "Medicare" shall be defined in the policy and 31.36 certificate. Medicare may be defined as the Health Insurance 32.1 for the Aged Act, title XVIII of the Social Security Amendments 32.2 of 1965, as amended, or title I, part I, of Public Law Number 32.3 89-97, as enacted by the 89th Congress of the United States of 32.4 America and popularly known as the Health Insurance for the Aged 32.5 Act, as amended. 32.6 (o) "Medicare eligible expenses" means health care expenses 32.7 covered by Medicare, to the extent recognized as reasonable and 32.8 medically necessary by Medicare. 32.9 (p) "Medicare+Choice plan" means a plan of coverage for 32.10 health benefits under Medicare part C as defined in section 1859 32.11 of the federal Social Security Act, United States Code, title 32.12 42, section 1395w-28, and includes: 32.13 (1) coordinated care plans which provide health care 32.14 services, including, but not limited to, health maintenance 32.15 organization plans, with or without a point-of-service option, 32.16 plans offered by provider-sponsored organizations, and preferred 32.17 provider organization plans; 32.18 (2) medical savings account plans coupled with a 32.19 contribution into a Medicare+Choice medical savings account; and 32.20 (3) Medicare+Choice private fee-for-service plans. 32.21 (q) "Medicare-related coverage" means a policy, contract, 32.22 or certificate issued as a supplement to Medicare, regulated 32.23 under sections 62A.31 to 62A.44, including Medicare select 32.24 coverage; policies, contracts, or certificates that supplement 32.25 Medicare issued by health maintenance organizations; or 32.26 policies, contracts, or certificates governed by section 1833 32.27 (known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA" 32.28 or "risk" contracts) of the federal Social Security Act, United 32.29 States Code, title 42, section 1395, et seq., as amended.; or 32.30 Section 4001 of the Balanced Budget Act of 1997 (BBA)(Public Law 32.31 105-33), Sections 1851 to 1859 of the Social Security Act 32.32 establishing Part C of the Medicare program, known as the 32.33 "Medicare+Choice program." 32.34 (r) "Medicare supplement policy or certificate" means a 32.35 group or individual policy of accident and sickness insurance or 32.36 a subscriber contract of hospital and medical service 33.1 associations or health maintenance organizations, or those 33.2 policies or certificates covered by section 1833 of the federal 33.3 Social Security Act, United States Code, title 42, section 1395, 33.4 et seq., or an issued policy under a demonstration project 33.5 specified under amendments to the federal Social Security Act, 33.6 which is advertised, marketed, or designed primarily as a 33.7 supplement to reimbursements under Medicare for the hospital, 33.8 medical, or surgical expenses of persons eligible for Medicare. 33.9 (s) "Physician" shall not be defined more restrictively 33.10 than as defined in the Medicare program or section 62A.04, 33.11 subdivision 1, or 62A.15, subdivision 3a. 33.12 (t) "Policy form" means the form on which the policy is 33.13 delivered or issued for delivery by the issuer. 33.14 (u) "Secretary" means the Secretary of the United States 33.15 Department of Health and Human Services. 33.16 (v) "Sickness" shall not be defined more restrictively than 33.17 the following: 33.18 "Sickness means illness or disease of an insured person 33.19 which first manifests itself after the effective date of 33.20 insurance and while the insurance is in force." 33.21 The definition may be further modified to exclude 33.22 sicknesses or diseases for which benefits are provided under a 33.23 workers' compensation, occupational disease, employer's 33.24 liability, or similar law. 33.25 [EFFECTIVE DATE.] This section is effective the day 33.26 following final enactment. 33.27 Sec. 26. Minnesota Statutes 2000, section 62A.65, 33.28 subdivision 8, is amended to read: 33.29 Subd. 8. [CESSATION OF INDIVIDUAL BUSINESS.] 33.30 Notwithstanding the provisions of subdivisions 1 to 7, a health 33.31 carrier may elect to cease doing business in the individual 33.32 health plan market in this state if it complies with the 33.33 requirements of this subdivision. For purposes of this section, 33.34 "cease doing business" means to discontinue issuing new 33.35 individual health plans and to refuse to renew all of the health 33.36 carrier's existing individual health plans issued in this state 34.1 whose terms permit refusal to renew under the circumstances 34.2 specified in this subdivision. This subdivision does not permit 34.3 cancellation of an individual health plan, unless the terms of 34.4 the health plan permit cancellation under the circumstances 34.5 specified in this subdivision. A health carrier electing to 34.6 cease doing business in the individual health plan market in 34.7 this state shall notify the commissioner 180 days prior to the 34.8 effective date of the cessation. Within 30 days after the 34.9 termination, the health carrier shall submit to the commissioner 34.10 a complete list of policyholders that have been terminated. The 34.11 cessation of business does not include the failure of a health 34.12 carrier to offer or issue new business in the individual health 34.13 plan market or continue an existing product line in that market, 34.14 provided that a health carrier does not terminate, cancel, or 34.15 fail to renew its current individual health plan business. A 34.16 health carrier electing to cease doing business in the 34.17 individual health plan market shall provide 120 days' written 34.18 notice to each policyholder covered by an individual health plan 34.19 issued by the health carrier. This notice must also inform each 34.20 policyholder of the existence of the Minnesota Comprehensive 34.21 Health Association, the requirements for being accepted, the 34.22 procedures for applying for coverage, and the telephone numbers 34.23 at the department of health and the department of commerce for 34.24 information about private individual or family health coverage. 34.25 A health carrier that ceases to write new business in the 34.26 individual health plan market shall continue to be governed by 34.27 this section with respect to continuing individual health plan 34.28 business conducted by the health carrier. A health carrier that 34.29 ceases to do business in the individual health plan market after 34.30 July 1, 1994, is prohibited from writing new business in the 34.31 individual health plan market in this state for a period of five 34.32 years from the date of notice to the commissioner. This 34.33 subdivision applies to any health maintenance organization that 34.34 ceases to do business in the individual health plan market in 34.35 one service area with respect to that service area only. 34.36 Nothing in this subdivision prohibits an affiliated health 35.1 maintenance organization from continuing to do business in the 35.2 individual health plan market in that same service area. The 35.3 right to refuse to renew an individual health plan under this 35.4 subdivision does not apply to individual health plans issued on 35.5 a guaranteed renewable basis that does not permit refusal to 35.6 renew under the circumstances specified in this subdivision. 35.7 Sec. 27. Minnesota Statutes 2000, section 62E.04, 35.8 subdivision 4, is amended to read: 35.9 Subd. 4. [MAJOR MEDICAL COVERAGE.] Each insurer and 35.10 fraternal shall affirmatively offer coverage of major medical 35.11 expenses to every applicant who applies to the insurer or 35.12 fraternal for a new unqualified policy, which has a lifetime 35.13 benefit limit of less than $1,000,000, at the time of 35.14 application and annually to every holder of such an unqualified 35.15 policy of accident and health insurance renewed by the insurer 35.16 or fraternal. The coverage shall provide that when a covered 35.17 individual incurs out-of-pocket expenses of $5,000 or more 35.18 within a calendar year for services covered in section 62E.06, 35.19 subdivision 1, benefits shall be payable, subject to any 35.20 copayment authorized by the commissioner, up to a maximum 35.21 lifetime limit of$500,000not less than $1,000,000. The offer 35.22 of coverage of major medical expenses may consist of the offer 35.23 of a rider on an existing unqualified policy or a new policy 35.24 which is a qualified plan. 35.25 Sec. 28. Minnesota Statutes 2000, section 62E.06, 35.26 subdivision 1, is amended to read: 35.27 Subdivision 1. [NUMBER THREE PLAN.] A plan of health 35.28 coverage shall be certified as a number three qualified plan if 35.29 it otherwise meets the requirements established by chapters 62A 35.30and, 62C, and 62Q, and the other laws of this state, whether or 35.31 not the policy is issued in Minnesota, and meets or exceeds the 35.32 following minimum standards: 35.33 (a) The minimum benefits for a covered individual shall, 35.34 subject to the other provisions of this subdivision, be equal to 35.35 at least 80 percent of the cost of covered services in excess of 35.36 an annual deductible which does not exceed $150 per person. The 36.1 coverage shall include a limitation of $3,000 per person on 36.2 total annual out-of-pocket expenses for services covered under 36.3 this subdivision. The coverage shall be subject to a maximum 36.4 lifetime benefit of not less than$500,000$1,000,000. 36.5 The $3,000 limitation on total annual out-of-pocket 36.6 expenses and the$500,000$1,000,000 maximum lifetime benefit 36.7 shall not be subject to change or substitution by use of an 36.8 actuarially equivalent benefit. 36.9 (b) Covered expenses shall be the usual and customary 36.10 charges for the following services and articles when prescribed 36.11 by a physician: 36.12 (1) hospital services; 36.13 (2) professional services for the diagnosis or treatment of 36.14 injuries, illnesses, or conditions, other than dental, which are 36.15 rendered by a physician or at the physician's direction; 36.16 (3) drugs requiring a physician's prescription; 36.17 (4) services of a nursing home for not more than 120 days 36.18 in a year if the services would qualify as reimbursable services 36.19 under Medicare; 36.20 (5) services of a home health agency if the services would 36.21 qualify as reimbursable services under Medicare; 36.22 (6) use of radium or other radioactive materials; 36.23 (7) oxygen; 36.24 (8) anesthetics; 36.25 (9) prostheses other than dental but including scalp hair 36.26 prostheses worn for hair loss suffered as a result of alopecia 36.27 areata; 36.28 (10) rental or purchase, as appropriate, of durable medical 36.29 equipment other than eyeglasses and hearing aids; 36.30 (11) diagnostic X-rays and laboratory tests; 36.31 (12) oral surgery for partially or completely unerupted 36.32 impacted teeth, a tooth root without the extraction of the 36.33 entire tooth, or the gums and tissues of the mouth when not 36.34 performed in connection with the extraction or repair of teeth; 36.35 (13) services of a physical therapist; 36.36 (14) transportation provided by licensed ambulance service 37.1 to the nearest facility qualified to treat the condition; or a 37.2 reasonable mileage rate for transportation to a kidney dialysis 37.3 center for treatment; and 37.4 (15) services of an occupational therapist. 37.5 (c) Covered expenses for the services and articles 37.6 specified in this subdivision do not include the following: 37.7 (1) any charge for care for injury or disease either (i) 37.8 arising out of an injury in the course of employment and subject 37.9 to a workers' compensation or similar law, (ii) for which 37.10 benefits are payable without regard to fault under coverage 37.11 statutorily required to be contained in any motor vehicle, or 37.12 other liability insurance policy or equivalent self-insurance, 37.13 or (iii) for which benefits are payable under another policy of 37.14 accident and health insurance, Medicare, or any other 37.15 governmental program except as otherwise provided by section 37.16 62A.04, subdivision 3, clause (4); 37.17 (2) any charge for treatment for cosmetic purposes other 37.18 than for reconstructive surgery when such service is incidental 37.19 to or follows surgery resulting from injury, sickness, or other 37.20 diseases of the involved part or when such service is performed 37.21 on a covered dependent child because of congenital disease or 37.22 anomaly which has resulted in a functional defect as determined 37.23 by the attending physician; 37.24 (3) care which is primarily for custodial or domiciliary 37.25 purposes which would not qualify as eligible services under 37.26 Medicare; 37.27 (4) any charge for confinement in a private room to the 37.28 extent it is in excess of the institution's charge for its most 37.29 common semiprivate room, unless a private room is prescribed as 37.30 medically necessary by a physician, provided, however, that if 37.31 the institution does not have semiprivate rooms, its most common 37.32 semiprivate room charge shall be considered to be 90 percent of 37.33 its lowest private room charge; 37.34 (5) that part of any charge for services or articles 37.35 rendered or prescribed by a physician, dentist, or other health 37.36 care personnel which exceeds the prevailing charge in the 38.1 locality where the service is provided; and 38.2 (6) any charge for services or articles the provision of 38.3 which is not within the scope of authorized practice of the 38.4 institution or individual rendering the services or articles. 38.5 (d) The minimum benefits for a qualified plan shall 38.6 include, in addition to those benefits specified in clauses (a) 38.7 and (e), benefits for well baby care, effective July 1, 1980, 38.8 subject to applicable deductibles, coinsurance provisions, and 38.9 maximum lifetime benefit limitations. 38.10 (e) Effective July 1, 1979, the minimum benefits of a 38.11 qualified plan shall include, in addition to those benefits 38.12 specified in clause (a), a second opinion from a physician on 38.13 all surgical procedures expected to cost a total of $500 or more 38.14 in physician, laboratory, and hospital fees, provided that the 38.15 coverage need not include the repetition of any diagnostic tests. 38.16 (f) Effective August 1, 1985, the minimum benefits of a 38.17 qualified plan must include, in addition to the benefits 38.18 specified in clauses (a), (d), and (e), coverage for special 38.19 dietary treatment for phenylketonuria when recommended by a 38.20 physician. 38.21 (g) Outpatient mental health coverage is subject to section 38.22 62A.152, subdivision 2. 38.23 Sec. 29. Minnesota Statutes 2000, section 62J.60, 38.24 subdivision 3, is amended to read: 38.25 Subd. 3. [HUMAN READABLE DATA ELEMENTS.] (a) The following 38.26 are the minimum human readable data elements that must be 38.27 present on the front side of the Minnesota health care 38.28 identification card: 38.29 (1) card issuer name or logo, which is the name or logo 38.30 that identifies the card issuer. The card issuer name or logo 38.31 may be the card's front background. No standard label is 38.32 required for this data element; 38.33 (2) claim submission number. The standardized label for 38.34 this element is "Clm Subm #"; 38.35 (3) identification number, which is the unique 38.36 identification number of the individual card holder established 39.1 and defined under this section. The standardized label for the 39.2 data element is "ID"; 39.3 (4) identification name, which is the name of the 39.4 individual card holder. The identification name must be 39.5 formatted as follows: first name, space, optional middle 39.6 initial, space, last name, optional space and name suffix. The 39.7 standardized label for this data element is "Name"; 39.8 (5) account number(s), which is any other number, such as a 39.9 group number, if required for part of the identification or 39.10 claims process. The standardized label for this data element is 39.11 "Account"; 39.12 (6) care type, which is the description of the group 39.13 purchaser's plan product under which the beneficiary is 39.14 covered. The description shall include the health plan company 39.15 name and the plan or product name. The standardized label for 39.16 this data element is "Care Type"; 39.17 (7) service type, which is the description of coverage 39.18 provided such as hospital, dental, vision, prescription, or 39.19 mental health. The standard label for this data element is "Svc 39.20 Type"; and 39.21 (8) provider/clinic name, which is the name of the primary 39.22 care clinic the card holder is assigned to by the health plan 39.23 company. The standard label for this field is "PCP." This 39.24 information is mandatory only if the health plan company assigns 39.25 a specific primary care provider to the card holder. 39.26 (b) The following human readable data elements shall be 39.27 present on the back side of the Minnesota health identification 39.28 card. These elements must be left justified, and no optional 39.29 data elements may be interspersed between them: 39.30 (1) claims submission name(s) and address(es), which are 39.31 the name(s) and address(es) of the entity or entities to which 39.32 claims should be submitted. If different destinations are 39.33 required for different types of claims, this must be labeled; 39.34 and 39.35 (2) telephone number(s) and name(s); which are the 39.36 telephone number(s) and name(s) of the following contact(s) with 40.1 a standardized label describing the service function as 40.2 applicable: 40.3 (i) eligibility and benefit information; 40.4 (ii) utilization review; 40.5 (iii) precertification; or 40.6 (iv) customer services. 40.7 (c) The following human readable data elements are 40.8 mandatory on the back side of the card for healthmaintenance40.9organizationsplan companies: 40.10 (1) emergency care authorization telephone number or 40.11 instruction on how to receive authorization for emergency care. 40.12 There is no standard label required for this information; and 40.13 (2) one of the following: 40.14 (i) telephone number to call to appeal to or file a 40.15 complaint with the commissioner of commerce or health; or 40.16 (ii) for persons enrolled under section 256B.69, 256D.03, 40.17 or 256L.12, the telephone number to call to file a complaint 40.18 with the ombudsperson designated by the commissioner of human 40.19 services under section 256B.69 and the address to appeal to the 40.20 commissioner of human services. There is no standard label 40.21 required for this information. 40.22 (d) All human readable data elements not required under 40.23 paragraphs (a) to (c) are optional and may be used at the 40.24 issuer's discretion. 40.25 Sec. 30. Minnesota Statutes 2000, section 62L.05, 40.26 subdivision 1, is amended to read: 40.27 Subdivision 1. [TWO SMALL EMPLOYER PLANS.] Each health 40.28 carrier in the small employer market must make available, on a 40.29 guaranteed issue basis, to any small employer that satisfies the 40.30 contribution and participation requirements of section 62L.03, 40.31 subdivision 3, both of the small employer plans described in 40.32 subdivisions 2 and 3. Under subdivisions 2 and 3, coinsurance 40.33 and deductibles do not apply to child health supervision 40.34 services and prenatal services, as defined by section 62A.047. 40.35 The maximum out-of-pocket costs for covered services must be 40.36 $3,000 per individual and $6,000 per family per year. The 41.1 maximum lifetime benefit must be$500,000not less than 41.2 $1,000,000. 41.3 Sec. 31. Minnesota Statutes 2000, section 62L.05, 41.4 subdivision 2, is amended to read: 41.5 Subd. 2. [DEDUCTIBLE-TYPE SMALL EMPLOYER PLAN.] The 41.6 benefits of the deductible-type small employer plan offered by a 41.7 health carrier must be equal to 80 percent of the charges, as 41.8 specified in subdivision 10, for health care services, supplies, 41.9 or other articles covered under the small employer plan, in 41.10 excess of an annual deductible which must be$500$2,250 per 41.11 individual and$1,000$4,500 per family. 41.12 Sec. 32. Minnesota Statutes 2000, section 62M.01, 41.13 subdivision 2, is amended to read: 41.14 Subd. 2. [JURISDICTION.] Sections 62M.01 to 62M.16 apply 41.15 to: (1) any insurance company licensed under chapter 60A to 41.16 offer, sell, or issue a policy of accident and sickness 41.17 insurance as defined in section 62A.01, or a policy of 41.18 automobile insurance providing personal injury protection as 41.19 defined in section 65B.43, subdivision 15; (2) a health service 41.20 plan licensed under chapter 62C; (3) a health maintenance 41.21 organization licensed under chapter 62D; (4) a community 41.22 integrated service network licensed under chapter 62N; (5) an 41.23 accountable provider network operating under chapter 62T; (6) a 41.24 fraternal benefit society operating under chapter 64B; (7) a 41.25 joint self-insurance employee health plan operating under 41.26 chapter 62H; (8) a multiple employer welfare arrangement, as 41.27 defined in section 3 of the Employee Retirement Income Security 41.28 Act of 1974 (ERISA), United States Code, title 29, section 1103, 41.29 as amended; (9) a third party administrator licensed under 41.30 section 60A.23, subdivision 8, that provides utilization review 41.31 services for the administration of benefits under a health 41.32 benefit plan as defined in section 62M.02; or (10) any entity 41.33 performing utilization review on behalf of a business entity in 41.34 this state pursuant to a health benefit plan covering a 41.35 Minnesota resident. 41.36 Sec. 33. Minnesota Statutes 2000, section 62M.02, 42.1 subdivision 6, is amended to read: 42.2 Subd. 6. [CLAIMS ADMINISTRATOR.] "Claims administrator" 42.3 means an entity that reviews and determines whether to pay 42.4 claims to enrollees or providers based on the contract 42.5 provisions of the health plan contract. Claims administrators 42.6 may include insurance companies licensed under chapter 60A to 42.7 offer, sell, or issue a policy of accident and sickness 42.8 insurance as defined in section 62A.01 or a policy of automobile 42.9 insurance providing personal injury protection as defined in 42.10 section 65B.43, subdivision 15; a health service plan licensed 42.11 under chapter 62C; a health maintenance organization licensed 42.12 under chapter 62D; a community integrated service network 42.13 licensed under chapter 62N; an accountable provider network 42.14 operating under chapter 62T; a fraternal benefit society 42.15 operating under chapter 64B; a multiple employer welfare 42.16 arrangement, as defined in section 3 of the Employee Retirement 42.17 Income Security Act of 1974 (ERISA), United States Code, title 42.18 29, section 1103, as amended. 42.19 Sec. 34. Minnesota Statutes 2000, section 62M.02, 42.20 subdivision 12, is amended to read: 42.21 Subd. 12. [HEALTH BENEFIT PLAN.] "Health benefit plan" 42.22 means a policy, contract, or certificate issued by a health plan 42.23 company for the coverage of medical, dental, or hospital 42.24 benefits. A health benefit plan does not include coverage that 42.25 is: 42.26 (1) limited to disability or income protection coverage; 42.27 (2)automobile medical payment coverage;42.28(3)supplemental to liability insurance; 42.29(4)(3) designed solely to provide payments on a per diem, 42.30 fixed indemnity, or nonexpense incurred basis; 42.31(5)(4) credit accident and health insurance issued under 42.32 chapter 62B; 42.33(6)(5) blanket accident and sickness insurance as defined 42.34 in section 62A.11; 42.35(7)(6) accident only coverage issued by a licensed and 42.36 tested insurance agent; or 43.1(8)(7) workers' compensation. 43.2 Sec. 35. Minnesota Statutes 2000, section 62M.02, is 43.3 amended by adding a subdivision to read: 43.4 Subd. 12b. [HEALTH CARE SERVICES.] "Health care services" 43.5 means services for the diagnosis, prevention, treatment, cure, 43.6 or relief of a health condition, illness, injury, or disease. 43.7 [EFFECTIVE DATE.] This section is effective the day 43.8 following final enactment. 43.9 Sec. 36. Minnesota Statutes 2000, section 62M.02, 43.10 subdivision 21, is amended to read: 43.11 Subd. 21. [UTILIZATION REVIEW ORGANIZATION.] "Utilization 43.12 review organization" means an entity including but not limited 43.13 to an insurance company licensed under chapter 60A to offer, 43.14 sell, or issue a policy of accident and sickness insurance as 43.15 defined in section 62A.01 or a policy of automobile insurance 43.16 providing personal injury protection as defined in section 43.17 65B.43, subdivision 15; a health service plan licensed under 43.18 chapter 62C; a health maintenance organization licensed under 43.19 chapter 62D; a community integrated service network licensed 43.20 under chapter 62N; an accountable provider network operating 43.21 under chapter 62T; a fraternal benefit society operating under 43.22 chapter 64B; a joint self-insurance employee health plan 43.23 operating under chapter 62H; a multiple employer welfare 43.24 arrangement, as defined in section 3 of the Employee Retirement 43.25 Income Security Act of 1974 (ERISA), United States Code, title 43.26 29, section 1103, as amended; a third party administrator 43.27 licensed under section 60A.23, subdivision 8, which conducts 43.28 utilization review and determines certification of an admission, 43.29 extension of stay, or other health care services for a Minnesota 43.30 resident; or any entity performing utilization review that is 43.31 affiliated with, under contract with, or conducting utilization 43.32 review on behalf of, a business entity in this state. 43.33 Sec. 37. Minnesota Statutes 2000, section 62M.05, 43.34 subdivision 5, is amended to read: 43.35 Subd. 5. [NOTIFICATION TO CLAIMS ADMINISTRATOR.] If the 43.36 utilization review organization and the claims administrator are 44.1 separate entities, the utilization review organization must 44.2 forward, electronically or in writing, a notification of 44.3 certification or determination not to certify to the appropriate 44.4 claims administrator for the health benefit plan. If it is 44.5 determined by the claims administrator that the certified health 44.6 care service is not covered by the health benefit plan, the 44.7 claims administrator must immediately notify the claimant and 44.8 provider of this information. 44.9 Sec. 38. Minnesota Statutes 2000, section 62Q.01, 44.10 subdivision 6, is amended to read: 44.11 Subd. 6. [MEDICARE-RELATED COVERAGE.] "Medicare-related 44.12 coverage" means a policy, contract, or certificate issued as a 44.13 supplement to Medicare, regulated under sections 62A.31 to 44.14 62A.44, including Medicare select coverage; policies, contracts, 44.15 or certificates that supplement Medicare issued by health 44.16 maintenance organizations; or policies, contracts, or 44.17 certificates governed by section 1833 (known as "cost" or "HCPP" 44.18 contracts) or 1876 (known as "TEFRA" or "risk" contracts) of the 44.19 federal Social Security Act, United States Code, title 42, 44.20 section 1395, et seq., as amended.; or Section 4001 of the 44.21 Balanced Budget Act of 1997 (BBA)(Public Law 105-33), Sections 44.22 1851 to 1859 of the Social Security Act establishing Part C of 44.23 the Medicare program, known as the "Medicare+Choice program." 44.24 [EFFECTIVE DATE.] This section is effective the day 44.25 following final enactment. 44.26 Sec. 39. [62Q.526] [MINIMUM STANDARDS FOR MEDICALLY 44.27 NECESSARY CARE.] 44.28 Subdivision 1. [REQUIREMENT.] No policy of accident and 44.29 sickness insurance or health plan that covers medical services 44.30 and supplies may be offered, sold, issued, or renewed in this 44.31 state unless it satisfies the definition of "medically necessary 44.32 care" provided in subdivision 2. 44.33 Subd. 2. [MEDICALLY NECESSARY CARE.] "Medically necessary 44.34 care" means health care services appropriate in terms of type, 44.35 frequency, level, setting, and duration to the enrollee's 44.36 diagnosis or condition, diagnostic testing, and preventive 45.1 services. Medically necessary care must be consistent with 45.2 generally accepted practice parameters as determined by health 45.3 care providers in the same or similar general specialty as 45.4 typically manages the condition, procedure, or treatment at 45.5 issue, and: 45.6 (1) help restore or maintain the enrollee's health; 45.7 (2) prevent deterioration of the enrollee's condition; or 45.8 (3) prevent the reasonable likely onset of a health problem 45.9 or detect an incipient problem. 45.10 Subd. 3. [POLICY OF ACCIDENT AND SICKNESS INSURANCE AND 45.11 HEALTH PLAN; DEFINITION.] For purposes of this section, "policy 45.12 of accident and sickness insurance" has the meaning given in 45.13 section 60A.06, subdivision 1, paragraph (5), clause (a), and 45.14 for the purpose of this section, "health plan" has the meaning 45.15 given in section 62Q.01, subdivision 3, but includes the 45.16 coverage listed in section 62A.011, subdivision 3, clauses (4), 45.17 (6), (7), (8), (9), and (10). 45.18 [EFFECTIVE DATE.] This section is effective the day 45.19 following final enactment. 45.20 Sec. 40. Minnesota Statutes 2000, section 62Q.68, 45.21 subdivision 1, is amended to read: 45.22 Subdivision 1. [APPLICATION.] For purposes of sections 45.23 62Q.68 to 62Q.72, the terms defined in this section have the 45.24 meanings given them. For purposes of sections 62Q.69 and 45.25 62Q.70, the term "health plan company"does not include an45.26insurance company licensed under chapter 60A to offer, sell, or45.27issue a policy of accident and sickness insurance as defined in45.28section 62A.01 or a nonprofit health service plan corporation45.29regulated under chapter 62C that only provides dental coverage45.30or vision coverageincludes the Minnesota Comprehensive Health 45.31 Association. 45.32 Sec. 41. Minnesota Statutes 2000, section 62Q.72, 45.33 subdivision 1, is amended to read: 45.34 Subdivision 1. [RECORDKEEPING.] Each health plan company 45.35 shall maintain records of all enrollee complaints and their 45.36 resolutions. These records shall be retained for five years and 46.1 shall be made available to the appropriate commissioner upon 46.2 request.An insurance company licensed under chapter 60A may46.3instead comply with section 72A.20, subdivision 30.46.4 Sec. 42. Minnesota Statutes 2000, section 62Q.73, 46.5 subdivision 3, is amended to read: 46.6 Subd. 3. [RIGHT TO EXTERNAL REVIEW.] (a) Any enrollee or 46.7 anyone acting on behalf of an enrollee who has received an 46.8 adverse determination may submit a written request for an 46.9 external review of the adverse determination, if applicable 46.10 under section 62Q.68, subdivision 1, or 62M.06, to the 46.11 commissioner of health if the request involves a health plan 46.12 company regulated by that commissioner or to the commissioner of 46.13 commerce if the request involves a health plan company regulated 46.14 by that commissioner. Notification of the enrollee's right to 46.15 external review must accompany the denial issued by the insurer 46.16 on forms acceptable to the appropriate commissioner. The 46.17 written request must be accompanied by a filing fee of $25. The 46.18 fee may be waived by the commissioner of health or commerce in 46.19 cases of financial hardship. 46.20 (b) Nothing in this section requires the commissioner of 46.21 health or commerce to independently investigate an adverse 46.22 determination referred for independent external review. 46.23 (c) If an enrollee requests an external review, the health 46.24 plan company must participate in the external review. The cost 46.25 of the external review in excess of the filing fee described in 46.26 paragraph (a) shall be borne by the health plan company. 46.27 Sec. 43. Minnesota Statutes 2000, section 65A.01, 46.28 subdivision 3b, is amended to read: 46.29 Subd. 3b. [RESCISSION AND VOIDABILITY.] This policy must 46.30 not be rescinded or voided except where the insured has 46.31 willfully and with intent to defraud concealed or misrepresented 46.32 a material fact or circumstance concerning this insurance or the 46.33 subject of this insurance or the interests of the insured in 46.34 this insurance. This provision must not operate to defeat a 46.35 claim by a third party or a minor child of the named insured or 46.36 an innocent coinsured for damage or loss for which the policy 47.1 provides coverage. 47.2 [EFFECTIVE DATE.] This section is effective the day 47.3 following final enactment. 47.4 Sec. 44. Minnesota Statutes 2000, section 65A.29, 47.5 subdivision 7, is amended to read: 47.6 Subd. 7. [RENEWAL; NOTICE REQUIREMENT.] No insurer shall 47.7 refuse to renew, or reduce limits of coverage, or eliminate any 47.8 coverage in a homeowner's insurance policy unless it mails or 47.9 delivers to the insured, at the address shown in the policy, at 47.10 least 60 days' advance notice of its intention. The notice must 47.11 contain the specific underwriting or other reason or reasons for 47.12 the indicated action and must clearly state the name of the 47.13 insurer and the date the notice is issued. 47.14 Proof of mailing this notice to the insured at the address 47.15 shown in the policy is sufficient proof that the notice required 47.16 by this section has been given. 47.17 [EFFECTIVE DATE.] This section is effective the day 47.18 following final enactment. 47.19 Sec. 45. Minnesota Statutes 2000, section 65A.30, is 47.20 amended to read: 47.21 65A.30 [DAY CARE SERVICES; COVERAGE.] 47.22 There shall be no coverage under the liability coverage 47.23 provisions of a day care provider's homeowner's insurance for 47.24 losses or damages arising out of the operation of day care 47.25 services unless: 47.26 (1) specifically covered in a policy; or 47.27 (2) covered by a rider for business coverage attached to a 47.28 policy. 47.29 For purposes of this section, "day care" means "family day 47.30 care" and "group family day care" as defined in Minnesota Rules, 47.31 part 9502.0315. "Day care" does not include care provided by an 47.32 individual who is related, as defined in Minnesota Rules, part 47.33 9502.0315, to the person being cared for or care provided by an 47.34 unrelated individual to persons from a single family of persons 47.35 related to each other. 47.36 [EFFECTIVE DATE.] This section is effective the day 48.1 following final enactment. 48.2 Sec. 46. Minnesota Statutes 2000, section 65B.04, 48.3 subdivision 3, is amended to read: 48.4 Subd. 3. [AMENDMENTS.] The plan of operation may be 48.5 amended by a majority vote of the governing committee,and the 48.6 approval of the commissionerand ratification by a majority of48.7the members. An order by the commissioner disapproving an 48.8 amendment to the plan of operation must be issued within 30 days 48.9 of receipt by the commissioner of the proposed amendment, 48.10 certified by the governing committee as having been adopted by 48.11 that committee by a majority vote, or the amendment shall be 48.12 deemed approved by the commissioner. An order of disapproval 48.13 may be appealed as provided in chapter 14. 48.14 [EFFECTIVE DATE.] This section is effective the day 48.15 following final enactment. 48.16 Sec. 47. Minnesota Statutes 2000, section 65B.06, 48.17 subdivision 1, is amended to read: 48.18 Subdivision 1. With respect to private passenger, nonfleet 48.19 automobiles, the facility shall provide for the equitable 48.20 distribution of qualified applicants to members in accordance 48.21 with the participation ratio or among these insurance companies 48.22 as selected under the provisions of the plan of operation. 48.23 [EFFECTIVE DATE.] This section is effective the day 48.24 following final enactment. 48.25 Sec. 48. Minnesota Statutes 2000, section 65B.06, 48.26 subdivision 4, is amended to read: 48.27 Subd. 4. Coverage made available under this section shall 48.28 be thestandardautomobile policy and endorsement forms, as 48.29 approved by the commissioner, with such changes, additions and 48.30 amendments as are adopted by the governing committee and 48.31 approved by the commissioner. 48.32 [EFFECTIVE DATE.] This section is effective the day 48.33 following final enactment. 48.34 Sec. 49. Minnesota Statutes 2000, section 65B.16, is 48.35 amended to read: 48.36 65B.16 [STATEMENT OF REASONS FOR CANCELLATION OR 49.1 REDUCTION.] 49.2 No notice of cancellation or reduction in the limits of 49.3 liability of coverage of an automobile insurance policy under 49.4 section 65B.15 shall be effective unless the specific 49.5 underwriting or other reason or reasons for such cancellation or 49.6 reduction in the limits of liability of coverage are stated in 49.7 such notice and the notice is mailed or delivered by the insurer 49.8 to the named insured at least3035 days prior to the effective 49.9 date of cancellation; provided, however, that when nonpayment of 49.10 premium is the reason for cancellation or when the company is 49.11 exercising its right to cancel insurance which has been in 49.12 effect for less than 60 days at least ten days' notice of 49.13 cancellation, and the reasons for the cancellation, shall be 49.14 given. Information regarding moving traffic violations or motor 49.15 vehicle accidents must be specifically requested on the 49.16 application in order for a company to use those incidents to 49.17 exercise its right to cancel within the first 59 days of 49.18 coverage. When nonpayment of premiums is the reason for 49.19 cancellation, the reason must be given to the insured with the 49.20 notice of cancellation; and if the company is exercising its 49.21 right to cancel within the first 59 days of coverage and notice 49.22 is given with less than ten days remaining in the 59-day period, 49.23 the coverage must be extended, to expire ten days after notice 49.24 was mailed. 49.25 Sec. 50. Minnesota Statutes 2000, section 65B.19, 49.26 subdivision 2, is amended to read: 49.27 Subd. 2. [NOTICE OF RIGHT TO COMPLAIN.] When the insurer 49.28 notifies the policyholder of nonrenewal, cancellation or 49.29 reduction in the limits of liability of coverage under section 49.30 65B.16 or 65B.17, the insurer shall also notify the named 49.31 insured of the right to complain within 30 days of receipt by 49.32 the named insured of notice of nonrenewal, cancellation or 49.33 reduction in the limits of liability to the commissioner of such 49.34 action and of the nature of and possible eligibility for 49.35 insurance through the Minnesota automobile insurance plan. Such 49.36 notice shall be included in the notice of nonrenewal, 50.1 cancellation or reduction in the limits of liability of 50.2 coverage, and shall state that such notice of the insured's 50.3 right of complaint to the commissioner and of the availability 50.4 of insurance through the Minnesota automobile insurance plan is 50.5 given pursuant to sections 65B.14 to 65B.21. The notice must 50.6 clearly state the name of the insurer and the date the notice is 50.7 issued. 50.8 Sec. 51. Minnesota Statutes 2000, section 65B.44, 50.9 subdivision 3, is amended to read: 50.10 Subd. 3. [DISABILITY AND INCOME LOSS BENEFITS.] Disability 50.11 and income loss benefits shall provide compensation for 85 50.12 percent of the injured person's loss of present and future gross 50.13 income from inability to work proximately caused by the nonfatal 50.14 injury subject to a maximum of$250$500 per week. Loss of 50.15 income includes the costs incurred by a self-employed person to 50.16 hire substitute employees to perform tasks which are necessary 50.17 to maintain the income of the injured person, which are normally 50.18 performed by the injured person, and which cannot be performed 50.19 because of the injury. 50.20 If the injured person is unemployed at the time of injury 50.21 and is receiving or is eligible to receive unemployment benefits 50.22 under chapter 268, but the injured person loses eligibility for 50.23 those benefits because of inability to work caused by the 50.24 injury, disability and income loss benefits shall provide 50.25 compensation for the lost benefits in an amount equal to the 50.26 unemployment benefits which otherwise would have been payable, 50.27 subject to a maximum of$250$500 per week. 50.28 Compensation under this subdivision shall be reduced by any 50.29 income from substitute work actually performed by the injured 50.30 person or by income the injured person would have earned in 50.31 available appropriate substitute work which the injured person 50.32 was capable of performing but unreasonably failed to undertake. 50.33 For the purposes of this section "inability to work" means 50.34 disability which prevents the injured person from engaging in 50.35 any substantial gainful occupation or employment on a regular 50.36 basis, for wage or profit, for which the injured person is or 51.1 may by training become reasonably qualified. If the injured 51.2 person returns to employment and is unable by reason of the 51.3 injury to work continuously, compensation for lost income shall 51.4 be reduced by the income received while the injured person is 51.5 actually able to work. The weekly maximums may not be prorated 51.6 to arrive at a daily maximum, even if the injured person does 51.7 not incur loss of income for a full week. 51.8 For the purposes of this section, an injured person who is 51.9 "unable by reason of the injury to work continuously" includes, 51.10 but is not limited to, a person who misses time from work, 51.11 including reasonable travel time, and loses income, vacation, or 51.12 sick leave benefits, to obtain medical treatment for an injury 51.13 arising out of the maintenance or use of a motor vehicle. 51.14 Sec. 52. Minnesota Statutes 2000, section 65B.49, 51.15 subdivision 5a, is amended to read: 51.16 Subd. 5a. [RENTAL VEHICLES.] (a) Every plan of reparation 51.17 security insuring a natural person as named insured, covering 51.18 private passenger vehicles as defined under section 65B.001, 51.19 subdivision 3, motor homes as defined in section 168.011, 51.20 subdivision 25, paragraphs (b) and (c), and pickup trucks and 51.21 vans as defined under section 168.011 must provide that all of 51.22 the obligation for damage and loss of use to a rented private 51.23 passenger vehicle, including pickup trucks and vans as defined 51.24 under section 168.011, and rented trucks with a registered gross 51.25 vehicle weight of 26,000 pounds or less would be covered by the 51.26 property damage liability portion of the plan. This subdivision 51.27 does not apply to plans of reparation security covering only 51.28 motor vehicles registered under section 168.10, subdivision 1a, 51.29 1b, 1c, or 1d, or recreational equipment as defined under 51.30 section 168.011 except for motor homes as defined in section 51.31 168.011, subdivision 25, paragraphs (b) and (c). The obligation 51.32 of the plan must not be contingent on fault or negligence. In 51.33 all cases where the plan's property damage liability coverage is 51.34 less than $35,000, the coverage available under the subdivision 51.35 must be $35,000. Other than as described in this paragraph or 51.36 in paragraph (j), nothing in this section amends or alters the 52.1 provisions of the plan of reparation security as to primacy of 52.2 the coverages in this section. 52.3 (b) A vehicle is rented for purposes of this subdivision: 52.4 (1) if the rate for the use of the vehicle is determined on 52.5 a monthly, weekly, or daily basis; or 52.6 (2) during the time that a vehicle is loaned as a 52.7 replacement for a vehicle being serviced or repaired regardless 52.8 of whether the customer is charged a fee for the use of the 52.9 vehicle. 52.10 A vehicle is not rented for the purposes of this 52.11 subdivision if the rate for the vehicle's use is determined on a 52.12 period longer than one month or if the term of the rental 52.13 agreement is longer than one month. A vehicle is not rented for 52.14 purposes of this subdivision if the rental agreement has a 52.15 purchase or buyout option or otherwise functions as a substitute 52.16 for purchase of the vehicle. 52.17 (c) The policy or certificate issued by the plan must 52.18 inform the insured of the application of the plan to private 52.19 passenger rental vehicles, including pickup trucks and vans as 52.20 defined under section 168.011, and that the insured may not need 52.21 to purchase additional coverage from the rental company. 52.22 (d) Where an insured has two or more vehicles covered by a 52.23 plan or plans of reparation security containing the rented motor 52.24 vehicle coverage required under paragraph (a), the insured may 52.25 select the plan the insured wishes to collect from and that plan 52.26 is entitled to a pro rata contribution from the other plan or 52.27 plans based upon the property damage limits of liability. If 52.28 the person renting the motor vehicle is also covered by the 52.29 person's employer's insurance policy or the employer's 52.30 automobile self-insurance plan, the reparation obligor under the 52.31 employer's policy or self-insurance plan has primary 52.32 responsibility to pay claims arising from use of the rented 52.33 vehicle. 52.34 (e) A notice advising the insured of rental vehicle 52.35 coverage must be given by the reparation obligor to each current 52.36 insured with the first renewal notice after January 1, 1989. 53.1 The notice must be approved by the commissioner of commerce. 53.2 The commissioner may specify the form of the notice. 53.3 (f) When a motor vehicle is rented in this state, there 53.4 must be attached to the rental contract a separate form 53.5 containing a written notice in at least 10-point bold type, if 53.6 printed, or in capital letters, if typewritten, which states: 53.7 Under Minnesota law, a personal automobile insurance policy 53.8 issued in Minnesota must cover the rental of this motor 53.9 vehicle against damage to the vehicle and against loss of 53.10 use of the vehicle. Therefore, purchase of any collision 53.11 damage waiver or similar insurance affected in this rental 53.12 contract is not necessary if your policy was issued in 53.13 Minnesota. 53.14 No collision damage waiver or other insurance offered as part of 53.15 or in conjunction with a rental of a motor vehicle may be sold 53.16 unless the person renting the vehicle provides a written 53.17 acknowledgment that the above consumer protection notice has 53.18 been read and understood. 53.19 (g) When damage to a rented vehicle is covered by a plan of 53.20 reparation security as provided under paragraph (a), the rental 53.21 contract must state that payment by the reparation obligor 53.22 within the time limits of section 72A.201 is acceptable, and 53.23 prior payment by the renter is not required. 53.24 (h) Compensation for the loss of use of a damaged rented 53.25 motor vehicle is limited to a period no longer than 14 days. 53.26 (i)(1) For purposes of this paragraph, "rented motor 53.27 vehicle" means a rented vehicle described in paragraph (a), 53.28 using the definition of "rented" provided in paragraph (b). 53.29 (2) Notwithstanding section 170.54, an owner of a rented 53.30 motor vehicle is not vicariously liable for legal damages 53.31 resulting from the operation of the rented motor vehicle in an 53.32 amount greater than $100,000 because of bodily injury to one 53.33 person in any one accident and, subject to the limit for one 53.34 person, $300,000 because of injury to two or more persons in any 53.35 one accident, and $50,000 because of injury to or destruction of 53.36 property of others in any one accident, if the owner of the 54.1 rented motor vehicle has in effect, at the time of the accident, 54.2 a policy of insurance or self-insurance, as provided in section 54.3 65B.48, subdivision 3, covering losses up to at least the 54.4 amounts set forth in this paragraph. Nothing in this paragraph 54.5 alters or affects the obligations of an owner of a rented motor 54.6 vehicle to comply with the requirements of compulsory insurance 54.7 through a policy of insurance as provided in section 65B.48, 54.8 subdivision 2, or through self-insurance as provided in section 54.9 65B.48, subdivision 3; or with the obligations arising from 54.10 section 72A.125 for products sold in conjunction with the rental 54.11 of a motor vehicle. Nothing in this paragraph alters or affects 54.12 liability, other than vicarious liability, of an owner of a 54.13 rented motor vehicle. 54.14 (3) The dollar amounts stated in this paragraph shall be 54.15 adjusted for inflation based upon the consumer price index for 54.16 all urban consumers, known as the CPI-U, published by the United 54.17 States Bureau of Labor Statistics. The dollar amounts stated in 54.18 this paragraph are based upon the value of that index for July 54.19 1995, which is the reference base index for purposes of this 54.20 paragraph. The dollar amounts in this paragraph shall change 54.21 effective January 1 of each odd-numbered year based upon the 54.22 percentage difference between the index for July of the 54.23 preceding year and the reference base index, calculated to the 54.24 nearest whole percentage point. The commissioner shall announce 54.25 and publish, on or before September 30 of the preceding year, 54.26 the changes in the dollar amounts required by this paragraph to 54.27 take effect on January 1 of each odd-numbered year. The 54.28 commissioner shall use the most recent revision of the July 54.29 index available as of September 1. Changes in the dollar 54.30 amounts must be in increments of $5,000, and no change shall be 54.31 made in a dollar amount until the change in the index requires 54.32 at least a $5,000 change. If the United States Bureau of Labor 54.33 Statistics changes the base year upon which the CPI-U is based, 54.34 the commissioner shall make the calculations necessary to 54.35 convert from the old base year to the new base year. If the 54.36 CPI-U is discontinued, the commissioner shall use the available 55.1 index that is most similar to the CPI-U. 55.2 (j) The plan of reparation security covering the owner of a 55.3 rented motor vehicle is excess of any residual liability 55.4 coverage insuring an operator of a rented motor vehicle if the 55.5 vehicle is loaned as a replacement for a vehicle being serviced 55.6 or repaired, regardless of whether a fee is charged for use of 55.7 the vehicle, provided that the vehicle so loaned is owned by the 55.8 service or repair business. 55.9 [EFFECTIVE DATE.] This section is effective the day 55.10 following final enactment. 55.11 Sec. 53. Minnesota Statutes 2000, section 67A.20, is 55.12 amended by adding a subdivision to read: 55.13 Subd. 3. [WITH LICENSED INSURERS.] Township mutual fire 55.14 insurance companies may enter into reinsurance agreements with 55.15 any Minnesota licensed insurer authorized to write the same 55.16 lines of business. 55.17 [EFFECTIVE DATE.] This section is effective the day 55.18 following final enactment. 55.19 Sec. 54. Minnesota Statutes 2000, section 70A.07, is 55.20 amended to read: 55.21 70A.07 [RATES AND FORMS OPEN TO INSPECTION.] 55.22 All ratesand, supplementary rate information, and forms, 55.23 furnished to the commissioner under this chapter shall, as soon 55.24 as the rates and forms are reviewed by the commissioner, be open 55.25 to public inspection at any reasonable time. 55.26 [EFFECTIVE DATE.] This section is effective the day 55.27 following final enactment. 55.28 Sec. 55. Minnesota Statutes 2000, section 72A.125, 55.29 subdivision 3, is amended to read: 55.30 Subd. 3. [COLLISION DAMAGE WAIVER.] A "collision damage 55.31 waiver" is a discharge of the responsibility of the renter or 55.32 leasee to return the motor vehicle in the same condition as when 55.33 it was first rented. The waiver is a full and complete 55.34 discharge of the responsibility to return the vehicle in the 55.35 same condition as when it was first rented. The waiver may not 55.36 contain any exclusions except those approved by the 56.1 commissioner. The filing and approval provisions of section 56.2 70A.06 and the fee provisions in section 60A.14, subdivision 1, 56.3 paragraph (c), clause (7), apply to a waiver containing 56.4 exclusions. 56.5 [EFFECTIVE DATE.] This section is effective the day 56.6 following final enactment. 56.7 Sec. 56. Minnesota Statutes 2000, section 72A.201, 56.8 subdivision 3, is amended to read: 56.9 Subd. 3. [DEFINITIONS.] For the purposes of this section, 56.10 the following terms have the meanings given them. 56.11 (1) [ADJUSTER OR ADJUSTERS.] "Adjuster" or "adjusters" is 56.12 as defined in section 72B.02. 56.13 (2) [AGENT.] "Agent" means insurance agents or insurance 56.14 agencies licensed pursuant to sections 60K.01 to 60K.18, and 56.15 representatives of these agents or agencies. 56.16 (3) [CLAIM.] "Claim" means a request or demand made with an 56.17 insurer for the payment of funds or the provision of services 56.18 under the terms of any policy, certificate, contract of 56.19 insurance, binder, or other contracts of temporary insurance. 56.20 The termdoes not includeincludes a claim under a health 56.21 insurance policy made by a participating provider with an 56.22 insurer in accordance with the participating provider's service 56.23 agreement with the insurer which has been filed with the 56.24 commissioner of commerce prior to its use. 56.25 (4) [CLAIM SETTLEMENT.] "Claim settlement" means all 56.26 activities of an insurer related directly or indirectly to the 56.27 determination of the extent of liabilities due or potentially 56.28 due under coverages afforded by the policy, and which result in 56.29 claim payment, claim acceptance, compromise, or other 56.30 disposition. 56.31 (5) [CLAIMANT.] "Claimant" means any individual, 56.32 corporation, association, partnership, or other legal entity 56.33 asserting a claim against any individual, corporation, 56.34 association, partnership, or other legal entity which is insured 56.35 under an insurance policy or insurance contract of an insurer. 56.36 (6) [COMPLAINT.] "Complaint" means a communication 57.1 primarily expressing a grievance. 57.2 (7) [INSURANCE POLICY.] "Insurance policy" means any 57.3 evidence of coverage issued by an insurer including all 57.4 policies, contracts, certificates, riders, binders, and 57.5 endorsements which provide or describe coverage. The term 57.6 includes any contract issuing coverage under a self-insurance 57.7 plan, group self-insurance plan, or joint self-insurance 57.8 employee health plans. 57.9 (8) [INSURED.] "Insured" means an individual, corporation, 57.10 association, partnership, or other legal entity asserting a 57.11 right to payment under their insurance policy or insurance 57.12 contract arising out of the occurrence of the contingency or 57.13 loss covered by the policy or contract. The term does not apply 57.14 to a person who acquires rights under a mortgage. 57.15 (9) [INSURER.] "Insurer" includes any individual, 57.16 corporation, association, partnership, reciprocal exchange, 57.17 Lloyds, fraternal benefits society, self-insurer, surplus line 57.18 insurer, self-insurance administrator, and nonprofit service 57.19 plans under the jurisdiction of the department of commerce. 57.20 (10) [INVESTIGATION.] "Investigation" means a reasonable 57.21 procedure adopted by an insurer to determine whether to accept 57.22 or reject a claim. 57.23 (11) [NOTIFICATION OF CLAIM.] "Notification of claim" means 57.24 any communication to an insurer by a claimant or an insured 57.25 which reasonably apprises the insurer of a claim brought under 57.26 an insurance contract or policy issued by the insurer. 57.27 Notification of claim to an agent of the insurer is notice to 57.28 the insurer. 57.29 (12) [PROOF OF LOSS.] "Proof of loss" means the necessary 57.30 documentation required from the insured to establish entitlement 57.31 to payment under a policy. 57.32 (13) [SELF-INSURANCE ADMINISTRATOR.] "Self-insurance 57.33 administrator" means any vendor of risk management services or 57.34 entities administering self-insurance plans, licensed pursuant 57.35 to section 60A.23, subdivision 8. 57.36 (14) [SELF-INSURED OR SELF-INSURER.] "Self-insured" or 58.1 "self-insurer" means any entity authorized pursuant to section 58.2 65B.48, subdivision 3; chapter 62H; section 176.181, subdivision 58.3 2; Laws of Minnesota 1983, chapter 290, section 171; section 58.4 471.617; or section 471.981 and includes any entity which, for a 58.5 fee, employs the services of vendors of risk management services 58.6 in the administration of a self-insurance plan as defined by 58.7 section 60A.23, subdivision 8, clause (2), subclauses (a) and 58.8 (d). 58.9 [EFFECTIVE DATE.] This section is effective the day 58.10 following final enactment. 58.11 Sec. 57. Minnesota Statutes 2000, section 72C.06, 58.12 subdivision 2, is amended to read: 58.13 Subd. 2. In determining whether a policy or contract is 58.14 readable within the meaning of this section the commissioner 58.15 shall consider, at least, the following factors: 58.16 (a) the simplicity of the sentence structure and the 58.17 shortness of the sentences used; 58.18 (b) the extent to which commonly used and understood words 58.19 are employed; 58.20 (c) the extent to which legal terms are avoided; 58.21 (d) the extent to which references to other sections or 58.22 provisions of the contract are minimized; 58.23 (e) the extent to which definitional provisions are 58.24 incorporated in the text of the policy or contract;and58.25 (f) whether the specific requirements of Minnesota law are 58.26 incorporated into the policy or contract; and 58.27 (g) any additional factors relevant to the readability or 58.28 understandability of an insurance policy or contract which the 58.29 commissioner may prescribe by rule. 58.30 Sec. 58. Minnesota Statutes 2000, section 79A.02, 58.31 subdivision 1, is amended to read: 58.32 Subdivision 1. [MEMBERSHIP.] For the purposes of assisting 58.33 the commissioner, there is established a workers' compensation 58.34 self-insurers' advisory committee of five members that are 58.35 employers authorized to self-insure in Minnesota. Three of the 58.36 members and three alternates shall be elected by the 59.1 self-insurers' security fund board of trustees and two members 59.2 and two alternates shall be appointed by the 59.3 commissioner. Notwithstanding section 15.059, subdivision 5a, 59.4 the advisory committee does not expire June 30, 2001. 59.5 [EFFECTIVE DATE.] This section is effective the day 59.6 following final enactment. 59.7 Sec. 59. Minnesota Statutes 2000, section 79A.03, 59.8 subdivision 7, is amended to read: 59.9 Subd. 7. [FINANCIAL STANDARDS.] A self-insurer group shall 59.10 have and maintain: 59.11 (a) A combined net worth of all of the members of an amount 59.12 at least equal to the greater of ten times the retention 59.13 selected with the workers' compensation reinsurance association 59.14 or one-third of the current annual modified premium of the 59.15 members. 59.16 (b) Sufficient assets, net worth, and liquidity to promptly 59.17 and completely meet all obligations of its members under chapter 59.18 176 or this chapter. In determining whether a group is in sound 59.19 financial condition, consideration shall be given to the 59.20 combined net worth of the member companies; the consolidated 59.21 long-term and short-term debt to equity ratios of the member 59.22 companies; any excess insurance other than reinsurance with the 59.23 workers' compensation reinsurance association, purchased by the 59.24 group from an insurer licensed in Minnesota or from an 59.25 authorized surplus line carrier; other financial data requested 59.26 by the commissioner or submitted by the group; and the combined 59.27 workers' compensation experience of the group for the last four 59.28 years. 59.29 No authority to self-insure will be granted unless, over 59.30 the term of the policy year, at least 65 percent of total 59.31 revenues from all sources for the year are available for the 59.32 payment of its claim and assessment obligations, and insurance 59.33 premiums for stop loss coverage. For purposes of this 59.34 calculation, claim and assessment obligations include the cost 59.35 of allocated loss expenses as well as special compensation fund 59.36 and self-insurers' security fund assessments but exclude the 60.1 cost of unallocated loss expenses. 60.2 [EFFECTIVE DATE.] This section is effective July 1, 2001. 60.3 Sec. 60. Minnesota Statutes 2000, section 471.617, 60.4 subdivision 1, is amended to read: 60.5 Subdivision 1. [IF MORE THAN 100 EMPLOYEES; CONDITIONS.] A 60.6 statutory or home rule charter city, county, school district, or 60.7 instrumentality thereof which has more than 100 employees, may 60.8 by ordinance or resolution self-insure for any employee health 60.9 benefits including long-term disability, but not for employee 60.10 life benefits. Any self-insurance plan shall provide all 60.11 benefits which are required by law to be provided by group 60.12 health insurance policies. Self-insurance plansshallmust be 60.13 certified as provided by section 62E.05 and must be filed and 60.14 certified by the department of commerce before they are issued 60.15 or delivered to any person in this state. 60.16 [EFFECTIVE DATE.] This section is effective the day 60.17 following final enactment. 60.18 Sec. 61. [REPEALER.] 60.19 Minnesota Statutes 2000, sections 13.7191, subdivision 11; 60.20 60A.111; 62G.01; 62G.02; 62G.03; 62G.04; 62G.05; 62G.06; 62G.07; 60.21 62G.08; 62G.09; 62G.10; 62G.11; 62G.12; 62G.13; 62G.14; 62G.15; 60.22 62G.16; 62G.17; 62G.18; 62G.19; 62G.20; 62G.21; 62G.22; 62G.23; 60.23 62G.24; and 62G.25, are repealed. 60.24 [EFFECTIVE DATE.] This section is effective the day 60.25 following final enactment.