Chapter 11
Churning
Occurs when an agent has a policy holder purchase additional insurance for the sole purpose of making more commission
Free Look
10 Days
Proof of loss
90 days after date of loss
Unfair Claims Practices
- Misrepresenting to insured pertinent facts or policy provisions relating to coverage at issue - Failure to acknowledge and act reasonable promptly upon communication with respect to an insurance claim - Failure to adopt and implement reasonable standards for prompt investigation and processing of an insureds claim Failure to affirm or deny converage of claims within a reasonable time after proof of loss statments are completed and submitted by insured - Denying an insured claim without indicating the basis of denial under the policy
Insurance Transaction
- Solicitation or Inducement to purchase insurance - Preliminary negotiations toward sale of insurance - Effectuation of a contract of insurance - Advising an individual concerning coverage or claims
Small Group Health Plans - Definition of Small employer
1-50 employees on at least 50% of its working days
Legal Action
60 day waiting period to file a lawsuit after a claim for loss has been filed by insured. No lawsuit may be filed after 3 years has passed from when claim was submitted
Reinstatement and Renewal
A producer that allows their license to lapse may, within 12 months from the renewal date, reinstate the license without retaking the state licensing exam. However, a penalty of double the unpaid renewal fee will be required
Licensing - Producers
An individual appointed by an insurance company that represents the company and presents policies on its behalf - Producer originating an insuarance application is usually the major personal contact with the insured
Termination of producer appointment
An insurer that terminates a producer's appointment must notify the Commissioner within 30 days of the date of termination
Alien Insurance Company
Company that is chartered and organized in any other country than the United States
Domestic Insurance Company
Company that resides and is incorporated under the laws of the state in which its home office is located. Company chartered in MA would be a domestic company in MA
Foreign Insurance Company
Company whose home office is in another state
Workers Comp
Exclude benefits for intentional self inflicted injuries occurring on job
Special Broker
Individual who places insurance business with insurers that aren't authorized to transact business in this state
Domestic, Foreign and Alien Companies
Insurance companies are classified according to location of its corporation
Claim Forms
Insurance company send forms filing proof of loss to a claimant within 15 days after insurance company receives notice of claim
Renewability of coverage
Insurer must provide 60 days notice of its intent to not renew group plan
Newborn child coverage
Insurer must provide coverage for the insured under a group health plan to newborn from moment of birth up to 31 days of any condition. Reducing benefits for a newborn is prohibited in any form
Continuation of coverage under COBRA
Must contain provision that allows an individual who leaves the group to continue coverage under the policy for 31 days
Dental Plans
Some dental policies are scheduled, meaning benefits are limited to specified maximums per procedure, with first dollar coverage - Pre treatment estimate of cost of dental services may be required whenever patient needs dental treatment - To prevent adverse selection in a group dental expense plan, plan may require any of the following (probationary period, waiting period, evidence of insurability, or limits on annual benefits) - Prepaid dental plans, coverage is limited to a closed panel of dentists
Larceny
Subject to fine or prison -Producer that collected premiums from an insured an intentionally withholds them from the insurer, producer than combines premiums with their own funds,
Temporary
Temp license may be issued in cases where a producer has become disabled or dies, requiring a replacement to service the producer's business. A temporary license is valid for a maximum of 180 days (3 moths)
Penalties and fines
After a hearing, persons can be fined up to $1000 for each unfair act or practice. cease and desist will be subject to license suspension or revocation as well as an $10,000 fine
Fraud and False statements including 1033 waiver
Any person engaged in interstate insurance business who engages in intentional unfair or deceptive insurance practices, or overvalues a product in a financial report or document will be in violation of federal law. Other violations include embezzling money from an insurance company, misappropriating insurance premiums, and writing threatening letters to insurance offices Penalty: Fine up to $50,000 imprisonment up to 15 years and/or license revocation. Anyone convicted may engage in the business of insurance ONLY after receiving written consent from the Superintendent and a 1033 waiver
State Regulations - Commissioner's general duties and powers
Commissioner oversees all insurance activities in Massachusetts, he may.. - Issue insurance related licenses for producers or a certificate of authority to insurers - Adopt, amend and rescind rules - Examine books and record of insurers -Determine, set or compute reserves of life insurers He has power to investigate anyone who has been involved in an unfair act in business of insurance. If examination shows that a person has violated an insurance law, the Commissioner will report the facts to the attorney general or district attorney for prosecution.
Controlled Business
Coverage written by an agent on their own life, health or property, or their immediate family or business associates. Won't issue a license to a person if their primary use is to sell using controlled business
Plant Closing
If insured of a group health insurance plan becomes inelegible due to a plant closing, insured and dependants are allowed to continue coverage for up to 90 days. Employee responsible for paying premium during these 90 days
Reinstatement
In case it lapses insurer will reinstate if insured - proves cognitive impairment - Asks insurer to reinstate the policy within 5 months of the date coverage lapsed and pays and past due premiums
Massachusetts Individual Mandate for Minimum Creditable Coverage
MA health care insurance law mandates nearly every resident of MA obtain a state government regulated minimum level of healthcare insurance coverage, and provides free health care insurance for residents earning less that 150% of the federal poverty level
Continuing Education
Must complete to maintain license: 60 hours during the first 36 month period after fate of initial license issuance 45 hours for each 36 month period after the first renewal cycle
Stock Insurance Company
Owned and controlled by stockholders, stockholders provide capital and share in profits or losses - nonparticipating because policy owners don't share in profits of the company - Stock insurance that issues both participating and non participating policies is doing a mixed plan
Pre existin conditions
6 months preceding individual LTC policy
Advertisements for Health Insurance
May not be misleading, must be genuine, only accurate, Insurers must use trade name, a copy of all advertisements must be kept by insurer for a minimum for 4 years
Notice of Lapse
Must provide notice 15 days before to insurer before a policy will be cancelled
Mutual Life Insurance Compaines
Owned and controlled by it's policy owners. Profits of a mutual insurance company are returned to policy owners in form of dividends or retained as surplus to meet future obligations - Participating because policy owners do share in profits of the company
Complaint record
Producer required to maintain and retain a complaint record for 2 years
Dental
Restorative - restoring missing tooth (fillings, crowns) Oral Surgery - treat diseases, injuries, defects in the head, neck, face jaws Endodontics - Disease of the dental pulp (root canals) Periodontics -treatment of supporting and surrounding tissues of the teeth Prosthodontics - Birdgework or dentures Orthodontics - irregularities of teeth (braces)
Medical Examination and labs tests including HIV
Authorization to conduct and AIDS related test is valid for only 90 days after the consent form is signed, test that comes back positive requires notification to applicant within 45 days
Pre-existing conditions
Health issues that existed, or diagnosed within 6 months prior to enrollment, benefit plans may not exclude coverage for these conditions beyond 6 months after date of enrollment
Twisting
Occurs when an insurance agent convinces a client to let their policy lapse, so they can purchase new life insurance with another company
Masshealth Health Care Plan
Pays for health care for certain low and medium income people living in Massachusetts, and is the name used in Massachusetts for Medicaid and the Children's Health Insurance Program (CHIP), to be eligible, you must have low to medium income and be in one or more categories - Family living with children under age of 19 - Pregnant with or without children - Long term unemployes - Disabled - Adult working for qualified employer - HIV positive - Child under age of 19 years - Elderly (65 or older) - Women with breast cancer - Person in need of LTC - MA resident
Massachusetts Health Laws :Provisions - Entire Contract
Policy (including endorsements and the attached papers) along with the application
Policy forms
Policy form may not be used in MA unless it has been approved by the Commissioner or on file for at least 30 days
Non-Resident producers
Producer that holds a resident license in a different state may apply for a nonresident license in MA, as long as both states have a reciprocal agreement. To apply, nonresidents must submit an application form, proof of resident license, and fees.
Assumed Names
Producers wishing to conduct business under a name other than their legal name must notify the Commissioner before using such name
Advisor
An individual who provides insurance advice for compensation, provides advice for a fee Must be: - MA Resident - Pass a written licensing exam - Supply 3 references with application for a license - Renew their license every 3 years
Authorized and Unauthorized Insurers
Authorized - Qualified and recived a Certificate of Authority from the Insurance Department Unauthorized - denied or not yet applied
Dependent Coverage
Group health insurance that provides coverage to dependents must do so up to the dependents age of 26. If dependent isn;t capable of living due to mental or physical problems, proof of incapacity must be provided within 31 days of date upon which the coverage would normally be terminated
Probation, Suspension, Revocation, refusal to issue or renew of license
If an insurance license has been suspended, revoked or refused to be issued or renewed, the individual can file a written demand within 30 days for a hearing with the commissioner
Creditable Coverage
Individuals waiting period for pre-existing conditions is reduced when they have creditable coverage. Previous coverage under another group or individual health plan that hasn't been broken in 63 days.
Disclosure
LTC policy wont be delivered in MA unless the applicant receives Your Options for Financing Long Term Care: A Massachusetts Guide
Unfair Claims Practices Pt.2
- Not attempting in good faith to effect prompt, fiar and equitable settlements of claims on which liability has become reasonably clear; refusing or delaying a settlement solely because there is other insurance available to partially or entirely satisfy the claim loss - Compelling insured to initiate suits to recover amounts due under an insurance policy by offering substantially less than the amount ultimately recovered in those suits
Disciplinary Actions - Cease and Desist order
Cease and desist order issued against a producer prohibits a specific practice listed in the order, if an individual violates this order, a fine of up to $10,000 may be issued
Unfair discrimination
Charging different premiums for policyholders under the same risk classification
Notice of Claim
Claim for injury or sickness must be given to insurer within 20 days after the occurrence
Company Regulation - Examination of books and records
Commissioner will examine financial affairs of all insurers before a certificate of authority to transact business in Massachusetts. Afterwards, examinations will be conducted once every five years - Cost of the exam will be paid for by insurer
Reinstatement
If a health policy is reinstated, there is a waiting period of 10 days before a claim covering sickenss will be covered, accidental injuries are covered inmmediately
Policy Forms
If insurer is notified that Health Policy form doesn't comply with state laws, insurer may not issue the for in connection with any new application
Grace Period
No less than 7 days for weekly premium policies, 10 day for monthly, 31 day for all other. If premium is paid during grace period, coverage shall remain in effect
Grandfathered plans
Plans purchased before March 23, 2010. These plans don't have to follow the ACA's rules and regulation or offer same benefits, rights and protection as new plans An exception: A grandfathered plan cannot impose lifetime limits on how much health care coverage people may receive
Free Look
Policy owner has 10 days to return a health insurance policy and recieve a full refund on premiums
Obtaining License
Within 12 months of passing your state license exam, you must apply for and be issued a license or you will be required to retake the exam. A producer can represent either and insurer or insured
Medicare Supplement exclusions
foot care, mental or emotional disorders, alcoholism and drug addiction, treatment for war, participation in felony, riot, suicide, aviation, cosmetic surgery, chiropractic care, dental care, custodial care, services rendered by employees of hospitals
Participation requirement
groups of five or gewer, insurer may make participation rate 100%, six or more, 75%
Metal Levels
Bronze 60% Silver 70% Gold 80% Platinum 90%
Pregnancy Discrimination Act
Employers must treat pregnancy the same as any other medical condition
Affordable Care Act
Ensure all Americans have access to quality, affordable health care, and will create transformation within the health care system - Individuals under 65 years with income below 133% of poverty level will be eligble for Medicaid
Federal Regulation - Fair Credit Reporting Act
Federal law that regulates the use and disclosure of consumer credit information, credit reporting agencies are regulated by FCRA. Consumer who is investigated must be advised that credit, insurance or employment was denied because of an unfavorable report
Notice to Buyer
First page of each LTC contract, explains some LTC costs may not be covered
Group Life Certificate
Group Policy Number, Description of insurance protection, names of insured, beneficiaries and dependents, Rights and Conditions
Unfair or Deceptive Insurance Practices -Misrepresentation
Illegal practice to misrepresent any fact about an insurance policy, such as policy terms, benefits, value, cost, effective date or existence of a contract of insurance Penalty: $1000 fine and imprisonment for up to 6 months
Boycott, coercion and intimidation
Illegal to boycott, coercion, or intimidate to unreasonably restrain or monopolize business of insurance
False advertising/Defamation of insurer/False financial statements/failure to maintain complaint record/ offer rebate
Illegal to false advertise/illegal to make any public statement or advertisement that contains false info
Renewability provision
Individual LTC insurance policies shall contain an appropriately captioned renewability provision on the first page of the policy form Renewability provision should clearly state that the coverage is guarenteed renewable or noncancellable
Massachusetts Life and Health Guaranty Association
Life and Health Insurance Guaranty Association is used to rehibalitate insolvent (financially incapacitated) insurers. For any one person $300,000 in life insurance death $100,000 in protection of cash surrender for life insurance, health insurance benefits, value annuity Guaranty will provide a max of $300,000 to any one person. Insurers and producers cannot advertise Guaranty Assoc.
Impersonating a producer
Violator may be assessed an $100 fine
Continuation of coverage after death or layoff
When group member dies or becomes unemployed that coverage will continue for the insured/spouse and dependents for 39 weeks. 30 days notice must be given to employer or policy holder if coverage is to continue, and the required premium must be paid
Producer appointments
- Producer cannot act as an agent for an insurer unless he or she is appointed to work for that insurer - A producer's authority to bind an insurer to an insurance contract is granted in the producer's appointment with the insurance company - Insurer responsible for submitted an appointment to the Commissioner within 15 days of a producers appointment or submission of the producer's first insurance application - Producer of an insurer can be personally liable when the producer performs an act which is prohibited in the agency contract
Other ACA requirements
- Prohibits health plans from putting lifetime dollar limits on most benefits that are received by an insurer - Defined by the ACA, MAXIMUM amount an individual can contribute to a flexible savings account is $2,500 - Parents can insure their dependent children up to their 26th birthday - Low income families between 100-400% of federal poverty level will receive federal subsidies on a sliding scale if they purchase insurance via an exchange - Beginning January 1st, 2024, ACA will require adjusted community rating in the small group market. Small group health plans will be allowed to vary rates based on whether the policy covers and individual or family, geographic area, age and tobacco use - If insurer fails to adhere to ACA rules, internal appeal may be deemed exhausted for purposed of submitting an external review - If large employer doesn't provide health insurance and owes an employer mandate penalty, annual penalty is calculated by multiplying $2,000 by the number of full time employees minus 30.
Address change
Licensees must report a change in address to the Commissioner within 30 days of the change
Group Health Insurance
May be issued to Employers, municipal corporations, police and fire departments, colleges, schools and other learning institutions, organization for health, recreational or military, automobile clubs, trade union, multiple employer trusts, associations and labor groups, creditor groups
Hearings
Commissioners issues notice of hearing, notice wil specify the cause and give at least 21 days of notice for which the person must attend the hearing. No existing producers license will be revoked until the producer has been afforded a right to a hearing on these charges
Emloyee
nonseasonal person who works on a full time basis with a normal work week of 30 or more hours. Must have been hired to work for a period of at least 5 months
Policy Termination
Except for non-payments of premiums, LTC contracts cant be cancelled. LTC policy may not lapse or be terminated for nonpayment of premiums unless 30 days notice is given ton insured
Contestability period (time limit on certain defenses)
Health or disability policy is incontestable after it has been in force for a period of 2 years. Only fraudulent misstatements in the application may be used to void the policy or deny any claim at this point
Time Payment of Claims
Indemnity claims will be paid immediately upon receipt of written proof of loss, disability claims will be paid no less frequently than monthly
Long Term Care
Insurance designed to provide coverage for diagnostic, preventive, therapeutic, rehabilitative, maintenance or personal care services in a setting other than acute care unit of a hospital. - Provide coverage up to 12 consecutive months -Insured must be unable to perform at least 2 ADL's
Medicare Supplements
Marketing of Medicare Supplements is regulated to prevemnt sales of excessive insurance, innacurate policy comparisons and the failure to display notice of limitations to the buyer - Producer who solicits the application is responsible for determining the appropriateness of a medicare supplement policy for a proposed insured - Producer MUST give prospective insured an Outline of Coverage (information about services, benefits, copayments, deductibles, exclusions, premiums and the insurer) when taking an application for a Medicare Supplement policy - Application form is required to verify if replacement is involved - Free look period is 30 days - Open enrollment begins 3 months before your 65th birthday, and lasts 7 months - Insurer may exclude coverage for pre-existing condition on a Medicare Supplement Policy for up to 6 months - Insurers can use government publications for communicating MS information without prior state approval - First year commissions of MS may not exceed 200% of compensation paid in second year - Commission provided in renewal years must be same as provided in 2nd year and must be provided for 5 year - There are 3 standardized MS policies available in MA
Agent Responsibility
Notice of Replacement - When a life agent makes a life insurance proposal and knows or should know that the purchase of such policy will replace an existing life insurance policy, replacement rule applies. Any transaction which new life insurance or new annuity is purchase and, as a result, the existing life insurance or annuities will be replaced Free Look - specified number of days from delivery date of policy to look at policy and send back Buyer's Guide - Provides basic information about an insurance policy. Must submit buyers guide along with a policy summary before accepting any premium
Reporting of actions
Producers must report any administrative actins that occurs in another jurisdiction to the Commissioner. Report must be submitted within 30 days of final disposition, and iclude a copy of the order, consent to order, and any other relevant legal document. Within 30 days of the initial pretrial hearing date, a producer shall report to the commissioner any criminal prosecution of the producer taken in any jurisdiction
Sliding
Agent tells applicant in order to get product they want, they are required by law to get an additional product as well