230 R.I. Code R. 230-RICR-20-30-1.7

Current through December 3, 2024

Section 230-RICR-20-30-1.7 - Individual Health Benefit Contracts

1.7.1Purpose, Applicability, and Definitions

A. The purpose of this part is to provide reasonable standardization and simplification of terms and coverages of individual health benefit contracts in order to facilitate public understanding and comparison and to eliminate provisions contained in individual health benefit contracts which may be misleading or confusing in connection either with the purchase of such coverages or with the settlement of claims and to provide for full disclosure in the sale of such coverages.

B. This part shall apply to all individual health benefit contracts delivered or issued for delivery in this state on or after the effective date hereof, except it shall not apply to individual health benefit contracts issued pursuant to a conversion privilege under a group health benefit contract or individual health benefit contract when such group or individual contract includes provisions which are inconsistent with the requirements of this Part, nor to health benefit contracts being issued to employees or members as additions to franchise plans in existence on the effective date of this Part. Neither shall this part apply to health benefit contracts issued by a health maintenance organization which has been certified as a health maintenance organization by the United States Secretary of Health, Education and Welfare for purposes of compliance with Section 1310 of Public Law 93-222 nor shall it apply to health benefit contracts issued by a health maintenance organization which has been certified as a health maintenance organization by the State of Rhode Island Director of Health for purposes of compliance with R.I. Gen. Laws § 42-62-9. The requirements contained in this Part shall be in addition to any other applicable laws and regulations.

C. Except as provided hereafter, no individual health benefit contract delivered or issued for delivery to any person in this State shall contain definitions respecting the matters set forth below unless such definitions comply with the requirements of §1.7.1 of this Part.

1. "Accident," "Accidental Injury," "Accidental Means," shall be defined to employ "result" language and shall not include words which establish an accidental means test or use words such as "external, violent, visible wounds" or similar words of description or characterization.

a. The definition shall not be more restrictive than the following: Injury or injuries, for which benefits are provided, means accidental bodily injury sustained by the insured person which is the direct cause, independent of disease or bodily infirmity or any other cause and occurs while the insurance is in force.

b. Such definition may provide that injuries shall not include injuries for which benefits are provided under any workmen's compensation, employer's liability or similar law, motor vehicle no fault plan, unless prohibited by law, or injuries occurring while the insured person is engaged in any activity pertaining to any trade, business, employment or occupation for wage or profit.

2. "Convalescent Nursing Home," "Extended Care Facility," or "Skilled Nursing Facility" shall be defined in relation to its status, facilities and available services and, only with respect to insurers permitted to contract with convalescent nursing homes, extended care facilities or skilled nursing facilities under R.I. Gen. Laws Chapter 27-19 such facilities may be defined to include only "contracting" facilities with which the insurer or another insurer with similar powers in another state has made a contract for the provision of services to its subscribers.

a. A definition of such home or facility shall not be more restrictive than one requiring that it:

(1) Be operated pursuant to law and, with respect to insurers permitted to contract with such facilities, be a contracting facility;

(2) Be approved for payment of Medicare benefits or be qualified to receive such approval, if so requested;

(3) Be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician;

(4) Provide continuous twenty-four (24) hour a day nursing service by or under the supervision of a registered graduate professional nurse (R.N.);

(5) Maintain a daily medical record of each patient.

b. The definition of such home or facility may provide that such term shall not be inclusive of:

(1) Any home, facility or part thereof used primarily for rest;

(2) A home of facility for the aged or for the care of drug addicts or alcoholics; or

(3) A home or facility primarily used for the care and treatment of mental diseases or disorders or for custodial or educational care.

3. "Hospital" may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals and, only with respect to insurers permitted to contract with hospitals under R.I. Gen. Laws § 27-19-5"hospital" may be defined to include only "contracting" hospitals with which the insurer or another insurer with similar powers in another state has made a contract for the provision of services to its subscribers.

a. The definition of the term "hospital" shall not be more restrictive than one requiring that the hospital:

(1) Be an institution operated pursuant to law and, with respect to insurers permitted to contract with hospitals, be a contracting hospital; and

(2) Be primarily and continuously engaged in providing or operating either on its premises or in facilities available to the hospital on a prearranged basis and under the supervision of a staff of duly licensed physicians, medical, diagnostic and major surgical facilities for the medical care and treatment of sick or injured persons on an in-patient basis for which a charge is made; and

(3) Provide twenty-four (24) hour nursing service by or under the supervision of registered graduate professional nurses (R.N.'s).

b. The definition of the term "hospital" may state that such term shall not be inclusive of:

(1) Convalescent homes, convalescent, rest or nursing facilities; or

(2) Facilities primarily affording custodial, educational or rehabilitory care; or

(3) Facilities for the aged, drug addicts, or alcoholics; or

(4) Any military or veterans hospital or soldiers home or any hospital contracted for or operated by any national government or agency thereof for the treatment of members or ex-members of the armed forces, except for services rendered on an emergency basis where a legal liability exists for charges made to the individual for such services, except that, with respect to "Hospital Confinement Indemnity Coverage," the same benefits must be provided for the first thirty five (35) days of any one confinement in any of the above government hospitals as is provided for confinement in any other hospital. Benefits for confinement in any of the above government hospitals may be reduced after the 35th day of confinement to no less than 2/3 of the benefit payable for confinement in any other hospital.

4. "Medicare" may be substantially defined as "The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or later Amended," or "Title I, Part I of Public Laws 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof" or words of similar import.

5. "Mental or Nervous Disorders" shall not be defined more restrictively than a definition including neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder of any kind.

6. "Nurses" may be defined so that the description of nurse is restricted to a type of nurse, such as a registered graduate professional nurse (R.N.), a licensed practical nurse (L.P.N.), or a licensed vocational nurse (L.V.N.). If the words "nurse," "trained nurse," or "registered nurse" are used without specific instruction, then the use of such terms requires the insurer to recognize the services of any individual who qualifies under such terminology in accordance with R.I. Gen. Laws Chapter 5-34 and any administrative rules of the Board of Nursing Registration and Nursing Education or in accordance with similar laws or rules of other states.

7. "One period of confinement" means consecutive days of in-hospital service received as an in-patient, or successive confinements when discharge from and readmission to the hospital occurs within a period of time not more than ninety (90) days or three (3) times the maximum number of days of in-hospital coverage provided by the policy to a maximum of one hundred eighty (180) days.

8. "Physician" may be defined by including words such as "legally qualified physician" or "legally licensed physician." The use of such terms requires an insurer to recognize and to accept, to the extent of its obligation under the contract, all providers of medical care and treatment when such services are within the scope of the provider's licensed authority and are provided pursuant to applicable laws, except to the extent provided to the contrary in R.I. Gen. Laws Title 27.

9. "Pre-Existing Condition" shall not be defined to be more restrictive than the following: Pre-existing condition means the existence of symptoms which would cause an ordinarily prudent person to seek diagnosis, care or treatment within a thirty six (36) month period preceding the effective date of the coverage of the insured person; or a condition for which medical advice or treatment was recommended by a physician or received from a physician within a thirty six (36) month period preceding the effective date of coverage of the insured person.

a. This definition does not prohibit an insurer, using an application form designed to elicit the complete health history of a prospective insured and on the basis of the answers on that application, from underwriting in accordance with that insurer's established standards. It is assumed that an insurer that elicits a complete health history of a prospective insured will act on the information and if the review of the health history results in a decision to exclude a condition, the policy will be endorsed or amended by including the specific exclusion. This same requirement of notice to the prospective insured of the specific exclusion will also apply to insurers which elect to use simplified application forms containing questions relating to the prospective insured's health.

b. This definition does, however, prohibit an insurer that elects to use a simplified application, with or without a question as to the applicant's health at the time of application, from reducing or denying a claim on the basis of the existence of a pre-existing condition that is defined more restrictively than above.

10. "Sickness" shall not be defined to be more restrictive than the following: Sickness means sickness or disease of an insured person which first manifests itself after the effective date of the insurance and while the insurance is in force. A definition of sickness may provide for a probationary period which will not exceed thirty (30) days from the effective date of the coverage of the insured person. The definition may be further modified to exclude sickness or accident for which benefits are provided under any workman's compensation, occupational disease, employer's liability or similar law.

1.7.2Prohibited Contract Provisions

A. Except as provided in §1.7.1(C)(10) of this Part, no contract shall contain provisions establishing a probationary or waiting period during which no coverage is provided under the contract subject to the further exception that a contract may specify a probationary or waiting period not to exceed six (6) months for losses resulting from hernia, disorder of reproduction organs, varicose veins, adenoids, appendix and tonsils. However, the permissible six (6) months exception shall not be applicable where such specified diseases or conditions are treated on an emergency basis. Accident contracts shall not contain probationary or waiting periods.

B. No contract or rider for additional coverage may be issued as a dividend unless an equivalent cash payment is offered to the contractholder as an alternative to such dividend contract or rider. No such dividend contract or rider shall be issued for an initial term of less than six (6) months.

1. The initial renewal subsequent to the issuance of any contract or rider as a dividend shall clearly disclose that the contractholder is renewing the coverage that was provided as a dividend for the previous term and that such renewal is optional with the contractholder.

C. No contract shall exclude coverage for a loss due to a pre-existing condition for a period greater than twelve (12) months following contract issue where the application for such insurance does not seek disclosure of prior illness, disease or physical conditions or prior medical care and treatment and such pre-existing condition is not specifically excluded by the terms of the contract.

D. No contract shall limit or exclude coverage by type of illness, accident, treatment or medical condition, except as follows:

1. Pre-existing conditions or diseases, except for congenital anomalies of a covered dependent child; [This exclusion shall not be interpreted so as to reduce any benefits required to be provided for newborn children in § 1.5 of this Part]

2. Mental or emotional disorders, alcoholism and drug addiction;

3. Pregnancy, except for complications of pregnancy;

4. Illness, treatment or medical condition arising out of:

a. war or act of war (whether declared or undeclared); participation in a felony, riot or insurrection; service in the armed forces or units auxiliary thereto,

b. suicide (sane or insane), attempted suicide or intentionally self-inflicted injury,

c. aviation,

d. with respect to short-term non-renewable contracts, interscholastic sports;

5. Cosmetic surgery, except that "cosmetic surgery" shall not include reconstructive surgery when such service is incidental to or follows surgery resulting from trauma, infection or other diseases of the involved part, and reconstructive surgery because of congenital disease or anomaly of a covered dependent child which has resulted in a functional defect;

6. Foot care in connection with corns, calluses, flat feet, fallen arches, weak feet, chronic foot strain, or symptomatic complaints of the feet;

7. Care in connection with the detection and correction by manual or mechanical means of structural imbalance, distortion, or subluxation in the human body for purposes of removing nerve interference and the effects thereof where such interference is the result of or related to distortion, misalignment or subluxation of, or in the vertebral column;

8. Treatment provided in a government hospital, however, contracts providing hospital confinement indemnity coverage shall not contain provisions excluding coverage because of confinement in a hospital operated by the Federal Government; benefits provided under Medicare or other governmental program (except Medicaid), any state or federal workmen's compensation, employers liability or occupational disease law, or any motor vehicle no-fault law; services rendered by employees of hospitals, laboratories or other institution; services performed by a member of the covered person's immediate family and services for which no charge is normally made in the absence of insurance.

a. Benefits provided by R.I. Gen. Laws Chapter 42-62, are, by their nature, supplemental to all health benefit contracts and are not to be treated as benefits provided under a governmental program for purposes of this exclusion.

9. Dental care or treatment;

10. Eye glasses, hearing aids and examination for the prescription or fitting thereof;

11. Rest cures, custodial care, transportation and routine physical examinations;

12. Territorial limitations.

E. Other provisions of § 1.7 of this Part shall not impair or limit the use of waivers to exclude, limit or reduce coverage or benefits for specifically named or described pre-existing diseases, physical condition or extra hazardous activity. Where waivers are required as a condition of issuance, renewal or reinstatement, signed acceptance by the insured is required unless on initial issuance the full text of the waiver is contained either on the first page or specification page of the contract or unless notice of the waiver appears on the first page or specification page.

F. Contract provisions precluded in §1.7.2 of this Part shall not be construed as a limitation on the authority of the Director to disapprove other contract provisions which, in the opinion of the Director, are unjust, unfair or unfairly discriminatory to the contractholder, beneficiary or any person insured under the contract; nor shall such provisions be construed as a limitation on the authority of the director to approve other exclusions which he finds to be in the interest of the public.

1.7.3Minimum Standards for Benefits

A. The following minimum standards for benefits are prescribed for the categories of coverage noted in the following subsections. Except as provided in §1.7.3(H) of this Part no individual health benefit contract shall be delivered or issued for delivery in this state which does not meet the required minimum standards for the specified categories unless the Director finds that such contracts are approvable as Limited Benefit Health Contracts and the Outline of Coverage complies with the appropriate outline in §1.7.4(H) of this Part.

B. Nothing in §1.7.3 of this Part shall preclude the issuance of any contract combining two (2) or more categories of coverage defined in §1.7.3 of this Part or combining one (1) or more categories of coverage defined in §1.7.3 of this Part with life insurance or with any form of policy of Accident and Sickness insurance or health benefit contract that may legally be issued in this State.

C. General Rules

1. A "non-cancelable," "guaranteed renewable" or "non-cancelable and guaranteed renewable" contract shall not provide for termination of coverage of the spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than nonpayment of premium. The contract shall provide that in the event of the insured's death, the spouse of the insured, if covered under the contract, shall become the insured.

2. The terms "non-cancelable," "guaranteed renewable" or "non-cancelable and guaranteed renewable" shall not be used without further explanatory language in accordance with the disclosure requirements of §1.7.4(A)(1) and (2) of this Part. The terms "non-cancelable" or "Non-cancelable and guaranteed renewable" may be used only in a health benefit contract which the insured has the right to continue in force by the timely payment of premiums set forth in the contract until the age of sixty-five (65) or to eligibility for Medicare, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force. The term "guaranteed renewable" may be used only in a contract which the insured has the right to continue in force by the timely payment of premiums until the age of sixty-five (65) or to eligibility for Medicare, during which period the insurer has no right to make unilaterally any change in any provision of the contract while the contract is in force, except that the insurer may make changes in premium rates by classes.

3. In a family contract covering both husband and wife, the age of the younger spouse must be used as the basis for meeting the age and durational requirements of the definitions of "non-cancelable" or "guaranteed renewable." However, this requirement shall not prevent termination of coverage of the older spouse upon attainment of the stated age limit (e.g., age 65) so long as the contract may be continued in force as to the younger spouse to the age or for the duration period as specified in said definition.

4. If a contract contains a status type military service exclusion or a provision which suspends coverage during military service, the contract shall provide, upon receipt of written request, for refund of premiums as applicable to such person on a pro rata basis.

5. In the event the insurer cancels or refuses to renew, contracts providing pregnancy benefits shall provide for an extension of benefits as to pregnancy commencing while the contract is in force and for which benefits would have been payable had the contract remained in force.

6. Contracts providing convalescent or extended care benefits following hospitalization shall not condition such benefits upon admission to the convalescent or extended care facility within a period of less than fourteen (14) days after discharge from the hospital.

7. Family coverage shall continue for any dependent child who is incapable of self-sustaining employment due to mental retardation or physical handicap on the date that such child's coverage would otherwise terminate under the contract due to the attainment of a specified age limit for children and is chiefly dependent on the insured for support and maintenance. The contract may require that within thirty-one (31) days of such date the insurer receive due proof of such incapacity in order for the insured to elect to continue the contract in force with respect to such child, or that a separate converted contract be issued at the option of the insured or contractholder.

8. Any contract providing coverage for the recipient in a transplant operation shall also provide reimbursement of any medical expenses of a live donor to the extent that benefits remain and are available under recipient's contract, after benefits for the recipient's own expenses have been paid.

9. A contract may contain a provision relating to recurrent disabilities; provided however, that no such provision shall specify that a recurrent disability be separated by a period greater than six (6) months.

10. Any accident only contract providing benefits which vary according to the type of accidental cause shall prominently set forth in the outline of coverage the circumstances under which benefits are payable which are lesser than the maximum amount payable under the contract.

11. No contract that provides in-hospital benefits only shall be represented in any manner to be a supplement to Medicare unless it shall include in its provided benefits the initial Part A Medicare deductible as established from time to time by the Social Security Administration. Premiums may be reduced or raised to correspond with changes in the covered deductible, subject to approval by the Director of each proposed reduction or increase.

12. Termination of the contract shall be without prejudice to any continuous loss which commenced while the contract was in force, but the extension of benefits beyond the period the contract was in force may be predicated upon the continuous disability of the insured, limited to the duration of the benefit period, if any, or payment of the maximum benefits.

D. Basic Hospital Expense Coverage

1. "Basic Hospital Expense Coverage" is a health benefit contract which provides coverage for a period of not less than thirty-one (31) days during any one period of confinement for each person insured under the contract, for expense incurred for necessary treatment and services rendered as a result of accident or sickness or which provides service benefits of equivalent value to the insured for at least the following:

a. Daily hospital room and board in an amount not less than the lesser of:

(1) eighty percent (80%) of the charges for semi-private room accommodations or

(2) fifty dollars ($50) per day.

b. Miscellaneous hospital services for expenses incurred for the charges made by the hospital for services and supplies which are customarily rendered by the hospital and provided for use during any period of confinement in an amount not less than either eighty percent (80%) of the charges incurred up to at least one thousand eight hundred ($1,800) or ten times the daily hospital room and board benefits; and

c. Hospital outpatient services consisting of (a) hospital services on the day surgery is performed, and (b) hospital services rendered within 24 hours after accidental injury, in an amount not less than nine hundred dollars ($900).

d. Benefits provided §1.7.3(D)(1)(a) and (b) of this Part above may be provided subject to a combined deductible amount not in excess of one hundred fifty ($150).

e. The above benefits may be provided in the form of equivalent services in lieu of reimbursement of actual expenses.

E. Basic Medical-Surgical Expense Coverage

1. "Basic Medical-Surgical Expense Coverage" is a health benefit contract which provides coverage for each person insured under the contract for the expenses incurred for the necessary services rendered by a physician for treatment of an injury or sickness or which provides service benefits of equivalent value to the insured for at least the following:

a. Surgical services;

(1) In amounts not less than those provided on a fee schedule based on the relative values contained in the State of New York certified surgical fee schedule, except that each relative value shall be multiplied by four dollars and fifty cents ($4.50) instead of the two dollars and fifty cents ($2.50) specified in the New York certified fee schedule; or other acceptable relative value scale of surgical procedures, up to a maximum of at least nine hundred dollars ($900) for any one procedure; or

(2) Not less than eighty percent (80%) of the usual and customary charges.

b. Anesthesia services, consisting of administration of necessary general anesthesia and related procedures in connection with covered surgical service rendered by a physician other than the physician (or his assistant) performing the surgical services:

(1) In an amount not less than eighty percent (80%) of the usual and customary charges; or

(2) fifteen percent (15%) of the surgical service benefit.

c. In-hospital medical services, consisting of physician services rendered to a person who is a bed patient in a hospital for treatment of sickness or injury other than that for which surgical care is required, in an amount not less than eighty (80%) of the reasonable charges; or eight dollars ($8.00) per day for not less than twenty-one (21) days during one continuous hospital confinement.

F. Hospital Confinement Indemnity Coverage

1. "Hospital Confinement Indemnity Coverage" is a health benefit contract which provides daily benefits for hospital confinement on an indemnity basis in an amount not less than fifty dollars ($50) per day and not less than thirty-one (31) days during any one period of confinement for each person insured under the contract.

G. Major Medical Expense Coverage

1. "Major Medical Expense Coverage" is a health benefit contract which provides hospital, medical and surgical expense coverage, to an aggregate maximum of not less than $10,000; copayment by the covered person not to exceed twenty five percent (25%), fifty percent (50%) in the case of the expense of diagnosis and treatment of mental and nervous disorders, of covered charges, a deductible stated on a per person, per family, per illness, per benefit period, or per year basis, or a combination of such bases not to exceed five percent (5%) of the aggregate maximum limit under the contract, unless the contract is written to complement underlying hospital and medical insurance in which case such deductible may be increased by the amount of the benefits provided by such underlying insurance (In no event, however, may the deduction of benefits of an underlying plan be applied to reduce the aggregate maximum.), for each covered person for at least:

a. Daily hospital room and board expense, prior to application of the co- payment percentages, for not less than ninety dollars ($90) daily (or in lieu thereof the average daily cost of semi-private room rate in the State of Rhode Island) for a period of not less than thirty-one (31) days during continuous hospital confinement;

b. Miscellaneous Hospital Services, prior to application of co-payment percentage, for an aggregate maximum of not less than two thousand six hundred dollars ($2,600) or fifteen (15) times the daily room and board rate if specified in dollar amounts;

c. Surgical Services, prior to application of co-payment percentage to a maximum of not less than one thousand one hundred dollars ($1,100) for the most severe operation with the amounts provided for other operations reasonably related to such maximum amount;

d. Anesthesia Services, prior to application of the co-payment percentage, for a maximum of not less than fifteen percent (15%) of the covered surgical fees or, alternatively, if the surgical schedule is based on relative values, not less than the amount provided therein for anesthesia services at the same unit value as used for the surgical schedule;

e. In-Hospital Medical Services, prior to application of the co-payment percentage, as defined in §1.7.5(E)(1)(c) of this Part.

f. Out of Hospital Care, prior to application of the co-payment percentage, consisting of usual and customary charges for physicians' services rendered on an ambulatory basis where coverage is not provided elsewhere in the contract, for diagnosis and treatment of sickness or injury, and for diagnostic x-ray, laboratory services, radiation therapy and hemodialysis ordered by a physician; and

g. Not fewer than three of the following additional benefits, prior to application of the co-payment percentage, for an aggregate maximum of such covered charges of not less than one thousand dollars ($1,000):

(1) In-hospital private duty graduate registered nurse services.

(2) Convalescent nursing home care.

(3) Diagnosis and treatment by a radiologist or physiotherapist.

(4) Rental of special medical equipment, as defined by the insurer in the contract.

(5) Artificial limbs or eyes; casts, splints, trusses or braces.

(6) Treatment for functional nervous disorders, and mental and emotional disorders.

(7) Out-of-hospital prescription drugs and medications.

H. Limited Health Benefit Coverage

"Limited Health Benefit Coverage" is any contract which provides benefits that are less than the minimum standards for benefits required under §1.7.3(D), (E), (F) and (G) of this Part or any other health benefit contract which does not satisfy the requirements of §1.7.3(D), (E), (F) and (G) of this Part. Such policies or contracts may be issued or issued for delivery in this state only if the outline of coverage required by §1.7.4(H) of this Part is completed and delivered as required by §1.7.4(B) of this Part.

1.7.4Required Disclosure Provisions

A. General Rules

1. Each individual health benefit contract shall include a renewal, continuation, or nonrenewal provision. The language or specifications of such provision must be consistent with the type of contract to be issued. Such provision shall be appropriately captioned, and shall clearly state the duration, where limited, of renewability and the duration of the term of coverage for which the contract is issued and for which it may be renewed.

2. No health benefit contract shall be delivered or issued for delivery to any person in this state unless provisions respecting renewability or cancellability by the insurer shall appear on the first page of the contract or reference shall be made thereto in a brief description of the first page. For purposes of this requirement, the "first page" shall include any parts of other pages which are visible at the same time as the first page through a cut out section of the first page or below a shortened first page.

3. The following texts for the brief description are considered as among those which would be acceptable:

a. Cancelable at Option of Company

b. Renewal Subject to Consent of Company

c. Renewal Subject to Company Consent

d. Renewal at Option of Company

4. A more general statement such as the following is not acceptable:

a. SEE SPECIAL RENEWAL PROVISION

b. The above captions are recommended without prejudice to the right of an insurer to submit another caption, subject to approval by the Director, which it believes is equally clear or more definite as to the subject matter.

5. If a contract contains a cancellation provision, the existence of the cancellation provisions must be referred to in the renewal provision by a specific cross reference to the cancellation provision in the Renewal Provision on the first page of the contract.

6. Except for riders or endorsements by which the insurer effectuates a request made in writing by the contractholder or exercises a specifically reserved right under the contract, all riders or endorsements added to a contract after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the contract shall require signed acceptance by the contractholder. After date of contract issue, any rider or endorsement which increases benefits or coverage with concomitant increase in premium during the contract term must be agreed to in writing signed by the insured, unless the increased benefit or coverage is required by law.

7. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, such premium charge shall be set forth in the contract.

8. A contract which provides for the payment of benefits based on standards described as "usual and customary," "reasonable and customary," or words of similar import shall include a definition of such terms and an explanation of such terms in its accompanying outline of coverage.

9. If a contract contains any limitations with respect to pre-existing conditions such limitations must appear as a separate paragraph of the contract and be labeled as "Pre-existing Condition Limitation".

10. All accident only contracts shall contain a prominent statement on the first page of the contract or attached thereto in either contrasting color or in boldface type at least equal to the size of type used for policy captions, a prominent statement as follows: "This is an accident only contract and it does not pay benefits for loss from sickness."

11. All contracts, except single premium nonrenewable contracts, shall have a notice prominently printed on the first page of the contract or attached thereto stating in substance that the contractholder shall have the right to return the contract within ten (10) days of its delivery and to have the premium refunded if after examination of the contract the contractholder is not satisfied for any reason.

12. If age is to be used as a determining factor for reducing the maximum aggregate benefits made available in the contract as originally issued, such fact must be prominently set forth in the outline of coverage.

13. If a contract contains a conversion privilege, it shall comply, in substance, with the following: The caption of the provision shall be "Conversion Privilege," or words of similar import. The provision shall indicate the persons eligible for conversion, the circumstances applicable to the conversion privilege, including any limitations on the conversion, and the person by whom the conversion privilege may be exercised. The provision shall specify the benefits to be provided on conversion or may state that the converted coverage will be as provided on a contract form then being used by the insurer for that purpose.

B. Outline of Coverage Requirements for Individual Coverages

1. No individual health benefit contract subject to this Part shall be delivered or issued for delivery in this State unless an appropriate outline of coverage, as prescribed in §1.7.4(C) through (H) of this Part is completed as to such contract; and

a. Is either delivered with the contract; or

b. Delivered to the applicant at the time application is made and acknowledgement of receipt or certification of delivery of such outline of coverage is provided to the insurer.

2. If an outline of coverage was delivered at the time of application and the contract is issued on a basis which would require revision of the outline, a substitute outline of coverage properly describing the contract must accompany the contract when it is delivered and contain the following statement, in no less than twelve (12) point type, immediately above the company name: "NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage originally applied for has not been issued."

3. The appropriate outline of coverage for contracts providing hospital coverage which only meets the standards of §1.7.3(D) of this Part shall be that statement contained in §1.7.4(G) of this Part. The appropriate outline of coverage for contracts providing coverage which meets the standards of both §1.7.3(D) and (E) of this Part shall be the statement contained in §1.7.4(E) of this Part. The appropriate outline of coverage for contracts providing coverage which meets the standards of both §§1.7.3(D) and (G) or §1.7.3(D), (E) and (G) of this Part shall be the statement contained in §1.7.4(G) of this Part.

4. Appropriate changes in terminology may be made in outlines of coverages in the case of contracts of nonprofit hospital, medical, or dental service corporations as defined in R.I. Gen. Laws Title 27. In any other case where the prescribed outline of coverage is inappropriate for the coverage provided by the contract, an alternate outline of coverage shall be submitted to the Director for prior approval.

C. Basic Hospital Expense Coverage (Outline of Coverage).

1. An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of §1.7.3(D) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a. (INSURER'S NAME)

b. BASIC HOSPITAL EXPENSE COVERAGE

c. OUTLINE OF COVERAGE

(1) The contract itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you READ YOUR CONTRACT CAREFULLY! (Instead of the word "contract," the word "policy" may be used where appropriate).

e. Basic Hospital Expense Coverage -- Contracts of this category are designed to provide to persons insured coverage for hospital expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, and hospital out-patient services, subject to any limitations, deductibles and co-payment requirements set forth in the contract. Coverage is not provided for physicians or surgeons fees or unlimited hospital expenses.

f. A brief specific description of the benefits, including dollar amounts and number of days duration where applicable, contained in this contract, in the following order;

(1) Daily hospital room and board;

(2) Miscellaneous hospital services;

(3) Hospital outpatient services; and

(4) Other benefits, if any.

(5) (Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provision applicable to the benefits described.)

g. (A description of any contract provisions which exclude, eliminate, restrict, reduce, limit, delay, or in any other manner operate to qualify payment of the benefits described in §1.7.4(C)(1)(f) of this Part.)

h. (A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

D. Basic Medical-Surgical Expense Coverage (Outline of Coverage) -

1. An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of §1.7.3(E)of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a. (INSURER'S NAME)

b. BASIC MEDICAL-SURGICAL EXPENSE COVERAGE

c. OUTLINE OF COVERAGE

d. Read Your Contract Carefully -- This outline of coverage provides a very brief description of the important features of your contract. This is not the insurance contract and only the actual contract provisions will control. The contract itself sets forth in detail the rights and obligations of both you and your insurer. It is, therefore, important that you READ YOUR CONTRACT CAREFULLY! (Instead of the word "contract," the word "policy" may be used where appropriate.)

e. Basic Medical-Surgical Expense Coverage -- Contracts of this category are designed to provide to persons insured coverage for medical-surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for surgical services, anesthesia services, and in-hospital medical services, subject to limitations, deductibles and co-payment requirements set forth in the contract. Coverage is not provided for hospital expenses or unlimited medical surgical expenses.

f. A brief specific description of the benefits, including dollar amounts and number of days duration where applicable, contained in this contract in the following order:

(1) Surgical services;

(2) Anesthesia services;

(3) In-hospital medical services; and

(4) Other benefits, if any.

h. (A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

E. Basic Hospital and Medical Surgical Expense Coverage (Outline of Coverage) -

1. An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of §1.7.3(D) and (E) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a. (INSURER'S NAME)

b. BASIC HOSPITAL AND MEDICAL SURGICAL EXPENSE

c. COVERAGE OUTLINE OF COVERAGE

e. Basic Hospital and Medical Surgical Expense Coverage -- Contracts of this category are designed to provide, to persons insured, coverage for hospital and medical-surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, hospital outpatient services, surgical services, anesthesia services, and in-hospital medical services, subject to any limitations, deductibles and co-payment requirements set forth in the contract. Coverage is not provided for unlimited hospital or medical surgical expenses.

f. A brief specific description of the benefits, including dollar amounts and number of days duration where applicable, contained in this contract, in the following order:

(1) Daily hospital room and board;

(2) Miscellaneous hospital services;

(3) Hospital outpatient services;

(4) Surgical services;

(5) Anesthesia services;

(6) In-hospital medical services; and

(7) Other benefits, if any.

g. (Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provision applicable to the benefits described.)

h. (A description of any contract provisions which exclude, eliminate, restrict, reduce, limit, delay, or in any other manner operate to qualify payment of the benefits described in §1.7.4(E)(1)(f) of this Part.)

i. (A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

F. Hospital Confinement Indemnity Coverage (Outline of Coverage) -

1. An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of §1.7.3(F) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a. (INSURER'S NAME)

b. HOSPITAL CONFINEMENT INDEMNITY COVERAGE

c. OUTLINE OF COVERAGE

e. Hospital Confinement Indemnity Coverage -- Contracts of this category are designed to provide, to persons insured, coverage in the form of a fixed daily benefit during periods of hospitalization resulting from a covered accident or sickness and any additional benefit described below, subject to any limitations set forth in the contract. Such contracts do not provide any benefits other than the fixed daily indemnity for hospital confinement and any additional benefit described below.

f. (A brief specific description of the benefits in this contract, in the following order:

(1) Daily benefit payable during hospital confinement; and

(2) Duration of benefit described in (a).

(3) (Note: The above description of benefits shall be stated clearly and concisely.)

h. (A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

i. (Any benefits provided in addition to the daily hospital benefit.)

G. Major Medical Expense Coverage (Outline of Coverage) -

1. An outline of coverage, in the form prescribed below, shall be issued in connection with contracts meeting the standards of §1.7.3(G) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a. (INSURER'S NAME)

b. MAJOR MEDICAL EXPENSE COVERAGE

c. OUTLINE OF COVERAGE

e. Major Medical Expense Coverage -- Contracts of this category are designed to provide, to persons insured, coverage for major hospital, medical, and surgical expenses incurred as a result of a covered accident or sickness. Coverage is provided for daily hospital room and board, miscellaneous hospital services, surgical services, anesthesia services, in- hospital medical services, and out of hospital care, subject to any deductibles, co-payment provisions, or other limitations which may be set forth in the contract. Basic hospital or basic medical insurance coverage is not provided. (If, in accordance with §1.7.4(B)(3) of this Part this form of outline is used for coverage which meets the standards of §1.7.3(D) and (G) or §1.7.3(D), (E) and (G) of this Part the preceding sentence shall be omitted and an appropriate description in accordance with §§1.7.4(C)(3) or (E)(3) of this Part shall be included.)

f. (A brief specific description of the benefits, including dollar amounts, contained in this contract, in the following order:

(1) Daily hospital room and board;

(2) Miscellaneous hospital services;

(3) Surgical services;

(4) Anesthesia services;

(5) In-hospital medical services;

(6) Out of hospital care;

(7) Maximum dollar amount for covered charges; and

(8) Other benefits, if any.)

(9) (Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provision applicable to the benefits described.)

h. (A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

H. Limited Benefit Health Coverage (Outline of Coverage) -

1. An outline of coverage, in the form prescribed below, shall be issued in connection with contracts which do not meet the minimum standards of §1.7.4(D), (E), (F) and (G) of this Part. The items included in the outline of coverage must appear in the sequence prescribed:

a. (INSURER'S NAME)

b. LIMITED BENEFIT HEALTH COVERAGE

c. OUTLINE OF COVERAGE

d. Read Your Contract Carefully -- This outline of coverage provides a very brief description of the important features of your contract. This is not the insurance contract and only the actual contract provisions will control. The contract itself sets forth in detail the rights and obligations of both you and your insurance company. It is, therefore, important that you READ YOUR CONTRACT CAREFULLY! (Instead of the word "contract," the word "policy" may be used where appropriate.)

e. Limited Benefit Health Coverage -- Contracts of this category are designed to provide, to persons insured, limited or supplemental coverage.

f. (A brief specific description of the benefits, including dollar amounts, contained in this policy.)

g. (Note: The above description of benefits shall be stated clearly and concisely, and shall include a description of any deductible or co-payment provisions applicable to the benefits described. Proper disclosure of benefits which vary according to accidental cause shall be made in accordance with §1.7.3(C)(10) of this Part.

i. (A description of contract provisions respecting renewability or continuation of coverage, including age restrictions or any reservation of right to change premiums.)

1.7.5Replacement of Individual Health Benefit Contracts

A. Application forms, except applications designed exclusively for use with accident only and single premium non-renewable contracts, shall include a question designed to elicit information as to whether the insurance to be issued is intended to replace any health benefit contract presently in force. A supplementary application or other form to be signed by the applicant containing such a question may be used.

B. Upon determining that a sale will involve replacement, an insurer, other than an insurer offering direct response insurance or its agent shall furnish the applicant, prior to issuance or delivery of the contract, the notice described in §1.7.5(C) of this Part. One (1) copy of such notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the insurer. An insurer offering direct response insurance shall deliver to the applicant upon issuance of the contract, the notice described in §1.7.5(D) of this Part. In no event, however, will such a notice be required in the solicitation of the following types of contracts: accident only and single premium non-renewable contracts.

C. The notice required by §1.7.5(B) of this Part for an insurer, other than an insurer offering direct response insurance, shall provide, in substantially the following form:

1. NOTICE TO APPLICANT REGARDING REPLACEMENT OF HEALTH BENEFIT CONTRACTS

2. According to (your application) (information you have furnished), you intend to lapse or otherwise terminate existing health benefits and replace them with a contract to be issued by (Insurer's Name). For your own information and protection, you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new contract.

a. Health conditions which you may presently have, (pre-existing conditions) may not be immediately or fully covered under the new contract. This could result in denial or delay of a claim for benefits under the new contract, whereas a similar claim might have been payable under your present contract.

b. You may wish to secure the advice of your present insurer or its agent regarding the proposed replacement of your present contract. This is not only your right, but it is also in your best interests to make sure you understand all the relevant factors involved in replacing your present coverage.

c. If, after due consideration, you still wish to terminate your present contract and replace it with new coverage, be certain to answer truthfully and completely all questions on the application concerning your medical/health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your contract had never been in force. After the application has been completed and before you sign it, re-read it carefully to be certain that all information has been properly recorded.

d. The above "Notice to Applicant" was delivered to me on:

(1) (Date)

(2) (Applicant's Signature)

e. Note: The term "accident and sickness insurance" may be used instead of "health benefits" or "health benefit contracts." "Policy" may be used instead of "contract."

D. The notice required by §1.7.5(B) of this Part for an insurer offering direct response insurance shall be as follows:

1. NOTICE TO APPLICANT REGARDING REPLACEMENT OF HEALTH BENEFIT CONTRACTS

2. According to (your application) (information you have furnished) you intend to lapse or otherwise terminate existing health benefits and replace them with the contract delivered herewith issued by (Insurer's Name). Your new contract provides 10 days within which you may decide without cost whether you desire to keep the contract. For your own information and protection you should be aware of and seriously consider certain factors which may affect the insurance protection available to you under the new contract.

c. (To be included only if the application is attached to the contract.) If, after due consideration, you still wish to terminate your present contract and replace it with new coverage, read the copy of the application attached to your new contract and be sure that all questions are answered fully and correctly. Omissions or misstatements in the application could cause an otherwise valid claim to be denied. Carefully check the application and write to (Insurer's Name and Address) within 10 days if any information is not correct and complete, or if any past medical history has been left out of the application.

d. (Insurer's Name)

e. Note: The term "accident and sickness insurance" may be used instead of "health benefits" or "health benefit contract." "Policy" may be used instead of "contract."

1.7.6Violation

Notwithstanding anything to the contrary in R.I. Gen. Laws Chapters 27-19 and 27-20 a violation of this section shall be prima facie evidence of a misrepresentation for the purpose of inducing a person to purchase insurance. A person guilty of such violation shall be subject to R.I. Gen. Laws § 27-29-4.

230 R.I. Code R. 230-RICR-20-30-1.7