Health Insurance Policy Regulations

Individual accident and health insurance policies issued in Florida must contain certain provisions, as required by law. These are called Required Policy Provisions.

Entire Contract [627.606 F.S.]

A health insurance policy must specify that the policy, any endorsements, and any attached documents, constitutes the entire insurance contract.

Changes to the contract are invalid unless they are approved and endorsed by an officer of the insurance company. A producer cannot change the terms of the policy.

Time Limit on Certain Defenses [627.607 F.S.]

After a health insurance policy has been in effect for two years, the insurer can void the policy or deny a claim only on the basis of a fraudulent misstatement the insured made in the application.

An insurer cannot deny or limit a claim for loss or disability beginning after two years from the policy’s issue date on the basis of a pre-existing condition that was not specifically excluded when the policy was issued.

Grace Period [627.608 F.S.]

A policyholder is entitled to the following grace periods following the premium due date, during which the policy remains in force • at least seven days for policies with premiums that are due weekly; • at least ten days for policies with premiums that are due monthly; and • at least 31 days for all other policies.

Policy Lapse [627.4555 F.S.]

Policies that cover persons age 64 or older and that have been in force for at least one year have an additional 21-day grace period before a policy will lapse due to nonpayment of premium. This means that a policyowner has a minimum grace period of 52 days for ordinary life insurance policies. However, this provision does not apply in cases where the premium is payable monthly or more often, or if the premium is automatically deducted from the policyowner's checking account, billed to a credit card, or regularly collected by an agent.

Insurers must send a lapse notice to these policyowners at the end of the regular grace period and allow an additional 21 days for payment of the past-due premium. In cases where the policy already includes an extended grace period (52 or more days), the lapse notice must be sent 21 days before the expiration of policy’s grace period.

Insurers must notify policyowners age 64 or older that they have the right to name a secondary addressee— that is, a person who will also be notified in the event of an impending lapse.

Policy Reinstatement [627.609 F.S.]

If a policyholder fails to pay the renewal premium within the grace period and the policy lapses, the policy will nevertheless be reinstated if the insurer accepts payment at a later date. However, if the insured must also apply for reinstatement, the insurer will issue a conditional receipt to the insured until the application for reinstatement is approved. If the insurer fails to approve the application within 45 days, the policy will be automatically reinstated unless the insurer has given written notice to the insured that it will not reinstate the policy.

The reinstated policy will cover losses resulting from accidental injury after the date of reinstatement and losses resulting from sickness that began more than ten days after reinstatement.

In all other respects, the reinstated policy restores the same rights that the insurer and insured had before the policy lapsed.

Claim Procedures Notice of Claim [627.611 F.S.]

Upon receiving the claimant’s notice of claim, the insurer has 15 days in which to send the claimant the forms for filing proof of loss. If the insurer fails to do so, the claimant can instead provide proof of loss by giving a written statement describing the loss

Time Limit for Notice of Claim [627.610 F.S.]

A claimant must give written notice of a claim to the insurer within 20 days after a loss or as soon thereafter as reasonably possible.

Proof of Loss [627.612, .627 F.S.]

If the policy provides benefits for a continuing loss (such as an ongoing disability), the claimant is required to give written proof of loss to the insurer within 90 days after the end of each period for which the insurer is obligated to pay benefits. For all other losses, the claimant has up to 90 days after the loss to file written proof of loss.

If it is not reasonably possible for the claimant to give this written proof within the time allowed, the claimant must provide it as soon as reasonably possible. However, the claimant cannot submit this proof more than one year after it is required, unless the claimant was legally incapacitated.

Duties of Agent [627.610 F.S.]

A policyowner can report a claim either to the insurer or to the insurer's agent. If an agent is notified, he or she must immediately report the claim to the insurance company.

Legal Actions [627.613, .616, 95.11 F.S.]

An insured cannot sue the insurer on a claim before 60 days have passed since filing written proof of loss. However, an insured cannot bring suit after five years has passed since filing proof of loss.

Time of Payment of Claims [627.613 F.S.]

Once the insurer receives proof of loss, it will pay the benefits due to the insured, the beneficiary, or the insured’s estate. If benefits are to be paid over a period of time, they cannot be paid any less often than monthly.

Health insurers must reimburse claims within 45 days after receiving the claim. If a claim is contested, the insurer must pay or deny the claim within 60 days after receiving additional information requested regarding the claim.

Medical Examination [627.615 F.S.]

The insurer has the right to conduct a physical examination of the insured whenever and as often as reasonably necessary to investigate a claim. The insurer may also conduct an autopsy of the insured in Florida during the contestability period unless the law forbids it.

Change of Beneficiary [627.617 F.S.]

Unless the insured makes an irrevocable beneficiary designation, the insured retains the right to change the beneficiary by giving written notice to the insurer. Consent of any beneficiary is not required for the insured to surrender or assign the policy or to change any beneficiary, or for other changes in the policy.

Optional Policy Provisions

Accident and health insurance policies issued in Florida may contain certain optional provisions, which provide additional protection for the insurer as well as the insured. Though they are not required by law, they must follow approved standards in content and form.

Change of Occupation [627.619 F.S.]

The insurer is allowed to reduce the benefits payable under the policy if the insured changes his or her occupation to one that is more hazardous than the one for which the premiums were set. Conversely, if the insured changes his or her occupation to one that is less hazardous than the one for which the premiums were set, the insurer may reduce the premium. Any excess unearned premium will be returned to the insured.

Misstatement of Age or Sex [627.620 F.S.]

If the insured misstated his or her age or sex in the application, benefits payable will be what the premiums would have purchased at the correct age or sex.

Other Insurance [627.622 F.S.]

If a person has other insurance that provides benefits on an expense-incurred (or for-service) basis, the total amount of coverage the person can have from a single insurer will be limited to a specific maximum amount, no matter how many health insurance policies have been issued to the person. The benefits that an insurer will pay for expenses incurred will be prorated if the insurer was not notified of other existing coverage for the same risk. This prevents overinsurance of the person. Any premiums paid for excess coverage will be returned to the insured.

Maternity Benefits Optional in Individual Policies

Individual health insurance policies may or may not provide maternity benefits. If an individual policy covers maternity services, the policy must meet minimum standards prescribed by law, discussed next.

Benefits Required in Group Plans [627.6574 F.S.]

A group health insurance policy or HMO contract is not required to provide benefits for maternity services. However, if a group policy or contract covers such care, certain minimum requirements must be met.

For example, a policy must provide coverage for birth centers and midwives, and cannot limit the length of stay in a hospital following childbirth to less than is medically necessary. In addition, post-delivery care must be provided to the mother and newborn, including immunization.

For Your Review

• By law, accident and health insurance policies issued in Florida must include certain provisions. • Changes to a health insurance contract can only be made or endorsed by an officer of the insurance company. • After two years, a health insurance policy becomes incontestable on the basis of statements made in the application, unless the misstatements were made with the intent to defraud the insurer. • A policyholder is entitled to a grace period of 7, 10, or 31 days in which to pay the premium due. • The policy remains in force during the grace period. • Policies that cover persons age 64 or older and that have been in force for at least one year have an additional 21-day grace period before a policy will lapse due to nonpayment of premium. • A reinstated policy will cover losses from accidental injury after the date of reinstatement and losses from sickness that begins more than ten days after reinstatement. • Written notice of a claim is due to the insurer within 20 days of the loss, or as soon thereafter as reasonably possible. • After receiving notice of a claim, the insurer must within 15 days provide the claimant with the forms to file proof of loss. • Unless the claimant is legally incapacitated, he or she must file proof of loss with the insurer within one year after it is required. • The insurer can conduct a physical examination of the insured whenever necessary to investigate a claim. • Unless the insured makes an irrevocable beneficiary designation, the insured retains the right to change the beneficiary by giving written notice to the insurer.

• The insurer may adjust the benefits or premium if the insured changes occupations to one that is more or less hazardous than the one for which the policy was written. • If the insured's age or sex was misstated in the application, benefits will be adjusted to be what the premiums would have purchased at the correct age or sex. • The other insurance provision prorates the benefits that an insurer will pay when the insured is covered by more than one insurer, thus preventing overinsurance of the individual. • Individual and group health insurance policies may or may not provide benefits for maternity care. • If a policy covers maternity care, it must provide coverage for birth centers and midwives and must provide post-delivery care to the mother and newborn.

QUIZ

Question 1

A claimant on a health insurance policy must give written notice of the claim to the insurer within how many days following a loss? a) 7

b) 20

c) 14 d) 10

Question 2

Eric fails to pay the annual premium on his major medical insurance policy. The grace period provision allows him to pay the premium within how many days after the due date? a) 21

b) 31

c) 14 d) 7

Question 3

Bill believes he has a cause of action against his health insurer for its refusal to pay benefits on a claim. He filed written proof of loss on April 1. Not having received a response by May 1, he decides to take legal action. His attorney will probably advise him to

a) wait

b) file proof of loss again c) file suit d) cancel the policy

Question 4

If Jack takes a new job that is less hazardous than the job he had when he obtained health coverage, the insurer may a) Cancel the policy b) Take no action c) Increase the benefits

d) Reduce the premium