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Merritt Personal Lines Manual: How State Regulations Affect Health Insurance Policies

Conformity with State Statutes: Any provision of this policy which, on its effective date, is in conflict with the statutes of the state in which you reside on such date is amended to conform to the minimum requirements of such statutes.

If any policy provision is in conflict with state law on the date it takes effect, it is automatically amended to conform with the minimum requirements of state law -- in other words, the insurance company may only have to do the least or offer the fewest benefits required by law. This sounds stingy, of course; but, in defense of the insurance companies, state heath insurance regulations can be unpredictable.

For example, in late 1993, New Jersey insurance law began requiring insurance companies to offer basic, inexpensive insurance plans. Every plan had to offer a guaranteed benefits package. This package included very low copayments:

  • preventive and primary care (including prenatal and well-baby care, immunizations, pelvic exams, mammograms and cholesterol screening): $10 copayment;
  • outpatient diagnostic services: $25 copayment;
  • emergency services: $25 copayment where applicable;
  • inpatient hospital care: 60 days a year with one-day deductible plus 20 percent copayment;
  • prescriptive/corrective lenses for children: $10 copayment;
  • preventive and acute dental care for children: $10 copayment;
  • maternity care: including pregnancy-related services and family planning services, such as birth control;
  • hospice and home health care: Pays for 60 days, then reassessed after 60 days;
  • physical, occupational and speech therapy: reassessed after 60 days;
  • prescription drugs: $250 a year deductible, 20 percent copayment;
  • mental health and substance abuse: 30 days a year maximum inpatient with 50 percent copayment.

The growing number of insurance consumer-rights laws passed in recent years gives many policyholders high hopes about citing this kind of passage in a dispute with their company. But courts and arbitrators scrutinize these changes very carefully -- and award new or unmentioned benefits conservatively.

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