A policy of "Major Medical Expense Coverage" provides
hospital, medical, and surgical coverage as follows:
(1) The aggregate maximum is not less than
$10,000 per covered person.
(2) The
copayment by a covered person is not more than 25% of covered charges except
that the copayment percentage applicable to paragraph (7) of §
88.166 of this title (relating to
coverage of each covered person) may not be more than 50%.
(3) The deductible shall be stated on a per
person, per family, per illness, per benefit period, or per year basis, or a
combination of such bases. The deductible shall be not more than 5% of the
maximum limit under the coverage unless the policy is written to complement
underlying hospital and medical insurance in which case such deductible may be
increased by the amount of the benefits provided by such underlying insurance.
If the deductible includes benefits provided by underlying hospital and medical
insurance, it shall be known as a variable deductible and shall be subject to
the following requirements:
(i) The sales
material and policy forms for this type of coverage shall clearly and fully
describe the variable deductible provision.
(ii)
Sales material describing the variable deductible shall be left
with the applicant at the time the application is executed.
(iii) The policy shall contain a provision
which will permit the insured to increase or decrease his basic deductible to
reflect his changing needs and changes in his other medical coverage. Such
change will be permitted on any policy whenever subject to an appropriate
adjustment of premiums. No evidence of insurability shall be required in
connection with a decrease in the basic deductible.
(iv) The minimum basic dollar deductible
shall be $750.
(v) Policies shall
provide for claim payments on a pro rata basis in the event that other policies
of the insured contain similar deductible provisions.
(vi) The insurance company shall remind the
insured of his right to adjust the deductible with each renewal notice. This
may be accomplished by a question or questions on the renewal notice. These
questions would concern themselves with any changes in the basic benefits of
the policyholder.
(vii) An
explanation of the variable deductible provision shall be included in the
outline of coverage and shall be worded substantially similar to the following:
Your Major Medical Expense Policy is designed to
coordinate its coverage with benefits provided under other medical expense
coverage. This is done by a deductible amount' which is the flat amount of the
Basic Deductible shown on page _____________ of your policy or the amount of
benefits paid under other medical expense coverage if that is greater.
If this feature of your policy is not understood contact your
agent or the company immediately.
In the application attached to your policy, you were asked
to furnish details of any other medical expense coverage applicable to Covered
Persons under your policy so that your choice of the flat amount Basic
Deductible could be an appropriate one under the circumstances. If the extent
of such other coverage changes in the future, it may be that you should
consider a change in the Basic Deductible amount in accordance with the
provision of your policy entitled Privilege of Changing Basic Deductible.' In
such event, we suggest that you get in touch with your agent or company, who
will be glad to assist you.
(4) The maximum benefit period for an "each cause" type of policy,
where a separate deductible is required for each sickness and accident, is not
less than 18 months. The maximum benefit period for an "all cause" type of
policy, where separate deductibles are not required for each sickness or
accident, is not less than the number of days remaining in the calendar or
policy year after the deductible has been met.
(5) The period allowed to satisfy the
deductible shall be at least 90 days.
