Chapter 15: State Laws
Penalties for violating insurance code with respect to annuity disclosures for all violations include:
License suspension, revocation, or refusal to renew for up to 12 months Compliance with a cease and desist order issued by the Director
All LTC policies and certificates must contain 5 specific provisions:
Riders and Endorsements Payment of Benefits Disclosure of Tax Consequences Benefit Triggers Tax-Qualified Contract Disclosure
The Director will not allow an individual to take an examination administered for any line of license authority more than ____ times within a _____ month period.
4 12
Licenses expire or renew every:
4 years
An insurer replacing a life policy must notify the existing insurer of the proposed replacement within how many days of receiving an application?
5 business days
Temporary License:
The Director of Insurance may issue a temporary insurance producer license for a period not exceeding 180 days, without requiring an examination if it is necessary to service insurance contracts
Assumed Trade Name:
The Director will not issue any license in a trade name, except to a business entity if the trade name is legally registered.
Using the insurance producer's license principally to provide insurance that covers the life, property, or insurable interests of the licensee, family members, employer or employees, is known as:
Controlled Business
Grandfathered plans don't have to:
Cover preventive care for free Guarantee your right to appeal a coverage decision Protect your choice of doctors and access to emergency care
Before granting a license, the Director may ask for:
Criminal background information
The Life Insurance Surrender Cost Index:
Is used to compare the cost of similar policies and is based on determining the guaranteed cash surrender value, if any, available at the end of the 10th and 20th policy years.
To obtain a nonresident license, an examination (is/isn't) required as long as the resident state is:
Isn't Reciprocal
An administrative penalty of ______ was fined by the Director instead of suspending the producer license.
$250
When must an insurer file policy forms with the Director?
30 days before first delivering the forms
Providing merchandise or prizes valued in excess of ___ is prohibited.
$25
If an individual wants to transact business as an insurance producer, he/she must apply for a license within _______ of passing the licensing exam.
1 year
An annuity may be reinstated within:
1 year of the lapse date
Producers must provide a buyer's guide and policy summary to all prospective purchasers of life insurance prior to accepting the applicant's initial premium, unless the policy contains an unconditional refund provision of at least how many days?
10
For cause, the Director of Insurance may suspend, revoke, or refuse renewal of a producer license for up to _____ months.
12
A person may renew a license within:
12 months
A minor not less than __ years old is able to contract for life or disability insurance and is deemed competent to exercise the rights with respect to the contract.
15
In Arizona, an employee must have at least __ months of creditable coverage before being eligible to continue coverage under HIPAA.
18
Life insurance policies are contestable for how long?
2 years
Sellers and telemarketers are required to keep the following records for __ months from the date the record is produced.
24
How long must a health insurer maintain files containing the advertisements it has used?
3 years
How long is a LTC policy's free look period?
30 Days
Within what timeframe must a nonresident producer apply for a resident producer license upon moving to Arizona?
90 Days
If an enrollee is delinquent on a premium payment for a QHP and is receiving advance payments of the premium tax credit, the QHP issuer must provide:
A 3 consecutive month grace period, if the enrollee paid at least one full month's premium during the benefit year. Claims will not be paid out until premiums have been paid.
Continued eligibility is determined on:
A 6 month basis unless a person is 21 years old or older and subject to redetermination of eligibility.
For policies in force for less than 6 months, an insurer may only rescind a LTC policy or deny a valid claim if:
A material misrepresentation was made on the application
For policies in force for more than 6 months but less than 2 years, an insurer may only rescind a LTC policy or deny a valid claim if:
A material misrepresentation was made on the application pertaining for the condition upon which a claim is made
Penalties for violating insurance code with respect to annuity disclosures for unintentional violations include:
A penalty of up to $1,000 for each violation with an aggregate of $10,000 within any 6-month period
Penalties for violating insurance code with respect to annuity disclosures for intentional violations include:
A penalty of up to $5,000 for each violation with an aggregate of $50,000 within any 6-month period
Misrepresentation involves making false or misleading statements during the sale of insurance and is considered a ________ felony under Arizona law.
Class-5
Licensees are required to inform the Director in writing of any change of:
Address, designated producer, or name. Notification must be submitted within 30 days
Eligibility must be based on a(n):
Adjusted gross income that does not exceed 100% of the federal poverty guidelines.
If a reservist in the U.S. armed forces is ordered to active duty while covered by an employer-sponsored disability policy, that reservist has the right to reinstate coverage, without evidence of insurability, upon release from active military duty subject to the following conditions:
After being rehired by the former employer, the reservist must submit a written application to the insurer within 90 days of discharge from active duty, or within 1 year of hospitalization following discharge; coverage must become effective upon the insurer's receipt of the application. Reinstated coverage must be the same as the coverage provided by the employer to other employees and their dependents at the time of application. Any health or physical condition that arose as a direct result of active military duty may be excluded from coverage.
In establishing premium rates for health benefits plans offered to small employers:
An accountable health plan making adjustments with respect to demographic characteristics must apply those adjustments consistently across all small employers An accountable health plan may not use a geographic area that is the smaller of either a county or an area in which the first three digits of the zip code are identical
A "rating area" means:
An area within which a health insurer may not vary rates based on geography.
The following types of groups are eligible for group disability (i.e., accident and health) coverage IF they are not formed for the sole purpose of obtaining insurance:
An employer Trustees of a fund established by an employer An association, including a labor union A Multiple Employer Trust established by 2 or more employers in the same or related industry Any person or organization to which a policy of group life insurance may be issued Any other substantially similar group approved by the Director
An Accountable Health Plan means:
An entity that may offer, issue or provide a health benefits plan as approved by the Director.
How may a producer request to used an assumed name?
An insurance producer doing business under any name other than their legal name is required to notify the Director prior to using the assumed name. The Director may turn down the use of the assumed name.
Managing General Agent (MGA)
Any person, firm, association, or corporation that manages all or part of the insurance business of an insurer, including the management of a separate division, department or underwriting office.
Life insurance buyer's guides and policy summaries must be provided:
At the time of direct solicitation.
An advertisement must disclose any waiting or elimination periods and any pre-existing condition exclusions. Testimonials used in advertisements must:
Be genuine Represent the current opinion of the author Be applicable to the policy advertised Be reproduced accurately Disclose the spokesperson's financial interest, if any, in the product or the insurer
Telephone solicitation calls under the Telemarketing Sales Rules can be made:
Between 8 am and 9 pm in the time zone of the customer
To prevent genetic based discrimination in the individual health insurance market, insurers cannot:
Deny coverage Raise premiums Impose pre-existing condition exclusions
The Life and Disability Insurance Guaranty Fund must maintain 3 accounts:
Disability, life insurance, and annuities
Prepaid dental plans are required to publish and make available to all members and insureds a schedule of benefits, including the plan's basic dental services, other available dental services, and any associated copayments. A prepaid dental plan must provide the following basic dental services:
Emergency dental services on a 24-hour per day basis Diagnostic services Preventive services Restorative services
It is a prohibited practice for an insurer, insurance producer, or other person to provide, promise, or offer any of the following to an insured or prospective insured as an inducement to purchase insurance:
Employment Shares of stock or securities Advisory board contract or similar contract, agreement, or understanding that provides for or promises special profits Prizes, goods, merchandise, or tangible property valued in excess of $25
In order for a business entity to obtain a producer license, it must:
Ensure that all employees acting as producers are licensed as producers
All LTC insurance must be either: (Renewal Considerations)
Guaranteed renewable or noncancellable and each contact must explain the terms accordingly.
Credit For Prior Coverage:
If an individual had any type of creditable coverage in place during the 18-month period before coverage under the plan becomes effective, the pre-existing condition exclusion must be reduced by the period of time during which creditable coverage was in place.
All LTC policies in Arizona must offer the policyholder which benefit?
Inflation Protection
Once issued, any license other than a temporary license continues in force until:
It expires or the Director suspends, revokes, or terminates the license.
With regard to hearings and the examination of insurer records the Commissioner of Insurance:
May subpoena witnesses, administer oaths, and require the disclosure of books and records
When may an insurance company discriminate based on blindness?
Never
LTC insurance policies must provide a benefit period of:
No less than 24 months for each person covered by the policy.
A health insurance policy is Guaranteed Renewable unless one of the following exceptions apply:
Nonpayment of premium The insured individual commits a fraudulent act The insured individual moves outside the health plan's coverage area A health insurer/carrier withdraws the health plan from the individual market in compliance with laws and after providing at least 180 days' advance notice A health insurer/carrier withdraws all products from the individual market in a state
A producer may share commissions with another producer:
Only if they are both licensed in the same line of insurance
Insurance companies may use genetic testing:
Only with an individual's expressed consent
Producer T's license expired 8 months ago and in order to renew it, T must
Pay a $100 late renewal fee
If an individual eligible for Medicare meets the income and asset eligibility requirements for the Qualified Medicare beneficiary (QMB) program, the state's QMB program will:
Pay all of Medicare Part A and Part B premiums, deductibles, and coinsurance
Collection, Use, and Disclosure limitations: (Privacy and Security Under the ACA)
Personally identifiable information should be created, collected, used, and disclosed as necessary to accomplish a specified purpose and never to discriminate inappropriately.
Safeguards: (Privacy and Security Under the ACA)
Personally identifiable information should be protected with reasonable operational, administrative, technical, and physical safeguards to ensure its confidentiality.
It is a prohibited practice for any person to knowingly offer or pay a __________ __________ as an incentive to offer or sell any insurance policy.
Premium Rebate
If the child's health insurance is provided by a noncustodial parent, the insurer must:
Provide any information to the custodial parent that may be necessary for the child to obtain benefits through the custodial parent's insurer Permit the custodial parent to submit claims for covered services without the approval of the noncustodial parent Make payments on claims directly to the custodial parent, the provider, or the Arizona health care cost containment system
What must a producer do when replacing a life insurance policy in Arizona?
Read the Notice of Replacement aloud to the applicant
A resident licensee must have a:
Residence or principal place of business in this state
Health plans and prepaid dental plans may not deny enrollment to an insured's child for any of the following reasons:
The child was born out of wedlock The child is not claimed as a dependent on the parent's federal or state income tax return The child does not live with the parent or in the plan's service area
Reasonable expenses and charges for the cost of the Director's examination will be paid by:
The examiner's revolving fund
For policies in force for more than 2 years, an insurer may only rescind a LTC policy or deny a valid claim if:
The insured knowingly and intentionally misrepresented material facts relevant to the insured's health
If an individual requests their Medicare Supplement policy to be suspended and the individual loses coverage, then:
The medicare Supplement policy must be reinstated automatically, effective the date the group health coverage was lost if the policyholder or certificate holder provides notice within 90 days of coverage loss and pays the premiums.
The percentage increase in the premium rate that is charged to a small employer for a new rating period may not exceed the sum of the following:
The percentage change in the base premium rate 15 percentage points Any adjustment due to a change in coverage, family size or composition, geographic area or demographic characteristics
If a LTC policy is sold to an individual who has attained age 76 as of the date of purchase, then:
The policy may (but is not required to) provide some level of inflation protection
If a LTC policy is sold to an individual who has not attained age 61 as of the date of purchase, then:
The policy must provide compound annual inflation protection
If a LTC policy is sold to an individual who has attained age 61 as of the date of purchase, then:
The policy must provide some level of inflation protection
What makes SLMB and QI different from QMB?
The resource limits for eligibility are the same as for a QMB, but the income limits are 20%-80% higher, depending on the program. Can pay all or part of the Part B premium, but not any deductibles or coinsurance amounts.
CAN-SPAM Act of 2003:
This established rules for unsolicited email (known as spam) that often generates unwanted costs to recipients, may contain content that is unwanted or pornographic, and may mislead the recipient about its content or purpose.
Gramm-Leach-Bliley Act:
This established to require financial institutions to protect consumers' personal information from unauthorized or public sharing
What is a Grandfathered Health Plan?
This is a plan issued or purchased on or before the date the ACA became law (March 23, 2010) and is exempt from some of the ACA's provisions.
What does an adjustor do?
This is any person who, for compensation, adjusts, investigates, or negotiates the settlement of claims on behalf of either the insurer or the insured.
Certificate of Authority:
This is issued by the director to an insurer is evidence of its authority to transact the kind of insurance specified in the certificate.
Life and Disability Insurance Guaranty Fund:
This is to protect the public in the case of insolvency of a life or disability insurer.
Twisting:
This occurs when an insurance agent replaces an existing life policy with a new one using misleading tactics.
When would a temporary license be issued?
To someone of similar statute upon the death, disability, or entering of the armed forces of a producer to provide time for licensing a new agent.
Cold Lead Advertising:
Using any marketing method that does not disclose in a conspicuous manner that the purpose of the marketing is to sell insurance and that additional contact will be made by an insurance producer or insurer.
High-Pressure Sales Tactics:
Using any type of marketing method that has the effect of forcing, frightening, threatening, or unduly pressuring a person to purchase or recommend the purchase of insurance.
What are the general penalties of violating the Violent Crime Control and Law Enforcement Act?
Violations will be punished by a fine established under law, imprisonment up to 10 years, or both If the damages affected the soundness of the insurer, imprisonment can be up to 15 years Exception: if the amount of illegally obtained funds is no more than $5,000, the term of imprisonment can be no more than 1 year
Insurers must provide a copy of the SBC to consumers at each of the following times:
When shopping for health insurance When enrolling in a new health plan At the beginning of each new plan year Within 7 business days of making a request for a SBC
Surplus Lines Brokers:
Write Surplus Lines Insurance
An insurer must provide _______ privacy protection disclosures
Written
Penalties for violation of the CAN-SPAM Act include actual damages or fines of up to ____ per violation (each separate email). The fines cannot exceed _________.
$250 $2 million
The benefit that the Life and Disability Insurance Guaranty Fund may be obligated to cover will not exceed:
$300,000 in life insurance death benefits No more than $100,000 cash surrender value $300,000 in disability income and long term care benefits $250,000 in present value annuity benefits
Insurers, producers, managing general agents, and business entities must maintain records of all information collected from consumers pertaining to annuity recommendations for the later of:
5 years after the annuity transaction Until the next regular regulatory examination of the insurer after the annuity transaction
Once a life insurance policy has been in force under specified conditions, the policyholder must be provided with the option to take out a policy loan using the policy's values as collateral. An adjustable interest rate may be established by the insurer, but the maximum interest rate cannot exceed:
8% annually
Limited benefits, such as dental and vision care for adults, that do not apply to individual health insurance as regulated by the ACA are considered:
Excepted Benefits
Qualified Health Plan Rating Factors:
Family Composition - Separate premiums are charged for each family member Geographic rating area as established by the state using the primary policyholder's home address Age - The oldest person cannot be charged more than 3 times the youngest person Tobacco Use - Only on the individuals who actually use tobacco
Instead of, or in addition to, suspending, revoking, or refusing to renew a producer license, the Director may:
For each unintentional act, impose a civil penalty up to $250 with a maximum penalty of $2,500 For each intentional act, impose a civil penalty up to $2,500 with a maximum penalty of $15,000 Order restitution to any party injured by the licensee
If a health benefits plan excludes or limits coverage based on a pre-existing condition in a fashion other than that prescribed by law, it is considered to be engaging in discrimination. State law permits the exclusion of coverage for pre-existing conditions under the following terms:
For late enrollees, for up to 18 months For all other individuals, for up to 12 months
Federal rules require the following for commercial email:
Identification - The email must be clearly identified as a solicitation or advertisement for products or services. Opt-Out - The email must provide easily-accessible, legitimate and free ways for you to reject future messages from that sender. Return Address - The email must contain legitimate return email addresses, as well as the sender's postal address.
Annuity Free-Look Period:
If a contract holder is age 65 or older, the free look period must be 30 days after the contract is delivered. Otherwise, the standard 10-day free look applies.
To be eligible as a QMB:
Income must be no more than slightly above the Federal Poverty Level and meet the limited value of assets requirements as established by the federal government each year.
To prevent genetic based discrimination in the group health insurance market, insurers cannot:
Increase premiums for the group based on the results of one enrollee's genetic information Deny enrollment Impose pre-existing condition exclusions Conduct other forms of underwriting based on genetic information
The following fraudulent practices are unlawful:
Presenting untrue statements or omissions of material fact Soliciting or accepting insurance risks by or for an insolvent insurer Concealing records at or removing records from the home office of any insurer Diverting the monies of an insurer
Transact - Includes any of the following:
Solicitation and inducement Preliminary negotiations Effectuation of a contract of insurance Transaction of matters subsequent to effectuation of the contract and arising out of it
An individual with income that is slightly too high to qualify for QMB benefits may still be eligible for one of two other state medical assistance programs:
Specified Low-Income Medicare Beneficiary (SLMB) or Qualifying Individual (QI).
Data Quality and Integrity: (Privacy and Security Under the ACA)
Steps must be taken to ensure that personally identifiable information is complete, accurate, and up-to-date as necessary for intended purposes and has not been altered or destroyed in an unauthorized manner.
In order for a business entity to obtain a producer license, it must ensure:
That all employees acting as producers are licensed as producers
If two group plans provide coverage for the same injury, and each plan contains a coordination of benefits provision, the determination of the order of claim payment is based on the following:
The plan providing benefits for an individual on a direct basis pays before a plan that provides benefits for that individual as a dependent If a dependent child is covered by 2 or more plans for parents who are married, the plan insuring the parent whose birthday occurs earlier in the calendar year (by month and day, not year) will pay first The dependent child of divorced or separated parents will be covered first by the parent with custody of the child
An insurer or producer may charge fees for services not customarily provided if they file the fee with the Director and meet the following conditions:
The services are in addition to those normally performed for insureds The specific services and their related charges are disclosed in writing to the insured The service charges are reasonable with respect to the cost of the service performed
Openness and Transparency: (Privacy and Security Under the ACA)
There should be openness and transparency about policies, procedures, and technologies that directly affect individuals and their personally identifiable information
Accountability: (Privacy and Security Under the ACA)
These principles should be implemented through appropriate monitoring and methods should be in place to report noncompliance and security breaches.
Captive Insurers:
They (pure, group, agency, or protected cell) must be licensed and maintain a principal place of business in this state and can only insure the risks of its members, owners, affiliates, and participants.
All accountable health plans must offer:
At least one health benefits plan to small employers on a guaranteed-issue basis.
A producer must report, within ___ days, any _______________ _______ or _____________ __________ that occurs in any jurisdiction or by another governmental agency in this state.
30 Administrative Action Criminal Prosecution
If a first party claim is not paid within __ days after the receipt of adequate proof of loss, the insurer must pay ___________ from the date the claim is received.
30 Interest
For licenses last renewed on or after January 1, 2014, a licensee must complete at least ____ hours of continuing education, including ____ hours of Ethics, offered by an approved provider.
24 hours 3 hours
Insurance producers are required to keep insurance records at the producer's principal place of business for ___ _____ following each transaction
3 years
Life Settlement Broker:
A producer that is licensed with a life line of authority is deemed to meet the licensing requirements to operate as a life settlement broker.
Disclosure requirements of a group health or disability plan include:
A statement as to whether a plan physician is restricted to prescribing drugs from a plan list or plan formulary, including enrollee costs for drugs not contained on the list or formulary
Reinstatement of Life Insurance:
As long as it is not surrendered or converted, it can be reinstated at any time within 3 years from premium default. Premiums in arrears may be required at an interest rate not to exceed 6% per year.
An insurer or producer must provide a notice of information practices to all applicants or policyholders upon application, and at the time of policy delivery:
At least once a year after a policy renews Upon reinstatement or change in benefits
Individual Choice: (Privacy and Security Under the ACA)
Individuals should be provided a reasonable opportunity to make informed decisions about the collection, use, and disclosure of their personally identifiable information.
Individual Access: (Privacy and Security Under the ACA)
Individuals should be provided access in a timely manner to view their personally identifiable information
Correction: (Privacy and Security Under the ACA)
Individuals should be provided with a timely means to correct their personally identifiable information
In order to sell variable contracts in Arizona, the person must have all of the following qualifications
Life producer license FINRA (Financial Industry Regulatory Authority) registration Variable contract license
The Summary of Benefits and Coverage (SBC) presents information so individuals can easily compare different coverage options, and must summarize the key features of the plan, including:
The ability to provide basic Health Care Services without undue restrictions or limitations Covered benefits and services Cost-sharing provisions (deductibles, copayments, and coinsurance) Coverage exceptions, exclusions, and limitations
The Director may suspend, revoke, or refuse renewal of a producer license for up to 12 months for:
Untrue information of licensing application Violate insurance law Misrepresenting a policy Convicted of felony Fraudulent practice Fraudulent license License used for own benefit
