DEPARTMENT OF BANKING AND INSURANCE
DIVISION OF INSURANCEActuarial Services
Minimum Standards for Specified Disease and Critical Illness Coverages
Adopted New Rules: N.J.A.C. 11:4-53
Adopted Amendment: N.J.A.C. 11:4-16.5
Proposed: February 5, 2001 at 33 N.J.R. 361(a)
Adopted: September 5, 2001 by Karen L. Suter, Commissioner, Department of Banking and Insurance.
Filed: September 10, 2001 as R.2001 d.363 with substantive and technical changes not requiring additional public notice and comment (see N.J.A.C. 1:30-6.3).
Authority: N.J.S.A. 17:1-8.1, 17:1-15e, 17B:26-1h, 17B:26-45, 17B:30-1 et seq. and 17B:27-49.
Effective Date: October 1, 2001
Expiration Date: November 30, 2005.
Summary of Public Comments and Agency Responses:
The Department received a total of 14 comments from the following: United Actuarial Services on behalf of Conseco Health Insurance Company, AmeriHealth HMO, Inc. and AmeriHealth Insurance Company of New Jersey, Guarantee Trust Life Insurance Company, UnumProvident Corporation and its subsidiary Colonial Life & Accident Insurance Company, Mutual of Omaha Companies, Bankers Life and Casualty Company, Trustmark Insurance Company, American Fidelity Assurance Company, New Jersey State Association of Life Underwriters, Caldwell Megna on behalf of American Family Life Assurance Company of Columbus, Physicians Mutual Insurance Company, Health Insurance Association of America, Central States Health & Life Co. of Omaha, and United HealthCare Insurance Company.
COMMENT: One commenter stated that it is not clear from the proposal whether the Department intends to apply the proposed standards retroactively (that is, to policies/certificates already inforce), especially as they relate to group coverage.
RESPONSE: The proposed standards are intended to apply prospectively. Because specified disease coverage is currently prohibited in New Jersey, policies or certificates that provide specified disease insurance on a stand-alone basis should not be in force in New Jersey.
COMMENT: Four commenters were concerned with the Department's proposed definitions of "aggregate loss ratio" and "anticipated loss ratio," which state that no reserves shall be included in the benefits or premiums. The commenters indicated that it is appropriate to include claim reserves in the calculation in order to accurately reflect experience, particularly in the early years, and that the Department's approach will have a significant impact on a company's ability to write profitable business in New Jersey.
One commenter stated that the Department's definition of "anticipated loss ratio" requires present values to incorporate realistic rates of interest that are determined "before Federal taxes." According to the commenter, it is a common industry practice to make this calculation using an interest rate that is determined on an after-tax basis. The commenter stated that this makes a significant difference in the calculation of anticipated loss ratio, and that the Department's approach "implies that a company can earn an unreasonably high investment rate."
One commenter stated that defining loss ratios on a paid basis versus an incurred basis will have a significant impact on a company's ability to write profitable business in New Jersey.
RESPONSE: The use of aggregate and anticipated loss ratios and paid claims has been a standard used by the Department for decades with respect to Medicare supplement insurance. The standards for Medicare supplement insurance have been required by the Legislature, and approved by the Federal Health Care Financing Administration (HCFA). HCFA, through the National Association of Insurance Commissioners (NAIC), oversees Medicare supplement standards. The Department has not been made aware that these definitions and use of paid claims has impeded those carriers' earnings thus far. The Department prefers to calculate loss ratios on a paid basis because such methodology is objective and does not require the Department to review the setting of reserves by the company.
COMMENT: Seven commenters raised concerns about the Department's proposed provisions regarding pre-existing condition limitations at N.J.A.C. 11:4-53.3(b)6 and probationary or waiting periods at N.J.A.C. 11:4-53.3(b)12. A few of the commenters requested clarification that the provision allowing pre-existing condition exclusions as a form of medical underwriting does not require coverage to be issued on a "guaranteed issue" basis and does not preclude medical underwriting.
One commenter stated that the proposed pre-existing condition limitations and waiting period provisions appear to conflict. The commenter questioned whether a carrier would be permitted to impose a pre-existing condition limitation if a member received treatment for a specified disease or critical illness six months prior to seeking coverage.
Two commenters were concerned with the proposed prohibition on probationary or waiting periods. One commenter stated that a 30-day waiting period provides an important risk management tool for cancer policies since their experience indicates that the number of cancer claims diagnosed in the first month following the typical 30-day waiting period is significantly higher than it is during the average month of the first policy year. The commenters stated that prohibiting a waiting period would lead to anti-selection and an increase in premiums of about four percent for all other policyholders.
RESPONSE: The Department is not requiring coverage to be provided on a "guaranteed-issue" basis, and medical underwriting is not prohibited by these rules.
The pre-existing condition limitations and waiting period provisions do not conflict. A carrier would be permitted to impose a pre-existing condition limitation if an insured received treatment for a specified disease or critical illness six months prior to seeking coverage. However, the probationary or waiting period provision at N.J.A.C. 11:4-53.3(b)12 limits the period for which a carrier can provide no coverage whatsoever for any specified disease which would otherwise be covered by the policy.
The Department believes that people purchase specified disease and critical illness coverage with the expectation that, upon diagnosis with a certain disease, they will obtain the benefit they paid for. Accordingly, if a person is diagnosed with cancer during the first month following the effective date of coverage, they are entitled to receive benefits under their policy or contract. Medical underwriting and the pre-existing condition limitations permitted under these rules will greatly reduce any anti-selection risk.
COMMENT: Four commenters expressed concern with the proposed provision at N.J.A.C. 11:4-53.3(b)11 prohibiting any policy from reducing benefits based upon the attainment of any age or other condition, or upon the occurrence of any event(s). One commenter stated that critical illness policies typically include a benefit reduction because the nature of such losses is not as great after retirement, and the benefit reduction enables carriers to provide lower premiums for buyers in the higher issue ages.
One commenter requested clarification that different payment amounts would be permitted for less severe conditions (for example, a critical illness policy paying one amount for a heart attack, but a lesser amount for heart bypass surgery).
One commenter stated that the prohibition of a benefit reduction provision should exclude from the "occurrence of any event(s)" the payment of any benefit (partial or full) for critical illness coverage (for example, for a lump sum $50,000 policy, the carrier under no circumstances should be required to pay more than the coverage amount and any partial payment should reduce future benefits by that amount).
RESPONSE: The Department does not believe that it is appropriate to reduce benefits as a policyholder ages because the chances of contracting a specified disease increase with age.
N.J.A.C. 11:4-53.5(a) has been revised to allow payment of lesser benefit amounts for diseases with lower treatment costs. While benefits are not tied to treatment costs under critical illness policies or contracts, treatment costs are one of the criteria used by carriers to identify less severe conditions.
A carrier under a critical illness policy would not be expected to pay more than the full coverage amount. However, partial payment under such a policy would not be permitted. As stated above, a lump sum payment for the full coverage amount is payable upon diagnosis of a specified disease.
COMMENT: Two commenters addressed the proposed comprehensive medical coverage requirement at N.J.A.C. 11:4-53.3(b)9. One commenter supported the requirement, stating that specified disease and critical illness policies are intended to supplement non-covered medical expenses, lost income and other high costs associated with having a major illness. One commenter opposed the requirement, stating that no state makes medical insurance an underlying requirement for sale of critical illness coverage. The commenter added that such coverage is more like disability income than major medical coverage, and that neither disability income nor long term care coverage requires underlying medical coverage.
RESPONSE: As part of its responsibility to protect New Jersey consumers, the Department believes it is necessary to require carriers to ensure that applicants for specified disease and critical illness coverage have underlying comprehensive medical coverage. Specified disease policies are marketed as supplemental coverage that covers medical and other expenses associated with the diagnosis of certain illnesses that are not covered fully by comprehensive health policies. In order to provide supplemental coverage, there must be underlying comprehensive health coverage. Disability and long term care insurance do not supplement benefits provided by other forms of insurance, and therefore do not require proof of underlying basic health coverage.
COMMENT: One commenter was concerned about the proposed 30-day "free look" provision at N.J.A.C. 11:4-53.3(b)13. The commenter stated that to the extent an insured has received services related to a specified disease during the 30-day examination period, and returns the policy at the expiration of that period, the carrier should be permitted to either retain or prorate the refund.
RESPONSE: Although it would seem unlikely that an insured who has a claim during the 30-day "free look" period would return the policy, the Department would not object to a carrier's seeking an adjustment of any refund due an insured at the expiration of the 30-day period, up to the amount of the claim(s) actually paid.
COMMENT: One commenter suggested that the requirement at proposed N.J.A.C. 11:4-53.4(a)1 for a fixed-sum benefit of at least $100.00 per day for at least 365 days, be subject to a lifetime maximum. Otherwise, the commenter stated that a carrier could be asked to absorb inpatient costs of $36,500 annually per insured for a specified disease. The commenter noted that this inpatient cost would not include other inpatient or other costs unrelated to the specified disease.
RESPONSE: The proposed rules do not prohibit the use of a lifetime maximum in a specified disease or critical illness policy. However, a lifetime maximum must be sufficient to provide the minimum benefits required by N.J.A.C. 11:4-53.4(a).
COMMENT: One commenter requested that the proposed lump sum payment for non-medical costs provision at N.J.A.C. 11:4-53.4(c) be deleted. The commenter stated that most carriers routinely exclude such non-medical costs. The commenter added that the proposed provision is unclear as to whom it applies (to the insured, covered dependents, spouse or family members), and that household costs and living expenses could be broadly interpreted to require carriers to cover electric and gas bills, groceries, etc.
RESPONSE: The proposed provision states that a lump sum payment of at least $1,000 "may" be made under a specified disease policy. Accordingly, carriers are not required to provide such a benefit.
COMMENT: One commenter stated that proposed N.J.A.C. 11:4-53.4(d) should be deleted. This provision requires benefit payments to begin with the first day of care or confinement for the specified disease after the effective date of the policy even if diagnosis is made at a later date. The commenter stated that benefit payments should only start when a definitive diagnosis has been made, and that the insured should use his or her underlying hospital coverage until such diagnosis has been made.
RESPONSE: It is the Department's position that a delay in diagnosis should not result in the loss of coverage. The only fair and equitable standard that can apply in such situations is that benefits accrue from the first day of treatment or confinement even though a diagnosis is not made until a later date. Moreover, this standard can be found in the laws of most other states. The reliance on underlying hospital coverage is misplaced because specified disease coverage is intended to cover expenses not covered by comprehensive health insurance.
COMMENT: One commenter stated that proposed N.J.A.C. 11:4-53.4(e) should be deleted. This provision states that no specified disease policy shall require that the covered person incur an expense in order for benefits to be paid. The commenter stated that the basic premise of insurance is to cover health coverage expenses in the event they are incurred, and that this provision would require a carrier to pay benefits for a critical illness regardless of whether expenses are actually incurred.
RESPONSE: If the policy were expense incurred, it would be considered a "health benefit plan" as defined in the Individual Health Insurance Reform Act at N.J.S.A. 17B:27A-2, and subject to all the requirements of that Act. Moreover, if specified disease insurance requires incurral of an expense by the insured before a benefit is payable, such insurance must comply with all of the mandated benefit laws in this State because it would be a "health insurance policy that provides hospital or medical expense benefits." Finally, specified disease policies have been described by the carriers themselves as supplemental coverage that is not intended to replace comprehensive health insurance, but rather to cover expenses not covered by such policies.
COMMENT: One commenter stated that the proposed critical illness coverage contemplates payment of a level lump sum benefit upon diagnosis of a specified disease without any further benefits in connection with hospital or medical care for the treatment of the disease. The commenter further stated that "To the extent the plan determines that additional hospital or medical care is medically necessary and covered services, although related to the critical illness, it will be administratively difficult for carriers to separately identify these claims." As an example, the commenter stated that if a carrier includes ovarian cancer as a critical illness requiring coverage, it is unclear whether the carrier could deny payment for treatment of pneumonia or an infection after the member is diagnosed with ovarian cancer.
RESPONSE: This comment is not entirely clear. It is unclear whether "the plan" the commenter refers to relates to the insured's underlying medical coverage or the critical illness coverage. Nevertheless, as proposed N.J.A.C. 11:4-53.5(b) states, benefits under a critical illness policy are paid in a lump sum upon diagnosis of a covered disease. These benefits are paid regardless of actual expenses incurred by the insured, and there are no additional benefits paid under the policy in connection with that critical illness. Any benefits a person may obtain under his or her critical illness policy should have no bearing on a claim submitted for treatment under his or her underlying health policy, whether or not the treatment may be related to the same specified disease covered under the critical illness policy.
COMMENT: Three commenters expressed concern with the proposed critical illness coverage standards at N.J.A.C. 11:4-53.5. N.J.A.C. 11:4-53.5(a) requires the benefit amount for critical illness coverage to be available only in increments of $1,000. One commenter requested that the Department clarify what is meant by "benefit amounts." The commenters stated that most critical illness policies are sold with "face amount" benefits in increments of $1,000, and that the payout for the majority of covered critical illnesses is 100 percent of the face amount benefit with less serious covered illnesses payable at 25 percent of the face amount. The partial benefit reduces the face amount and allows for payment of the balance of proceeds if there are future diagnoses under the policy. The commenter questioned whether the rules would permit carriers to offer insureds a $50.00 per calendar year health screening benefit that does not reduce the face amount of the policy.
One commenter requested confirmation that the total face amount is payable one time only, thereby terminating the policy.
One commenter stated that requests for $1,000 increments could be made on a daily basis, causing an extreme administrative hardship for carriers. The commenter further stated that carriers should analyze coverage of expenses related to a critical illness to the extent services are covered and are medically necessary.
RESPONSE: Under critical illness policies, the policy is terminated upon payment of the full face amount of the policy. However, the Department is permitting payment of benefit amounts less than the face amount of the policy for less severe conditions, and is revising N.J.A.C. 11:4-53.5(a) to reflect that fact. Additionally, the Department would not object to carriers offering insureds a $50.00 per calendar year health screening benefit as an additional benefit that would not reduce the face amount of the policy. The $1,000 increments required by this provision refer to the face amount of the policy, not to incremental payment of benefits under the policy.
COMMENT: Two commenters questioned the requirement at proposed N.J.A.C. 11:4-53.5(b) that no survival period is necessary for a critical illness benefit to be payable. One commenter questioned whether New Jersey will permit critical illness coverage to be made part of a life insurance contract as a rider. One commenter stated that some carriers sell their plans in conjunction with life insurance, and in that case a survival period would be necessary to determine which benefit will apply. Such a survival period would not be necessary in a stand-alone policy.
RESPONSE: The rule allows critical illness policies to be issued as stand-alone policies, and does not permit the coverage to be issued as a rider to a life insurance policy.
COMMENT: Twelve commenters expressed opposition to the proposed minimum loss ratio amounts at N.J.A.C. 11:4-53.6(a), which for both specified disease and critical illness policies are at least 75 percent for group policies and at least 65 percent for individual policies. Some of the commenters requested that the minimum loss ratios be consistent with those for other similar limited benefit health products (for example, accident, disability income, hospital confinement and indemnity) set forth at N.J.A.C. 11:4-18.5, which are 55 percent for under age 65 guaranteed renewable products. Some of the commenters suggested that the minimum be lowered to 60 percent with a small premium adjustment, while others suggested that a 50 percent loss ratio for individual policies would be more reasonable.
Many of the commenters stated that the Department's comparison of specified disease coverage to Medicare supplement coverage is inappropriate because Medicare supplement products are high premium plans, while specified disease and critical illness products are low premium. Moreover, Medicare supplement plan claims are, for the most part, predetermined by the Federal Medicare program administrators, resulting in lower administrative expenses than other products. Some commenters stated that the proposed loss ratios are too high for guaranteed renewable products. Many of the commenters stated that the Department's proposed loss ratio requirements would have an adverse impact on their ability to offer these products to New Jersey consumers because they would be prohibited from offering competitive commissions.
RESPONSE: The Department has reviewed the individual loss ratio requirements in light of the comments received on this issue. The Department notes that the 65 percent individual loss ratio is disproportionately high when compared to the loss ratios of other states with comparable regulatory frameworks. While the Department emphasizes its consumer protection role in the sale of specified disease coverage, it does not believe that a slight reduction of the proposed 65 percent loss ratio requirement for individual policies would diminish that protection. Moreover, a slightly lower loss ratio would improve insurers' ability to offer these products to New Jersey consumers. Accordingly, the Department has determined that it would be appropriate to adopt a minimum individual loss ratio of 60 percent. Such a change, however, cannot be accomplished at the time of adoption of these rules. Such a change would require further public notice and comment pursuant to New Jersey's Administrative Procedure Act. Accordingly, concurrent with the publication of the adoption of these rules, the Department is proposing (elsewhere in this issue of the New Jersey Register) for amendment that portion of these rules pertaining to the loss ratio requirements to reflect a 60 percent minimum loss ratio requirement for individual policies.
COMMENT: Two commenters cited a recent New Jersey Appellate Division decision In the Matter of the Adoption of N.J.A.C. 9A:10-7.8(b), 327 N.J. Super. 149 (App. Div. 2000), as a basis for stating that the Department would be able to make certain requested changes to this rule proposal (that is, revising the loss ratio standards, revising Exhibit B, and clarifying that specified disease coverage is not required to be issued on a "guaranteed issue" basis) on adoption without the necessity of reproposal and republication in the New Jersey Register.
RESPONSE: In the case cited by the commenters, the New Jersey Higher Education Assistance Authority ("Authority") adopted an amendment to N.J.A.C. 9A:10-7.8(b) that College Savings Bank ("Savings") claimed was so substantially different from the Authority's proposed amendment that the value of the original notice was destroyed. On appeal, Savings was seeking a remand instructing the Authority to repropose the amendment, providing an additional opportunity for public comment. The Appellate Division concluded that the changes made on adoption were clarifications that did not enlarge or curtail the scope of the rule, the public had adequate notice of the agency action, and the rule was properly adopted. In this Appellate Division case, the proposal provided that the service charge at issue would not exceed four percent of trust earnings. The adopted text provided that the charge would not be more than one percent of trust earnings. The adopted one percent language was clearly encompassed in the "not to exceed four percent" proposal language. Hence, the court concluded that the regulated public had adequate notice of the agency action (327 N.J. Super. at 157).
N.J.A.C. 1:30-6.3(a) requires reproposal when "following the notice of proposal, an agency determines to make changes in the proposed rule which are so substantial that the changes effectively destroy the value of the original notice." N.J.A.C. 1:30-6.3(b) also states:
"In determining whether the changes in the proposed rule are so substantial, consideration shall be given to the extent that the changes:
1. Enlarge or curtail who and what will be affected by the proposed rule;
2. Change what is being prescribed, proscribed or otherwise mandated by the rule;
3. Enlarge or curtail the scope of the proposed rule and its burden on those affected by it."
The Department is required to follow these rules in making changes to any rules on adoption. In the instant rule adoption, a lower loss ratio standard would adversely impact the public because the proposal contained a higher loss ratio standard and did not notice the public that the loss ratio standard could be less than what was proposed. Since the loss ratio standards in the proposal were specific percentages (that is, 75 percent and 65 percent) rather than a range, as was the case in Savings, a lower percentage loss ratio standard would require a new proposal and notice cycle.
COMMENT: One commenter was concerned with the proposed requirement at N.J.A.C. 11:4-53.6(b) that, with respect to filings of rate revisions for previously approved policy forms, benefits shall be deemed reasonable in relation to premiums if both the anticipated loss ratio and the aggregate loss ratio satisfy the loss ratio standards set forth at proposed N.J.A.C. 11:4-53.6(a). The commenter stated that the aggregate loss ratio should not be used as the standard of reasonableness for premiums in relation to benefits because the level premium structure of these policies creates a pattern of increasing loss ratios by policy year. This pattern holds true even if statutory active life reserves are included. The aggregate loss ratio is not expected to reach the anticipated loss ratio for more than 10 years. Carriers could develop adverse experience in the early durations requiring rate action, but still have an aggregate loss ratio below the standard.
RESPONSE: The aggregate loss ratio is the sum of past and future paid claims divided by past and future premiums. To the extent that early durations are experiencing adverse results, the future projection may be adjusted to reflect the deviation from expected results. In the early durations, the projection of the future claims will far outweigh the past claims. Therefore, both anticipated and aggregate loss ratios will reflect a substantial proportion of the adverse results. Accordingly, the Department does not believe any change in the proposed rule is necessary.
COMMENT: Two commenters addressed the proposed provision at N.J.A.C. 11:4-53.6(f). This provision requires a loss ratio, based on a substantial volume of reasonably mature business, to meet the standards set forth at N.J.A.C. 11:4-53.6(a), and further requires carriers not meeting the standard to provide the Department with an explanation as to why the premium should not be regarded as unreasonably high in relation to the benefits provided.
One commenter stated that the proposed provision is restrictive and out of sync with other states' regulations. Further, the carrier should not bear all the down side risk for poor claims experience and forfeit all positive claim experience in the form of increased benefits or reduced premium.
One commenter requested that the Department define "substantial volume of reasonably mature business." The commenter suggested that the Department use a current inforce policy count (500) for a substantial volume standard and a cumulative life years exposed count (2000) for reasonably mature business.
RESPONSE: It is the Department's position that carriers who experience poor claims experience may request a rate increase from the Department.
The Department agrees that "substantial volume of reasonably mature business" should be defined. However, such a significant change would not be permitted on adoption. Accordingly, the Department will propose this change following adoption of these rules.
COMMENT: Five of the commenters addressed Exhibit B of the proposed rules, which is an annual experience reporting form to be submitted by carriers to the Department. The commenters stated their concern that the proposed form will not provide the Commissioner with sufficient data to correctly monitor the aggregate loss ratio experience of specified disease and critical illness products. The commenters recommended that claims reserves and projected premiums be included so that experience can be more accurately reported on an incurred basis.
RESPONSE: As stated above in an earlier response, the Department will be reviewing this information on a paid or cash basis, and therefore does not need data on claim reserves.
COMMENT: Two commenters questioned whether medical underwriting for specified disease and critical illness policies is permitted under the proposed rules. One commenter stated that some carriers sell their plans in conjunction with life insurance, which requires underwriting.
RESPONSE: As stated in the Department's response to a comment appearing above, medical underwriting is not prohibited by these rules. Also as stated earlier, these policies must be issued on a stand alone basis. They are not permitted to be issued as riders to life insurance policies, nor may their issuance be contingent on the issue of a life policy.
COMMENT: One commenter questioned whether the Department will permit an optional return-of-premium (ROP) rider for specified disease policies. The ROP rider would return the sum of premiums paid less claims incurred at the end of twenty years for ROP periods beginning on or before age 55, and upon attaining age 75 for ROP periods beginning from ages 56 to 65. For ROP periods beginning at ages 66 and older, one-half of premiums paid less claims incurred are returned at the end of 10 years. The policy and rider do not need to be surrendered in order to collect the ROP benefit, and the ROP period automatically restarts once benefits are paid.
RESPONSE: The Department's rules on minimum standards for individual health insurance policies at N.J.A.C. 11:4-16.5(g) permits a cash value or premium refund benefit to be included only in disability income policies.
COMMENT: One commenter questioned whether policy fees would be permitted if such fees are considered as a part of premium paid.
RESPONSE: Policy fees are permitted, provided they are included with premium when calculating whether the loss ratio requirements of N.J.A.C. 11:4-53.5 have been satisfied.
COMMENT: One commenter stated that the proposed rules should include a provision that allows the carrier to preauthorize coverage for a covered disease upon receipt of medical records confirming the diagnosis.
RESPONSE: The benefits under these policies are indemnity benefits payable upon the occurrence of an event, not medical reimbursement benefits. As such, pre-authorization should not be a consideration. Specified disease and critical illness policies are intended to supplement a comprehensive health insurance policy. It is the carrier that issues the comprehensive policy that will perform utilization management.
COMMENT: One commenter stated that the proposed requirement that the outline of coverage form at Exhibit A include disclosure of the anticipated loss ratio will confuse and perhaps mislead the consumer. The commenter stated that a consumer may expect that 65 percent (or 75 percent) of their premium will be returned to them in the form of benefits, which would not be true for every individual consumer. The commenter recommended that the loss ratio information be removed from the form.
RESPONSE: The Department does not believe that consumers will be confused or misled by the loss ratio information. Rather, the Department believes that applicants should have enough information to make an informed decision as to whether to purchase the specified disease or critical illness policy.
COMMENT: One commenter stated that its proposed mental health benefits coverage program, which includes benefits for mental health, psychiatric and substance abuse services, would not be eligible for specified disease status under the proposed definition of "specified disease coverage." The commenter requested that the Department find a way to approve a stand-alone mental health benefit that is simply carved out of the medical benefit, but is not limited in scope like a specified disease benefit.
RESPONSE: As the commenter itself recognized, its proposed mental health policy would not be considered "specified disease coverage" because it would not pay fixed-sum benefits on a non-expense incurred basis.
Summary of Agency-Initiated Changes:
1. N.J.A.C. 11:4-16.5(a) currently prohibits individual health insurance policies to provide coverage for specified diseases or for procedures or treatments which are limited to specified diseases. In light of the adoption of these rules permitting the sale of such policies in this State, the Department is deleting this provision. This proposed amendment was inadvertently omitted from the proposal of these new rules at N.J.A.C. 11:4-53.
2. Exhibit B is being amended by deleting the section requesting year 2000 data, and adding a section requesting year 2010 data. This change is being made because the time has expired for submission of 2000 data.
Federal Standards Statement
A Federal standards analysis is not required because these adopted new rules are not subject to any Federal standards or requirements.
Full text of the adoption follows (additions to proposal indicated in boldface with asterisks *thus*; deletions from proposal indicated in brackets with asterisks *[thus]*):
SUBCHAPTER 16. MINIMUM STANDARDS FOR INDIVIDUAL HEALTH
11:4-16.5 Prohibited policy provisions
[(a) No policy shall provide coverage for specified disease(s) or for procedures or treatments which are limited to specified diseases.]
Recodify existing (b) - (q) as (a) - (p). (No change in text.)
11:4-53.5 Standards for critical illness coverage
(a) *[Benefit]* *The total benefit* amounts *available under the policy* shall only be available in increments of $1,000. *As long as the policy clearly indicates, in cases of clearly identifiable forms of diseases with significantly lower treatment costs, lesser amounts may be provided, but in no event shall amounts be less than 25 percent of the largest benefit amount under the policy.*
(b) (No change from proposal.)