Insurers have persuaded state insurance regulators to keep disability insurance in two models that apply to a wide variety of health insurance products other than major medical insurance, at least for now.
See also: 5 hot battles over the PPACA-free zone
Members of the Regulatory Framework Task Force, an arm of the National Association of Insurance Commissioners (NAIC), agreed recently in New Orleans, at the NAIC’s spring meeting, to set up an Accident and Sickness Insurance Minimum Standards Subgroup.
The subgroup is supposed to looking at updating NAIC Model 170, an accident and sickness insurance model act, and NAIC Model 171, an accident and sickness insurance model regulation.
The task force ”decided, with the option to revisit at a later date, to retain the disability income protection coverage in the models,” according to a meeting summary.
The NAIC is a group for state insurance regulators. It does not have the direct ability to change state laws and regulations, but states often use its models when developing their own insurance laws and regulations.
The accident and sickness models apply to products such as hospital confinement insurance, indemnity insurance, accident-only insurance, cancer insurance, critical illness insurance and disability insurance. Before the major Patient Protection and Affordable Care Act (PPACA) major medical coverage rules took effect, the models applied to individual major medical coverage, but not to group health plans.
The NAIC began looking into revising the accident and sickness models after deciding that PPACA had taken the place of the models for individual major medical insurance and dramatically changed the rules governing some other products, such as limited-benefit health insurance.
Timothy Stoltzfus Jost, a law professor who receives funding to speak for consumers in NAIC proceedings, said he and many other NAIC-funded consumer representatives would like to see the Association develop a new NAIC disability insurance model, according to minutes from earlier meetings included in a spring meeting document packet.
Fred Nepple, a consumer liaison representative at the Interstate Insurance Product Regulation Commission (IIPRC), has also asked the NAIC to develop a new disability insurance model. He said that the current NAIC models include no substantive consumer protection provisions, and that the IIPRC has developed consumer protection standards for individual disability insurance products that are not included in Model 170 or Model 171.
America’s Health Insurance Plans (AHIP) has argued that disability insurance is a form of accident and sickness insurance, is similar to other products governed by Model 170 and Model 171, and that Model 170 and 171 should continue to apply to disability insurance.
The NAIC task force kept disability insurance in Model 170 and Model 171 as the U.S. Department of Labor is working on the final version of new standards for handling group disability insurance claims. Supporters of the Labor Department efforts say the current rules are unfair to claimants. Opponents say a Labor Department proposal is too complicated to apply and would lead to endless rounds of litigation.
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