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Oregon Bulletin

March 1, 2011

 

Department of Consumer and Business Services,
Insurance Division
Chapter 836

Rule Caption: Annual Financial Reports for Self-Insured Groups.

Adm. Order No.: ID 1-2011

Filed with Sec. of State: 2-4-2011

Certified to be Effective: 2-4-11

Notice Publication Date: 1-1-2011

Rules Adopted: 836-011-0250, 836-011-0253, 836-011-0255, 836-011-0258, 836-011-0260

Subject: These rules clarify the requirements for annual financial statements filed by self-insured groups comprising three or more public bodies. In particular the rules specify how to calculate annual contributions, require the financial statement to be supported by an actuarial opinion and provide a due date for filing an annual statement.

Rules Coordinator: Sue Munson—(503) 947-7272

836-011-0250

Authority; Purpose; Scope

(1) OAR 836-011-0250 to 836-011-0260 are adopted by the Director of the Department of Consumer and Business Services pursuant to ORS 731.244. The purpose of OAR 836-011-0250 to 836-011-0260 is to improve the Director’s ability to determine whether a self-insurance program satisfies the financial requirements of ORS 30.282 and 731.036 to be exempt from the Insurance Code and to clarify the components of the annual financial statement required under ORS 30.282 and 731.036, including the timeline for providing the annual financial statement to the program participants and to the director.

(2) OAR 836-011-0250 to 836-011-0260 apply to every public body that establishes a self-insurance program that is exempt from the Insurance Code under ORS 30.282 and 731.036.

(3) OAR 836-011-0250 to 836-011-0260 do not limit the Director’s authority to order, conduct or perform examinations of self insurance programs to determine whether the program complies with applicable criteria for exemption from the Insurance Code.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 30.282, 731.036

Hist.: ID 1-2011, f. & cert. ef. 2-4-11

836-011-0253

Definitions

As used in OAR 836-011-0250 to 836-011-0260:

(1) “Annual contributions” means total contributions paid by program participants less any premium collected from participants to procure insurance of any kind.

(2) “Annual financial statement” means the financial report required under ORS 731.036 or the annual independently audited financial statement provided to program participants under ORS 30.282. The report described in this rule must comply with all applicable Government Accounting Standards Board requirements.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 30.282, 731.036

Hist.: ID 1-2011, f. & cert. ef. 2-4-11

836-011-0255

Reserve Adequacy

In order to demonstrate that a self-insurance program complies with the reserve adequacy provisions contained in ORS 30.282(6)(d) or 731.036(6)(e), the demonstration of compliance must be accompanied and supported by the written actuarial report issued by a qualified actuary. As used in this rule, “qualified actuary” means a person who is either:

(1) A member in good standing of the Casualty Actuarial Society; or

(2) A member in good standing of the American Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 30.282, 731.036

Hist.: ID 1-2011, f. & cert. ef. 2-4-11

836-011-0258

Unallocated Reserve Account

In order to demonstrate compliance with the requirement to maintain an unallocated reserve account as set forth in ORS 30.282(6)(e)in which total assets exceed total liabilities by the greater of 25 percent of annual contributions or $250,000, total liabilities must include all liabilities identified by a qualified actuary including but not necessarily limited to the items listed in ORS 30.282(6)(d).

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 30.282, 731.036

Hist.: ID 1-2011, f. & cert. ef. 2-4-11

836-011-0260

Distribution of Annual Financial Statement

A public body or the administrator of a self-insurance program must make the annual financial statement available to program participants and to the director not later than six months after the close of the program’s fiscal year.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 30.282, 731.036

Hist.: ID 1-2011, f. & cert. ef. 2-4-11

 

Rule Caption: Annuity Suitability Model Rule.

Adm. Order No.: ID 2-2011

Filed with Sec. of State: 2-4-2011

Certified to be Effective: 2-4-11

Notice Publication Date: 11-1-2010

Rules Adopted: 836-080-0170, 836-080-0172, 836-080-0175, 836-080-0178, 836-080-0180, 836-080-0183, 836-080-0185, 836-080-0188, 836-080-0193

Rules Amended: 836-080-0090

Rules Ren. & Amend: 836-080-0095 to 836-080-0190

Subject: In recent years, the availability and complexity of annuities has increased dramatically. If a consumer purchases an annuity that is not appropriate for the consumer’s situation, the consumer may be harmed or fail to receive the expected benefit from the annuity. Determining the suitability of a particular annuity product for a particular consumer requires that the insurer and producer have a thorough knowledge of annuities in general, financial implications of choosing an annuity and the particular products. Products change rapidly. These rules, which in large part adopt the National Association of Insurance Commissioners’ (NAIC) Model Rule #275, Suitability in Annuity Transactions (April 2010 version) will ensure that the insurer and producer evaluate the suitability of an annuity for a particular client and also ensure that producers who sell annuities receive minimum training about annuities and suitability.

Rules Coordinator: Sue Munson—(503) 947-7272

836-080-0090

Suitability in the Sale of Life Insurance

A person may not recommend to a consumer the purchase, sale or replacement of a life insurance policy, or any rider, endorsement or amendment to the policy, without reasonable grounds to believe that the recommendation or transaction is not unsuitable for the consumer based upon reasonable inquiry concerning the consumer’s insurance objectives, financial situation and needs, age and other relevant information known by the person. For the purpose of this rule, when a person recommends a group life insurance policy, “consumer” refers to the intended group policyholder.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 6-2004, f. 8-26-04, cert. ef. 1-1-05; ID 2-2011, f. & cert. ef. 2-4-11

836-080-0170

Statutory Authority; Purpose

(1) OAR 836-080-0170 to 836-080-0190 are issued under the general rulemaking authority of the director in ORS 731.244 to aid in the effectuation of ORS Chapter 746, especially the provisions of ORS 746.100, 746.110 and 746.240.

(2) The purpose of this rule is to require insurers to establish a system to supervise recommendations and to set forth standards and procedures for recommendations to consumers that result in transactions involving annuity products so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed.

(3) Nothing in OAR 836-080-0170 to 836-080-0190 shall be construed to create or imply a private cause of action for a violation of OAR 836-080-0170 to 836-080-0190.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

836-080-0172

Applicability

OAR 836-080-0170 to 836-080-0190 apply to any recommendation to purchase, exchange or replace an annuity made to a consumer by an insurance producer, or an insurer where no insurance producer is involved, that results in the purchase, exchange or replacement recommended.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

836-080-0175

Exemptions

Unless otherwise specifically included, OAR 836-080-0170 to 836-080-0190 do not apply to transactions involving:

(1) Direct response solicitations where there is no recommendation based on information collected from the consumer pursuant to OAR 836-080-0170 to 836-080-0190;

(2) Contracts used to fund:

(a) An employee pension or welfare benefit plan that is covered by the federal Employee Retirement and Income Security Act as amended;

(b) A plan described by sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the Internal Revenue Code, as amended, if established or maintained by an employer;

(c) A government or church plan defined in section 414 of the Internal Revenue Code, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under section 457 of the Internal Revenue Code;

(d) A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(e) Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or

(f) Formal prepaid funeral contracts.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

836-080-0178

Definitions

(1) “Annuity” means an insurance product that is individually solicited, whether the product is classified as an individual or group annuity.

(2) “Insurer” means a company required to be licensed under the laws of this state to provide insurance products, including annuities.

(3) “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance, including annuities.

(4)  “Recommendation” means advice provided by an insurance producer, or an insurer where no insurance producer is involved, to an individual consumer that results in a purchase, exchange or replacement of an annuity in accordance with that advice. 

(5) “Replacement” has the meaning given in OAR 836-080-0005.

(6) “Suitability information” means information that is reasonably appropriate to determine the suitability of a recommendation, including the following:

(a) Age;

(b) Annual income;

(c) Financial situation and needs, including the financial resources used for the funding of the annuity;

(d) Financial experience;

(e) Financial objectives;

(f) Intended use of the annuity;

(g) Financial time horizon;

(i) Existing assets, including investment and life insurance holdings;

(j) Liquidity needs;

(k) Liquid net worth;

(l) Risk tolerance; and

(m) Tax status.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

836-080-0180

Duties of Insurers and of Insurance Producers

(1) As used in this rule, “FINRA” means the Financial Industry Regulatory Authority or a succeeding agency.

(2) In addition to the disclosure requirements of OAR 836-051-0900 to 836-051-0925, in recommending to a consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, the insurance producer, or the insurer where no insurance producer is involved, shall have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer as to his or her investments and other insurance products and as to his or her financial situation and needs, including the consumer’s suitability information, and that there is a reasonable basis to believe all of the following:

(a) The consumer has been reasonably informed of various features of the annuity, such as the potential surrender period and surrender charge, potential tax penalty if the consumer sells, exchanges, surrenders or annuitizes the annuity, mortality and expense fees, investment advisory fees, potential charges for and features of riders, limitations on interest returns, insurance and investment components and market risk;

(b) The consumer would benefit from certain features of the annuity, such as tax deferred growth, annuitization or death or living benefit;

(c) The particular annuity as a whole, the underlying subaccounts to which funds are allocated at the time of purchase or exchange of the annuity, and riders and similar product enhancements, if any, are suitable (and in the case of an exchange or replacement, the transaction as a whole is suitable) for the particular consumer based on his or her suitability information; and

(d) In the case of an exchange or replacement of an annuity, the exchange or replacement is suitable including taking into consideration whether:

(A) The consumer will incur a surrender charge, be subject to the commencement of a new surrender period, lose existing benefits (such as death, living or other contractual benefits), or be subject to increased fees, investment advisory fees or charges for riders and similar product enhancements;

(B) The consumer would benefit from product enhancements and improvements; and

(C) The consumer has had another annuity exchange or replacement and, in particular, an exchange or replacement within the preceding 36 months.

(3) Prior to the execution of a purchase, exchange or replacement of an annuity resulting from a recommendation, an insurance producer, or an insurer where no insurance producer is involved, shall make reasonable efforts to obtain the consumer’s suitability information

(4) Except as permitted under section (3) of this rule, an insurer shall not issue an annuity recommended to a consumer unless there is a reasonable basis to believe the annuity is suitable based on the consumer’s suitability information.

(5) (a) Except as provided under subsection (b) of this section, neither an insurance producer, nor an insurer, shall have any obligation to a consumer under subsection A or C related to any annuity transaction if:

(A) No recommendation is made;

(B) A recommendation was made and was later found to have been prepared based on materially inaccurate information provided by the consumer;

(C) A consumer refuses to provide relevant suitability information and the annuity transaction is not recommended; or

(D) A consumer decides to enter into an annuity transaction that is not based on a recommendation of the insurer or the insurance producer.

(b) An insurer’s issuance of an annuity subject to subsection (a) of this section shall be reasonable under all the circumstances actually known to the insurer at the time the annuity is issued.

(6) An insurance producer or, where no insurance producer is involved, the responsible insurer representative, shall at the time of sale:

(a) Make a record of any recommendation subject to section (2) of this rule;

(b) Obtain a customer signed statement documenting a customer’s refusal to provide suitability information, if any; and

(c) Obtain a customer signed statement acknowledging that an annuity transaction is not recommended if a customer decides to enter into an annuity transaction that is not based on the insurance producer’s or insurer’s recommendation.

(7) (a) An insurer shall establish a supervision system that is reasonably designed to achieve the insurer’s and its insurance producers’ compliance with OAR 836-080-0170 to 836-080-0190. The supervision system must include but need not be limited to, the following:

(A) The insurer shall maintain reasonable procedures to inform its insurance producers of the requirements of OAR 836-080-0170 to 836-080-0190 and shall incorporate the requirements of OAR 836-080-0170 to 836-080-0190 into relevant insurance producer training manuals;

(B) The insurer shall establish standards for insurance producer product training and shall maintain reasonable procedures to require its insurance producers to comply with the requirements of OAR 836-080-0185;

(C) The insurer shall provide product-specific training and training materials that explain all material features of its annuity products to its insurance producers;

(D) The insurer shall maintain procedures to review each recommendation prior to issuance of an annuity that are designed to ensure that there is a reasonable basis to determine that a recommendation is suitable. The review procedures may apply a screening system for the purpose of identifying selected transactions for additional review and may be accomplished electronically or through other means including, but not limited to, physical review. An electronic or other system may be designed to require additional review only of those transactions identified for additional review by the selection criteria;

(E) The insurer shall maintain a reasonable procedure to detect recommendations that are not suitable. The procedure may include, but need not be limited to, confirmation of consumer suitability information, systematic customer surveys, interviews, confirmation letters and programs of internal monitoring. Nothing in this paragraph prevents an insurer from complying with this paragraph by applying sampling procedures, or by confirming suitability information after issuance or delivery of the annuity; and

(F) The insurer annually shall provide a report to senior management, including to the senior manager responsible for audit functions, which details a review, with appropriate testing, reasonably designed to determine the effectiveness of the supervision system, the exceptions found, and corrective action taken or recommended, if any.

(b)(A) Nothing in this section restricts an insurer from contracting for performance of a function (including maintenance of procedures) required under subsection (a) of this section. An insurer is responsible for taking appropriate corrective action and may be subject to sanctions and penalties under OAR 836-080-0185 regardless of whether the insurer contracts for performance of a function and regardless of the insurer’s compliance with subparagraph (B) of this paragraph.

(B) An insurer’s supervision system under subsection (a) of this section shall include supervision of contractual performance under this subsection. The supervision must include, but is not limited to, the following:

(i) Monitoring and, as appropriate, conducting audits to assure that the contracted function is properly performed; and

(ii) Annually obtaining a certification from a senior manager who has responsibility for the contracted function that the manager has a reasonable basis to represent, and does represent, that the function is properly performed.

(C) An insurer is not required to include in its system of supervision an insurance producer’s recommendations to consumers of products other than the annuities offered by the insurer.

(8)An insurance producer shall not dissuade, or attempt to dissuade, a consumer from:

(a) Truthfully responding to an insurer’s request for confirmation of suitability information;

(b) Filing a complaint; or

(c) Cooperating with the investigation of a complaint.

(8) (a) Sales made in compliance with FINRA requirements pertaining to suitability and supervision of annuity transactions shall satisfy the requirements under OAR 836-080-0170 to 836-080-0190. This subsection applies to FINRA broker-dealer sales of variable annuities and fixed annuities if the suitability and supervision is similar to those applied to variable annuity sales. However, nothing in this subsection shall limit the director’s ability to investigate and enforce the provisions of OAR 836-080-0170 to 836-080-0190.

(b) In order for subsection (b) to apply, an insurer shall:

(A) Monitor the FINRA member broker-dealer using information collected in the normal course of an insurer’s business; and

(B) Provide to the FINRA member broker-dealer information and reports that are reasonably appropriate to assist the FINRA member broker-dealer to maintain its supervision system.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

836-080-0183

Insurance Producer Training

(1) An insurance producer shall not solicit the sale of an annuity product unless the insurance producer has adequate knowledge of the product to recommend the annuity and the insurance producer is in compliance with the insurer’s standards for product training. An insurance producer may rely on insurer-provided product-specific training standards and materials to comply with this section.

 (2) (a)(A) An insurance producer who engages in the sale of annuity products shall complete a one-time four credit training course provided by a continuing education provider registered with the department.

 (B) Individuals who obtain a life insurance line of authority on or after the effective date of OAR 836-080-0170 to 836-080-0190 may not engage in the sale of annuities until the insurance producer completes the annuity training course required under this section.

(b) The minimum length of the training required under this section shall be sufficient to qualify for at least four continuing education credits, but may be longer.

(c) The training required under this subsection shall include information on the following topics:

(A) The types of annuities and various classifications of annuities;

(B) Identification of the parties to an annuity;

(C) How fixed, variable and indexed annuity contract provisions affect consumers;

(D) The application of income taxation of qualified and non-qualified annuities;

(E) The primary uses of annuities; and

(F) Appropriate sales practices, replacement and disclosure requirements.

(d) Providers of courses intended to comply with this subsection shall cover all topics listed in the prescribed outline and may not present any marketing information or provide training on sales techniques or provide specific information about a particular insurer’s products. Additional topics may be offered in conjunction with and in addition to the required outline.

(e) A provider of an annuity training course intended to comply with this section shall register as a continuing education provider in this state and comply with the rules and guidelines applicable to insurance producer continuing education courses as set forth in ORS 744.072 and OAR 836-071-0180 to 836-071-0250.

 (f) Annuity training courses may be conducted and completed by classroom or self-study methods in accordance with ORS 744.072 and OAR 836-071-0180 to 836-071-0250.

(g) Providers of annuity training shall comply with the reporting requirements and shall issue certificates of completion in accordance with OAR 836-071-0180 to 836-071-0250.

 (h) The satisfaction of the training requirements of another state that are substantially similar to the provisions of this subsection shall be deemed to satisfy the training requirements of this section in this state.

(i) An insurer shall verify that an insurance producer has completed the annuity training course required under this section before allowing the insurance producer to sell an annuity product for that insurer. An insurer may satisfy its responsibility under this section by obtaining certificates of completion of the training course or obtaining reports provided from a reasonably reliable commercial database vendor that has a reporting arrangement with approved insurance continuing education providers.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

836-080-0185

 Compliance Mitigation; Penalties

(1) An insurer is responsible for compliance with OAR 836-080-0170 to 836-080-0190. If a violation occurs, either because of the action or inaction of the insurer or its insurance producer, the director may order:

(a) An insurer to take reasonably appropriate corrective action for any consumer harmed by violation of OAR 836-080-0170 to 836-080-0190 by the insurer, or by the insurer’s producer;

(b) A general agency, independent agency or the insurance producer to take reasonably appropriate corrective action for any consumer harmed by the insurance producer’s violation of OAR 836-080-0170 to 836-080-0190; and

(c) Appropriate penalties and sanctions.

(2) Violation of any provision of OAR 836-080-0170 to 836-080-0190 is an unfair trade practice under ORS 746.240.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

836-080-0188

Recordkeeping

(1) Insurers, general agents, independent agencies and insurance producers shall maintain or be able to make available to the Director records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for three years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of an insurance producer.

(2) Records required to be maintained by under section (1) of this rule may be maintained in paper, photographic, micro-process, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

836-080-0190

Annuity Sales; Disclosure Not a Defense

The fact that a person made a disclosure to a consumer about the nature of an annuity in connection with the sale of the annuity to the consumer is not a defense by itself to a determination by the Director under OAR 836-080-0170 to 836-080-0188 that the sale was unsuitable with respect to the consumer.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 14-2008, f. & cert. ef. 8-15-08, Renumbered from 836-080-0095, ID 2-2011, f. & cert. ef. 2-4-11

836-080-0193

Effective Date and Operative Date

(1) OAR 836-080-0170 to 836-080-0190 and the amendments to OAR 836-080-0090 become operative on July 1, 2011, except that the requirement under OAR 836-080-0183 (2) shall become operative on August 1, 2011 or six months after the director determines that the requisite training is available.

(2) Insurance producers who hold a life insurance line of authority on the effective date of OAR 836-080-0170 to 836-080-0190 and who desire to sell annuities shall complete the requirements of OAR 836-080-0183 within six months after July 1, 2011.

Stat. Auth.: ORS 731.244

Stats. Implemented: ORS 746.100, 746.110 & 746.240

Hist.: ID 2-2011, f. & cert. ef. 2-4-11

 

Rule Caption: Non-grandfathered Individual Health Insurance Open Enrollment Periods for Persons under 19 Years of Age.

Adm. Order No.: ID 3-2011

Filed with Sec. of State: 2-10-2011

Certified to be Effective: 2-10-11

Notice Publication Date: 11-1-2010

Rules Adopted: 836-100-0010, 836-100-0015

Rules Repealed: 836-100-0010(T), 836-100-0015(T)

Subject: These rules are necessary to make permanent provisions of temporary rules that implement Oregon law in a manner that is consistent with provisions of the federal Affordable Care Act. The rules prohibit insurers from limiting or denying coverage for persons under the age of 19 because of health status or preexisting condition; they establish uniform open enrollment periods in February and August of each year during which all insurers offering subject policies must allow persons under the age of 19 years to enroll in, as a dependent or as the primary policyholder if eligible, and obtain individual health insurance coverage; they provide insurers with standards for providing notice to consumers about these enrollment periods; the rules require the effective date of coverage obtained during the February and August open enrollment periods to be the earlier of the first eligible plan date according to the terms of the plan or the first of the following month. Under specified, limited circumstances, these rules exempt subject insurers from the requirement that they reinsure previously enrolled individuals who reapply within a 12-month period.

      These rules will ensure that all carriers offering individual health insurance subject to Sections 1201 and 10103 of the federal Affordable Care Act do so in a manner that is consistent with the requirements of the law, which is essential to the continuing stability and competitiveness of the health insurance market in Oregon. These rules are necessary to avoid public harm because in the absence of certainty provided by this rule, health insurers may stop offering individual policies to persons less than 19 years of age. This rule is necessary to ensure that insurers are consistently and uniformly offering such coverage, and to provide for the broad availability of coverage available to Oregonians.

Rules Coordinator: Sue Munson—(503) 947-7272

836-100-0010

Non-grandfathered Individual Health Insurance Enrollment Periods for Persons Under 19 Years of Age

(1) An insurer that issues a non-grandfathered individual health insurance policy subject to Sections 1201 and 10103 of the Patient Protection and Affordable Care Act, Public Law 111-148, issued or renewed on or after September 23, 2010, may not limit, exclude, or deny health insurance coverage under a non-grandfathered individual health insurance policy based on health status or preexisting condition of a person under the age of 19 years.

(2) Except as provided in section (4) of this rule, an insurer that issues a non-grandfathered individual health insurance policy subject to Sections 1201 and 10103 of the Patient Protection and Affordable Care Act, Public Law 111-148, issued or renewed on or after September 23, 2010 that provides coverage for persons under 19 years of age, must allow a person under the age of 19 years to enroll in, as a dependent or as the primary policyholder if eligible, and obtain individual health insurance coverage during the following time periods:

(a) The month of February each year beginning February 1, 2011.

(b) The month of August of each year beginning August 1, 2011.

(c) The 30-day period after the date the insurer receives notice of loss of other individual coverage if:

(A) Such notice is provided to the insurer no later than the 60th day after the loss of coverage;

(B) The loss of other coverage results from:

(i) Legal separation;

(ii) Divorce;

(iii) Cessation of dependent status;

(iv) Death of the primary policyholder; or

(v) Incurrence of a claim that meets or exceeds a lifetime limit on all benefits; and

(C) The person under 19 years of age is not eligible for group coverage.

(3) Health insurance coverage:

(a) Provided under subsections (2)(a) and (b) of this rule shall be effective on the earlier of the first eligible plan date according to the terms of the plan and the first day of the month following the date the insurer receives the application and initial premium for such coverage.

(b) Provided under subsection (2)(c) of this rule must be, subject to the choice of the applicant, as similar to the prior coverage as is offered by the insurer and shall be effective, upon payment of the premium on the first day following the loss of other coverage.

(c) Must be effective from the moment of birth for a newly born child of the insured in accordance with ORS 743A.090.

(d) Must be effective upon placement for adoption for an adopted child of the insured in accordance with ORS 743A.090.

(4) An insurer that issues a non-grandfathered individual health insurance policy subject to Sections 1201 and 10103 of the Patient Protection and Affordable Care Act, Public Law 111-148:

(a) Need not comply with section (2) of this rule if the insurer does not condition, deny, or otherwise limit eligibility for individual coverage based on health status or preexisting conditions of persons under 19 years of age.

(b) Need not provide coverage to a person under 19 years of age if the person previously had coverage with the insurer during the 12 months prior to the application for coverage and that coverage was terminated:

(A) For conduct that constituted the basis for a legally valid rescission;

(B) Except as provided in subsection (2)(c) of this rule, for failing to abide by the terms and conditions of the insurance contract, including but not limited to the failure to pay premiums in a timely manner; or

(C) Except as provided in subsection (2)(c) of this rule, by the policyholder.

(5) Except as provided in subsection (2)(c) of this rule, an insurer that issues an individual health insurance policy subject to Sections 1201 and 10103 of the Patient Protection and Affordable Care Act, Public Law 111-148 is not required to provide coverage to a person under 19 years of age as the primary policyholder.

Stat. Auth.: ORS 731.244 & 743.773

Stats Implemented: ORS 743.731, 743A.090 & 743.769

Hist.: ID 19-2010(Temp), f. & cert. ef. 9-23-10 thru 3-21-11; ID 3-2011, f. & cert. ef. 2-10-11

836-100-0015

Notice of Enrollment Periods for Persons Under 19 Years of Age in Non-grandfathered Individual Health Insurance Policies

(1) An insurer that issues a non-grandfathered health insurance policy that provides coverage to a person under the age of 19 years according to OAR 836-100-0010(2) must provide, at a minimum, written notice, which includes notice written in electronic format, of the enrollment periods listed in OAR 836-100-0010(2):

(a) To its policyholders at least 30 days prior to but no more than 60 days prior to each enrollment period;

(b) To the public by prominently posting such notice on its public website at least 30 days prior to the open enrollment period through the end of the open enrollment period; and

(c) In pre-enrollment materials.

(2) An insurer that issues a non-grandfathered health insurance policy that provides coverage to a person under the age of 19 years according to OAR 836-100-0010(2) must provide notice of the enrollment periods listed in OAR 836-100-0010(2)(c) to persons eligible for coverage during such enrollments within five business days after the insurer learns of the person’s eligibility.

(3) A health insurer covering persons under the age of 19 years according to OAR 836-100-0010(2) must implement eligibility and enrollment periods consistent with OAR 836-100-0010(2).

Stat. Auth.: ORS 731.244 & 743.773

Stats Implemented: ORS 743.731, 743A.090 & 743.769

Hist.: ID 19-2010(Temp), f. & cert. ef. 9-23-10 thru 3-21-11; ID 3-2011, f. & cert. ef. 2-10-11

 

Rule Caption: Changes to Long Term Care Insurance Claims Requirements.

Adm. Order No.: ID 4-2011

Filed with Sec. of State: 2-10-2011

Certified to be Effective: 2-10-11

Notice Publication Date: 11-1-2010

Rules Adopted: 836-052-0790

Rules Amended: 836-052-0636, 836-052-0756, 836-052-0776

Subject: These rules change exhibits to reflect changes in the National Association of Insurance Commissioners’ model law relating to long term care. In addition, a requirement is added so that insurers include information for policyholders about how to contact the Insurance Division when a claim is denied. Currently, insurers are not required to provide that information as they are for other kinds of insurance policies. Insurers are required to include information on a quarterly basis about benefits paid under a long term care policy. Two forms are revised and the language of the related rules revised to refer stakeholders to the Insurance Division website for the latest form. This will allow the Division to more quickly adapt to changes that insurers must make in all states.

Rules Coordinator: Sue Munson—(503) 947-7272

836-052-0636

Reporting Requirements

(1) Every insurer shall maintain records for each insurance producer of that insurance producer’s amount of replacement sales as a percent of the insurance producer’s total annual sales and the amount of lapses of long-term care insurance policies sold by the insurance producer as a percent of the insurance producer’s total annual sales.

(2) Reported replacement and lapse rates do not alone constitute a violation of insurance laws or necessarily imply wrongdoing. The reports are for the purpose of reviewing more closely agent activities regarding the sale of long-term care insurance.

(3) Every insurer shall report to the Director annually by June 30 the ten percent of its insurance producers with the greatest percentages of lapses and replacements as measured by section (1) of this rule using the form provided by the director on the Insurance Division website or a similar form and shall also include the following information in the annual report:

(a) The number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year.

(b) The number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year.

(4) Every insurer shall report to the Director annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied using the form provided by the director on the Insurance Division website or a similar form.

(5) As used in this rule:

(a) “Claim” means, subject to subsection (b) of this section, a request for payment of benefits under an in force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;

(b) “Denied” means the insurer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition;

(c) “Policy” means only long term care insurance; and

(d) “Report” means on a statewide basis.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244, 742.023, 743.013, 743.655, 743.656 & 746.240

Stats. Implemented: ORS 731.244, 742.003, 742.005, 742.009, 743.010(3), 743.013(3), 743.650, 743.653, 743.655, 743.656 & 746.240

Hist.: ID 3-2005, f. & cert. ef. 3-1-05; ID 10-2007, f. 12-3-07, cert. ef. 1-1-08; ID 4-2011, f. & cert. ef. 2-10-11

836-052-0756

Standards for Benefit Triggers

(1) A long-term care insurance policy shall condition the payment of benefits on a determination of the insured’s ability to perform activities of daily living and on cognitive impairment. Eligibility for the payment of benefits shall not be more restrictive than requiring either a deficiency in the ability to perform not more than three of the activities of daily living or the presence of cognitive impairment.

(2)(a) Activities of daily living shall include at least the following as defined in OAR 836-052-0516 and in the policy:

(A) Bathing;

(B) Continence;

(C) Dressing;

(D) Eating;

(E) Toileting; and

(F) Transferring;

(b) An insurer may use activities of daily living to trigger covered benefits in addition to those contained in subsection (a) of this section as long as they are defined in the policy.

(c) For purposes of this rule, a cognitive impairment must be a result of a clinically diagnosed organic dementia, including but not limited to Alzheimer’s disease or a related progressive degenerative dementia of an organic origin such as the following, by way of example only:

(A) Parkinson’s Disease;

(B) Huntington’s Disease;

(C) Creutzfeldt-Jakob Disease;

(D) Picks Disease;

(E) Multi-infarct dementia;

(F) Normal pressure hydrocephalus;

(G) Multiple sclerosis;

(H) Inoperable tumors of the brain.

(3) An insurer may use additional provisions for determining when benefits are payable under a policy, certificate or rider, but the provisions shall not restrict, and are not in lieu of, the requirements contained in sections (1) and (2) of this rule.

(4) For purposes of this rule, the determination of a deficiency shall not be more restrictive than:

(a) Requiring the hands-on assistance of another person to perform the prescribed activities of daily living; or

(b) Requiring that if the deficiency is due to the presence of a cognitive impairment, supervision or verbal cueing by another person is needed in order to protect the insured or others.

(5) Assessments of activities of daily living and cognitive impairment shall be performed by licensed or certified professionals, such as physicians, nurses or social workers.

(6) A long term care insurance policy shall include a clear description of the process for appealing and resolving benefit determinations.

(7) If an insurer denies payment of benefits under a long term care policy, the insurer shall include in its denial letter information about how the insured may contact the Insurance Division of the Department of Consumer and Business Services for assistance either by contacting the Insurance Division Consumer Advocacy Unit at its toll free telephone number or visiting the Division’s website at the website address currently provided by the Division as may be updated from time to time on the Division website.

(8) The requirements set forth in this rule are effective March 1, 2006, except for the following:

(a) The requirements of this rule apply to a long-term care policy or rider issued in this state on or after March 1, 2005.

(b) This rule does not apply to a certificate issued on or after March 1, 2006, under a group long-term care insurance policy as defined in ORS 743.652(3)(a) that was in force on March 1, 2005.

Stat. Auth.: ORS 731.244, 742.023, 743.013, 743.655, 743.656 & 746.240

Stats. Implemented: ORS 731.244, 742.003, 742.005, 742.009, 743.010(3), 743.013(3), 743.650, 743.653, 743.655, 743.656 & 746.240

Hist.: ID 3-2005, f. & cert. ef. 3-1-05; ID 10-2007, f. 12-3-07, cert. ef. 1-1-08; ID 4-2011, f. & cert. ef. 2-10-11

836-052-0776

Standard Format Outline of Coverage

(1) This rule implements, interprets and makes specific the provisions of ORS 743.655(7) in prescribing a standard format and the content of an outline of coverage. The format for the outline of coverage shall be as provided by the Department of Consumer and Business Services and displayed on the department’s website.

(2) The following requirements apply to the outline:

(a) The outline must be presented in the format prescribed on the department’s website and must be a free-standing document;

(b) The outline must be printed in no smaller than ten-point type;

(c) The outline may not contain material of an advertising nature;

(d) Text that is capitalized or underscored in the standard format outline of coverage on the department’s website may be emphasized by other means that provide prominence equivalent to the capitalization or underscoring.

(e) Use of the text and sequence of text of the standard format outline of coverage on the department’s website is mandatory, unless otherwise specifically indicated.

[ED. NOTE: Exhibits referenced are available from the agency.]

Stat. Auth.: ORS 731.244, 742.023, 743.013, 743.655, 743.656 & 746.240

Stats. Implemented: ORS 742.003, 742.005, 743.650, 743.655 & 743.656

Hist.: ID 20-1990, f. 12-13-90, cert. ef. 1-1-91; ID 1-1996, f. & cert. ef. 1-12-96; Renumbered from 836-052-0600, ID 3-2005, f. & cert. ef. 3-1-05; ID 10-2007, f. 12-3-07, cert. ef. 1-1-08; ID 4-2011, f. & cert. ef. 2-10-11

836-052-0790

Disclosure of Benefits Paid

(1) Each insurer shall provide at a minimum the following information at least quarterly to each insured, or a designee of the insured, who is currently receiving, or has received during that quarter, any benefits under a qualified long term care partnership insurance policy:

(a) The total benefits paid by the insurer for services rendered during the quarter;

(b) The total amount of benefits paid to date under the policy; and

(c) A general disclosure statement that informs the policyholder or the designee of the policyholder:

(A) The benefits paid are pursuant to a long term care partnership policy; and

(B) To determine if the benefits paid would qualify for asset protection, the policyholder should contact their local Medicaid office.

(2) An insurer shall provide the information required under section (1) of this rule each quarter until the claim is no longer active. The insurer may include the information required in section (1) of this rule either in a separate report to the insured or as part of the explanation of benefits provided to the insured when the insurer pays benefits under the long term care partnership policy.

Stat. Auth.: ORS 731.244, 743.655, 743.656 & 746.240

Stats. Implemented: ORS 743.650, 743.655 & 743.656

Hist.: ID 4-2011, f. & cert. ef. 2-10-11

Notes
1.) This online version of the OREGON BULLETIN is provided for convenience of reference and enhanced access. The official, record copy of this publication is contained in the original Administrative Orders and Rulemaking Notices filed with the Secretary of State, Archives Division. Discrepancies, if any, are satisfied in favor of the original versions. Use the OAR Revision Cumulative Index found in the Oregon Bulletin to access a numerical list of rulemaking actions after November 15, 2010.

2.) Copyright 2011 Oregon Secretary of State: Terms and Conditions of Use

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