31.12.07.04

.04 Group Contract Standard Provisions.

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

(1) Which documents constitute the entire contract; and

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

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

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

B. Contestability of the Contract.

(1) Each group 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 a member covered under the contract relating to insurability may not be used in contesting the validity of the coverage with respect to which the statement was made after the coverage has been in force before the contest for a period of 2 years during the member's lifetime;

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

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

(i) The statement is contained in a written instrument signed by the group contract holder or member, and

(ii) A copy of the statement is given to the group contract holder or member.

(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 the HMO.

(2) If the HMO requires written notice of claim for the HMO 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 contract; and

(b) The HMO 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 contract shall contain a provision that:

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

(2) If the HMO does not provide the claim forms within 15 days after notice of claim is given, the claimant is considered to have complied with the requirements of the contract as to proof of loss if the claimant submits, within the time fixed in the contract 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 contract shall contain a provision that:

(1) Written proof of loss shall be furnished to the HMO at its office within 90 days after the date of the loss; and

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

F. Time of Payment of Claims. Each group contract shall contain a provision that benefits payable under the contract for any loss will be paid not more than 30 days after receipt of written proof of loss.

G. Payment of Claims.

(1) Each group contract shall contain a provision that all benefits, other than those described in G(2) of this regulation, will be paid to the health care provider who rendered the services.

(2) The provision may indicate that, if the member has paid the health care provider for services rendered, benefits will be payable to the member.

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

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

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

I. Grace Period.

(1) Each group 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 HMO does not intend to renew the contract beyond the period for which premiums have been accepted and notice of the intention not to renew is delivered to the group contract holder at least 45 days before the premium is due. During the grace period the contract shall continue in force."

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

(a) Unless the HMO receives a notice of the group contract holder's intention to terminate the contract before the end of the grace period, the HMO may collect premiums for the 30-day grace period;

(b) If the HMO receives a notice of intention to terminate the contract during the grace period, the HMO may collect premiums 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 premiums for the 30-day grace period are paid after the grace period ends, the HMO 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 contract shall contain a provision that:

(1) Unless the HMO makes delivery directly to the employee or member, the HMO will provide to the group contract holder, for delivery to each employee or member of the group, a statement that summarizes the benefits and rights which pertain to the members covered under the group contract; 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 contract shall contain a provision that eligible new employees, members, or dependents may be added periodically to the group originally covered in accordance with the terms of the contract.

L. Misstatement of Age. If the premiums or benefits vary by age, each group contract shall contain a provision specifying an equitable adjustment of premiums or benefits to be made in the event the age of a member has been misstated.

M. Premium Due Date.

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

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

(3) An HMO may offer each group contract holder the option to pay the premium through an electronic payment.

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