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Admittedly, those are not words you see in the same sentence very often.
Nonetheless, Colorado Division of Insurance Bulletin No. B-6.3, issued in mid-June, is an interesting example of the effort by regulators to contend with new insurance product development features and technologies that were just not contemplated when state insurance laws were written. In the absence of any CO law specifically permitting or prohibiting use of pre-paid debit or stored value cards as a method of paying benefits, the CO bulletin provides guidance about insurers’ use of such cards for benefit payment purposes.
Insurers must afford claimants the choice of whether to receive their benefits in the form of a stored value card or a traditional check, draft, or EFT, and the right to subsequently revoke that choice at any time.
Insurers remain liable to claimants for any outstanding amounts in the event of insolvency or insufficiency of the issuer of the pre-paid debit or stored value card.
Claimants cannot be assessed any fees, charges or surcharges for depositing, withdrawing or drawing down or accessing the funds on their card, and “there should not be burdensome obstacles to the claimant being able to access the funds.”
The insurer and the card issuer must make full written disclosure of all aspects of the card system to claimants at the time the claimant chooses the form in which he/she wants to receive his benefits, including:
• All fees associated with use of the card, including ATM, paper statement, card replacement, overdraft, balance inquiry or similar fees;
• Customer service and contact information, including a list of financial institutions that participate in the card system in the claimant’s area and ATM’s where funds can be accessed;
• Whether interest is paid on funds remaining on the card, and to whom the interest is payable; and
• That the funds on the card are subject to Colorado’s unclaimed property laws.
Tuesday, August 7, 2012
Thursday, July 5, 2012
ERISA Stirrings?
The ERISA Advisory Council held hearings a couple weeks ago in Washington on “Managing Disability Risks in an Environment of Individual Responsibility.” Another hearing is slated for mid-August. The Council advises the Secretary of Labor on ERISA-related matters and is comprised of 15 appointees representing employee organizations, employers, the general public, and the insurance, corporate trust, accounting, actuarial, and investment fields.
The Council is examining the impact that the shift to Defined Contribution plans has had on access to employer-provided LTD coverage. The review is being conducted in the context of promoting conditions for a financially secure retirement for American workers, including how to protect employees’ retirement savings in periods of disability.
The broad questions that the council is reviewing and attempting to answer are:
1) What are employees offered?
2) What retirement income gaps are created during a period of disability?
3) What role can the DOL adopt to assist participants with respect to managing disability risks?
4) What role can the DOL undertake with respect to assisting employers to develop and offer effective disability benefit designs?
In regard to the last item, the Council is specifically looking at how LTD insurers adjudicate claims for persons going through the Social Security disability claim and appeal process and also “what revisions, if any, can be made to the [ERISA] claims regulations to explicitly address the application of the full and fair review standard as applied to disability plan,” including offset provisions.
This is no surprise, as regulators at the state and federal levels have had Social Security and other LTD policy offsets in their cross-hairs for the last couple years. What is not always well understood, though, is the crucial role that offsets play in keeping LTD premiums down and claimants from being over-insured relative to their normal work earnings.
It will be interesting to see if the August hearings bring more calls from consumer groups (and their allies in the plaintiff bar) for changes in the regulatory framework that governs employee benefit plans, including ERISA.
The Council is examining the impact that the shift to Defined Contribution plans has had on access to employer-provided LTD coverage. The review is being conducted in the context of promoting conditions for a financially secure retirement for American workers, including how to protect employees’ retirement savings in periods of disability.
The broad questions that the council is reviewing and attempting to answer are:
1) What are employees offered?
2) What retirement income gaps are created during a period of disability?
3) What role can the DOL adopt to assist participants with respect to managing disability risks?
4) What role can the DOL undertake with respect to assisting employers to develop and offer effective disability benefit designs?
In regard to the last item, the Council is specifically looking at how LTD insurers adjudicate claims for persons going through the Social Security disability claim and appeal process and also “what revisions, if any, can be made to the [ERISA] claims regulations to explicitly address the application of the full and fair review standard as applied to disability plan,” including offset provisions.
This is no surprise, as regulators at the state and federal levels have had Social Security and other LTD policy offsets in their cross-hairs for the last couple years. What is not always well understood, though, is the crucial role that offsets play in keeping LTD premiums down and claimants from being over-insured relative to their normal work earnings.
It will be interesting to see if the August hearings bring more calls from consumer groups (and their allies in the plaintiff bar) for changes in the regulatory framework that governs employee benefit plans, including ERISA.
Friday, April 20, 2012
Policy Delivery State Requirements
I saw an industry reference tool this week showing state requirements on time frames for delivery of policies.
With no small amount of nostalgia, I was reminded of my early years as a group life and disability benefits analyst, where I was close to the “hand to hand combat” that seemed to break out in haggling with the broker and the employer’s Benefits/HR rep over the wording of provisions in the new policy we were issuing vs. the one they had just terminated. In extreme examples, the process could drag on for months, with multiple iterations of the policy being swapped back and forth in what sometimes came to resemble a hostage exchange.
In fact, the laws of most states require that a policy be delivered “within a reasonable amount of time” after it is issued, “except where a condition required by the insurer has not been met.”
FL requires mail or delivery of a policy “not later than 60 days after the effective date of coverage.”
KY requires the policyholder’s agreement for delivery of the policy in electronic form, a common practice in the group world these days.
MD requires delivery of individual health insurance policies (including long term care) within 60 days of the effective date of the policy.
MN requires that agents deliver a policy, certificate or other evidence of coverage to the insured within 30 working days of the agent’s receipt, unless the insured agrees in writing that the agent may retain it.
NJ requires that agents deliver a policy, certificate or other evidence of coverage to the insured within 10 calendar days of the agent’s receipt, unless the insured agrees in writing that the agent may retain it for a longer period.
In addition, many states have laws requiring long term care policies to be issued within 30 days after approval of the application.
With no small amount of nostalgia, I was reminded of my early years as a group life and disability benefits analyst, where I was close to the “hand to hand combat” that seemed to break out in haggling with the broker and the employer’s Benefits/HR rep over the wording of provisions in the new policy we were issuing vs. the one they had just terminated. In extreme examples, the process could drag on for months, with multiple iterations of the policy being swapped back and forth in what sometimes came to resemble a hostage exchange.
In fact, the laws of most states require that a policy be delivered “within a reasonable amount of time” after it is issued, “except where a condition required by the insurer has not been met.”
FL requires mail or delivery of a policy “not later than 60 days after the effective date of coverage.”
KY requires the policyholder’s agreement for delivery of the policy in electronic form, a common practice in the group world these days.
MD requires delivery of individual health insurance policies (including long term care) within 60 days of the effective date of the policy.
MN requires that agents deliver a policy, certificate or other evidence of coverage to the insured within 30 working days of the agent’s receipt, unless the insured agrees in writing that the agent may retain it.
NJ requires that agents deliver a policy, certificate or other evidence of coverage to the insured within 10 calendar days of the agent’s receipt, unless the insured agrees in writing that the agent may retain it for a longer period.
In addition, many states have laws requiring long term care policies to be issued within 30 days after approval of the application.
Monday, April 9, 2012
Interstate Compact Soon To Develop Group Disability Product Standards
Having completed development of the Product Standards for individual disability income products, it looks like the Interstate Insurance Product Regulation Commission (IIPRC) will soon begin work to draft and refine the Product Standards for group disability income products. As noted in prior posts here, approvals of product filings submitted to the IIPRC are extended to all the states that belong to the IIPRC for that product. I am looking forward to being part of the group working with IIPRC staff in the effort to develop the group disability standards that will serve as the guide to future state filings of group disability products.
There are presently 39 states that belong to the IIPRC (plus PR and DC), with legislation pending in several other states. Holdouts include AR, AZ, CA, CT, DC, DE, FL, MT, ND, NY and SD.
There are presently 39 states that belong to the IIPRC (plus PR and DC), with legislation pending in several other states. Holdouts include AR, AZ, CA, CT, DC, DE, FL, MT, ND, NY and SD.
Tuesday, January 24, 2012
2012 Regulatory Stirrings
As state legislators and regulators kick into gear for 2012, here are some recent items of note for disability carriers …. NJ AB 1562 proposal would replace existing language in a current law requiring disclosure of broker commissions in “health insurance policies or contracts” with a more narrow reference to “health benefit plans”, thereby exempting disability policies….MA SB 452 proposal would require a conversion provision in all group health, accident and sickness policies, including STD and LTD .… GA HB 736 wins the award for first 2012 state proposal aiming to ban discretionary clauses in disability policies…. CA Insurance Department just announced the formation of a new unit within the Policy Approval Bureau to focus solely on health insurance policy reviews. The CA DOI also affirmed its commitment to improving its organizational effectiveness. The department is scheduled to meet today with industry representatives regarding ongoing policy form review and approval issues
Tuesday, December 20, 2011
MA and RI Regulatory News
A number of disability-related proposals have been languishing on the MA state legislative docket since early 2011. These included prohibitions on Social Security offsets, behavioral health disorder limitations and discretionary clauses in group LTD policies. Now it looks like the MA Joint Committee on Financial Services will hold hearings on these proposals January 24, 2012. For some time, MA has been a state that does not require filing for approval of new group disability products, and has very few regulations for such products. Stay tuned.
On another New England state regulatory note, we want to congratulate Phil Sheridan of the RI Insurance Division for receiving the Arlene Violet Award for Consumer Protection. Phil is one of the truly good people in the insurance regulatory world and a deserving recipient of this award. Way to go Phil!
On another New England state regulatory note, we want to congratulate Phil Sheridan of the RI Insurance Division for receiving the Arlene Violet Award for Consumer Protection. Phil is one of the truly good people in the insurance regulatory world and a deserving recipient of this award. Way to go Phil!
Wednesday, November 23, 2011
Notes From The State Filing Desk
As we head into the holiday season, here are a couple recent news items on the topic of state filings:
CA - The Department of Insurance (CDI) has a hearing scheduled for next week on its proposal to increase filing fees for most product lines. The proposed new fees for group disability filings will more than double the current filing fees for those products. The CDI last month also announced the retirement of the assistant chief counsel who had been overseeing the Policy Approval Bureau for the last several years, and appointed attorney Leslie Tick as the acting chief.
IN - In a letter to the Interstate Compact dated October 27, 2011, Insurance Commissioner Stephen Robertson advised that the Compact’s recently adopted uniform standards for individual disability income products “do not provide sufficient protections to the citizens of Indiana” and informed the Compact that IN planned to “opt-out” of those standards. Under Interstate Compact rules, a state such as IN that has approved the Compact may still “opt-out” of the Compact for specific products. in the event of an “opt-out”, insurers would still be required to submit their product for approval by the state that opted out, instead of deeming that state approved once the compact has approved the product filing.
Interstate Compact – a Compact representative stated at last week’s annual meeting of the National Conference of Insurance Legislators (NCOIL) that the Compact has completed the uniform standards for individual products ands will now begin development of uniform standards for group products. It is anticipated that group life will be the first product on the Compact’s docket.
CA - The Department of Insurance (CDI) has a hearing scheduled for next week on its proposal to increase filing fees for most product lines. The proposed new fees for group disability filings will more than double the current filing fees for those products. The CDI last month also announced the retirement of the assistant chief counsel who had been overseeing the Policy Approval Bureau for the last several years, and appointed attorney Leslie Tick as the acting chief.
IN - In a letter to the Interstate Compact dated October 27, 2011, Insurance Commissioner Stephen Robertson advised that the Compact’s recently adopted uniform standards for individual disability income products “do not provide sufficient protections to the citizens of Indiana” and informed the Compact that IN planned to “opt-out” of those standards. Under Interstate Compact rules, a state such as IN that has approved the Compact may still “opt-out” of the Compact for specific products. in the event of an “opt-out”, insurers would still be required to submit their product for approval by the state that opted out, instead of deeming that state approved once the compact has approved the product filing.
Interstate Compact – a Compact representative stated at last week’s annual meeting of the National Conference of Insurance Legislators (NCOIL) that the Compact has completed the uniform standards for individual products ands will now begin development of uniform standards for group products. It is anticipated that group life will be the first product on the Compact’s docket.
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