Minnesota Session Laws - 1983, Regular Session

  

                         Laws of Minnesota 1983 

                        CHAPTER 263--H.F.No. 314
           An act relating to insurance; requiring insurance 
          agents to maintain trust accounts; requiring certain 
          disclosures in personal sales contacts; requiring 
          disclosure of certain limitations on medicare 
          supplement insurance coverage; prohibiting the sale of 
          more than two medicare supplement insurance policies 
          to an individual; requiring copies of medicare 
          supplement and life insurance applications to be 
          provided to applicants; requiring applications for 
          medicare supplement insurance to list health and 
          accident insurance already maintained by applicant; 
          providing for continuation and conversion of health 
          and accident coverage for laid off employees; 
          providing group coverage for handicapped dependents; 
          allowing a deductible on certain medicare supplement 
          insurance coverages; providing rulemaking authority; 
          imposing civil penalties for certain violations; 
          providing a criminal penalty; amending Minnesota 
          Statutes 1982, sections 60A.17, subdivisions 1, 1a, 
          and 6c, and by adding subdivisions; 62A.17; 62A.31; 
          62A.39; 62A.42; proposing new law coded in Minnesota 
          Statutes, chapters 61A and 62A. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1982, section 60A.17, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LICENSE.] (a) [REQUIREMENT.] No person 
shall act or assume to act as an insurance agent in the 
solicitation or procurement of applications for insurance, nor 
in the sale of insurance or policies of insurance, nor in any 
manner aid as an insurance agent in the negotiation of insurance 
by or with an insurer, including resident agents or reciprocal 
or interinsurance exchanges and fraternal beneficiary 
associations, until that person shall obtain from the 
commissioner a license therefor.  The license shall specifically 
set forth the name of the person so authorized to act as agent 
and the class or classes of insurance for which that person is 
authorized to solicit or countersign policies.  An insurance 
agent may qualify for a license in the following classes:  (1) 
life and health; and (2) property and casualty.  
     No insurer shall appoint any natural person, partnership, 
or corporation to act as an insurance agent on its behalf until 
that natural person, partnership, or corporation obtains a 
license as an insurance agent.  
     (b) [PARTNERSHIPS AND CORPORATIONS.] A license issued to a 
partnership or corporation shall be solely in the name of the 
entity to which it is issued; provided, that each partner, 
director, officer, stockholder, or employee of the licensed 
entity who is personally engaged in the solicitation or 
negotiation of a policy of insurance on behalf of the licensed 
entity shall be personally licensed as an insurance agent.  
     Upon request by the commissioner, each partnership and 
corporation licensed as an insurance agent shall provide the 
commissioner with a list of the names of each partner, director, 
officer, stockholder, and employee who is required to hold a 
valid insurance agent's license.  
     (c) [TRANSITION.] (1) Any agent who is qualified for life 
or accident and health as of June 1, 1981 shall be deemed to 
have qualified for a life and health license under Laws 1981, 
chapter 307 and been appointed by an insurer which has submitted 
a written requisition for a license for that agent as of June 1, 
1981.  
    (2) Any agent who is qualified for one or more lines of 
insurance, excluding life or accident and health and farm 
property liability as of June 1, 1981 shall be deemed to have 
qualified for a property and casualty license under Laws 1981, 
chapter 307 and been appointed by any insurer which has 
submitted a written requisition for a license for that agent as 
of June 1, 1981.  
     (d) [PENALTIES.] (1) A person who acts or assumes to act as 
an insurance agent without a valid license issued by the 
commissioner is guilty of a gross misdemeanor.  
     (2) In addition to any other penalty, the commissioner may, 
in the manner prescribed by chapter 14, impose a civil penalty, 
not to exceed $500 per violation, on a person who acts or 
assumes to act as an insurance agent without a valid license 
issued by the commissioner. 
     Sec. 2.  Minnesota Statutes 1982, section 60A.17, 
subdivision 1a, is amended to read: 
    Subd. 1a.  [LICENSE APPLICATION.] (a) [PROCEDURE.] An 
application for a license to act as an insurance agent shall be 
made to the commissioner by the person who seeks to be licensed 
and shall be accompanied by a money order or cashier's check 
payable to the state treasurer for the amount of the examination 
fee prescribed by section 60A.14, subdivision 1, paragraph (c), 
clause (8).  All examination fees shall be nonrefundable.  The 
applicant shall have six months from the date of payment of the 
examination fee to take the exam.  The application for license 
shall be accompanied by a written appointment from an admitted 
insurer authorizing the applicant to act as its agent under one 
or both classes of license.  The insurer must also submit its 
check payable to the state treasurer for the amount of the 
appointment fee prescribed by section 60A.14, subdivision 1, 
paragraph (c), clause (9) at the time the agent becomes 
licensed.  The application and appointment shall be on forms 
prescribed by the commissioner.  
     If the applicant is a natural person, no license shall be 
issued until that natural person has become qualified.  
     If the applicant is a partnership or corporation, no 
license shall be issued until at least one natural person who is 
a partner, director, officer, stockholder, or employee shall be 
licensed as an insurance agent.  
     (b) [RESIDENT AGENT.] The commissioner shall issue a 
resident insurance agent's license to a qualified resident of 
this state as follows:  
     (1) A person may qualify as a resident of this state if 
that person resides in this state or the principal place of 
business of that person is maintained in this state.  
Application for a license claiming residency in this state for 
licensing purposes, shall constitute an election of residency in 
this state.  Any license issued upon an application claiming 
residency in this state shall be void if the licensee, while 
holding a resident license in this state, also holds, or makes 
application for, a resident license in, or thereafter claims to 
be a resident of, any other state or jurisdiction or if the 
licensee ceases to be a resident of this state; provided, 
however, if the applicant is a resident of a community or trade 
area, the border of which is contiguous with the state line of 
this state, the applicant may qualify for a resident license in 
this state and at the same time hold a resident license from the 
contiguous state;  
     (2) The commissioner shall subject each applicant who is a 
natural person to a written examination as to the applicant's 
competence to act as an insurance agent.  The examination shall 
be held at a reasonable time and place designated by the 
commissioner;  
     (3) The examination shall be approved for use by the 
commissioner and shall test the applicant's knowledge of the 
lines of insurance, policies, and transactions to be handled 
under the class of license applied for, of the duties and 
responsibilities of the licensee, and pertinent insurance laws 
of this state;  
     (4) The examination shall be given only after the applicant 
has completed a program of studies in a school, which shall 
include a school conducted by an admitted insurer, a 
correspondence course given by an admitted insurer, or other 
course of study.  The course of study shall consist of the 
equivalent of 45 hours study for each line for which a license 
application is made.  After January 1, 1982, the program of 
studies or study course shall have been approved by the 
commissioner in order to qualify under this clause.  If the 
applicant has been previously licensed for the particular line 
of insurance in the state of Minnesota, the requirement of a 
program of studies or a study course shall be waived.  A 
certification of compliance by an admitted insurer shall 
accompany the agent's license application.  This program of 
studies in a school or a study course shall not apply to farm 
property perils and farm liability applicants, or to agents 
writing such other lines of insurance as the commissioner may 
exempt from examination by order;  
     (5) The applicant must pass the examination with a grade 
determined by the commissioner to indicate satisfactory 
knowledge and understanding of the class or classes of insurance 
for which the applicant seeks qualification.  The commissioner 
shall inform the applicant as to whether or not the applicant 
has passed;  
     (6) An applicant who has failed to pass an examination may 
take subsequent examinations.  Examination fees for subsequent 
examinations shall not be waived; and 
     (7) Any applicant for a license covering the same class or 
classes of insurance for which the applicant was licensed under 
a similar license in this state, other than a temporary license, 
within the three years preceding the date of the application 
shall be exempt from the requirement of a written examination, 
unless the previous license was revoked or suspended by the 
commissioner.  
     (c) [NONRESIDENT AGENT.] The commissioner shall issue a 
nonresident insurance agent's license to a qualified person who 
is a resident of another state or country as follows:  
     (1) A person may qualify for a license under this section 
as a nonresident only if that person holds a license in another 
state, province of Canada, or other foreign country which, in 
the opinion of the commissioner, qualifies that person for the 
same activity as that for which a license is sought;  
     (2) The commissioner shall not issue a license to any 
nonresident applicant until that person files with the 
commissioner a designation of the commissioner and the 
commissioner's successors in office as the applicant's true and 
lawful attorney upon whom may be served all lawful process in 
any action, suit, or proceeding instituted by or on behalf of 
any interested person arising out of the applicant's insurance 
business in this state.  This designation shall constitute an 
agreement that this service of process is of the same legal 
force and validity as personal service of process in this state 
upon that applicant.  
     Service of process upon any licensee in any action or 
proceeding commenced in any court of competent jurisdiction of 
this state may be made by serving the commissioner with 
appropriate copies of the process along with payment of the fee 
pursuant to section 60A.14, subdivision 1, paragraph (c), clause 
(4).  The commissioner shall forward a copy of the process by 
registered or certified mail to the licensee at the last known 
address of record or principal place of business of the 
licensee; and 
    (3) A nonresident license shall terminate automatically 
when the resident license for that class of license in the 
state, province, or foreign country in which the licensee is a 
resident is terminated for any reason.  
    (d) [DENIAL.] (1) If the commissioner finds that an 
applicant for a resident or nonresident license has not fully 
met the requirements for licensing, the commissioner shall 
refuse to issue the license and shall promptly give written 
notice to both the applicant and the appointing insurer of the 
denial, stating the grounds for the denial.  All fees which 
accompanied the application and appointment shall be deemed 
earned and shall not be refundable.  
    (2) The commissioner may also deny issuance of a license 
for any cause that would subject the license of a licensee to 
suspension or revocation.  If a license is denied pursuant to 
this clause, the provisions of section 60A.17, subdivision 6c, 
paragraph (c) apply.  
    (3) The applicant may make a written demand upon the 
commissioner for a hearing within 30 days of the denial of a 
license to determine whether the reasons stated for the denial 
were lawful.  The hearing shall be held pursuant to chapter 14.  
     (e) [TERM.] All licenses issued pursuant to this section 
shall remain in force until voluntarily terminated by the 
licensee or until suspended or revoked by the commissioner.  A 
voluntary termination shall occur when the license is 
surrendered to the commissioner with the request that it be 
terminated or when the licensee dies, or when the licensee is 
dissolved or its existence is terminated.  In the case of a 
nonresident license, a voluntary termination shall also occur 
upon the happening of the event described in paragraph (c), 
clause (3).  
     Every licensed agent shall notify the commissioner within 
30 days of any change in address or change in state of residency.
     (f) [SUBSEQUENT APPOINTMENTS.] A person who holds a valid 
agent's license from this state may solicit applications for 
insurance on behalf of an admitted insurer with which the 
licensee does not have a valid appointment on file with the 
commissioner; provided, that the licensee has permission from 
the insurer to solicit insurance on its behalf and, provided 
further, that the insurer upon receipt of the application for 
insurance submits a written notice of appointment to the 
commissioner accompanied by its check payable to the state 
treasurer in the amount of the appointment fee prescribed by 
section 60A.14, subdivision 1, paragraph (c), clause (9).  The 
notice of appointment shall be on a form prescribed by the 
commissioner.  
     (g) [AMENDMENT OF LICENSE.] An application to the 
commissioner to amend a license to reflect a change of name, or 
to include an additional class of license, or for any other 
reason, shall be on forms provided by the commissioner and shall 
be accompanied by the applicant's surrendered license and a 
money order or cashier's check payable to the state treasurer 
for the amount of fee specified in section 60A.14, subdivision 
1, paragraph (c), clause (7).  
     An applicant who surrenders an insurance license pursuant 
to this clause retains licensed status until an amended license 
is received.  
     (h) [EXCEPTIONS.] The following are exempt from the general 
licensing requirements prescribed by this section:  
     (1) Agents of township mutuals who are exempted pursuant to 
subdivision 1b;  
     (2) Fraternal beneficiary association representatives 
exempted pursuant to subdivision 1c;  
     (3) Any regular salaried officer or employee of a licensed 
insurer, without license or other qualification, may act on 
behalf of that licensed insurer in the negotiation of insurance 
for that insurer; provided that a licensed agent must 
participate in the sale of any such insurance;  
     (4) Employers and their officers or employees, and the 
trustees or employees of any trust plan, to the extent that the 
employers, officers, employees, or trustees are engaged in the 
administration or operation of any program of employee benefits 
for the employees of the employers or employees of their 
subsidiaries or affiliates involving the use of insurance issued 
by a licensed insurance company; provided, that the activities 
of the officers, employees and trustees are incidental to 
clerical or administrative duties and their compensation does 
not vary with the volume of insurance or applications therefor;  
     (5) Employees of a creditor who enroll debtors for life or 
accident and health insurance; provided the employees receive no 
commission or fee therefor; and 
     (6) Clerical or administrative employees of an insurance 
agent who take insurance applications or receive premiums in the 
office of their employer, if the activities are incidental to 
clerical or administrative duties and the employee's 
compensation does not vary with the volume of the applications 
or premiums.  
     Sec. 3.  Minnesota Statutes 1982, section 60A.17, 
subdivision 6c, is amended to read: 
    Subd. 6c.  [REVOCATION OR SUSPENSION OF LICENSE.] (a) The 
commissioner may suspend or revoke an insurance agent's license 
issued to a natural person or impose a civil penalty appropriate 
to the offense, not to exceed $5,000 upon that licensee, or 
both, if, after notice and hearing, the commissioner finds as to 
that licensee any one or more of the following conditions: 
    (1) any materially untrue statement in the license 
application; 
    (2) any cause for which issuance of the license could have 
been refused had it then existed and been known to the 
commissioner at the time of issuance; 
    (3) violation of, or noncompliance with, any insurance law 
or violation of any rule or order of the commissioner or of a 
commissioner of insurance of another state or jurisdiction; 
    (4) obtaining or attempting to obtain any license through 
misrepresentation or fraud; 
    (5) improperly withholding, misappropriating, or converting 
to the licensee's own use any moneys belonging to a 
policyholder, insurer, beneficiary, or other person, received by 
the licensee in the course of the licensee's insurance business; 
    (6) misrepresentation of the terms of any actual or 
proposed insurance contract; 
    (7) conviction of a felony or of a gross misdemeanor or 
misdemeanor involving moral turpitude; 
    (8) that the licensee has been found guilty of any unfair 
trade practice, as defined in chapters 60A to 72A, or of fraud; 
    (9) that in the conduct of the agent's affairs under the 
license, the licensee has used fraudulent, coercive, or 
dishonest practices, or the licensee has been shown to be 
incompetent, untrustworthy, or financially irresponsible; 
    (10) that the agent's license has been suspended or revoked 
in any other state, province, district, territory, or foreign 
country; 
    (11) that the licensee has forged another's name to an 
application for insurance; or 
    (12) that the licensee has violated subdivision 6b. 
    (b) The commissioner may suspend or revoke an insurance 
agent's license issued to a partnership or corporation or impose 
a civil penalty not to exceed $5,000 upon that licensee, or 
both, if, after notice and hearing, the commissioner finds as to 
that licensee, or as to any partner, director, shareholder, 
officer, or employee of that licensee, any one or more of the 
conditions set forth in paragraph (a). 
     (c) A revocation of a license shall prohibit the licensee 
from making a new application for a license for at least one 
year.  Further, the commissioner may, as a condition of 
relicensure, require the applicant to file a reasonable bond for 
the protection of the citizens of this state, which bond shall 
be maintained by the licensee in full force for a period of five 
years immediately following issuance of the license, unless the 
commissioner at his or her discretion shall after two years 
permit the licensee to sooner terminate the maintenance filing 
of the bond. 
     (d) Whenever it appears to the commissioner that any person 
has engaged or is about to engage in any act or practice 
constituting a violation of chapter 60A or of any rule or order 
of the commissioner: 
     (1) The commissioner may issue and cause to be served upon 
the person an order requiring the person to cease and desist 
from the violation.  The order shall give reasonable notice of 
the time and place of hearing and shall state the reasons for 
the entry of the order.  A hearing shall be held not later than 
seven days after the issuance of the order unless the person 
requests a delay.  After the hearing and within 30 days of 
filing of any exceptions to the hearing examiner's report, the 
commissioner shall issue an order vacating the cease and desist 
order or making it permanent as the facts require.  All hearings 
shall be conducted in accordance with the provisions of chapter 
14.  If the person to whom a cease and desist order is issued 
fails to appear at the hearing after being duly notified, the 
person shall be deemed in default, and the proceeding may be 
determined against the person upon consideration of the cease 
and desist order, the allegations of which may be deemed to be 
true; 
     (2) The commissioner may bring an action in the district 
court in the appropriate county to enjoin the acts or practices 
and to enforce compliance with chapter 60A and any rule or order 
of the commissioner; and 
     (3) In any proceeding under chapter 60A relating to 
injunction, the request for injunction may be brought on for 
hearing and disposition upon an order to show cause returnable 
upon not more than eight days notice to the defendant.  The case 
shall have precedence over other matters on the court calendar 
and shall not be continued without the consent of the state of 
Minnesota, except upon good cause shown to the court, and then 
only for a reasonable length of time as may be necessary in the 
opinion of the court to protect the rights of the defendant.  
     (e) The commissioner may, in the manner prescribed by 
chapter 14, impose a civil penalty not to exceed $5,000 upon a 
person whose licensed has lapsed, or been suspended, revoked, or 
otherwise terminated, for engaging in conduct prohibited by 
paragraph (a) before, during, or after the period of his or her 
licensure.  
    Sec. 4.  Minnesota Statutes 1982, section 60A.17, is 
amended by adding a subdivision to read:  
    Subd. 17.  [PREMIUMS.] All premiums or other monies 
received by an agent from an insured or applicant for insurance 
must be forthwith deposited directly in a business checking, 
savings, or other similar account maintained by the agent or his 
agency, unless the moneys are forwarded directly to the 
designated insurer.  
     Sec. 5.  Minnesota Statutes 1982, section 60A.17, is 
amended by adding a subdivision to read:  
     Subd. 18.  [PERSONAL SOLICITATION OF INSURANCE SALES.] (a) 
[DEFINITIONS.] For the purposes of this subdivision, the 
following terms have the meanings given them:  
     (1) "agent" means a person, copartnership, or corporation 
required to be licensed pursuant to subdivision 1.  
     (2) "personal solicitation" means any contact by an agent, 
or any person acting on behalf of an agent, made for the purpose 
of selling or attempting to sell insurance, when either the 
agent or a person acting for the agent contacts the buyer by 
telephone or in person, except:  an attempted sale in which the 
buyer personally knows the identity of the agent, the name of 
the general agency, if any, which he or she represents, and the 
fact that the agent is an insurance agent; an attempted sale in 
which the prospective purchaser of insurance initiated the 
contact; or a personal contact which takes place at the agent's 
place of business.  
    (b) [DISCLOSURE REQUIREMENT.] Before a personal 
solicitation, the agent or person acting for an agent shall, at 
the time of initial personal contact or communication with the 
potential buyer, clearly and expressly disclose:  
    (1) the name of the person making the contact or 
communication;  
    (2) the name of the agent, general agency, or insurer he or 
she represents;  
    (3) the fact that the agent, agency, or insurer is in the 
business of selling insurance.  
    (c) [FALSE REPRESENTATION OF GOVERNMENT AFFILIATION.] No 
agent or person acting for an agent shall make any communication 
to a potential buyer that indicates or gives the impression that 
the agent is acting on behalf of a government agency.  
    Sec. 6.  Minnesota Statutes 1982, section 60A.17, is 
amended by adding a subdivision to read:  
    Subd. 19.  [PRIVACY OF CLIENT.] Except as otherwise 
provided by law, no insurance agent may disclose nor cause to be 
disclosed to any other person the identity of a person insured 
through the agent without the consent of the insured.  
    Sec. 7.  [61A.071] [APPLICATIONS.] 
    No individual life insurance policy, except mass marketed 
life insurance as defined in section 72A.13, subdivision 2, 
shall be issued or delivered in this state to a person age 65 or 
older unless a signed and completed copy of the application for 
insurance is left with the applicant at the time application is 
made.  
    Sec. 8.  [62A.141] [COVERAGE FOR HANDICAPPED DEPENDENTS.] 
    No group policy or plan of health and accident insurance 
regulated under this chapter, chapter 62C, or chapter 62D, which 
provides for dependent coverage may be issued or renewed in this 
state after August 1, 1983, unless it covers the handicapped 
dependents of the insured, subscriber, or enrollee of the policy 
or plan.  
    Sec. 9.  Minnesota Statutes 1982, section 62A.17, is 
amended to read:  
    62A.17 [TERMINATION OF OR LAY OFF FROM EMPLOYMENT.] 
    Subdivision 1.  [CONTINUATION OF COVERAGE.] Every group 
insurance policy, group subscriber contract, and health care 
plan included within the provisions of section 62A.16, except 
policies, contracts, or health care plans covering employees of 
an agency of the federal government, shall contain a provision 
which permits every eligible employee whose employment who is 
terminated or laid off from his employment, if the policy, 
contract, or health care plan remains in force for active 
employees of the employer, to elect to continue the coverage for 
himself and his dependents. 
    Subd. 2.  [RESPONSIBILITY OF EMPLOYEE.] Every eligible 
employee electing to continue coverage shall pay his former 
employer, on a monthly basis, the cost of the continued 
coverage.  If the policy, contract, or health care plan is 
administered by a trust, every eligible employee electing to 
continue coverage shall pay the trust the cost of continued 
coverage according to the eligibility rules established by the 
trust.  The employee shall be eligible to continue the coverage 
until he becomes re-employed and eligible for health care 
coverage under a group policy, contract, or plan sponsored by 
the same or another employer, or for a period of six 12 months 
after the termination of or lay off from employment, whichever 
is shorter. 
    Subd. 3.  [ELIGIBILITY FOR CONTINUED COVERAGE.] An employee 
shall be eligible to make the election for himself and his 
dependents provided for in subdivision 1 if: 
    (a) In the period preceding the termination of or lay off 
from his employment, he and his dependents were covered through 
his employment by a group insurance policy, subscriber's 
contract, or health care plan included within the provisions of 
section 62A.16; 
    (b) The termination of or lay off from employment was for 
reasons other than the discontinuance of the business, 
bankruptcy, or the employee's disability or retirement. 
    Subd. 4.  [RESPONSIBILITY OF EMPLOYER.] After timely 
receipt of the monthly payment from an eligible employee, if the 
employer, or the trustee, if the policy, contract, or health 
care plan is administered by a trust, fails to make the payment 
to the insurer, the nonprofit health service plan corporation, 
or the health maintenance organization, with the result that the 
employee's coverage is terminated, the employer or the trust 
shall become liable for the employee's coverage to the same 
extent as the insurer, the nonprofit health service plan 
corporation, or the health maintenance organization, would be if 
the coverage were still in effect. 
    Subd. 5.  [NOTICE OF OPTIONS.] Upon the termination of or 
lay off from employment of an eligible employee, the employer 
shall inform the employee within ten days after termination or 
lay off of: 
    (a) his right to elect to continue the coverage; 
    (b) the amount he must pay monthly to the employer to 
retain the coverage; 
    (c) the manner in which and the office of the employer to 
which the payment to the employer must be made; and 
    (d) the time by which the payments to the employer must be 
made to retain coverage. 
    If the policy, contract, or health care plan is 
administered by a trust, the terminating employer is relieved of 
the obligation imposed by clauses (a) to (d).  The trust shall 
inform the employee of the information required by clauses (a) 
to (d). 
    Notice may be in writing and sent by first class mail to 
the employee's last known address which the employee has 
provided the employer or trust.  If the employer or trust fails 
to so notify the employee who is properly enrolled in the 
program, the employee shall have the option to retain coverage 
provided if he makes this election within 60 days of the date 
his employment he is terminated or laid off by making the proper 
payment to the employer or trust to provide continuous coverage. 
    A notice in substantially the following form shall be 
sufficient.  As a terminated or laid off employee, the law 
authorizes you to maintain your group medical insurance for a 
period of up to six 12 months.  To do so you must notify your 
former employer within ten days of this notice that you intend 
to retain such this coverage and must make a monthly payment of 
$.......... to ........... at .......... by the ............... 
of each month. 
    Subd. 6.  [CONVERSION TO INDIVIDUAL POLICY.] A group 
insurance policy that provides post termination or lay off 
coverage as required by this section shall also include a 
provision allowing a covered employee or, surviving spouse, or 
dependent at the expiration of the post termination or lay off 
coverage provided by subdivision 2 to obtain from the insurer 
offering the group policy or group subscriber contract, at the 
employee's, spouse's, or dependent's option and expense, without 
further evidence of insurability and without interruption of 
coverage, an individual policy of insurance or an individual 
subscriber contract providing at least the minimum benefits of a 
qualified plan as prescribed by section 62E.06 and the option of 
a number three qualified plan, a number two qualified plan, and 
a number one qualified plan as provided by section 62E.06, 
subdivisions 1 to 3.  A policy providing reduced benefits at a 
reduced premium rate may be accepted by the employee, the spouse 
, or a dependent in lieu of the optional coverage otherwise 
required by this subdivision. 
    The individual policy shall be renewable at the option of 
the individual as long as the individual is not covered under 
another qualified plan as defined in section 62E.02, subdivision 
4, up to age 65 or to the day before the date of eligibility for 
coverage under title XVIII of the Social Security Act, as 
amended.  Any revisions in the table of rate for the individual 
policy shall apply to the covered person's original age at entry 
, and shall apply equally to all similar policies issued by the 
insurer. 
    Sec. 10.  Minnesota Statutes 1982, section 62A.31, is 
amended to read: 
    Subdivision 1.  [POLICY REQUIREMENTS.] No individual or 
group policy, certificate, subscriber contract or other evidence 
of accident and health insurance issued or delivered in this 
state shall be sold or issued to an individual age 65 or older 
covered by medicare unless the following requirements are met:  
    (a) The policy must provide a minimum of the coverage set 
out in subdivision 2;  
    (b) The policy must cover pre-existing conditions during 
the first six months of coverage if the insured was not 
diagnosed or treated for the particular condition during the 90 
days immediately preceding the effective date of coverage;  
    (c) The policy must contain a provision that the plan will 
not be canceled or nonrenewed on the grounds of the 
deterioration of health of the insured; and 
    (d) An outline of coverage as provided in section 62A.39 
must be delivered at the time of application and prior to 
payment of any premium.  
    The requirements of sections 62A.31 to 62A.42 62A.44 shall 
not apply to disability income protection insurance policies or 
group policies of accident and health insurance which do not 
purport to supplement medicare issued to any of the following 
groups:  
     (a) A policy issued to an employer or employers or to the 
trustee of a fund established by an employer where only 
employees or retirees, and dependents of employees or retirees, 
are eligible for coverage.  
     (b) A policy issued to a labor union or similar employee 
organization.  
     (c) A policy issued to an association, a trust or the 
trustee of a fund established, created or maintained for the 
benefit of members of one or more associations.  The association 
or associations shall have at the outset a minimum of 100 
persons; shall have been organized and maintained in good faith 
for purposes other than that of obtaining insurance; shall have 
a constitution and by-laws which provide that (1) the 
association or associations hold regular meetings not less 
frequently than annually to further purposes of the members, (2) 
except for credit unions, the association or associations 
collect dues or solicit contributions from members, and (3) the 
members have voting privileges and representation on the 
governing board and committees.  
    Subd. 2.  [GENERAL COVERAGE.] For a policy to meet the 
requirements of this section it must contain (1) a designation 
specifying whether the policy is a medicare supplement 1+, 1, 2, 
or 3, (2) a caption stating that the commissioner has 
established four categories of medicare supplement insurance and 
minimum standards for each, with medicare supplement 1+ being 
the most comprehensive and medicare supplement 3 being the least 
comprehensive, and (3) the policy must provide the minimum 
coverage prescribed in sections 62A.32 to 62A.35 for the 
supplement specified, provided that an annual deductible of not 
more than $200 is permissible for those covered charges not paid 
by medicare or otherwise included in paragraph (f) of sections 
62A.32 and 62A.33. 
    Sec. 11.  Minnesota Statutes 1982, section 62A.39, is 
amended to read: 
    62A.39 [DISCLOSURE.] 
    No individual medicare supplement plan shall be delivered 
or issued in this state and no certificate shall be delivered 
pursuant to a group medicare supplement plan delivered or issued 
in this state unless an outline containing at least the 
following information is delivered to the applicant at the time 
the application is made:  
    (a) A description of the principal benefits and coverage 
provided in the policy;  
    (b) A statement of the exceptions, reductions, and 
limitations contained in the policy including the following 
language, as applicable, in bold print:  "THIS POLICY DOES NOT 
COVER ALL MEDICAL EXPENSES BEYOND THOSE COVERED BY MEDICARE.  
THIS POLICY DOES NOT COVER ALL SKILLED NURSING HOME CARE 
EXPENSES AND DOES NOT COVER CUSTODIAL OR RESIDENTIAL NURSING 
CARE.  READ YOUR POLICY CAREFULLY TO DETERMINE WHICH NURSING 
HOME FACILITIES AND EXPENSES ARE COVERED BY YOUR POLICY."; 
    (c) A statement of the renewal provisions including any 
reservations by the insurer of a right to change premiums;  
    (d) A statement that the outline of coverage is a summary 
of the policy issued or applied for and that the policy should 
be consulted to determine governing contractual provisions; and 
    (e) A statement of the policy's loss ratio as follows:  
"This policy provides an anticipated loss ratio of [..%].  This 
means that, on the average, policyholders may expect that 
[$....] of every $100.00 in premium will be returned as benefits 
to policyholders over the life of the contract.".  
    Sec. 12.  Minnesota Statutes 1982, section 62A.42, is 
amended to read: 
    62A.42 [RULEMAKING AUTHORITY.] 
    To carry out the purposes of sections 62A.31 to 62A.42 
62A.44, the commissioner may promulgate rules pursuant to 
chapter 14.  These rules may:  
    (a) prescribe additional disclosure requirements for 
medicare supplement plans, designed to adequately inform the 
prospective insured of the need and extent of coverage offered;  
    (b) prescribe uniform policy forms in order to give the 
insurance purchaser a reasonable opportunity to compare the cost 
of insuring with various insurers; and 
    (c) establish other reasonable standards to further the 
purpose of sections 62A.31 to 62A.42 62A.44. 
    Sec. 13.  [62A.43] [LIMITATIONS ON SALES.] 
    Subdivision 1.  [DUPLICATE COVERAGE PROHIBITED.] No agent 
shall sell a medicare supplement plan, as defined in section 
62A.31, to a person who currently has one plan in effect; 
however, an agent may sell a replacement plan in accordance with 
section 62A.40, provided that the second plan is not made 
effective any sooner than necessary to provide continuous 
benefits for preexisting conditions.  Every application for 
medicare supplement insurance shall require a listing of all 
health and accident insurance maintained by the applicant as of 
the date the application is taken.  
    Subd. 2.  [REFUNDS.] Notwithstanding the provisions of 
section 62A.38, an insurer which issues a medicare supplement 
plan to any person who has one plan then in effect, except as 
permitted in subdivision 1, shall, at the request of the 
insured, either refund the premiums or pay any claims on the 
policy, whichever is greater.  
    Subd. 3.  [ACTION BY COMMISSIONER.] If the commissioner 
determines after an investigation that an insurer has issued a 
medicare supplement plan to a person who already has one plan, 
except as permitted in subdivision 1, the commissioner shall 
notify the insurer in writing of his or her determination.  If 
the insurer thereafter fails to take reasonable action to 
prevent overselling, the commissioner may, in the manner 
prescribed in chapter 14, revoke or suspend the insurer's 
authority to sell accident and health insurance in this state or 
impose a civil penalty not to exceed $10,000, or both.  
    Sec. 14.  [62A.44] [APPLICATIONS.] 
    No individual medicare supplement plan shall be issued or 
delivered in this state unless a signed and completed copy of 
the application for insurance is left with the applicant at the 
time application is made. 
    Approved June 6, 1983