(a)

1. (1) Except as provided in 23 CAR § 86-104(12), no policy shall contain provisions establishing a probationary or waiting period during which no coverage is provided under the policy subject to the further exception that a policy may specify a probationary or waiting period not to exceed six (6) months for specified diseases or conditions and losses resulting therefrom for:

   1. (A) Hernia;
   2. (B) Disorder of reproduction organs;
   3. (C) Varicose veins;
   4. (D) Adenoids;
   5. (E) Appendix; and
   6. (F) Tonsils.
2. (2) However, the permissible six-month exception shall not be applicable where such specified diseases or conditions are treated on an emergency basis.
3. (3) Accident policies shall not contain probationary or waiting periods.

(b)

1. (1)

   1. (A) No policy or rider for additional coverage may be issued as a dividend unless an equivalent cash payment is offered to the policyholder as an alternative to such dividend policy or rider.
   2. (B) No such dividend policy or rider shall be issued for an initial term of less than six (6) months.

2. (2) The initial renewal subsequent to the issuance of any policy or rider as a dividend shall clearly disclose that:

   1. (A) The policyholder is renewing the coverage that was provided as a dividend for the previous term; and
   2. (B) Such renewal is optional with the policyholder.

(c) No policy shall exclude coverage for a loss due to a preexisting condition for a period greater than twelve (12) months following policy issue where:

1. (1) The application for such insurance does not seek disclosure of prior:

   1. (A) Illness;
   2. (B) Disease;
   3. (C) Physical conditions; or
   4. (D) Medical care and treatment; and
2. (2) Such preexisting condition is not specifically excluded by the terms of the policy.

(d)

1. (1) A disability income policy may contain a "return of premium" or "cash value benefit" so long as:

   1. (A) Such return of premium or cash value benefit is not reduced by an amount greater than the aggregate of any claims paid under the policy;
   2. (B) The insurer demonstrates that the reserve basis for such policies is adequate; and
   3. (C) The policy guarantees that it is renewable.
2. (2) Insurers may also issue a return of premium on cancer, specified disease, and long-term care policies.

3. (3) No other policy shall provide a return of premium or cash value benefit, except:

   1. (A) Return of unearned premium upon termination or suspension of coverage;
   2. (B) Retroactive waiver of premium paid during disability;
   3. (C) Payment of dividends on participating policies; or
   4. (D) Experience rating refunds.

(f) No policy shall limit or exclude coverage by type of illness, accident, treatment, or medical condition, except as follows:

1. (1) Preexisting conditions or diseases, except for congenital anomalies of a covered dependent child;
2. (2) Mental or emotional disorders, alcoholism, and drug addiction;
3. (3) Pregnancy, except for complications of pregnancy, other than for policies defined in 23 CAR § 86-306;

4. (4) Illness, treatment, or medical condition arising out of:

   1. (A) War or act of war (whether declared or undeclared);
   2. (B) Participation in a felony, riot, or insurrection;
   3. (C) Service in the armed forces or units auxiliary thereto;
   4. (D) Suicide (sane or insane), attempted suicide, or intentionally self-inflicted injury;
   5. (E) Aviation, except as a fare-paying passenger on a scheduled aircraft; and
   6. (F) Interscholastic sports, with respect to short-term nonrenewable policies;

5. (5) Cosmetic surgery, except that "cosmetic surgery" shall not include:

   1. (A) Reconstructive surgery when such service is incidental to trauma, infection, or other diseases of the involved part; and
   2. (B) Reconstructive surgery because of congenital disease or anomaly of a covered dependent child that has resulted in a functional defect;

6. (6)

   1. (A) Treatment provided in a government hospital, except as provided in 23 CAR § 86-104(3)(C)(iv) and (v).
   2. (B) Benefits provided under:

(i) Medicare or other government program (except Medicaid);

1. (ii) Any state or federal workers’ compensation, employer's liability, or occupational disease law; or

   1. (iii) Any motor vehicle no-fault law.

   2. (C) Services rendered by employees of:

      1. (i) Hospitals;
      2. (ii) Laboratories; or
      3. (iii) Other institutions.
   3. (D) Services performed by a member of the covered person's immediate family and any other services for which no charge is normally made in the absence of insurance.
   4. (E) Note. The first-party coverage that was prescribed for use in automobile liability policies issued in Arkansas effective July 1, 1974, is not a motor vehicle no-fault plan under which benefits may be excluded under this section.
   5. (F) Note. Hospital confinement indemnity coverage shall be controlled by subsection (e) of this section and not subsection (f) of this section;
2. (7) Dental care or treatment, except that "dental care” or "treatment" shall not include reconstructive surgery when such service is incidental to trauma;
3. (8) Eyeglasses, hearing aids, and examination for the prescription or fitting thereof;
4. (9) Rest cures, custodial care, transportation, and routine physical examinations; and
5. (10) Territorial limitations.

(g)

1. (1) Provisions of this part shall not impair or limit the use of waivers to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases, physical condition, or extra-hazardous activity.
2. (2) Where waivers are required as a condition of issuance, renewal, or reinstatement, signed acceptance by the insured is required, unless on the initial issuance of the policy the full text of the waiver is contained or referred to either on the first page or specification page.