31.11.10.04

.04 Group Health Insurance Standard Provisions.

A. Entire Contract; Changes. Each group health insurance contract shall contain a provision that specifies:

(1) Which documents constitute the entire contract of insurance; and

(2) That a change in the policy may not be valid:

(a) Until approved by an executive officer of the carrier, and

(b) Unless the approval is endorsed on the policy or attached to the policy.

B. Contestability of Coverage.

(1) Each group health insurance contract shall contain a provision that:

(a) The contract may not be contested, except for nonpayment of premiums, after it has been in force for 2 years from its date of issue;

(b) A statement made by any person covered under the policy relating to insurability may not be used in contesting the validity of the insurance with respect to which the statement was made after the insurance has been in force before the contest for a period of 2 years during the person's lifetime;

(c) Absent fraud, each statement made by an applicant, group policyholder, or insured is considered to be a representation and not a warranty; and

(d) A statement made to effectuate insurance may not be used to avoid the insurance or reduce benefits under the policy unless:

(i) The statement is contained in a written instrument signed by the group policyholder or insured, and

(ii) A copy of the statement is given to the group policyholder, insured, or beneficiary of the insured.

(2) The provision required by B(1) of this regulation does not preclude the assertion at any time of defenses based upon the person's ineligibility for coverage under the contract or upon other provisions in the contract.

C. Notice of Claim.

(1) Each group contract shall contain a provision describing how and when a claim form can be requested from a carrier.

(2) If the carrier requires written notice of claim for the carrier to send a claim form to the claimant, the provision shall indicate that:

(a) The written notice of claim is not required before 20 days after the occurrence or commencement of the loss covered by the policy; and

(b) The carrier may not invalidate or reduce a claim if it is shown that:

(i) It was not reasonably possible to give notice within 20 days, and

(ii) Notice was given as soon as was reasonably possible.

D. Claim Forms. Each group health insurance contract shall contain a provision that:

(1) The carrier shall provide claim forms for filing proof of loss to each claimant or to the group policyholder for delivery to the claimant; and

(2) If the carrier does not provide the claim forms within 15 days after notice of claim is received, the claimant is considered to have complied with the requirements of the policy as to proof of loss if the claimant submits, within the time fixed in the policy for filing proof of loss, written proof of the occurrence, character, and extent of the loss for which the claim is made.

E. Proofs of Loss. Each group health insurance contract shall contain a provision that:

(1) Written proof of loss shall be furnished to the carrier:

(a) In case of claim for loss of time because of disability, within 90 days after the commencement of the period for which the carrier is liable, and that subsequent written proofs that the disability continues shall be furnished to the carrier at the intervals that the carrier reasonably requires; or

(b) In case of claim for any loss other than loss of time because of disability, within 90 days after the date of the loss; and

(2) Failure to furnish the proof of loss within the time required does not invalidate or reduce a claim if it was not reasonably possible to submit the proof within the required time, if the proof is furnished as soon as reasonably possible and, except in the absence of legal capacity of the claimant, not later than 1 year from the time proof is otherwise required.

F. Time of Payment of Claims.

(1) Each group health insurance contract shall contain a provision that:

(a) Benefits payable under the policy for any loss other than benefits for the loss of time will be paid not more than 30 days after receipt of written proof of loss; and

(b) Subject to written proof of loss, all accrued indemnities for loss of time will be paid not less frequently than monthly during the continuance of the period for which the carrier is liable, and any balance remaining unpaid at the termination of the period will be paid as soon as reasonably possible after receipt of proof.

(2) A policy is considered to provide for periodic payment for loss under F(1)(b) of this regulation only if the policy contains a specific statement to that effect.

G. Payment of Claims.

(1) Each group health insurance contract shall contain a provision that all benefits, other than those described in G(2) and (3) of this regulation, will be payable to the insured.

(2) Loss of Life Benefits.

(a) Benefits for loss of life of the insured shall be payable to the beneficiary designated by the insured.

(b) If the contract contains conditions pertaining to family status, the beneficiary may be the family member specified by the policy terms.

(c) The payment of the loss of life benefits are subject to the provisions of the policy if no designated or specified beneficiary is living at the time of death of the insured.

(3) If a group health insurance policy contains a preferred provider benefit, the policy may indicate that benefits for services rendered by a preferred provider will be paid directly to the preferred provider rendering the services.

(4) At the option of the carrier, the contract may provide that if any benefit of the contract is payable to the estate of an individual, or to an individual who is a minor or otherwise not competent to give a valid release, the carrier may pay the benefit, up to an amount not exceeding $5,000, to any relative by blood or connection by marriage of the individual who is considered by the carrier to be equitably entitled to the benefit.

H. Legal Action. Each group health insurance contract shall contain a provision that an action at law or in equity may not be brought:

(1) To recover on the policy before the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of the policy; and

(2) After the expiration of 3 years after the written proof of loss is required to be furnished.

I. Grace Period.

(1) Each group health insurance contract shall contain in substance the following provision: "Grace Period: A grace period of 30 days will be granted for payment of each premium due after the first premium, unless the carrier does not intend to renew the policy beyond the period for which premium has been accepted and notice of the intention not to renew is delivered to the group policyholder at least 45 days before the premium is due. During the grace period the policy shall continue in force."

(2) Any additional provisions related to the grace period shall be expressly stated in the policy subject to the following limitations:

(a) Unless a carrier receives a notice of the group policyholder's intention to terminate the policy before the end of the grace period, the carrier may collect premium for the 30-day grace period;

(b) If a carrier receives a notice of intention to terminate the policy during the grace period, the carrier may collect premium for the period beginning on the first day of the grace period until the date on which notice is received or the date of termination stated in the notice, whichever is later; and

(c) If premium for the 30-day grace period is paid after the grace period ends, a carrier may charge interest for the premium, but:

(i) Interest may not begin to accrue during the 30-day grace period, and

(ii) The interest rate charged may not exceed an effective rate of 6 percent per year.

J. Certificates. Each group health insurance contract shall contain a provision that:

(1) Unless the carrier makes delivery directly to the employee or member, the carrier will provide to the group policyholder, for delivery to each employee or member of the insured group, a statement that summarizes the essential features of the insurance coverage of the employee or member and that indicates to whom benefits under the policy are payable; and

(2) If dependents are included in the coverage, only one statement need be issued for each family unit.

K. Addition of Employees/Members. Each group health insurance contract shall contain a provision that eligible new employees, members, or dependents may be added periodically to the group originally insured in accordance with the terms of the policy.

L. Misstatement of Age. If the premiums or benefits vary by age, each group health insurance contract shall contain:

(1) A provision specifying an equitable adjustment of premiums or of benefits, or both, to be made in the event the age of an insured has been misstated; and

(2) A clear statement of the method of adjustment to be used.

M. Group Policyholder Liable for Premium Until Notice of Termination is Received. Each group health insurance contract shall contain a provision that requires the employer, labor union, association, or other entity to which a contract of group health insurance has been issued to continue to pay the premium for an employee, member, or dependent under the policy until notice of termination of coverage has been received by the carrier.

Agency Note: Section M of this regulation is intended to implement the standard provision required by Insurance Article, §15-303(f), Annotated Code of Maryland, which was enacted as part of Chapter 554, Acts of 1999 (SB 350). The Attorney General approved the enactment for constitutionality and legal sufficiency, but determined that the standard provision requiring employers, labor unions, associations, and other purchasers of group insurance to notify insurers immediately on termination of an individual insured or continue to pay premiums after coverage has ceased, was likely preempted by the federal Employees' Retirement Security Act (ERISA).

N. Premium Due Date.

(1) Each group health insurance contract shall specify the premium due date.

(2) The premium due date shall be the date the coverage period begins.

(3) A carrier may offer each group policyholder the option to pay the premium through an electronic payment.

(4) If the group policyholder elects an electronic payment, the carrier may not debit or charge the amount of the premium due prior to the premium due date, except as authorized by the group policyholder.