DEPARTMENT OF REGULATORY AGENCIES Division of Insurance LIFE, ACCIDENT AND HEALTH 3 CCR 702-4 [Editor’s Notes follow the text of the rules at the end of this CCR Document.] Regulation 4-1-1 Variable Annuity Contracts I. Authority This regulation is promulgated pursuant to the authority of § § 10-1-109 and 10-7-405, C.R.S. II. Purpose The purpose of this regulation is to amend existing Regulation 4-1-1 (3 CCR 702-4) and to establish the standards and limitations for variable annuity contracts issued by insurers authorized for such sales in Colorado.

III. Scope This regulation is applicable to all insurance companies and fraternal benefit societies delivering or issuing for delivery in Colorado variable annuity contracts providing for payments which vary directly according to investment experience of any separate account or accounts maintained by the insurer as provided in § 10-7-402, C.R.S.

IV. Separate Accounts A. The company shall maintain in each such separate account assets with a market value at least equal to the reserves and other contract liabilities with respect to such account, except as may otherwise be approved by the Commissioner.

B. Rules under any provision of the insurance law of this state or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest shall also apply to member; of any separate account's committee, board or other similar body. C. Reserve liabilities for the variable aspects of the variable annuity contracts shall be maintained in the separate account and established under the standards of Part 3 of Article 7 of Title 10, C.R.S., in accordance with actuarial procedures that recognize the variable nature of the benefits provided. The reserve liabilities shall be limited to the market value of the assets in the separate account. D. Except with specific prior written authorization from the Commissioner, any guaranteed contract benefit in a variable annuity contract must be purchased from, and reserved in, the general account, with the appropriate transfer of sufficient cash or cash equivalent funds for the risk being transferred.

E. To the extent provided in the variable annuity contract, that portion of the assets of any separate account which is equal to the reserves and other contract liabilities shall not be subject to creditor claims against the insurer.

V. Contracts Providing For Variable Benefits A. Any variable annuity contract providing benefits payable in variable amounts delivered or issued for delivery in this state shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of such variable benefits. Any such contract, including a group contract and any certificate of evidence of variable benefits issued thereunder, shall state that such dollar amount will vary to reflect investment experience. Such contract or certificate shall contain on its first page a clear statement, in type at least as large as that used for text matter, to the effect that the benefits thereunder are on a variable basis. The contract benefits shall reflect the investment and expense experience, positive or negative, of separate accounts) established and maintained by the insurer for such contracts. The allocation and determination of the variable benefits derived from such experience must be actuarially sound and shall not exceed the total separate account assets. B. Illustrations of benefits payable under any variable annuity contract shall not include projections of past investment experience into the future or attempted predictions of future investment experience; provided that nothing contained herein is intended to prohibit use of hypothetical assumed rates of return to illustrate possible levels of benefits. C. No individual variable annuity contract calling for the payment of periodic stipulated payments shall be delivered or issued for delivery in this state unless it contains in substance the following provision or provisions which in the opinion of the Commissioner are more favorable to the holders of such contracts.

1. A provision that there shall be a grace period of not less than 30 days within which any stipulated payment to the insurer may be made. During such grace period the contract shall continue in force. The contract may include a statement of the basis for determining the date as of which any such payment received during the grace period shall be applied to produce the values under the contract arising therefrom; 2. A provision that, at any time within three years from the date of default, in making periodic stipulated payments to the insurer during the life of the annuitant and unless the cash surrender value has been paid, the contract may be reinstated upon payment to the insurer of such overdue payments as required by the contract, and of all indebtedness to the insurer on the contract, including interest. The contract may include a statement of the basis for determining the date as of which the amount to cover such overdue payments and indebtedness shall be applied to produce the values under the contract arising therefrom;

3. A provision specifying the options available in the event of default in a periodic stipulated payment. Such options may include an option to surrender the contract for a cash value as determined by the contact, and shall include an option to receive a paid-up annuity if the contract is not surrendered for cash, the amount of such paid-up annuity being determined by applying the value of the contract at the annuity commencement date in accordance with the terms of the contract; and 4. A provision specifying that only the contract, application, and any documents attached thereto constitute the entire contract.

VI Required Reports A. Any company issuing individual variable annuity contracts shall mail to the contract holder at least once in each contract year at his last address known to the company, a statement or statements reporting he investments held in the separate account B. in the case of a variable annuity contract under which payments have not yet commenced, any company issuing individual variable annuity contracts shall mail to the contract holder at least once in each contract year at his last address known to the company, a statement as of a date not more than four months previous to the date of mailing that reports: (1) the number of accumulation units credited to such contract and the dollar value of a unit, or (2) the value of the contract holder's account VII Foreign or Alien Companies If the law or regulation in the place of domicile of a foreign or alien company provides protection to the policy holders and the public which is substantially equal to that provided by Colorado statutes and regulations, the Commissioner may consider compliance with such laws or regulations as compliance with Colorado laws and regulations. The state of entry of an alien insurer shall be deemed to be its domiciliary state for the purpose of this regulation.

VIII Statutory Construction Pursuant to the provisions of § 10-7-405, CRS, the provisions of the Colorado Insurance Laws applicable to annuity contracts shall apply to variable annuity contracts.. This includes, but is not limited to, custodial arrangements of separate account assets, unfair methods of competition and deceptive acts or practices, annual reporting, and appropriate contract requirements contained in Parts 1 and 3 of Article 7 of Tittle 10, C.R.S. In addition, all federal laws and regulations governing variable life policies shall apply. IX. Severability If any provision of this regulation or the application thereof to any person or circumstance is; for any reason held to be invalid, the remainder of the regulation and the application of such provision to other person or circumstances shall not be affected thereby.

X. Effective Date This regulation is effective July 1, 1994.

Amended Regulation 4-1-2 Advertising and Sales Promotion of Life Insurance Section 1. Authority Section 2. Scope and Purpose Section 3. Applicability Section 4. Definitions Section 5. Form and Content of Advertisements Section 6. Disclosure Requirements Section 7. Identity of Insurer Section 8. Jurisdictional Licensing and Status of Insurer Section 9. Statements About the Insurer Section 10 Enforcement Procedures Section 11. Enforcement Section 12. Conflict With Other Laws or Regulations Section 13. Severability Section 14. Effective Date Section 15. History Section 1. Authority This amended regulation is promulgated under the authority of § §10-1-108(8), 10-1-109 and 10-3-1110, Colorado Revised Statutes (C.R.S.).

Section 2. Scope and Purpose The purpose of this regulation is to set forth minimum standards and guidelines to assure a full and truthful disclosure to the public of all material and relevant information in the advertising of life insurance policies and annuity contracts.

Section 3. Applicability A. This regulation shall apply to any life insurance or annuity advertisement intended for dissemination in this state. In variable contracts where disclosure requirements are established pursuant to federal regulation, this regulation shall be interpreted so as to eliminate conflict with federal regulation.

B. All advertisements, regardless of by whom written, created or presented the advertisement, shall be the responsibility of the insurer whose policies are advertised. Every insurer shall establish and, at all times, maintain a system of control over the content, form and method of dissemination of all advertisements of its policies. A system of control shall include regular and routine notification, at least once a year, to producers, brokers and others authorized by the insurer to disseminate advertisements of the requirement and procedures for company approval prior to the use of any advertisements that is not furnished by the insurer and that clearly sets forth within the notice the most serious consequence of not obtaining the required prior approval. Section 4. Definitions A. "Advertisement" means material designed to create public interest in life insurance or annuities or in an insurer, or in an insurance producer; or to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy including: 1. Printed and published material, audiovisual material and descriptive literature of an insurer or insurance producer used in direct mail, newspapers, magazines, radio and television scripts, seminars, telemarketing scripts, billboards, posters and similar displays, and the Internet or any other mass communication media.

2. Descriptive literature and sales aids of all kinds, authored by the insurer, its insurance producers or third parties, issued, distributed or used by such insurer or insurance producer, including but not limited to circulars, leaflets, booklets, depictions, web pages, illustrations, form letters, and lead-generating devices of all kinds; 3. Material used for the recruitment, training and education of an insurer's insurance producers which is designed to be used or is used to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy; and 4. Prepared sales talks, presentations and material for use by insurance producers. B. "Advertisement" for the purpose of these rules shall not include: 1. Communications or materials used within an insurer's own organization and not intended for dissemination to the public;

2. Communications with policyholders other than material urging policyholders to purchase, increase, modify, reinstate or retain a policy;

3. A general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list that a policy or program has been written or arranged; provided the announcement clearly indicates that it is preliminary to the issuance of a booklet explaining the proposed coverage.

C. “Determinable policy elements” means elements that are derived from processes or methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable policy elements only, or from both determinable and guaranteed policy elements.

D. "Guaranteed policy element" means the premiums, benefits, values, credits or charges under a policy, or elements of formulas used to determine any of these that are guaranteed and determined at issue.

E. "Insurance producer" means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance.

F. "Insurer" means any individual, corporation, association, partnership, reciprocal exchange, inter- insurer, Lloyd’s, fraternal benefit society, and any other legal entity which is defined as an “insurer” in the insurance code of this state or issues life insurance or annuities in this state and is engaged in the advertisement of a policy.

G. “Lead-generating device” means any communication directed to the public that, regardless of form, content or stated purpose, is intended to result in the compilation or qualification of a list containing names and other personal information to be used to solicit residents of this state for the purchase of life insurance policies and annuity contracts. H. "Policy" means any policy, plan, certificate, including a fraternal benefit certificate, contract, agreement, statement of coverage, rider or endorsement which provides for life insurance or annuity benefits.

I. “Nonguaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered nonguaranteed if any of the underlying nonguaranteed elements are used in its calculation.

J. "Preneed funeral contract or prearrangement" has the same meaning as the definition found in § 10C.R.S.

Section 5. Form and Content of Advertisements A. Advertisements shall be truthful and not misleading in fact or by implication. The form and content of an advertisement of a policy shall be sufficiently complete and clear so as to avoid deception. It shall not have the capacity or tendency to mislead or deceive. Whether an advertisement has the capacity or tendency to mislead or deceive shall be determined by the Commissioner of Insurance from the overall impression that the advertisement may be reasonably expected to create upon a person of average education or intelligence within the segment of the public to which it is directed.

B. No advertisement shall use the terms “investment,” “investment plan,” “founder’s plan,” “charter plan,” “deposit,” “expansion plan,” “profit,” “profits,” “profit sharing,” “interest plan,” “savings,” “savings plan,” “private pension plan,” “retirement plan” , “risk-free” or other similar terms in connection with a policy in a context or under such circumstances or conditions as to have the capacity or tendency to mislead a purchaser or prospective purchaser of such policy to believe that he will receive, or that it is possible that he will receive, something other than a policy or some benefit not available to other persons of the same class and equal expectation of life. Section 6. Disclosure Requirements A. The information required to be disclosed by this regulation shall not be minimized, rendered obscure, or presented in an ambiguous fashion or intermingled with the text of the advertisement so as to be confusing or misleading.

B. An advertisement shall not omit material information or use words, phrases, statements, references or illustrations if the omission or use has the capacity, tendency or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered, premium payable, or state or federal tax consequences. The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale, or an offer is made to refund the premium if the purchaser is not satisfied or that the policy or contract includes a “free look” period that satisfies or exceeds regulatory requirements, does not remedy misleading statements.

C. In the event an advertisement uses “non“no medical examination required,” or similar terms where issue is not guaranteed, terms shall be accompanied by a further disclosure of equal prominence and in juxtaposition thereto to the effect that issuance of the policy may depend upon the answers to the health questions set forth in the application.

D. An advertisement shall not use as the name or title of a life insurance policy any phrase that does not include the words “life insurance” unless accompanied by other language clearly indicating it is life insurance. An advertisement shall not use as the name or title of an annuity contract any phrase that does not include the word “annuity” unless accompanied by other language clearly indicating it is an annuity. An annuity advertisement shall not refer to an annuity as a CD annuity, or deceptively compare an annuity to a certificate of deposit. E. An advertisement shall prominently describe the type of policy advertised. F. An advertisement of an insurance policy marketed by direct response techniques shall not state or imply that because there is no insurance producer or commission involved there will be a cost saving to prospective purchasers unless that is the fact. No cost savings may be stated or implied without justification satisfactory to the commissioner prior to use. G. An advertisement for a life insurance policy containing graded or modified benefits shall prominently display any limitation of benefits. If the premium is level and coverage decreases or increases with age or duration, that fact shall be commonly disclosed. An advertisement of or for a life insurance policy under which the death benefit varies with the length of time the policy has been in force shall accurately describe and clearly call attention to the amount of minimum death benefit under the policy.

H. An advertisement for the types of policies described in subsections F and G of this section shall not use the words "inexpensive," "low cost," or other phrases or words of similar import when such policies are being marketed to persons who are fifty years of age or older, when the policies being marketed are guaranteed issue.

I. Premiums 1. An advertisement for a policy with nonpremiums shall prominently describe the premium changes.

2. An advertisement in which the insurer describes a policy where it reserves the right to change the amount of the premium during the policy term, but which does not prominently describe this feature, is deemed to be deceptive and misleading and is prohibited. 3. An advertisement shall not contain a statement or representation that premiums paid for a life insurance policy can be withdrawn under the terms of the policy. Reference may be made to amounts paid into an advance premium fund, which are intended to pay premiums at a future time, to the effect that they may be withdrawn under the conditions of the prepayment agreement. Reference may also be made to withdrawal rights under any unconditional premium refund offer.

4. An advertisement that represents that a pure endowment benefit has a “profit” or “return” on the premium paid, rather than a policy benefit for which a specified premium is paid is deemed to be deceptive and misleading and is prohibited. 5. An advertisement shall not represent in any way that premium payments will not be required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact.

6. An advertisement shall not use the term “vanish” or “vanishing premium,” or a similar term that implies the policy becomes paid up, to describe a plan using nonguaranteed elements to pay a portion of future premiums.

J. Analogies between a life insurance policy or annuity contract’s cash values and savings accounts or other investments and between premium payments and contributions to savings accounts or other investments shall be complete and accurate. An advertisement shall not emphasize the investment or tax features of a life insurance policy to such a degree that the advertisement would mislead the purchaser to believe the policy is anything other than life insurance. K. An advertisement shall not state or imply in any way that interest charged on a policy loan or the reduction of death benefits by the amount of outstanding policy loans is unfair, inequitable or in any manner an incorrect or improper practice.

L. If nonforfeiture values are shown in any advertisement, the values must be shown either for the entire amount of the basic life policy death benefit or for each $1,000 of initial death benefit. M. The words “ free,” “no cost,” “without cost,” “no additional cost, “at no extra cost,” or words of similar import shall not be used with respect to any benefit or service being made available with a policy unless true. If there is no charge to the insured, then the identity of the payor shall be prominently disclosed. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the premium or use other appropriate language. N. No insurance producer may use terms such as “financial planner,” “investment adviser,” “financial consultant,” or “financial counseling” in such a way as to imply that he or she is generally engaged in an advisory business in which compensation is unrelated to sales unless that actually is the case. This provision is not intended to preclude persons who hold some form of formal recognized financial planning or consultant designation from using this designation even when they are only selling insurance. This provision also is not intended to preclude persons who are members of a recognized trade or professional association having such terms as part of its name from citing membership, providing that a person citing membership, if authorized only to sell insurance products, shall disclose that fact. This provision does not permit persons to charge an additional fee for services that are customarily associated with the solicitation, negotiation or servicing of policies.

O. Nonguaranteed Elements 1. An advertisement shall not utilize or describe nonguaranteed elements in a manner that is misleading or has the capacity or tendency to mislead.

2. An advertisement shall not state or imply that the payment or amount of nonguaranteed elements is guaranteed. Unless otherwise specified in Colorado Regulation 4-1-8, if nonguaranteed elements are illustrated, they shall be based on the insurer’s current scale and the illustration shall contain a statement to the effect that they are not to be construed as guarantees or estimates of amounts to be paid in the future. 3. Unless otherwise specified in Colorado Regulation 4-1-8, an advertisement that includes any illustrations or statements containing or based upon nonguaranteed elements shall set forth, with equal prominence comparable illustrations or statements containing or based upon the guaranteed policy elements.

4. An advertisement shall not use or describe determinable policy elements in a manner that is misleading or has the capacity or tendency to mislead.

5. Advertisement may describe determinable policy elements as guaranteed but not determinable at issue. This description should include an explanation of how these elements operate, and their limitations, if any.

6. If an advertisement refers to any nonguaranteed policy element, it shall indicate that the insurer reserves the right to change any such element at any time and for any reason. However, if an insurer has agreed to limit this right in any way; such as, for example, if it has agreed to change these elements only at certain intervals or only if there is a change in the insurer’s current or anticipated experience, the advertisement may indicate any such limitation on the insurer’s right.

7. An advertisement shall not refer to dividends as “taxor use words of similar import, unless the tax treatment of dividends is fully explained and the nature of the dividend as a return of premium is indicated clearly.

8. An advertisement may not state or imply that illustrated dividends under either or both a participating policy or pure endowment will be or can be sufficient at any future time to assure without the future payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains the benefits or coverage provided at that time and the conditions required for that to occur. P. An advertisement shall not state that a purchaser of a policy will share in or receive a stated percentage or portion of the earnings on the general account assets of the company. Q. Testimonials, Appraisals, Analysis, or Endorsements by Third Parties 1. Testimonials, appraisals or analysis used in advertisements must be genuine; represent the current opinion of the author; be applicable to the policy advertised, if any; and be accurately reproduced with sufficient completeness to avoid misleading or deceiving prospective insureds as to the nature or scope of the testimonial, appraisal, analysis or endorsement. In using testimonials, appraisals or analysis; the insurer or insurance producer makes as its own all the statements contained therein, and these statements are subject to all the provisions of this regulation.

2. If the individual making a testimonial, appraisal, analysis or an endorsement has a financial interest in the insurer or related entity as a stockholder, director, officer, employee or otherwise, or receives any benefit directly or indirectly other than required union scale wages, that fact shall be prominently disclosed in the advertisement. 3. An advertisement shall not state or imply that an insurer or a policy has been approved or endorsed by a group of individuals, society, association or other organization unless such is the fact and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial is owned, controlled or managed by the insurer, or receives any payment or other consideration from the insurer for making an endorsement or testimonial, that fact shall be disclosed in the advertisement.

4. When an endorsement refers to benefits received under a policy for a specific claim, the claim date, including claim number, date of loss and other pertinent information shall be retained by the insurer for inspection for a period of five (5) years after the discontinuance of its use or publication.

R. An advertisement shall not contain statistical information relating to any insurer or policy unless it accurately reflects recent and relevant facts. The source of any statistics used in advertisement shall be identified.

S. Policies Sold to Students 1. The envelope in which insurance solicitation material is contained may be addressed to the parents of students. The address may not include any combination of words which imply that the correspondence is from a school, college, university or other education or training institution nor may it imply that the institution has endorsed the material or supplied the insurer with information about the student unless such is a correct and truthful statement.

2. All advertisements including, but not limited to, informational flyers used in the solicitation of insurance shall be identified clearly as coming from an insurer or insurance producer, if such is the case, and these entities shall be clearly identified as such. 3. The return address on the envelope may not imply that the soliciting insurer or insurance producer is affiliated with a university, college, school or other educational or training institution, unless true.

T. Introductory, Initial or Special Offers and Enrollment Periods 1. An advertisement of an individual policy or combination of policies shall not state or imply that the policy or combination of policies is an introductory, initial or special offer, or that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group of individuals, unless that is the fact. An advertisement shall not describe an enrollment period as “special” or “limited” or use similar words or phrases in describing it when the insurer uses successive enrollment periods as its usual method of marketing its policies.

2. An advertisement shall not state or imply that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy advertised because of special advantages available in the policy.

3. An advertisement shall not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the reduced initial premium. A reduced initial or first year premium may not be described as constituting free insurance for a period of time. When insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, all references to the reduced initial premium shall be followed by an asterisk or other appropriate symbol that refers the reader to that specific portion of the advertisement that contains the full rate schedule for the policy being advertised. 4. An advertisement shall not offer a policy that provides for “bonus interest” or similar inducement without clearly specifying the terms and conditions the applicant has to meet to earn such bonus. No advertisement shall promote any form of “bonus interest” as providing an off-set to the surrender charges upon replacement of existing life insurance or annuity product.

5. An enrollment period during which a particular insurance policy may be purchased on an individual basis shall not be offered within this state unless there has been a lapse of not less than 6 months between the close of the immediately preceding enrollment period for the same policy and the opening of the new enrollment period. The advertisement shall specify the date by which the applicant must mail the application, which shall be not less than ten (10) days and not more than forty (40) days from the date on which the enrollment period is advertised for the first time. This regulation applies to all advertising media—i.e., mail, newspapers, radio, television, magazines and periodicals—by any one insurer or insurance producer. The phrase “any one insurer” includes all the affiliated companies of a group of insurance companies under common management or control. This regulation does not apply to the use of a termination or cutoff date beyond which an individual application for a guaranteed issue policy will not be accepted by an insurer in those instances where the application has been sent to the applicant in response to his or her request. It is also inapplicable to solicitations of employees or members of a particular group or association that otherwise would be eligible under specified provisions of the insurance code for group, blanket or franchise insurance. In cases where insurance product is marketed on a direct mail basis to prospective insurance by reason of some common relationship with a sponsoring organization, this regulation shall be applied separately to each sponsoring organization.

U. An advertisement of a particular policy shall not state or imply that prospective insureds shall be or become members of a special class, group, or quasiand as such enjoy special rates, dividends or underwriting privileges, unless that is the fact.

V. An advertisement shall not make unfair or incomplete comparisons of policies, benefits, dividends or rates of other insurers. An advertisement shall not disparage other insurers, insurance producers, policies, services or methods of marketing.

W. For individual deferred annuity products or deposit funds, the following shall apply: 1. Any illustrations or statements containing or based upon nonguaranteed interest rates shall likewise set forth with equal prominence comparable illustrations or statements containing or based upon the guaranteed accumulation interest rates. The nonguaranteed interest rate shall not be greater than those currently being credited by the company unless the nonguaranteed rates have been publicly declared by the company with an effective date for new issues not more than three (3) months subsequent to the date of declaration.

2. If an advertisement states the net premium accumulation interest rate, whether guaranteed or not, it shall also disclose in close proximity thereto and with equal prominence, the actual relationship between the gross and the net premiums.

3. If the contract does not provide a cash surrender benefit prior to commencement of payment of annuity benefits, an illustration or statement concerning the contract shall prominently state that cash surrender benefits are not provided.

4. Any illustrations, depictions or statements containing or based on determinable policy elements shall likewise set forth with equal prominence comparable illustrations, depictions or statements containing or based on guaranteed policy elements. X. An advertisement of a life insurance policy or annuity that illustrates nonguaranteed values shall only do so in accordance with current applicable state law relative to illustrating such values for life insurance policies and annuity contracts.

Y. An advertisement for the solicitation or sale of a preneed funeral contract or prearrangement as defined in Section 4F that is funded or to be funded by a life insurance policy or annuity contract shall adequately disclose the following:

1. The fact that a life insurance policy or annuity contract is being used to fund a prearrangement as defined in Section 4F; and 2. The nature of the relationship among the soliciting agent or agents, the provider of the funeral or cemetery merchandise services, the administrator and any other person. Section 7. Identity of Insurer A. The name of the insurer shall be clearly identified in all advertisements about the insurer or its products, and if any specific individual policy is advertised it shall be identified either by form number or other appropriate description. If an application is a part of the advertisement, the name of the insurer shall be shown on the application. However, if an advertisement contains a listing of rates or features that is a composite of several different policies or contracts of different insurers, the advertisement shall so state, shall indicate, if applicable, that not all policies or contracts on which the composite is based may be available in all states, and shall provide a rating of the lowest rated insurer and reference the rating agency, but need not identify each insurer. If an advertisement identifies the issuing insurers, insurance issuer ratings need not be stated . B. An advertisement shall not use a trade name, an insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, a reinsurer of the insurer, service mark, slogan, symbol or other device or reference without disclosing the name of the insurer, if the advertisement would have the capacity or tendency to mislead or deceive as to the true identity of the insurer or create the impression that a company other than the insurer would have any responsibility for the financial obligation under a policy. C. An advertisement shall not use any combination of words, symbols or physical materials that by their content, phraseology, shape, color or other characteristics are so similar to a combination of words, symbols or physical materials used by a governmental program or agency or otherwise appear to be of such a nature that they tend to mislead prospective insureds into believing that the solicitation is in some manner connected with a governmental program or agency. Section 8. Jurisdictional Licensing and Status of Insurer A. An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed shall not imply licensing beyond those limits. B. An advertisement may state that an insurer or insurance producer is licensed in a particular state or states, provided it does not exaggerate that fact or suggest or imply that competing insurers or insurance producers may not be so licensed.

C. An advertisement shall not create the impression that the insurer, its financial condition or status, the payment of its claims or the merits, desirability, or advisability of its policy forms or kinds of plans of insurance are recommended or endorsed by any governmental entity. However, where a governmental entity has recommended or endorsed a policy form or plan, that fact may be stated if the entity authorizes its recommendation or endorsement to be used in an advertisement. Section 9. Statements About the Insurer An advertisement shall not contain statements, pictures or illustrations that are false or misleading, in fact or by implication, with respect to the assets, liabilities, insurance in force, corporate structure, financial condition, age or relative position of the insurer in the insurance business. An advertisement shall not contain a recommendation by any commercial rating system unless it clearly defines the scope and extent of the recommendation including, but not limited to, the placement of insurer’s rating in the hierarchy of the rating system cited.

Section 10. Enforcement Procedures A. Each insurer shall maintain at its home or principal office a complete file containing a specimen copy of every printed, published or prepared advertisement of its individual policies and specimen copies of typical printed, published or prepared advertisements of its blanket, franchise and group policies, hereafter disseminated in this state, with a notation indicating the manner and extent of distribution and the form number of any policy advertised. The file shall be subject to inspection by the department. All advertisements shall be maintained in the file for a period of five (5) years after discontinuance of its use or publication.

B. If the commissioner determines that an advertisement has the capacity or tendency to mislead or deceive the public, the commissioner may require an insurer or insurance producer to submit all or any part of the advertising material for review or approval prior to use. Section 11. Enforcement Failure to comply with this regulation is considered an unfair or deceptive trade practice pursuant to §10Colorado Revised Statutes (C.R.S.). Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of all applicable sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines and suspension or revocation of license.

Section 12. Conflict With Other Laws or Regulations It is not intended that this regulation conflict with or supersede any regulations currently in force or subsequently adopted in this state governing specific aspects of the sale or replacement of life insurance including, but not limited to, laws or regulations dealing with life insurance cost comparison indices, deceptive practices in the sale of life insurance, replacement of life insurance policies, illustration of life insurance policies, and annuity disclosures. Consequently, no disclosure pursuant to or required under those regulations shall be deemed to be an advertisement within the meaning of this regulation. Section 13. Severability If any provisions of this regulation or the application thereof to any person or circumstances are for any reason held to be invalid, the remainder of the regulation shall not be affected in any way. Section 14. Effective Date This regulation as amended is effective January 1, 2007. Section 15. History Originally issued as Regulation 74-5, effective March 15, 1974. Amended Regulation, effective July 1, 1976.

Renumbered as Regulation 4-1-2, effective June 1, 1992. Repealed and Repromulgated in full, effective July 1, 2001. Amended Regulation, effective March 1, 2003.

Amended Regulation, effective September 1, 2006.

Amended Regulation, effective January 1, 2007.

AMENDED REGULATION 4-1-3 VARIABLE LIFE INSURANCE POLICIES Section 1 Authority Section 2 Purpose Section 3 Scope Section 4 Definitions Section 5 Standards of Suitability Section 6 Insurance Policy Requirements Section 7 Information Furnished to Applicants Section 8 Reports to Policyholders Section 9 Reserve Liabilities for Variable Life Insurance Policies Section 10 Separate Accounts Section 11 Foreign or Alien Companies Section 12 Statutory Construction Section 13 Severability Section 14 Enforcement Section 15 Effective Date Section 16 History Section 1 Authority The following regulations applicable to variable life insurance policies are promulgated under the authority of § §10-1-109 and 10-7-405, C.R.S.

Section 2 Purpose The purpose of this regulation is to amend existing Colorado Insurance Regulation 4-1-3 (3 CCR 702-4) and to establish the standards and limitations for variable life insurance policies issued by insurers authorized for such sales in Colorado.

Section 3 Scope This regulation is applicable to all insurance companies and fraternal benefit societies delivering or issuing for delivery in this state variable life insurance policies providing for payments which vary directly according to investment experience of any separate account or accounts maintained by the insurer as provided in §10-7-402, C.R.S. This regulation does not apply to variable annuity contracts, which are regulated pursuant to Colorado Insurance Regulation 4-1-1 (3 CCR 702-4). Section 4 Definitions As used in this regulation:

A. "Assumed investment rate" means the rate of investment return which would be required to be credited to a variable life insurance policy, after deduction of charges for taxes, investment expenses and mortality and all other charges and expenses to maintain the variable death benefit equal at all times to the amount of death benefit other than incidental insurance benefits, which would be payable under the plan of insurance if the death benefit did not vary according to the investment experience of the separate account. For the purposes of this calculation, the deductions for expense charges shall be at the maximum rate permitted in the policy. B. "Benefit base" means the amount to which the net investment return is applied. C. "Flexible Premium Policy" means any variable life insurance policy other than a scheduled premium policy as specified in this section.

D. "General account" means all assets of the insurer other than assets in separate accounts established pursuant to §10-7-402, C.R.S., or pursuant to the corresponding section of the Insurance Laws of the state of domicile of a foreign or alien insurer. E. "Incidental insurance benefit" means all insurance benefits in a variable life insurance policy, other than the variable death benefit and the minimum death benefit, including but not limited to accidental death and dismemberment benefits, disability income benefits, guaranteed insurability options, family income, or term riders.

F. "Minimum death benefit" means the amount of the guaranteed death benefit, other than incidental insurance benefits, payable under a variable life insurance policy regardless of the investment performance of the separate account.

G. "Net investment return" means the rate of investment return in a separate account to be applied to the benefit base.

H. "Person" means an individual, corporation, partnership, association, trust, or fund. I. "Policy processing day" means the day on which charges authorized in the policy are deducted from the policy's cash value.

J. "Scheduled premium policy" means any variable life insurance policy under which both the amount and timing of premium payments are fixed by the insurer. K. "Separate account" means a separate account established pursuant to §10-7-402, C.R.S., or pursuant to the corresponding section of the Insurance Laws of the state of domicile of a foreign or alien insurer.

L. "Variable death benefit" means the amount of death benefit, other than incidental insurance benefits, payable under a variable life insurance policy dependent on the investment performance of the separate account, which the insurer would have to pay in the absence of any minimum death benefit.

M. "Variable life insurance policy" means any individual policy which provides for life insurance the amount or duration of which varies according to the investment experience of any separate account or accounts established and maintained by the insurer as to such policy, pursuant to §10-7-402, C.R.S.

Section 5 Standards of Suitability Every insurer seeking approval to enter into the variable life insurance business in this state shall establish and maintain a written statement specifying the Standards of Suitability to be used by the insurer. These Standards shall include procedures to assure that the sales of variable products are not unsuitable for applicants on the basis of information furnished, after reasonable inquiry of such applicants concerning their insurance and investment objectives, financial situation and needs, and taking into account any other information known to the insurer or to the agent (any person, corporation, partnership, or other legal entity which is licensed by this state as a life insurance agent) making the recommendation. Section 6 Insurance Policy Requirements A. Mandatory Policy Benefit and Design Requirements Variable life insurance policies delivered or issued for delivery in this state shall comply with the following minimum requirements.

1. The policy benefits shall reflect the investment and expense experience, positive or negative, of separate account(s) established and maintained by the insurer for such policies. The allocation and determination of the variable benefits derived from such experience must be actuarially sound and shall not exceed the total separate account assets. 2. Each variable life insurance policy shall be credited with the full amount of the net investment return applied to the benefit base.

3. Any change(s) in variable death benefits of each variable life insurance policy shall be determined at least annually.

4. The cash value of each variable life insurance policy shall be determined at least monthly. The method of computation of cash values and other nonforfeiture benefits, as described in the policy shall be in accordance with generally accepted actuarial procedures that recognize the variable nature of the policy. The method of computation must be such that, if the net investment return credited to the policy at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the policy, then the resulting cash values and other nonforfeiture benefits must be at least equal to the minimum values required by Part 3, Article 7 of Title 10, C.R.S. for a general account policy with such premiums and benefits. The assumed investment rate shall not exceed the maximum interest rate permitted under Part 3 of Article 7 of Title 10, C.R.S. If the policy does not state an assumed investment rate, this demonstration shall be based on the maximum interest rate permitted under Part 3 of Article 7 of Title 10, C.R.S. B. Applications The application for a variable life insurance policy shall contain the following. 1. A prominent statement in either contrasting color or in boldface type that the death benefit may be variable or fixed under specified conditions.

2. A prominent statement in either contrasting color or in boldface type that cash values may increase or decrease in accordance with the experience of the separate account (subject to any specified minimum guarantees).

3. Questions designed to elicit information which enables the insurer to determine the suitability of variable life insurance for the applicant.

C. Mandatory Policy Provisions Every variable life insurance policy shall contain at least the following. 1. The cover page or pages corresponding to the cover page of each such policy shall contain the following a. A prominent statement in either contrasting color or in boldface type that the amount or duration of death benefit, cash values or other nonforfeiture benefits may be variable or fixed under specified conditions which may include minimum guarantees.

b. A statement describing any guaranteed minimum benefit. c. The method, or a reference to the policy provision, which describes the method for determining the amount of insurance payable at death.

d. Such other items as are currently required for fixed benefit life insurance policies and which are appropriate for the policy and not inconsistent with this regulation. 2. A provision for a grace period as follows.

a. For scheduled premium policies, a provision for a grace period of not less than thirty- one days from the premium due date which shall provide that where the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium, as if the premium were paid on or before the due date.

b. For flexible premium policies, a provision for a grace period beginning on the policy processing day when the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay such charges in accordance with the terms of the policy. Such grace period shall end on a date not less than 61 days after the mailing date of the Report to Policyholders required by Section 8(C) of this regulation.

The death benefit payable during the grace period will equal the death benefit in effect immediately prior to such period less any overdue charges. If the policy processing day falls within the grace period, the insurer may require the payment of not more than 3 times the charges due on that policy processing day, but only for those charges which are necessary to keep such policy in force until the next policy processing day.

3. For scheduled premium policies, a provision that the policy will be reinstated at any time within two years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of: a. all overdue premiums with interest at a rate not exceeding six percent (6%) per annum compounded annually and any indebtedness in effect at the end of the grace period following the date of default with interest at a rate not exceeding eight percent (8%) per annum compounded annually; or b. one hundred ten percent (110%) of the increase in cash value resulting from reinstatement plus all overdue premiums for incidental insurance benefits with interest at a rate not exceeding six percent (6%) per annum compounded annually;

4. A full description of the benefit base and of the method of calculation and application of any factors used to adjust variable benefits under the policy. 5. A provision designating the separate account(s) to be used and stating that: a. the assets of such separate account(s) shall be available to cover the liabilities of the general account of the insurer only to the extent that the assets of the separate account exceed the liabilities of the separate account arising under the variable life insurance policies supported by the separate account; b. the assets of such separate account shall be valued at least as often as any policy benefits vary but at least monthly;

6. A provision specifying that only the policy, application, and any documents attached thereto constitute the entire insurance policy.

7. A designation of the officers of the insurer who are empowered to make an agreement or representation on behalf of the insurer and an indication that statements by the insured, or on his behalf, shall be considered as representations and not warranties. 8. An identification of the owner of the insurance policy. 9. A provision setting forth conditions or requirements as to the designation, or change of designation, of a beneficiary and a provision for disbursement of benefits in the absence of a beneficiary designation.

10. A statement of any conditions or requirements concerning the assignment of the policy. 11. A description of any adjustments in policy values to be made in the event of misstatement of age or sex of the insured.

12. A provision that the policy shall be incontestable by the insurer after it has been in force for two years during the lifetime of the insured. However, any increase in the amount of the policy's death benefits subsequent to the policy issue date, which increase occurred upon a new application or request of the owner and was subject to satisfactory proof of the insured's insurability, shall be incontestable after any such increase has been in force, during the lifetime of the insured, for two years from the date of issue of such increase. In addition, if the policy has lapsed and is subsequently reinstated, a new contestable period of two years shall start on the date of reinstatement. 13. A provision that payment of variable death benefits in excess of any minimum death benefits, cash values, policy loans, or partial withdrawals (except when used to pay premiums) or partial surrenders may be deferred:

a. for up to six months from the date of request, if such payments are based on policy values which do not depend on the investment performance of the separate account; or b. otherwise, for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists which may make such payment impractical.

14. If settlement options are provided, at least one such option shall be on a fixed basis. 15. A description of the basis for computing the cash value and the surrender value under the policy shall be included.

16. Premiums or charges for insurance benefits with incidental insurance benefits stated separately.

17. Any other policy provisions required by this regulation. 18. Such other items as are currently required for fixed benefit life insurance policies which are appropriate for the policy and are not inconsistent with this regulation. 19. If the investment policy of the separate account is materially changed, a provision giving policyholders the right to convert, without evidence of insurability, to an alternate plan in the separate or general account.

D. Policy Loan Provisions Every variable life insurance policy, other than term insurance policies and pure endowment policies, delivered or issued for delivery in this state shall contain a provision for policy loans after the policy has been in force for 2 full years which provides the following. 1. At least 75% of the policy's cash surrender value may be borrowed. 2. Any indebtedness shall be deducted from the cash surrender value upon surrender or in determining any nonforfeiture benefit.

3. For scheduled premium policies, whenever the indebtedness exceeds the cash surrender value, the insurer shall give notice of any intent to cancel the policy if the excess indebtedness is not repaid within thirty-one days after the date of mailing of such notice. For flexible premium policies, whenever the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay such charges, a report must be sent to the policyholder which contains the information specified by Section 8(C) of this regulation. 4. The policy may provide that if, at any time so long as premiums are duly paid, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, the policyholder may increase such variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding 110% of the corresponding increase in cash value and by furnishing such evidence of insurability as the insurer may request.

5. The policy may specify a reasonable minimum amount which may be borrowed at any time but such minimum shall not apply to any automatic premium loan provision. 6. No policy loan provision is required if the policy is under extended term insurance nonforfeiture option.

7. Amounts paid to the policyholders upon the exercise of any policy loan provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment.

E. Policy Guarantee Provisions Except with specific prior written authorization from the Commissioner, any guaranteed policy benefit in a variable life insurance policy must be purchased from, and reserved in, the general account, with the appropriate transfer of sufficient cash or cash equivalent funds for the risk being transferred.

F. Other Policy Provisions The following provisions may in substance be included in a variable life insurance policy or related form delivered or issued for delivery in this state. 1. An exclusion for suicide within one year of the issue date of the policy; provided, however, that to the extent of the increased death benefits only, the policy may provide an exclusion for suicide within one year of any increase in death benefits which results from an application of the owner subsequent to the policy issue date.

2. Policies issued on a participating basis shall offer to pay dividend amounts in cash. In addition, such policies may offer dividend options available under general account products. 3. A provision allowing the policyholder to elect in writing in the application for the policy or thereafter an automatic premium loan on a basis not less favorable than that required of policy loans under subsection (D) of this section of this regulation, except that a restriction that no more than two consecutive premiums can be paid under this provision may be imposed.

4. A provision allowing the policyholder to make partial withdrawals. 5. Any other policy provision approved by the Commissioner. Section 7 Information Furnished to Applicants An insurer delivering or issuing for delivery in this state any variable life insurance policies shall deliver to the applicant, and obtain a written acknowledgment of receipt from such applicant coincident with or prior to the execution of the application, the following information. The requirements of this section shall be deemed to have been satisfied to the extent that a disclosure containing information required by this section is delivered, either in the form of (1) a prospectus included in the requirements of the Securities Act of 1933 and which was declared effective by the Securities and Exchange Commission; or (2) all information and reports required by the Employee Retirement Income Security Act of 1974 if the policies are exempted from the registration requirements of the Securities Act of 1933 pursuant to section 3(a)(2) thereof.

A. A summary explanation, in non-technical terms, of the principal features of the policy, including a description of the manner in which the variable benefits will reflect the investment experience of the separate account and the factors which affect such variation. B. A statement of the investment policy of the separate account, including: 1. a description of the investment objectives intended for the separate account and the principal types of investments intended to be made; and 2. any restriction or limitations on the manner in which the operations of the separate account are intended to be conducted.

C. A statement of the net investment return of the separate account for each of the last ten years or such lesser period as the separate account has been in existence. D. A statement of the charges levied against the separate account during the previous year. E. A summary of the method to be used in valuing assets held by the separate account. F. A summary of the federal income tax aspects of the policy applicable to the insured, the policyholder, and the beneficiary.

G. Illustrations of benefits payable under the variable life insurance policy. Such illustrations shall be prepared by the insurer and shall not include projections of past investment experience into the future or attempted predictions of future investment experience, provided that nothing contained herein prohibits use of hypothetical assumed rates of return to illustrate possible levels of benefits if it is made clear that such assumed rates are hypothetical only. Section 8 Reports to Policyholders Any insurer delivering or issuing for delivery in this state any variable life insurance policies shall mail to each variable life insurance policyholder at his or her last known address the following reports: A. within 30 days after each anniversary of the policy, a statement or statements of the cash surrender value, death benefit, any partial withdrawal or policy loan, any interest charge, and any optional payments allowed pursuant to Section 4(D) of this regulation under the policy computed as of the policy anniversary date. Provided, however, that such statement may be furnished within thirty days after a specified date in each policy year so long as the information contained therein is computed as of a date not more than sixty days prior to the mailing of such notice. This statement shall state that, in accordance with the investment experience of the separate account, the cash values and the variable death benefit may increase or decrease, and shall prominently identify any value described therein which may be recomputed prior to the next statement required by this section. If the policy guarantees that the variable death benefit on the next policy anniversary date will not be less than the variable death benefit specified in such statement, the statement shall be modified to so indicate. For flexible premium policies, the report must contain a reconciliation of the change since the previous report in cash value and cash surrender value, if different, because of payments made (less deductions for expense charges), withdrawals, investment experience, insurance charges and any other charges made against the cash value. In addition, the report must show the projected cash value and cash surrender value, if different, as of one year from the end of the period covered by the report assuming that: 1. planned periodic premiums, if any, are paid as scheduled; 2. guaranteed costs of insurance are deducted; and 3. the net investment return is equal to the guaranteed rate or, in the absence of a guaranteed rate, is not greater than zero. If the projected value is less than zero, a warning message must be included that states that the policy may be in danger of terminating without value in the next 12 months unless additional premium is paid; B. annually, a statement or statements including:

1. a summary of the financial statement of the separate account based on the annual statement last filed with the Commissioner;

2. the net investment return of the separate account for the last year and, for each year after the first, a comparison of the investment rate of the separate account during the last year with the investment rate during prior years, up to a total of not less than five years when available;

3. a list of investments held by the separate account as of a date not earlier than the end of the last year for which an annual statement was filed with the Commissioner; 4. any charges levied against the separate account during the previous year; and 5. a statement of any change, since the last report, in the investment objective and orientation of the separate account, in any investment restriction or material quantitative or qualitative investment requirement applicable to the separate account or in the investment adviser of the separate account.

C. For flexible premium policies, a report must be sent to the policyholder if the amounts available under the policy on any policy processing day to pay the charges authorized by the policy are less than the amount necessary to keep the policy in force until the next following policy processing day. The report must indicate the minimum payment required under the terms of the policy to keep it in force and the length of the grace period for payment of such amount. Section 9 Reserve Liabilities for Variable Life Insurance Policies A. Reserve liabilities for the variable aspects of the variable life insurance policies shall be maintained in the separate account and established under Part 3 of Article 7 of Title 10, C.R.S., in accordance with actuarial procedures that recognize the variable nature of the benefits provided. The reserve liabilities shall be limited to the market value of the assets of the separate account. B. Reserve liabilities for the guaranteed minimum death benefit shall be the reserve needed to provide for the contingency of death occurring when the guaranteed minimum death benefit exceeds the death benefit that would be paid in the absence of the guarantee, and shall be maintained in the general account of the insurer and shall be not less than the greater of the following minimum reserve.

1. The aggregate total of the term costs, if any, covering a period of one full year from the valuation date, of the guarantee on each variable life insurance policy; or 2. the aggregate total of the "attained age level" reserve on each variable life insurance policy. The "attained age level" reserve on each variable life insurance policy shall not be less than zero and shall equal the "residue," as described in subsection (B)(2)(a) of this section of this regulation, of the prior year's "attained age level" reserve on the policy, with any such "residue" increased or decreased by a payment computed on an attained age basis as described in subsection (B)(2)(b) of this section of this regulation. a. The "residue" of the prior year's "attained age level" reserve on each variable life insurance policy shall not be less than zero and shall be determined by adding interest at the valuation interest rate to such prior year's reserve, deducting the tabular claims based on the "excess," if any, of the guaranteed minimum death benefit over the death benefit that would be payable in the absence of such guarantee, and dividing the net result by the tabular probability of survival. The "excess" referred to in the preceding sentence shall be based on the actual level of death benefits that would have been in effect during the preceding year in the absence of the guarantee, taking appropriate account of the reserve assumptions regarding the distribution of death claim payments over the year. b. The payment referred to in subsection (B)(2) of this section of this regulation shall be computed so that the present value of a level payment of that amount each year over the future premium paying period for the policy is equal to (X) minus (Y) minus (Z), where (X) is the present value of the future guaranteed minimum death benefits, (Y) is the present value of the future death benefits that would be payable in the absence of such guarantee, and (Z) is any "residue," as described in subsection (B)(2)(a) of this section of this regulation, for the prior year's "attained age level" reserve on such variable life insurance policy. The amounts of future death benefits referred to in subsection (B)(2) of this section of this regulation shall be computed assuming a net investment return of the separate account which may differ from the assumed investment rate and/or the valuation interest rate but in no event may exceed the maximum interest rate permitted for the valuation of life insurance policies.

3. The valuation interest rate and mortality table used in computing the two minimum reserves described in subsections (B)(1) and (B)(2) of this section of this regulation shall conform to permissible standards for the valuation of life insurance policies. In determining such minimum reserve, the company may employ suitable approximations and estimates, including but not limited to groupings and averages.

C. Except with specific prior written authorization from the Commissioner, any guaranteed policy benefit in a variable life insurance policy must be purchased from, and reserved in, the general account, with the appropriate transfer of sufficient cash or cash equivalent funds for the risk being transferred.

Section 10 Separate Accounts The following requirements apply to the establishment and administration of variable life insurance separate accounts by any domestic insurer.

A. Establishment and Administration of Separate Accounts Any domestic insurer issuing variable life insurance policies shall establish one or more separate accounts pursuant to §10-7-402, C.R.S.

1. All persons with access to the cash, securities, or other assets of the separate account shall be under bond in an amount as prescribed in Colorado Insurance Regulation 3-1-1 (3 CCR 702-3).

2. The assets of such separate accounts shall be invested in investments having a reasonably ascertainable market value with such market value determined at least as often as variable benefits are determined but in any event at least monthly. 3. To the extent provided in the policies, that portion of the assets of any separate account which is equal to the reserves and other policy liabilities shall not be subject to creditor claims against the insurer.

B. Amounts in the Separate Account The insurer shall maintain in each separate account assets with a value at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance policies or the benefit base for such policies.

C. Charges Against a Separate Account 1. The insurer must disclose in writing, prior to or contemporaneously with delivery of the policy, all charges that may be made against the separate account, including, but not limited to, the following.

a. Taxes or reserves for taxes attributable to investment gains and income of the separate account.

b. Actual cost of reasonable brokerage fees and similar direct acquisitions and sales costs incurred in the purchase or sale of separate account assets. c. Charges for administrative expenses and investment management expenses, including internal costs attributable to the investment management of assets of the separate account; and d. Other risk charges not directly paid by the policy owner. D. Conflicts of Interest Rules under any provision of the Insurance Laws of this state or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest shall also apply to members of any separate account's committee or other similar body. E. Investment Advisory Services to a Separate Account 1. An insurer shall not enter into a policy under which any person undertakes, for a fee, to regularly furnish investment advice to such insurer with respect to its separate accounts maintained for variable life insurance policies unless such investment advisory policy shall be in writing and provide that it may be terminated by the insurer without penalty to the insurer or the separate account upon no more than 60 days' written notice to the investment adviser.

2. The Commissioner may, after notice and opportunity for hearing, by order require such investment advisory policy to be terminated if he deems continued operation thereunder to be hazardous to the public or the insurer's policyholders. Section 11 Foreign or Alien Companies If the law or regulation in the place of domicile of a foreign or alien company provides protection to the policy holders and the public which is substantially equal to that provided by Colorado statutes and regulations, the Commissioner may consider compliance with such laws or regulations as compliance with Colorado laws and regulations. The state of entry of an alien insurer shall be deemed to be its domiciliary state for the purpose of this regulation.

Section 12 Statutory Construction Except as provided by §10-7-405, C.R.S., the provisions of the Colorado Insurance Laws applicable to life insurance policies shall apply to variable life insurance policies. This includes, but is not limited to, custodial arrangements of separate account assets, unfair methods of competition and deceptive acts or practices, annual reporting, and appropriate policy requirements contained in Parts 1 and 3 of Article 7 of Title 10, C.R.S. In addition, all federal laws and regulations governing variable life insurance policies shall apply.

Section 13 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 14 Enforcement Noncompliance with this Regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of license. Among others, the penalties provided for in §10-3-1108, C.R.S. may be applied. Section 15 Effective Date This amended regulation is effective August 1, 2006.

Section 16 History This regulation was originally effective July 1, 1994.

Amended regulation effective August 1, 2006.

Repromulgated Regulation 4-1-4 Replacement Of Life Insurance Policies And Annuities Section 1. Authority Section 2. Purpose Section 3. Scope Section 4. Definitions Section 5. Duties of Producers Section 6. Duties of All Insurers that Use Producers Section 7. Duties of Replacing Insurers that Use Producers Section 8. Duties of the Existing Insurer Section 9. Duties of Insurers with Respect to Direct Response Solicitations Section 10. Violations and Penalties Section 11. Enforcement Section 12. Severability Section 13. Effective Date Section 14. History Appendix A. Important Notice Regarding Replacements Appendix B. Notice Regarding Replacements for Direct Response Insurers Appendix C. Important Notice Regarding Replacements for Direct Response Insurers Section 1. Authority This regulation is promulgated under the authority of § § 10-1-109 and 10-3-1110(1). Colorado Revised Statutes (C.R.S.).

Section 2. Purpose A. The purpose of this regulation is:

(1) To regulate the activities of insurers and producers with respect to the replacement of existing life insurance and annuities.

(2) To protect the interests of life insurance and annuity purchasers by establishing minimum standards of conduct to be observed in replacement or financed purchase transactions. It will:

(a) Assure that purchasers receive information with which a decision can be made in his or her own best interest;

(b) Reduce the opportunity for misrepresentation and incomplete disclosure; and (c) Establish penalties for failure to comply with requirements of this regulation. Section 3. Scope A. This regulation shall apply to life insurance policies and annuity contracts covering residents of this state, which are solicited and issued by insurance corporations, fraternal benefit societies, associations or other institutions, which issue life insurance or annuities. B. Unless otherwise specifically included, this regulation shall not apply to transactions involving: (1) Credit life insurance;

(2) Group life insurance or group annuities where there is no direct solicitation of individuals by an insurance producer. Direct solicitation shall not include any group meeting held by an insurance producer solely for the purpose of educating or enrolling individuals or, when initiated by an individual member of the group, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual. Group life insurance or group annuity certificates marketed through direct response solicitation shall be subject to the provisions of Section 9;

(3) Group life insurance and annuities used to fund prearranged funeral contracts; (4) An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant, to a program filed with the commissioner, (5) Proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same company;

(6)

(a) Policies or contracts used to fund (i) an employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA); (ii) a plan described by Sections 401 (a), 401 (k) or 403(b) of the Internal Revenue Code, where the plan, for purposes of ERISA, is established or maintained by an employer; (iii) a governmental or church plan defined in Section 414, a governmental or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the Internal Revenue Code; or (iv) a nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor. (b) Notwithstanding Subparagraph (a), this regulation shall apply to policies or contracts used to fund any plan or arrangement that is funded solely by contributions an employee elects to make, whether on a pre-tax or after-tax basis, and where the insurer has been notified that plan participants may choose from among two (2) or more insurers and there is a direct solicitation of an individual employee by an insurance producer for the purchase of a contract or policy. As used in this subsection, direct solicitation shall not include any group meeting held by an insurance producer solely for the purpose of educating individuals about the plan or arrangement or enrolling individuals in the plan or arrangement or, when initiated by an individual employee, assisting with the selection of investment options offered by a single insurer in connection with enrolling that individual employee;

(7) Where new coverage is provided under a life insurance policy or contract and the cost is borne wholly by the insured's employer or by an association of which the insured is a member, (8) Existing life insurance that is a non-convertible term life insurance policy that will expire in five (5) years or less and cannot be renewed;

(9) Immediate annuities that are purchased with proceeds from an existing contract. Immediate annuities purchased with proceeds from an existing policy are not exempted from the requirements of this regulation; or (10) Structured settlements.

C. Registered contracts shall be exempt from the requirements of Sections 7A(2) and 8B with respect to the provision of illustrations or policy summaries; however, premium or contract contribution amounts and identification of the appropriate prospectus or offering circular shall be required instead.

Section 4. Definitions A. “Direct-response solicitation” means a solicitation through a sponsoring or endorsing entity or individually solely through mails, telephone, the Internet or other mass communication media. B. “Existing insurer” means the insurance company whose policy or contract is or will be changed or affected in a manner described within the definition of “replacement.” C. “Existing policy or contract” means an individual life insurance policy (policy) or annuity contract (contract) in force, including a policy under a binding or conditional receipt or a policy or contract that is within an unconditional refund period.

D. “Financed purchase” means the purchase of a new policy involving the actual or intended use of funds obtained by the withdrawal or surrender of, or by borrowing from values of an existing policy to pay all or part of any premium due on the new policy. For purposes of a regulatory review of an individual transaction only, if a withdrawal, surrender or borrowing involving the policy values of an existing policy is used to pay premiums on a new policy owned by the same policyholder and issued by the same company within four (4) months before or thirteen (13) months after the effective date of the new policy, it will be deemed prima facie evidence of the policyholder's intent to finance the purchase of the new policy with existing policy values. This prima facie standard is not intended to increase or decrease the monitoring obligations contained in Section 6A(5) of this regulation.

E. “Illustration” means a presentation or depiction that includes non-guaranteed elements of a policy of life insurance over a period of years as defined in Colorado Regulation 4-1-8. F. “Policy summary,” for the purposes of this regulation; (1) For policies or contracts other than universal life policies, means a written statement regarding a policy or contract which shall contain to the extent applicable, but need not be limited to, the following information: current death benefit; annual contract premium; current cash surrender value; current dividend; application of current dividend; and amount of outstanding loan.

(2) For universal life policies, means a written statement that shall contain at least the following information: the beginning and end date of the current report period; the policy value at the end of the previous report period and at the end of the current report period; the total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders); the current death benefit at the end of the current report period on each life covered by the policy; the net cash surrender value of the policy as of the end of the current report period; and the amount of outstanding loans, if any, as of the end of the current report period. G. “Producer,” for the purpose of this regulation, shall be defined to include agents, brokers and producers.

H. “Replacing insurer” means the insurance company that issues or proposes to issue a new policy or contract that replaces an existing policy or contract or is a financed purchase. I. “Registered contract” means a variable annuity contract or variable life; insurance policy subject to the prospectus delivery requirements of the Securities Act of 1933. J. “Replacement” means a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposing producer, or to the proposing insurer if there is no producer, that by reason of the transaction, an existing policy or contract has been or is to be: (1) Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer or otherwise terminated;

(2) Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by the use of nonforfeiture benefits or other policy values; (3) Amended so as to effect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid; (4) Reissued with any reduction in cash value; or (5) Used in a financed purchase.

K. “Sales material” means a sales illustration and any other written, printed or electronically presented information created, or completed or provided by the company or producer and used in the presentation to the policy or contract owner related to the policy or contract purchased. Section 5. Duties of Producers A. A producer who initiates an application shall submit to the insurer, with or as part of the application, a statement signed by both the applicant and the producer as to whether the applicant has existing policies or contracts. If the answer is “no,” the producer's duties with respect to replacement are complete.

B. If the applicant answered “yes” to the question regarding existing coverage referred to in Subsection A, the producer shall present and read to the applicant, not later than at the time of taking the application, a notice regarding replacements in the form as described in Appendix A or other substantially similar form which is not less favorable in any respect to the insured. The notice shall be signed by both the applicant and the producer attesting that the notice has been read aloud by the producer or that the applicant did not wish the notice to be read aloud (in which case the producer need not have read the notice aloud) and left with the applicant. C. The notice shall list all life insurance policies or annuities proposed to be replaced, properly identified by name of insurer, the insured or annuitant, and policy or contract number if available; and shall include a statement as to whether each policy or contract will be replaced or whether a policy will be used as a source of financing for the new policy or contract. If a policy or contract number has not been issued by the existing insurer, alternative identification, such as an application or receipt number, shall be listed.

D. In connection with a replacement transaction the producer shall leave with the applicant at the time an application for a new policy or contract is completed the original or a copy of all sales material. With respect to electronically presented sales material, it shall be provided to the policy or contract owner in printed form no later than at the time of policy or contract delivery. E. Except as provided in Section 7C, in connection with a replacement transaction the producer shall submit to the insurer to which an application for a policy or contract is presented, a copy of each document required by this section, a statement identifying any preprinted or electronically presented company approved sales materials used, and copies of any individualized sales materials, including any illustrations related to the specific policy or contract purchased. Section 6. Duties of Insurers that Use Producers Each insurer shall:

A. Maintain a system of supervision and control to insure compliance with the requirements of this regulation that shall include at least the following:

(1) Inform its producers of the requirements of this regulation and :incorporate the requirements of this regulation into all relevant producer training manuals prepared by the insurer; (2) Provide to each producer a written statement of the company's position with respect to the acceptability of replacements providing guidance to its producer as to the appropriateness of these transactions;

(3) A system to review the appropriateness of each replacement transaction that the producer does not indicate is in accord with Paragraph (2) above; (4) Procedures to confirm that the requirements of this regulation have been met; and (5) Procedures to detect transactions that are replacements of existing policies or contracts by the existing insurer, but that have not been reported as such by the applicant or producer. Compliance with this regulation may include, but shall not be limited to, systematic customer surveys, interviews, confirmation letters, or programs of internal monitoring; B. Have the capacity to monitor each producer's life insurance policy and annuity contract replacements for that insurer, and shall produce, upon request, and make such records available to the Insurance Department. The capacity to monitor shall include the ability to produce records for each producer's:

(1) Life replacements, including financed purchases, as a percentage of the producer's total annual sales for life insurance;

(2) Number of lapses of policies by the producer as a percentage of the producer's total annual sales for life insurance;

(3) Annuity contract replacements as a percentage of the producer's total annual annuity contract sales;

(4) Number of transactions that are unreported replacements of existing policies or contracts by the existing insurer detected by the company's monitoring system as required by Subsection A(5) of this section; and (5) Replacements, indexed by replacing producer and existing insurer; C. Require with or as a part of each application for life insurance or an annuity a signed statement by both the applicant and the producer as to whether the applicant has existing policies or contracts; D. Require with each application for life insurance or an annuity that indicates an existing policy or contract a completed notice regarding replacements as contained in Appendix A; E. When the applicant has existing policies or contracts, each insurer shall be able to produce copies of any sales material required by Section 5E, the basic illustration and any supplemental illustrations related to the specific policy or contract that is purchased, and the producer's and applicant's signed statements with respect to financing and replacement for at least five (5) years after the termination or expiration of the proposed policy or contract; F. Ascertain that the sales material and illustrations required by Section 5E of this regulation meet the requirements of this regulation and are complete and accurate for the proposed policy or contract; G. If an application does not meet the requirements of this regulation, notify the producer and applicant and fulfill the outstanding requirements; and H. Maintains records in paper, photograph, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document. Section 7. Duties of Replacing Insurers that Use Producers A. Where a replacement is involved in the transaction, the replacing insurer shall: (1) Verify that the required forms are received and are in compliance with this regulation; (2) Notify any other existing insurer that may be affected by the proposed replacement within five (5) business days of receipt of a completed application indicating replacement or when the replacement is identified if not indicated on the application, and mail a copy of the available illustration or policy summary for the proposed policy or available disclosure document for the proposed contract within five (5) business days of a request from an existing insurer;

(3) Be able to produce copies of the notification regarding replacement required in Section 5B, indexed by producer, for at least five (5) years or until the next regular examination by the insurance department of a company's state of domicile, whichever is later; and (4) Provide to the policy or contract owner notice of the right to return the policy or contract within thirty (30) days of the delivery of the contract and receive an unconditional full refund of all premiums or considerations paid on it, including any policy fees or charges or, in the case of a variable or market value adjustment policy or contract, a payment of the cash surrender value provided under the policy or contract plus the fees and other charges deducted from the gross premiums or considerations or imposed under such policy or contract; such notice may be included in Appendix A or C. B. In transactions where the replacing insurer and the existing insurer are the same or subsidiaries or affiliates under common ownership or control allow credit for :he period of time that has elapsed under the replaced policy's or contract's incontestability and suicide period up to the face amount of the existing policy or contract. With regard to financed purchases the credit may be limited to the amount the face amount of the existing policy is reduced by the use of existing policy values to fund the new policy or contract.

C. If an insurer prohibits the use of sales material other than that approved by the company, as an alternative to the requirements made of an insurer pursuant to Section 5E, the insurer may: (1) Require with each application a statement signed by the producer that: (a) Represents that the producer used only company-approved sales material; and (b) States that copies of all sales material were left with the applicant in accordance with Section 5D; and (2) Within ten (10) days of the issuance of the policy or contract: (a) Notify the applicant by sending a letter or by verbal communication with the applicant by a person whose duties are separate from the marketing area of the insurer, that the producer has represented that copies of all sales material have been left with the applicant in accordance with Section 5D;

(b) Provide the applicant with a toll free number to contact company personnel involved in the compliance function if such is not the case; and (c) Stress the importance of retaining copies of the sales material for future reference; and (3) Be able to produce a copy of the letter or other verification in the policy file for at least five (5) years after the termination or expiration of the policy or contract. Section 8. Duties of the Existing Insurer Where a replacement is involved in the transaction, the existing insurer shall: A. Retain and be able to produce all replacement notifications received, indexed by replacing insurer, for at least five (5) years or until the conclusion of the next regular examination conducted by the Insurance Department of its state of domicile, whichever is later. B. Send a letter to the policy or contract owner of the right to receive information regarding the existing policy or contract values including, if available, an in force illustration or policy summary if an in force illustration cannot be produced within five (5) business days of receipt of a notice that an existing policy or contract is being replaced. The information shall be provided within five (5) business days of receipt of the request from the policy or contract owner. C. Upon receipt of a request to borrow, surrender or withdraw any policy values, send a notice, advising the policy owner that the release of policy values may affect the guaranteed elements, non- guaranteed elements, face amount or surrender value of the policy from which the values are released. The notice shall be sent separate from the check if the check is sent to anyone other than the policy owner. In the case of consecutive automatic premium loans, the insurer is only required to send the notice at the time of the first loan. Section 9. Duties of Insurers with Respect to Direct Response Solicitations A. In the case of an application that is initiated as a result of a direct response solicitation, the insurer shall require, with or as part of each completed application for a policy or contract, a statement asking whether the applicant, by applying for the proposed policy or contract, intends to replace, discontinue or change an existing policy or contract. If the applicant indicates a replacement or change is not intended or if the applicant fails to respond to the statement, the insurer shall send the applicant, with the policy or contract, a notice regarding replacement in Appendix B, or other substantially similar form which is no less favorable in any respect to the insured. B. If the insurer has proposed the replacement or if the applicant indicates a replacement is intended and the insurer continues with the replacement, the insurer shall: (1) Provide to applicants or prospective applicants with the policy or contract a notice, as described in Appendix C, or other substantially similar form which is not less favorable in any respect to the insured. The insurer's obligation to obtain the applicant's signature shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the notice referred to in this paragraph. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed notice referred to in this section; and (2) Comply with the requirements of Section 7A(2), if the applicant furnishes the names of the existing insurers, and the requirements of Sections 7A(3), 7A(4) and 7B. Section 10. Violations and Penalties A. Any failure to comply with this regulation shall be considered a violation of Colorado Revised Statute 10-3-1104( 1 )(b). Examples of violations include:

(1) Any deceptive or misleading information set forth in sales material; (2) Failing to ask the applicant in completing the application the pertinent questions regarding the possibility of financing or replacement;

(3) The intentional incorrect recording of an answer;

(4) Advising an applicant to respond negatively to any question regarding replacement in order to prevent notice to the existing insurer; or (5) Advising a policy or contract owner to write directly to the company in such a way as to attempt to obscure the identity of the replacing producer or company. B. Policy and contract owners have the right to replace existing life insurance policies or annuity contracts after indicating in or as a part of applications for new coverage that replacement is not their intention; however, patterns of such action by policy or contract owners of the same producer shall be deemed prima facie evidence of the producer's knowledge that replacement was intended in connection with the identified transactions, and these patterns of action shall be deemed prima facie evidence of the producer's intent to violate this regulation. C. Where it is determined that the requirements of this regulation have not been met the replacing insurer shall provide to the policy owner an in force illustration if available or policy summary for the replacement policy or available disclosure document for the replacement contract and the appropriate notice regarding replacements in Appendix A or C. D. Violations of this regulation shall subject the violators to penalties that may include the revocation or suspension of a producer's or company's license, monetary fines and the forfeiture of any commissions or compensation paid to a producer as a result of the transaction in connection with which the violations occurred. In addition, where the commissioner has determined that the violations were material to the sale, the insurer may be required to make restitution and restore policy or contract values.

Section 11. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of all applicable sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines and suspension or revocation of license. Section 12. Severability If any section or portion of a section of this regulation, or its applicability to any person or circumstances, is held invalid by a court, the remainder of this regulation, or the applicability of its provisions to other persons, shall not be affected.

Section 13. Effective Date This regulation shall be effective July 1,2001.

Section 14. History Originally issued as Regulation 72-7, effective April 1,1972. Regulation 72-7 repealed and replaced by Regulation 82-1, effective September 1,1982. Renumbered as Regulation 4-1-4, effective June 1,1992.

Repealed and Repromulgated in full, effective July 1, 2001. Appendix A Important Notice: Replacement of Life Insurance or Annuities This document must be signed by the applicant and the producer, if there is one, and a copy left with the applicant.

You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing policy or contract. If so, a replacement is occurring. Financed purchases are also considered replacements. A replacement occurs when a new policy or contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing policy or contract, or an existing policy or contract is surrendered, forfeited, assigned to the replacing insurer, or otherwise terminated or used in a financed purchase.

A financed purchase occurs when the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all of the policy values, including accumulated dividends, of an existing policy to pay all or part of any premium or payment due on the new policy. A financed purchase is a replacement.

You should carefully consider whether a replacement is in your best interests. You will pay acquisition costs and there may be surrender costs deducted from your policy or contract. You may be able to make changes to your existing policy or contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing policy and may reduce the amount paid upon the death of the insured.

We want you to understand the effects of replacements before you make your purchase decision and ask that you answer the following questions and consider the questions on the back of this form. 1. Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract? ___YES ___NO 2. Are you considering using funds from your existing policies or contracts to pay premiums due on the new policy or contract?___YES ___NO If you answered “yes” to either of the above questions, list each existing policy or contract you are contemplating replacing (include the name of the insurer, the insured or annuitant, and the policy or contract number if available) and whether each policy or contract will be replaced or used as a source of financing:

INSURER NAME CONTRACT OR INSURED OR REPLACED (R) OR POLICY #. ANNUITANT FINANCING (F)

1. __________ ________________ ________________ ________________ 2. __________ ________________ ________________ ________________ 3. __________ ___________ ________________ ________________ Make sure you know the facts. Contact your existing company or its agent for information about the old policy or contract. If you request one, an in force illustration, policy summary or available disclosure documents must be sent to you by the existing insurer. Ask for and retain all sales material used by the agent in the sales presentation. Be sure that you are making an informed decision. The existing policy or contract is being replaced because_________________________ I certify that the responses herein are, to the best of my knowledge, accurate: Applicant's Signature and Printed Name Date Producer's Signature and Printed Name Date I do not want this notice read aloud to me._______ (Applicants must initial only if they do not want the notice read aloud.) A replacement may not be in your best interest, or your decision could be a good one. You should make a careful comparison of the costs and benefits of your existing policy or contract and the proposed policy or contract. One way to do this is to ask the company or agent that sold you your existing policy or contract to provide you with information concerning your existing policy or contract. This may include an illustration of how your existing policy or contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare policies or contracts. You should discuss the following with your agent to determine whether replacement or financing your purchase makes sense:

PREMIUMS:

Are they affordable? Could they change? You're older-are premiums higher for the proposed new policy? How long will you have to pay premiums on the new policy? On the old policy? POLICY VALUES:

New policies usually take longer to build cash values and to pay dividends. Acquisition costs for the old policy may have been paid, you will incur costs for the new one. What surrender charges do the policies have? What expense and sales charges will you pay on the new policy? Does the new policy provide more insurance coverage? INSURABILITY:

If your health has changed since you bought your old policy, the new one could cost you more, or you could be turned down. You may need a medical exam for a new policy. Claims on most new policies for up to the first two years can be denied based on inaccurate statements. Suicide limitations may begin anew on the new coverage. IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW POLICY: How are premiums for both policies being paid? How will the premiums on your existing policy be affected? Will a loan be deducted from death benefits? What values from the old policy are being used to pay premiums? IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST SENSITIVE LIFE PRODUCT: Will you pay surrender charges on your old contract? What are the interest rate guarantees for the new contract? Have you compared the contract charges or other policy expenses? OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:

What are the tax consequences of buying the new policy? Is this a tax free exchange? (See your tax advisor.) Is there a benefit from favorable “grandfathered” treatment of the old policy under the federal tax code? Will the existing insurer be willing to modify the old policy? How does the quality and financial stability of the new company compare with your existing company? Appendix B Notice Regarding Replacement Replacing Your Life Insurance Policy or Annuity? Are you thinking about buying a new life insurance policy or annuity and discontinuing or changing an existing one? If you are, your decision could be a good one-or a mistake. You will not know for sure unless you make a careful comparison of your existing benefits and the proposed policy or contract's benefits.

Make sure you understand the facts. You should ask the company or agent that sold you your existing policy or contract to give you information about it.

Hear both sides before you decide. This way you can be sure you are making a decision that is in your best interest.

Appendix C Important Notice: Replacement of Life Insurance or Annuities You are contemplating the purchase of a life insurance policy or annuity contract. In some cases this purchase may involve discontinuing or changing an existing policy or contract. If so, a replacement is occurring. Financed purchases are also considered replacements. A replacement occurs when a new policy or contract is purchased and, in connection with the sale, you discontinue making premium payments on the existing policy or contract, or an existing policy or contract is surrendered, forfeited, assigned to the replacing insurer, or otherwise terminated or used in a financed purchase.

A financed purchase occurs when the purchase of a new life insurance policy involves the use of funds obtained by the withdrawal or surrender of or by borrowing some or all o;7 the policy values, including accumulated dividends, of an existing policy, to pay all or part of any premium or payment due on the new policy. A financed purchase is a replacement.

You should carefully consider whether a replacement is in your best interests. You will pay acquisition costs and there may be surrender costs deducted from your policy or contract. You may be able to make changes to your existing policy or contract to meet your insurance needs at less cost. A financed purchase will reduce the value of your existing policy and may reduce the amount paid upon the death of the insured.

We want you to understand the effects of replacements and ask that you answer the following questions and consider the questions on the back of this form.

1. Are you considering discontinuing making premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing policy or contract? ____YES ____NO 2. Are you considering using funds from your existing policies or contracts to pay premiums due on the new policy or contract?____YES ____NO Please list each existing policy or contract you are contemplating replacing (include the name of the insurer, the insured, and the policy or contract number if available) and whether each policy or contract will be replaced or used as a source of financing:

INSURER NAME CONTRACT OR INSURED OR REPLACED (R) OR POLICY #. ANNUITANT FINANCING (F)

1. __________ ________________ ________________ ________________ 2. __________ ________________ ________________ ________________ 3. __________ ___________ ________________ ________________ Make sure you know the facts. Contact your existing company or its agent for information about the old policy or contract. If you request one, an in force illustration, policy summary or available disclosure documents must be sent to you by the existing insurer. Ask for and retain all sales material used by the agent in the sales presentation. Be sure that you are making an informed decision. I certify that the responses herein are, to the best of my knowledge, accurate: Applicant's Signature and Printed Name Date A replacement may not be in your best interest, or your decision could be a good one. You should-make a careful comparison of the costs and benefits of your existing policy or contract and the proposed policy or contract. One way to do this is to ask the company or agent that sold you your existing policy or contract to provide you with information concerning your existing policy or contract. This may include an illustration of how your existing policy or contract is working now and how it would perform in the future based on certain assumptions. Illustrations should not, however, be used as a sole basis to compare policies or contracts. You should discuss the following with your agent to determine whether replacement or financing your purchase makes sense:

PREMIUMS:

Are they affordable? Could they change? You're older-are premiums higher for the proposed new policy? How long will you have to pay premiums on the new policy? On the old policy? POLICY VALUES:

New policies usually take longer to build cash values and to pay dividends. Acquisition costs for the old policy may have been paid, you will incur costs for the new one. What surrender charges do the policies have? What expense and sales charges will you pay on the new policy? Does the new policy provide more insurance coverage? INSURABILITY:

If your health has changed since you bought your old policy, the new one could cost you more, or you could be turned down. You may need a medical exam for a new policy. Claims on most new policies for up to the first two years can be denied based on inaccurate statements. Suicide limitations may begin anew on the new coverage. IF YOU ARE KEEPING THE OLD POLICY AS WELL AS THE NEW POLICY: How are premiums for both policies being paid? How will the premiums on your existing policy be affected? Will a loan be deducted from death benefits? What values from the old policy are being used to pay premiums? IF YOU ARE SURRENDERING AN ANNUITY OR INTEREST SENSITIVE LIFE PRODUCT: Will you pay surrender charges on your old contract? What are the interest rate guarantees for the new contract? Have you compared the contract charges or other policy expenses? OTHER ISSUES TO CONSIDER FOR ALL TRANSACTIONS:

What are the tax consequences of buying the new policy? Is this a tax free exchange? (See your tax advisor.) Is there a benefit from favorable “grandfathered” treatment of the old policy under the federal tax code? Will the existing insurer be willing to modify the old policy? How does the quality and financial stability of the new company compare with your existing company? Regulation 4-1-5 Permitting Same Minimum Nonforfeiture Standards for Men and Women Insured Under 1980 CSO and 1980 CET Mortality Tables I. Authority This Regulation is promulgated under the authority of Sections 10-1-108(8), 10-1-109, and 10-7-305.1. (8) (f),. C.R.S.

II. Purpose The purpose of this Regulation is to permit individual life insurance policies to provide the same cash surrender values and paid-up nonforfeiture benefits to both men and women to the extent necessary to comply with the U.S. Supreme Court decision in Arizona Governing Committee vs. Norris. No change in minimum valuation standards is implied by this rule.

The purpose of the January 1, 1989 amendment is to permit the use of smoker/nonsmoker status in providing the same cash surrender values and paid-up nonforfeiture benefits to both men and women. III. Definitions A. As used in this Regulation, “1980 CSO Table, with or without Ten-Year Select Mortality Factors” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the Society of Actuaries Committee to Recommend New Mortality Tables for Valuation of Standard Individual Ordinary Life Insurance, referred to in section 10- 7-305.1 (8) C.R.S. and referred to as the Commissioners 1980, Standard Ordinary Mortality Table, with or without ten-year select mortality factors.

B. As used in this Regulation, “1980 CSO Table (M), with or without ten-year select mortality factors” means that mortality table consisting of the rates of mortality for male lives from the 1980 CSO Table, with or without ten-year select mortality factors. C. As used in this Regulation, “1980 CSO Table (F), with or without ten-year select mortality factors” means that mortality table consisting of the rates of mortality for female lives from the 1980 CSO Table, with or without ten-year select mortality factors. D. As used in this Regulation, “1980 CET Table” means that mortality table consisting of separate rates of mortality for male and female lives, developed by the Society of Actuaries Committee to Recommend New Mortality Tables for Valuation of Standard Individual Ordinary Life Insurance, referred to in section 10-7-305.1(8) (d) C.R.S. and referred to as; the Commissioners 1980 Extended Term Insurance Table.

E. As used in this Regulation, “1980 CET Table (M)” means that mortality table consisting of the rates, of mortality for male lives from the 1980 CET Table.

F. As used in this Regulation, “1980 BET Table (F)” means that mortality table consisting of the rates of mortality for female lives from the 1980 BET Table.

G. As used in this Regulation, “1980 CSO and 1980 CET Smoker and Nonsmoker Mortality Tables” mean the mortality tables with separate rates of mortality for smokers and nonsmokers derived from the 1980 CSO and 1980 BET Mortality Tables by the Society of Actuaries Task Force on Smoker/Nonsmoker Mortality and adopted by the NAIC, in December 1983. IV. Rule For any policy of insurance on the life of either a male or female insured delivered or issued for delivery in this state after the operative date of section 10-7-305.1, C.R.S. for that policy form, (i) a mortality table which is a blend of the 1980 CSO Table (M) and the 1980 CSO Table (F) with or without ten- year select mortality factors may at the option of the company be substituted for the 1980 CSO Table, with or without Ten-Year Select Mortality Factors, and (ii) a mortality table which is of the same blend as used in (i) but applied to form a blend of the 1980 BET Table (M) and the 1980 BET Table (F) may at the option of the company be substituted for the 1980 BET Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits.

The following tables will be considered as the basis for acceptable tables: A. 100% Male 0% Female for tables to be designated as the “1980 CSO-A” and “1980 CET-A” tables. B. 80% Male 20% Female for tables to be designated as the “1980 CSO-B” and “1980 CET-B” tables. C. 60% Male 40% Female for tables to be designated as the “1980 CSO-C” and “1980 CET-C” tables. D. 50% Male 50% Female for tables to be designated as the “1980 CSO-D” and “1980 CET-D” tables. E. 40% Male 60% Female for tables to be designated as the “1980 CSO-E” and “1980 CET-E” tables. F. 20% Male 80% Female for tables to be designated as the “1980 CSO-F” and “1980 CET-F” tables. G. 0% Male 100% Female for tables to be designated as the “1980 CSO-G” and “1980 CET-G” tables. Tables A and G are not to be used with respect to policies issued on or after January 1, 1985,-except where the proportion of persons insured is anticipated to be 90% or more of one sex or the other or except for certain policies converted from group insurance. Such group conversions issued on or after January 1, 1986 must use Mortality Tables based on the blend of lives by sex expected for such policies if such group conversions are considered as extensions of the Norris decision. This consideration has not been clearly defined by court or legislative action in all jurisdictions. The values of l000qx for blended Tables B, C, D, E and F are as published in the 1984 Proceedings of the National Association of Insurance Commissioners, Volume I, pages 396 - 400, and the method by which selection factors may be obtained is as described on page 457 of such publication. Table A is the same as 1980 CSO Table (M) and 1980 BET Table (M) and Table G is the same as 1980 CSO Table (F) and 1980 BET Table (F). IV-A. Alternate Rule In determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits for any policy of insurance on the life of either a male or female insured on a form of insurance with separate rates for smokers and nonsmokers delivered or issued for delivery in this state after the operative date of section 10-7-305.1 C.R.S. for that policy form, in addition to the mortality tables that may be used according to Section IV, (i) a mortality table which is a blend of the male and female rates of mortality according to the 1980 CSO Smoker Mortality Table, in the case of lives classified as smokers, or the 1980 CSO Nonsmoker Mortality Table, in the case of lives classified as nonsmokers, with or without Ten-Year Select Mortality Factors, may at the option of the company be substituted for the 1980 CSO Table, with or without Ten-Year Select Mortality Factors, and (ii) a mortality table which is of the same blend as used in (i) but applied to form a blend of the male and female rates of mortality according to the corresponding 1980 BET Smoker Mortality Table or 1980 BET Nonsmoker Mortality Table may at the option of the company be substituted for the 1980 BET Table.

The following tables will be considered as the basis for acceptable Tables: SA. 100% Male 0% Female smoker tables to be designated as the “1980 CSO-SA” and “1980 CET-SA” tables.

SB. 80% Male 20% Female smoker tables to be designated as the “1980 CSO-SB” and “1980 CET-SB” tables.

SC. 60% Male 40% Female smoker tables to be designated as the “1980 CSO-SC” and “1980 CET-SC” tables.

SD. 50% Male 50% Female smoker tables to be designated as the “1980 CSO-SD” and “1980 CET-SD” tables.

SE. 40% Male 60% Female smoker tables to be designated as the “1980 CSO-SE” and “1980 CET-SE” tables.

SF. 20% Male 80% Female smoker tables to be designated as the “1980 CSO-SF” and “1980 CET-SF” tables.

SG. 0% Male 100% Female smoker tables to be designated as the “1980 CSO-SG” and “1980 CET-SG” tables.

NA. 100% Male O% Female non-smoker tables to be designated as the “1980 CSO-NA” and “1980 CET-NA” tables.

NB. 80% Male 20% Female non-smoker tables to be designated as the “1980 CSO-NB” and “1980 CET- NB” tables.

NC. 60% Male 40% Female non-smoker tables to be designated as the “1980 CSO-NC” and “1980 CET- NC” tables.

ND. 50% Male 50% Female non-smoker tables to be designated as the “1980 CSO-ND” and “1980 CET- ND” tables.

NE. 40% Male 60% Female non-smoker tables to be designated as the “1980 CSO-NE” and “1980 CET- NE” tables.

ND. 20% Male 80% Female non-smoker tables to be designated as the “1980 CSO-NF” and “1980 CET- NF” tables.

NG. 0% Male 100% Female non-smoker tables to be designated as the “1980 CSO-NG” and “1980 CET-NG” tables.

Tables SA, SG, NA and NG are not acceptable as blended tables unless the proportion of persons insured is anticipated to be 90% or more of one sex or the other. The values of l000qx for blended Tables SB, SC, SD, SE, SF, NB, NC, ND, NE and NF are as published in the 1987 Proceedings of the National Association of Insurance Commissioners, Volume I, pages 521 - 530, and the method by which selection factors may be obtained is as described in the 1984 Proceedings of the National Association of Insurance Commissioners, Volume I, page 457. Tables SA and NA are the same as 1980 CSO Table (M) and 1980 BET Table (M) smoker and nonsmoker respectively, and Tables SG and NG are the same as 1980 CSO Table (F) and 1980 BET Table (F) smoker and nonsmoker respectively. This rules does not include any later amendments to the NAIC tables described in sections IV and IV-A above.

Any person seeking information on the incorporated material set forth in Sections IV and IV-A above should contact the Chief Actuary at the Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver, Colorado, 80202.

V. Unfair Discrimination The tables described in Sections IV and IV-A above may be used to the extent necessary to comply with the requirements of the U.S. Supreme Court decision in Arizona Governing Committee vs. Norris. To that extent the use of the tables will not be a violation of section 10-3-1104, C.R.S. VI. Separability If any provision of this Regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of such provision to other persons or circumstances shall not be affected thereby. VII. Effective Date The effective date of this Regulation is January 1, 1985. The effective date of section IV-A is January 1, 1939; as corrected, effective December' 31, 1992. Regulation 4-1-6 Permitting Smoker/Nonsmoker Mortality Tables for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits I. Authority This Regulation is promulgated under the authority of § § 10-1-109, 10-7-309, and 10-7-305.1, Colorado Revised Statutes (C.R.S.).

II. Purpose The purpose of the regulation is to permit the use of mortality tables that reflect differences in mortality between smokers and nonsmokers in determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits for plans of insurance with separate premium rates for smokers and nonsmokers.

III. Definitions A. As used in this regulation, “1980 CSO Table, with or without; Ten-Year Select Mortality Factor” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the Society of Actuaries Committee to Recommend New Mortality Tables for Valuation of Standard Individual Ordinary Life Insurance, referred to in § 10-7-305.1(8) C.R.S. and referred to as the Commissioners 1980 Standard Ordinary Mortality Table, with or without ten-year select mortality factors. The same factors will be used for both smokers and nonsmokers tables. B. As used in this regulation, “1980 BET Table” means that mortality table consisting of separate rates of mortality for male and female lives, developed by the Society of Actuaries Committee to Recommend New Mortality Tables for Valuation of Standard Individual Ordinary Life Insurance, referred to in § 10-7-305.l(8)(d) and referred to as the Commissioners 1980 Extended Term Insurance Table.

C. As used in this regulation, “1958 CSO Table” means that mortality table developed by the Society of Actuaries Special Committee on new Mortality Tables, referred to in § 10-7-309(1)(a) and referred to as the Commissioners 1958 Standard Ordinary Mortality Table. D. As used in this regulation, “1958 BET Table” means that mortality table developed by the Society of Actuaries Special Committee on New Mortality Tables, referred to in § 10-7-305(4)(b) and referred to as the Commissioners 1958 Extended Term Insurance Table. E. As used in this regulation, the phrase “smoker and nonsmoker mortality tables” refers to the mortality tables with separate rates of mortality for smokers and nonsmokers derived from the tables defined in A through D of this section which were developed by the Society of Actuaries Task Force on Smoker/Nonsmoker Mortality and the California Insurance Department staff as published in the 1984 Proceedings of the National Association of Insurance Commissioners, Volume I, pages 402 - 413.

F. As used in this regulation, the phrase “composite mortality tables” refers to the mortality tables defined in A through D of this section as they were originally published with rates of mortality that do not distinguish between smokers and nonsmokers.

(This rule does not include any later amendments to the NAIC tables described in (E) above. Any person seeking information on the incorporated material described above should contact the Chief Actuary at the Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver, Colorado 80202.) IV. Alternate Tables A. For any policy of insurance delivered or issued for delivery in this state after the operative date of § 10-7-305.1, C.R.S. for that : policy form and before January 1, 1989, at the option of the company and subject to the conditions stated in section V of this regulation, 1. the 1958 CSO Smoker and Nonsmoker Mortality Tables may be substituted for the 1980 CSO Table, with or without ten-year select mortality factors, and 2. the 1958 BET Smoker and Nonsmoker Mortality Tables may be substituted for the 1980 BET Table for use in determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.

Provided that for any category of insurance issued on female lives with minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits determined using the 1958 CSO or 1958 BET Smoker and Nonsmoker Mortality Tables, such minimum values may be calculated according to an age not more than six years younger than the actual age of the insured.

Provided further that the substitution of the 1958 CSO or 1958 GET Smoker and Nonsmoker Mortality Tables is available only if made for each policy of insurance on a policy form delivered or issued for delivery on or after the operative date for that policy form and before a date not later than January 1, 1989.

B. For any policy of insurance delivered or issued for delivery in this state after the operative date of § 10-7-305.1, C.R.S. for that policy form, at the option of the company and subject to the conditions stated in section V of this regulation, 1. The 1980 CSO Smoker and Nonsmoker Mortality Tables, with or without ten-year select mortality factors, may be substituted for the 1980 CSO Table, with or without ten-year select mortality factors, and 2. the 1980 CET Smoker and Nonsmoker Mortality Tables may be substituted for the 1980 CET Table.

for use in determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits.

V. Conditions For each plan of insurance with separate rates for smokers and nonsmokers an insurer may 1. use composite mortality tables to determine minimum reserve liabilities and minimum cash values and amounts of paid-up nonforfeiture benefits, 2. use smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by § 10-7-303, C.R.S. and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits, or 3. use smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits. VI. Separability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of such provision to other persons or circumstances shall not be affected thereby. VII. Effective Date The effective date of this regulation is January 1, 1985. Amended Regulation 4-1-7 For Recognizing A New Annuity Mortality Table For Use In Determining Liabilities For Annuities Section 1. Authority Section 2. Basis and Purpose Section 3. Definitions Section 4. Rule Section 5. Enforcement Section 6. Severability Section 7. Effective Date Section 8. History Section 1. Authority This Regulation is promulgated by the Commissioner of Insurance pursuant to Section 10-1-108(8), 10-1- 109, 10-7-309(2)(a)(I) and (2)(a)(m) Colorado Revised Statutes. Section 2. Basis And Purpose The purpose of this Regulation is to recognize the following mortality tables for use in determining the minimum standard of valuation for annuity and pure endowment contracts: the 1983 Table “a,” the 1983 Group Annuity Mortality (1983 GAM) Table, the Annuity 2000 Mortality Table, and the 1994 Group Annuity Reserving (1994 GAR) Table.

Section 3. Definitions A. As used in this Regulation” 1983 Table “a” means that mortality table developed by the Society of Actuaries Committee to Recommend a New Mortality Basis for Individual Annuity Valuation and adopted as a recognized mortality table for annuities in June 1982 by the National Association of Insurance Commissioners. [See 1982 Proceedings of the NAIC II, page 454.] B. As used in this Regulation “1983 GAM Table” means that mortality table developed by the Society of Actuaries Committee on Annuities and adopted as a recognized mortality table for annuities in December 1983 by the National Association of Insurance [See 1984 Proceedings of the NAIC I, pages 414 to 415.] C. As used in this rule “1994 GAR Table” means that mortality table developed by the Society of Actuaries Group Annuity Valuation Table Task Force and shown at XLVII Transactions of the Society of Actuaries 866-867 (1995), and adopted as a recognized mortality table for annuities in December 1996 by the National Association of Insurance Commissioners. [See 1996 Proceedings of the NAIC, third quarter, pages 9,40, 908, 1202, 1236-1237.] D. As used in this rule “Annuity 2000 Mortality Table” means that mortality table developed by the Society of Actuaries Committee on Life Insurance Research and shown at XLVII Transactions of the Society of Actuaries 240 (1995) and adopted as a recognized mortality table for annuities in December 1996 by the National Association of Insurance Commissioners. [See 1996 Proceedings of the NAIC, third quarter, pages 9,40, 908,1202,1236-1237.] (This rule does not include any later amendments to the NAIC and Society of Actuary tables described above. Any person seeking information should contact the Chief Actuary at the Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver, Colorado, 80202). Section 4. Rule A. Individual Annuities Or Pure Endowment Contracts 1. Except as provided irr Subsections B and C of this section, the 1983 Table “a” is recognized and approved as an individual annuity mortality table for valuation and, at the option of the company, may be used for purposes of determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after July 1, 1981.

2. Except as provided in Subsection C of this section, either the 1983 Table “a” or the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after January 1, 1985. 3. Except as provided in Subsection D of this section, the Annuity 2000 Mortality Table shall be used for determining the minimum standard of valuation for any individual annuity or pure endowment contract issued on or after March 2, 2001.

4. The 1983 Table “a” without projection is to be used for determining the minimum standards of valuation for an individual annuity or pure endowment contract issued on or after March 2, 2001, solely when the contract is based on life contingencies and is issued to fund periodic benefits arising from:

(a) Settlements of various forms of claims pertaining to court settlements or out of court settlements from ton actions;

(b) Settlements involving similar actions such as workers' compensation claims; or (c) Settlements of long term disability claims where a temporary or life annuity has been used in lieu of continuing disability payments.

B. Group Annuity Or Pure Endowment Contracts 1. Except as provided in Subsections B and C of this section, the 1983 GAM Table, the 1983 Table “a” and the 1994 GAR Table are recognized and approved as group annuity mortality tables for valuation and, at the option of the company, any one of these tables may be used for purposes of valuation for any annuity or pure endowment purchased on or after July l, 1981, under a group annuity or pure endowment contract. 2. Except as provided in Subsection C of this section, either the 1983 GAM Table or the 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after January l, 1985 under a group annuity or pure endowment contract.

3. The 1994 GAR Table shall be used for determining the minimum standard of valuation for any annuity or pure endowment purchased on or after March 2, 2001 under a group annuity or pure endowment contract.

C. Application Of The 1994 GAR Table In using the 1994 GAR Table, the mortality rate for a person age x in year (1994 + n) is calculated as follows:

q 1994+n = q 1994 (1 - AA ) n where the q 1994 and AA S are as specified in the 1994 x x x x x GAR Table.

Section 5. Enforcement Noncompliance with this regulation may result, after notice and hearing, in the imposition of any lawful sanction including the imposition of fines and suspension or revocation of license. Section 6. Severability If any provision of this Regulation or the application to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of its provisions to other persons or circumstances shall not be affected Section 7. Effective Date The effective date of this Regulation as amended is March 2, 2001. Section 8. History This regulation was originally effective January l, 1985. Amended and Effective March 2, 2001.

Amended Regulation 4-1-8 Concerning The Disclosure Requirements For Life Insurance Illustrations Section 1. Authority Section 2. Purpose Section 3. Scope Section 4. Definitions Section 5. Policies to be Illustrated Section 6. General Rules and Prohibitions Section 7. Standards for Basic Illustrations Section 8. Standards for Supplemental Illustrations Section 9. Delivery of Illustrations and Record Retention Section 10. Annual Report Notice to Policy Owners Section 11. Annual Certifications Section 12. Enforcement Section 13. Severability Section 14. Effective Date Section 15. History Section 1. Authority This regulation is issued based upon the authority granted the commissioner under Section 10-1- 109, C.R.S. and 10-3-1110(1), C.R.S.

Section 2. Purpose The purpose of this regulation is to provide roles for life insurance policy illustrations that will protect consumers and foster consumer education. The regulation provides illustration formats, prescribes standards to be followed when illustrations are used, and specifies the disclosures that are required in connection with illustrations. The goals of this regulation are to ensure that illustrations do not mislead purchasers of life insurance and to make illustrations more understandable. Insurers will, as far as possible, eliminate the use of footnotes and caveats and define terms, used in the illustration, in language that would be understood by a typical person within the segment of the public to which the illustration is directed.

Section 3. Scope This regulation applies to all group and individual life insurance policies and certificates except: A. Variable life insurance;

B. Individual and group annuity contracts;

C. Credit life insurance; or D. Life insurance policies whose death benefits on any individual will not exceed $10,000 during the term of the policy.

Section 4. Definitions For the purposes of this regulation:

A. “Actuarial Standards Board” means the board established by the American Academy of Actuaries to develop and promulgate standards of actuarial practice. B. “Contract premium” means the gross premium that is required to be paid under a fixed premium policy, including the premium for a rider for which benefits are shown in the illustration. C. “Currently payable scale” means a scale of non-guaranteed elements in effect for a policy form as of the preparation date of the illustration or declared to become effective within the next ninety-five (95) days.

D. “Disciplined current scale” means a scale of non-guaranteed elements constituting a limit on illustrations currently being illustrated by an insurer that is reasonably based on actual recent historical experience, as certified annually by an illustration actuary designated by the insurer. The disciplined current scale standards established by the Actuarial Standards Board should be consulted in the preparation of illustrations only to the extent these standards: (1) Are consistent with all provisions of this regulation; (2) Limit a disciplined current scale to reflect only actions that have already been taken or events that have already occurred;

(3) Do not permit a disciplined current scale to include any projected trends of improvements in experience or any assumed improvements in experience beyond the illustration date; and (4) Do not permit assumed expenses to be less than minimum assumed expenses. E. “Generic name” means a short title descriptive of the policy being illustrated such as “whole life,” “term life” or “flexible premium adjustable life.”

F. “Guaranteed elements” and “non-guaranteed elements” . (1) “Guaranteed elements” means the premiums, benefits, values, credits or charges under a policy of life insurance that are guaranteed and determined at issue. (2) “Non-guaranteed elements” means the premiums, benefits, values, credits or charges under a policy of life insurance that are not guaranteed or not determined at issue. G. “Illustrated scale” means a scale of non-guaranteed elements currently being illustrated that is not more favorable to the policy owner than the lesser of:

(1) The disciplined current scale; or (2) The currently payable scale.

H. “Illustration” means a presentation or depiction mat includes non-guaranteed elements of a policy of life insurance over a period of years and that is one of the three (3) types defined below: (1) “Basic illustration” means a ledger or proposal used in the sale of a life insurance policy mat shows both guaranteed and non-guaranteed elements.

(2) “Supplemental illustration” means an illustration furnished in addition to a basic illustration that meets the applicable requirements of this regulation, and that may be presented in a format differing from the basic illustration, but may only depict a scale of non-guaranteed elements that is permitted in a basic illustration.

(3) “In force illustration” means an illustration furnished at any time after the policy that it depicts has been in force for one year or more.

I. “Illustration actuary” means an actuary meeting the requirements of Section 11 C of this regulation who certifies to illustrations.

J. “Lapse-supported illustration” means an illustration of a policy form failing the test of self-supporting as defined in this regulation, under a modified persistency rate assumption using persistency rates underlying the disciplined current scale for the first five (5) years and 100 percent policy persistency thereafter.

K.

(1) “Minimum assumed expenses” means the minimum expenses that may be used in the calculation of the disciplined current scale for a policy form. The insurer may choose to designate each year the method of determining assumed expenses for all policy forms from the following:

(a) Fully allocated expenses;

(b) Marginal expenses; and (c) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies.

(2) Marginal expenses may be used only if greater than a generally recognized expense table. If a generally recognized expense table is not used, fully allocated expenses must be used. L. “Non-term group life” means a group policy or individual policies of life insurance issued to members of an employer group or other permitted group where:

(1) Every plan of coverage was selected by the employer or other group representative; (2) Some portion of the premium is paid by the group or through payroll deduction; and (3) Group underwriting or simplified underwriting is used. M. “Policy owner” means the owner named in the policy or the certificate holder in the case of a group policy.

N. “Premium outlay” means the amount of premium assumed to be paid by the policy owner or other premium payer out-of-pocket O. “Self-supporting illustration” means an illustration of a policy form for which it can be demonstrated that, when using experience assumptions underlying the disciplined current scale, for all illustrated points in time on or after the fifteenth policy anniversary or the twentieth policy anniversary for second-or-later-to-die policies (or upon policy expiration if sooner), the accumulated value of all policy cash flows equals or exceeds the total policy owner value available. For this purpose, policy owner value will include cash surrender values and any other illustrated benefit amounts available at the policy owner's election. Section 5. Policies To Be Illustrated A. Each insurer marketing policies to which this regulation is applicable shall notify the commissioner whether a policy form is to be marketed with or without an illustration. For all policy forms being actively marketed on the effective date of this regulation, the insurer shall identify in writing those forms and whether or not an illustration will be used with them. For policy forms filed after the effective date of this regulation, the identification shall be made at the time of filing. Any previous identification may be changed by notice to the commissioner. B. If the insurer identifies a policy form as one to be marketed without an illustration, any use of an illustration for any policy using that form prior to the first policy anniversary is prohibited. Insureds who purchased a policy without an illustration may subsequently request an in-force illustration for that policy.

C. If a policy form is identified by the insurer as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with this regulation is required, except that a basic illustration need not be provided to individual numbers of a group or to individuals insured under multiple lives coverage issued to a single applicant unless the coverage is marketed to these individuals. The illustration furnished an applicant for a group life insurance policy or policies issued to a single applicant on multiple lives may be either an individual or composite illustration representative of the coverage on the lives of members of the group or the multiple lives covered. D. Potential enrollees of non-term group life subject to this regulation shall be furnished a quotation with the enrollment materials. The quotation shall show potential policy values for sample ages and policy years on a guaranteed and non-guaranteed basis appropriate to the group and the coverage. This quotation shall not be considered an illustration for purposes of this regulation, but all information provided shall be consistent with the illustrated scale. A basic illustration shall be provided at delivery of the certificate to enrollees for non-term group life who enroll for more than the minimum premium necessary to provide pure death benefit protection. In addition, the insurer shall make a basic illustration available to any non-term group life enrollee who requests it Section 6. General Roles And Prohibitions A. An illustration used in the sale of a life insurance policy shall satisfy the applicable requirements of this regulation, be clearly labeled “life insurance illustration” and contain the following basic information:

(1) Name of insurer, (2) Name and business address of producer or insurer's authorized representative, if any; (3) Name, age and sex of proposed insured, except where a composite illustration is permitted under this regulation;

(4) Underwriting or rating classification upon which the illustration is based; (5) Generic name of policy, the company product name, if different, and form number; (6) Initial death benefit; and (7) Dividend option election or application of non-guaranteed elements, if applicable. B. When using an illustration in the sale of a life insurance policy, an insurer or its producers or other authorized representatives shall not:

(1) Represent the policy as anything other than a life insurance policy, (2) Use or describe non-guaranteed elements in a manner that is misleading or has the capacity or tendency to mislead;

(3) State or imply that the payment or amount of non-guaranteed elements is guaranteed; (4) Use an illustration that does not comply with the requirement:; of this regulation; (5) Use an illustration that at any policy duration depicts policy performance more favorable to the policy owner than that produced by the illustrated scale of the insurer whose policy is being illustrated;

(6) Provide an applicant with an incomplete illustration; (7) Represent in any way that premium payments will not be .required for each year of the policy in order to maintain the illustrated death benefits, unless that is the fact; (8) Use the term “vanish” or “vanishing premium,” or a similar term that implies the policy becomes paid up to describe a plan for using non-guaranteed elements to pay a portion of future premiums;

(9) Except for policies that can never develop nonforfeiture values , use an illustration that is “lapse-supported” ; or (10) Use an illustration that is not “self-supporting.” C. If an interest rate used to determine the illustrated non-guaranteed elements is shown, it shall not be greater than the earned interest rate underlying the disciplined current scale. Section 7. Standards For Basic Illustrations A. Format A basic illustration shall conform with the following requirement;: (1) The illustration shall be labeled with the date on which it was prepared. (2) Each page, including any explanatory notes or pages, shall be numbered and show its relationship to the total number of pages in the illustration (e.g., the fourth page of a seven-page illustration shall be labeled “page 4 of 7.” (3) The assumed dates of payment receipt and benefit pay-out within a policy year shall be clearly identified.

(4) If the age of the proposed insured is shown as a component of the tabular detail, it shall be issue age plus the numbers of years the policy is assumed to have been in force. (5) The assumed payments on which the illustrated benefits and values are based shall be identified as premium outlay or contract premium, as applicable. For policies that do not require a specific contract premium, the illustrated payments shall be identified as premium outlay.

(6) Guaranteed death benefits and values available upon surrender, if any, for the illustrated premium outlay or contract premium shall be shown and clearly labeled guaranteed. (7) If the illustration shows any non-guaranteed elements, they cannot be based on a scale more favorable to the policy owner than the insurer's illustrated scale at any duration. These elements shall be clearly labeled non-guaranteed.

(8) The guaranteed elements, if any, shall be shown before corresponding non-guaranteed elements and shall be specifically referred to on any page of an illustration that shows or describes only the non-guaranteed elements (e.g., “see page one for guaranteed elements.” )

(9) The account or accumulation value of a policy, if shown, shall be identified by the name this value is given in the policy being illustrated and shown in close proximity to the corresponding value available upon surrender.

(10) The value available upon surrender shall be identified by the name this value is given in the policy being illustrated and shall be the amount available to the policy owner in a lump sum after deduction of surrender charges, policy loans and policy loan interest, as applicable.

(11) Illustrations may show policy benefits and values in graphic or chart form in addition to the tabular form.

(12) Any illustration of non-guaranteed elements shall be accompanied by a statement indicating that:

(a) The benefits and values are not guaranteed (b) The assumptions on which they are based are subject to change by the insurer, and (c) Actual results may be more or less favorable.

(13) If the illustration shows that the premium payer may have the option to allow policy charges to be paid using non-guaranteed values, the illustration must clearly disclose that a charge continues to be required and that, depending on actual results, the premium payer may need to continue or resume premium outlays. Similar disclosure shall be made for premium outlay of lesser amounts or shorter durations than the contract premium. If a contract premium is due, the premium outlay display shall not be left blank or show zero unless accompanied by an asterisk or similar mark to draw attention to the fact that the policy is not paid up.

(14) If the applicant informs the producer that he/she plans to use dividends or policy values, guaranteed or non-guaranteed, to pay all or a portion of the contract premium or policy charges, or for any other purpose, the illustration stall reflect those plans and the impact on future policy benefits and values.

B. Narrative Summary. A basic illustration shall include the following: (1) A brief description of the policy being illustrated, including a statement that it is a life insurance policy, (2) A brief description of the premium outlay or contract premium, as applicable, for the policy. For a policy that does not require payment of a specific contract premium, the illustration shall show the premium outlay that must be paid to guarantee coverage for the term of the contract, subject to maximum premiums allowable to qualify as a life insurance policy under the applicable provisions of the Internal Revenue Code; (3) A brief description of any policy features, riders or options, guaranteed or non-guaranteed, shown in the basic illustration and the impact they may have on the benefits and values of the policy, (4) Identification and a brief definition of column headings and key terms used in the illustration; and (5) A statement containing in substance the following: “This illustration assumes that the currently illustrated nonguaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown.” C. Numeric Summary.

(1) Following the narrative summary, a basic illustration shall include a numeric summary of the death benefits and values and the premium outlay and contract premium, as applicable. For a policy that provides for a contract premium, the guaranteed death benefits and values shall be based on the contract premium. This summary shall be shown for at least policy years five (5), ten (10) and twenty (20) and at age 70, if applicable, on the three bases shown below. For multiple life policies the summary shall show policy years five (5), ten (10), twenty (20) and thirty (30).

The numeric summary bases are:

(a) Policy guarantees;

(b) Insurer's illustrated scale;

(c) Insurer's illustrated scale used but with the non-guaranteed elements reduced as follows:

(i) Dividends at fifty percent (50%) of the dividends contained in the illustrated scale used;

(ii) Non-guaranteed credited interest at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used; and (iii) All non-guaranteed charges, including but not limited to, term insurance charges, mortality and expense charges, at rates that are the average of the guaranteed rates and the rates contained in the illustrated scale used.

(2) In addition, if coverage would cease prior to policy maturity or age 100, the year in which coverage ceases shall be identified for each of the three (3) bases in Subsection (c)(1), above.

D. Statements. Statements substantially similar to the following shall be included on the same page as the numeric summary and signed by the applicant, or the policy owner in the case of an illustration provided at time of delivery, as required in this regulation. (1) A statement to be signed and dated by the applicant or policy owner reading as follows: “I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to change and could be either higher or lower. The agent has told me they are not guaranteed.”

(2) A statement to be signed and dated by the insurance producer or other authorized representative of the insurer reading as follows: “I certify that this illustration has been presented to the applicant and that I have explained that any non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration.”

E. Tabular Detail.

(1) A basic illustration shall include the following for at least each policy year from one (1) to ten (10) and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and except for term insurance beyond the 20th year, for any year in which the premium outlay and contract premium, if applicable, is to change: (a) The premium outlay and mode the applicant plans to pay and the contract premium, as applicable;

(b) The corresponding guaranteed death benefit, as provided in the policy, and (c) The corresponding guaranteed value available upon surrender, as provided in the policy.

(2) For a policy mat provides for a contract premium, the guaranteed death benefit and value available upon surrender shall correspond to the contract premium. (3) Non-guaranteed elements may be shown if described in the contract. In the case of an illustration for a policy on which the insurer intends to credit terminal dividends, they may be shown if the insurer's current practice is to pay terminal dividends. If any non- guaranteed elements are shown they must be shown at the same durations as the corresponding guaranteed elements, if any. If no guaranteed benefit or value is available at any duration for which a non-guaranteed benefit or value is shown, a zero shall be displayed in the guaranteed column.

Section 8. Standards For Supplemental Illustrations A. A supplemental illustration may be provided so long as: (1) It is appended to, accompanied by or preceded by a basic illustration that complies with this regulation;

(2) The non-guaranteed elements shown are not more favorable to the policy owner than the corresponding elements based on the scale used in the basic illustration; (3) It contains the same statement required of a basic illustration that non- guaranteed elements are not guaranteed; and (4) For a policy that has a contract premium, the contract premium underlying the supplemental illustration is equal to the contract premium shown in the basic illustration. For policies that do not require a contract premium, the premium outlay underlying the supplemental illustration shall be equal to the premium outlay shown in the basic illustration. B. The supplemental illustration shall include a notice referring to the basic illustration for guaranteed elements and other important information.

Section 9. Delivery Of Illustration And Record Retention A.

(1) If a basic illustration is used by an insurance producer or other authorized representative of the insurer m the sale of a life insurance policy, and the policy is applied for as illustrated, a copy of that illustration, signed in accordance with this regulation, shall be submitted to the insurer at the time of policy application, A copy also shall be provided to the applicant (2) If the policy is issued other man as applied for, a revised basic illustration conforming to the policy, as issued, shall be sent with the policy. The revised illustration shall conform to the requirements of this regulation* shall be labeled “Revised Illustration” and shall be signed and dated by the applicant or policy owner and producer, or other authorized representative of the insurer, no later than the time the policy is delivered. A copy shall be provided to the insurer and the policy owner.

B.

(1) If no illustration is used by an insurance producer, or other authorized representative in the sale of a life insurance policy or if the policy is applied for other than as illustrated, the producer or representative shall certify to that effect in writing on a form provided by the insurer. On the same form, the applicant shall acknowledge that no illustration conforming to the policy applied for was provided and shall further acknowledge an understanding that an illustration conforming to the policy as issued, will be provided no later than at the time of policy delivery. This form shall be submitted to the insurer at the time of policy application.

(2) If the policy is issued, a basic illustration conforming to the: policy as issued shall be sent with the policy and signed and dated by the applicant or policy owner and producer or other authorized representative of the insurer no later than the time the policy is delivered A copy shall be provided to the insurer and the policy owner. C. If the basic illustration or revised illustration is sent to the applicant or policy owner by mail, from the insurer, it shall include instructions for the applicant or policy owner to sign the duplicate copy of the numeric summary page of the illustration for the policy issued and return the signed copy to the insurer. The insurer's obligation under this subsection shall be satisfied if it can demonstrate that it has made a diligent effort to secure a signed copy of the numeric summary page. The requirement to make a diligent effort shall be deemed satisfied if the insurer includes in the mailing a self-addressed postage prepaid envelope with instructions for the return of the signed numeric summary page.

D. A copy of the basic illustration and a revised basic illustration, if any, signed as applicable, along with any certification that either no illustration was used or that the policy was applied for other than as illustrated, shall be retained by the insurer until three (3) years after the policy is no longer in force. A copy need not be retained if no policy is issued. Section 10. Annual Report: Notice To Policy Owners A. In the case of a policy designated as one for which illustrations will be used, the insurer shall provide each policy owner with an annual report on the status of the policy that shall contain at least the following information:

(1) For universal life policies, the report shall include the following: (a) The beginning and end date of the current report period; (b) The policy value at the end of the previous report period and at the end of the current report period;

(c) The total amounts that have been credited or debited to the policy value during the current report period, identifying each by type (e.g., interest, mortality, expense and riders);

(d) The current death benefit at the end of the current report period on each life covered by the policy;

(e) The net cash surrender value of the policy as of the end of the current report period; (f) The amount of outstanding loans, if any, as of the end of the current report period; and (g) For fixed premium policies:

If, assuming guaranteed interest, mortality and expense loads and continued scheduled premium payments, the policy's net cash surrender value is such that it would not maintain insurance in force until the end of the next reporting period, a notice to this effect shall be included in the report; or (h) For flexible premium policies:

If assuming guaranteed interest, mortality and expense loads, the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period unless further premium payments are made, a notice to this effect shall be included in the report (2) For all other policies, where applicable:

(a) Current death benefit;

(b) Annual contract premium;

(c) Current cash surrender value;

(d) Current dividend;

(e) Application of current dividend; and (f) Amount of outstanding loan.

(3) Insurers writing life insurance policies that do not build nonforfeiture values shall only be required to provide an annual report with respect to these policies for those years when a change has been made to nonguaranteed policy elements by the insurer.” B. If the annual report does not include an in force illustration, it shall contain the following notice displayed prominently: “IMPORTANT POLICY OWNER NOTICE: You should consider requesting more detailed information about your policy to understand how it may perform in the future. You should not consider replacement of your policy or make changes in your coverage without requesting a current illustration. You may annually request, without charge, such an illustration by calling [insurer's phone number], writing to [insurer's name] at [insurer's address] or contacting your agent If you do not receive a current illustration of your policy within 30 days from your request, you should contact your state insurance department” The insurer may vary the sequential order of the methods for obtaining an in force illustration. C. Upon the request of the policy owner, the insurer shall furnish an in force illustration of current and future benefits and values based on the insurer's present illustrated scale. This illustration shall comply with the requirements of Sections 6A, 6B, 7A and 7E of this regulation. No signature or other acknowledgment of receipt of this illustration shall be required. D. If an adverse change in non-guaranteed elements that could affect the policy has been made by the insurer since the last annual report, the annual report shall contain a notice of that fact and the nature of the change prominently displayed.

Section 11. Annual Certifications All annual reports, certifications, and appointments required by this section shall be delivered to the attention of the: Rates and Forms Section, Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver, Colorado 80202.

A. The board of directors of each insurer shall appoint one or more illustration actuaries. B. The illustration actuary shall certify that the disciplined current scale used in illustrations is in conformity with the Actuarial Standard of Practice for Compliance with the NAIC Regulation on Life Insurance Illustrations, promulgated by the Actuarial Standards Board, and that the illustrated scales used in insurer-authorized illustrations meet the requirements of this regulation. C. The illustration actuary shall:

(1) Be a member in good standing of the American Academy of Actuaries; (2) Be familiar with the standard of practice regarding life insurance policy illustrations; (3) Not have been found by the commissioner, following appropriate notice and hearing, to have: (a) Violated any provision of, or any obligation imposed by, the insurance law or other law in the course of his or her dealings as an illustration actuary; (b) Been found guilty of fraudulent or dishonest practices; (c) Demonstrated his or her incompetence, lack of cooperation, or untrustworthiness to act as an illustration actuary; or (d) Resigned or been removed as an illustration actuary within the past five (5) years as a result of acts or omissions indicated in any adverse report on examination or as a result of a failure to adhere to generally acceptable actuarial standards. (4) Notify the commissioner of any action taken by a commissioner of another state similar to that under Paragraph (3) above;

(5) Disclose in the annual certification whether, since the last certification, a currently payable scale applicable for business issued within the previous five (5) years and within the scope of the certification has been reduced for reasons other than changes in the experience factors underlying the disciplined current scale. If nonguaranteed elements illustrated for new policies are not consistent with those illustrated for similar in force policies, this must be disclosed in the annual certification. If nonguaranteed elements illustrated for both new and in force policies are not consistent with the nonguaranteed elements actually being paid, charged or credited to the same or similar forms, this must be disclosed in the annual certification; and (6) Disclose in the annual certification the method used to allocate overhead expenses for all illustrations:

(a) Fully allocated expenses;

(b) Marginal expenses; or (c) A generally recognized expense table based on fully allocated expenses representing a significant portion of insurance companies.

D. The illustration actuary shall file a certification with the board and with the commissioner (1) Annually for all policy forms for which illustrations are used; and (2) Before a new policy form is illustrated.

(3) If an error in a previous certification is discovered, the illustration a actuary shall notify the board of directors of the insurer and the commissioner promptly. E. If an illustration actuary is unable to certify the scale for any policy form illustration the insurer intends to use, the actuary shall notify the board of directors of the insurer and the commissioner promptly of his or her inability to certify.

F. A responsible officer of the insurer, other than the illustration actuary, shall certify annually: (1) That the illustration formats meet the requirements of this regulation and that the scales used in insurer-authorized illustrations are those scales certified by the illustration actuary; and (2) That the company has provided its agents with information about the expense allocation method used by the company in its illustrations and disclosed as required in Subsection C(6) of this section.

G. The annual certifications shall be provided to the commissioner each year by a date determined by the insurer.

H. If an insurer changes the illustration actuary responsible for all or a portion of the company's policy forms, the insurer shall notify the commissioner of that fact promptly and disclose the reason for the change.

Section 12. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. Section 13. Severability If any section or portion of a section of this regulation, or the applicability thereof to any person or circumstance is held invalid by a court, the remainder of the regulation, or the applicability of such provision to other persons or circumstances, shall not be affected thereby. Section 14. Effective Date This regulation shall become effective November 1, 2000. Section 15. History Originally issued as Regulation 4-1-8, effective April 1, 1997. Amended Regulation effective November 1, 2000.

New Regulation 4-1-9 Valuation of Life Insurance Policies Model Regulation (Including the Introduction and Use of New Select Mortality Factors) Section 1. Authority Section 2. Purpose Section 3. Applicability Section 4. Definitions Section 5. General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves Section 6. Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other Than Universal Life Policies)

Section 7. Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period Section 8 Enforcement Section 9 Severability Section 10. Effective Date Section 11 History Appendix Section 1. Authority This regulation is issued under the authority of § § 10-1-109 and 10-7-313.7, C.R.S.. Section 2. Purpose The purpose of this regulation is to clarify the provisions of the Standard Nonforfeiture and Valuation Act (Part 3 of Article 7, C.R.S.) by providing:

A. Tables of select mortality factors and rules for their use: B. Rules concerning a minimum standard for the valuation of plans with nonlevel premiums or benefits; and C. Rules concerning a minimum standard for the valuation of plans with secondary guarantees. The method for calculating basic reserves defined in this regulation will constitute the Commissioners' Reserve Valuation Method for policies to which this regulation is applicable. Section 3. Applicability This regulation shall apply to all life insurance policies, with or without nonforfeiture values, issued on or after the effective date of this regulation, subject to the following exceptions and conditions. A. Exceptions 1. This regulation shall not apply to any individual life insurance policy issued on or after the effective date of this regulation if the policy is issued in accordance with and as a result of the exercise of a reentry provision contained in the original life insurance policy of the same or greater face amount, issued before the effective date of this regulation, that guarantees the premium rates of the new policy. This regulation also shall not apply to subsequent policies issued as a result of the exercise of such a provision, or a derivation of the provision, in the new policy.

2. This regulation shall not apply to any universal life policy that meets all of the following requirements:

a. The secondary guarantee period, if any, is five (5) years or less; b. The specified premium for the secondary guarantee period is not less than the net level reserve premium for the secondary guarantee period based on the CSO valuation tables as defined in Section 4F and the applicable valuation interest rate; and c. The initial surrender charge is not less than 100 percent of the first year annualized specified premium for the secondary guarantee period.

3. This regulation shall not apply to any variable life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

4. This regulation shall not apply to any variable universal life insurance policy that provides for life insurance, the amount or duration of which varies according to the investment experience of any separate account or accounts.

5. This regulation shall not apply to a group life insurance certificate unless the certificate provides for a stated or implied schedule of maximum gross premiums required in order to continue coverage in force for a period in excess of one year. B. Conditions 1. Calculation of the minimum valuation standard for policies with guaranteed nonlevel gross premiums or guaranteed nonlevel benefits (other than universal life policies), or both, shall be in accordance with the provisions of Section 6. 2. Calculation of the minimum valuation standard for flexible premium and fixed premium universal life insurance policies, that contain provisions resulting in the ability of a policyholder to keep a policy in force over a secondary guarantee period shall be in accordance with the provisions of Section 7.

Section 4. Definitions For purposes of this regulation:

A. “Basic reserves” means reserves calculated in accordance with the principles of § 10-7-310, C.R.S. B. “Contract segmentation method” means the method of dividing the period from issue to mandatory expiration of a policy into successive segments, with the length of each segment being defined as the period from the end of the prior segment (from policy inception, for the first segment) to the end of the latest policy year as determined below. All calculations are made using the 1980 CSO valuation tables, as defined in Subsection F of this Section, (or any other valuation mortality table adopted by the National Association of Insurance Commissioners (NAIC) after the effective date of this regulation and promulgated by regulation by the commissioner for this purpose), and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in Section 5B of this regulation.

The length of a particular contract segment shall be set equal to the minimum of the value t for which Gt is greater than R (if G never exceeds R , the segment length is deemed to be the t t t number of years from the beginning of the segment to the mandatory expiration date of the policy), where G and R are defined as follows:

t t G = 702_4_20060430_4-1-9inline1.jpg t where:

x = original issue age;

k = the number of years from the date of issue to the beginning of the segment; t = 1, 2, t is reset to 1 at the beginning of each segment; GP =Guaranteed gross premium per thousand of face amount for year t of x+k+t-1 the segment, ignoring policy fees only if level for the premium paying period of the policy.

R = 702_4_20060430_4-1-9inline2.jpg , However, R may be increased or t t decreased by one percent in any policy year, at the company's option, but R t shall not be less than one;

where:

x, k and t are as defined above, and q = valuation mortality rate for x-k+t-1 deficiency reserves in policy year k+t but using the mortality of Section 5B(2) if Section 5B(3) is elected for deficiency reserves.

However, if GP is greater than 0 and GP is equal to 0, G shall be x+k-t x+k-t-1 t deemed to be 1000. If GP and GP are both equal to 0, G shall be x+k-t x-k-t-1 t deemed to be 0 C. “Deficiency reserves” means the excess, if greater than zero, of 1. Minimum reserves calculated in accordance with the principles of § 10-7-313, C.R.S. over 2. Basic reserves.

D. “Guaranteed gross premiums” means the premiums under a policy of life insurance that are guaranteed and determined at issue.

E. “Maximum valuation interest rates” means the interest rates defined in § 10-7-309.5, C.R.S. (Computation of Minimum Standard by Calendar Year of Issue) that are to be used in determining the minimum standard for the valuation of life insurance policies. F. “1980 CSO valuation tables” means the Commissioners' 1980 Standard Ordinary Mortality Table (1980 CSO Table) without ten-year selection factors, incorporated into the 1980 amendments; to the NAIC Standard Valuation Law, and variations of the 1980 CSO Table approved by the NAIC, such as the smoker and nonsmoker versions approved in December 1983. G. “Scheduled gross premium” means the smallest illustrated gross premium at issue for Other than universal life insurance policies. For universal life insurance policies, scheduled gross premium means the smallest specified premium described in Section 7A(3), if any, or else the minimum premium described in Section 7A(4).

H.

1. “Segmented reserves” means reserves, calculated using segments produced by “the contract segmentation method, equal to the present value of all future guaranteed benefits less the present value of all future net premiums to the mandatory expiration of a policy, where the net premiums within each segment are a uniform percentage of the respective guaranteed gross premiums within the segment The uniform percentage for each segment is such that, at the beginning of the segment, the present value of the net premiums within the segment equals:

a. The present value of the death benefits within the segment, plus b. The present value of any unusual guaranteed cash value (see Section 6D) occurring at the end of the segment, less c. Any unusual guaranteed cash value occurring at the start of the segment plus d. For the first segment only, the excess of the item (i) over item (ii), as follows: i. A net level annual premium equal to the present value, at the date of issue, of the benefits provided for in the first segment after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary within the first segment on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.

ii. A net one year term premium for the benefits provided for in the first policy year.

2. The length of each segment is determined by the “contract segmentation method,” as defined in this Section.

3. The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the sum of the lengths of all segments of the policy.

4. For both basic reserves and deficiency reserves computed by the segmented method, present values shall include future benefits and net premiums in the current segment and in all subsequent segments.

I. “Tabular cost of insurance” means the net single premium at the beginning of a policy year for one- year term insurance in the amount of the guaranteed death benefit in that policy year. J. “Ten-year select factors” means the select factors adopted with the 1980 amendments to the NAIC Standard Valuation Law.

K. 1. “Unitary reserves” means the present value of all future guaranteed benefits less the present value of all future modified net premiums, where:

a. Guaranteed benefits and modified net premiums are considered to the mandatory expiration of the policy; and b. Modified net premiums are a uniform percentage of the respective guaranteed gross premiums, where the uniform percentage is such that, at issue, the present value of the net premiums equals the present value of all death benefits and pure endowments, plus the excess of Item (i) over Item (ii), as follows: i. A net level annual premium equal to the present value, at the date of issue, of the benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per year payable on the first and each subsequent anniversary of the policy on which a premium falls due. However, the net level annual premium shall not exceed the net level annual premium on the nineteen-year premium whole life plan of insurance of the same renewal year equivalent level amount at an age one year higher than the age at issue of the policy.

ii. A net one year term premium for the benefits provided for in the first policy year.

2. The interest rates used in the present value calculations for any policy may not exceed the maximum valuation interest rate, determined with a guarantee duration equal to the length from issue to the mandatory expiration of the policy. L. “Universal life insurance policy” means any individual life insurance policy under the provisions of which separately identified interest credits (other than in connection with dividend accumulations, premium deposit funds, or other supplementary accounts) and mortality or expense charges are made to the policy.

Section 5. General Calculation Requirements for Basic Reserves and Premium Deficiency Reserves A. At the election of the company for any one or more specified plans of life insurance, the minimum mortality standard for basic reserves may be calculated using the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after the effective date of this regulation and promulgated by regulation by the commissioner for this purpose). If select mortality factors are elected, they may be: 1. The ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;

2. The select mortality factors in the Appendix; or 3. Any other table of select mortality factors adopted by the NAIC after the effective date of this regulation and promulgated by regulation by the commissioner for the purpose of calculating basic reserves.

B. Deficiency reserves, if any, are calculated for each policy as the excess, if greater than zero, of the quantity A over the basic reserve. The quantity A is obtained by recalculating the basic reserve for the policy using guaranteed gross premiums instead of net premiums when the guaranteed gross premiums are less than the corresponding net premiums. At the election of the company for any one or more specified plans of insurance, the quantity A and the corresponding net premiums used in the determination of quantity A may be based upon the 1980 CSO valuation tables with select mortality factors (or any other valuation mortality table adopted by the NAIC after the effective date of this regulation and promulgated by regulation by the commissioner). If select mortality factors are elected, they may be:

1. The ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law;

2. The select mortality factors in the Appendix of this regulation; 3. For durations in the first segment, X percent of the select mortality factors in the Appendix, subject to the following:

a. X may vary by policy year, policy form, underwriting classification, issue age, or any other policy factor expected to affect mortality experience; b. X shall not be less than twenty percent (20%);

c. X shall not decrease in any successive policy years; d. X is such that, when using the valuation interest rate used for basic reserves, Item (i) is greater than or equal to Item (ii);

i. The actuarial present value of future death benefits, calculated using the mortality rates resulting from the application of X;

ii. The actuarial present value of future death benefits calculated using anticipated mortality experience without recognition of mortality improvement beyond the valuation date;

e. X is such that the mortality rates resulting from the application of X are at least as great as the anticipated mortality experience, without recognition of mortality improvement beyond the valuation date, in each of the first five (5) years after the valuation date;

f. The appointed actuary shall increase X at any valuation date where it is necessary to continue to meet all the requirements of Section 5, Subsection B(3); g. The appointed actuary may decrease X at any valuation date as long as X does not decrease in any successive policy years and as long as it continues to meet all the requirements of Section 5, Subsection B(3); and h. The appointed actuary shall specifically take into account the adverse effect on expected morality and lapsation of any anticipated or actual increase in gross premiums i. If X is less than 100 percent at any duration for any policy, the following requirements shall be met i. The appointed actuary shall annually prepare an actuarial opinion and memorandum for the company in conformance with the requirements of Colorado Insurance Regulation 3-1-8; and ii. The appointed actuary shall annually opine for all policies subject to this regulation as to whether the mortality rates resulting from the application of X meet the requirements of Section 5, Subsection B(3). This opinion shall be supported by an actuarial report, subject to appropriate Actuarial Standards of Practice promulgated by the Actuarial Standards Board of the American Academy of Actuaries. The X factors shall reflect anticipated future mortality, without recognition of mortality improvement beyond the valuation date, taking into account relevant emerging experience.

4. Any other table of select mortality factors adopted by the NAIC after the effective date of this regulation and promulgated by regulation by the commissioner for the purpose of calculating deficiency reserves.

C. This Subsection C applies to both basic reserves and deficiency reserves. Any set of select mortality factors may be used only for the first segment However, if the first segment is less than ten (10) years, the appropriate ten-year select mortality factors incorporated into the 1980 amendments to the NAIC Standard Valuation Law may be used thereafter through the tenth policy year from the date of issue.

D. In determining basic reserves or deficiency reserves, guaranteed gross premiums without policy fees may be used where the calculation involves the guaranteed gross premium but only if the policy fee is a level dollar amount after the first policy year. In determining deficiency reserves, policy fees may be included in guaranteed gross premiums, even if not included in the actual calculation of basic reserves.

E. Reserves for policies that have changes to guaranteed gross premiums, guaranteed benefits, guaranteed charges, or guaranteed credits that are unilaterally made by the insurer after issue and that are effective for more than one year after the date of the change shall be the greatest of the following: (1) reserves calculated ignoring the guarantee, (2) reserves assuming the guarantee was made at issue, and (3) reserves assuming that the policy was issued on the date of the guarantee.

F. The commissioner may require that the company document the extent of the adequacy of reserve for specified blocks, including but-not limited to, policies issued prior to the effective date of this regulation. This documentation may include a demonstration of the extent to which aggregation with other non-specified blocks of business is relied upon in the formation of the appointed actuary opinion pursuant to and consistent with the requirements of Colorado Insurance Regulation 3-1-8.

Section 6. Calculation of Minimum Valuation Standard for Policies with Guaranteed Nonlevel Gross Premiums or Guaranteed Nonlevel Benefits (Other than Universal Life Policies) A. Basic Reserves Basic reserves shall be calculated as the greater of the segmented reserves and the unitary reserves. Both the segmented reserves and the unitary reserves for any policy shall use the same valuation mortality table and selection factors. At the option of the insurer, in calculating segmented reserves and net premiums, either of the adjustments described in Paragraph (1) or (2) below may be made: 1. Treat the unitary reserve, if greater than zero, applicable at the end of each segment as a pure endowment and subtract the unitary reserve, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment.

2. Treat the guaranteed cash surrender value, if greater than zero, applicable at the end of each segment as a pure endowment; and subtract the guaranteed cash surrender value, if greater than zero, applicable at the beginning of each segment from the present value of guaranteed life insurance and endowment benefits for each segment. B. Deficiency Reserves 1. The deficiency reserve at any duration shall be calculated: a. On a unitary basis if the corresponding basic reserve determined by Section 6, Subsection A is unitary;

b. On a segmented basis if the corresponding basic reserve determined by Section 6, Subsection A is segmented; or c. On the segmented basis if the corresponding basic reserve determined by Section 6, Subsection A is equal to both the segmented reserve and the unitary reserve. 2. This Subsection 2 shall apply to any policy for which the guaranteed gross premium at any duration is less than the corresponding modified net premium calculated by the method used in determining the basic reserves, but using the minimum valuation standards of mortality (specified in Section 5B) and rate of interest. 3. Deficiency reserves, if any, shall be calculated for each policy as the excess if greater than zero, for the current and all remaining periods, of the quantity A over the basic reserve, where A is obtained as indicated in Section 5B.

4. For deficiency reserves determined on a segmented basis, the quantity A is determined using segment lengths equal to those determined for segmented basic reserves. C. Minimum Value Basic reserves may not be less than the tabular cost of insurance for the balance of the policy year, if mean reserves are used. Basic reserves may not be less than the tabular cost of insurance for the balance of the current modal period or to the paid-to-date, if later, but not beyond the next policy anniversary, if mid- terminal reserves are used. The tabular cost of insurance shall use the same valuation mortality table and interest rates as that used for the calculation of the segmented reserves. However, if select mortality factors are used, they shall be the ten-year select factors incorporated into the 1980 amendments of the NAIC Standard Valuation Law. In no case may total reserves (including basic reserves, deficiency reserves and any reserves held for supplemental benefits that would expire upon contract termination) be less than the amount that the policyowner would receive (including the cash surrender value of the supplemental benefits, if any, referred to above), exclusive of any deduction for policy loans, upon termination of the policy.

D. Unusual Pattern of Guaranteed Cash Surrender Values 1. For any policy with an unusual pattern of guaranteed cash surrender values, the reserves actually held prior to the first unusual guaranteed cash surrender value shall not be less then the reserves calculated by treating the first unusual guaranteed cash surrender value as a pure endowment and treating the policy as an n year policy providing term insurance plus a pure endowment equal to the unusual cash surrender value, where n is the number of years from the date of issue to the date the unusual cash surrender value is scheduled.

2. The reserves actually held subsequent to any unusual guaranteed cash surrender value shall not be less than the reserves calculated by treating the policy as an n year policy providing term insurance plus a pure endowment equal to the next unusual guaranteed cash surrender value, and treating any unusual guaranteed cash surrender value at the end of the prior segment as a net single premium, where: a. n is the number of years from the date of the last unusual guaranteed cash surrender value prior to the valuation date to the earlier of:

i. The date of the next unusual guaranteed cash surrender value, if any, that is scheduled after the valuation date; or ii. The mandatory expiration date of the policy; and b. The net premium for a given year during the n year period is equal to the pro duct of the net to gross ratio and the respective gross premium; and c. The net to gross ratio is equal to item (i) divided by item (ii) as follows: i. The present value, at the beginning of the nyear period, of death benefits payable during the n year period plus the present value, at the beginning of the n year period, of the next unusual guaranteed cash surrender value, if any, minus the amount of the last unusual guaranteed cash surrender value, if any, scheduled at the beginning of the n year period. ii. The present value, at the beginning of the n year period, of the scheduled gross premiums payable during the n year period.

3. For purposes of this Subsection 3, a policy is considered to have an unusual pattern of guaranteed cash surrender values if any future guaranteed cash surrender value exceeds the prior year's guaranteed cash surrender value by more than the sum of: a. One hundred ten percent (110%) of the scheduled gross premium for that year, b. One hundred ten percent (110%) of one year's accrued interest on the sum of the prior year's guaranteed cash surrender value and the scheduled gross premium using the nonforfeiture interest rate used for calculating policy guaranteed cash surrender values; and c. Five percent (5%) of the first policy year surrender charge, if any. E. Optional Exemption for Yearly Renewable Term Reinsurance. At the option of the company, the following approach for reserves on YRT reinsurance may be used: 1. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

2. Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in Subsection C.

3. Deficiency reserves.

a. For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium. b. Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with Subparagraph (a) above.

4. For purposes of this Subsection, the calculations use the maximum valuation interest rate and the 1980 CSO mortality tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this regulation by the NAIC and promulgated by regulation by the commissioner for this purpose. 5. A reinsurance agreement shall be considered YRT reinsurance for purposes of this Subsection if only the mortality risk is reinsured.

6. If the assuming company chooses this optional exemption, the ceding company's reinsurance reserve credit shall be limited to the amount of reserve held by the assuming company for the affected policies.

F. Optional Exemption for Attained-Age-Based Yearly Renewable Term Life Insurance Policies. At the option of the company, the following approach for reserves for attained-age-based YRT life insurance policies may be used:

1. Calculate the valuation net premium for each future policy year as the tabular cost of insurance for that future year.

2. Basic reserves shall never be less than the tabular cost of insurance for the appropriate period, as defined in Subsection 6C. I 3. Deficiency reserves.

a. For each policy year, calculate the excess, if greater than zero, of the valuation net premium over the respective maximum guaranteed gross premium. b. Deficiency reserves shall never be less than the sum of the present values, at the date of valuation, of the excesses determined in accordance with Subparagraph (a) above 4. For purposes of this Subsection, the calculations use the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any o :her table adopted after the effective date of this regulation by the NAIC and promulgated by regulation by the commissioner for this purpose. 5. A policy shall be considered an attained-age-based YRT life insurance policy for purposes of this Subsection if:

a. The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are based upon the attained age of the insured such that the rate for any given policy at a given attained age of the insured is independent of the year the policy was issued; and b. The premium rates (on both the initial current premium scale and the guaranteed maximum premium scale) are the same as the premium rates for policies covering all insureds of the same sex, risk class, plan of insurance and attained age.

6. For policies that become attained-age-based YRT policies after an initial period of coverage, the approach of this Subsection may be used after the initial period if: a. The initial period is constant for all insureds of the same sex, risk class and plan of insurance; or b. The initial period runs to a common attained age for all insureds of the same sex, risk class and plan of insurance; and c. After the initial period of coverage, the policy meets the conditions of Paragraph (5) above.

7. If this election is made, this approach shall be applied in determining reserves for all attained- age-based YRT life insurance policies issued on or after the effective date of this regulation.

G. Exemption from Unitary Reserves for Certain n-Year Renewable Term Life Insurance Policies. Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met:

1. The policy consists of a series of n-year periods, including the first period and all renewal periods, where n is the same for each period, except that for the final renewal period, nmay be truncated or extended to reach the expiry age, provided that this final renewal period is less than 10 years and less than twice the size of the earlier n-year periods, and for each period, the premium rates on both the initial current premium scale and the guaranteed maximum premium scale are level;

2. The guaranteed gross premiums in all n-year periods are not less than the corresponding net premiums based upon the 1980 CSO Table with or without the ten-year select mortality factors; and 3. There are no cash surrender values in any policy year. H. Exemption from Unitary Reserves for Certain Juvenile Policies Unitary basic reserves and unitary deficiency reserves need not be calculated for a policy if the following conditions are met, based upon the initial current premium scale at issue: 1. At issue, the insured is age twenty-four (24) or younger; 2. Until the insured reaches the end of the juvenile period, which shall occur at or before age twenty-five (25), the gross premiums and death benefits are level, and there are no cash surrender values; and 3. After the end of the juvenile period, gross premiums are level for the remainder of the premium paying period, and death benefits are level for the remainder of the life of the policy. Section 7. Calculation of Minimum Valuation Standard for Flexible Premium and Fixed Premium Universal Life Insurance Policies That Contain Provisions Resulting in the Ability of a Policyowner to Keep a Policy in Force Over a Secondary Guarantee Period A. General 1. Policies with a secondary guarantee include:

a. A policy with a guarantee that the policy will remain in force at the original schedule of benefits subject only to the payment of specified premiums; b. A policy in which the minimum premium at any duration is less man the corresponding one year valuation premium, calculated using the maximum valuation interest rate and the 1980 CSO valuation tables with or without ten-year select mortality factors, or any other table adopted after the effective date of this regulation by the NAIC and promulgated by regulation by the commissioner for this purpose; or c. A policy with any combination of subparagraph (a) and (b), above. 2 A secondary guarantee period is the period for which the policy is guaranteed to remain in force subject only to a secondary guarantee. When a policy contains more than one secondary guarantee, the minimum reserve shall be the greatest of the respective minimum reserves at that valuation date, of each unexpired secondary guarantee, ignoring all other secondary guarantees. Secondary guarantees that are unilaterally changed by the insurer after issue shall be considered to have been made at issue. Reserves described in Subsections B and C below shall be recalculated from issue to reflect these changes.

3. Specified premiums mean the premiums specified in the policy, the payment of which guarantees that the policy will remain in force at the original schedule of benefits, but which otherwise would be insufficient to keep the policy in force in the absence of the guarantee if maximum mortality and expense charges and minimum interest credits were made and any applicable surrender charges were assessed. 4. For purposes of this Section, the minimum premium for any policy year is the premium that, when paid into a policy with a zero account value at the beginning of the policy year, produces a zero account value at the end of the policy year. The minimum premium calculation shall use the policy cost factors (including mortality charges, loads and expense charges) and the interest auditing rate, which are all guaranteed at issue. 5. The one-year valuation premium means the net one-year premium based upon the original schedule of benefits for a given policy year. The one-year valuation premiums for all policy years are calculated at issue. The select mortality factors defined in Section 5B(2), (3), and (4) may not be used to calculate the one-year valuation premiums. 6. The one-year valuation premium should reflect the frequency of fund processing, as well as the distribution of deaths assumption employed in the calculation of the monthly mortality charges to the fund.

B. Basic Reserves for the Secondary Guarantees Basic reserves for the secondary guarantees shall be the segmented reserves for the secondary guarantee period. In calculating the segments and the segmented reserves, the gross premiums shall be set equal to the specified premiums, if any, or otherwise to the minimum premiums, that keep the policy in force and the segments will be determined according to the contract segmentation method as defined in Section 4B.

C. Deficiency Reserves for the Secondary Guarantees Deficiency reserves, if any, for the secondary guarantees shall be calculated for the secondary guarantee period in the same manner as described in Section 6B with gross premiums set equal to the specified premiums, if any, or otherwise to the minimum premiums that keep the policy in force. D. Minimum Reserves The minimum reserves during the secondary guarantee period are the greater of: 1. The basic reserves for the secondary guarantee plus the deficiency reserve, if any, for the secondary guarantees: or 2. The minimum reserves required by other rules or regulations governing universal life plans. Section 8. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of Cease & Desist Orders, and /or other suspensions or revocations of license.

Section 9. Severability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of this regulation and the application of such provision to other persons or circumstances shall not be affected thereby. Section 10. Effective Date This regulation shall become effective January 1, 2000. Section 11. History New regulation, effective January 1, 2000.

Appendix Select Mortality Factors This appendix contains tables of select mortality factors that are the bases to which the respective percentage of Section 5A(2), 5B(2) and 5B(3) are applied. The six tables of select mortality factors contained herein include: (1) male aggregate, (2) male nonsmoker, (3) male smoker, (4) female aggregate, (5) female nonsmoker, and (6) female smoker. These tables apply to both age last birthday and age nearest birthday mortality tables. For sex-blended mortality tables, compute select mortality factors in the same proportion as the underlying mortality. For example, for the 1980 CSO-B Table, the calculated select mortality factors are eighty percent (80%) of the appropriate male table in this Appendix, plus twenty percent (20%) of the appropriate female table in this Appendix.

Regulation 4-1-10 Recognition of the 2001 CSO Mortality Table for Use in Determining Minimum Reserve Liabilities and Nonforfeiture Benefits Section 1. Authority Section 2. Basis and Purpose Section 3. Definitions Section 4. 2001 CSO Mortality Table Section 5. Conditions Section 6. Applicability of the 2001 CSO Mortality Table to Colorado Regulation 4-1-9 Section 7. Gender-Blended Tables Section 8. Enforcement Section 9. Severability Section 10. Effective Date Section 11. History Section 1. Authority This regulation is promulgated by the Commissioner of Insurance pursuant to § § 10-1-108(7), 10-1- 109(1), 10-7-305.1(8)(f), and 10-7-309(l)(a)(m), Colorado Revised Statutes (C.R.S.). Section 2. Basis and Purpose The purpose of this regulation is to recognize, permit and prescribe the use of the 2001 Commissioners Standard Ordinary (CSO) Mortality Table in accordance with § § 10-7-309(1), 10-7-305.1(8)(0, and 10-7- 313, C.R.S., and Sections 5(A) and 5(B) of Colorado Regulation 4-1-9. Section 3. Definitions A. “2001 CSO Mortality Table” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002). This table may also be found in Appendix A of the Final Report of the American Academy of Actuaries' Commissioners Standard Ordinary Task Force, dated June 2002. No other amendments or revisions of this table, after this date, are authorized in this regulation. For information as to how this table may be obtained or examined, please contact the Chief Actuary, Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver CO, 80202. A copy of the table has been provided to the state publications depository library and is available for review at the library. Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality table.

B. “2001 CSO Mortality Table (F)” means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.

C. “2001 CSO Mortality Table (M)” means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.

D. “Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.

E. “Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers.

Section 4. 2001 CSO Mortality Table A. At the election of the company, for any one or more specified plans of insurance and subject to the conditions stated in this regulation, the 2001 CSO Mortality Table may be used as the minimum standard for policies issued on or after February 1,2004, and before the date specified in Subsection B, to which § § 10-7-309(l)(a)(III) and 10-7-305.1(8)(f), C.R.S., and Sections 5(A) and 5(B) of Colorado Regulation 4-1-9 are applicable. If the company elects to use the 2001 CSO Mortality Table, it shall do so for both valuation and nonforfeiture purposes. B. Subject to the conditions stated in this regulation, the 2001 CSO Mortality Table shall be used in determining minimum standards for policies issued on and after January 1,2009, to which § § 10- 7-309(l)(a)(III) and 10-7-305.1(8)(f), C.R.S. and Sections 5(A) and 5(B) of Colorado Regulation 4- 1-9 are applicable.

C. It should be noted that there is no new Commissioners Extended Term (CET) Table being proposed to replace the 1980 CET Table. Therefore, the new minimum basis for the computation of values related to extended term benefits will be the 2001 CSO Mortality Table. Section 5. Conditions A. For each plan of insurance with separate rates for smokers and nonsmokers, an insurer may use: (1) Composite mortality tables to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits; (2) Smoker and nonsmoker mortality tables to determine the valuation net premiums and additional minimum reserves, if any, required by § 10-7-313, C.R.S., and use composite mortality tables to determine the basic minimum reserves, minimum cash surrender values and amounts of paid-up nonforfeiture benefits; or (3) Smoker and nonsmoker mortality to determine minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits. B. For plans of insurance without separate rates for smokers and nonsmokers, the composite mortality tables shall be used.

C. For the purpose of determining minimum reserve liabilities and minimum cash surrender values and amounts of paid-up nonforfeiture benefits, the 2001 CSO Mortality Table may, at the option of the company for each plan of insurance, be used in its ultimate or select and ultimate form, subject to the restrictions of Section 6 and § 10-7-305.1, C.R.S., relative to use of the select and ultimate form.

D. When the 2001 CSO Mortality Table is the minimum reserve standard for any plan for a company, the actuarial opinion in the annual statement filed with the commissioner shall be based on an asset adequacy analysis as specified in Sections 5(C) of Colorado Regulation 3-1-8. The commissioner may exempt a company from this requirement if it only does life insurance business in this state and in no other state.

Section 6. Applicability of the 2001 CSO Mortality Table to Colorado Regulation 4-1-9 A. The 2001 CSO Mortality Table may be used in applying Colorado Regulation 4-1-9 in the following manner, subject to the transition dates for use of the 2001 CSO Mortality Table in Section 4 of this regulation (unless otherwise noted, the references in this section are to Colorado Regulation 4-1- 9.)

(1) Section 3A(2)(b): The net level reserve premium is based on the ultimate mortality rates in the 2001 CSO Mortality Table.

(2) Section 4B: All calculations are made using the 2001 CSO Mortality Rate, and, if elected, the optional minimum mortality standard for deficiency reserves stipulated in Section 6A(4) of this regulation. The value of “q(x+k+t-l)” is the valuation mortality rate for deficiency reserves in policy year k+t, but using the unmodified select mortality rates if modified select mortality rates are used in the computation of deficiency reserves. (3) Section 5A: The 2001 CSO Mortality Table is the minimum standard for basic reserves. (4) Section 5B: The 2001 CSO Mortality Table is the minimum standard for deficiency reserves. If select mortality rates are used, they may be multiplied by X percent for durations in the first segment, subject to the conditions specified in Sections 5B(3)(a) to (i). In demonstrating compliance with those conditions, the demonstrations may not combine the results of tests that utilize the 1980 CSO Mortality Table with those tests that utilize the 2001 CSO Mortality Table, unless the combination is explicitly required by regulation or necessary to be in compliance with relevant Actuarial Standards of Practice. (5) Section 6C: The valuation mortality table used in determining the tabular cost of insurance shall be the ultimate mortality rates in the 2001 CSO Mortality Table. (6) Section 6E(4): The calculations specified in Section 6E shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

(7) Section 6F(4): The calculations specified in Section 6F shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

(8) Section 6G(2): The calculations specified in Section 6G shall use the ultimate mortality rates in the 2001 CSO Mortality Table.

(9) Section 7A(l)(b): The one-year valuation premium shall be calculated using the ultimate mortality rates in the 2001 CSO Mortality Table.

B. Nothing in this section shall be construed to expand the applicability of Colorado Regulation 4-1-9 to include life insurance policies exempted under Section 3 A of Colorado Regulation 4-1-9. Section 7. Gender-Blended Tables A. For any ordinary life insurance policy delivered or issued for delivery in this state on and after February 1, 2004, that utilizes the same premium rates and charges for male and female lives or is issued in circumstances where applicable law does not permit distinctions on the basis of gender, a mortality table that is a blend of the 2001 CSO Mortality Table (M) and the 2001 CSO Mortality Table (F) may, at the option of the company for each plan of insurance, be substituted for the 2001 CSO Mortality Table for use in determining minimum cash surrender values and amounts of paid-up nonforfeiture benefits. No change in minimum valuation standards is implied by this subsection of this regulation.

B. The company may choose from among the blended tables developed by the American Academy of Actuaries CSO Task Force and adopted by the NAIC in December 2002. This table may be found in Appendix J3 of the Final Report of the American Academy of Actuaries' Commissioners Standard Ordinary Task Force, dated June 2002. No other amendments or revisions of this table, after this date, are authorized in this regulation.

For information as to how this table may be obtained or examined, please contact the Chief Actuary, Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver , CO, 80202. A copy of the table has been provided to the state publications depository library and is available for review at the library. C. It shall not, in and of itself, be a violation of § 10-3-1104, C.R.S., for an insurer to issue the same kind of policy of life insurance on both a sex-distinct and sex-neutral basis. Section 8. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines, issuance of Cease & Desist Orders, and/or other suspensions or revocations of license.

Section 9. Severability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of the provision to other persons or circumstances shall not be affected.

Section 10. Effective Date The effective date of this regulation is February 1, 2004. Section 11. History New regulation effective February 1, 2004.

AMENDED REGULATION 4-1-11 CONCERNING SUITABILITY IN ANNUITY TRANSACTIONS Section 1. Authority Section 2. Purpose and Background Section 3. Applicability and Scope Section 4. Definitions Section 5. Duties of Insurers and Insurance Producers Section 6. Recordkeeping Section 7. Enforcement Section 8. Severability Section 9. Effective Date Section 10. History Section 1. Authority This regulation is issued under the authority of Sections 10-1-109 and 10-3-1110(1), Colorado Revised Statutes.

Section 2. Purpose and Background The purpose of this regulation is to set forth standards and procedures for recommendations to consumers that result in a transaction involving annuity products so that the insurance needs and financial objectives of consumers at the time of the transaction are appropriately addressed. Section 3. Applicability and Scope A. This regulation shall apply to any recommendation to purchase or exchange an annuity made to a consumer by an insurance producer, or an insurer where no producer is involved, that results in the purchase or exchange recommended.

B. Unless otherwise specifically included, this regulation shall not apply to recommendations involving: 1. Direct response solicitations where there is no recommendation based on information collected from the consumer pursuant to this regulation; 2. Contracts used to fund:

a. An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

b. A plan described by Sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the Internal Revenue Code (IRC), as amended, if established or maintained by an employer; c. A government or church plan defined in Section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the IRC; d. A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

e. Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or f. Formal prepaid funeral contracts.

C. Nothing herein shall be construed to create or imply a private cause of action for a violation of this regulation.

Section 4. Definitions A. “Annuity” means a fixed annuity or variable annuity that is individually solicited, whether the product is classified as an individual or group annuity.

B. “Insurer” means a company required to be licensed under the laws of this state to provide insurance products, including annuities.

C. “ Insurance producer ” means a person required to be licensed under the laws of this state to sell, solicit or negotiate insurance, including annuities.

D. “Recommendation” means advice provided by an insurance producer, or an insurer where no producer is involved, to an individual consumer that results in a purchase or exchange of an annuity in accordance with that advice.

Section 5. Duties of Insurers and of Insurance Producers A. In recommending to a consumer the purchase of an annuity or the exchange of an annuity that results in another insurance transaction or series of insurance transactions, the insurance producer, or the insurer where no producer is involved, shall have reasonable grounds for believing that the recommendation is suitable for the consumer on the basis of the facts disclosed by the consumer as to his or her investments and other insurance products and as to his or her financial situation and needs.

B. Prior to the execution of a purchase or exchange of an annuity resulting from a recommendation, an insurance producer, or an insurer where no producer is involved, shall make reasonable efforts to obtain information concerning:

(1) The consumer’s financial status;

(2) The consumer’s tax status;

(3) The consumer’s investment objectives; and (4) Such other information used or considered to be reasonable by the insurance producer, or the insurer where no producer is involved, in making recommendations to the consumer. C.

1. Except as provided under Paragraph (2) of this subsection, neither an insurance producer, nor an insurer where no producer is involved, shall have any obligation to a consumer under Subsection A related to any recommendation if a consumer: a. Refuses to provide relevant information requested by the insurer or insurance producer;

b. Decides to enter into an insurance transaction that is not based on a recommendation of the insurer or insurance producer; or c. Fails to provide complete or accurate information.

2. An insurer or insurance producer’s recommendation subject to Paragraph (1) shall be reasonable under all the circumstances actually known to the insurer or insurance producer at the time of the recommendation.

D.

1. An insurer either shall assure that a system to supervise recommendations that is reasonably designed to achieve compliance with this regulation is established and maintained by complying with Paragraphs (3) to (5) of this subsection, or shall establish and maintain such a system, including, but not limited to:

a. Maintaining written procedures; and b. Conducting periodic reviews of its records that are reasonably designed to assist in detecting and preventing violations of this regulation. 2. A general agent and independent agency either shall adopt a system established by an insurer to supervise recommendations of its insurance producers that is reasonably designed to achieve compliance with this regulation, or shall establish and maintain such a system, including, but not limited to:

a. Maintaining written procedures; and b. Conducting periodic reviews of records that are reasonably designed to assist in detecting and preventing violations of this regulation. 3. An insurer may contract with a third party, including a general agent or independent agency, to establish and maintain a system of supervision as required by Paragraph (1) with respect to insurance producers under contract with or employed by the third party. 4. An insurer shall make reasonable inquiry to assure that the third party contracting under Paragraph (3) of this subsection is performing the functions required under Paragraph (1) of this subsection and shall take such action as is reasonable under the circumstances to enforce the contractual obligation to perform the functions. An insurer may comply with its obligation to make reasonable inquiry by doing all of the following: a. The insurer annually obtains a certification from a third party senior manager who has responsibility for the delegated functions that the manager has a reasonable basis to represent, and does represent, that the third party is performing the required functions; and b. The insurer, based on reasonable selection criteria, periodically selects third parties contracting under Paragraph (3) of this subsection for a review to determine whether the third parties are performing the required functions. The insurer shall perform those procedures to conduct the review that are reasonable under the circumstances.

5. An insurer that contracts with a third party pursuant to Paragraph (3) of this subsection and that complies with the requirements to supervise in Paragraph (4) of this subsection shall have fulfilled its responsibilities under Paragraph (1) of this subsection. 6. An insurer, general agent or independent agency is not required by Paragraph (1) or (2) of this subsection to:

a. Review, or provide for review of, all insurance producer solicited transactions; or b. Include in its system of supervision an insurance producer’s recommendations to consumers of products other than the annuities offered by the insurer, general agent or independent agency.

7. A general agent or independent agency contracting with an insurer pursuant to Paragraph (3) of this subsection shall promptly, when requested by the insurer pursuant to Paragraph (4) of this subsection, give a certification as described in Paragraph (4) of this subsection or give a clear statement that it is unable to meet the certification criteria. 8. No person may provide a certification under Paragraph (4)(a) of this subsection unless: a. The person is a senior manager with responsibility for the delegated functions; and b. The person has a reasonable basis for making the certification. E. Compliance with the National Association of Securities Dealers Conduct Rules pertaining to suitability shall satisfy the requirements under this section for the recommendation of variable annuities. However, nothing in this subsection shall limit the insurance commissioner’s ability to enforce the provisions of this regulation.

Section 6. Recordkeeping A. Insurers, general agents, independent agencies and insurance producers shall maintain or be able to make available to the commissioner records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for five years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of an insurance producer.

B. Records that are required to be maintained by this regulation may be maintained in paper, photographic, microprocess, magnetic, mechanical or electronic media or by any process that accurately reproduces the actual document.

Section 7. Enforcement A. Mitigation of Responsibility 1. The Commissioner may order:

a. An insurer to take reasonable appropriate corrective action for any consumer harmed by the insurer’s, or by its insurance producer’s violation of this regulation; b. An insurance producer to take reasonably appropriate corrective action for any consumer harmed by the insurance producer’s violation of this regulation; and c. A general agency or independent agency that employs or contracts with an insurance producer to sell, or solicit the sale, of annuities to consumers, to take reasonably appropriate corrective action for any consumer harmed by the insurance producer’s violation of this regulation 2. Any applicable penalty under Sections 7. Enforcement for a violation of Section 5 of this Regulation may be reduced or eliminated if corrective action for the consumer was taken promptly after a violation was discovered.

B. Noncompliance with this regulation may result, after proper notice, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines, issuance of Cease & Desist Orders, and/or suspensions or revocations of license.

Section 8. Severability If any provision of this regulation or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application for such provision to other persons or circumstances shall not be affected thereby. Section 9. Effective Date This amended regulation shall be effective August 1, 2006. Section 10. History Original regulation effective October 1, 2004.

Emergency regulation 04-E-12 effective October 8, 2004 deferred effective date to January 1, 2005. Amended, effective August 1, 2006.

NEW REGULATION 4-1-12 Concerning the Disclosure Requirements for Annuity Transactions Section 1. Authority Section 2. Scope and Purpose Section 3. Applicability Section 4. Definitions Section 5. Standards for the Disclosure Document and Buyer’s Guide Section 6. Report to Contract Owners Section 7. Enforcement Section 8. Severability Section 9. Incorporated Materials Section 10. Effective Date Section 11. History Section 1. Authority This regulation is issued under the authority of Sections 10-1-109 and 10-3-1110(1), Colorado Revised Statutes.

Section 2. Scope and Purpose The purpose of this regulation is to provide standards for the disclosure of certain minimum information about annuity contracts to protect consumers and foster consumer education. The regulation specifies the minimum information which must be disclosed and the method for disclosing it in connection with the sale of annuity contracts. The goal of this regulation is to ensure that purchasers of annuity contracts understand certain basic features of annuity contracts. Section 3. Applicability This regulation applies to all group and individual annuity contracts and certificates except: A. Registered or non-registered variable annuities or other registered products; B. Immediate and deferred annuities that contain no non-guaranteed elements; C.

1. Annuities used to fund:

a. An employee pension plan which is covered by the Employee Retirement Income Security Act (ERISA);

b. A plan described by Sections 401(a), 401(k) or 403(b) of the Internal Revenue Code, where the plan, for the purposes of ERISA, is established or maintained by the employer;

c. A governmental or church plan defined in Section 414 or a deferred compensation plan of a state or local government or a tax exempt organization under Section 457 of the Internal Revenue Code; or d. A non-qualified deferred compensation arrangement established or maintained by an employer or plan sponsor.

2. Notwithstanding Paragraph (1), the regulation shall apply to annuities used to fund a plan or arrangement that is funded solely by contributions an employee elects to make whether on a pre-tax or after-tax basis, and where the insurance company has been notified that plan participants may choose from among two (2) or more fixed annuity providers and there is a direct solicitation of an individual employee by a producer for the purchase of an annuity contract. As used in this subsection, direct solicitation shall not include any meeting held by a producer solely for the purpose of education or enrolling employees in the plan or arrangement;

D. Structured settlement annuities;

E. Charitable gift annuities; and F. Funding agreements.

Section 4. Definitions A. “Charitable gift annuity” shall have the same meaning as the definition found in § 10-1-102(4)(a) through (c)(II), C.R.S.

B “Contract owner” means the owner named in the annuity contract or certificate holder in the case of a group annuity contract.

C. “Determinable elements” means elements that are derived from processor methods that are guaranteed at issue and not subject to company discretion, but where the values or amounts cannot be determined until some point after issue. These elements include the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, and charges or elements of formulas used to determine any of these. These elements may be described as guaranteed but not determined at issue. An element is considered determinable if it was calculated from underlying determinable elements only, or from both determinable and guaranteed elements.

D. “Funding agreement” means an agreement for an insurer to accept and accumulate funds and to make one or more payments at future dates in amounts that are not based on mortality or morbidity contingencies.

E. “Generic name” means a short title descriptive of the annuity contract being applied for or illustrated such as “single premium deferred annuity.”

F. “Guaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, and charges or elements of formulas used to determine any of these, that are guaranteed and determined at issue. An element is considered guaranteed if all of the underlying elements that go into its calculation are guaranteed. G. “Non-guaranteed elements” means the premiums, credited interest rates (including any bonus), benefits, values, non-interest based credits, and charges or elements of formulas used to determine any of these, that are subject to company discretion and are not guaranteed at issue. An element is considered non-guaranteed if any of the underlying non-guaranteed elements are used in its calculation.

H. “Structured settlement annuity” means a “qualified funding asset” as defined in section 130(d) of the Internal Revenue Code or an annuity that would be a qualified funding asset under section 130(d) but for the fact that it is not owned by an assignee under a qualified assignment. Section 5. Standards for the Disclosure Document and Buyer’s Guide A. When an insurer or an insurance producer receives an application for an annuity contract, the insurer or insurance producer shall provide the applicant the disclosure document described in Subsection B and the Buyer's Guide to Fixed Deferred Annuities, hereafter “the Buyer’s Guide,” in the current form prescribed by the National Association of Insurance Commissioners (NAIC) or in language approved by the commissioner of insurance.

1. Where the application for an annuity contract is taken in a face-to-face meeting, the applicant shall at or before the time of application be given both the disclosure document described in Subsection B and the Buyer's Guide.

2. Where the application for an annuity contract is taken by means other than in a face-to-face meeting, the applicant shall be sent both the disclosure document and the Buyer’s Guide no later than five (5) business days after the complete application is received by the insurer.

a. With respect to an application received as a result of a direct solicitation through the mail:

(1) Providing a Buyer’s Guide in a mailing inviting prospective applicants to apply for an annuity contract shall be deemed to satisfy the requirement that the Buyer’s guide be provided no later than five (5) business days after receipt of the application.

(2) Providing a disclosure document in a mailing inviting a prospective applicant to apply for an annuity contract shall be deemed to satisfy the requirement that the disclosure document be provided no later than five (5) business days after receipt of the application.

b. With respect to an application received via the Internet: (1) Taking reasonable steps to make the Buyer’s Guide available for viewing and printing on the insurer’s website shall be deemed to satisfy the requirement that the Buyer’s Guide be provided no later than five (5) business days after receipt of the application.

(2) Taking reasonable steps to make the disclosure document available for viewing and printing on the insurer’s website shall be deemed to satisfy the requirement that the disclosure document be provided no later than five (5) business days after receipt of the application. c. A solicitation for an annuity contract provided in other than a face-to-face meeting shall include a statement that the proposed applicant may contact the Colorado Division of Insurance for a free annuity Buyer’s Guide. In lieu of the forgoing statement, an insurer may include a statement that the prospective applicant may contact the insurer for a free annuity Buyer’s Guide.

3. Where the Buyer’s Guide and disclosure document are not provded at or before the time of application, a free look period of no less than fifteen (15) days shall be provided for the applicant to return the annuity contract without penalty. This free look shall run concurrently with any other free look provided under state law or regulation. B. At a minimum, the following information shall be included in the disclosure document required to be provided under this regulation:

1. The generic name of the contract, the company product name, if different, and form number, and the fact that is an annuity;

2. The insurer’s name and address;

3. A description of the contract and its benefits, emphasizing its long-term nature, including examples where appropriate:

a. The guaranteed, non-guaranteed and determinable elements of the contract, and their limitations, if any, and an explanation of how they operate; b. An explanation of the initial crediting rate, specifying any bonus or introductory portion, the duration of the rate and the fact that rates may change from time to time and are not guaranteed;

c. Periodic income options both on a guaranteed and non-guaranteed basis; d. Any value reductions caused by withdrawals from or surrender of the contract; e. How values in the contract can be accessed;

f. The death benefit, if available, and how it will be calculated; g. A summary of the federal tax status of the contract and any penalties applicable on withdrawal of values from the contract; and h. Impact of any rider, such as a long-term care rider. 4. Specific dollar amount or percentage charges and fees shall be listed with an explanation of how they apply.

5. Information about the current guaranteed rate for new contracts that contains a clear notice that the rate is subject to change.

C. Insurers shall define terms used in the disclosure statement in language that facilitates the understanding by a typical person within the segment of the public to which the disclosure statement is directed.

Section 6. Report to Contract Owners For annuities in the payout period with changes in non-guaranteed elements and for the accumulation period of a deferred annuity, the insurer shall provide each contract owner with a report, at least annually, on the status of the contract that contains at least the following information: A. The beginning and the end date of the current report period; B. The accumulation and cash surrender value, if any, at the end of the previous report period and at the end of the current report period;

C. The total amounts, if any, that have been credited, charged to the contract value or paid during the current report period; and D. The amounts of outstanding loans, if any, as of the end of the current report period. Section 7. Enforcement In addition to any other penalties provided by the laws of this state, an insurer or producer that violates a requirement of this regulation shall be guilty of a violation of Section 10-3-1104, Colorado Revised Statues.

Section 8. Severability If any provision of this regulation or its application to any person or circumstances is for any reason held to be invalid by any court of law, the remainder of this regulation and its application to other persons or circumstances shall not be affected.

Section 9. Incorporated Materials The Buyer’s Guide to Fixed Deferred Annuities published by the National Association of Insurance Commissioners “the Buyer’s Guide” shall mean the Buyer’s Guide as published on the effective date of this regulation and does not include later amendments to or editions of the Buyer’s Guide. A copy of the Buyer’s Guide may be examined at any state publications depository library. For additional information regarding how the Buyer’s Guide may be obtained or examined contact Paula Sisneros, Compliance Director, Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver, Colorado 80202. Section 10. Effective Date This regulation shall apply to contracts sold on or after January 1, 2007. Section 11. History New regulation effective September 1, 2006.

Am ended regulation effective January 1, 2007.

REGULATION 4-1-13 PERMITTING THE RECOGNITION OF PREFERRED MORTALITY TABLES FOR USE IN DETERMINING MINIMUM RESERVE LIABILITIES Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 2001 CSO Preferred Class Structure Table Section 6 Conditions Section 7 Severability Section 8 Enforcement Section 9 Effective Date Section 10 History Section 1 Authority This regulation is promulgated pursuant to Sections 10-1-109 and 10-7-309(2)(a), C.R.S. and Sections 5A and 5B of Colorado Insurance Regulation 4-1-9.

Section 2 Scope and Purpose The purpose of this regulation is to recognize, permit and prescribe the use of mortality tables that reflect differences in mortality between Preferred and Standard lives in determining minimum reserve liabilities in accordance with Section 10-7-309(2)(a), C.R.S. and Sections 5A and 5B of Colorado Insurance Regulation 4-1-9.

Section 3 Applicability This regulation is applicable to all foreign or domestic life and fraternal insurers. Section 4 Definitions A. “2001 CSO Mortality Table” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the NAIC in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002) and supplemented by the 2001 CSO Preferred Class Structure Mortality Table defined below in Subsection B. Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. Mortality tables in the 2001 CSO Mortality Table include the following: 1. “2001 CSO Mortality Table (F)” means that mortality table consisting of the rates of mortality for female lives from the 2001 CSO Mortality Table.

2. “2001 CSO Mortality Table (M)” means that mortality table consisting of the rates of mortality for male lives from the 2001 CSO Mortality Table.

3. “Composite mortality tables” means mortality tables with rates of mortality that do not distinguish between smokers and nonsmokers.

4. “Smoker and nonsmoker mortality tables” means mortality tables with separate rates of mortality for smokers and nonsmokers.

B. “2001 CSO Preferred Class Structure Mortality Table” means mortality tables with separate rates of mortality for Super Preferred Nonsmokers, Preferred Nonsmokers, Residual Standard Nonsmokers, Preferred Smokers, and Residual Standard Smoker splits of the 2001 CSO Nonsmoker and Smoker tables as adopted by the NAIC at the September, 2006 National Meeting and published in the NAIC Proceedings (3rd Quarter 2006) . Unless the context indicates otherwise, the “2001 CSO Preferred Class Structure Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table. It includes both the smoker and nonsmoker mortality tables. It includes both the male and female mortality tables and the gender composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality table.

C. “Statistical agent” means an entity with proven systems for protecting the confidentiality of individual insured and insurer information; demonstrated resources for and history of ongoing electronic communications and data transfer ensuring data integrity with insurers, which are its members or subscribers; and a history of and means for aggregation of data and accurate promulgation of the experience modifications in a timely manner.

D. All tables referenced in this regulation are available for review on the Division of Insurance website at http://www.dora.state.co.us/insurance/regs/incbyref.htm and also at the State Publications Depository Library. The tables are those that have been adopted by the NAIC and are in effect on the effective date of this regulation. This regulation does not include later amendments or editions of the tables. For questions regarding the tables, please contact: Chief Actuary Colorado Division of Insurance 1560 Broadway, Suite 850 Denver, CO 80202 Section 5 2001 CSO Preferred Class Structure Table At the election of the company, for each calendar year of issue, for any one or more specified plans of insurance and subject to satisfying the conditions stated in this regulation, the 2001 CSO Preferred Class Structure Mortality Table may be substituted in place of the 2001 CSO Smoker or Nonsmoker Mortality Table as the minimum valuation standard for policies issued on or after January 1, 2007. No such election shall be made until the company demonstrates at least 20% of the business to be valued on this table is in one or more of the preferred classes. A table from the 2001 CSO Preferred Class Structure Mortality Table used in place of a 2001 CSO Mortality Table, pursuant to the requirements of this rule, will be treated as part of the 2001 CSO Mortality Table only for purposes of reserve valuation pursuant to the requirements of Colorado Insurance Regulation 4-1-10.

Section 6 Conditions A. For each plan of insurance with separate rates for Preferred and Standard Nonsmoker lives, an insurer may use the Super Preferred Nonsmoker, Preferred Nonsmoker, and Residual Standard Nonsmoker tables to substitute for the Nonsmoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, except for business valued under the Residual Standard Nonsmoker Table, the appointed actuary shall certify that:

1. The present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class. 2. The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the valuation basic table corresponding to the valuation table being used for that class. B. For each plan of insurance with separate rates for Preferred and Standard Smoker lives, an insurer may use the Preferred Smoker and Residual Standard Smoker tables to substitute for the Smoker mortality table found in the 2001 CSO Mortality Table to determine minimum reserves. At the time of election and annually thereafter, for business valued under the Preferred Smoker Table, the appointed actuary shall certify that:

1. The present value of death benefits over the next ten years after the valuation date, using the anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the Preferred Smoker valuation basis table corresponding to the valuation table being used for that class.

2. The present value of death benefits over the future life of the contracts, using anticipated mortality experience without recognition of mortality improvement beyond the valuation date for each class, is less than the present value of death benefits using the Preferred Smoker valuation basic table.

C. Unless exempted by the commissioner, every authorized insurer using the 2001 CSO Preferred Class Structure Table shall annually file with the commissioner, with the NAIC, or with a statistical agent designated by the NAIC and acceptable to the commissioner, statistical reports showing mortality and such other information as the commissioner may deem necessary or expedient for the administration of the provisions of this regulation. The form of the reports shall be established by the commissioner or the commissioner may require the use of a form established by the NAIC or by a statistical agent designated by the NAIC and acceptable to the commissioner. Section 7 Severability If any provision of this regulation or its application to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of the provision to other persons or circumstances shall not be affected.

Section 8 Enforcement Noncompliance with the Regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of license. Among others, the penalties provided for in Section 10-3-1108, C.R.S. may be applied.

Section 9 Effective Date The effective date of this regulation is February 1, 2007. Section 10 History New regulation, effective February 1, 2007.

Regulation 4-1-14 MILITARY SALES PRACTICES Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Practices Declared False, Misleading, Deceptive or Unfair on a Military Installation Section 6 Practices Declared False, Misleading, Deceptive or Unfair Regardless of Location Section 7 Severability Section 8 Enforcement Section 9 Effective Date Section 10 History Section 1 Authority This regulation is promulgated by the Commissioner of Insurance under the authority of § § 10-1-109 and 10-7-116, C.R.S.

Section 2 Scope and Purpose A. The purpose of this regulation is to set forth standards to protect active duty service members of the United States Armed Forces from dishonest and predatory insurance sales practices by declaring certain identified practices to be false, misleading, deceptive or unfair. B. Nothing herein shall be construed to create or imply a private cause of action for a violation of this regulation.

Section 3 Applicability A. This regulation shall apply only to the solicitation or sale of any life insurance or annuity product by an insurer or insurance producer to an active duty service member of the United States Armed Forces.

B. Exemptions 1. This regulation shall not apply to solicitations or sales involving: a. Credit insurance;

b. Group life insurance or group annuities where there is no in-person, face-to-face solicitation of individuals by an insurance producer or where the contract or certificate does not include a side fund;

c. An application to the existing insurer that issued the existing policy or contract when a contractual change or a conversion privilege is being exercised; or, when the existing policy or contract is being replaced by the same insurer pursuant to a program filed with and approved by the commissioner; or, when a term conversion privilege is exercised among corporate affiliates; d. Individual stand-alone health policies, including disability income policies; e. Contracts offered by Servicemembers’ Group Life Insurance (SGLI) or Veterans’ Group Life Insurance (VGLI), as authorized by 38 U.S.C. Section 1965 et seq. or contracts offered by state sponsored life insurance (SSLI) as authorized by Public- Law 93-289, title 37 U.S.C. sec. 707, et. seq.; f. Life insurance contracts offered through or by a non-profit military association, qualifying under Section 501(c) (23) of the Internal Revenue Code (IRC), and which are not underwritten by an insurer; or g. Contracts used to fund:

(1) An employee pension or welfare benefit plan that is covered by the Employee Retirement and Income Security Act (ERISA);

(2) A plan described by Sections 401(a), 401(k), 403(b), 408(k) or 408(p) of the Internal Revenue Code (IRC), as amended, if established or maintained by an employer;

(3) A government or church plan defined in Section 414 of the IRC, a government or church welfare benefit plan, or a deferred compensation plan of a state or local government or tax exempt organization under Section 457 of the IRC;

(4) A nonqualified deferred compensation arrangement established or maintained by an employer or plan sponsor;

(5) Settlements of or assumptions of liabilities associated with personal injury litigation or any dispute or claim resolution process; or (6) Prearranged funeral contracts.

2. Nothing herein shall be construed to abrogate the ability of nonprofit organizations (and/or other organizations) to educate members of the United States Armed Forces in accordance with Department of Defense DoD Instruction 1344.07 – Personal Commercial Solicitation on DoD Installations or a successor directive. 3. For purposes of this regulation, general advertisements, direct mail and internet marketing shall not constitute “solicitation.” Telephone marketing shall not constitute “solicitation” provided the caller explicitly and conspicuously discloses the product concerned is life insurance and makes no statements that avoid a clear and unequivocal statement that life insurance is the subject matter of the solicitation. Provided however, nothing in this subsection shall be construed to exempt an insurer or insurance producer from this regulation in any in-person, face-to-face meeting established as a result of the “solicitation” exemptions identified in this subsection. Section 4 Definitions A. “Active Duty” means full-time duty in the active military service of the United States and includes members of the reserve component (National Guard and Reserve) while serving under published orders for active duty or full-time training. The term does not include members of the reserve component who are performing active duty or active duty for training under military calls or orders specifying periods of less than 31 calendar days.

B. “Department of Defense (DoD) Personnel” means all active duty service members and all civilian employees, including nonappropriated fund employees and special government employees, of the Department of Defense.

C. “Door to Door” means a solicitation or sales method whereby an insurance producer proceeds randomly or selectively from household to household without prior specific appointment. D. “General Advertisement” means an advertisement having as its sole purpose the promotion of the reader’s or viewer’s interest in the concept of insurance, or the promotion of the insurer or the insurance producer.

E. “Insurer” means an insurance company required to be licensed under the laws of this state to provide life insurance products, including annuities.

F. “Insurance producer” means a person required to be licensed under the laws of this state to sell, solicit or negotiate life insurance, including annuities. G. “Know” or “Knowingly” means, depending on its use herein, the insurance producer or insurer had actual awareness, or in the exercise of ordinary care should have known, at the time of the act or practice complained of, that the person solicited:

1. is a service member, or 2. is a service member with a pay grade of E-4 or below. H. “Life Insurance” means insurance coverage on human lives including benefits of endowment and annuities, and may include benefits in the event of death or dismemberment by accident, and benefits for disability income, and, unless otherwise specifically excluded, includes individually issued annuities.

I. “Military Installation” means any federally owned, leased, or operated base, reservation, post, camp, building, or other facility to which service members are assigned for duty, including barracks, transient housing, and family quarters.

J. “MyPay” is a Defense Finance and Accounting Service (DFAS) web-based system that enables service members to process certain discretionary pay transactions or provide updates to personal information data elements without using paper forms.

K. “Service Member” means any active duty officer (commissioned and warrant) or enlisted member of the United States Armed Forces.

L. “Side Fund” means a fund or reserve that is part of or otherwise attached to a life insurance policy (excluding individually issued annuities) by rider, endorsement or other mechanism which accumulates premium or deposits with interest or by other means. The term does not include: 1. accumulated value or cash value or secondary guarantees provided by a universal life policy nor does it include cash values provided by a universal life policy; 2. cash values provided by a whole life policy which are subject to standard nonforfeiture law for life insurance; or 3. a premium deposit fund which:

a. contains only premiums paid in advance which accumulate at interest; b. imposes no penalty for withdrawal;

c. does not permit funding beyond future required premiums; d. is not marketed or intended as an investment; and e. does not carry a commission, either paid or calculated. M. “Specific Appointment” means a prearranged appointment agreed upon by both parties and definite as to place and time.

N. “United States Armed Forces” means all components of the Army, Navy, Air Force, Marine Corps, and Coast Guard.

Section 5 Practices Declared False, Misleading, Deceptive or Unfair on a Military Installation A. The following acts or practices when committed on a military installation by an insurer or insurance producer with respect to the in-person, face-to-face solicitation of life insurance are declared to be false, misleading, deceptive or unfair:

1. Knowingly soliciting the purchase of any life insurance product “door to door” or without first establishing a specific appointment for each meeting with the prospective purchaser. 2. Soliciting service members in a group or “mass” audience or in a “captive” audience where attendance is not voluntary.

3. Knowingly making appointments with or soliciting service members during their normally scheduled duty hours.

4. Making appointments with or soliciting service members in barracks, day rooms, unit areas, or transient personnel housing or other areas where the installation commander has prohibited solicitation.

5. Soliciting the sale of life insurance without first obtaining permission from the installation commander or the commander’s designee.

6. Posting unauthorized bulletins, notices or advertisements. 7. Failing to present DD Form 2885, Personal Commercial Solicitation Evaluation, to service members solicited or encouraging service members solicited not to complete or submit a DD Form 2885.

8. Knowingly accepting an application for life insurance or issuing a policy of life insurance on the life of an enlisted member of the United States Armed Forces without first obtaining for the insurer’s files a completed copy of any required form which confirms that the applicant has received counseling or fulfilled any other similar requirement for the sale of life insurance established by regulations, directives or rules of the DoD or any branch of the Armed Forces.

B. The following acts or practices when committed on a military installation by an insurer or insurance producer constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:

1. Using DoD personnel, directly or indirectly, as a representative or agent in any official or business capacity with or without compensation with respect to the solicitation or sale of life insurance to service members.

2. Using an insurance producer to participate in any United States Armed Forces sponsored education or orientation program.

Section 6 Practices Declared False, Misleading, Deceptive or Unfair Regardless of Location A. The following acts or practices by an insurer or insurance producer constitute corrupt practices, improper influences or inducements and are declared to be false, misleading, deceptive or unfair:

1. Submitting, processing or assisting in the submission or processing of any allotment form or similar device used by the United States Armed Forces to direct a service member’s pay to a third party for the purchase of life insurance. The foregoing includes, but is not limited to, using or assisting in using a service member’s “MyPay” account or other similar internet or electronic medium for such purposes. This subsection does not prohibit assisting a service member by providing insurer or premium information necessary to complete any allotment form.

2. Knowingly receiving funds from a service member for the payment of premium from a depository institution with which the service member has no formal banking relationship. For purposes of this section, a formal banking relationship is established when the depository institution:

a. provides the service member a deposit agreement and periodic statements and makes the disclosures required by the Truth in Savings Act, 12 U.S.C. §4301 et. seq. and the regulations promulgated there under; and b. permits the service member to make deposits and withdrawals unrelated to the payment or processing of insurance premiums.

3. Employing any device or method or entering into any agreement whereby funds received from a service member by allotment for the payment of insurance premiums are identified on the service member’s Leave and Earnings Statement or equivalent or successor form as “Savings” or “Checking” and where the service member has no formal banking relationship as defined in subsection 6 A 2.

4. Entering into any agreement with a depository institution for the purpose of receiving funds from a service member whereby the depository institution, with or without compensation, agrees to accept direct deposits from a service member with whom it has no formal banking relationship.

5. Using DoD personnel, directly or indirectly, as a representative or agent in any official or unofficial business capacity with or without compensation with respect to the solicitation or sale of life insurance to service members who are junior in rank or grade, or to the family members of such personnel.

6. Offering or giving anything of value, directly or indirectly, to DoD personnel to procure their assistance in encouraging, assisting or facilitating the solicitation or sale of life insurance to another service member.

7. Knowingly offering or giving anything of value to a service member with a pay grade of E-4 or below for his or her attendance to any event where an application for life insurance is solicited.

8. Advising a service member with a pay grade of E-4 or below to change his or her income tax withholding or State of legal residence for the sole purpose of increasing disposable income to purchase life insurance.

B. The following acts or practices by an insurer or insurance producer lead to confusion regarding source, sponsorship, approval or affiliation and are declared to be false, misleading, deceptive or unfair:

1. Making any representation, or using any device, title, descriptive name or identifier that has the tendency or capacity to confuse or mislead a service member into believing that the insurer, insurance producer or product offered is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, the United States Armed Forces, or any state or federal agency or government entity. Examples of prohibited insurance producer titles include, but are not limited to, “Battalion Insurance Counselor,” “Unit Insurance Advisor,” “Servicemen’s Group Life Insurance Conversion Consultant” or “Veteran’s Benefits Counselor.”

Nothing herein shall be construed to prohibit a person from using a professional designation awarded after the successful completion of a course of instruction in the business of insurance by an accredited institution of higher learning. Such designations include, but are not limited to, Chartered Life Underwriter (CLU), Chartered Financial Consultant (ChFC), Certified Financial Planner (CFP), Master of Science In Financial Services (MSFS), or Masters of Science Financial Planning (MS). 2. Soliciting the purchase of any life insurance product through the use of or in conjunction with any third party organization that promotes the welfare of or assists members of the United States Armed Forces in a manner that has the tendency or capacity to confuse or mislead a service member into believing that either the insurer, insurance producer or insurance product is affiliated, connected or associated with, endorsed, sponsored, sanctioned or recommended by the U.S. Government, or the United States Armed Forces.

C. The following acts or practices by an insurer or insurance producer lead to confusion regarding premiums, costs or investment returns and are declared to be false, misleading, deceptive or unfair:

1. Using or describing the credited interest rate on a life insurance policy in a manner that implies that the credited interest rate is a net return on premium paid. 2. Excluding individually issued annuities, misrepresenting the mortality costs of a life insurance product, including stating or implying that the product “costs nothing” or is “free.” D. The following acts or practices by an insurer or insurance producer regarding SGLI or VGLI are declared to be false, misleading, deceptive or unfair:

1. Making any representation regarding the availability, suitability, amount, cost, exclusions or limitations to coverage provided to a service member or dependents by SGLI or VGLI, which is false, misleading or deceptive.

2. Making any representation regarding conversion requirements, including the costs of coverage, or exclusions or limitations to coverage of SGLI or VGLI to private insurers which is false, misleading or deceptive.

3. Suggesting, recommending or encouraging a service member to cancel or terminate his or her SGLI policy or issuing a life insurance policy which replaces an existing SGLI policy unless the replacement shall take effect upon or after the service member’s separation from the United States Armed Forces.

E. The following acts or practices by an insurer and/or insurance producer regarding disclosures are declared to be false, misleading, deceptive or unfair:

1. Deploying, using or contracting for any lead generating materials designed exclusively for use with service members that do not clearly and conspicuously disclose that the recipient will be contacted by an insurance producer, if that is the case, for the purpose of soliciting the purchase of life insurance.

2. Failing to disclose that a solicitation for the sale of life insurance will be made when establishing a specific appointment for an in-person, face-to-face meeting with a prospective purchaser.

3. Excluding individually issued annuities, failing to clearly and conspicuously disclose the fact that the product being sold is life insurance.

4. Failing to make, at the time of sale or offer to an individual known to be a service member, the written disclosures required by Section 10 of the “Military Personnel Financial Services Protection Act,” Pub. L. No. 109-290, page 16.

5. Excluding individually issued annuities, when the sale is conducted in-person, face-to-face with an individual known to be a service member, failing to provide the applicant at the time of the application is taken:

a. an explanation of any free look period with instructions on how to cancel if a policy is issued; and b. either a copy of the application or a written disclosure. The copy of the application or the written disclosure shall clearly and concisely set out the type of life insurance, the death benefit applied for and its expected first year cost. A basic illustration that meets the requirements of Colorado Regulation 4-1-8 shall be deemed sufficient to meet this requirement for a written disclosure. F. The following acts or practices by an insurer or insurance producer with respect to the sale of certain life insurance products are declared to be false, misleading, deceptive or unfair: 1. Excluding individually issued annuities, recommending the purchase of any life insurance product which includes a side fund to a service member in pay grades E-4 and below unless the insurer has reasonable grounds for believing that the life insurance death benefit, standing alone, is suitable. Sale of a life insurance product which includes a side fund to a service member in pay grades E-1 through E-4 or their equivalent, who is currently enrolled in SGLI, is presumed unsuitable.

2. Offering for sale or selling a life insurance product which includes a side fund to a service member in pay grades E-4 and below who is currently enrolled in SGLI, is presumed unsuitable, unless, after the completion of a needs assessment, the insurer demonstrates that the applicant’s SGLI death benefit, together with any other military survivor benefits, savings and investments, survivor income, and other life insurance are insufficient to meet the applicant’s insurable needs for life insurance. a. “Insurable needs” are the risks associated with premature death taking into consideration the financial obligations and immediate and future cash needs of the applicant’s estate and/or survivors or dependents.

b. “Other military survivor’s benefits” include, but are not limited to the Death Gratuity, Funeral Reimbursement, Transition Assistance, Survivor and Dependents’ Educational Assistance, Dependency and Indemnity Compensation, TRICARE Healthcare benefits, Survivor’s Housing Benefits and Allowances, Federal Income Tax Forgiveness and Social Security Survivors Benefits. 3. Excluding individually issued annuities, offering for sale or selling any life insurance contract which includes a side fund:

a. unless interest credited accrues from the date of deposit to the date of withdrawal and permits withdrawals without limit or penalty;

b. unless the applicant has been provided with a schedule of effective rates of return based upon cash flows of the combined product. For this disclosure, the effective rate of return will consider all premiums and cash contributions made by the policyholder and all cash accumulations and cash surrender values available to the policyholder in addition to life insurance coverage. This schedule will be provided at least each policy year from one (1) to ten (10) and for every fifth policy year thereafter ending at age 100, policy maturity or final expiration; and c. which by default diverts or transfers funds accumulated in the side fund to pay, reduce or offset any premiums due.

4. Excluding individually issued annuities, offering for sale or selling any life insurance contract which after considering all policy benefits, including but not limited to endowment, return of premium or persistency, does not comply with a standard nonforfeiture law for life insurance.

5. Selling any life insurance product to an individual known to be a service member that excludes coverage if the insured’s death is related to war, declared or undeclared, or any act related to military service except for an accidental death coverage, e.g., double indemnity, which may be excluded.

Section 7 Severability If any provision of this regulation or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of such provision shall not be affected thereby.

Section 8 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. Section 9 Effective Date This regulation shall become effective on January 1, 2008. Section 10 History Emergency Regulation 07-E-1 effective August 3, 2007. Eff. 01/01/2008 New Regulation effective January 1, 2008. Eff. 01/01/2008 Regulation 4-1-15 PRENEED LIFE INSURANCE MINIMUM MORTALITY STANDARDS FOR DETERMINING RESERVE LIABILITIES AND NONFORFEITURE VALUES [Eff. 02/01/2009] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Minimum Valuation Mortality Standards Section 6 Transition Rules Section 7 Severability Section 8 Incorporated Materials Section 9 Enforcement Section 10 Effective Date Section 11 History Section 1 Authority This regulation is promulgated and adopted by the Commissioner of Insurance under the authority of § §10-1-109, and 10-7-313.7, C.R.S.

Section 2 Scope and Purpose The purpose of this regulation is to establish, for preneed insurance products, minimum mortality standards for reserves and nonforfeiture values, and to require the use of the Commissioners’ 1980 Standard Ordinary (CSO) Mortality Table for use in determining the minimum standard of valuation of reserves and the minimum standard nonforfeiture values for preneed insurance products. It is not the purpose of this regulation to change the minimum interest rate standards or the methods used in determining the minimum standards for reserves and nonforfeiture values for preneed insurance products.

Section 3 Applicability This regulation shall apply to all preneed insurance contracts and to similar policies and certificates issued on or after January 1, 2009.

Section 4 Definitions A. “2001 CSO Mortality Table” means that mortality table, consisting of separate rates of mortality for male and female lives, developed by the American Academy of Actuaries CSO Task Force from the Valuation Basic Mortality Table developed by the Society of Actuaries Individual Life Insurance Valuation Mortality Task Force, and adopted by the National Association of Insurance Commissioners (NAIC) in December 2002. The 2001 CSO Mortality Table is included in the Proceedings of the NAIC (2nd Quarter 2002). This table may also be found in Appendix A of the Final Report of the American Academy of Actuaries’ Commissioners Standard Ordinary Task Force, dated June 2002. Unless the context indicates otherwise, the “2001 CSO Mortality Table” includes both the ultimate form of that table and the select and ultimate form of that table and includes both the smoker and nonsmoker mortality tables and the composite mortality tables. It also includes both the age-nearest-birthday and age-last-birthday bases of the mortality tables. B. “Preneed insurance,” for purposes of this regulation, is any life insurance policy or certificate that is issued in combination with, in support of, with an assignment to, as a guarantee or consideration for a prearrangement agreement or preneed contract for goods and services to be provided at the time of and immediately following the death of the insured. Goods and services may include, but are not limited to embalming, cremation, body preparation, viewing or visitation, coffin or urn, memorial stone, and transportation of the deceased. The status of the policy or contract as preneed insurance is determined at the time of issue in accordance with the policy form filing. C. “Ultimate 1980 CSO” means the Commissioners’ 1980 Standard Ordinary Mortality Table (1980 CSO), without ten-year (10-year) selection factors, incorporated into the 1980 amendments to the NAIC Standard Valuation Law. Unless the context indicates otherwise, the “Ultimate 1980 CSO” includes variations of the 1980 CSO without ten-year (10-year) selection factors, approved by the NAIC, such as the smoker and nonsmoker versions and the composite version of the mortality tables.

Section 5 Minimum Valuation Mortality Standards For preneed insurance and similar policies and contracts, the minimum standard for mortality in the determination of reserve liabilities and nonforfeiture values shall be the Ultimate 1980 CSO. Section 6 Transition Rules A. For preneed insurance policies issued on or after the effective date of this regulation and before January 1, 2012, the 2001 CSO Mortality Table may be used as the minimum standard for reserves and minimum standard for nonforfeiture benefits. B. If an insurer elects to use the 2001 CSO Mortality Table as the minimum standard for any policy issued on or after the effective date of this regulation and before January 1, 2012, the insurer shall meet the following requirements:

1. The insurer shall annually provide a certification signed by the appointed actuary stating that the reserve methodology employed by the company in determining reserves for the preneed insurance policies issued on or after the effective date of this regulation and using the 2001 CSO Mortality Table as the minimum standard, develops adequate reserves. The certification shall be provided with the annual statutory financial statement filed with the Commissioner along with the Statement of Actuarial Opinion. For the purposes of this certification, the preneed insurance policies using the 2001 CSO Mortality Table as the minimum standard cannot be aggregated with any other policies; 2. The certification required in Paragraph 1 of this subsection shall be supported by information regarding the adequacy of reserves for preneed insurance policies issued on or after the effective date of this regulation and using the 2001 CSO Mortality Table as the minimum standard for reserves. The supporting information shall be included in an actuarial report or in the actuarial memorandum which documents the company’s asset adequacy analysis in support of the Statement of Actuarial Opinion; 3. The actuarial report in Paragraph 2 of this subsection or the actuarial memorandum shall include a complete list of all the preneed insurance policy forms that use the 2001 CSO Mortality Table as the minimum standard.

C. Preneed insurance policies issued on or after January 1, 2012 shall use the Ultimate 1980 CSO as the minimum standard for mortality in the determination of reserve liabilities and nonforfeiture values. Section 7 Severability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation shall not be affected thereby. Section 8 Incorporated Materials The 2001 CSO Mortality Table and the Ultimate 1980 CSO adopted by the NAIC shall mean the 2001 CSO Mortality Table and the Ultimate 1980 CSO as adopted on the effective date of this regulation and does not include later amendments to or editions of the 2001 CSO Mortality Table or the Ultimate 1980 CSO. A copy of the 2001 CSO Mortality Table and the Ultimate 1980 CSO may be examined at any state publications depository library. For additional information regarding how the 2001 CSO Mortality Table and the Ultimate 1980 CSO may be obtained or examined contact Craig Chupp, Chief Actuary, Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver, Colorado, 80202. Section 9 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of certificates of authority. Among others, the penalties provided for in § §10-3-109(3) and 10- 3-1108, C.R.S. may be applied.

Section 10 Effective Date This regulation is effective February 1, 2009.

Section 11 History Emergency regulation 08-E-9 was effective January 1, 2009. New regulation is effective February 1, 2009.

Repromulgated Regulation 4-2-1 - Replacement of Accident and Sickness Insurance Section 1. Authority Section 2. Purpose Section 3. Scope Section 4. Definitions Section 5. Rules Section 6. Enforcement Section 7. Severability Section 8. Effective Date Section 9. History Appendix A. Notice of Replacement Section 1. Authority This amended regulation is promulgated under the authority of § § 10-1-109 and 10-3-1110, Colorado Revised Statutes (C.R.S.).

Section 1 Purpose The purpose of this regulation is to safeguard the interests of persons covered by individual accident and sickness insurance policies or plans who consider replacement of their coverage by making available to them information regarding replacement and thereby reducing the opportunity for misrepresentation and other unfair practices and methods of competition in the business of insurance. Section 3. Applicability This regulation shall apply to individual accident and sickness insurance (except Medicare supplement insurance, conversion to an individual or family policy from a group, blanket 01 group type policy, or any other insurance that is covered by a separate state statute). Section 4. Definitions A. “Accident and sickness insurance” means a policy, plan, contract, agreement, statement of coverage, rider or endorsement that provides accident or sickness benefits or medical, surgical or hospital benefits, whether on an indemnity, reimbursement, service or prepaid basis, except when issued hi connection with another kind of insurance other than life and except disability, waiver of premium and double indemnity benefits included in life insurance and annuity contracts. An accident and sickness insurance policy does not include a Medicare supplement insurance policy, or any other type of accident and sickness insurance with advertising guidelines covered by a separate statute.

B “Direct response” means a solicitation through a sponsoring or endorsing entity or individually solely through mail, telephone, the Internet or other mass communication media. Section 5. Rules A. Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has accident and sickness insurance in force or whether accident and sickness insurance is intended to replace or be in addition to any other accident and sickness insurance presently in force. A supplementary application or other form to be signed by the applicant and producer containing such questions and statements may be used. [Statements] (1) You normally do not require more than one policy.

(2) If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need multiple coverages.

(3) You may be eligible for benefits under Medicaid or Medicare and may not need an accident and sickness policy. If you are eligible for Medicare, you may want to purchase a Medicare Supplemental policy.

(4) If you are eligible for Medicare due to age or disability, counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the state Medicaid program. [Questions] To the best of your knowledge:

(1) Do you have another insurance policy or contract in force? (a) If so, with which company? (b) If so, do you intend to replace your current accident and sickness insurance with this policy (contract)? (2) Do you have any other accident and sickness insurance that provides benefit similar to this accident and sickness policy? (a) If so, with which company? (b) What kind of policy? (3) Are you covered for medical assistance through the state Medicaid program: (a) As a Specified Low Income Medicare Beneficiary (SLMB)? (b) As a Qualified Medicare Beneficiary (QMB)? (c) For other Medicaid medical benefit? B. Producers shall list any other accident and sickness insurance they have sold to the applicant (1) List policies sold which are still in force.

(2) List policies sold in the past five (5) years which are no longer in force. C. In the case of a direct response insurer, a copy of the application or supplemental form, signed by the applicant, and acknowledged by the insurer, shall be returned to the applicant by the insurer upon delivery of the policy.

D. Upon determining that a sale will involve replacement of accident and sickness insurance, any issuer, other than a direct response issuer, or its producer, shall furnish the applicant, prior to issuance or delivery of the accident and sickness insurance policy or contract, a notice regarding replacement of accident and sickness insurance. One (1) copy of such notice signed by the applicant and producer, except where the coverage is old without a producer, shall be provided to the applicant and an additional signed copy shall be retained by the issuer. A direct response issuer shall deliver to the applicant, at the time of issuance of the policy, The Notice to Applicant Regarding Replacement of Accident and Sickness Insurance, located in Appendix A of this regulation. E. The Notice to Applicant Regarding Replacement of Accident and Sickness Insurance (Appendix A) required by Subsection D above for an issuer, shall be provided in the format prescribed and adopted by the Commissioner of Insurance.

F. Paragraphs 1 and 2, contained in such Notice to the Applicant Regarding Replacement of Accident and Sickness Insurance, (applicable to preexisting conditions), in Appendix A, may be deleted by the issuer if the replacement does not involve the application of a new preexisting condition limitation.

G. Failure to comply with the requirements of this Section 5 constitutes an unfair method of competition and an unfair or deceptive act or practice in the business of insurance which is prohibited under § 10-3-1104, C.R.S.

Section 6. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of all applicable sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines and suspension or revocation of license. Section 7. Severability If any provisions of this regulation or the application thereof to any person or circumstances are for any reason held to be invalid, the remainder of the regulation shall not be affected in any way. Section 8. Effective Date This regulation is effective February 1, 2001.

Section 9. History Originally issued as Regulation 74-2, effective March 15, 1974. Amended December 22,1975, effective January 1, 1976.

Amended effective January 14, 1977.

Amended effective January 14, 1977.

Renumbered on June 1, 1992.

Repealed and Repromulgated in full, effective February 1, 2001. Appendix A Notice to Applicant Regarding Replacement of Accident and Sickness Insurance [Insurance company's name and address)

According to (your application) (the information furnished by you), you intend to lapse or otherwise terminate your present policy and replace it with a policy to be issued by [Company Name] Insurance Company. Your new policy will provide [Number days of free look period, if any] days within which you may decide without cost whether you desire to keep the policy. You should review this new coverage carefully. Compare it with all accident and sickness coverage you now have. If, after due consideration, you find the purchase of this accident and sickness coverage is a wise decision you should evaluate the need for other accident and sickness coverage you have that may duplicate this policy.

Statement to Applicant by Issuer or Producer:

I have reviewed your current accident and sickness insurance coverage. To the best of my knowledge, this accident and sickness policy will net duplicate your existing coverage because you intend to terminate your existing coverage. The replacement policy is being purchased for the following reason(s) (check one):

______ Additional benefits ______ No change in benefits, but lower premiums ______ Fewer benefits and lower premiums ______ Other, (please specify)

1. Health conditions which you may presently have (preexisting conditions) may not be immediately or fully covered under the new policy. This could result in denial or delay of claim for benefits under the new policy, whereas a similar claim may have been payable under your present policy. 2. State law provides that your replacement policy or contract may not contain new preexisting conditions, waiting periods, elimination periods or probationary periods. The issuer will waive any time periods applicable to preexisting conditions, waiting periods, elimination periods, or probationary periods in the new policy (or coverage) for similar benefits to the extent such time was spent (depleted) under the original policy.

3. It you wish to terminate your present policy and replace it with new coverage, be certain to truthfully and completely answer all questions on the application concerning your medical and health history. Failure to include all material medical information on an application may provide a basis for the company to deny any future claims and to refund your premium as though your policy has never been in force. After the application has been completed and before you sign it, review it carefully to be certain that all information has been properly recorded. [If the policy or contract is guaranteed issued this paragraph need not appear].

Do not cancel your present policy until you have received your new policy and are sure mat you want to keep it _______________________________________(Signature of Producer or Other Representative)*[Typed Name and Address of Issuer or Producer] _____________________________________(Applicants Signature) _____________________________________(Date)

*Signature not required for direct response sales.

Repealed and Repromulgated Regulation 4-2-2 (In Full) Hospital Indemnity and Disability Income Policies Section 1. Authority Section 2. Purpose Section 3. Scope Section 4. Definitions Section 5. Rules Section 6. Enforcement Section 7. Severability Section 8. Effective Date Section 9. History Section 1. Authority This regulation is issued based upon the authority granted the commissioner under § 10-1-109 and 10- 16- 109, C.R.S.

Section 2. Purpose This regulation prohibits insurers from refusing to pay benefits under certain contracts because of hospitalization m government hospitals.

Section 3. Scope This regulation applies to all hospital, indemnity and disability income policies , contracts, riders, endorsements, etc, which provides benefits because of hospitalization or disability originating out of hospitalization hereinafter referred to as hospital indemnity and disability income policies. It does not apply to hospital expense policies.

Section 4. Definitions For the purposes of this regulation:

A. “Disability income policy” means a policy that provides periodic payments to replace income lost when the insured is unable to work as the result of a sickness or injury. B. “Government hospital” means any hospital under governmental control whether federal, state, county or city. It includes Veterans Administration hospitals. C. “Hospital indemnity policy” means a policy that provides a stated daily, weekly or monthly payment while the insured is hospitalized, regardless of expenses incurred and regardless of whether or not other insurance is in force. The insured can use the daily, weekly or monthly benefit as (s)he chooses, for hospital or other expenses.

Section 5. Rules All hospital indemnity and disability income policies delivered or issued for delivery in the State of Colorado winch provide benefits predicated on hospitalization will not in any way deny such benefits on the basis that such hospitalization was in a government hospital. Section 6. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. Section 7. Severability If any provisions of this regulation or the application thereof to any person or circumstances are for any reason held to be invalid, the remainder of the regulation shall not be affected in any way. Section 8. Effective Date This regulation as amended shall become effective January 1, 2001. Section 9. History Originally issued as Regulation 74-4, effective July 1, 1974. Renumbered as Regulation 4-2-2, effective June 1, 1991 Repealed and Repromulgated in full, effective January 1, 2001. Amended Regulation 4-2-3 Advertisements Of Accident And Sickness Insurance Section 1. Authority Section 2. Purpose Section 3. Scope Section 4. Definitions Section 5. Method of Disclosure of Required Information Section 6. Form and Content of Advertisements Section 7. Advertisement of Benefits Payable, Losses Covered or Premiums Payable Section 8. Necessity for Disclosing Policy Provisions Relating to Renewability, Cancellability and Termination Section 9. Standards for Marketing Section 10. Testimonials or Endorsements by Third Parties Section 11. Use of Statistics Section 12. Identification of Plan or Number of Policies Section 13. Disparaging Comparisons and Statements Section 14. Jurisdictional Licensing and Status of Insurer Section 15. Identity of Insurer Section 16. Group or Quasi-Group Implications Section 17. Introductory, Initial or Special Offers Section 18. Statements about an Insurer Section 19. Enforcement Procedures Section 20. Enforcement Section 21. Severability Section 22. Effective Date Section 23. History Section 1. Authority This regulation is promulgated under the authority of § § 10-1-109 and 10-3-1110, Colorado Revised Statutes (C.R.S.).

Section 2. Purpose The purpose of this regulation is to establish minimum criteria to assure proper and accurate description and to protect prospective purchasers with respect to the advertisement of accident and sickness insurance in the same manner as the regulation governing advertisements of Medicare supplement insurance. This regulation assures the clear and truthful disclosure of the benefits, limitations and exclusions of policies sold as accident and sickness insurance by the establishment of standards of conduct in the advertising of accident and sickness insurance in a manner that prevents unfair, deceptive and misleading advertising and is conducive to accurate presentation and description to the insurance- buying public through the advertising media and material used by insurance producers and companies. Section 3. Applicability A. This regulation shall apply to individual and group accident and sickness insurance (except Medicare supplement insurance or any other insurance that is covered by a separate state statute) “advertisement,” as that term is defined in Section 4, subsections B, G, H and I unless otherwise specified in this regulation, which the insurer knows or reasonably should know is intended for presentation, distribution or dissemination in this state when the presentation, distribution or dissemination is made either directly or indirectly by or on behalf of an insurer, producer or solicitor, as those terms are defined in the Insurance Code of this state. B. Every insurer shall establish and at all times maintain a system of control over the content, form and method of dissemination of all advertisements of its policies. All of the insurer's advertisements, regardless of by whom written, created, designed or presented, shall be the responsibility of the insurer whose policies are advertised.

C. Advertising materials that are reproduced in quantity shall be identified by form numbers or other identifying means. The identification shall be sufficient to distinguish an advertisement from any other advertising materials, policies, applications or other materials used by the insurer. Section 4. Definitions A.

(1) “Accident and sickness insurance policy” means a policy, plan, certificate, contract, agreement, statement of coverage, rider or endorsement that provides accident or sickness benefits or medical, surgical or hospital benefits, whether on an indemnity, reimbursement, service or prepaid basis, except when issued in connection with another kind of insurance other than life and except disability, waiver of premium and double indemnity benefits included in life insurance and annuity contracts. An accident and sickness insurance policy does not include a Medicare supplement insurance policy, or any other type of accident and sickness insurance with advertising guidelines covered by a separate statute and/or regulation.

(2) The language “except disability, waiver of premium and double indemnity benefits included in life insurance and annuity contracts” means it does not include disability, waiver of premium and double indemnity benefits included in life insurance, endowment or annuity contracts or contracts supplemental to the above contracts that contain only provisions that:

(a) Provide additional benefits in case of death or dismemberment or loss of sight by accident; or (b) Operate to safeguard the contracts against lapse or to give a special surrender value, special benefit or an annuity in the event that the insured or annuitant shall become totally and permanently disabled as defined by the contract or supplemental contract.

B.

(1) “Advertisement” means:

(a) Printed and published material, audio visual material, and descriptive literature of an insurer used in direct mail, newspapers, magazines, radio scripts, TV scripts, web sites and other Internet displays or communications, oilier forms of electronic communications, billboards and similar displays; (b) Descriptive literature and sales aids of all kinds issued by an insurer, producer, or solicitor for presentation to members of the insurance-buying public, such as circulars, leaflets, booklets, depictions, illustrations, form letters and lead- generating devices of all kinds; and (c) Prepared sales talks, presentations and material for use by producers and solicitors whether prepared by the insurer, producer or solicitor. (2) The definition of “advertisement” includes advertising material included with a policy when the policy is delivered and material used in the solicitation of renewals and reinstatements.

(3) The definition of “advertisement” extends to the use of all media for communications to the general public, to the use of all media for communications to specific members of the general public, and to the use of all media for communications by insurers, producers and solicitors.

(4) The definition of advertisement does not include:

(a) Material used solely for the training and education of an insurer's employees or producers;

(b) Material used in-house by insurers;

(c) Communications within an insurer's own organization not intended for dissemination to the public;

(d) Individual communications of a personal nature with current policyholders other than material urging the policyholders to increase or expand coverages; (e) Correspondence between a prospective group or blanket policyholder and an insurer in the course of negotiating a group or blanket contract; (f) Court-approved material ordered by a court to be disseminated to policyholders; or (g) A general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list that a contract or program has been written or arranged; provided that the announcement clearly indicates that it is preliminary to the issuance of a booklet and that the announcement does not describe the specific benefits under the contract or program nor describe advantages as to the purchase of the contract or program. This does not prohibit a general endorsement of the program by the sponsor.

C. “Certificate” means a statement of the coverage and provisions of a group accident and sickness insurance policy, which has been delivered or issued for delivery in this state and includes riders, endorsements and enrollment forms, if attached.

D. “Exception” means any provision in a policy whereby coverage for a specified hazard is entirely eliminated; it is a statement of a risk not assumed under the policy. E. “Institutional advertisement” means an advertisement having as its sole purpose the promotion of the reader's, viewer's or listener's interest in the concept of accident and sickness insurance, or the promotion of the insurer as a seller of accident and sickness insurance. F. “Invitation to contract” means an advertisement that is neither an “invitation to inquire” nor an “institutional advertisement.”

G. “Invitation to inquire” means:

(1) An advertisement having as its objective the creation of a desire to inquire further about accident and sickness insurance and that is limited to a brief description of the loss for which benefits are payable, but may contain:

(a) The dollar amount of benefits payable; and (b) The period of time during which benefits are payable. (2) An “invitation to inquire” may not refer to cost.

(3) An “invitation to inquire” shall contain a provision in the following or substantially similar form: “This policy has [exclusions] [limitations] [reduction of benefits] [terms under which the policy may be continued in force or discontinued]. For costs and complete details of the coverage, call [or write] your insurance producer or the company [whichever is applicable].”

H. “Lead-generating device” means any communication directed to the public that, regardless of form, content or stated purpose, is intended to result in the compilation or qualification of a list containing names and other personal information to be used to solicit residents of this state for the purchase of accident and sickness insurance.

I. “Limitation” means a provision that restricts coverage under the policy other than an exception or a reduction.

J. “Limited benefit health coverage” means a health policy, contract, or certificate offered or marketed as supplemental health insurance that pays specified amounts according to a schedule of benefits to defray the costs of care, services, deductibles, copayments, or coinsurance amounts not covered by a health benefit plan. “Limited benefit health insurance” does not include short-term hospital and medical expense policies, contracts or certificates, or catastrophic health policies, contracts, or certificates. Such nonsupplemental plans are included under the term “health benefit plan” as defined in Section 10-16-102(21)(b), C.R.S.

This subsection does not apply to policies designed to provide coverage for long-term care or to Medicare supplement insurance.

K. “Prominently” or “conspicuously” means that the information to be disclosed “prominently” or “conspicuously” will be presented in a manner that is noticeably set .apart from other information or images in the advertisement.

L. “Reduction” means a provision that reduces the amount of the benefit; a risk of loss is assumed but payment upon the occurrence of the loss is limited to some amount or period less than would be otherwise payable, had the reduction not been used.

Section 5. Method of Disclosure of Required Information All information, exceptions, limitations, reductions and other restrictions required to be disclosed by this regulation shall be set out conspicuously and in close conjunction to the statements to which theinformation relates or under appropriate captions of such prominence that it shall not be minimized, rendered obscure or presented in an ambiguous fashion or intermingled with the context of the advertisements so as to be confusing or misleading. This regulation permits, but is not limited to, the use of either of the following methods of disclosure:

A. Disclosure in the description of the related benefits or in a paragraph set out in close conjunction with the description of policy benefits; or B. Disclosure not in conjunction with the provisions describing policy benefits but under appropriate captions of such prominence that the information shall not be minimized, rendered obscure or otherwise made to appear unimportant The phrase “under appropriate captions” means that the title must be accurately descriptive of the captioned material. Appropriate captions include the following: “Exceptions,” “Exclusions,” “Conditions Not Covered,” and “Exceptions and Reductions.” The use of captions such as the following are prohibited because they do not provide adequate notice of the significance of the material: “Extent of Coverage,” “Only these Exclusions,” or “Minimum Limitations.”

Section 6. Form and Content of Advertisements A. The format and content of an advertisement of an accident and sickness insurance policy shall be sufficiently complete and clear to avoid deception or the capacity or tendency to mislead or deceive. Format means the arrangement of the text and the captions. B. Distinctly different advertisements are required for publication in different media, such as newspapers or magazines of general circulation as compared to scholarly, technical or business journals and newspapers. Where an advertisement consists of more than one piece of material, each piece of material must, independent of all other pieces of material, conform to the disclosure requirements of this regulation.

C. Whether an advertisement has a capacity or tendency to mislead or deceive shall be determined by the commissioner from the overall impression that the advertisement may be reasonably expected to create within the segment of the public to which it is directed. D. Advertisements shall be truthful and not misleading in fact or in implication. Words or phrases, the meaning of which is clear only by implication or by familiarity with insurance terminology, shall not be used.

E. An insurer shall clearly identify its accident and sickness insurance policy as an insurance policy. A policy trade name shall be followed by the words “insurance policy” or similar words clearly identifying the fact that an insurance policy or health benefits product (in the case of health maintenance organizations, prepaid health plans and other direct service organizations) is being offered.

F. An insurer, producer, solicitor or other person shall not solicit a resident of this state for the purchase of accident and sickness insurance in connection with or as the result of the use of advertisement by the person or any other persons, where the advertisement: (1) Contains any misleading representations or misrepresentations, or is otherwise untrue, deceptive or misleading with regard to the information imparted, the status, character or representative capacity of the person or the true purpose of the advertisement; or (2) Otherwise violates the provisions of this regulation. G. An insurer, producer, solicitor or other person shall not solicit residents of this state for the purchase of accident and sickness insurance through the use of a true or fictitious name that is deceptive or misleading with regard to the status, character or proprietary or represertative capacity of the person or the true purpose of the advertisement.

Section 7. Advertisements of Benefits Payable, Losses Covered or Premiums Payable A. Covered Benefits.

(1) The use of deceptive words, phrases or illustrations in advertisements of accident and sickness insurance is prohibited.

(2) An advertisement that fails to state clearly the type of insurance coverage being offered is prohibited.

(3) An advertisement shall not omit information or use words, phrases, statements, references or illustrations if the omission of information or use of words, phrases, statements, references or illustrations has the capacity, tendency or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered or premium payable. The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale or an offer is made to refund the premium if the purchaser is not satisfied, does not remedy misleading statements.

(4) An advertisement shall not contain or use words or phrases such as “all,” “full,” “complete,” “comprehensive,” “unlimited,” “up to,” “as high as,” “this policy will help fill some of the gaps that Medicare and your present insurance leave out,” “the policy will help to replace your income” (when used to express loss of time benefits) or similar words and phrases, in a manner that exaggerates a benefit beyond the terms of the policy. (5) An advertisement of a hospital or other similar facility confinement benefit that makes reference to the benefit being paid directly to the policyholder is prohibited unless, in making the reference, the advertisement includes a statement that the benefits may be paid directly to the hospital or other health care facility if an assignment of benefits is made by the policyholder. An advertisement of medical and surgical expense benefits shall comply with tin's regulation in regard to the disclosure of assignments of benefits to providers of services. Phrases such as “you collect,” “you get paid,” “pays you,” or other words or phrases of similar import may be used so long as the advertisement indicates that it is payable to the insured or someone designated by the insured. (6)

(a) An advertisement for basic hospital expense coverage, basic medical- surgical expense coverage, basic hospital/medical-surgical expense coverage, hospital confinement indemnity coverage, accident only coverage, specified disease coverage, specified accident coverage or limited benefit health coverage or for coverage that covers only a certain type of loss is prohibited if: (i) The advertisement refers to a total benefit maximum limit payable under the policy in any headline, lead-in or caption without, also in the same headline, a lead-in or caption specifying the applicable daily limits and other internal limits;

(ii) The advertisement states a total benefit limit without stating the periodic benefit payment, if any, and the length of time the periodic benefit would be payable to reach the total benefit limit; or (iii) The advertisement prominently displays a total benefit limit that would not, as a general rule, be payable under an average claim.

(b) This paragraph 6 does not apply to individual major medical expense coverage, individual basic medical expense coverage, or disability income insurance. (7) Advertisements that emphasize total amounts payable under hospital, medical or surgical accident and sickness insurance coverage or other benefits in a policy, such as benefits for private duty nursing, are prohibited unless the actual amounts payable per day for the indemnity or benefits are stated.

(8) Advertisements that include examples of benefits payable under a policy shall not use examples in a way that implies that the maximum payable benefit payable under the policy will be paid, when less than maximum benefits are paid for an average claim. (9) When a range of benefit levels is set forth in an advertisement, it shall be clear that the insured will receive only the benefit level written or printed in the policy selected and issued. Language that implies that the insured may select the benefit level at the time of filing claims is prohibited.

(10) Language in an advertisement that implies that the amount of benefits payable under a loss- of-time policy may be increased at the time of claim or disability according to the needs of the insured is prohibited.

(11) Advertisements for policies with premiums that are modest because of their limited coverage or limited amount of benefits shall not describe premiums as “low,” “low cost,” “budget” or use qualifying words of similar import. The use of words such as “only” and “just” in conjunction with statements of premium amounts when used to imply a bargain are prohibited.

(12) Advertisements that state or imply that premiums will not be changed in the future are prohibited unless the advertised policies expressly provide that the premiums will not be changed in the future.

(13) An advertisement for a policy that does not require the premium to accompany the application shall not overemphasize that fact and shall clearly indicate under what circumstances coverage will become effective.

(14) An advertisement that exaggerates the effects of statutorily mandated benefits or required policy provisions or that implies that the provisions are unique to the advertised policy is prohibited.

(15) An advertisement that implies that a common type of policy or a comb nation of common benefits is “new,” “unique,” “a bonus,” “a breakthrough,” or is otherwise unusual is prohibited. The addition of a novel method of premium payment to ;m otherwise common plan of insurance does not render it new.

(16) Language in an advertisement that states or implies that each member under a family contract is covered as to the maximum benefits advertised, where that is: not the fact, is prohibited.

(17) An advertisement that contains statements such as “anyone can apply,” or “anyone can join,” other than with respect to a guaranteed issue policy for which administrative procedures exist to assure that the policy is issued within a reasonable period of time after the application is received by the insurer, is prohibited. (18) An advertisement that states or implies immediate coverage of a policy is prohibited unless administrative procedures exist so that the policy is issued within fifteen (15) working days after the insurer receives the completed application. (19) An advertisement that contains statements such as “here is all you do 1o apply,” or “simply” or “merely” to refer to the act of applying for a policy that is not a guaranteed issue policy is prohibited unless it refers to the fact that the application is subject to acceptance or approval by the insurer.

(20) An advertisement of accident and sickness insurance sold by direct response shall not state or imply that because no insurance producer will call and no commissions will be paid to producers that it is a low cost plan, or use other similar words or phrases because the cost of advertising and servicing the policies is a substantial cost in the marketing by direct response.

(21) Applications, request forms for additional information and similar related materials are prohibited if they resemble paper currency, bonds, stock certificates, etc., or use any name, service mark, slogan, symbol or device in a manner that implies that the insurer or the policy advertised is connected with a government agency, such as the Social Security Administration or the Department of Health and Human Services. (22) An advertisement that implies in any manner that the prospective insured may realize a profit from obtaining hospital, medical or surgical insurance coverage is prohibited. (23) An advertisement that uses words such as “extra,” “special” or “added” to describe a benefit in the policy is prohibited. No advertisement of a benefit for which payment is conditioned upon confinement in a hospital or similar facility shall use words or phrases such as “tax-free,” “extra cash,” “extra income,” “extra pay,” or substantially similar words or phrases because these words and phrases have the capacity, tendency or effect of misleading the public into believing that the policy advertised will, in some way, enable them to make a profit from being hospitalized.

(24) An advertisement of a hospital or other similar facility confinement benefit shall not advertise that the amount of the benefit is payable on a monthly or weekly basis when, in fact, the amount of the benefit payable is based upon a daily pro rata basis relating to the number of days of confinement unless the statements of the monthly or weekly benefit amounts are in juxtaposition with equally prominent statements of the benefit payable on a daily basis. The term “juxtaposition” means side by side or immediately above or below. When the policy contains a limit on the number of days of coverage provided, the limit shall appear in the advertisement.

(25) An advertisement of a policy covering only one disease or a list of specified diseases shall not imply coverage beyond the terms of the policy. Synonymous terms shall not be used to refer to any disease so as to imply broader coverage than is the fact. (26) An advertisement that is an invitation to contract for a specified disease policy that provides lesser benefit amounts for a particular subtype of disease, shall clearly disclose the subtype and its benefits. This provision shall not apply to institutional advertisements. (27) An advertisement of a specified disease policy providing expense benefits shall not use the term “actual” when the policy only pays up to a limited amount for expenses. Instead, the term “charges” or substantially similar language should be used that does not create the misleading impression that there is full coverage for expenses. (28) An advertisement that describes any benefits that vary by age shall disclose that fact. (29) An advertisement that uses a phrase such as “no age limit,” if benefits or premiums vary by age or if age is an underwriting factor, shall disclose that fact. (30) A television, radio, internet, mail or newspaper advertisement or lead-generating device that is designed to produce leads either by use of a coupon, a request to write or e- mail or to call the company or a subsequent advertisement prior to contact shall include information disclosing that a producer may contact the applicant.

(31) Advertisements, applications, requests for additional information and similar materials are prohibited if they state or imply that the recipient has been individually selected to be offered insurance or has had his or her eligibility for the insurance individually determined in advance when the advertisement is directed to all persons in a group or to all persons whose names appear on a mailing list.

(32) An advertisement, including invitations to inquire or invitations to contract, shall not employ devices that are designed to create undue fear or anxiety in the minds of those to whom they are directed. Examples of prohibited devices are:

(a) The use of phrases such as “cancer kills somebody every two minutes” and “total number of accidents” without reference to the total population from which the statistics are drawn;

(b) The exaggeration of the importance of diseases rarely or seldom found in the class of persons to whom the policy is offered;

(c) The use of phrases such as “the finest kind of treatment,” implying that the treatment would be unavailable without insurance;

(d) The reproduction of newspaper articles, magazine articles, information from the Internet or other similar published material containing irrelevant facts and figures; (e) The use of images that unduly emphasize automobile accidents, disabled persons or persons confined in beds who are in obvious distress, persons receiving hospital or medical bills or persons being evicted from their homes due to their medical bills;

(f) The use of phrases such as “financial disaster,” “financial distress,” “financial shock,” or another phrase implying that financial ruin is likely without insurance is only permissible in an advertisement for major medical expense coverage, individual basic medical expense coverage or disability income coverage, and only if the phrase does not dominate the advertisement;

(g) The use of phrases or devices that unduly excite fear of dependence upon relatives or charity; and (h) The use of phrases or devices that imply that long sicknesses or hospital stays are common among the elderly.

B. Exceptions, Reductions and Limitations (1) An advertisement shall not contain descriptions of policy limitations, exceptions or reductions, worded in a positive manner to imply that it is a benefit, such as describing a waiting period as a “benefit builder” or stating “even preexisting conditions are covered after two years.” Words and phrases used in an advertisement to describe the policy limitations, exceptions and reductions shall fairly and accurately describe the negative features of the limitations, exceptions and reductions of the policy offered. (2) An advertisement that is an invitation to contract shall disclose those exceptions, reductions and limitations affecting the basic provisions of the policy. (3) When a policy contains a waiting, elimination, probationary or similar time period between the effective date of the policy and the effective date of coverage under the policy or a time period between the date a loss occurs and the date benefits begin to accrue for the loss, an advertisement that is subject to the requirements of the preceding paragraph shall prominently disclose the existence of such periods.

(4) An advertisement shall not use the words “only,” “just,” “merely,” “minimum,” “necessary” or similar words or phrases to describe the applicability of any exceptions, reductions, limitations or exclusions such as: “This policy is subject to the following minimum exceptions and reductions.”

(5) An advertisement that is an invitation to contract that fails to disclose the amount of any deductible or the percentage of any coinsurance factor is prohibited. (6) An advertisement for loss-of-time coverage that is an invitation to contract that sets forth a range of amounts of benefit levels is prohibited unless it also states that eligibility for the benefits is based upon condition of health, income or other economic conditions, or other underwriting standards of the insurer if that is the fact. (7) An advertisement that refers to “hospitalization for injury or sickness” omitting the word “covered” when the policy excludes certain sicknesses or injuries, or that refers to “whenever you are hospitalized,” “when you go to the hospital” or “while you are confined in the hospital” omitting the phrase “for covered injury or sickness,” if the policy excludes certain injuries or sicknesses, is prohibited. Continued reference to “covered injury or sickness” is not necessary where this fact has been prominently disclosed in the advertisement and where the description of sicknesses or injuries not covered is prominently set forth.

(8) An advertisement that fails to disclose that the definition of “hospital” does not include certain facilities that provide institutional care such as a nursing home, convalescent home or extended care facility, when the facilities are excluded under the definition of hospital in the policy, is prohibited.

(9) The term “confining sickness” shall be explained in an advertisement containing the term. The explanation might be as follows: “Benefits are payable for total disability due to confining sickness only so long as the insured is necessarily confined indoors.” Captions such as “Lifetime Sickness Benefits” or “Five-Year Sickness Benefits” are incomplete if the benefits are subject to confinement requirements. When sickness benefits are subject to confinement requirements, captions such as “Lifetime House Confining Sickness Benefits” or “Five-Year House Confining Sickness Benefits” would be permissible. (10) An advertisement that fails to disclose any waiting or elimination periods for specific benefits is prohibited.

(11) An advertisement for a policy providing benefits for specified illnesses only, such as cancer, or for specified accidents only, such as automobile accidents, or other policies providing benefits that are limited in nature, shall clearly and conspicuously in prominent type state the limited nature of the policy. The statement shall be worded in language identical to or substantially similar to the following: “THIS IS A LIMITED POLICY,” “THIS POLICY PROVIDES LIMITED BENEFITS,” or “THIS IS A CANCER ONLY POLICY. Some advertisements disclose exceptions, reductions and limitations as required, but the advertisement is so lengthy as to obscure the disclosure. Where the length of an advertisiement has this effect, special emphasis must be given by changing the format to show the restrictions in a manner that does not minimize, render obscure or otherwise make them appear unimportant.

C. Preexisting Conditions (1) An advertisement that is an invitation to contract shall, in negative terms, disclose the extent to which any loss is not covered if the cause of the loss is traceable to a condition existing prior to the effective date of the policy. The use of the term “preexisting condition” without an appropriate definition or description shall not be used. Negative features must be accurately set forth. Any limitation on benefits including preexisting conditions also must be restated under a caption concerning exclusions or limitations, notwithstanding that the preexisting condition exclusion has been disclosed elsewhere h the advertisement.

(2) When an accident and sickness insurance policy does not cover losses resulting from preexisting conditions, an advertisement of the policy shall not state or imply that the applicant's physical condition or medical history will not affect the issuance of the policy or payment of a claim under the policy. This regulation prohibits the use of the phrase “no medical examination required” and phrases of similar import, but does not prohibit explaining “guaranteed issue.” If an insurer requires a medical examination for a specified policy, the advertisement, if it is an invitation to contract, shall disclose that a medical examination is required.

(3) When an advertisement contains an application form to be completed by the applicant and returned by mail, the application form shall contain a question or statement that reflects the preexisting condition provisions of the policy immediately preceding the blank space for the applicant's signature. For example, the application form shall contain a question or statement substantially as follows:

“Do you understand that this policy will not pay benefits during the first [insert number] [years, months] after the issue date for a disease or physical condition that you now have or have had in the past? “YES”

Or substantially the following statement:

“Iunderstand that the policy applied for will not pay benefits for any loss incurred during the first [insert number] [years, months] after the issue date on account of disease or physical condition that I now have or have had in the past.” Section 8. Necessity for Disclosing Policy Provisions Relating to Renewability, Cancellability and Termination A. An advertisement that is an invitation to contract shall disclose the provisions relating to renewability, cancellability and termination and any modification of benefits, losses covered, or premiums because of age or for other reasons, in a manner that shall not minimize or render obscure the qualifying conditions.

B. Advertisements of cancellable accident and sickness insurance policies shall state that the contract is cancellable or renewable at the option of the company, as the case may be: A policy that is renewable at the option of the insurance company shall use language substantially similar to the following: “This policy is renewable at the option of the company,” or “The company has the right to refuse renewal of this policy,” or “Renewable at the option of the insurer,” or “This policy can be cancelled by the company at any time.”

C. Advertisements of insurance policies that are guaranteed renewable, cancelable or renewable at the option of the company shall disclose that the insurer has the right to increase premium rates if the policy so provides.

D. Qualifying conditions that constitute limitations on the permanent nature of the coverage shall be disclosed in advertisements of insurance policies that are guaranteed renewable, cancelable or renewable at the option of the company. Examples of qualifying conditions are (1) age limits, (2) reservation of a right to increase premiums, and (3) the establishment of aggregate limits. (1) Provisions for reduction of benefits at stated ages shall be set forth. For example, a policy may contain a provision that reduces benefits fifty percent (50%) after age sixty (60) although it is renewable to age sixty-five (65). Such a reduction shall be set forth. Also, a provision for the elimination of certain hazards at any specific ages or after the policy has been in force for a specified time shall be set forth.

(2) An advertisement for a policy that provides for step-rated premium rates based upon the policy year or the insured's attained age shall disclose the rate increases and the times or ages at which the premiums increase.

Section 9. Standards for Marketing A. An insurer, directly or through its producers or solicitors, shall: (1) Establish marketing procedures to assure that any comparison of policies by its producers or solicitors will be fair and accurate;

(2) Establish marketing procedures assuring excessive insurance is not sold or issued, except this requirement does not apply to group major medical expense coverage and disability income coverage; and (3) Establish auditable procedures for verifying compliance with this subsection. B. The following acts and practices are prohibited:

(1) Twisting. Knowingly making any misleading representation or incomplete or fraudulent comparison of insurance policies, or insurers for the purpose of inducing, or tending to induce, a person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert an insurance policy, or to take out a policy of insurance with another insurer; (2) High Pressure Tactics. Employing a method of marketing that has the effect of inducing the purchase of insurance, or tends to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance; and (3) Cold Lead Advertising. Making use directly or indirectly of any method of marketing that fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance producer or insurance company.

Section 10. Testimonials or Endorsements by Third Parties A. Testimonials and/or endorsements used in advertisements shall be genuine, represent the current opinion of the author, be applicable to the policy advertised and be accurately reproduced. The insurer, in using a testimonial or endorsement, makes as its own all of the statements contained in it, and the advertisement, including the statement, is subject to all of the provisions of this regulation. When a testimonial or endorsement is used more than one year after it was originally given, a confirmation must be obtained.

B. A person shall be deemed a “spokesperson” if the person making the testimonial or endorsement: (1) Has a financial interest in the insurer or a related entity as a stockholder, director, officer, employee or otherwise;

(2) Has been formed by the insurer, is owned or controlled by the insurer, its employees, or the person or persons who own or control the insurer;

(3) Has any person in a policy-making position who is affiliated with the insurer .in any of the above described capacities; or (4) Is in any way directly or indirectly compensated for making a testimonial or endorsement. C. Any person or agency acting as a spokesperson, as defined in the preceding paragraph, who performs any of the following acts in an advertisement shall be considered soliciting an insurance product, and such person or agency shall be a licensed insurance producer or agency pursuant to the Colorado Insurance Laws:

(1) Individual who solicits, negotiates, effects, procures, delivers, renews, continues or binds; or (2) A corporation, partnership, association, or other legal entity transacting the business of insurance.

D. The fact of a financial interest or the proprietary or representative capacity of a spokesperson shall be disclosed in an advertisement and shall be accomplished in the introductory portion of the testimonial or endorsement in the same form and with equal prominence. If a spokesperson is directly or indirectly compensated for making a testimonial or endorsement, the fact shall be disclosed in the advertisement by language substantially as follows: “Paid Endorsement.” The requirement of this disclosure may be fulfilled by use of the phrase “Paid Endorsement” or words of similar import in a type style and size at least equal to that used for the spokesperson's name or the body of the testimonial or endorsement, whichever is larger. In the case of television or radio advertising, the required disclosure shall be accomplished in the introductory portion of the advertisement and shall be given prominence.

E. The disclosure requirements of this regulation shall not apply where the sole financial interest or compensation of a spokesperson, for all testimonials or endorsements made cm behalf of the insurer, consists of the payment of union scale wages required by union rules, and if the payment is actually the scale for TV or radio performances.

F. An advertisement shall not state or imply that an insurer or an accident and sickness insurance policy has been approved or endorsed by any individual, group of individuals, society, association or other organizations, unless that is the fact, and unless any proprietary relationship between an organization and the insurer is disclosed. If the entity making the endorsement or testimonial has been formed by the insurer or is owned or controlled by the insurer or the person or persons who own or control the insurer, the fact shall be disclosed in the advertisement If the insurer or an officer of the insurer formed or controls the association, or holds any policy-making position in the association, that fact must be disclosed.

G. When a testimonial refers to benefits received under an accident and sickness insurance policy, the specific claim data, including claim number, date of loss and other pertinent information shall be retained by the insurer for inspection for a period of four (4) years or until the filing of the next regular report of examination of the insurer, whichever is the longer period of time. The use of testimonials that do not correctly reflect the present practices of the insurer or that are not applicable to the policy or benefit being advertised is not permissible. Section 11. Use of Statistics A. An advertisement relating to the dollar amounts of claims paid, the number of persons insured, or similar statistical information relating to an insurer or policy shall not use irrelevant facts, and shall not be used unless it accurately reflects all of the current and relevant facts. The advertisement shall not imply that the statistics are derived from the policy advertised unless that is the fact, and when applicable to other policies or plans, shall specifically so state. (1) An advertisement shall specifically identify the accident and sickness insurance policy to which statistics relate and where statistics are given that are applicable to a different policy, it shall be stated clearly that the data does not relate to the policy being advertised.

(2) An advertisement using statistics that describe an insurer, such as asses, corporate structure, financial standing, age, product lines or relative position in the insurance business, may be irrelevant and, if used at all, shall be used with extreme caution because of the potential for misleading the public. As a specific example, an advertisement for accident and sickness insurance that refers to the amount of life insurance which the company has in force or the amounts paid out in life insurance benefits is not permissible unless the advertisement clearly indicates the amount paid out for each line of insurance. B. An advertisement shall not represent or imply that claim settlements by the insurer are “liberal” or “generous,” or use words of similar import, or that claim settlements are or will be beyond the actual terms of the contract. An unusual amount paid for a unique claim for the policy advertised is misleading and shall not be used.

C. The source of any statistics used in an advertisement shall be identified in the advertisement. Section 12. Identification of Plan or Number of Policies A. An advertisement that uses the word “plan” without prominently identifying it as an accident and sickness insurance policy is prohibited.

B. When a choice of the amount of benefits is referred to, an advertisement that is an invitation to contract shall disclose that the amount of benefits provided depends upon the plan selected and that the premium will vary with the amount of the benefits selected. C. When an advertisement that is an invitation to contract refers to various benefits that may be contained in two (2) or more policies, other than group master policies, the advertisement shall disclose that the benefits are provided only though a combination of policies. Section 13. Disparaging Comparisons and Statements An advertisement shall not directly or indirectly make unfair or incomplete comparisons of policies or benefits or comparisons of non-comparable policies of other insurers, and shall not disparage competitors, their policies, services or business methods, and shall not disparage or unfairly minimize competing methods of marketing insurance.

A. An advertisement shall not contain statements such as “no red tape” or “here is all you do to receive benefits.”

B. Advertisements that state or imply that competing insurance coverages customarily contain certain exceptions, reductions or limitations not contained in the advertised policies are prohibited unless the exceptions, reductions or limitations are contained in a substantial majority of the competing coverages.

C. Advertisements that state or imply that an insurer's premiums are lower or that its loss ratios are higher because its organizational structure differs from that of competing insurers are prohibited. Section 14. Jurisdictional Licensing and Status of Insurer A. An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed shall not imply licensing beyond those limits. B. An advertisement shall not create the impression directly or indirectly that the insurer, its financial condition or status, or the payment of its claims, or the merits, desirability, or advisability of its policy forms or kinds of plans of insurance are approved, endorsed or accredited by any division or agency of this state or the federal government. Terms such as “official” or words of similar import, used to describe any policy or application form are prohibited because of the potential for deceiving or misleading the public.

C. An advertisement shall not imply that approval, endorsement or accreditation of policy forms or advertising has been granted by any division or agency of the state or federal government. Approval of either policy forms or advertising shall not be used by an insurer to imply or state that a governmental agency has endorsed or recommended the insurer, its policies, advertising or its financial condition.

Section 15. Identity of Insurer A. The name of the actual insurer shall be stated in all of its advertisements. The form number or numbers of the policy advertised shall be stated in an advertisement that is an invitation to contract. An advertisement shall not use a trade name, an insurance group designation, name of the parent company of the insurer, name of a particular division of the insurer, service mark, slogan, symbol or other device that without disclosing the name of the actual insurer, would have the capacity and tendency to mislead or deceive as to the true identity of the insurer. B. An advertisement shall not use any combination of words, symbols, or physical materials that by their content, .phraseology, shape, color or other characteristics are so similar to combination of words, symbols or physical materials used by agencies of the federal government or of this state, or otherwise appear to be of such a nature that it tends to confuse or mislead prospective insureds into believing that the solicitation is in some manner connected with an agency of the municipal, state or federal government.

C. Advertisements, envelopes or stationery that employ words, letters, initials, symbols or other devices that are similar to those used in governmental agencies or by other insurers are not permitted if they may lead the public to believe:

(1) That the advertised coverages are somehow provided by or are endorsed by the governmental agencies or the other insurers;

(2) That the advertiser is the same as is connected with or is endorsed by the governmental agencies or the other insurers.

D. An advertisement shall not use the name of a state or political subdivision of a state in a policy name or description.

E. An advertisement in the form of envelopes or stationery of any kind may not use any name, service mark, slogan, symbol or any device in a manner that implies that the insurer or the policy advertised, or that any producer who may call upon the consumer in response to the advertisement, is connected with a governmental agency, such as the Social Security Administration.

F. An advertisement may not incorporate the word “Medicare” in the title of the plan or policy being advertised unless, wherever it appears, the word is qualified by language differentiating it from Medicare. The advertisement, however, shall not use the phrase “[ ] Medicare Department of the [ ] Insurance Company,” or language of similar import.

G. An advertisement may not imply that the reader may lose a right or privilege or benefit under federal, state or local law if he or she fails to respond to the advertisement. H. The use of letters, initials or symbols of the corporate name or trademark that would have the tendency or capacity to mislead or deceive the public as to the true identity of the insurer is prohibited unless the true, correct and complete name of the insurer is in close conjunction and in the same size type as the letters, initials or symbols of the corporate name or trademark. I. The use of the name of an agency or “[ ] Underwriters” or “[ ] Plan” in type, size and location so as to have the capacity and tendency to mislead or deceive as to the true identity of the insurer is prohibited.

J. The use of an address so as to mislead or deceive as to true identity of the insurer, its location or licensing status is prohibited.

K. An insurer shall not use, in the trade name of its insurance policy, any terminology or words so similar to the name of a governmental agency or governmental program as to have the tendency to confuse, deceive or mislead the prospective purchaser.

L. Advertisements used by producers or solicitors of an insurer shall have prior written approval of the insurer before they may be used.

M. A producer who makes contact with a consumer, as a result of acquiring that consumer's name from a lead-generating device, shall disclose that fact in the initial contact with the consumer. A producer or insurer may not use names produced from lead-generating devices that do not comply with the requirements of this regulation.

Section 16. Group or Quasi-Group Implications A. An advertisement of a particular policy shall not state or imply that prospective insureds become group or quasi-group members covered under a group policy and as members, enjoy special rates or underwriting privileges, unless that is the fact.

B. This regulation prohibits the solicitations of a particular class, such as governmental employees, by use of advertisements which state or imply that their occupational status, entitles them to reduced rates on a group or other basis when, in fact, the policy being advertised is sold only on an individual basis at regular rates.

C. Advertisements that indicate that a particular coverage or policy is exclusively for “preferred risks” or a particular segment of the population or that a particular segment of the population is an acceptable risk, when the distinctions are not maintained in the issuance of policies, are prohibited.

D. An advertisement to join an association, trust or discretionary group that is also an invitation to contract for insurance coverage shall clearly disclose that the applicant will be purchasing both membership in the association, trust or discretionary group and insurance coverage. The insurer shall solicit insurance coverage on a separate and distinct application that requires a separate signature. The separate and distinct applications required need not be on separate documents or contained in a separate mailing. The insurance program shall be presented so as not to conceal the fact that the prospective members are purchasing insurance as well as applying for membership, if that is the case. Similarly, it is prohibited to use terms such as “enroll” or “join” to imply group or blanket insurance coverage when that is not the fact. Advertisements for group or franchise group plans that provide a common benefit or a common combination of benefits shall not imply that the insurance coverage is tailored or designed specifically for that group, unless that is the fact.

Section 17. Introductory, Initial or Special Offers A.

(1) An advertisement of an individual policy shall not directly or by implication represent that a contract or combination of contracts is an introductory, initial or special offer, or that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group of individuals, unless that is the fact. An advertisement shall not contain phrases describing an enrollment period as “special,” “limited,” or similar words or phrases when the insurer uses the enrollment periods as the usual method of marketing accident and sickness insurance. (2) An enrollment period during which a particular insurance product may be purchased on an individual basis shall not be offered within this state unless there has been a lapse of not less than [insert number] months between the close of the immediately preceding enrollment period for the same product and the opening of the new enrollment period. The advertisement shall indicate the date by which the applicant must mail the application, which shall be not less than ten (10) days and not more than forty (40) days from the date that the enrollment period is advertised for the first time. This regulation applies to all advertising media, i.e., mail, newspapers, the Internet, radio, television, magazines and periodicals, by any one insurer. It is inapplicable to solicitations of employees or members of a particular group or association that otherwise would be eligible under specific provisions of the Insurance Code for group, blanket or franchise insurance. The phrase “any one insurer” includes all the affiliated companies of a group of insurance companies under common management or control. (3) This regulation prohibits any statement or implication to the effect that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy advertised because of special advantages available in the policy, unless that is the fact.

(4) The phrase “a particular insurance product” in Paragraph (2) of this subsection means an insurance policy that provides substantially different benefits than those contained in any other policy. Different terms of renewability; an increase or decrease in the dollar amounts of benefits; an increase or decrease in any elimination period or waiting period from those available during an enrollment period for another policy shall not be sufficient to constitute the product being offered as a different product eligible for concurrent or overlapping enrollment periods.

B. An advertisement shall not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and the amount of the initial reduced premium. When an insurer charges an initial premium that differs in amount from the amount of the renewal premium payable on the same mode, the advertisement shall not display the amount of the reduced initial premium either more frequently or more prominently than the renewal premium, and both the initial reduced premium and the renewal premium must be stated in juxtaposition in each portion of the advertisement where the initial reduced premium appears. C. Special awards, such as a “safe drivers' award,” shall not be used in connection with advertisements of accident and sickness insurance.

Section 18. Statements about an Insurer An advertisement shall not contain statements that are untrue in fact, or by implication misleading, with respect to the assets, corporate structure, financial standing, age or relative position of the insurer in the insurance business. An advertisement shall not contain a recommendation by any commercial rating system unless it clearly indicates the purpose of the recommendation and the limitations of the scope and extent of the recommendations.

Section 19. Enforcement Procedures A. Advertising File. Each insurer shall maintain at its home or principal office a complete file containing every printed, published or prepared advertisement of its individual policies and typical printed, published or prepared advertisements of its blanket, franchise and group policies hereafter disseminated in this or any other state, whether or not licensed in an other state, with a notation attached to each advertisement that indicates the manner and extent of distribution and the form number of any policy advertised. The file shall be subject to regular and periodical inspection by the commissioner. All of these advertisements shall be maintained in a file for a period of either four (4) years or until the filing of the next regular report on examination of the insurer, whichever is the longer period of time.

Section 20. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of all applicable sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines and suspension or revocation of license. Failure to comply with the requirements of this regulation constitutes an unfair method of competition and an unfair or deceptive act or practice in the business of insurance which is prohibited under § 10-3- 1104,C.R.S. Section 21. Severability If any provisions of this regulation or the application thereof to any person or circumstances are for any reason held to be invalid, the remainder of the regulation shall not be affected in any way. Section 22. Effective Date This regulation is effective February 1, 2003.

Section 23. History Originally issued as Regulation 75-2, effective December 22, 1975. Renumbered as Regulation 4-2-3, effective June 1, 1992. Amended Regulation, effective July 1, 1993.

Repealed and Repromulgated in full, effective February 1, 2001. Amended Regulation, effective August 1, 2001.

Amended Regulation, effecive February 1, 2003.

Amended Regulation 4-2-5 Hospital Definition Section 1. Authority Section 2. Purpose Section 3. Scope Section 4. Definitions Section 5. Enforcement Section 6. Severability Section 7. Effective Date Section 8. History Section 1. Authority This amended regulation is promulgated under the authority of § 10-1-109 C.R.S. Section 2. Purpose The purpose of this regulation is to standardize the definition of “hospital” used in sickness and accident insurance policy forms in this state to ensure the adequate provision of inpatient health care services. Section 3. Scope This regulation shall apply to all entities marketing or selling policies of sickness and accident insurance within the State of Colorado which provide coverage for inpatient health care services at a hospital; except this regulation does not include a Medicare supplement insurance policies and a waiver of premium or double indemnity benefit included in a life insurance policy or annuity contract Section 4. Definitions “Hospital” means a hospital currently licensed or certified by the department of public health and environment pursuant to the department's authority under section 25-1-107 (1) (1). This definition shall not be construed to create coverage for any health care service that is not otherwise covered under the terms of the sickness and accident insurance policy.

Section 5. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, int the imposition of any sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines and/or suspension or revocation of license. Section 6. Severability If any provisions of this regulation or the application thereof to any person or circumstances are for any reason held to be invalid, the remainder of the regulation shall not be affected in any way. Section 7. Effective Date This regulation as amended is effective January 1, 2001. Section 8. History Originally issued as Regulation 76-6, effective January 14, 1977. Renumbered as Colorado Regulation 4-2-5 on June 1, 1992. Amended Regulation effective March 1, 1994.

Amended Regulation effective January 1, 2001.

Amended Regulation 4-2-6 Concerning The Definition Of The Term “Complications Of Pregnancy” For Use In Accident And Health Insurance Policies Section 1. Authority Section 2. Purpose Section 3. Scope Section 4. Definitions Section 5. Roles Section 6. Enforcement Section 7. Severability Section 8. Effective Date Section 9. History Section 1. Authority This amended regulation is promulgated under the authority granted to the Commissioner of Insurance under Sections 10-1-109, 10-16-109 and 10-3-1110, C.R.S. Section 2. Purpose The purpose of this regulation is to standardize the definition of the term “complications of pregnancy” as employed in sickness and accident insurance policies covering residents of this state consistent with the commonly perceived connotation of this term by the general public. Section 3. Scope This regulation shall apply to all entities marketing or selling policies of sickness and accident insurance within the State of Colorado; except that this regulation win not apply to Medicare supplement insurance policies and a waiver of premium or double indemnity benefit included in a life insurance policy or annuity contract.

Section 4. Definitions For the purposes of this regulation “Complications of pregnancy” shall mean: (1) Conditions (when the pregnancy is not terminated) pregnancy but are adversely affected by pregnancy or are caused by pregnancy, such as acute nephritis, nephrosis, cardiac decompensation, missed abortion, and similar medical and surgical conditions of comparable severity, but shall not include false labor, occasional spotting, physician- prescribed rest during the period of pregnancy, morning sickness, hyperemesis gravidarum, preeclampsia, and similar conditions associated with the management of a difficult pregnancy not constituting a nosologically distinct complication of pregnancy; (2) Non-elective cesarean section, ectopic pregnancy, which is terminated, and spontaneous termination of pregnancy, which occurs during a period of gestation in which a viable birth is not possible.

Section 5. Rules All insurers marketing sickness and accident insurance policies, as defined in this regulation, delivered or issued for delivery in the State of Colorado shall employ in each insurance policy or certificate of insurance a definition of the complications of pregnancy no more restrictive man that required by this regulation.

NOTE: All insurers, nonprofit hospital and health service corporations under 10-16-101, et seq., C.R.S., marketing group sickness and accident coverage within the State of Colorado should be aware that both the Colorado Civil Rights Commission, pursuant to 24-34-402(1) and (3(, C.R.S., and the Federal Equal Employment Opportunity Commission, in accordance with 42 U.S.C. 2000 e(k), require that all such coverage provided to the employees as an employment benefit treat a normal pregnancy the same as a sickness.

Section 6. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. Section 7. Severability If any provisions of this regulation or the application thereof to any person or circumstances are for any reason held to be invalid, the remainder of the regulation shall not be affected in any way. Section 8. Effective Date This amended regulation shall become effective November 1, 2000. Section 9. History Originally issued as Regulation 78-16, effective June 30, 1979. Amended Regulation 78-16, effective October 1, 1983.

Renumbered as Regulation 4-2-6, effective June 1, 1992. Amended effective November 1, 2000.

Amended Regulation 4-2-8 Concerning Required Health Insurance Benefits For Home Health Services And Hospice Care Section 1. Authority Section 2. Basis and Purpose Section 3. Scope.

Section 4. Requirements for Home Health Services Section 5. Requirements for Hospice Care Section 6. Additional Requirements for Home Health Services Section 7. Enforcement Section 8. Severability Section 9. Effective Date Section 10. History Section 1. Authority This regulation is promulgated under the authority of § § 10-1-109 and 10-16-104(8)(d), Colorado Revised Statutes (C.R.S.).

Section 2. Purpose The purpose of this regulation is to establish requirements for standard policy provisions, which state clearly and completely the criteria for and extent of coverage for home health services and hospice care and to facilitate prompt and informed decisions regarding patient placement and discharge. Section 3. Scope The requirements of this regulation shall apply to:

A. Insurers subject to the provisions of Part 2 of Article 16 of Title 10, C.R.S. and non-profit hospital, medical surgical, and health service corporations subject to the provisions of Part 3 of Article 16 of Title 10, C.R.S., which provide: hospital, surgical or major medical coverage on an expense incurred basis, except as noted in paragraph B below, issued on or after the effective date hereof and to all such policies renewed after said date, unless the insurer certifies in writing to the Commissioner of Insurance that it no longer issues the type of policy being renewed. “Renewed” or “renewal” means to continue coverage for an additional policy period upon expiration of the current policy period of a policy.

B. This regulation does not apply to the following:

(1) Medicare supplement policies issued under § 10-18-101 et seq., C.R.S.; (2) Credit accident and health policies issued under § 10-10-101 et seq., C.R.S.; and (3) Any insurance policy, contracts or certificate which provides coverage exclusively for. (a) Disability loss of income;

(b) Dental services;

(c) Optical services;

(d) Hospital confinement indemnity, (e) Accident only; or (f) Prescription drug services.

Section 4. Requirements for Home Health Services A. Definitions.

(1) “Home health agency” means an agency which has been certified by the Colorado Department of Public Health and Environment as meeting the provisions of Title XVII of the Federal “Social Security Act” , as amended, for home health agencies and which is engaged in arranging and providing nursing services, home health aide services and other therapeutic and related services.

(2) “Home health services” means the following services provided by a certified home health agency under a plan of care to eligible persons in their place of residence: (a) Professional nursing services;

(b) Certified nurse aide services, as defined in § 12-38.1-102(3), C.R.S.; (c) Medical supplies, equipment and appliances suitable for use in the home; and (d) Physical therapy, occupational therapy or speech pathology and audiology services, as such therapy and services are defined in C.R.S.

(3) “Home health visit” is each visit by a member of the home health team, provided on a part- time and intermittent basis as included in the plan of care. Services of up to 4 hours by a home health aide shall be considered as one visit.

(4) “Medical social services” are those services provided by an individual who possesses a baccalaureate degree in social work, psychology or counseling or the documented equivalent in a combination of education, training and experience, which services are provided at the recommendation of a physician for the purpose of assisting the insured or the family in dealing with a specific medical condition. B. General Policy Provisions Pertaining to Home Health Care. (1) The policy offering shall provide that home health services are to be covered when such services are necessary as alternatives to hospitalization or in place of hospitalization. Prior hospitalization shall not be required.

(2) The policy offering shall require, as a condition of coverage that home health care services are to be rendered pursuant to a physician's written order, under a plan of care established by the physician in collaboration with a home health care provider. (3) The policy offering may use case management requirements including, but not limited to, authorization of benefits prior to the beginning of services, review of treatment at periodic intervals and certification by the physician that confinement in a hospital or skilled nursing facility would be required in the absence of home health services. (4) The policy may require that all home health services included in the plan of care be coordinated by the home health agency.

C. Benefits for Home Health Care Services.

(1) Benefits levels for home health care services shall not be less than the deductible, coinsurance and stop loss provisions of the overall policy or certificate. (2) The policy or certificate may contain a limitation on the number of home health visits, but no policy offered may provide for fewer than 60 home health visits in any calendar year. (3) The policy offered shall include benefits for the following services: (a) Professional nursing services provided by a Registered Nurse; (b) Certified nurse aide services under the supervision of a Registered Nurse or a qualified therapist;

(c) Physical therapy;

(d) Occupational therapy;

(e) Speech therapy and audiology, (f) Respiratory and inhalation therapy, (g) Nutrition counseling by a nutritionist or dietitian; (h) Medical social services;

(i) Medical supplies;

(j) Prosthesis and orthopedic appliances;

(k) Rental or purchase of durable medical equipment; and (l) Drugs, medicines, or insulin.

(4) The services identified in (C)(3)(i) through (C)(3)(1) above may be included elsewhere in the policy, rather than specifically in the home health benefit provisions. D. Limitations and Exclusions.

(1) Benefits for home health services may be governed by policy or certificate limitations and exclusions, including but not limited to, exclusion for non-skilled personal care and conditions for surgery excluded in the policy or certificate. (2) The following items need not be considered as eligible expenses under home health care benefits:

(a) Services or supplies for personal comfort or convenience, including homemaker services;

(b) Services related to well-baby care; and (c) Food services or meals other than dietary counseling. Section 5. Requirements for Hospice Care A. Definitions.

(1) A “hospice” is a facility or service licensed by the Department of Public Health and Environment under a centrally administered program of palliative supportive, and interdisciplinary team services providing physical, psychological, spiritual, and bereavement care for terminally ill individuals and their families within a continuum of inpatient and home care available 24 hours, 7 days a week. Hospice services shall be provided in the home, a licensed hospice, and/or other licensed health facility. Hospice services include but shall not necessarily be limited to the following: nursing, physician, certified nurse aide, nursing services delegated to other assistants, homemaker, physical therapy, pastoral counseling, trained volunteer, and social services. (2) “Hospice care” is an alternative way of caring for terminally ill individuals which stresses palliative care as opposed to curative or restorative care. Hospice care focuses upon the patient/family as the unit of care. Supportive services are offered to the family before and after the death of the patient Hospice care is not limited to medical intervention, but addresses physical, social, psychological, and spiritual needs of the patient Hospice care is planned, implemented and evaluated by an interdisciplinary team of professionals and volunteers. The emphasis of the hospice program is keeping the hospice patient at home among family and friends as much as possible.

(3) A “patient” is an individual in the terminal stage of illness who has an anticipated life expectancy of six months or less and who alone or in conjunction with a family member or members, has voluntarily requested admission and been accepted into a hospice. (4) A “patient/family” is one unit of care consisting of those individuals who are closely linked with the patient, including the immediate family, the primary care giver and individuals with significant personal ties.

(5) “Palliative services” are those services and/or interventions which are not curative but which produce the greatest degree of relief from pain and other symptoms of the terminal illness.

(6) The “interdisciplinary team” is a group of qualified individuals, which shall include, but is not limited to, a physician, registered nurse, clergy/counselors, volunteer director, and/or trained volunteers, and appropriate staff who collectively have expertise in meeting the special needs of hospice patient/families.

(7) “Core services” are physician services, nursing services, pastoral counseling, trained volunteers, and social/counseling services routinely provided by hospice staff or volunteers.

(8) “Social/counseling services” are those services provided by an individual who possesses a baccalaureate degree in social work, psychology or counseling or the documented equivalent in a combination of education, training and experience. (9) “Personal care” means services provided to a patient in his or her home to meet the patient's physical requirements and/or to accommodate a patient's maintenance or supportive needs.

(10) “Homemaker services” means services provided the patient which include: (a) General household activities including the preparation of meals and routine household care; and (b) Teaching, demonstrating and providing patient/family with household management techniques that promote self-care, independent living and good nutrition. (11) “Hospice staff” shall include volunteers and paid persons. (12) “Home care services” are hospice services, which are provided in the place the patient designates as his/her primary residence, which may be a private residence, retirement community, assisted living, nursing or Alzheimer facility. (13) “Inpatient services” are hospice services provided to patient/families who require 24 hour nursing supervision in a licensed hospice facility or other licensed health facility. In the event that a hospice provides inpatient services in a licensed health facility other than a hospice, such hospice shall maintain administrative control of and responsibility for the provision of all hospice services.

(14) “Hospice day care” means health and social services provided on a regularly scheduled basis in a day care center governed by the licensed hospice to insure the overall continuum of patient care.

(15) “Hospice levels of care:”

(a) “Routine home care:” The level of care a patient/family receives according to the interdisciplinary team's plan of care each day the patient is at home and not receiving continuous home care.

(b) “Continuous home care:” The level of care received by the patient during a period of medical crisis to achieve palliation and management of acute medical symptoms. The preponderance of care must be nursing care (at least half) and care must be provided for a period of at least eight hours in one calendar day. Home health aide and homemaker services, or both, may be provided to supplement nursing care.

(c) “Inpatient hospice respite care:” The level of care received when the patient is in a licensed facility to provide the caregiver a period of relief Inpatient respite care may be provided only on an intermittent, non- routine, short-term basis. It may be limited to periods of five days or less, (d) “General inpatient hospice care:” The level of care the patient receives when short- term inpatient care for pain control or acute symptom management cannot be achieved in the home. This level of care must be provided in a licensed facility with the approval of the physician and the hospice.

(16) “Bereavement” is that period of time during which survivors mourn a death and experience grief. Bereavement services mean support services to be offered during the bereavement period.

(17) An “inpatient hospice facility” is one, which shall directly provide inpatient services and may provide any or all of the continuum of hospice services as described in (5)(A)(1). These services are provided 24 hours a day and, to the extent possible, in a homelike setting. (18) A “benefit period” for hospice care services is a period of three months, during which services are provided on a regular basis.

(19) A “hospice per diem” rate is the predetermined rate for each day in which an individual is enrolled in a hospice program and under its care, without regard to which, if any, services are actually provided on a specific day.

(20) An “unrelated illness” is a diagnosed condition, which is not a direct result of the terminal diagnosis or its treatment and the expected course of that terminal illness. (21) “Evaluation” means an objective, formal and cyclical assessment of the functioning of the organization and of the provision of hospice care.

B. General Provisions Pertaining to Hospice Care.

(1) The policy offering shall provide mat hospice care services are to be covered when such services are provided under active management through a hospice which is responsible for coordinating all hospice care services, regardless of me location or facility in which such services are furnished (2) The policy offering shall provide that benefits are allowed only for individuals who are terminally ill and have a life expectancy of six months or less, except mat benefits may exceed six months should the patient continue to live beyond the prognosis for life expectancy, in which case the benefits shall continue at the same rate for one additional benefit period. After the exhaustion of three benefit periods, the insurer's case management staff shall work with the individual's attending physician and the hospice's Medical Director to determine the appropriateness of continuing hospice care. (3) The policy offering shall require a physician's certification of the patient's illness, including a prognosis for life expectancy and the appropriateness for hospice care. The insurer may also require a copy of the patient's plan of care and any changes made to the level of care or to the plan of care.

(4) The policy offering may use case management requirements including, but not limited to, authorization of benefits prior to the beginning of services and review of care at periodic intervals.

(5) The policy offering shall clearly indicate that services and charges incurred in connection with an unrelated illness will be processed in accordance with policy coverage provisions applicable to all other illnesses and/or injuries.

C. Benefits for Hospice Care Services.

(1) Benefits for hospice care services shall be governed by the deductible, coinsurance and stop- loss provisions of the overall policy or certificate. The details of these provisions will be forwarded and updated to the provider upon authorization of benefits. (2) The policy or certificate may contain a dollar limitation on routine home care hospice benefits. Other services provided by or through the hospice that are available to the insured will be negotiated at a hospice per diem rate with the hospice provider. Any policy offered shall provide a benefit of no less than S100 per day for any combination of the following routine home care services, which are planned, implemented and evaluated by the interdisciplinary team:

(a) Intermittent and 24 hour on-call professional nursing services provided by or under the supervision of a Registered Nurse;

(b) Intermittent and 24 hour on-call social/counseling services: and; (c) Certified nurse aide services or nursing services delegated to other persons pursuant to § 12-38-132, C.R.S.

The total benefit for each benefit period for these services shall not be less man the per diem benefit multiplied by ninety-one (91) days.

(3) The policy offering shall include the following benefits, subject to the policy's deductible, coinsurance and stoploss provisions, which are exclusive of and shall not be included in the dollar limitation for hospice care benefits as specified in (2) above: (a) Bereavement support services for the family of the deceased person during the twelve month period following death, and in no event shall this maximum benefit be less than $1150.

(b) Short-term general inpatient (acute) hospice care or continuous home care which may be required during a period of crisis, for pain control or symptom management and shall be paid consistent with any other sickness or illness (i.e., not included in the per diem limitation specified in (2) above). Such care shall require prior authorization of the interdisciplinary team and may, except for emergencies, weekends or holidays, require prior authorization by the insurer, provided, however, that the insurer may not require prior authorization when the transfer to the higher level of care was necessary during the insurer's non- business hours if the hospice seeks the authorization during the insurer's first business day, (c) Medical supplies;

(d) Drugs and biologicals;

(e) Prosthesis and orthopedic appliances;

(f) Oxygen and respiratory supplies;

(g) Diagnostic testing;

(h) Rental or purchase of durable equipment;

(i) Transportation;

(j) Physicians services;

(k) Therapies including physical, occupational and speech; and (l) Nutritional counseling by a nutritionist or dietitian. D. Limitations and Exclusions.

Benefits for hospice care services shall be governed by policy or certificate limitations and exclusions, to the extent that such policy or certificate is not in conflict with the statutory mandate that hospice care be offered with the minimum benefits required by this regulation. The insurer must notify the hospice in writing of any such limitation of benefits, and must do so within two business days of a request to determine if specific services are excluded or authorized under the coverage. Section 6. Additional Requirements for Home Health Care Services and Hospice Care A. The offer to a policyholder to purchase home health care and hospice care coverage must be in writing, either by means of a prominent statement or question on the application for the policy or on a separate form.

B. Nothing in this regulation shall prohibit the insurer from offering a higher level of benefits than required herein.

Section 7. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. Section 8. Severability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of such provision shall not be affected thereby.

Section 9. Effective Date The effective date of this regulation is February 1, 2001. Section 10. History Originally issued as Colorado Regulation 85-6, effective Oct 1, 1985. Amended October 1, 1986.

Renumbered as Colorado Regulation 4-2-8, July 1, 1992.

Amended August 1, 1993.

Amended February 1, 1994.

Amended February 1, 2001.

Amended Regulation 4-2-9 Concerning Non-Discriminatory Treatment of Acquired Immune Deficiency Syndrome (AIDS) and Human Immunodeficiency Virus(HIV) Related Illness by Life and Health Carriers Section 1 Authority Section 2 Purpose Section 3 Scope Section 4 Definitions Section 5 Standards Section 6 Enforcement Section 7 Severability Section 8 Effective Date Section 9 History Section 1 Authority This amended regulation is promulgated under the authority of § 10-1-109, 1104.5(3)(d)(n) and 10-3- 1110, C.R.S.

Section 2 Purpose The purpose of this regulation is to establish standards that will assure non-discriminatory treatment with respect to AIDS and HIV infection in underwriting practices, policy forms and benefit provisions utilized by entities subject to the provisions of this regulation. It also establishes what HIV/AIDS medical tests permitted under §10-3-1104.5, C.R.S., are considered medically reliable for underwriting decisions. Section 3 Scope This regulation applies to all entities that provide life or health coverage in this state including a franchise insurance plan, a fraternal benefit society, a health maintenance organization, a nonprofit hospital and health service corporation, a sickness and accident company, a life or annuity company, and any other entity providing a plan of life, annuity, health coverage or health benefits subject to the insurance laws and regulations of Colorado.

Section 4 Definitions “Insurance Coverage” shall mean life insurance policies and health coverage plans. “Person” shall have the meaning in § 10-3-1104.5(2)(f), C.R.S.

Section 5 Standards A. No person, their agent or employee shall make any inquiry or investigation to determine an insurance applicant's sexual orientation.

B. Sexual orientation may not be used in the underwriting process or in the determination of insurability. C. Insurance support organizations shall be directed by insurers to not investigate, directly or indirectly, the sexual orientation of an applicant or a beneficiary. All persons shall give written notice to their agents and employees who conduct investigations of applicants for insurance coverage, that they shall not investigate, either directly or indirectly, the sexual orientation of an applicant or beneficiary.

D. No question shall be used which is designed to establish the sexual orientation of the applicant. E. Questions relating to the applicant having or having been diagnosed as having AIDS or HIV infection are permissible if they are designed solely to establish the existence of the condition. For example, straightforward questions on applications are acceptable, such as, “Have you had or been told by a member of the medical profession that you have AIDS or HIV infection?” or “Have you received treatment from a member of the medical profession for AIDS or HIV infection?” are acceptable.

F. Questions relating to medical and other factual matters intending to reveal the possible existence of a medical condition are permissible if they are not used as a proxy to establish the sexual orientation of the applicant, and the applicant has been given an opportunity to provide an explanation for any affirmative answers given in the application. For example: “Have you had chronic cough, significant weight loss, chronic fatigue, diarrhea, enlarged glands...” These types of questions should be related to a finite period of time preceding completion of the application and should be specific. Such questions should provide the applicant the opportunity to give a detailed explanation.

G. Insurers may not use an applicant's marital status, living arrangements, occupation, gender, medical history, beneficiary designation, or zip code or other territorial classification to establish, or aid in establishing, the applicant's sexual orientation.

H. For the purpose of rating an applicant for health and life insurance, a person may impose territorial rates only if the rates are based on sound actuarial principles or are related to actual or reasonably anticipated experience.

I. No adverse underwriting decision shall be made because medical records or any investigation or report indicates that the applicant has demonstrated AIDS or HIV infection related concerns by seeking counseling from health care professionals. Neither shall an adverse underwriting decision be made on the basis of such AIDS or HIV infection related concerns unless a medical test which is a reliable predictor of infection, as defined in Section 5. J. below, has been administered. This subsection does not apply to an applicant seeking treatment and/or diagnosis. J. Reliable predictors of infection are delineated in Section 10-3-1104.5(3)(d)(I), C.R.S. Pursuant to Section 10-3-1104.5 (3)(d)(II), C.R.S., the commissioner designates the following tests, approved by the Colorado Department of Public Health and Environment, as equally reliable predicters of AIDS OR HIV infection:

1. A positive HIV-1 p24 antigen test, as defined by the U.S. Department of Public Health and Human Services, Center for Disease Control and Prevention (The Mobidity and Mortality Weekly Report, Volume 95, March 1, 1996). A copy of this USDPHHS publication is on file at the Colorado Division of Insurance. This regulation does not include later editions or amendments to this USDPHHS report.

2. A positive licensed polymerase chain reaction assay for HIV levels in the serum. 3. Two positive or repeatedly reactive commercially licensed serum, oral fluid or urine ELISA or EIA tests and either:

a. For serum or oral fluid specimens, a Western Blot test with bands present at any two of p24, gp41 or gpl20/gp160; or b. or urine specimens, a Western Blot test with bands present gp 160. K. To be used for issuing or underwriting a policy, a test described in Section 5 J. must have been licensed by the U.S. Food and Drug Administration as of the effective date of this regulation. A list of such tests is attached as Exhibit 1.

L. If a specific test licensed by the U.S. Food and Drug Administration indicates the presence of the HIV infection or medical condition indicative of the HIV infection, the insurer shall, before relying on a single test result to deny or limit coverage or to rate the coverage, follow the U.S. Food and Drug Administration confirmation protocols licensed as of the effective date of this regulation and shall use any applicable confirmatory tests or series of tests licensed as of the effective date of this regulation by the U.S. Food and Drug Administration to confirm the indication. The confirmation protocols and applicable follow-up test regimens are attached as Exhibit 1. M. If an applicant is required to take an AIDS or HIV infection test in connection with an application for life or health insurance, the use of such test must be revealed to the applicant and his or her written consent obtained. Test results shall be strictly confidential medical information. However, this regulation is not intended nor should it be interpreted as prohibiting reporting HIV infection to state and local departments of health as provided in Sections 25-4-1402 and 25-4-1403, C.R.S. N. Persons subject to this regulation may include questions on applications as to whether or not the applicant has tested positive on an AIDS or HIV infection test. However, in the event of an affirmative response, no adverse underwriting decisions shall be made on the basis of such response unless it can be determined that the test protocols in Section 5. J. and K. above have been followed.

O. Insurance coverage which excludes or limits coverages for expenses related to the treatment of AIDS and HIV related illness or complications of AIDS, e.g., opportunistic infection resulting from AIDS, will not be approved for use in Colorado, except to the extent that such exclusions or limitations are consistent with the exclusions or limitations applicable to other covered illnesses or conditions covered by the policy or certificate.

Section 6 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of all applicable sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines and suspension or revocation of license. Section 7 Severability If any provisions of this regulation or the application thereof to any person or circumstance are for any reason held to be invalid, the remainder of the regulation shall not be affected in any way. Section 8 Effective Date This regulation as amended is effective April 1, 2000.

Section 9. History Originally issued as Regulation 87-2, effective January 1, 1988. Renumbered as Regulation 4-2-9, effective June 1, 1992. Amended Section IV(J), effective February 1,1995.

Amended Regulation, effective March 2, 1999.

Amended Regulation, effective April 1, 2000.

Exhibit 1 FDA Licensed/Approved HIV Tests for Colorado Regulation 4-2-9 Published as of 7/16/98 Amended Regulation 4-2-10 Reporting Requirements For Multiple Employer Welfare Arrangements (MEWAs)

Section 1. Authority This regulation is promulgated under the authority of §10-1-109, C.R.S. Section 2. Scope and Purpose Many Multiple Employer Welfare Arrangements (MEWAs) have previously claimed ERISA preemption whereby health plans may operate without obtaining a license from the Division of Insurance. Section 10- 3-903.5, C.R.S., regarding the Division's jurisdiction over providers of health care benefits was effective as of March 31, 1993. This statute, as well as recent advisory opinions from the US Department of Labor, has clarified the limited nature of the federal ERISA (Employee Retirement Income Security Act) preemption. [Eff 10/01/2006] In addition, it has come to the Division's attention that producers who are licensed by the Colorado Division of Insurance have been involved in the sale of health plans offered by unlicensed entities. This regulation is intended to: (1) clarify the information to be filed under the provisions of §10-3-903.5(7)(c), C.R.S. by MEWAs claiming exempt status from formal licensing requirements; (2) clarify the responsibilities of licensed producers, and; (3) to repeal and replace Insurance Regulation 4-2-10 (3 CCR 702-4, pg. 122). [Eff 10/01/2006] Section 3. Applicability This regulation applies to all multiple employer trusts subject to §10-3-903.5, C.R.S It does not apply to the Multiple Employer Welfare Arrangement Pilot Program regulated under Colorado Insurance Regulation 4-2-25. [Eff 10/01/2006] Section 4. Definitions A. "Fully insured" means an arrangement where a licensed entity is liable to pay all health care benefits, less any contractual deductibles, coinsurance or copayments to be made by the enrollee. The liability of the licensed entity for payment of the covered services or benefits is directly to the individual employee, member or dependent(s) receiving the health care services or benefits. The contract issuance claims payment and administration and all other insurance related functions remain the ultimate responsibility of the licensed entity. [Eff 10/01/2006] B. "Health plan" is an arrangement such as a fund, trust, plan, program or other funding mechanism that provides health care benefits. [Eff 10/01/2006] C. "Licensed entity" means a licensed insurance company; health maintenance organization; or nonprofit hospital, medical-surgical, and health service corporation having a certificate of authority to transact business in this state. [Eff 10/01/2006] D. "Producer" means a licensed person as defined by Article 2 of Title 10. [Eff 10/01/2006] E. "Substantial compliance" means that each benefit provided to an individual covered by a MEWA complies with the essential requirements of each mandated benefit. [Eff 10/01/2006] Section 5. Filing Requirements of MEWAs A filing under this regulation by a MEWA is solely for the purpose of providing the information required to the Commissioner in order to demonstrate if a MEWA complies with the requirements of §10-3-903.5(c) (7), C.R.S. Determination of compliance or noncompliance will be provided in writing to the MEWA. [Eff 10/01/2006] The following information is required to be filed in order to meet the filing requirements of §10-3-903.5(7) (c), C.R.S. and for the Division of Insurance to make a determination regarding the qualification of a Multiple Employer Welfare Arrangement (MEWA) seeking exemption from licensure requirements. [Eff 10/01/2006] A. Evidence that the MEWA has existed continuously since January 1, 1983. This is accomplished by submitting copies of formation documents, bylaws, if applicable, and financial reports, audited preferred, for years 1983, 1987 and 1991. [Eff 10/01/2006] B. A copy of the sponsor association's organizational documents, membership criteria, ownership and a summary of the activities and benefits, other than health plan coverage, provided to its membership. [Eff 10/01/2006] C. A copy of the most recent financial report, which includes at a minimum, a balance sheet, income statement, cash flow report and a detailed listing of assets, as of the MEWA's most recent fiscal year end. The financial report must disclose and support the required five percent (5%) unallocated reserve level. [Eff 10/01/2006] D. The method of marketing and enrolling eligible participants. [Eff 10/01/2006] E. Actuarial information that must be prepared and signed by a qualified actuary as indicated by §10-7- 114(1)(e), C.R.S. This information must include: [Eff 10/01/2006] 1. An opinion that: [Eff 10/01/2006] a. is prepared in a format consistent with that required, and from time to time amended, by the National Association of Insurance Commissioners for commercial health insurers, and [Eff 10/01/2006] b. opines on the adequacy of the health plan reserves and liabilities reflected in the financial report. [Eff 10/01/2006] 2. A copy of the underlying actuarial report supporting such opinion, including all methods and assumptions employed. In addition, the report must evaluate the adequacy of the contribution and funding levels of the health plan for the current and immediately subsequent fiscal year. [Eff 10/01/2006] F. A copy of the products offered along with a summary of benefits and a comparison of how each benefit is in substantial compliance with the state's mandated benefit provisions. [Eff 10/01/2006] G. Such other relevant information as the Commissioner may request in order to evaluate the financial, actuarial and benefits of the health plan. [Eff 10/01/2006] H. A copy of an audited annual financial report within 150 days of the MEWA's fiscal year end. [Eff 10/01/2006] Items A and B above are only required to be filed once, unless materially altered. Items C through G will be required to be filed annually within sixty (60) days following the fiscal year end of the MEWA. Item H shall be filed annually as indicated. [Eff 10/01/2006] Section 6. Authorized Insurance Arrangements Qualifying health plans that are not subject to licensure as an insurer under Colorado law are plans that are: [Eff 10/01/2006] A. Fully insured; [Eff 10/01/2006] B. Established and maintained by a single employer; [Eff 10/01/2006] C. Established and subject to a collectively bargained agreement pursuant to §10-3-903.5-(7)(b)(II), C.R.S.; [Eff 10/01/2006] D. Established by a government entity, pursuant to §10-3-903.5(b)(I), C.R.S.; or [Eff 10/01/2006] E. Determined to be in compliance with §10-3-905.3(7)(c), C.R.S. and Section IV of this regulation. [Eff 10/01/2006] Pursuant to Colorado law, health plans sold to residents of Colorado are subject to Colorado law even if the master policy is issued and delivered outside of Colorado. [Eff 10/01/2006] Section 7. Producer Responsibilities No producer may solicit, advertise, market, accept an application, or place coverage for a person who resides in this state with a MEWA unless the producer first verifies that the MEWA complies with the requirements of this regulation and the provisions of §10-3-903.5, C.R.S. This is accomplished by the producer acquiring a copy of the Division's correspondence determining that the MEWA is in compliance with this regulation and the provisions of §10-3-903.5(7)(c), C.R.S. [Eff 10/01/2006] Lack of knowledge regarding the compliance of any organization or health plan is not a defense to a violation of this regulation. Any producer involved in the solicitation or sale of health plans through unauthorized insurers or MEWAs which are found not to be in compliance with the provisions of §10-3- 903.5, C.R.S. and this regulation are subject to discipline or action including fines, suspension or revocation of their license. [Eff 10/01/2006] Section 8. Continuing Compliance In the event that a MEWA ceases to qualify under Section 6 of this regulation, it will be transacting the business of insurance in the State of Colorado without a license and subject to the procedures of Parts 9 and 10 of Article 3 of Title 10, C.R.S. and the provisions of the State Administrative Procedure Act, Part 4 of Title 24, C.R.S. as applicable. Any insurer that may have issued a contract to a health plan is not exempt from the liability under its contract solely due to the unauthorized status of a health plan. [Eff 10/01/2006] Section 9. Enforcement Noncompliance with this regulation may result, after proper notice and opportunity for hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspension or revocation of licenses. Among others, the penalties provided for in § 10-3-1108, C.R.S. may be applied. [Eff 10/01/2006] Section 10. Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. [Eff 10/01/2006] Section 11. Effective Date This regulation as amended shall be effective October 2, 2006. [Eff 10/01/2006] Section 12. History Regulation 4-2-10, effective July 1, 1994. [Eff 10/01/2006] Amended regulation effective October 2, 2006. [Eff 10/01/2006] Regulation 4-2-11 RATE FILING AND ANNUAL REPORT SUBMISSIONS HEALTH INSURANCE [Eff. 07/01/2009] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 General Rate Filing Requirements Section 6 Actuarial Memorandum Section 7 Additional Rate Filing Requirement by Line of Business Section 8 Annual Rate Report Section 9 Annual Cost Report Section 10 Prohibited Rating Practices Section 11 Severability Section 12 Enforcement Section 13 Effective Date Section 14 History Section 1 Authority This regulation is promulgated pursuant to the authority of § §10-1-109, 10-3-1110, 10-16-107(1), 10-16- 107(1.5), 10-16-109 and 10-18-105(2), C.R.S.

Section 2 Scope and Purpose The purpose of this regulation is to ensure that health insurance rates are not excessive, inadequate or unfairly discriminatory, by establishing the requirements for rate filings and to require an Annual Rate Report. This regulation provides a listing of the items required to be included in this Annual Rate Report. Section 3 Applicability This regulation applies to all companies operating in the State of Colorado, as defined in Section 4. This regulation concerns all health insurance rate filings, including, but not limited to, comprehensive health insurance, long-term care, supplemental health, limited benefit health, prepaid dental, limited service licensed provider networks, disability, and Health Maintenance Organization (HMO) coverages. Section 4 Definitions A. “Administrative ratio” means, for purposes of this regulation, the ratio of actual total administrative expenses, not including dividends, to the value of the actual earned premiums, not reduced by dividends, over the specified period, which is typically a calendar year. B. “Benefits ratio” means, for purposes of this regulation, the ratio of policy benefits, not including dividends, to the value of the earned premiums, not reduced by dividends, over the entire period for which rates are computed to provide coverage. Note: active life reserves do not represent claim payments, but provide for timing differences. Benefits ratio calculations must be displayed without the inclusion of active life reserves.

C. “Company” means, for purposes of this regulation, a carrier as defined in §10-16-102(8), C.R.S., and includes, but is not limited to, licensed property and casualty insurance companies; licensed life and health insurance companies; non-profit hospital, medical-surgical, and health service corporations; HMOs; prepaid dental companies; and limited service licensed provider networks. D. “Dividends” means, for purposes of this regulation, both policyholder and stockholder dividends. E. “Excessive rates” means, for purposes of this regulation, rates that are likely to produce a long run profit that is unreasonably high for the insurance provided or if the rates include a provision for expenses that is unreasonably high in relation to the services rendered. F. “File and use” is a filing procedure that requires rates and rating data to be filed with the Division of Insurance concurrent with or prior to distribution, release to producers, collection of premium, advertising, or any other use of the rates. Under no circumstance shall the carrier use the rates for the collection of premiums until after the proposed effective date specified in the rate filing. G. “Filing date” means, for purposes of this regulation, the date that the rate filing is received at the Division of Insurance.

H. “Inadequate rates” means, for purposes of this regulation, rates that are clearly insufficient to sustain projected losses and expenses, or if the use of such rates, if continued, will tend to create a monopoly in the marketplace.

I. “Indemnity benefits” means, for the purpose of the twenty percent (20%) limitation imposed on HMOs, the following benefits: out-of-area services, supplemental benefits (such as vision and dental provided on a non-contractual fee-for-service basis) and point-of-service benefits. It does not include any benefits provided by an HMO for which there exists a hold harmless agreement between the providers and the HMO.

J. “Lifetime loss ratio” :

1. “Lifetime loss ratio,” for purposes of this regulation, is equal to: a. The sum of the accumulated value of policy benefits from the inception of the policy form(s) to the end of the experience period and the present value of expected policy benefits over the entire future period for which the proposed rates are expected to provide coverage; divided by:

b. The sum of the accumulated value of earned premiums from the inception of the policy form(s) to the end of the experience period and the present value of expected earned premium over the entire future period for which the proposed rates are expected to provide coverage.

2. The lifetime loss ratio should be calculated on an incurred basis as the ratio of accumulated and expected future incurred losses to accumulated and expected future earned premiums. Note: active life reserves do not represent claim payments, but provide for timing differences. Benefit or loss ratio calculations must be displayed without the inclusion of active life reserves.

3. An appropriate rate of interest should be used in calculating the accumulated values and the present values of incurred losses and earned premiums.

4. Any policy form or forms for which the anticipated loss ratio in any policy duration is expected to differ more than 10% from the lifetime loss ratio shall be assumed to have been priced on a “lifetime loss ratio standard” , for purposes of this regulation. K. “Non-developed rates” are rates that are not developed primarily from statistics, experience data or studies but are established by agreement with a governmental entity through a bidding process or by some other means and include, but are not limited to: rates for Medicare, Title XVIII of the federal “Social Security Act;” Medicaid, Title XIX of the federal “Social Security Act;” and the State Children’s Health Insurance Program (SCHIP), Title XXI of the federal “Social Security Act.” L. “On-rate-level premium” is the premium that would have been generated if the present rates had been in effect during the entire period under consideration. M. “Pod” means any subdivision or subgrouping of a network, if arrangements between the plan and participating providers or the policy itself have specific incentives for the use of providers and services within the subdivision or subgrouping of the network. N. “Premium” means, for purposes of this regulation, the amount of money paid by the insured member, subscriber, or policyholder as a condition of receiving health care coverage. The premium paid normally reflects such factors as the carrier’s expectation of the insured’s future claim costs and the insured’s share of the carrier’s claims settlement, operational and administrative expenses, and the carrier’s cost of capital. This amount is net of any adjustments, discounts, allowances or other inducements permitted by the health care coverage contract. O. “Prior approval” is a filing procedure that requires a rate change to be affirmatively approved by the Commissioner prior to distribution, release to agents, collections of premium, advertising, or any other use of the rate. Under no circumstance shall the carrier use the rates for the collection of premiums until after the proposed effective date specified in the rate filing. P. “Qualified actuary” is a person who meets the qualifications in Colorado Insurance Regulation 1-1-1. Q. “Rate” means, for purposes of this regulation, the amount of money a carrier charges as a condition of providing health care coverage. The rate charged normally reflects such factors as the carrier’s expectation of the insured’s future claim costs, and the insured’s share of the carrier’s claim settlement, operational and administrative expenses, and cost of capital. This amount is net of any adjustments, discounts, allowances or other inducements permitted by the health care coverage contract.

R. “Rate filing,” for purposes of this regulation, is a filing that contains all of the items required in this regulation and the bulletin entitled “Requirements for the Filing of Rate and Forms for Life, Accident and Health Carriers;” and 1. For individual products, the proposed base rates and all rating factors, the underlying rating assumptions, and support for changes in these rates, factors and assumptions; and; 2. For group products, the underlying rating factors and assumptions, and support for changes in these factors and assumptions.

S. “Rate increase” shall have the same meaning as defined in §10-16-102(36.5), C.R.S., and includes an increase in any current rate or factor used to calculate premium rates for new or existing policyholders or certificateholders.

T. “Retention” means, for the purposes of this regulation, the percentage of total premium determined by either 100% minus the percentage of total premium anticipated to be paid for policyholder benefits or 100% minus the anticipated loss ratio (or 100% minus the lifetime loss ratio, for products priced on a lifetime loss ratio standard).

U. “Targeted” or “anticipated loss ratio” shall have the same meaning as defined in §10-16-102(43.7), C.R.S. Note: active life reserves do not represent claim payments, but provide for timing differences. Targeted loss ratio calculations must be displayed without the inclusion of active life reserves.

V. “Trend” or “trending” means any procedure for projecting losses to the average date of loss, or of projecting premium or exposures to the average date of writing. W. “Unfairly discriminatory rates” means, for purposes of this regulation, charging different rates for the same benefits provided to individuals, or groups, with like expectations of loss; or if after allowing for practical limitations, differences in rates fail to reflect equitably the differences in expected losses and expenses. For individual policies, rates which differ for new and renewal policies are not necessarily considered unfairly discriminatory. In addition, a rate is not unfairly discriminatory solely if different premiums result for policyholders with like loss exposures but different expenses, or like expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.

X. “Use of the rates” means, for purposes of this regulation, any use of the rates or factors including collection of premiums, distribution to agents, disclosure or premium quotes to parties outside the company, advertising, or any other use of the rates or factors. Section 5 General Rate Filing Requirements All rate filings shall be submitted electronically by licensed entities. Failure to supply the information required in Sections 5, 6 and 7 of this regulation will render the filing incomplete. Incomplete filings are not reviewed for substantive content. All filings that are not returned or disapproved on or before the 30th calendar day after receipt will be considered complete. Filings may be reviewed for substantive content, and if reviewed, any deficiency will be identified and communicated to the filing company on or before the 45th calendar day after receipt. Correction of any deficiency, including deficiencies identified after the 45th calendar day, will be required on a prospective basis, and no penalty will be applied for a non-willful violation identified in this manner. Nothing in this regulation shall render a rate filing subject to prior approval by the Commissioner that is not otherwise subject to prior approval as provided by statute. A. General Requirements 1. Prior Approval: Any proposed rate increase for other than dental insurance or a rate increase of 5% or more annually for dental insurance, which is effective on or after January 1, 2009, is subject to prior approval by the Commissioner and must be filed with the Division of Insurance at least 60 calendar days prior to the proposed implementation or use of the rates. If the Commissioner approves the rate filing within 60 calendar days after the filing date, the carrier may use the rates immediately upon approval, but only in communications or advertisements to agents or to other parties outside the company. Under no circumstance shall the carrier use the rates for the collection of premiums until after the proposed effective date specified in the rate filing. If the Commissioner does not approve or disapprove the rate filing within 60 calendar days after the filing date, the carrier may implement and make use of the rates. Corrections of any deficiency identified after the 60th calendar day will be required on a prospective basis and no penalty will be applied for a non-willful violation identified in this manner if the rates are determined to be excessive, inadequate or unfairly discriminatory. Rates for Medicare supplement insurance are subject to prior approval as specified in Colorado Insurance Regulation 4- 3-1, but are not subject to the 60 day filing requirement of this paragraph. All filings must be filed with the Rates and Forms Section of the Division of Insurance. The Commissioner shall disapprove the rate filing if any of the following apply: a. The benefits provided are not reasonable in relation to the premiums charged; b. The rate filing contains rates that are excessive, inadequate, unfairly discriminatory, or otherwise does not comply with the provisions of Sections 5, 6 and 7 of this regulation. In determining if the rate is excessive or inadequate, the Commissioner may consider profits, dividends, Annual Rate Reports, annual financial statements, subrogation funds credited, investment income or losses, unearned premium reserve, reserve for losses, surpluses, executive salaries, expected benefits ratios, and any other appropriate actuarial factors as determined by accepted actuarial standards of practice; c. The actuarial reasons and data do not justify the requested rate increase; or d. The rate filing is incomplete.

2. File and Use: Any rate filing not specified in Paragraph 1 of this subsection is classified as file and use. If a rate change has been implemented or used without being filed with the Division of Insurance, corrective actions may be ordered, including fines, refunds to policyholders, and/or rate credits. Under no circumstance shall the carrier use the rates for the collection of premiums until after the proposed effective date specified in the rate filing. All filings must be filed with the Rates and Forms Section of the Division of Insurance.

3. Non-Developed Rates: Non-developed rates are not subject to the filing requirements of Sections 5, 6 and 7 of this regulation.

4. Required Submissions:

a. All companies must submit rate filings whenever the rates charged new or renewal policyholders or certificate holders differ from the rates on file with the Division of Insurance. Included in this requirement are changes due to periodic recalculation of experience, change in rate calculation methodology, or change(s) in the trend or other rating assumptions.

b. All companies must submit a rate filing on at least an annual basis to support the continued use of rating variables which change on a predetermined basis, such as trend, durational factors, or the Index Rate for small group business, for continued appropriateness. These rate filings must contain detailed support as to why the assumptions continue to be appropriate.

c. All companies must submit a rate filing within 60 calendar days after Commissioner's approval of the assumption or acquisition of a block of business. This rate filing should provide detailed support for the rating factors the assuming or acquiring company proposes to use, even if the rating factors are not changing. The new filing must demonstrate that the rating assumptions continue to be appropriate. d. A separate rate filing is required for each major line of business. Rate filings should not be combined with form filings. Each type requires a separate filing. 5. Withdrawn, Returned, or Disapproved Filings: Filings that have either been withdrawn by the filer, returned by the Division of Insurance as incomplete or disapproved as unjustified, and subsequently are resubmitted, will be considered as new filings. If a filing is withdrawn, returned, or disapproved, the rates may not be used or distributed. Nothing in this regulation shall render a rate filing subject to prior approval by the Commissioner that is not otherwise subject to prior approval as provided by statute. 6. Submission of rate filings: All health, sickness and accident insurance (Title 10, Article 16), health care coverage (Title 10, Article 16), Medicare supplement insurance (Title 10, Article 18), long-term care insurance (Title 10, Article 19) and health excess/stop loss insurance (Title 10, Article 16) rate filings must be filed electronically in a format made available by the Division of Insurance, unless exempted by rule for an emergency situation as determined by the Commissioner. If the company fails to comply with these requirements, the company will be notified that the filing has been returned as incomplete. If a filing is returned due to lack of completeness, the rates may not be used or distributed.

7. Company Specific: A separate filing must be submitted for each company. A single filing, which is made for more than one company or for a group of companies, is not permitted. This applies even if a product is comprised of components from more than one company, such as an HMO/indemnity point-of-service plan.

8. Required Inclusions: The level of detail and the degree of consistency incorporated in the experience records of the company are vital factors in the presentation and review of rate filings. Every rate filing shall be accompanied by sufficient information to support the reasonableness of the rate. Valid company experience should be used whenever possible. This information may include the company’s experience and judgment; the experience or data of other companies or organizations relied on by the company; the interpretation of any statistical data relied on by the company; descriptions of methods used in making the rates; and any other similar information. In addition, the Commissioner may request additional information necessary to adequately support the rate change request.

9. Confidentiality: All rate filings submitted shall be considered public and shall be open to inspection by the public, unless the information may be considered confidential pursuant to §24-72-204, C.R.S. If the carrier desires confidential treatment of any information submitted as required in this regulation, a “Confidentiality Index” must be completed. Please see the bulletin entitled, “Guidelines for Rate, Rule, Loss Cost and Form Filings Containing Confidential Information.” This bulletin can be found on the Division of Insurance’s website, www.dora.state.co.us/insurance. The Division will evaluate the reasonableness of any request for confidentiality and will provide notice to the carrier if the request for confidentiality is rejected. It should be noted that HMOs are not afforded automatic confidential treatment of any rate filings and must also complete a Confidentiality Index.

B. Forms and Actuarial Certification 1. Required Forms: A fully completed NAIC Uniform Transmittal Document and Form HR-1 must be completed for each rate filing. These forms are available in Division of Insurance Bulletin B-1.15 entitled “Requirements for the Filing of Rate and Forms for Life, Accident and Health Carriers.” This bulletin can be found on the Division of Insurance’s website, www.dora.state.co.us/insurance.

2. Actuarial Certification: A signed and dated statement by a qualified actuary, which attests that, in the actuary’s opinion, the rates are not excessive, inadequate or unfairly discriminatory. (The requirements for the actuarial certification for Medicare supplement rate filings can be found in Section 14(H) of Colorado Insurance Regulation 4-3-1. The requirements for the actuarial certification for certain long-term care rate filings can be found in Sections 10(B) and 18(B) of Colorado Insurance Regulation 4-4-1). Section 6 Actuarial Memorandum The rate filing must contain an actuarial memorandum, either signed by, or prepared under the supervision of, a qualified actuary, containing, at a minimum, the following sections in the designated order shown below:

A. Summary: A brief written summary of the filing including, but not limited to, the following: 1. Reason(s) for the rate filing;

2. Marketing method(s);

3. Premium classification;

4. Product descriptions;

5. A listing of all policy/rider forms impacted (for standardized Medicare supplement, also identify plans); and 6. A statement as to whether the premiums will be charged on an issue age, attained age, renewal age or other basis.

B. Assumption or Acquisition: The memorandum must state whether or not the products included in the rate filing were part of an assumption or acquisition of policies from another company. If so, then the memorandum must include the full name of the company from which the policies were assumed or acquired and the closing date of assumption or acquisition. C. Rating Period: The memorandum must identify the period for which the rates will be effective. At a minimum, the proposed effective date of the rates must be provided. If the length of the rating period is not clearly identified, it will be assumed to be for twelve months, starting from the proposed effective date.

D. Underwriting: The memorandum must include a brief description of the extent to which this product will be underwritten, if a new product, or the changes, if any, to the underwriting standards, if an existing product. The memorandum should include the expected impact on the claim costs by duration and in total. The company shall state separately the effects of different types of underwriting: medical, financial or other. An example of an acceptable brief description is: “This policy form is subject to limited underwriting with yes/no questions. The expected impact is: duration 1 = .15; duration 2 = .05; duration 3 = .03 decrease in claim costs.” E. Effect of Law Changes: The memorandum should identify and quantify any changes to the rates, expenses, and/or medical costs that result from changes in law(s) or regulation(s). This quantification must include the effect of specific mandated benefits and anticipated changes. F. Rate History: The memorandum must include a chart showing the rate changes implemented including the actual effective date of each rate change in at least the three years immediately prior to the date of the filing. The cumulative effect of all rate filings, submitted in the prior year, on renewal rates should be specified, including the range of increases the renewing policyholder may experience, i.e., the minimum, average, and maximum. The rate history should be provided on both a Colorado basis, as well as an average nationwide basis, if applicable. G. Coordination of Benefits: Each rate filing must reflect actual loss experience net of any savings associated with coordination of benefits and/or subrogation. H. Relation of Benefits to Premium: The memorandum must adequately support the reasonableness of the relationship of the projected benefits to projected earned premiums for the rating period. This relationship will be presumed to be reasonable if the company complies with the following: 1. Medicare Supplement and Long-Term Care Policies: See Section 7(D) and 7(E) of this regulation.

2. Retention Percentage: The actuarial memorandum must list and adequately support each specific component of the retention percentage. If the product was not initially priced using a lifetime loss ratio standard, the retention percentage is equal to 1 minus the targeted loss ratio. If the product was initially priced using a lifetime loss ratio standard, the retention percentage is equal to 1 minus the lifetime loss ratio. Each of these specific components must be expressed as a percentage of the earned premium, and should sum to the total company retention percentage. Each component should reflect the average assumption used in pricing. Ranges for each assumption and flat dollar amounts are not permitted. The component for profit/contingencies should reflect the target load for profit and contingencies, and not the expected results or operating margin. The Commissioner will evaluate each component for reasonableness and consistency with other similar rate filings. Any change in these components from the previous rate filing must be adequately supported. It should be noted that broad groupings of these components are not permitted.

3. Benefits Ratio Guidelines: The Commissioner uses these percentages as guidelines for the acceptability of the company’s targeted loss ratio or lifetime loss ratio. a. All rate filings justifying the relationship of benefits to premium using one of these guidelines must list the components of the retention percentage, as defined in Subsection H(2) of this section. The Commissioner will evaluate these components for reasonableness. Policy forms priced at, or above, these benefits ratios may be unacceptable, if one or more of the retention components is not supported.

b. For the following types of business, if the company prices the product at or above any of the following minimum anticipated benefits ratios.

Comprehensive Major 65% Medical (Individual)

Comprehensive Major 70% Medical (Small Group)

Comprehensive Major 75% Medical (Large Group)

Specified or Dread 60% Disease Limited Benefit Plans 60% Disability Income 60% Dental/Vision 60% Stop Loss 60% c. For conversion products, if the anticipated loss ratio is at least 125%. d. For individual products issued to HIPAA eligible individuals, if the premiums for these products are, at most, two times the premiums for the underlying, underwritten product.

I. Lifetime Loss Ratio: The memorandum must state whether or not the product was priced initially using a lifetime loss ratio standard. If the product was priced using a lifetime loss ratio standard, then any subsequent rate change request must be based on the same lifetime loss ratio standard with consideration given to investment income and the variance in the expected benefits ratios over the duration of the policy. The rate filing must include the average policy duration in years as of the endpoint of the experience period and the expected benefits ratio, as originally priced, for each year of the experience period. The rate filing must also include a chart showing actual and expected benefits ratios for both the experience and rating periods. For each year of the experience period the chart must show the actual and expected benefits ratios, and the ratio of these two benefits ratios. For each year of the rating period, the chart must show the projected and expected benefits ratios, and the ratio of these two benefits ratios. It is expected that the company is pricing these products to achieve a benefits ratio greater than or equal to the expected benefits ratio for the rating period, unless there has been a material change in assumptions which would justify a deviation from this expectation. These changes must be identified and clearly supported in the rate filing.

J. Provision for Profit and Contingencies: The memorandum must identify the amount or percentage of the provision for profit and contingencies, and how this provision is included in the final rate. If material, investment income from unearned premium reserves, reserves from incurred losses, and reserves from incurred but not reported losses must be considered in the ratemaking process. Detailed support must be provided for any proposed load in excess of 7% after tax. K. Complete Explanation as to How the Proposed Rates were Determined: The memorandum must contain a section with a complete explanation as to how the proposed rates were determined, including all underlying rating assumptions, with detailed support for each assumption. The Division of Insurance may return a rate filing if adequate support for each rating assumption is not provided. This explanation may be on an aggregate expected loss basis or as a per-member-per- month (PMPM) basis, but must completely explain how the proposed rates were determined. The memorandum must adequately support all material assumptions and methodologies used to develop the expected losses or pure premiums.

L. Trend: This section must describe the trend assumptions used in pricing. These assumptions must each be separately discussed, adequately supported, and also be appropriate for the specific line of business, product design, benefit configuration, and time period. Any and all factors affecting the projection of future claims must be presented and adequately supported. The trend assumptions shall be, if practical, separately quantified into two categories, medical and insurance, as defined below:

1. Medical trend is the combined effect of medical provider price increases, utilization changes, medical cost shifting, and new medical procedures and technology. 2. Insurance trend is the combined effect of underwriting wearoff, deductible leveraging, and antiselection resulting from rate increases and discontinuance of new sales. Note: medical trend must be determined or assumed before insurance trend can be determined. Underwriting wearoff means the gradual increase from initial low expected claims that result from underwriting selection to higher expected claims for later (ultimate) durations. Underwriting wearoff does not apply to guaranteed issue products. M. Credibility: The Colorado standard for fully credible data is 2,000 life years and 2,000 claims a year. Both standards must be met within a maximum of three years, if the proposed rates are based on claims experience.

1. The memorandum must discuss the credibility of the Colorado data with the proposed rates based upon as much Colorado data as possible. The memorandum must also identify and discuss the source, applicability and use of collateral data used to support partially credible Colorado data. The use of collateral data is only acceptable if the Colorado data does not meet the full credibility standard. The formula for determining the amount of credibility to assign to the data is SQRT [(# life years or claims)/full credibility standard]. The full credibility standard is defined above.

2. The memorandum should also discuss how and if the aggregated data meets the Colorado credibility requirement. Any filing, which bases its conclusions on partially credible data, should include a discussion as to how the rating methodology was modified for the partially credible data.

N. Data Requirements: The memorandum must, at a minimum, include earned premium, loss experience data, average covered lives and number of claims, submitted on a Colorado-only basis for at least 3 years, if available, and on a national, regional or other appropriate basis, if the Colorado data is not fully credible, or provide an acceptable reason(s) as to why this data was not provided. Rates must be supported by the most recent data available, with as much weight as possible placed upon the Colorado experience. If the Colorado experience is not fully credible, the data may be supplemented with national data, or other relevant data. The filing should clearly discuss the reliance upon non-Colorado data, and the credibility of the Colorado data. The experience period must include consecutive data no older than nine months prior to the proposed effective date of the filing, or a clear and acceptable reason as to why such data was not included. The loss data must be on an incurred basis, including both the accrued and unaccrued portions of the liability and reserve (e.g., case, bulk and IBNR reserves) as of the valuation date. Premiums and/or exposure data must be stated on both an actual and on-rate-level basis. Capitation payments should be considered as claim or loss payments. O. Side-by-Side Comparison: Each memorandum must include a “side-by-side comparison” identifying any proposed change(s) in rates. This comparison should include three columns: the first containing the current rate, rating factor, or rating variable; the second containing the proposed rate, rating factor, or rating variable; and the third containing the percentage increase or decrease of each proposed change(s). If the proposed rating factor(s) are new, the memorandum must specifically so state, and provide detailed support for each of the factors. P. Benefits Ratio Projections: The memorandum must contain a section projecting the benefits ratio, over the rating period, both with and without the requested rate change. For products priced using a lifetime loss ratio standard, such as long-term care and long term disability, the projections should include a timeframe as to when the lifetime loss ratio will be achieved. Q. Other Factors: The memorandum must clearly display or clearly reference all other rating factors and definitions, including the area factors, age factors, gender factors, etc., and support for each of these factors in a new rate filing and support for changes to any of these factors in renewal rate filings. In addition, the Commissioner expects each company to review each of these rating factors at least every five years and provide detailed support for the continued use of each of these factors in a rate filing.

Section 7 Additional Rate Filing Requirement by Line of Business The following subsections set forth the requirements by separate lines of business, which must be complied with in addition to the above general requirements: A. Individual: Renewal rates for individual health insurance plans shall not be affected by the health status or claims experience of the individual insured. A “claims experience factor,” or any other part of the renewal rate calculation, which is based in whole or in part upon the health status or claims experience of the individual insured is prohibited. B. Small Employer Group Health Benefit Plans: The provisions of § §10-16-105 and 10-16-107, C.R.S., and Colorado Insurance Regulations 4-6-5, 4-6-7, and 4-6-8, shall apply to the filing of rates for small employer health benefit plans.

1. The factors usually included in the determination of a trend percentage are not considered a small group rating variable and must be included in the calculation of the Index Rate. A company may, in a single rate submission, file up to a maximum of twelve different Index Rates for effective dates in the subsequent twelve-month period; however, only one Index Rate can be effective at any given time. Only the factors defined in Colorado Insurance Regulation 4-6-7 may be used to adjust the filed Index Rate, and changes should be clearly set forth in the side-by-side comparison. Each rate filing should contain all tables necessary to recalculate the small group renewal rates, even if the factors in the table have not changed. It should be clearly indicated that the factors in these tables are unchanged.

2. Pursuant to §10-16-105(6), C.R.S., all small group insurers or other entities must file a complete and detailed description of rating practices and renewal underwriting practices. This paragraph shall not apply to non-developed rates.

3. The Commissioner has determined that the information required under Paragraph 2 of this Subsection B may be considered confidential pursuant to §24-72-204, C.R.S., and/or §10-16-105(6.6), C.R.S. If a carrier desires confidential treatment of the information specified in Paragraph 2 of this subsection, a “Confidentiality Index” must be completed. Please see Division of Insurance Bulletin B-1.15 entitled, “Guidelines for Rate, Rule, Loss Cost and Form Filings Containing Confidential Information” . This bulletin can be found on the Division of Insurance’s website, www.dora.state.co.us/insurance. It should be noted that HMOs are not afforded automatic confidential treatment in the filing of this report and must also complete a “Confidentiality Index” . C. Large Group Health Benefit Plans: Large group major health benefit plan contracts are considered to be a negotiated agreement between a sophisticated purchaser and seller. Certain rating variables may vary due to the final results of each negotiation. Each large group rate filing must contain the ranges for these negotiated rating variables, an explanation of the method used to apply these rating variables, and a discussion of the need for the filed ranges. A new rate filing is required whenever a rating variable or a range for a rating variable changes. Each filing should also contain an example of how the large group health rates are calculated. While the final rate charged the large group may differ from the initial quote, all rating variables must be on file with the Division of Insurance.

Although it is not necessary to submit a separate rate filing for each large group policy issued, each company must retain detailed records for each large group policy issued. At a minimum, such records shall include: any data, statistics, rates, rating plans, rating systems, and underwriting rules used in underwriting and issuing such policies, experience data on each group insured, including, but not limited to, written premiums at a manual rate, paid losses, outstanding losses, loss adjustment expenses, underwriting expenses, and underwriting profits. All rating factors used in determining the final rate should be identified in the detail material and lie within the range identified in the rate filing on file with the Division of Insurance. The company shall make all such information available for review by the Commissioner upon request. All such requests will be made at least three (3) business days prior to the date of review. The rates for subgroups must be determined in an actuarially sound manner using credible data. The methodology for determining these rates must be on file with the Division of Insurance and any changes in the methodology must be filed with the Division of Insurance. D. Valid Multi-State Association Groups: Pursuant to §10-16-107(6), C.R.S., any health benefit plan issued or renewing on or after January 1, 2010, for any valid multi-state association under §10- 16-214(2), C.R.S., shall not use any health status-related factor in determining the premium or contribution for any enrolled individual and/or their dependent. E. Medicare Supplement: A Medicare supplement policy is defined in §10-18-101(4), C.R.S., and regulated pursuant to Colorado Insurance Regulation 4-3-1 and § §10-18-101 to 109, C.R.S. If the requirements of both Colorado Insurance Regulation 4-3-1 and this regulation are not met, the filing will be considered incomplete and returned to the company. Medicare supplement filings require prior approval. (The requirements for the actuarial certification for Medicare supplement rate filings can be found in Section 14(H) of Colorado Insurance Regulation 4-3-1). Rating requirements can be found in Sections 10(E)(2), 13 and 14(G) – (J). F. Long-Term Care: Long-term care insurance is defined in §10-19-103(5), C.R.S., and regulated pursuant to Colorado Insurance Regulation 4-4-1 and § §10-19-101 to 115, C.R.S. If the requirements of both Colorado Insurance Regulation 4-4-1 and this regulation are not met, the filing will be considered incomplete and returned to the company. The filing must also: 1. Demonstrate that investment income has been considered in the development of the rate; 2. Provide the expected benefits ratios for both the experience period and the projection period on an annual basis;

3. Provide the ratio of the actual benefits ratio to the expected benefits ratio for each year of the life of the policy on both a durational and calendar year basis; and 4. Provide a discussion as to how the original pricing assumptions have changed historically, and how the assumptions for the future period compare to the original pricing assumptions and the current rating assumptions.

G. Disability Income: The filing must demonstrate that investment income has been considered in the development of the rate.

H. Health Maintenance Organization (HMO): The rates for all HMO point-of-service (POS) benefits must be separately determined and supported. The actuarial memorandum supporting any rate filing for a policy which includes POS or other indemnity benefits must include a statement that all indemnity benefits are not expected to exceed twenty percent (20%) of the net medical and hospital expenses incurred. HMOs that exceed the 20% limitation in the prior calendar year may be prohibited from offering a point-of-service plan for new issues until compliance can be demonstrated.

I. Limited Service Licensed Provider Network (LSLPN): Rates and premiums for products issued by an LSLPN are to be determined on a fixed prepayment basis. Therefore, no LSLPN product may be issued on a cost-plus or retrospective rating basis.

Section 8 Annual Rate Report A. All foreign companies (whose reported Colorado health insurance written premiums were in excess of $20,000,000 in the preceding calendar year) and all Colorado domestic companies (without regard to yearly earned premium), subject to this regulation, must file an Annual Rate Report with the following exceptions:

1. Companies writing only disability income policies;

2. Companies whose only in force health policies are non-cancelable policies, if the premiums cannot be increased; and 3. LSLPNs who contract exclusively with national, state or local governments and whose rate, premium or reimbursement rate is determined by the contracting governmental entity. All other companies, subject to this regulation, may be required to file the Annual Rate Report upon request from the Commissioner. The Annual Rate Report must comply with the provisions of this section and must contain the information specified in Subsections C. and D. of this section. B. Timing and Submission: All Annual Rate Reports must be filed electronically in a format made available by the Division of Insurance. The Division of Insurance must receive all Annual Rate Reports on or before June 1 of each year. Failure to file this report by June 1 will result in a late penalty not to exceed $100 per day. Reports not completely discussing each of the required items under Subsection C. of this section, or not containing all of the information required in Subsection D. of this section, may be subject to a fine for an incomplete report. C. All Annual Rate Reports filed by companies identified in Subsection A. of this section must contain all of the information specified in this subsection. The information required in this subsection shall be organized by major line of business. For the purposes of this requirement, a “major line of business” includes at least the following categories: individual, small group, large group, Medicare risk, and Medicaid risk. For each of the company’s major lines of business, the report shall discuss the following topics:

1. Reason for filing: The report shall provide the reason for filing the report. Acceptable reasons include:

a. The company is a Colorado domestic company; and b. The company is a foreign company with over $20 million in written Colorado health insurance premium during the prior calendar year.

If the report is being prepared by a foreign company, the total amount of written Colorado health insurance premium during the prior year shall be included as part of the reason for filing.

2. Business written: The report shall contain a brief description of each of the major lines of business written or in force during the prior calendar year. 3. Rate filings filed: The report shall list by date and major line of business a brief description of all rate filings filed with the Division of Insurance during the prior calendar year. 4. Certification: The report shall be signed by a qualified actuary. For each major lines of business, including those for which a filing has not been made in the prior calendar year, the report shall include a certification which states that the current rate(s) or premium for such line(s) of business are not excessive, inadequate or unfairly discriminatory. For HMOs, the qualified actuary shall also certify that the indemnity benefits provided did not exceed 20% of the net medical and hospital benefits provided during the prior calendar year. Long-term care insurance for which the company can issue a certification as set forth in Subsection D. (4) of this section is exempt from this requirement. 5. Automatic factors: The report shall specifically:

a. List all automatic rating factors in use, including trend and inflation; b. Describe how each of these factors were determined;

c. Provide support for the continued use of these factors; and d. State that, in the actuary’s opinion, the continued use of any such factors used in calculation of the rates is still appropriate.

6. Appropriateness of rates charged: The report shall include a brief analysis of the appropriateness of rates charged to Colorado policyholders or certificateholders in the prior calendar year for each major line of business. This analysis shall include a table containing the earned premium, incurred losses, and number of policyholders for each major line of business. This analysis shall compare the anticipated to actual results for the prior calendar year by comparing the actual to expected benefits ratios and any other information as deemed appropriate for this analysis.

7. Reinsurance arrangements: The report shall include a discussion of the reinsurance arrangements in place and the reasonableness of these arrangements as regards the protection against claims volatility these arrangements provide the company. 8. Future rate changes planned: The report shall describe the steps, if any, taken or proposed to be taken, for each major line of business, to adjust the current year or future rates due to these findings. If a company states in this report that an indicated increase will not be implemented in the following year, nothing in this regulation shall be construed to prohibit the company from implementing a supportable rate increase in future years. D. Additional Information: In addition to the above, the Annual Rate Report for companies writing certain categories of business shall include the following information: 1. Health Maintenance Organizations:

a. Non-Developed Rates: If the HMO accepts business on a risk basis and does not develop rates (common for Medicaid and some Medicare business), the actuary shall include:

(1) A separate certification that the premium or reimbursements received for such business are sufficient to satisfy all medical expenditures, guaranteed provider benefits, internal and external expenses associated with the business, and all other costs associated with the risk transfer, or a quantification as to the amount of any deficiency; and (2) A description of any changes to the plan, provider risk arrangements or any other material aspect of the benefits provided under these plans. b. Provider Compensation: The manner in which the providers are compensated has a material effect on the rating process. In the report, therefore, the actuary shall provide all of the following:

(1) Clearly describe the type and scope of capitated or other provider risk sharing arrangements (if material to the rating assumptions), including the existence of any multiple capitation contracts, and any other material aspect of the benefits provided.

(2) State the degree to which the actuary has evaluated the financial position of the risk-assuming provider entities and the results of that evaluation. (3) State whether or not the rates include an adequate provision for contractual incentive payments.

(4) For all provider agreements which materially impact the rating assumptions, note whether or not the payments to these providers assumed in the rate development have, in fact, been confirmed by an executed agreement. For example, if the rates assume that all primary care will be performed by physicians who will be paid a fixed per member per month capitation in compensation for their services, the actuary should note whether or not the contract between the HMO and the physician group which agrees to this rate of compensation has been executed and will be in effect for the period the rates are effective. If the actuary is not aware or cannot determine if the amounts of provider compensation assumed in the rates is supported by actual, executed contracts, the actuary should still identify these assumptions and note that there is no confirmation that the supporting contracts have been executed.

(5) Indicate the impact the above arrangements/findings have on the rates. c. Pods: If the HMO uses pod ratings or classifications, the actuary shall adequately support the rate differentials through use of historical loss/expense experience and prospective provider compensation arrangements.

d. Prospective Changes: The report shall include a description of any other current and anticipated changes that would affect the HMO’s financial solvency, organizational structure, or market share.

e. Indemnity Benefits. The filing shall demonstrate that indemnity benefits do not exceed twenty percent (20%) of net medical and hospital expenses incurred during the previous calendar year.

2. Small Groups: Pursuant to §10-16-105(6.5), C.R.S., all companies who sell or offer for sale policies subject to the requirements of this regulation shall submit an annual actuarial rate certification to the Division of Insurance on or before March 1 of each calendar year. The small group certification, required under §10-16-105 (6.5), C.R.S., may be included in the Annual Rate Report provided the company submits written notification to the Division of Insurance on or before March 1, and clearly indicates, in the annual filing, that the annual filing satisfies the annual filing requirements in this section and the small group certification requirements in §10-16-105 (6.5), C.R.S. The certification shall be signed by a qualified actuary and shall contain at least the following: a. The name of the company and the identification number assigned by the National Association of Insurance Commissioners;

b. A list of all plans of health benefits and policy forms to which the certification applies; c. A statement that covers at least the points listed in the following illustration: “I am familiar with the small group rating laws and regulations of the state of Colorado. In my opinion, as of January 1 of the year of this certification, the premium rates and rating methodology to which this certification applies are not excessive, inadequate or unfairly discriminatory, and they meet the requirements of the insurance laws and regulations of Colorado;”

d. The name and title of the qualified actuary signing the certification and the name of the firm with which the actuary is associated; and e. The original signature of the qualified actuary and the date of the signature. Signature stamps or signatures on behalf of the actuary are not acceptable. 3. Limited Service Licensed Provider Networks (LSLPN): The annual certification must certify as to the appropriateness of the charges or rates and shall accompany the annual rate filing along with adequate supporting information. This certification shall state that the rates are not excessive, inadequate or unfairly discriminatory.

For all provider agreements which materially impact the rating assumptions, the report must note whether or not the payments to these providers assumed in the rate development have in fact been confirmed by an executed agreement. For example, if the rates assume that all services will be performed by providers who will be paid a fixed PMPM capitation in compensation for their services, then the actuary should note whether or not the contract between the LSLPN and the provider group which agrees to this amount of compensation has been executed, and will be in effect for the period the rates are effective. If the actuary is not aware or cannot determine if the amount of provider compensation assumed in the rates is supported by actual, executed contracts, then the actuary should still identify these assumptions and note that there is no confirmation that the supporting contracts have been executed. Non-Developed Rates: If the LSLPN accepts business on a risk basis and does not develop the rates (common for Medicaid business), then the actuary shall include: a. A separate certification that the premium or reimbursements received for such business will be sufficient to satisfy all medical expenditures, guaranteed provider benefits, internal and external expenses associated with the business, and all other costs associated with the risk transfer, or a quantification as to the amount of any deficiency; and b. A description of any changes to the plan, provider risk arrangements or any other material aspect of the benefits provided under these plans. The report shall state the degree to which the actuary has evaluated the financial position of the risk assuming provider entities, the results of that evaluation, and whether or not the rates include an adequate provision for contractual incentive payments.

4. Long-Term Care Insurance: The Annual Rate Report shall include a statement as to whether or not the actuary expects premiums to be level over the life of the policy. In lieu of the requirements of Subsections (8)(A) and 8(C) of this regulation, the actuary may certify that the premiums have remained level for existing policyholders and are expected to remain level over the life of the policy.

E. The Commissioner has determined that the information required in Subsections C and D of this section may be considered confidential pursuant to §24-72-204, C.R.S. If a carrier desires confidential treatment of the information specified in Subsections C. and D. of this section, a “Confidentiality Index” must be completed. Please see Colorado Insurance Bulletin B-1.15 entitled, “Guidelines for Rate, Rule, Loss Cost and Form Filings Containing Confidential Information.” This bulletin can be found on the Division of Insurance’s website, www.dora.state.co.us/insurance. It should be noted that HMOs are not afforded automatic confidential treatment in the filing of this report and must also complete a “Confidentiality Index” . Section 9 Annual Cost Report A. Pursuant to §10-16-111(4)(a), C.R.S., all companies subject to this regulation shall file an Annual Cost Report as described in this section. This report must comply with the requirements of this section and must contain the information specified in Subsection C. of this section and shall be filed electronically via the Division of Insurance’s website (www.dora.state.co.us/insurance). B. Timing and Submission: All Annual Cost Reports shall be filed electronically in a format made available by the Division of Insurance via the Division’s website on or before June 1 of each year. Failure to file this report by June 1 will result in a late penalty not to exceed $100 per day. Reports not containing all of the information specified in Subsection C. of this section may be subject to a fine for an incomplete report.

C. Annual Cost Reports filed by companies identified in Subsection A. of this section shall contain, where applicable, the following premium and cost information for the previous calendar year: 1. Earned premium, not reduced by dividends;

2. Medical trend percent itemized by medical provider price increases, utilization changes, medical cost shifting, and new medical procedures and technology; 3. Pharmacy medical trend percent itemized by pharmaceutical price increases, utilization changes, cost shifting, and the introductions of new brand and generic drugs; 4. Policyholder dividends and stockholder dividends paid; 5. Salaries, stock options, and bonuses for all CEO’s, and all executive officers; 6. Insurance producer commissions;

7. Payments to legal counsel;

8. Net income or loss;

9. Administrative expenditures with breakdowns for advertising or marketing expenditures, paid lobbying expenditures, and staff salaries;

10. Expenditures for disease or case management programs or patient education and other cost containment or quality improvement expenses;

11. Charitable contributions;

12. Investment income or losses on investments;

13. All reserve amounts, including active life reserves, claims reserves, and premium deficiency reserves;

14. The amount of total adjusted capital and the carrier’s authorized control level risk-based capital;

15. Taxes itemized by category;

16. Administrative ratio;

17. Actual benefits ratio;

18. The number of lives insured under each benefit plan the carrier offers to small employers; and 19. The cost of providing or arranging health care services. D. The information provided in Subsection C. of this section shall be provided on a Colorado only basis. A carrier licensed in multiple jurisdictions may satisfy the requirements of Subsection C. of this section by filing the Colorado allocated portion of national data if the actual Colorado only data is not otherwise available. If any of the items of information listed in Subsection C. of this section are not applicable to the carrier, the carrier shall indicate in the filing which items are not applicable and the reason why such items are not applicable. The information provided to the Division of Insurance in Subsection C. of this section will be aggregated for all carriers and will be published on the Division of Insurance’s website, www.dora.state.co.us/insurance.

Section 10 Prohibited Rating Practices The Commissioner has determined that certain rating activities lead to excessive, inadequate or unfairly discriminatory rates, and are unfair methods of competition and/or unfair or deceptive acts or practices in the business of insurance. Therefore, in accordance with § §10-16-107, 10-16-109, and 10-3-1110(1), C.R.S., the following are prohibited:

A. Attained age premium schedules where the slope by age is substantially different from the slope of the ultimate claim cost curve. However, this requirement is not intended to prohibit use of a premium schedule which provides for attained age premiums to a specific age followed by a level premium, or the use of reasonable step rating;

B. The use of premium modalization factors which implicitly or explicitly increase the premium to the consumer by any amount other than those amounts necessary to offset reasonable increases in actual operating expenses that are associated with the increased number of billings and/or the loss of interest income, unless such factors are adequately supported by acceptable data; and C. For individual health insurance plans, the use of any rating factors based upon zip codes which fail to equitably adjust for different expectations of loss. It is the expectation of the Commissioner that areas of the state with like expectations of loss must be treated in a similar manner. Also, policyholders utilizing the same provider groups should be rated in a like manner. The use of zip codes in determining rating factors can result in inequities. Unless different rating factors can be justified based upon different provider groups or other actuarially sound reasons, the following guidelines shall be followed whenever zip codes are used in determining a company’s rating factors:

1. All zip codes in the 800-802 three-digit zip code groups are considered part of the Denver metropolitan area and shall receive the same rating factor, with the following possible exceptions:

a. The following zip codes in Elbert County: 80101, 80106, 80107, 80117, b. The following zip codes in Arapahoe County: 80102, 80103, 80105, 80136, c. The following zip codes in El Paso County: 80132, 80133), d. The following zip codes in Boulder County: 80025, 80026, 80027, 80028. 2. In addition, the following zip codes outside the 800-802 three-digit zip code groups are considered part of the Denver metropolitan area and shall receive the same rating factor as the 800-802 three-digit zip code groups:

a. The following zip codes in Jefferson County: 80401-80403, 80419, 80433, 80437, 80439, 80453, 80454, 80457, 80465.

b. The following zip codes in Adams County: 80614, 80640. 3. All zip codes in the 809 three-digit zip code group are considered part of the Colorado Springs metropolitan area and shall receive the same rating factor. In addition, the following zip codes in El Paso County, which lie outside the 809 three-digit zip code group shall be considered part of the Colorado Springs metropolitan area and shall receive the same rating factor as the 809 three-digit zip code group:

80809, 80817, 80819, 80829, 80831, 80840, 80841.

If a company uses area rating factors which are based in whole or in part upon the zip code, and does not follow these guidelines, the company may be found to have rates that are unfairly discriminatory. The Commissioner would prefer that a company use federal MSA’s, rather than zip codes, in their rating structure. The Commissioner expects companies to review the appropriateness of area factors at least every five years and provide detailed support for the continued use of the factors in rate filings and upon request.

Section 11 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of the regulation shall not be affected. Section 12 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of certificates of authority. Among others, the penalties provided for in §10-3-1108, C.R.S. may be applied.

Section 13 Effective date This regulation is amended effective July 1, 2009.

Section 14 History Regulation 4-2-11, effective November 1, 1992.

Regulation Repealed and Re-promulgated, effective February 1, 1999. Regulation amended effective January 1, 2001.

Regulation amended effective December 1, 2005.

Regulation amended effective December 1, 2007.

Emergency Regulation 08-E-4 was effective July 1, 2008. Regulation amended effective October 1, 2008.

Regulation amended effective February 1, 2009.

Regulation amended effective July 1, 2009 Regulation 4-2-13 Mammography Minimum Benefit Level I. Authority This regulation is promulgated under the authority of § 10-1-109 C.R.S. II. Basis and Purpose The purpose of this regulation is to provide a method for adjusting the minimum mammography benefit which reflects increases and decreases in the consumer price index, as provided in § 10-16-104(4)(a), C.R.S.

III. Rule As of September 1, 1995, the minimum mammography benefit will be $55.37. Hereafter, on September 1 of each year, every individual and group sickness and accident insurer, non- profit hospital, health service corporation and health maintenance organization subject to § 10-16-104(4) (a) and 10-3-903(2)(h) C.R.S. shall annually update its mammography benefit to reflect the most recent annual national Consumer Price Index - Urban (CPI-U) published by the U.S. Bureau of Labor and Statistics. This may be done by either revising the policy forms or evidence of coverage, processing claims at the new benefit level or both.

IV. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. V. Severability If any provision of this regulation or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of such provision shall not be affected thereby.

VI. Effective Date This regulation will be effective September 1, 1995.

Regulation 4-2-15 Required Provisions in Carrier Contracts with Providers and Intermediaries Negotiating on Behalf of Providers I. Authority This regulation is promulgated pursuant to Sections 10-1-109 and 10-16-121(5), Colorado Revised Statutes (C.R.S.).

II. Purpose The purpose of this regulation is to describe the entities subject to the provisions of Section 10-16-121, C.R.S., which concerns required provisions in insurance carriers' contracts with health care providers, and to establish, how those entities shall meet the requirements of Section 10-16-121, C.R.S. III. Applicability and Scope The provisions of this regulation shall apply to all contracts that concern the delivery, provision, payment or offering of care or services covered by a managed care plan that are entered into between a carrier and a provider or its representative, or between a carrier and an intermediary. IV. Clarification of Terms A. “Carrier is defined in Section 10-16-102(8), C.R.S. An entity providing a “health coverage plan” (defined in Section 10-16-102(22.5) that is subject to the insurance laws and regulations of Colorado comes under the definition of a carrier. Examples of carriers include, but are not limited to, sickness and accident insurers, nonprofit hospital, medical-surgical, and health service corporations, health maintenance organizations, limited service licensed provider networks, prepaid dental care plan organizations and if they provide health benefits, private passenger automobile insurance carriers, workers' compensation carriers, and disability carriers. B. “Intermediary” is defined in Section 10-16-102(25.5), C.R.S. An intermediary must be authorized by health care providers to negotiate and execute provider contracts with carriers on behalf of such, providers. Examples of intermediaries may include but are not limited to: medical service organizations, provider networks, provider organizations, physician group practices, and physician hospital organizations.

C. “Managed care plan” is defined in Section 10-16-102(26.5), C.R.S. Examples of managed care plans include but are not limited to: preferred provider plans, gatekeeper plans, health maintenance organization plans, plans offered by limited service licensed provider networks, prepaid dental plans, and plans that provide different levels of benefits or claims payments depending on whether a covered person uses specified providers (sometimes called in-network providers). V. Rules I. Each and every contract between a carrier that has covered lives in Colorado and a provider or its representative that concerns the delivery, provision, payment, or offering of care or services covered by a managed care plan that is issued, renewed, amended or extended after January 1, 1997, shall contain provisions substantially similar to the following: A. “No individual or group of providers covered by this contract shall be prohibited from protesting or expressing disagreement with a medical decision, medical policy, or medical practice of [name of carrier] or an entity representing or working for the carrier (e.g., a utilization review company).”

B. “[Name of carrier] or an entity representing or working for the carrier shall not to; prohibited from protesting or expressing disagreement with a medical decision, medical policy, or medical practice of an individual or group or providers covered by this contract.” C. “[Name of carrier] shall not terminate this contract because a provider covered by this contract expresses disagreement with a decision by [name of carrier] or an entity representing or working for such carrier to deny or limit benefits to a covered person or because the provider assists the covered person to seek reconsideration of the carrier's decision, or because a provider discusses with a current, former, or prospective patient any aspect of the patient's medical condition, any proposed treatments or treatment alternatives, whether covered by the plan or not, policy provisions of a plan, or a provider's personal recommendation regarding selection of a health plan based on the provider's personal knowledge of the health needs of such patients.”

II. Each and every contract between a carrier and an intermediary that concerns the delivery, provision, payment, or offering of care or services covered by a managed care plan that is issued, renewed, amended or extended after January 1, 1997, shall contain a provision substantially similar to the following:

“[Name of intermediary] shall include in each and every one of its underlying contract'; authorizing said intermediary to negotiate and execute contracts with carriers on behalf of providers a provision substantially similar to the following:

Each and every contract which [name of intermediary] negotiates and executes with carriers, on behalf of the providers covered by this intermediary-provider contract, shall contain a provision stating that: 1) No individual or group of providers covered by the contract shall be prohibited from protesting or expressing disagreement with a medical decision, medical policy, or medical practice of the carrier or an entity representing or working for such carrier (e.g., a utilization review company); 2) The carrier or an entity representing or working for such carrier shall not be prohibited from protesting or expressing disagreement with a medical decision, medical policy, or medical practice of a individual or group of providers covered by the contract; and 3) The carrier shall not terminate any contract executed by [name of intermediary] because any individual or group of providers covered by the contract (a) expresses disagreement with a decision by the carrier or an entity representing or working for such carrier to deny or limit benefits to a covered person, or (b) assists the covered person to seek reconsideration of the carrier's decision, or (c) discusses with a current, former, or prospective patient any aspect of the patient's medical condition, any proposed treatments or treatment alternatives, whether covered by the plan or not, policy provisions of a plan, or a provider's personal recommendation regarding selection of a health plan based on the provider's personal knowledge of the health needs of such patients.” VI. Severability If any provision of this regulation or the application thereof to any person or circumstance is held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the other provisions, and this regulation is expressly declared to be severable. VII. Effective Date This regulation is effective on October 30, 1996.

Amended Regulation 4-2-16 Women's Access To Obstetricians, Gynecologists And Certified Nurse Midwives Under Managed Care Plans Table of ContentsSection 1 Authority Section 2 Purpose Section 3 Applicability and Scope Section 4 Definitions Section 5 Rules Section 6 Enforcement Section 7 Severability Section 8 Effective Date Section 9 History Section 1 Authority This regulation is promulgated pursuant to Section 10-1-109 and 10-16-107(5)(b), C.R.S. Section 2. Purpose The purpose of this regulation is to set forth guidelines for carrier compliance with the provisions of Section 10-16-107(5), C.R.S., concerning women's access to obstetricians, gynecologists, and certified nurse midwives in managed care plans.

Section 3. Applicability And Scope The provisions of this regulation shall apply to all managed care plans that provide coverage far reproductive health or gynecological care. “Managed care plan” is defined in Section 10-16-102(26.5), C.R.S. Examples of managed care plans include but are not limited to: preferred provider plans, gatekeeper plans, health maintenance organization plans, plans offered by limited service licensed provider networks, and plans that provide better coverage (e.g., pay a greater percentage of covered expenses or have lower copayment requirements) if a covered person uses specified providers (sometimes called participating or in-network providers). Section 4. Definitions A. “Reproductive health and gynecological care” means care for both the normal and abnormal processes of the female reproductive system, including medical and surgical management of disorders, pregnancy and childbirth, and related preventive care. Section 5. Rules A. A managed care plan that provides coverage for reproductive health or gynecological care shall not be issued or renewed unless such plan either provides a woman covered under the plan direct access to an obstetrician, gynecologist, or certified nurse midwife, participating and available under the plan, for her reproductive or gynecological care or has referral procedures in place that comply with this regulation.

B. A managed care plan will be considered to have provided “direct access” to an obstetrician, gynecologist, or certified nurse midwife for reproductive and gynecological care only if a woman covered under the plan has the option of selecting a participating obstetrician, gynecologist or certified nurse midwife who is available under the plan as her primary care provider, or : 1. Can herself directly make an appointment with an obstetrician, gynecologist or certified nurse midwife who is participating and available under the plan; 2. Is not required as a condition of coverage to get prior approval or a referral from her primary care provider, the managed care plan, a representative of the managed care plan, or any other entity for an appointment/visit with an obstetrician, gynecologist or certified nurse midwife who is participating and available under the plan; and 3. Is not required to pay more out-of-pocket for directly accessing an obstetrician, gynecologist, or certified nurse midwife who is participating and available under the plan than if she received prior approval for, or a primary care provider referral to, such an obstetrician, gynecologist or certified nurse midwife.

C. A managed care plan that does not provide direct access pursuant to subsection B shall have procedures in place to ensure that a woman covered under the plan who requests a referral to, or preauthorization of care provided by, an obstetrician, gynecologist or certified nurse midwife participating and available under the plan for her reproductive and gynecological care shall not have such referral or preauthorization unreasonably withheld. Such procedures shall be in writing, shall be provided upon request and at no charge to the Division of Insurance, a covered person, or a participating provider, and shall make provision for the following: 1. A request for a referral or preauthorization may be made orally (e.g., by telephone) or in writing, at the discretion of the covered woman making the request The managed care plan's procedures shall specify whether the request should be submitted to the plan or to the primary care provider, or whether either may receive the request. 2. A managed care plan may require that a request by a woman for a referral to, or preauthorization of care provided by, a participating obstetrician, gynecologist or certified nurse midwife include the following information only:

a. The reason for the request for referral or preauthorization of care and the type of care being sought (e.g., ongoing gynecological care, prenatal care, etc.), including sufficient information to determine if referral services requested are a benefit under the plan;

b. The number of visits or period for which the referral or preauthorization is being requested (e.g., for one visit, for all obstetrical care throughout the term of a pregnancy, etc.); and c. Identifying information (e.g., name of primary care provider, name of the obstetrician, gynecologist or certified nurse midwife to whom the woman wants a referral, plan number, enrollee name, etc.).

3. A request for a referral or preauthorization shall be approved or denied within three (3) working days of the date on which the request was made if it is an oral request, or within three (3) working days of the date on which it was received if it is a written request Where a plan allows a primary care provider to process referral requests, pursuant to Section V.C.1, of this regulation, the same timelines shall apply.

4. An approval of a request by a woman for a referral to, or preauthorization of care provided by, a participating obstetrician, gynecologist or certified nurse midwife shall include, at minimum, the following information:

a. The number of visits or period for which the referral or preauthorization is being approved (e.g., for one visit, for all obstetrical care throughout the term of a pregnancy, etc.); and b. The plan's understanding of the reason for the referral (e.g., ongoing gynecological care, prenatal care, etc.).

5. Approvals and denials of requests may be made orally but all denials shall be followed up by the health coverage plan or its representative within three (3) working days of the receipt of the original oral or written request with a detailed written explanation of the reason (s) for the denial, The written denial shall also describe the process by which the covered person may appeal and/or file a grievance concerning the denial pursuant to Division of Insurance Regulation 4-2-17.

6. Managed care plans shall not financially penalize, sanction, terminate, or reward a participating provider responsible for making referrals based on the volume and/or consequent expenditures incurred as a result of that provider's referrals to participating obstetricians, gynecologists, or certified nurse midwives made pursuant to this regulation. 7. A managed care plan or its representative shall not deny a request for a referral to, or preauthorization of care by, a participating obstetrician, gynecologist, or certified nurse midwife solely because a covered woman's primary care provider is able/qualified to provide the same reproductive health or gynecological care, treatment or diagnostic tests as the obstetrician or gynecologist.

8. Managed care plans may require an obstetrician, gynecologist, or certified nurse midwife to whom a woman has been referred to send information concerning care for the woman to her primary care provider, in order to promote ongoing management of her care and continuity of care. However, failure of an obstetrician, gynecologist, or certified nurse midewife to provide such information shall not in any way result in financial or other penalties being imposed by the plan on either the patient or the primary care provider. D. All managed care plans subject to subsection C shall keep a log on file of all denied requests for referrals to, and denials of preauthorizations of care provided by, an obstetrician, gynecologist, or certified nurse midwife who is participating and available under the plan that have been appealed. The log shall indicate the date of each request, the reason for each denial, and the final outcome of each appeal. The log of denied requests mat have been appealed shall not include patient identifying information. The log shall be made available upon request to the Division of Insurance. E. Nothing in this regulation shall be construed to require a managed care plan to make or approve a referral to an obstetrician, gynecologist, or certified nurse midwife who is not a participating provider under the plan. Also, nothing in this regulation shall be construed to require a managed care plan to include in its plan of coverage specific obstetrical or gynecological services except to the extent otherwise required by law or regulation.

Section 6. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of penalties, issuance of cease and desist orders, and/or suspensions or revocations of license.

Section 7. Severability If any provision of this regulation or the application thereof to any person or circumstance is held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the other provisions, and this regulation is expressly declared to be severable. Section 8. Effective Date This amended regulation is effective on March 1, 2000.

Section 9. History 1. Originally effective December 30, 1996 for health coverage plans issued or renewed on or after January 31, 1997.

2. Amended March 1, 2000 to include access to certified nurse midwives. Amended Regulation 4-2-17 PROMPT INVESTIGATION OF HEALTH PLAN CLAIMS INVOLVING UTILIZATION REVIEW AND DENIAL OF BENEFITS Section 1 Authority Section 2 Background and Purpose Section 3 Applicability and Scope Section 4 Definitions Section 5 Compliance Requirements Section 6 Standard Utilization Review Section 7 Expedited Utilization Review Section 8 Emergency Services Section 9 Peer-to-Peer Conversation Section 10 First Level Review Section 11 Voluntary Second Level Review Section 12 Expedited Review of an Adverse Determination Section 13 Enforcement Section 14 Severability Section 15 Effective Date Section 16 History Section 1 Authority This regulation is promulgated and adopted by the Commissioner of Insurance under the authority of Sections 10-1-109, 10-3-1110, 10-16-113(2) and (3)(b) and 10-16-109, Colorado Revised Statutes (C.R.S.).

Section 2 Background and Purpose The purpose of this regulation is to set forth guidelines for carrier compliance with the provisions of Sections 10 3 1104(1)(h), 10-16-409(1)(a), and 10-16-113, C.R.S., in situations involving utilization review and certain denials of benefits for treatment, as described herein. Among other things, Section 10-3- 1104(1)(h), C.R.S., requires carriers to adopt and implement reasonable standards for the prompt investigation of claims arising from insurance policies; promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement; and refrain from denying a claim without conducting a reasonable investigation based upon all available information. This regulation replaces Colorado Emergency Regulation 05-E-5 in its entirety.

This regulation is designed to provide minimum standards for handling appeals and grievances involving utilization review determinations and certain denials of benefits for treatments excluded by health coverage plans.

Section 3 Applicability and Scope The provisions of this regulation shall apply to all health coverage plans, but shall not apply to automobile medical payment policies, worker’s compensation policies or property and casualty insurance. Where a decision concerning a claim is not based on utilization review, a carrier is not required to use the specific procedures outlined in this regulation, except this regulation shall apply to a carrier’s denial of a benefit because the treatment is excluded by the health coverage plan if the covered person presents evidence from a medical professional that there is a reasonable medical basis that the contractual exclusion does not apply. Nothing in this regulation shall be construed to supplant any appeal or due process rights that a person may have under federal or state law.

Section 4 Definitions 1 A. “Adverse determination” means a determination by a health carrier or its designee that request for a benefit has been reviewed and, based upon the information provided, does not meet the health carrier’s requirement for medical necessity, or is determined to be experimental or investigational, and is therefore denied, reduced, or terminated. An adverse determination also includes a denial for a benefit excluded by a health coverage plan for which the claimant is able to present evidence from a medical professional that there is a reasonable medical basis that the contractual exclusion does not apply to the denied benefit.

B. “Ambulatory review” means utilization review of health care services performed or provided in an outpatient setting.

C. “Case management” means a coordinated set of activities conducted for individual patient management of serious, complicated, protracted or other health conditions. D. “Clinical peer” means a physician or other health care professional who holds a non-restricted license in a state of the United States and in the same or similar specialty as typically manages the medical condition, procedure or treatment under review. E. “Complaint” means a written communication primarily expressing a grievance. F. “Designated representative” means:

1. A person, including the treating health care professional or a person authorized by Paragraph 2 of this Subsection F., to whom a covered person has given express written consent to represent the covered person; or 2. A person authorized by law to provide substituted consent for a covered person, including but not limited to a guardian, agent under a power of attorney, or a proxy; or 3. In the case of an urgent care request, a health care professional with knowledge of the covered person’s medical condition.

G. “Discharge planning” means the formal process for determining, prior to discharge from a facility or service, the coordination and management of the care that a patient receives following discharge from a facility or service.

1 In addition to the terms defined in this section, the following terms are defined in statute (see Section 10-16-102 , C.R.S.): “carrier” , “covered person” , and “health coverage plan” . H. “Emergency medical condition” means the sudden, and at the time, unexpected onset of a health condition that requires immediate medical attention, where failure to provide medical attention would result in serious impairment to bodily functions or serious dysfunction of a bodily organ or part, or would place the person’s health in serious jeopardy. I. “Grievance” means a circumstance regarded as a cause for protest, including the protest of an adverse determination.

J. “Health care professional” means a physician or other health care practitioner licensed, accredited or certified to perform specified health services consistent with state law. K. “Life or limb threatening emergency” shall have the same meaning as defined in Section 10-16- 407(2), C.R.S.

L. “Medical professional” means an individual licensed pursuant to the “Colorado Medical Practice Act” , article 36 of title 12, C.R.S., or, for dental plans only, a dentist licensed pursuant to the “Dental Practice Law of Colorado” , article 35 of title 12, C.R.S., acting within his or her scope of practice. M. “Prospective review” means utilization review conducted prior to an admission or course of treatment. N. “Provider” shall have the same meaning as defined in Section 10-16-102(36), C.R.S. O. “Retrospective review” means any utilization review that is not prospective review, but does not include the review of a claim that is limited to veracity of documentation or accuracy of coding. P. “Second opinion” means an opportunity or requirement to obtain a clinical evaluation by a provider other than the one originally making a recommendation for a proposed health service to assess the clinical necessity and appropriateness of the initial proposed health service. Q. “Stabilized” means, with respect to an emergency medical condition, that no material deterioration of the condition is likely, within reasonable medical probability, to result or occur before an individual can be transferred.

R. “Urgent care request” means:

1. A request for a health care service or course of treatment with respect to which the time periods for making a non-urgent care request determination that, a. Could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function; or for persons with a physical or mental disability, create an imminent and substantial limitation on their existing ability to live independently, or b. In the opinion of a physician with knowledge of the covered person’s medical condition, would subject the covered person to severe pain that cannot be adequately managed without the health care service or treatment that is the subject of the request.

2. Except as provided in Paragraph 3 of this Subsection R., in determining whether a request is to be treated as an urgent care request, an individual acting on behalf of the health carrier shall apply the judgment of a prudent layperson who possesses an average knowledge of health and medicine.

3. Any request that a physician with knowledge of the covered person’s medical condition determines and states is an urgent care request within the meaning of Paragraph 1 shall be treated as an urgent care request.

S. “Utilization review” means a set of formal techniques designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of, health care services, procedures, or settings. Techniques include ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning, or retrospective review. For the purposes of this regulation, utilization review shall also include reviews for the purpose of determining coverage based on whether or not a procedure or treatment is considered experimental or investigational in a given circumstance, and reviews of a covered person's medical circumstances when necessary to determine if an exclusion applies in a given situation. Section 5 Compliance Requirements A. A health carrier that does not use a procedure for investigating claims involving utilization review that is consistent with this regulation shall be deemed not to be in compliance with the requirement under the unfair competition and deceptive practice insurance statutes of Colorado that a carrier refrain from denying a claim without conducting a reasonable investigation based upon all available information.

( Section 10-3-1104(1)(h)(IV), C.R.S.)

B. A health carrier that uses standards in the review of claims involving utilization review that are not in compliance with the rules contained in this regulation shall be deemed not to be in compliance with the requirement under the unfair competition and deceptive practice insurance statutes of Colorado that a carrier use reasonable standards for the prompt investigation of claims. ( Section 10-3-1104(1)(h)(III), C.R.S.)

C. A health carrier that does not investigate claims involving utilization review within the time frames set out in this regulation shall be deemed not to be in compliance with the requirement under the unfair competition and deceptive practice insurance statutes of Colorado that a carrier promptly investigate claims.

( Section 10 3 1104(1)(h)(II), C.R.S.)

D. A health carrier that does not follow the procedures for explaining the basis of a utilization review decision set forth in this regulation shall be deemed not to be in compliance with the requirement under the unfair competition and deceptive practice insurance statutes of Colorado that a carrier promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim.

( Section 10 3 1104(1)(h)(XIV), C.R.S.)

E. A health carrier that does not allow an appeal, consistent with the procedures set forth in this regulation, of a benefit denial for a treatment excluded by the health coverage plan when the covered person presents evidence from a medical professional that there is a reasonable medical basis that the contractual exclusion does not apply shall be deemed not to be in compliance with the requirement under the unfair competition and deceptive practice insurance statutes of Colorado that a carrier refrain from denying a claim without conducting a reasonable investigation based upon all available information.

(Section 10-3-1104(1)(h)(IV), C.R.S.)

Section 6 Standard Utilization Review A. A health carrier shall maintain written procedures pursuant to this section for making utilization review decisions and for notifying covered persons of its decisions. For purposes of this section, "covered person" includes the designated representative of a covered person. B. Prospective review determinations.

1. Time period for determination and notification.

a. Subject to Subparagraph b. of Paragraph 1., a health carrier shall make the determination and notify the covered person and the covered person’s provider of the determination, whether the carrier certifies the provision of the benefit or not, within a reasonable period of time appropriate to the covered person’s medical condition, but in no event later than fifteen (15) days after the date the health carrier receives the request. Whenever the determination is an adverse determination, the health carrier shall make the notification of the adverse determination in accordance with Subsection E.

b. The time period for making a determination and notifying the covered person of the determination pursuant to Subparagraph a. of Paragraph 1. may be extended one time by the health carrier for up to fifteen (15) days, provided the health carrier:

(i) Determines that an extension is necessary due to matters beyond the health carrier’s control; and (ii) Notifies the covered person prior to the expiration of the initial fifteen-day time period, of the circumstances requiring the extension of time and the date by which the health carrier expects to make a determination. c. If the extension under Subparagraph b. of Paragraph 1. is necessary due to the failure of the covered person to submit information necessary to reach a determination on the request, the notice of extension shall:

(i) Specifically describe the required information necessary to complete the request; and (ii) Give the covered person at least forty-five (45) days from the date of receipt of the notice to provide the specified information.

2. Failure to meet the health carrier’s filing procedures. a. Whenever the health carrier receives a prospective review request from a covered person that fails to meet the health carrier’s filing procedures, the health carrier shall notify the covered person of this failure and provide in the notice information on the proper procedures to be followed for filing a request. b. Required notice.

(i) The notice required under Subparagraph a. of Paragraph 2. shall be provided, as soon as possible, but in no event later than five (5) days following the date of the failure.

(ii) The health carrier must provide the notice in writing. c. The provisions of Paragraph 2. shall apply only in the case of a failure that: (i) Is a communication by a covered person that is received by a person or organizational unit of the health carrier responsible for handling benefit matters; and (ii) Is a communication that refers to a specific covered person, a specific medical condition or symptom, and a specific health care service, treatment or provider for which certification is being requested. 3. For an adverse determination regarding a prospective review decision that occurs during a covered person’s hospital stay or course of treatment, the health care service or treatment that is the subject of an adverse determination shall be continued without liability to the covered person until the covered person has been notified of the determination by the carrier.

C. Retrospective review determinations.

1. For retrospective review determinations, a health carrier shall make the determination and notify the covered person and the covered person’s provider of the determination within a reasonable period of time, but in no event later than thirty (30) days after the date of receiving the benefit request. If the determination is an adverse determination, the health carrier shall provide notice of the adverse determination to the covered person in accordance with Subsection E.

2. Time period for determination and notification.

a. The time period for making a determination and notifying the covered person of the determination pursuant to Paragraph 1. may be extended one time by the health carrier for up to fifteen (15) days, provided the health carrier: (i) Determines that an extension is necessary due to matters beyond the health carrier’s control; and (ii) Notifies the covered person prior to the expiration of the initial thirty-day time period, of the circumstances requiring the extension of time and the date by which the health carrier expects to make a determination. b. If the extension under Subparagraph a. of Paragraph 2. is necessary due to the failure of the covered person to submit information necessary to reach a determination on the request, the notice of extension shall:

(i) Specifically describe the required information necessary to complete the request; and (ii) Give the covered person at least thirty (30) days from the date of receipt of the notice to provide the specified information.

D. Calculation of time periods.

1. For purposes of calculating the time periods within which a determination is required to be made under Subsections B and C, the time period within which the determination is required to be made shall begin on the date the request is received by the health carrier in accordance with the health carrier’s procedures for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing.

2. Extensions.

a. If the time period for making the determination under Subsection B. or C. is extended due to the covered person’s failure to submit the information necessary to make the determination, the time period for making the determination shall be tolled from the date on which the health carrier sends the notification of the extension to the covered person until the earlier of:

(i) The date on which the covered person responds to the request for additional information; or (ii) The date on which the specified information was to have been submitted. b. If the covered person fails to submit the information before the end of the period of the extension, as specified in Subsection B. or C., the health carrier may deny the certification of the requested benefit.

E. Requirements for adverse determination notifications. 1. A notification of an adverse determination under this section shall, in a manner calculated to be understood by the covered person, set forth:

a. An explanation of the specific medical basis for the adverse determination; b. The specific reason or reasons for the adverse determination; c. Reference to the specific plan provisions on which the determination is based; d. A description of any additional material or information necessary for the covered person to perfect the benefit request, including an explanation of why the material or information is necessary to perfect the request; e. If the health carrier relied upon an internal rule, guideline, protocol or other similar criterion to make the adverse determination, either the specific rule, guideline, protocol or other similar criterion or a statement that a specific rule, guideline, protocol or other similar criterion was relied upon to make the adverse determination and that a copy of the rule, guideline, protocol or other similar criterion will be provided free of charge to the covered person upon request; f. If the adverse determination is based on a medical necessity or experimental or investigational treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for making the determination, applying the terms of the health coverage plan to the covered person’s medical circumstances or a statement that an explanation will be provided to the covered person free of charge upon request;

g. If applicable, instructions for requesting:

(i) A copy of the rule, guideline, protocol or other similar criterion relied upon in making the adverse determination, as provided in Subparagraph e. of this paragraph; or (ii) The written statement of the scientific or clinical rationale for the adverse determination, as provided in Subparagraph f. of this paragraph; and h. A description of the health coverage plan’s review procedures and the time limits applicable to such procedures and shall advise the covered person of the right to appeal such decision;

2. A health carrier must provide the notice required under this section in writing, either on paper or electronically.

Section 7 Expedited Utilization Review A. Procedures.

1. A health carrier shall establish written procedures in accordance with this section for receiving benefit requests from covered persons and for making and notifying covered persons of expedited utilization review with respect to urgent care requests. For purposes of this section, "covered person" includes the designated representative of a covered person. 2. Notification requirements.

a. As part of the procedures required under Paragraph 1., a health carrier shall provide that, in the case of a failure by a covered person to follow the health carrier’s procedures for filing an urgent care request, the covered person shall be notified of the failure and the proper procedures to be following for filing the request. b. The notice required under Subparagraph a. of this paragraph: (i) Shall be provided to the covered person as soon as possible but not later than twenty-four (24) hours after receipt of the request; and (ii) Must be in writing.

c. The provisions of this paragraph apply only in the case of a failure that: (i) Is a communication by a covered person that is received by a person or organizational unit of the health carrier responsible for handling benefit matters; and (ii) Is a communication that refers to a specific covered person, a specific medical condition or symptom, and a specific health care service, treatment or provider for which approval is being requested. B. Urgent care requests.

1. Notification requirements for carrier determinations. a. For an urgent care request, unless the covered person has failed to provide sufficient information for the health carrier to determine whether, or to what extent, the benefits requested are covered benefits or payable under the health carrier’s health coverage plan, the health carrier shall notify the covered person and the covered person’s provider of the health carrier’s determination with respect to the request, whether or not the determination is an adverse determination, as soon as possible, taking into account the medical condition of the covered person, but in no event later than seventy-two (72) hours after the receipt of the request by the health carrier.

b. If the health carrier’s determination is an adverse determination, the health carrier shall provide notice of the adverse determination in accordance with Subsection E.

2. Notification requirements for insufficient information. a. If the covered person has failed to provide sufficient information for the health carrier to make a determination, the health carrier shall notify the covered person either orally or, if requested by the covered person, in writing of this failure and state what specific information is needed as soon as possible, but in no event later than twenty-four (24) hours after receipt of the request. b. The health carrier shall provide the covered person a reasonable period of time to submit the necessary information, taking into account the circumstances, but in no event less than forty-eight (48) hours after notifying the covered person of the failure to submit sufficient information, as provided in Subparagraph a. of this paragraph.

c. The health carrier shall notify the covered person and the covered person’s provider of its determination with respect to the urgent care request as soon as possible, but in no event more than forty-eight ( 48) hours after the earlier of: (i) The health carrier’s receipt of the requested specified information; or (ii) The end of the period provided for the covered person to submit the requested specified information.

d. If the covered person fails to submit the information before the end of the period of the extension, as specified in Subparagraph b. of this paragraph, the health carrier may deny the certification of the requested benefit.

e. If the health carrier’s determination is an adverse determination, the health carrier shall provide notice of the adverse determination in accordance with Subsection E.

C. Concurrent urgent care review requests.

1. For concurrent review urgent care requests involving a request by the covered person to extend the course of treatment beyond the initial period of time or the number of treatments authorized, if the request is made at least twenty-four (24) hours prior to the expiration of the authorized period of time or authorized number of treatments, the health carrier shall make a determination with respect to the request and notify the covered person and the covered person’s provider of the determination, whether it is an adverse determination or not, as soon as possible, taking into account the covered person’s medical condition, but in no event more than twenty-four (24) hours after the health carrier’s receipt of the request.

2. If the health carrier’s determination is an adverse determination, the health carrier shall provide notice of the adverse determination in accordance with Subsection E. D. For purposes of calculating the time periods within which a determination is required to be made under Subsection B. or C., the time period within which the determination is required to be made shall begin on the date the request is filed with the health carrier in accordance with the health carrier’s procedures established for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing. E. Adverse determination notification requirements.

1. A notification of an adverse determination under this section shall, in a manner calculated to be understood by the covered person, set forth:

a. An explanation of the specific medical basis for the adverse determination; b. The specific reasons or reasons for the adverse determination; c. Reference to the specific plan provisions on which the determination is based; d. A description of any additional material or information necessary for the covered person to perfect the benefit request, including an explanation of why the material or information is necessary to perfect the request; e. If the health carrier relied upon an internal rule, guideline, protocol or other similar criterion to make the adverse determination, either the specific rule, guideline, protocol or other similar criterion or a statement that a specific rule, guideline, protocol or other similar criterion was relied upon to make the adverse determination and that a copy of the rule, guideline, protocol or other similar criterion will be provided free of charge to the covered person upon request; f. If the adverse determination is based on a medical necessity or experimental or investigational treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for making the determination, applying the terms of the health coverage plan to the covered person’s medical circumstances or a statement that an explanation will be provided to the covered person free of charge upon request;

g. If applicable, instructions for requesting:

(i) A copy of the rule, guideline, protocol or other similar criterion relied upon in making the adverse determination, as provided in Subparagraph e. of this paragraph; or (ii) The written statement of the scientific or clinical rationale for the adverse determination, as provided in Subparagraph f. of this paragraph; and h. A description of the health coverage plan’s expedited review procedures and the time limits applicable to such procedures and shall advise the covered person of the right to appeal such decision;

2. Notification requirements.

a. A health carrier may provide the notice required under this section orally, in writing or electronically.

b. If notice of the adverse determination is provided orally, the health carrier shall provide written or electronic notice of the adverse determination within three (3) days following the oral notification.

Section 8 Emergency Services A. A health carrier shall not deny a claim for emergency services necessary to screen and stabilize a covered person on the grounds that an emergency medical condition did not actually exist if a prudent lay person having average knowledge of health services and medicine and acting reasonably would have believed that an emergency medical condition or life or limb threatening emergency existed. Under these same circumstances, a claim for emergency services necessary to screen and stabilize a covered person shall not be denied for failure by the covered person or the emergency service provider to secure prior authorization. With respect to care obtained from a non-contracting provider within the service area of a managed care plan, a health carrier shall not deny a claim for emergency services necessary to screen and stabilize a covered person and shall not require prior authorization of the services if a prudent layperson would have reasonably believed that use of a contracting provider would result in a delay that would worsen the emergency, or if a provision of federal, state or local law requires the use of a specific provider. B. Health maintenance organizations shall also comply with the life or limb threatening emergency coverage provisions of Section 10-16-407(2), C.R.S., in reviewing claims for emergency services necessary to screen and stabilize a covered person.

Section 9 Peer-to-Peer Conversation A. In a case involving a prospective review determination, a health carrier shall give the provider rendering the service an opportunity to request on behalf of the covered person a peer-to-peer conversation regarding an adverse determination by the reviewer making the adverse determination. Such a request may be made either orally or in writing. B. The peer-to-peer conversation shall occur within five (5) days of the receipt of the request and shall be conducted between the provider rendering the service and the reviewer who made the adverse determination or a clinical peer designated by the reviewer if the reviewer who made the adverse determination cannot be available within five (5) days. C. If the peer-to-peer conversation does not resolve the difference of opinion, the adverse determination may be appealed by the covered person. A peer-to-peer conversation is not a prerequisite to a first level review or an expedited review of an adverse determination. D. For the purposes of Section 10-3-1104(1)(i), C.R.S., and Colorado Insurance Regulation 6-2-1 concerning complaints and complaint records, a request for a peer-to-peer conversation shall not be considered a complaint.

Section 10 First Level Review A. A health carrier shall establish written procedures for the review of an adverse determination that does not involve an urgent care request. The procedures shall specify whether a first level review request must be in writing or may be submitted orally. The procedures shall also allow the covered person to identify providers to whom the health carrier shall send a copy of the review decision.

B. A first level review shall be available to, and may be initiated by, the covered person. For purposes of this section, “covered person” includes the designated representative of a covered person. C. Pursuant to Section 10-3-1104(1)(i), C.R.S., all written requests for a first level review must be entered into the carrier’s complaint record.

D. Within 180 days after the date of receipt of a notice of an adverse determination sent pursuant to Section 6 or 7 or after the receipt of notification of a benefit denied due to a contractual exclusion, a covered person may file a grievance with the health carrier requesting a first level review of the adverse determination. In order to secure a first level review after the receipt of the notification of a benefit denied due to a contractual exclusion, the covered person must be able to provide evidence from a medical professional that there is a reasonable medical basis that the exclusion does not apply.

E. Conduct of first level reviews.

1. First level reviews shall be evaluated by a physician who shall consult with an appropriate clinical peer or peers, unless the reviewing physician is a clinical peer. The physician and clinical peer(s) shall not have been involved in the initial adverse determination. However, a person that was previously involved with the denial may answer questions. 2. In conducting a review under this section, the reviewer or reviewers shall take into consideration all comments, documents, records and other information regarding the request for services submitted by the covered person without regard to whether the information was submitted or considered in making the initial adverse determination. If the appeal is pursuant to Section 10-16-113(1)(c), C.R.S., regarding the applicability of a contractual exclusion, the determination shall be made on the basis of whether the contractual exclusion applies to the denied benefit.

F. Covered person’s rights.

1. A covered person does not have the right to attend or to have a representative in attendance at the first level review, but the covered person is entitled to: a. Submit written comments, documents, records and other material relating to the request for benefits for the reviewer or reviewers to consider when conducting the review.

For review of a benefit denial due to a contractual exclusion, the covered person shall provide evidence from a medical professional that there is a reasonable medical basis that the exclusion does not apply; and b. Receive from the health carrier, upon request and free of charge, reasonable access to, and copies of all documents, records and other information relevant to the covered person’s request for benefits.

2. For purposes of Subparagraph 1.b. of this subsection, a document, record or other information shall be considered “relevant” to a covered person’s request for benefits if the document, record or other information:

a. Was relied upon in making the benefit determination; b. Was submitted, considered or generated in the course of making the adverse determination, without regard to whether the document, record or other information was relied upon in making the benefit determination; c. Demonstrates that, in making the benefit determination, the health carrier or its designated representatives consistently applied required administrative procedures and safeguards with respect to the covered person as other similarly situated covered persons; or d. Constitutes a statement of policy or guidance with respect to the health coverage plan concerning the denied health care service or treatment for the covered person’s diagnosis, without regard to whether the advice or statement was relied upon in making the benefit determination.

G. Notification requirements.

1. A health carrier shall notify and issue a decision in writing or electronically to the covered person within the time frames provided in Paragraph 2. or 3. 2. With respect to a request for a first level review of an adverse determination involving a prospective review request, the health carrier shall notify and issue a decision within a reasonable period of time that is appropriate given the covered person’s medical condition, but no later than thirty (30) days after the date of the health carrier’s receipt of the grievance requesting the first level review.

3. With respect to a request for a first level review of an adverse determination involving a retrospective review request, the health carrier shall notify and issue a decision within a reasonable period of time, but no later than thirty (30) days after the date of the health carrier’s receipt of a request for the first level review. H. For purposes of calculating the time periods within which a determination is required to be made and notice provided under Subsection G., the time period shall begin on the date the grievance requesting the review is filed with the health carrier in accordance with the health carrier’s procedures for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing.

I. The decision issued pursuant to Subsection G. shall set forth in a manner calculated to be understood by the covered person:

1. The name, title and qualifying credentials of the physician evaluating the appeal, and the qualifying credentials of the clinical peer(s) with whom the physician consults. (For the purposes of this section, the physician and consulting clinical peers shall be called “the reviewers” .);

2. A statement of the reviewers’ understanding of the covered person’s request for a review of an adverse determination;

3. The reviewers’ decision in clear terms; and 4. A reference to the evidence or documentation used as the basis for the decision. J. A first level review decision involving an adverse determination issued pursuant to Subsection G. shall include, in addition to the requirements of Subsection I. : 1. The specific reason or reasons for the adverse determination, including the specific plan provisions and medical rationale;

2. A statement that the covered person is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant, as the term “relevant” is defined in Subsection F.2., to the covered person’s benefit request;

3. If the reviewers relied upon an internal rule, guideline, protocol or other similar criterion to make the adverse determination, either the specific rule, guideline, protocol or other similar criterion or a statement that a specific rule, guideline, protocol or other similar criterion was relied upon to make the adverse determination and that a copy of the rule, guideline, protocol or other similar criterion will be provided free of charge to the covered person upon request;

4. If the adverse determination is based on a medical necessity or experimental or investigational treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for making the determination, applying the terms of the health coverage plan to the covered person’s medical circumstances or a statement that an explanation will be provided to the covered person free of charge upon request; and 5. If applicable, instructions for requesting:

a. A copy of the rule, guideline, protocol or other similar criterion relied upon in making the adverse determination, as provided in Paragraph 3. of this subsection; and b. The written statement of the scientific or clinical rationale for the determination, as provided in Paragraph 4. of this subsection.

6. A description of the process to obtain a voluntary second level review, including: a. The written procedures governing the voluntary second level review, including any required time frames for the review;

b. The right of the covered person to:

(i) Request the opportunity to appear in person before a health care professional (reviewer) or, if offered by the health carrier, a review panel of health care professionals, who have appropriate expertise, who were not previously involved in the appeal, and who do not have a direct financial interest in the outcome of the review;

(ii) Receive, upon request, a copy of the materials that the carrier intends to present at the review at least five (5) days prior to the date of the review meeting. Any new material developed after the five-day deadline shall be provided by the carrier when practicable;

(iii) Present written comments, documents, records and other material relating to the request for benefits for the reviewer or review panel to consider when conducting the review both before and, if applicable, at the review meeting;

(a) A copy of the materials the covered person plans to present or have presented on his or her behalf at the review should be provided to the health carrier at least five (5) days prior to the date of the review meeting.

(b) Any new material developed after the five-day deadline shall be provided to the carrier when practicable;

(iv) Present the covered person’s case to the reviewer or review panel; (v) If applicable, ask questions of the reviewer or review panel; and (vi) Be assisted or represented by an individual of the covered person’s choice, including counsel, advocates, and health care professionals; c. A statement that the carrier will provide the covered person, upon request, sufficient information relating to the voluntary second level review to enable the claimant to make an informed judgment about whether to submit the adverse determination to a voluntary second level review, including a statement that the decision of the covered person as to whether or not to submit the adverse determination to a voluntary second level review will have no effect on the covered person’s rights to any other benefits under the plan, the process for selecting the decision maker, and the impartiality of the decision maker.

d. A description of the procedures for obtaining an independent external review of the adverse determination pursuant to Colorado Insurance Regulation 4-2-21 if the covered person chooses not to file for a voluntary second level review of the first level review decision involving an adverse determination. Section 11 Voluntary Second Level Review A. A carrier shall establish a voluntary review process to give those covered persons who are dissatisfied with the first level review decision the option to request a voluntary second level review, at which the covered person has the right to appear in person or by telephone conference at the review meeting before a health care professional (reviewer) or, if offered by the health carrier, a review panel of health care professionals, selected by the carrier. The procedures shall allow the covered person to identify providers to whom the health carrier shall send a copy of the second level review decision. The purpose of the voluntary review process is to give the covered person the opportunity to explain their grievance and to provide any relevant evidence in support of their claim for benefits.

B. For purposes of this section, "covered person" includes the designated representative of a covered person.

C. A complaint record entry shall be made for all voluntary second level reviews, pursuant to Section 10- 3-1104(1)(i), C.R.S., and Colorado Insurance Regulation 6-2-1. D. Within thirty (30) days after the date of receipt of a notice of an adverse determination, a covered person may file a request with the carrier requesting a voluntary second level review of the adverse determination.

E. The covered person’s right to a fair review shall not be made conditional on the covered person’s appearance at the review.

F. Procedures.

1. With respect to a voluntary second level review of a first level review decision, the denial shall be reviewed by a health care professional (reviewer) or, if offered by the health carrier, a review panel of health care professionals, who have appropriate expertise in relation to the case presented by the covered person. The reviewer or review panel, shall meet the following criteria: were not previously involved in the appeal and who do not have a direct financial interest in the appeal or outcome of the review. The reviewer or the review panel shall have the legal authority to bind the health carrier to the reviewer’s or review panel’s decision.

G. A health carrier's procedures for conducting a voluntary second level review shall include the following:

1. The reviewer or review panel shall schedule and hold a review meeting within sixty (60) days of receiving a request from a covered person for a voluntary second level review. The covered person shall be notified in writing at least twenty (20) days in advance of the review date. The health carrier shall not unreasonably deny a request for postponement of the review made by a covered person.

2. Notice requirements. The notice to the covered person of the review date shall include: a. The right of the covered person to present written comments, documents, records and other material relating to the request for benefits for the reviewer or review panel to consider when conducting the review both before and, if applicable, at the review meeting.

b. The right of the covered person to receive, upon request, a copy of the materials that the carrier intends to present at the review at least five (5) days prior to the date of the review meeting. Any new material developed after the five-day deadline shall be provided by the carrier when practicable.

c. The responsibility of the covered person to submit a copy of the materials that the covered person plans to present or have presented on his or her behalf at the review to the health carrier at least five (5) days prior to the date of the review meeting. Any new material developed after the five-day deadline shall be provided to the carrier when practicable.

d. The responsibility of the covered person to, within seven (7) days in advance of the review, inform the carrier if the covered person intends to have an attorney present to represent such person’s interests. If the covered person decides to have an attorney present after the seven-day deadline, notice will be provided to the carrier when practicable.

e. The health carrier shall use this notification to advise the covered person if it intends to have an attorney present to represent the interests of the health carrier. f. The health carrier shall use this notification to advise the covered person that the plan shall make an audio or video recording of the review unless neither the covered person nor the health carrier wants the recording made . The notice shall advise that this recording shall be made available to the covered person and that if there is an external review, the audio or video recording shall, at the request of either party, be included in the material provided by the carrier to the reviewing entity. 3. Carriers shall in no way discourage a covered person from requesting a face-to-face review meeting. Whenever a covered person has requested the opportunity to appear in person, the review meeting shall be held during regular business hours at a location reasonably accessible to the covered person, including accommodation for disabilities. In cases where a face-to-face meeting is not practical for geographic reasons, a health carrier shall offer the covered person the opportunity to communicate, at the health carrier's expense , by telephone conference call. A carrier may also offer video conferencing or other appropriate technology.

4. In conducting the review, the reviewer or review panel shall take into consideration all comments, documents, records and other information regarding the request for benefits submitted by the covered person pursuant to Section 10.J.6.b., without regard to whether the information was submitted or considered in reaching the first level review decision. If the appeal is pursuant to Section 10-16-113(1)(c), C.R.S., regarding the applicability of a contractual exclusion, the determination shall be made on the basis of whether the contractual exclusion applies to the denied benefit.

5. The reviewer or review panel shall issue a written decision, as provided in Subsection H., to the covered person within seven (7) days of completing the review meeting. 6. For purposes of calculating the time periods within which a decision is required to be made and notice provided, the time period shall begin on the date the request for a voluntary second level review is filed with the health carrier in accordance with the health carrier’s procedures for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing.

H. A decision issued pursuant to Subsection G. shall include: 1. The name(s), title(s) and qualifying credentials of the reviewer or members of the review panel;

2. A statement of the reviewer’s or the review panel’s understanding of the covered person’s request for review of an adverse determination;

3. The reviewer’s or the review panel’s decision in clear terms; 4. A reference to the evidence or documentation used as the basis for the decision; 5. For a voluntary second level decision issued involving an adverse determination: a. The specific reason or reasons for the adverse determination, including the specific plan provisions and medical rationale;

b. A statement that the covered person is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant, as the term “relevant” is defined in Section 10.F.2., to the covered person’s benefit request;

c. If the reviewer or review panel has relied upon an internal rule, guideline, protocol or other similar criterion to make the adverse determination, either the specific rule, guideline, protocol or other similar criterion or a statement that a specific rule, guideline, protocol or other similar criterion was relied upon to make the adverse determination and that a copy of the rule, guideline, protocol or other similar criterion will be provided free of charge to the covered person upon request; d. If the adverse determination is based on a medical necessity or experimental or investigational treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for making the determination, applying the terms of the health coverage plan to the covered person’s medical circumstances or a statement that an explanation will be provided to the covered person free of charge upon request; and e. If applicable, instructions for requesting:

(i) A copy of the rule, guideline, protocol or other similar criterion relied upon in making the adverse determination, as provided in Subparagraph c. of this paragraph; and (ii) The written statement of the scientific or clinical rationale for the determination, as provided in Subparagraph d. of this paragraph; f. A statement describing the procedures for obtaining an independent external review of the adverse determination pursuant to Colorado Insurance Regulation 4-2-21. Section 12 Expedited Review of an Adverse Determination A. A health carrier shall establish written procedures for the expedited review of urgent care requests of grievances involving an adverse determination. A health carrier shall also provide an expedited review to a request for a benefit for a covered person who has received emergency services but has not been discharged from a facility. The procedures shall allow a covered person to request an expedited review under this section orally or in writing. The procedures shall also allow the covered person to identify providers to whom the health carrier shall send a copy of the review decision.

B. An expedited review shall be available to, and may be initiated by, the covered person or the provider acting on behalf of the covered person. For purposes of this section, "covered person" includes the designated representative of a covered person.

C. Pursuant to Section 10-3-1104(1)(i), C.R.S., all written requests for an expedited review must be entered into the carrier’s complaint record.

D. Expedited appeal evaluations.

1. Expedited appeals shall be evaluated by an appropriate clinical peer or peers in the same or similar specialty as would typically manage the case under review. (For the purposes of this section, the clinical peers shall be called “the reviewers” .) The clinical peer or peers shall not have been involved in the initial adverse determination. 2. In conducting a review under this section, the reviewer or reviewers shall take into consideration all comments, documents, records and other information regarding the request for services submitted by the covered person without regard to whether the information was submitted or considered in making the initial adverse determination. E. Covered person’s rights.

1. A covered person does not have the right to attend or to have a representative in attendance at the expedited review, but the covered person is entitled to: a. Submit written comments, documents, records and other materials relating to the request for benefits for the reviewer or reviewers to consider when conducting the review; and b. Receive from the health carrier, upon request and free of charge, reasonable access to, and copies of all documents, records and other information relevant to the covered person’s request for benefits, as described in Section 10 .F.1.b. F. In an expedited review, all necessary information, including the health carrier's decision, shall be transmitted between the health carrier and the covered person or the provider acting on behalf of the covered person by telephone, facsimile or similar expeditious method available. G. In an expedited review, a health carrier shall make a decision and notify the covered person or the provider acting on the covered person's behalf as expeditiously as the covered person's medical condition requires, but in no event more than seventy-two (72) hours after the review is commenced. If the expedited review is a concurrent review determination, the service shall be continued without liability to the covered person until the covered person has been notified of the determination.

H. A health carrier shall provide written confirmation of its decision concerning an expedited review within three (3) days of providing notification of that decision, if the initial notification was not in writing. I. In the case of an adverse determination, the written decision shall contain the provisions specified in Sections 10.I . and 10.J. of this regulation.

J. For purposes of calculating the time periods within which a decision is required to be made under Subsection G., the time period within which the decision is required to be made shall begin on the date the request is filed with the health carrier in accordance with the health carrier’s procedures for filing a request without regard to whether all of the information necessary to make the determination accompanies the filing.

K. In any case where the expedited review process does not resolve a difference of opinion between the health carrier and the covered person or the provider acting on behalf of the covered person, the covered person or the provider acting on behalf of the covered person may request a voluntary second level appeal or request an independent external review. L. A health carrier shall not provide an expedited review for retrospective adverse determinations. Section 13 Enforcement Noncompliance with the requirements and time frames specified in this regulation may result, after proper notice and hearing, in the imposition of any sanctions made available in Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspension or revocation of the certificate of authority. Among others, the penalties provided for in Sections 10 3 1108 and 10-3-1110( 2), C.R.S., may be applied. Section 14 Severability If any provision of this regulation or application thereof to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected thereby. Section 15 Effective Date This amended regulation is hereby effective on February 1, 2006. Section 16 History 1. Originally promulgated effective July 1, 1997.

2. Amended effective April 1, 2000.

3. Amended effective April 1, 2004 to comply with ERISA claims/appeals procedures. 4. Amended effective October 1, 2004, to correct internal references and to provide clarification with respect to the expedited appeal.

5. Emergency Regulation 05-E-5 effective January 1, 2006. 6. Amended effective February 1, 2006 .

Amended Regulation: 4-2-18 Concerning The Method Of Crediting And Certifying Creditable Coverage For Pre-Existing Conditions Section 1 Authority Section 2 Purpose and Background Section 3 Applicability and Scope Section 4 Definitions Section 5 Rules Section 6 Enforcement Section 7 Severability Section 8 Effective Date Section 9 History Section 1. Authority This regulation is promulgated by the Commissioner under the authority granted in Sections 10-1-109(1), 10-16-109 and 10-16-118(1)(b), C.R.S.

Section 2. Purpose and Background The purpose of this regulation is to establish the method health coverage plans must use to credit and certify creditable coverage for purposes of limiting pre-existing condition exclusion periods, as required by Section 10- 16-118(1)(b), C.R.S. he purpose of the 2004 amendments to this regulation is to make clarifications and allowances to ensure Colorado consumers receive correct certificates of creditable coverage in a timely manner.

Section 3. Applicability and Scope This amended regulation shall apply to all certificates of creditable coverage issued on or after October 1, 2004.

Section 4. Definitions A. “Significant break in coverage” means a period of consecutive days during all of which the individual does not have any creditable coverage, except that neither a waiting period nor an affiliation period is taken into account in determining a significant break in coverage. For plans subject to the jurisdiction of the Colorado Division of Insurance, a significant break in coverage consists of more than ninety (90) consecutive days. For all other plans (i.e., those not subject to the jurisdiction of the Colorado Division of Insurance), a significant break in coverage may consist of as few as sixty-three (63) days.

B. “Student health plan” means a health benefit plan that covers the students of an educational institution.

Section 5. Rules A. Application of federal laws concerning creditable coverage. 1. The method for crediting and certifying creditable coverage for purposes of limiting pre- existing condition exclusion periods, as required by Section 10-16-118(1)(b), C.R.S., shall be as set forth in the federal regulations incorporated below. 2. Where Colorado law exists on the same subject and has different requirements that are not pre-empted by federal law, Colorado law shall prevail.

3. The following sections of the federal regulations, adopted by the U.S. Department of Health and Human Services, are hereby incorporated by reference and shall have the force of Colorado law, in accordance with Section 24-4-103(12.5), C.R.S.: 45 C.F.R. 146.113(a)(3), (b) and (c); 45 C.F.R. 146.115; and 45 C.F.R. 148.124(b). These sections concern the method for counting creditable coverage; requirements for providing certificates of creditable coverage to those who were insured under group plans, including the form and content of the certificates; and requirements for providing certificates of creditable coverage to those who were insured under individual plans, including the form and content of the certificates.

4. Later amendments to, or editions of, the above-referenced federal regulations are not included in this regulation. Interested parties are encouraged to refer to the summary and supplementary information concerning the incorporated federal regulations which begins in Volume 62, number 67, page 16894 of the Federal Register, April 8, 1997, for assistance in interpreting the federal regulations.

5. Copies of the incorporated federal regulations may be obtained or examined from the Commissioner’s office by contacting the Assistant to the Commissioner at 1560 Broadway, Suite 850, Denver, Colorado, 80202. The above-referenced federal regulations may also be examined at any state publications depository library. B. Colorado law concerning creditable coverage.

1. The method for crediting and certifying creditable coverage described in this regulation shall apply both to group and individual plans that are subject to Section 10-16-118(1)(b), C.R.S.

2. Colorado law requires health coverage plans to waive any exclusionary time periods applicable to pre-existing conditions for the period of time an individual was previously covered by creditable coverage, provided there was no significant break in coverage, if such creditable coverage was continuous to a date not more than ninety (90) days prior to the effective date of the new coverage. Colorado law prevails over the federal regulations.

3. Application of the rules regarding breaks in coverage can vary between issuers located in different states, and between fully insured plans and self-insured plans within a state. The laws applicable to the health coverage plan that has the pre-existing condition exclusion will determine which break rule applies.

4. Certifying creditable coverage Colorado law does not require a specific format for certificates of creditable coverage as long as all of the information required by 45 C.F.R. 146.115(a)(3), or 45 C.F.R. 148.124(b) (2), as appropriate, is included. owever, any health coverage plan subject to the jurisdiction of the Colorado Division of Insurance must issue certificates of creditable coverage that reflect the definition of “Significant break in coverage” found in Section 4.A. of this regulation.

C. Maximum six (6) month pre-existing condition exclusion period for group health plans. Colorado law prohibits group health plans from imposing a pre-existing condition limitation period that exceeds six (6) months, except with respect to late enrollees as provided for in Section 10- 16-118(1)(c), C.R.S. ll references in the federal regulations to twelve (12) month pre-existing condition limitations for group health benefit plans are not applicable in Colorado. D. Student health plans are considered group health plans. Colorado law considers student health benefit plans to be group plans. As such, student health plans shall comply with the group health benefit plan provisions of Colorado law including those related to pre-existing condition limitations.

E. Children's Basic Health Plan is considered a group health plan. Colorado law considers the Children's Basic Health Plan (also known as CHP+) to be a group plan. As such, carriers offering coverage through the Children's Basic Health Plan shall comply with the group health benefit plan provisions of Colorado law. F. Treatment of late enrollees.

Colorado law requires late enrollees (i.e., those individuals who did not enroll when initially offered coverage and who are not special enrollees pursuant to section 10-16-102(26), C.R.S.) to be enrolled upon request. However, late enrollees are subject to longer pre-existing condition periods, affiliation periods, and waiting periods for coverage, as provided for in Section 10-16- 118(1)(c), C.R.S.

Section 6. Enforcement Noncompliance with this rule may result, after notice and opportunity for hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws including the imposition of fines, issuance of cease and desist orders, and/or suspension or revocation of certificates of authority.

Section 7. Severability In the event any part of this rule or application of it to any person or circumstance is determined to be invalid for any reason, the remainder of the rule shall not be affected. Section 8. Effective Date This amended rule is effective October 1, 2004.

Section 9. History 1. Originally issued as Emergency Regulation 97-E-6, effective July 31, 1997. 2. Issued as Regulation 4-2-18, effective October 30, 1997. 3. Amended, effective November 1, 1999.

4. Amended, effective October 1, 2004.

Amended Regulation 4-2-19 Concerning Individual Health Benefit Plans Issued To Self-Employed Business Groups Of One Section 1 Authority Section 2 Basis and Purpose Section 3 Applicability and Scope Section 4 Definitions Section 5 Rules Section 6 Enforcement Section 7 Severability Section 8 Effective Date Section 9 History 1. Authority This regulation is promulgated pursuant to Sections 10-1-109(1), 10-16-105.2(1)(c)(I) and (3), 10-16- 108.5(8), and 10-16-109, C.R.S.

2. Basis And Purpose The purpose of this regulation is to establish and implement rules concerning health benefit plans marketed and/or newly issued to self-employed business groups of one on or after October 1, 2004. In some cases such plans are exempt from Colorado’s small group guarantee issue laws, pursuant to Section 10-16-105.2(1)(c), (d) and (3), C.R.S. The purpose of the 2004 amendment to this regulation is to bring the regulation into compliance with recent statutory changes. 3. Applicability And Scope This amended regulation shall apply to individual health benefit plans marketed and/or newly issued to self-employed business groups of one on or after October 1, 2004. 4. Definitions A. “Self-employed business group of one” means, pursuant to Section 10-16-105(1)(c)(I), C.R.S., that type of business group of one that includes only a self-employed person who has no employees, or a sole proprietor who is not offering or sponsoring health care coverage to his or her employees.

B. “Health benefit plan” shall have the same meaning as defined in Section 10-16-102(21)(a), which includes high deductible health savings account (HSA) plans. 5. Rules A. An individual health benefit plan marketed and/or newly issued on or after October 1, 2004, to a self- employed business group of one, together with the dependents of the self-employed business group of one, shall be regulated as an individual health benefit plan instead of a small group health plan if the carrier issuing such policy, the policy itself, and the application for coverage meet all the following conditions:

1. Pursuant to Section 10-16-105.2(1)(c)(I)(A), C.R.S., the carrier issuing the policy determines whether or not the applicant is a self-employed business group of one. A carrier shall meet this requirement by having all applicants fill out the “Determination of Self-Employed Business Group of One Form” available from the Colorado Division of Insurance. A copy of the completed form shall be kept on file with each application. In addition, pursuant to Section 10-16-102(6)(c), C.R.S., a carrier may require all business group of one applicants to supply certain tax and withholding documents in order to determine if an applicant meets the definition of a business group of one. Applicants who answer “yes” to all the questions in the form and, if required by the carrier, who can document their answers shall be considered to have met the test of a self-employed business group of one. An applicant who does not meet this test falls into one of two categories. Either: a) The applicant is a small employer that is not a self-employed business group of one and thus any plan sold to such person is subject to the small group laws of Colorado, pursuant to Section 10-16-105.2(1)(a), C.R.S.; or b) The applicant is neither a small employer, nor a self-employed business group of one, nor any other person covered by the small group laws of Colorado (see Section 10-16-105.2(1), C.R.S.) and thus any plan sold to such person is not subject to this regulation but is subject to the other laws of Colorado relating to individual health benefit plans.

2. Pursuant to Section 10-16-105.2(1)(c)(I)(B), C.R.S., the carrier issuing the individual health benefit plan accepts or rejects a self-employed business group of one who applies for coverage and, if such person is applying for family coverage, his/her entire family (all dependents), unless the applicant waives coverage for a family member who has other coverage in effect. A carrier shall meet this family coverage requirement by: a) Asking each self-employed business group of one applicant requesting coverage for himself/herself and one or more dependents for the names of all his/her dependents;

b) Where the applicant waives coverage for a family member, keeping on file with the application a signed statement from the applicant that he/she is waiving coverage for a dependent because that person already has other coverage in effect and shall state what that coverage is and when it became effective; and c) Where a self-employed business group of one is rejected for individual coverage because one or more family members fail to meet normal and actuarially-based underwriting criteria, the carrier shall clearly state this as part of the reason for the denial and shall notify the applicant in writing of the availability of coverage for his/her whole family under a small group policy.

3. If, pursuant to Section 5.A.2 of this regulation, a carrier rejects an application by a self- employed business group of one for coverage under an individual plan, and if that same carrier sells coverage in both the individual and small group markets, then pursuant to Section 10-16-105.2(1)(c)(I)(C), C.R.S., the carrier notifies the applicant of the availability of small group coverage both through the small group market and through the carrier. The notice shall inform the applicant of his/her guarantee issue rights as detailed in Section 10-16-105(7.3)(a) and (c), C.R.S. This notice shall be in writing and shall be included as part of the denial of individual coverage letter. A copy of the denial letter and the notice concerning the availability of small group coverage shall be maintained by the carrier in the file with the original application.

4. A carrier issuing an individual health benefit plan to a self-employed business group of one shall abide by the disclosure requirements as described in Section 10-16-105.2(1)(c)(I) (D), C.R.S. Accordingly:

a) The carrier, as part of its application form, shall require each self-employed business group of one purchasing an individual health benefit plan pursuant to Section 10- 16-105.2(1)(c)(I) to read and sign a disclosure form, as proscribed by the Division of Insurance, attesting that they understand that they are forfeiting their rights to purchase a business group of one standard, basic, or other health benefit plan from a small employer carrier for a period of three (3) years after the date of purchase, unless a small employer carrier voluntarily permits the purchase of a business group of one policy within that three-year period. b) The carrier must provide the applicant with a Colorado Health Plan Description Form for the state's Standard Health Benefit Plans, available from the Colorado Division of Insurance. Carriers may reproduce and distribute this form in order to comply with the provisions of Section 10-16-105.2(1)(c)(I)(D), C.R.S. B. Material failure by a carrier or its representative to comply with the requirements of Part A of Section 5 of this regulation will result in individual policies sold to self-employed business groups of one becoming subject to Colorado’s small group laws.

C. A small employer carrier may reject for coverage under a small group plan a self-employed business group of one otherwise eligible for small group coverage if, at the time of application for small group coverage, the small employer carrier determines that the self-employed person has in place, or within the immediately preceding thirty (30) days has had in place, an individual health benefit plan, other than a short-term policy, that meets the requirements of Part A of Section 5 of this regulation (and any applicable statutory provisions) and such individual health benefit plan has been in place for less than three (3) years.

The small employer carrier shall make this determination by requesting, in writing, from the individual carrier from whom the self-employed business group of one has had coverage, verification that the coverage was or was not issued pursuant to Section 10-16-105.2(1)(c)(I), C.R.S., and this regulation. The small employer carrier shall also request information as to how long the coverage was or has been in place if such coverage was issued pursuant to Section 10- 16-105.2(1)(c)(I), C.R.S., and this regulation.

Requests for such verification shall be answered in writing, be signed by a representative of the individual carrier, and shall be responded to within five (5) business days of the date the request was received.

6. Enforcement Noncompliance with this regulation is a violation of Section 10-3-1104, C.R.S., including but not limited to Subsection 10-3-1104(1)(a)(I), C.R.S., and subject to the sanctions specified in Section 10-3-1108, C.R.S., including the imposition of fines and the suspension or revocation of certificates of authority. 7. Severability If any provision of this regulation is for any reason held to be invalid, the remainder of the regulation shall not be affected.

8. Effective Date This amended regulation is effective on October 1, 2004. 9. History 1. Original regulation effective November 1, 1997.

2. Amended regulation hearing September 8, 1999; effective November 1, 1999. Following Sections were amended: 2, 5, 8, and Appendices A and B. 3. Amended regulation effective January 1, 2002.

Following sections were amended: 2, 3, 5, 6, and Appendices A. 4. Amended regulation effective October 1, 2004.

Regulation 4-2-20 Concerning the Colorado Health Benefit Plan Description Form Section 1. Authority This regulation is promulgated pursuant to Sections 10-1-109, 10-3-1110(1), 10-16-108.5(11)(b), and 10- 16-109, C.R.S.

Section 2. Scope and Purpose The purpose of this regulation is to establish and implement rules concerning the format for, elements of, and issuance of a Colorado Health Benefit Plan Description Form, pursuant to Section 10-16-108.5(11) (b), C.R.S. As required by law, the form is designed to facilitate comparison of different health plans by persons interested in purchasing or obtaining coverage under a health benefit plan. As also required by law, this regulation sets out procedures for carriers to make available a Colorado Health Benefit Plan Description Form for each policy, contract, and plan of health benefits that either covers a Colorado resident or is marketed to a Colorado resident or such resident's employer. This regulation is being changed in response to concerns from interested parties. Section 3. Applicability This amended regulation shall apply to all carriers offering or providing health benefit plan coverage or Medicare supplemental coverage on and after July 1, 2007. Section 4. Rules A. Effective July 1, 2007, all carriers offering or providing health benefit plan coverage or Medicare supplemental coverage shall make available to a producer or consumer through electronic means or hard copy, a completed copy of the Colorado Health Benefit Plan Description Form shown in Appendix A for each policy, contract, and plan of health benefits that either covers a Colorado resident or is selected by a Colorado resident or such resident’s employer as one of the final choices from which the ultimate selection will be made, except as provided in Part B of Section 4 of this regulation.

B Carriers marketing or providing a Medicare supplemental plan will be deemed to have met the requirement of Part A of Section 4 of this regulation if, in lieu of the Colorado Health Benefit Plan Description Form, they make available for each such plan a Medicare supplement outline of coverage as prescribed in Colorado insurance regulation 4-3-1, 3 C.C.R. 702-4. Carriers shall make available the Medicare supplement Outline of Coverage pursuant to Part E of Section 4 below.

C. Carriers shall use the exact format found in Appendix A for the Colorado Health Benefit Plan Description Form, including all headings, notes, row numbers, and footnotes. All boxes must be filled in. Carriers may modify box dimensions, reduce margins, or use a landscape rather than a portrait page layout format, but carriers shall follow the exact requirements and use only the choices set forth in the directions found in Appendix B of this regulation. A carrier may also add its logo to the form and print the form in color or black and white. Pursuant to Section 10-3- 1104(1), C.R.S., in completing the form, carriers shall not misrepresent the benefits, advantages, conditions, or terms of the policy.

D. Carriers shall follow the directions for completing the Colorado Health Benefit Plan Description Form found in Appendix B of this regulation.

E. Carriers shall provide a Colorado Health Benefit Plan Description Form that is specific with respect to the particular policy provisions of the policy (e.g., individual deductible = $500 per year) as follows:

1. Automatically, as part of the health benefit plan description materials given to employees or members of a group, association or health care cooperative who have the option of selecting such an employer-sponsored, group-sponsored, association-sponsored, or cooperative-sponsored plan when they initially become eligible for coverage and thereafter during any open enrollment period;

2. Automatically within three (3) business days of a potential policyholder expressing interest in a particular plan or such plan being selected as a finalist from which the ultimate selection will be made (e.g., “I am interested in the Gold Plan, the $500 deductible PPO plan, your HMO plan with vision care coverage, etc,” or “I want to purchase your Plan 200, $5 copay HMO plan,” etc.);

3. Upon request, within three (3) business days, to any person who is interested in coverage under or who is covered by a health benefit plan of the carrier; and 4. Upon request within three (3) business days to a producer on behalf of any person, group, association, or health care cooperative that is interested in coverage or is covered by a health benefit plan of the carrier.

F.

1. Carriers shall prominently include with all marketing materials the following notice: "Colorado law requires carriers to make available a Colorado Health Benefit Plan Description Form, which is intended to facilitate comparison of health plans. The form must be provided automatically within three (3) business days to a potential policyholder who has expressed interest in a particular plan or who has selected the plan as a finalist from which the ultimate selection will be made. The carrier also must provide the form, upon oral or written request, within three (3) business days, to any person who is interested in coverage under or who is covered by a health benefit plan of the carrier." 2. The carrier shall ensure that the form is given to the person making the request within three (3) business days of receipt of such request. The request may be made orally or in writing and may be made to either a carrier or a producer. G. Concerning the carrier’s obligation contained in Part E(1) of Section 4 to make the health benefit plan description form available to employees, or members of a group, association, or health care cooperative, a carrier is in compliance if:

1. The carrier provides the health benefit description form to the group, association, or health care cooperative, or to a producer on behalf of the group, association, or health care cooperative, or to an individual; or 2. The carrier determines that the employer has developed and will distribute or has distributed a conforming grid.

a. A grid is conforming if an employer offers an employee a choice of health plans and compares the benefits for the plans on a grid that meets all the following requirements:

(1) The grid must follow the exact format contained in Appendix A for the Colorado Health Benefit Plan Description Form, including the labeling and numerical identification of rows and columns, the headings, the footnotes, and the notes, except as set forth in subparagraph (b), below. (2) At the employer’s sole discretion, the grid also may include additional rows, as long as the numbering of those rows does not interfere with the ordering and numbering of rows established in Appendix A. For example, the “PRESCRIPTION DRUGS” row is always row 11 on the grid; the “HOSPICE CARE” row is always row 26 on the grid. In addition, the employer grid could include more rows (e.g., “10A INFERTILITY TREATMENT,” "11A. CONTRACEPTIVES," “31A NATUROPATHY").

(3) The benefit descriptions in the grid must follow exactly the directions contained in Appendix B of this regulation for completing the grid, except as set forth in subparagraph (b), below.

(4) At the employer’s sole discretion, the benefit descriptions may include additional relevant information.

(5) The grid must be given to all new enrollees, to all employees eligible for coverage during any open enrollment periods, and, upon request, to any covered employee and any person interested in obtaining coverage. (6) The grid may contain several columns comparing the benefits of the different plans available to the employer’s employees, which shall also conform to this regulation.

b. Where employees of an employer or members of a health care purchasing cooperative are given a choice of two or more plans, the form may be further modified as follows. Where a specific benefit for all plans is the same, the comparison grid may simply describe that same benefit once, across all columns, for all plans, or state “see rider” across all columns, for all plans. For example: EXAMPLE . HMO A HMO B PPO Z . . In-Network Out-of- Network 28. DENTAL CARE See rider. See rider. See rider.

29. VISION CARE All plans cover up to $50 All plans cover up to $50 All plans cover up to $50 per year toward per year toward per year toward eyeglasses. eyeglasses. eyeglasses.

c. Nothing in this regulation shall be construed to require an employer to develop or use a grid for comparing employee benefit plan choices.

H. With respect to the specific Colorado Health Benefit Plan Description Form required to be made available by carriers pursuant to Part E(1) of Section 4, a carrier shall develop a separate Colorado Health Benefit Plan Description Form for each of its policies, contracts, and plans of benefits. If a carrier offers a policy with a choice of copayments, coinsurance levels, deductibles, lifetime maximums, annual maximums, and/or other benefit maximums, minimums or restrictions, the carrier shall provide a separate Colorado Health Benefit Plan Description Form specific to the particular benefits of the policy being sold, marketed, or that is in place. I. The Colorado Health Benefit Plan Description Form is designed to be a stand-alone piece describing a health benefit plan. The forms should not include attachments, except that a carrier may: 1. Attach a list of exclusions developed pursuant to Part K of Section 4 of this regulation; 2. Attach information on premiums;

3. Attach information on riders;

4. Include as an attachment information specifying the plan’s cancer screening coverages and their respective parameters, as required by Section 10-16-108.5(11)(c), C.R.S.; 5. Include at the end of the form or as an attachment information that is statutorily required of marketing materials (e.g., for managed care plans, disclosure of the existence and availability of an access plan, as required pursuant to Section 10-16-704(1), (2) and (9), C.R.S.); or 6. Include the Optional Attachment, "Selected Benefit Descriptions," that appears at the end of the Colorado Health Benefit Plan Description Form.

J. A carrier shall make a list of policy exclusions available immediately upon request (but in no event more than three (3) business days after the request) for each of its health benefit plans. K. The Colorado Health Benefit Plan Description Forms developed for each policy, contract, and plan of benefits shall be in standard, easy-to-read type sizes and fonts, of no less than 10 points. Section 5. Enforcement Noncompliance with this regulation is a violation of Section 10-3-1104, C.R.S., and subject to the sanctions specified in Section 10-3-1108, C.R.S., including the imposition of fines and the suspension or revocation of insurance licenses and/or certificates of authority. Section 6. Severability If any provision of this regulation is for any reason held to be invalid, the remainder of the regulation shall not be affected.

Section 7. Effective Date This amended regulation is effective on July 1, 2007.

Section 8. History - Hearing date: September 10, 1997; Effective: November 15, 1997 - Hearing date: August 4, 1998: Effective date: September 30, 1998. - Amended Sections 1,2,3,4,7, Appendix A, and Appendix B. - Hearing date: March 2003, Effective: January 1, 2004. - Hearing date: August 4, 2004; Effective: January 1, 2005 - Amended effective July 1, 2007.

NOTE: An unofficial copy of this amended regulation, including the description form, is available on the Colorado Division of Insurance web site on the Internet at: http://www.dora.state.co.us/insurance/regs

Appendix B Directions for Filling Out the Colorado Health Benefit Plan Description Form TOP OF FORM Carrier and plan names. Fill in complete carrier name on the first line and the name of the plan on the second line. Plans may also include the following information, if they wish to do so, either at the top of the form, at the bottom of the page, or at the end of the document: carrier logo, group identification number, class or division, and effective date.

PART A: TYPE OF COVERAGE Question 1, Type of Plan . Enter type of plan. Select one of the following choices only: (1)“Medical expense policy,” (2) “Hospital expense policy,” (3) “Preferred provider plan,” (4) “Health maintenance organization (HMO),” (5) “Point of service (i.e., an HMO plan with some out-of-network benefits),” or (6) “Limited service licensed provider network (LSLPN) plan.” Note: Plans that have in-network and out-of- network benefits that are not offered by an HMO but which use gatekeepers should enter "Preferred Provider Plan."

Question 2, Coverage for Out-of-Network Care . Indicate if out-of-network care is covered. Select one of the following choices only: (1) “Only for emergency care” ; (2) ” Only for emergency and urgent care” ; (3) “Only for specified services; patient pays more for such out-of-network care” [e.g., POS plans]; (4) “Yes, but patient pays more for out-of-network care.” [e.g., PPO’s]; (5) “Yes; policy makes no distinction between in-network and out-of-network care.” [e.g., traditional indemnity plans]. (6) For HMOs that are marketing to small employers or employees of small employers outside of its geographic service area, the following statement must be added in bold, 12 pt. caps: ” INTERESTEDPOLICYHOLDERS, CERTIFICATE HOLDERS, AND ENROLLES ARE HEREBY GIVEN NOTICE THAT THIS SMALL GROUP POLICY REQUIRES THAT AN INSURED TRAVEL OUTSIDE OF THE GEOGRAPHIC AREA TO RECEIVE COVERED HEALTH BENEFITS.” Question 3, Where Plan Is Available . Indicate where the plan itself is available. This question does not concern the residence of the potential enrollee. Select one of the following choices only: (1) “Plan is available throughout Colorado” ; (2) “Plan is available only in the following areas: [fill in]” ; or (3) “Plan is available throughout Colorado except in the following areas: [fill in].” A note should be added if the Plan is marketed to employers or employees located over state or county lines. PART B: SUMMARY OF BENEFITS Questions 4-31: General Directions.

- If the plan has separate in-network and out-of-network benefits (e.g., preferred provider plan), use two columns and label them “In-network” and “Out-of-network.” - If the plan does not make such a distinction (e.g., traditional indemnity plan) replace two columns with a single column labeled “Benefit Levels.”

- HMOs may use one rather than two columns to describe their benefits. HMOs that decide to use one column only should label that column as follows: "In-Network Only (out-of network care is not covered except as noted)." Wherever the plan does provide out-of-network care (e.g., emergency care), this should be noted in the appropriate boxes describing benefits. Point of service plans and preferred provider plans should continue to use two columns—one for in-network and one for out-of-network coverage—to describe their plans.

- For questions 4-6, 11, 19-20, 22 and 28-30, carriers may write in “See benefit schedule attached” and show actual benefit levels on a separate schedule attached to the form. Carriers that choose to use a separate schedule for the designated questions shall use the form labeled “Selected Benefit Descriptions,” which is found at the end of the description form and labeled Optional Attachment. The same rules apply for filling out the boxes on this optional form as on the main description form. Question 4, Deductible Type* . Enter “Calendar Year” or “Benefit Year” . If the deductible is anything other than per calendar or benefit year, the specific requirements must be disclosed here.

Question 4a, Annual Deductible* . Specify “Individual” and “Family” for non-HSA qualified plans or “Single” or “Non-single” for HSA-qualified plans. Enter applicable “individual” or “single” and “family” or “non-single” annual deductibles for the plan as a whole. Indicate whether they are aggregate or separate deductibles. Carriers shall identify what services are subject to the deductible by making a text notation next to those services in items 8 through 31 of the Colorado Health Benefit Plan Description Form. If the plan does not require deductibles, enter “No deductibles.”

Question 5, Out-of-Pocket Annual Maximum* . Enter applicable out-of-pocket individual and family annual maximums. If the out-of-pocket maximum excludes deductibles and/or copayments, so indicate. If the plan has combined in-network and out-of-network annual out-of- pocket maximums, so indicate. Carriers may identify what deductibles and copayments are included in calculating the out-of-pocket maximums by making a text notation next to any applicable deductibles or copayments in items 8 through 31 of the Colorado Health Benefit Plan Description Form. If the plan has no out-of-pocket maximum, enter “No out-of-pocket maximum.” Question 6, Lifetime/benefit Maximum* . Enter lifetime maximum (e.g., “$2 million” ) and other benefit maximums that apply to the whole policy (e.g., “$50,000 per year” or “$20,000 per episode of care” ). If lifetime/benefit maximums apply to both in-network and out-of-network expenses, so indicate. If the plan has no lifetime maximum, enter “No lifetime maximum.” Question 7A, Covered Providers . Indicate covered providers. Select one of the following choices only: (1) “[Insert name of provider network]. See provider directory for complete list of current providers” ; (2) “[Insert total number] physicians and [Insert total number] hospitals in Colorado as of [insert date]. See provider directory for complete list of current providers” ; or (3) “All providers licensed or certified to provide covered benefits.” Question 7B, Accessibility of Providers . One purpose of this question is to get at the so-called “pod” issue. In some plans, once an enrollee selects a PCP, that PCP only refers to a selected subset of otherwise covered network providers, sometimes called a pod. The subset is usually a physician-hospital network that has made special arrangements with the carrier concerning provider payment. An enrollee who wants to be referred to a specialist who is covered by his plan as a network provider but who is not part of his PCP’s pod would have to select a new PCP who practices in the same pod as the specialist in order to get a referral. Select one of the following choices only: Network plans using this kind of pod system should answer “No” ; all other network plans should answer “Yes” . If the answer depends on the service area or some other factor, so indicate (e.g., “Yes, except in Denver and Adams County.” ) A note should be added if the Plan includes network providers located over state or county lines. Plans that do not use networks should enter: “Not applicable. This is not a network plan.” Questions 8-30: General Directions.

Show benefit levels, including copayments, coinsurance, and other applicable payment. If deductibles or copayments can vary by provider, disclose how this will apply. Indicate significant benefit limits. If per diem, annual, or per visit maximums apply, show them. If separate deductibles apply, so indicate. Examples: “80% for up to 6 visits per year,” or “80% for generic drugs only,” or “$10 per visit copayment,” or “$50 per day up to $500 per year,” or “50% after separate $100 per year physical therapy deductible,” or “50% for 2 acute care detoxifications per year.” If no coverage is provided for a category of benefit write in “Not covered.” If full coverage is provided, write in “No copayment (100% covered)” . Coinsurance options should reflect the carrier’s reimbursement level.

HMOs that use one rather than two columns to describe their benefits should note in the appropriate boxes where the plan does cover out-of-network care (e.g., emergency care). Question 8, Medical Office Visits . Indicate coverage for primary care provider and specialist services separately.

Question 9, Preventive Services . Carriers are reminded that Colorado law has benefit mandates regarding the coverage of children’s preventive services (all individual and group health benefit plans). Indicate coverage for children’s and adult preventive services separately. A complete, detailed list of services does not need to be provided. Question 10, Maternity. Carriers are reminded that Colorado law has benefit mandates regarding maternity care coverage (employer group plans only). Indicate coverage for prenatal care and for delivery and inpatient well baby care separately. Question 11, Prescription Drugs* . Indicate the amount of coverage for prescription drugs. Also indicate whether the level of coverage is based on generic versus brand name drugs, use of a prescription drug card, and/or other requirements. Note if separate copayments and deductibles apply. Examples: “Separate $100 deductible. $8 copayment per prescription” ; or “80% generic; 50% brand name drugs” ; or “90% with prescription drug card. Maximum benefit of $200/month” ; or “$5 per prescription for drugs on our approved list only.” If a formulary is used, add this statement: “For drugs on our approved list, contact [position title], at [telephone number].” Questions 12 and 13, Inpatient Hospital and Outpatient/Ambulatory Surgery . See General Directions for Questions 8-30, above.

Question 14, Laboratory & X-ray . If coverage, copayments, or deductibles for diagnostic benefits vary depending on whether they are associated with a medical office visit, so indicate. Questions 15, 16 and 17, Emergency Care, Ambulance, and Urgent Care . If copayments or deductibles differ by service among emergency care, ambulance, or urgent care, so indicate. Question 18, Biologically Based Mental Illness Care . For group plans issued or renewed on or after January 1, 1998, carriers must enter: “Coverage is no less extensive than the coverage provided for any other physical illness.”

Question 19, Other Mental Health Care* . Carriers are reminded that Colorado law has benefit mandates for group plans regarding the coverage of other, non-biologically based mental health conditions. If coverage varies depending on whether inpatient or outpatient, so indicate. Question 20, Alcohol & Substance Abuse* . See General Directions for Questions 8-30, above. If coverage varies depending on whether the care is inpatient or outpatient, so indicate. Also indicate if coverage varies depending on whether care is for alcohol versus other substance abuse.

Question 21, Physical, Occupational and Speech Therapy. If benefit levels vary, so indicate. Example: “Physical therapy: 50% maximum for up to six visits per event; Occupational: 80%; Speech: not covered.” If coverage varies depending on whether inpatient or outpatient, so indicate.

Question 22, Durable Medical Equipment* . Carriers must indicate benefit level. Carriers may also add the following statement: “See policy for types and circumstances of coverage.” If coverage varies depending on whether inpatient or outpatient, so indicate. Questions 23, 24, 25, 26 and 27 . See General Directions for Questions 8-30, above. If coverage varies depending on whether inpatient or outpatient, so indicate. Questions 28-30, Dental Care, Vision Care and Chiropractic Care* . Briefly describe coverage, if any, and note if coverage may be obtained either under a separate dental/vision/chiropractic care plan or as an optional benefit. If no coverage is provided, write in “No coverage” . Question 31, Significant Additional Covered Services . You may list up to five additional covered benefits not already asked about in questions 10-30. Examples: acupuncture; other alternative medical treatments; transportation. Information specifying the plan’s cancer screening coverages, as required by Section 10-16-108.5(11)(c), C.R.S., must be included in box 31 if it is not included at the end of the form or attached as allowed by Section 4.I.4. of this regulation. Information regarding cancer screening coverages counts as only one (1) of the five (5) additional services that can be listed in this box.

PART C: LIMITATIONS AND EXCLUSIONS Question 32, Pre-existing Condition Exclusion Period. Select one of the following choices only: (1) “____ months [insert the length of the limitation period] for all pre-existing conditions” ; (and for business groups of one the limitation period may not exceed 12 months.) (2) “____ months [insert the length of the limitation period] for selected pre-existing conditions only; no pre-existing condition limitation for all other conditions. See policy for details.” ; (3) “Not applicable; plan does not impose limitation periods for pre- existing conditions.” (4) “This individual short-term health benefit plan does not cover pre-existing conditions.” Note: For group plans (except business groups of one) the limitation period may not exceed six (6) months; for business groups of one the limitation period may not exceed 12 months. Individual carriers that use pre-existing exclusion periods shall also add the following to their answer: “unless the covered person is a HIPAA-eligible individual as defined under federal and state law, in which case there are no pre-existing condition exclusions.” This additional language is not applicable to individual short- term health benefit plans. Carriers are reminded that Colorado law governs allowable pre-existing periods for all health benefit plans.

Question 33, Exclusionary Riders . All group carriers must enter “No” . Depending on the policy, individual carriers should enter “Yes” or “No.”

Question 34, Definition of a Pre-existing Condition . Enter the definition of a pre-existing condition under this policy. Select one of the following choices only: (1) “Not applicable. Plan does not exclude coverage for pre-existing conditions.” ; (2) for group plans: “A pre-existing condition is a condition for which medical advice, diagnosis, care, or treatment was recommended or received within the last ___ [insert a number not to exceed 12 for business groups of one and not to exceed 6 for all other group plans] months immediately preceding the date of enrollment or, if earlier, the first day of the waiting period; except that pre-existing condition exclusions may not be imposed on a newly adopted child, a child placed for adoption, a newborn, other special enrollees, or for pregnancy” ; (3) for individual plans: “A pre-existing condition is an injury, sickness or pregnancy for which a person incurred charges, received medical treatment, consulted a health care professional, or took prescription drugs within ___ [insert a number not to exceed 12] months immediately preceding the effective date of coverage.” ; or (4) for individual short- term health benefit plans: “Pre-existing conditions are not covered.” Question 35, Policy Exclusions . All carriers must enter the following language: “Exclusions vary by policy. A list of exclusions is available immediately upon request from your carrier, agent, or plan sponsor (e.g., employer). Review the list to see if a service or treatment you may need is excluded from the policy.” On demand, carriers must give applicants and insureds a complete list of exclusions. Carriers are encouraged, but not required, to list the exclusions in alphabetical order (e.g., custodial care; enteral feedings; growth hormone therapy; health services which are not medically necessary; travel or transportation expenses except for ambulance).

PART D: USING THE PLAN Questions 36-38: General Directions . If the plan has separate in-network and out-of-network benefits, use two columns and label them “In-network” and “Out-of-network.” If the plan does not make such a distinction (e.g., a traditional indemnity plan), replace two columns with a single column labeled “Using the Plan.”

Questions 36, 37, and 38, Specialty Care, Surgical Procedures, and Provider Charges . In each column, select one of the following choices only: (1) “Yes” or (2) “No.” If the answer is “Yes” , a carrier may expand on the answer to note exceptions to this requirement (e.g., “Yes, except for obstetrical or gynecological care.” )

Question 39, Customer Service Number . Enter your main customer service number for members/insureds.

Question 40, Filing Complaints . Enter name, address and phone number for complaints and grievances. Question 41, Dissatisfaction With Resolution of Consumer Complaint . Except as noted, all plans enter: “Write to: Colorado Division of Insurance, ICARE Section, 1560 Broadway, Suite 850, Denver, CO 80202.”

Question 42, Form Number, Group Size, and Short-Term . Enter the policy form number by writing “Policy form # ___ [fill in]” . Indicate whether this is an individual, small, or large group policy. Select one of the following choices only: (1) “Individual” , (2) “Small group only” , (3) “Large group only” , or (4) “Group--all sizes.” Indicate if policy is short-term by writing “short term policy.” Examples: “Policy form # CO-1247, large group.” or “Policy form # 12-30-7, individual, short-term.” Note: If a carrier offers the identical policy in several markets (e.g., large group market, small group market, etc.) then multiple responses may be included here (e.g., "Policy form #CO-1247 large group, and #CO-807 small group." Question 43, Binding Arbitration . Indicate, with a “Yes” or “No” , if the plan has binding arbitration. OPTIONAL ATTACHMENT: SELECTED BENEFIT DESCRIPTIONS Carriers are not required to use this form. At the carrier's option, with respect to questions 4-6,11, 19-20, 22, and 28-30 only, a carrier may describe its benefits with respect to these items on the optional attachment instead of on the main form. A carrier that chooses to do this must write in "See benefit schedule attached" for the designated questions and shall use the form labeled “Selected Benefit Descriptions,” which is found at the end of the description form and labeled Optional Attachment. The same rules apply for filling out the boxes on this optional form as on the main description form. Carriers using the optional attachment must attach it to all health plan description forms. Endnote:

* For questions 4-6, 11, 19-20, 22 and 28-30, carriers may write in “See benefit schedule attached” and show actual benefit levels on a separate schedule attached to the form. Carriers shall use the form labeled “Specific Benefits Selected” which is shown as the Optional Attachment at the end of the form in Appendix A.

Amended Regulation 4-2-21 EXTERNAL REVIEW OF BENEFIT DENIALS OF HEALTH COVERAGE PLANS Section 1 Authority Section 2 Background and Purpose Section 3 Applicability and Scope Section 4 Definitions Section 5 Notice and Disclosure of Right to External Review Section 6 Request for External Review Section 7 Exhaustion of Internal Appeal Process Section 8 Standard External Review Section 9 Expedited External Review Section 10 Binding Nature of External Review Decision Section 11 Approval of Independent External Review Entities Section 12 Minimum Qualifications for Independent External Review Entities Section 13 External Review Record Requirements Section 14 Funding of External Review Section 15 Enforcement Section 16 Severability Section 17 Effective Date Section 18 History Section 1 Authority This regulation is promulgated and adopted by the Commissioner of Insurance under the authority of § §10-1-109, 10-16-109, 10-16-113(3)(b) and 10-16-113.5(4)(d), C.R.S. Section 2 Background and Purpose The purpose of this regulation is to provide standards for the external review process set forth in §10-16- 113.5, C.R.S., including the approval of independent external review entities. Section 3 Applicability and Scope The provisions of this regulation shall apply to all health coverage plans that base decisions concerning claims in whole or in part based on utilization reviews. This regulation shall not apply to automobile medical payment policies, worker’s compensation policies or property and casualty contracts. Where a decision concerning a claim is in no way based on utilization review, a carrier is not required to use the specific procedures outlined in this regulation, except this regulation shall apply to a carrier’s denial of a benefit because the treatment is excluded by the health coverage plan if the covered person presents evidence from a medical professional that there is a reasonable medical basis that the contractual exclusion does not apply. Nothing in this regulation shall be construed to supplant any appeal or due process rights that a person may have under federal or state law. Section 4 Definitions For purposes of this regulation, the following definitions apply: A. “Ambulatory review” means utilization review of health care services performed or provided in an outpatient setting.

B. “Carrier’s adverse determination” means an adverse determination, as defined in Colorado Insurance Regulation 4-2-17, involving a covered benefit that has been upheld by a carrier at the completion of at least one of the carrier’s internal appeal processes as set forth in Colorado Insurance Regulation 4-2-17.

C. “Case management” means a coordinated set of activities conducted for individual patient management of serious, complicated, protracted or other health conditions. D. “Certification,” as used in the definition of "utilization review," means a determination by a carrier that an admission, availability of care, continued stay or other health care service has been reviewed and, based on the information provided, satisfies the carrier’s requirements for medical necessity, appropriateness, health care setting, level of care, effectiveness or efficiency. E. “Clinical review criteria” means the written screening procedures, decision abstracts, clinical protocols and practice guidelines used by a carrier to determine the necessity and appropriateness of health care services.

F. “Concurrent review” means utilization review conducted during a patient’s hospital stay or course of treatment.

G. “Covered benefits” or “benefits,” means those health care services to which a covered person is entitled under the terms of a health coverage plan.

H. “Designated representative” means:

1. A person, including the treating health care professional or a person authorized by Paragraph 2. of this Subsection H., to whom a covered person has given express written consent to represent the covered person in an external review; or 2. A person authorized by law to provide substituted consent for a covered person, including but not limited to a guardian, agent under a power of attorney, or a proxy. I. “Discharge planning” means the formal process for determining, prior to discharge from a facility or service, the coordination and management of the care that a patient receives following discharge from a facility or service.

J. “Disability” shall mean, with respect to a covered person, a physical or mental impairment that substantially limits one or more of the major life activities of such covered person, in accordance with the Americans with Disabilities Act of 1990, 42 U.S.C § 12101 . K. “Facility” means an institution providing health care services, or a health care setting, including but not limited to, hospitals and other licensed inpatient centers, ambulatory surgical or treatment centers, skilled nursing centers, residential treatment centers, diagnostic, laboratory and imaging centers, and rehabilitation and other therapeutic health settings. L. “Health care professional” means a physician or other health care practitioner licensed, accredited or certified to perform specified health services consistent with state law. M. “Health care services” means services for the diagnosis, prevention, maintenance, treatment, cure or relief of a health condition, illness, injury or disease. N. “Prospective review” means utilization review conducted prior to an admission or a course of treatment.

O. “Protected health information” means health information: 1. That identifies an individual who is the subject of the information; or 2. With respect to which there is a reasonable basis to believe that the information could be used to identify an individual.

P. “Retrospective review” means a review of medical necessity conducted after services have been provided to a patient, but does not include the review of a claim that is limited to an evaluation of reimbursement levels, veracity of documentation, accuracy of coding or adjudication for payment.

Q. “Second opinion” means an opportunity or requirement to obtain a clinical evaluation by a provider other than the one originally making a recommendation for a proposed health service to assess the clinical necessity and appropriateness of the initial proposed health service. R. “Utilization review” means a set of formal techniques designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of, health care services, procedures, or settings. Techniques include ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning, or retrospective review. For the purposes of this regulation, utilization review shall also include reviews for the purpose of determining coverage based on whether or not a procedure or treatment is considered experimental or investigational in a given circumstance, and reviews of a covered person's medical circumstances when necessary to determine if an exclusion applies in a given situation. Section 5 Notice and Disclosure of Right to External Review A. Notification requirements.

1. A carrier shall notify the covered person in writing of the covered person’s right to request an external review and include the appropriate statements and information set forth in Paragraph 2. of this Subsection A. at the time the carrier sends written notice of carrier’s decision following the first level or second level review of an adverse determination as set forth in Colorado Insurance Regulation 4-2-17.

2. The carrier shall include in the required notice a copy of the description of both the standard and expedited external review procedures the carrier is required to provide pursuant to Subsection B., including the provisions in the external review procedures that give the covered person or the covered person’s designated representative the opportunity to submit new information and including any forms used to process an external review, as specified by the Division of Insurance.

B. Disclosure requirements.

1. Effective for policies issued or renewed on or after June 1, 2000, each carrier shall include a description of the external review procedures in or attached to all health coverage plan materials dealing with the plan’s grievance procedures including but not limited to the policy, certificate, membership booklet, outline of coverage or other evidence of coverage it provides to covered persons.

2. The description required under Paragraph 1. of this Subsection B. shall include a notification of the availability of an external review process, the circumstances under which a covered person may use the external review process, the procedures for requesting an external review, and the timelines associated with an external review. Section 6 Request for External Review A. Within sixty (60) calendar days after the date of receipt of a notice of a carrier’s adverse determination pursuant to Section 5.A. of this regulation, a covered person or the covered person’s designated representative may file a request for an external review with the carrier. B. All requests for external review shall be made in writing to the carrier and must include a completed external review request form as specified by the Division of Insurance. C. A covered person or covered person's designated representative requesting an expedited external review must include a request for an expedited review in the written request described in Subsection A. of this Section 6.

D. All requests for external review shall include a signed consent, authorizing the carrier to disclose protected health information, including medical records, concerning the covered person that is pertinent to the external review.

E. A request for external review submitted by the covered person or the covered person's designated representative may include new information, if significantly different from information provided or considered during the internal review process, for consideration by the carrier and the independent external review entity.

Section 7 Exhaustion of Internal Appeal Process A request for an external review pursuant to Section 8 or 9 of this regulation may be made after the covered person has received the carrier’s decision following the first level or second level review of an adverse determination as set forth in Colorado Insurance Regulation 4-2-17. Section 8 Standard External Review A. Carrier requirements.

1. Except as provided in Paragraph 2. of this Subsection A., the carrier, upon receipt of a complete request for an external review pursuant to Section 6 of this regulation, shall deliver a copy of the request to the Commissioner of Insurance within two (2) working days.

2. If the carrier, before the expiration of the deadline for sending notification to the Commissioner, reverses its adverse determination based on new information submitted by the covered person or the designated representative pursuant to Section 6, Subsection E., the carrier must notify the covered person or the designated representative within one (1) working day of its reversal, electronically, by facsimile, or by telephone, followed by a written confirmation.

B. Division of Insurance requirements.

1. Within two (2) working days from the time a request for external review is received from the carrier, the Commissioner shall assign an independent external review entity to conduct the external review that has been approved pursuant to Section 11 of this regulation. The Commissioner shall randomly select an independent external review entity that does not have a conflict of interest, as described in Section 12. Upon assignment, the Commissioner shall notify the carrier, electronically, by facsimile, or by telephone, followed by a written confirmation, of the name and address of the independent external review entity to which the appeal should be sent.

2. After notice from the Commissioner pursuant to Paragraph 1. of this Subsection B., the carrier shall notify within two (2) working days the covered person or the designated representative, electronically, by facsimile, or by telephone, followed by a written confirmation. The notice shall include a written description of the independent external review entity that the Commissioner has selected to conduct the external review and information regarding how the covered person or the designated representative may provide the Commissioner with documentation regarding any potential conflict of interest of the independent external review entity as described in Section 12 of this regulation. 3. Within two (2) working days of receipt of notice from the carrier, the covered person or the designated representative may provide the Commissioner with documentation regarding a potential conflict of interest of the independent external review entity, electronically, by facsimile, or by telephone, followed by a written confirmation. If the Commissioner determines that the independent external review entity presents a conflict of interest as described in § 10- 16-113.5(4)(b), C.R.S., the Commissioner shall assign, within one (1) working day, another independent external review entity to conduct the external review that has been approved pursuant to Section 11 of this regulation. Upon this reassignment, the Commissioner shall notify the carrier, electronically, by facsimile, or by telephone, followed by a written confirmation, of the name and address of the new independent external review entity to which the appeal should be sent. The Commissioner will notify the covered person or the designated representative in writing of the Commissioner’s determination regarding the potential conflict of interest and the name and address of the new independent external review entity, if applicable. 4. In reaching a decision, the assigned independent external review entity is not bound by any decisions or conclusions reached during the carrier’s utilization review process or the carrier’s internal appeal process as set forth in Colorado Insurance Regulation 4-2-17. C. Carrier requirements to provide documents and information. 1. Within six (6) working days from the date the carrier receives notice from the Commissioner pursuant to Paragraph 1. of Section 8.B., the carrier shall deliver to the assigned independent external review entity the following documents and information considered in making the carrier’s adverse determination including:

a. Any and all information submitted to the carrier by a health care professional or the covered person or designated representative in support of the request for coverage under the health coverage plan’s procedures;

b. Any and all information used by the plan during the internal appeal process to determine the medical necessity, medical appropriateness, medical effectiveness, or medical efficiency of the proposed treatment or service, including medical and scientific evidence and clinical review criteria; c. A copy of any and all denial letters issued by the plan concerning the case under review;

d. A copy of the signed consent form, authorizing the carrier to disclose protected health information, including medical records, concerning the covered person that is pertinent to the external review; and e. An index of all submitted documents.

2. Within two (2) working days of receipt of the material specified in Paragraph 1. of this Subsection C., the independent external review entity shall deliver to the covered person or the designated representative the index of all materials that the plan has submitted to the independent external review entity. The carrier shall provide to the covered person or designated representative, upon request, all relevant information supplied to the independent external review entity that is not confidential or privileged under state or federal law concerning the case under review.

3. Independent external review entity notification requirements. a. The certified independent external review entity shall notify the covered person or the designated representative, the health care professional of the covered person, and the carrier of any additional medical information required to conduct the review after receipt of the documentation required pursuant to Paragraph 1. of this Subsection C. Within five (5) working days of such a request, the covered person or the designated representative or the health care professional of the covered person shall submit the additional information, or an explanation of why the additional information is not being submitted to the certified independent external review entity and the carrier.

b. If the covered person or designated representative or the health care professional of the covered person fails to provide the additional information or the explanation of why additional information is not being submitted within the timeframe specified in Subparagraph a. of this Paragraph 3., the assigned independent external review entity shall make a decision based on the information submitted by the carrier as required by Paragraph 1. of this Subsection C. 4. Failure of the carrier to provide documents and information. a. If the carrier fails to provide the required documents and information within the time specified in Paragraph 1. of this Subsection C., the assigned independent external review entity may terminate the external review and make a decision to reverse the carrier’s adverse determination.

b. Immediately upon the reversal under Subparagraph a. of this Paragraph 4., the independent external review entity shall notify the covered person, if applicable, the covered person’s designated representative, the carrier, and the Commissioner.

5. Except as provided in Paragraph 4. of this Subsection C., failure by the carrier to provide the documents and information within the time specified in Paragraph 1. of this Subsection C. shall not delay the conduct of the external review.

D. The assigned independent external review entity shall review all of the information and documents received pursuant to Subsection C. of this Section 8.

E. Carrier’s reconsideration of its adverse determination. 1. Upon receipt of the information permitted to be forwarded pursuant to Section 6.E. of this regulation, the carrier may reconsider the its adverse determination that is the subject of the external review.

2. Consideration of new information by the carrier of the its adverse determination pursuant to Paragraph 1. of this Subsection E. shall not delay or terminate the external review. 3. The external review may only be terminated if the carrier decides to reverse the its adverse determination and provide coverage or payment for the health care service that is the subject of the carrier’s adverse determination.

4. Carrier notification requirements of reversal of adverse determination. a. Within one (1) working day of making the decision to reverse the its adverse determination, as provided in Paragraph 3., the carrier shall notify the covered person or the covered person’s designated representative, the assigned independent external review entity, and the Commissioner of its decision, electronically, by facsimile, or by telephone followed by a written confirmation. b. The assigned independent external review entity shall terminate the external review upon receipt of the notice from the carrier sent pursuant to Subparagraph a. of this Paragraph 4.

F. In addition to the documents and information provided pursuant to Subsection C. of this Section 8, the assigned independent external review entity, to the extent the documents or information are available, shall review the following:

1. The covered person’s medical records;

2. The attending health care professional’s recommendation; 3. Consulting reports from appropriate health care professionals and other documents submitted by the health carrier, covered person, the covered person’s authorized representative, or the covered person’s treating provider;

4. Any applicable clinical review criteria developed and used by the carrier; and 5. Medical and scientific evidence determined to be relevant and appropriate by the independent review entity.

G. The independent external review entity shall base its determination on an objective review of relevant medical and scientific evidence.

H. Independent external review entity notice requirements. 1. Except as provided in Paragraph 2. of this Subsection H., within thirty (30) working days after the date of receipt of the request for external review by the carrier, the assigned independent external review entity shall provide written notice of its decision to uphold or reverse the carrier’s adverse determination to:

a. The covered person;

b. If applicable, the covered person’s designated representative; c. The carrier;

d. The physician or other health care professional of the covered person; and e. The Commissioner.

2. The expert reviewer may request that the Commissioner extend the deadline for the written notice of the independent external review entity up to ten (10) working days for the consideration of additional information required pursuant to Subsection C.3. of this Section 8.

3. In addition to the requirements of § 10- 16-113.5(10), C.R.S., the independent external review entity shall include in the notice sent pursuant to Paragraph 1. of this Subsection H.:

a. The date the independent external review entity received the assignment from the Commissioner to conduct the external review;

b. The date of its decision; and c. An explanation that the external review decision is the final appeal available to the consumer under state insurance law.

4. Upon carrier’s receipt of the independent external review entity’s notice of a decision pursuant to Paragraph 1. of this Subsection H. reversing the its adverse determination, the carrier shall approve the coverage that was the subject of the carrier’s adverse determination. For concurrent and prospective reviews, the carrier shall approve the coverage within one (1) working day. For retrospective reviews, the carrier shall approve the coverage within five (5) working days. The carrier shall provide written notice of the approval to the covered person or the designated representative within one (1) working day of the carrier's approval of coverage. The coverage shall be provided subject to the terms and conditions applicable to benefits under the health coverage plan. Section 9 Expedited External Review A. Request requirements.

1. Except as provided in Subsection I. of this Section 9, a covered person or the covered person’s designated representative may make a request for an expedited external review with the carrier if the covered person has a medical condition where the timeframe for completion of a standard external review pursuant to Section 8 of this regulation would seriously jeopardize the life or health of the covered person, would jeopardize the covered person’s ability to regain maximum function or, for persons with a disability, create an imminent and substantial limitation of their existing ability to live independently. 2. The covered person’s or the designated representative's request for an expedited review must include a physician’s certification that the covered person’s medical condition meets the criteria in Paragraph 1. of this Subsection A.

3. Upon receipt of a request for an external review pursuant to Paragraph 1. of this Subsection A., the carrier shall notify and send a copy of the request to the Commissioner within one (1) working day electronically or by telephone or facsimile or any other available expeditious method.

B. Division of Insurance requirements.

1. Within one (1) working day of the time the Commissioner receives a request for an expedited external review, the Commissioner shall randomly assign an independent external review entity that has been approved pursuant to Section 11 of this regulation to conduct the review and to make a decision regarding the carrier’s adverse determination. The Commissioner shall select an independent external review entity that does not have a conflict of interest with the case, as described in Section 12. Upon assignment, the Commissioner shall inform the carrier of the name and address of the independent external review entity to which the appeal should be sent. 2. Within one (1) working day of notice from the Commissioner pursuant to Paragraph 1. of this Subsection B., the carrier shall notify the covered person or designated representative, electronically, by facsimile, or by telephone followed by a written confirmation. The notice shall include a written description of the independent external review entity that the Commissioner has selected to conduct the independent review. C. In reaching a decision, the assigned independent external review entity is not bound by any decisions or conclusions reached during the carrier’s utilization review process or the carrier’s internal appeal process as set forth in Colorado Insurance Regulation 4-2-17. D. Carrier requirements to provide documents and information. 1. Within three (3) working days of the time the carrier receives the request pursuant to Subsection A., the carrier shall provide or transmit all necessary documents and information, as described in Section 8.C.1., considered in making the its adverse determination to the assigned independent external review entity electronically or by telephone or facsimile or any other available expeditious method. 2. Within one (1) working day of receiving documents and information as described in Paragraph 1. of this Subsection D., the independent external review entity shall deliver to the covered person or the designated representative an index of all materials that the plan has submitted to the independent external review entity. The carrier shall provide to the covered person or designated representative, upon request, all information supplied to the independent external review entity that is not confidential or privileged under state or federal law concerning the case under review.

E. The certified independent external review entity shall notify, electronically, by facsimile, or by telephone followed by a written confirmation, the covered person or designated representative, the health care professional of the covered person, and the carrier of any additional medical information required to conduct the review after receipt of the documentation required pursuant to Subsection D. of this Section 9. The covered person or designated representative or the health care professional of the covered person shall submit the additional information, or an explanation of why the additional information is not being submitted to the certified independent external review entity and the carrier within two (2) working days of such a request. F. In addition to the documents and information provided or transmitted pursuant to Subsections D. and E. of this Section 9, the assigned independent external review entity, to the extent the information or documents are available, shall consider the following in reaching a decision: 1. The covered person’s medical records;

2. The attending health care professional’s recommendation; 3. Consulting reports from appropriate health care professionals and other documents submitted by the health carrier, covered person, the covered person’s authorized representative, or the covered person’s treating provider;

4. Any applicable clinical review criteria developed and used by the carrier; and 5. Documents and information regarding medical and scientific evidence, to the extent the independent review entity considers them appropriate.

G. The independent external review entity shall base its determination on an objective review of relevant medical and scientific evidence.

H. Independent external review entity notice requirements. 1. Except as provided in Paragraph 2. of this Subsection H., within seven (7) working days after the date of receipt of the request for external review by the carrier, the assigned independent external review entity shall:

a. Make a decision to uphold or reverse the carrier’s adverse determination; and b. Notify the covered person, if applicable, the covered person’s designated representative, the carrier, the covered person’s physician, and the Commissioner of the decision.

2. The expert reviewer may request the Commissioner to extend the deadline for the written notice of the independent external review entity up to five (5) working days for the consideration of additional information pursuant to Subsection E. of this Section 9. 3. If the notice provided pursuant to Paragraph 1. of this Subsection H. was not in writing, within two (2) working days after the date of providing that notice, the assigned independent external review entity shall:

a. Provide written confirmation of the decision to the covered person, if applicable, the covered person’s designated representative, the carrier, and the Commissioner; and b. Include the information set forth in Section 8.H.3. of this regulation. 4. Upon carrier’s receipt of the independent external review entity’s notice of a decision pursuant to Paragraph 1. of this Subsection H. reversing the its adverse determination, the carrier shall approve the coverage that was the subject of the its adverse determination within one (1) working day. The carrier shall provide written notice of the approval to the covered person or the designated representative within one (1) working day of receipt of the notice pursuant to Paragraph 1. of this Subsection H. The coverage shall be provided subject to the terms and conditions applicable to benefits under the health coverage plan. I. An expedited external review may not be provided for retrospective adverse determinations. Section 10 Binding Nature of External Review Decision A. An external review decision is binding on the carrier and the covered person except to the extent the carrier and covered person have other remedies available under federal or state law; however, the determination of the expert reviewer will create a rebuttable presumption in any subsequent action.

B. A covered person or the covered person’s designated representative may not file a subsequent request for external review involving the same carrier’s adverse determination for which the covered person has already received an external review decision pursuant to this regulation. Section 11 Approval of Independent External Review Entities A. The Commissioner shall approve independent external review entities eligible to be assigned to conduct external reviews under this regulation to ensure that an independent external review entity satisfies the minimum qualifications established under Section 12 of this regulation. B. Application shall be made on a form specified by the Commissioner for approving independent external review entities to conduct external reviews.

C. Any independent external review entity wishing to be approved to conduct external reviews under this regulation shall submit a completed application form, including any documentation or information necessary for the Commissioner to determine if the independent external review entity satisfies the minimum qualifications established under Section 12 of this regulation. D. Expiration of approval.

1. An approval is effective for two (2) years, unless the Commissioner determines before expiration of the approval that the independent external review entity is not satisfying the minimum qualifications established under Section 12 of this regulation. 2. Whenever the Commissioner determines that an independent external review entity no longer satisfies the minimum requirements established under Section 12 of this regulation, the Commissioner shall notify the independent external review entity that its approval has been withdrawn and remove the independent external review entity from the list of independent external review entities approved to conduct external reviews under this regulation that is maintained by the Commissioner pursuant to Subsection E. E. The Commissioner shall maintain and update, as necessary, a list of approved independent external review entities.

F. The Commissioner may rely on the accreditation status of an applicant independent external review entity as demonstration of fulfillment of any or all requirements of this section. Section 12 Minimum Qualifications for Independent External Review Entities A. To be approved under Section 11 of this regulation to conduct external reviews, an independent external review entity shall meet the requirements of § 10- 16-113.5(4), C.R.S., and shall: 1. Agree to maintain and provide to the Commissioner the information set out in Section 13 of this regulation; and 2. Submit to the Commissioner, with the application for approval as an independent external review entity, a schedule of reasonable fees to be charged to carriers for performance of external review, including administrative fees as described in Section 14. B. All expert reviewers assigned by an independent external review entity to conduct external reviews shall be physicians or other appropriate health care providers who meet the minimum qualifications and conflict of interest requirements described in § 10-16-113.5(2)(c), C.R.S. Section 13 External Review Record Requirements A. An independent external review entity assigned pursuant to Section 8 or Section 9 of this regulation to conduct an external review shall maintain written records in the aggregate and by carrier on all requests for external review for which it conducted an external review for the Colorado Division of Insurance during a calendar year. The independent external review entity shall retain the written records required pursuant to this subsection for at least three (3) years. B. Each carrier shall maintain written records in the aggregate and for each type (i.e., indemnity, PPO, HMO, and POS) of health coverage plan offered by the carrier on all requests for external review that are filed with the carrier. The carrier shall retain the written records required pursuant to this subsection for at least three (3) years.

Section 14 Funding of External Review The carrier against which a request for a standard external review or an expedited external review is filed shall pay the cost, consistent with the fee schedule the independent external review entity filed with the Commissioner, to the independent external review entity for conducting the external review. In the case of a carrier reversing a denial which is the subject of an external review after assignment of the review to independent external review entity, but prior to assignment of an expert reviewer, the carrier shall pay an administrative fee to the independent external review entity. Charges for the independent external review when denial is reversed by the carrier prior to review completion but after assignment to an expert reviewer, shall be the full cost.

Section 15 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any sanctions made available in Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspension or revocation of the certificate of authority. Among others, the penalties provided for in § § 10- 3-1108 and 10-3-1110(2), C.R.S., may be applied.

Section 16 Severability If any provision of this regulation, or the application of the provision to any person or circumstance shall be held invalid, the remainder of the regulation, and the application of the provision to persons or circumstances other than those to which it is held invalid, shall not be affected. Section 17 Effective Date This amended regulation shall be effective on February 1, 2006. Section 18 History 1. Originally promulgated with an effective date of April 1, 2000 for the approval process for independent expert review entities and an effective date of June 1, 2000 for the external review process. 2. Amended effective October 1, 2003 to delete reporting requirements since the Division of Insurance already tracks external review information.

3. Amended effective October 1, 2004, to clarify the options available after a covered person receives a final adverse determination.

4. Amended effective February 1, 2006.

Amended Regulation 4-2-22 INSURER ASSESSMENTS FOR COVERCOLORADO Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Annual Report of Lives Section 6 Determination of Amount of Special Fee Assessment to Each Insurer Section 7 Notice and Collection of the Assessed Special Fees Section 8 Deferral of or Credit Against Special Fees Section 9 Severability Section 10 Enforcement Section 11 Effective Date Section 12 History Section 1 Authority This regulation is promulgated under the authority of § § 10-1-109 and 10-8-530(1.5), C.R.S. Section 2 Scope and Purpose CoverColorado was created by legislation in 1990 to provide access to health insurance for those Colorado residents who are termed “high risk” because they are unable to obtain health insurance or unable to obtain health insurance except at prohibitive rates or with restrictive exclusions. In order to keep up with the rising medical care costs for eligible individuals, § 10-8-530(1.5), C.R.S. was enacted to permit CoverColorado to assess special fees against certain insurers in Colorado, as necessary, to pay projected administrative expenses and losses of the program. Such special fees will be used to supplement premiums and other sources of funding, as set forth in § 10-8-530(1), C.R.S., received by the program.

The purpose of this regulation is to establish the procedures for the assessment of special fees for the CoverColorado program.

Section 3 Applicability This regulation shall apply to insurers that are assessed special fees by CoverColorado. Section 4 Definitions For the purposes of this regulation, the following terms shall have the meanings set forth below: A. “Benefit design weighted average” means the average actuarial value of the benefits provided under all plans issued in Colorado by the insurer during the previous year, weighted by enrollment in each plan.

B. “CoverColorado” is the Colorado program which provides health insurance for those individuals who are termed “high risk” because they are unable to obtain health insurance or are unable to obtain health insurance except at prohibitive rates or with restrictive exclusions. The program is described in §10-8-501 et seq. , C.R.S.

C. “Eligible Individual” is either:

1. a resident of this state who meets the eligibility requirements set forth in §10-8-513, C.R.S.; or 2. an individual who meets the eligibility requirements for a federally eligible individual, as set forth in §10-8-513.5, C.R.S.

This term does not include the dependents of eligible individuals. D. “Group health plan” has the same meaning as set forth in §10-16-105.5(1)(a), C.R.S. E. “Higher level health benefit plan design” means a health plan benefit design for which the actuarial value of the benefits is at least one hundred percent (100%) but not greater than one hundred twenty percent (120%) of the benefit design weighted average. F. “Insurer” is any entity that provides group or individual health benefit plans, as that phrase is defined in §10-16-102(21), C.R.S., and is subject to state insurance regulation in this state, as well as any entity, including a property and casualty insurance company, that, directly or indirectly, provides stop loss or excess loss insurance to a self-insured group health plan. G. “Lower level health benefit plan design” means a health benefit plan design for which the actuarial value of the benefits is at least eighty-five percent (85%) but not greater than ninety-nine percent (99%) of the benefit design weighted average.

H. “Total funding for the program” means the amount needed in a given calendar year to fund projected claims, administrative expenses, reserves for claims incurred but not reported, and amounts need to ensure that CoverColorado maintains a surplus equal to five percent (5%) of the projected annual claims of the program.

I. “Unexpected growth” means an increase in program enrollment or claims expenses in a calendar year of more than one hundred fifteen percent (115%) of the amount of the projected growth in program enrollment or claims expenses of that calendar year. Section 5 Annual Report of Lives A. On March 1 of each year, each insurer shall report to CoverColorado, on the prescribed form, (i) the total number of employees and retired employees or individual policyholders or subscribers enrolled in all, of its health benefit plans offered in this state and (ii) the number of employees/retired employees for whom a premium is paid and coverage is provided under an excess loss, stop loss or reinsurance policy issued by such insurer to an employer or group health plan in this state as of January 1 of that year, beginning in 2009. B. The Annual Report of Lives shall not include any employees, retired employees or individual policyholders or subscribers who receive health benefits through Medicare, Medicaid, the Children’s Basic Health Plan (pursuant to article 8 of title 25.5, C.R.S.), or the Federal Employees Health Benefit Plan.

C. Insurers providing stop loss, excess loss or reinsurance are permitted to exclude from their Annual Report of Lives those employees/retired employees or individual policyholders/subscribers who have been counted by the primary carrier or primary reinsurer. Section 6 Determination of Amount of Special Fee Assessment to Each Insurer A. For calendar year 2009 and thereafter, CoverColorado shall, on an annual basis and by August 1 of the preceding calendar year, determine the amount of special fees needed to pay twenty-five (25%) of the total funding for the program (e.g. the total amount of special fees needed for calendar year 2009 will be determined by August 1, 2008). The total funding for the program for any calendar year shall be determined by the board based on the incurred claims and administrative expenses of the program in the immediately preceding calendar year, the expected annual program growth, existing cash balances and interest earned thereon, and other actuarial considerations of the program. The projections shall not include any costs related to any dependent coverage offered by CoverColorado.

B. The amount of special fees needed by CoverColorado pursuant to Section 6.A. shall be assessed in an equitable manner upon insurers, as follows:

1. The amount of special fees shall be divided by the total number of employees, retired employees and individual policyholders or subscribers reported by all insurers, to arrive at a per capita amount.

2. The special fee assessed to each insurer shall be equal to the number of employees and retired employees or individual policyholders or subscribers reported in the month of March immediately preceding multiplied by the per capita amount (e.g. the Report of Lives submitted by an insurer in March 2008 will be used to calculate the special fees to be paid in calendar year 2009).

C. In no event shall CoverColorado increase the amount of special fees to be collected from insurers in any calendar year because of unexpected growth during that calendar year. If CoverColorado’s incurred administrative expenses or losses exceed the amounts collected through special fees and other sources in any calendar year, the amount needed to pay for such excess expenses and losses shall be requested from the Colorado Unclaimed Property Trust Fund in accordance with § 10-8-530(1)(d), C.R.S.

Section 7 Notice and Collection of the Assessed Special Fees A Each insurer shall receive written notice of the special fee to be paid by such insurer in a calendar year no later than September 1 of the preceding calendar year (e.g. an insurer will receive notice of the special fees owing in calendar year 2009 no later than September 1, 2008). Each notice of a special fee shall include (i) the per capita amount, determined as in Section 6.B.1 above; (ii) a calculation of the special fee due and owing (based on the per capita amount multiplied by the number of employees and retired employees of individual policyholders or subscribers reported in the month of March immediately preceding issuance of the notice); and (iii) a summary of the projections and underlying assumptions which support the need for the special fee in general and the per capita amount in particular.

B Each insurer shall pay the special fees to CoverColorado in two installments, with the first installment due on July 1 and the second installment due on December 1 of each calendar year. C CoverColorado, or its designated agent, shall collect all assessed special fees and deposit the fees into the accounts specifically maintained by the CoverColorado board for this purpose. Any amounts not immediately needed to pay the expenses and losses for eligible individuals shall be invested by the board in accordance with the investment guidelines adopted by the board and filed with the Division of Insurance as part of CoverColorado’s plan of operations. D If the special fees collected in any calendar year exceed the amount actually needed, the excess shall be invested by the board in accordance with the investment guidelines adopted by the board and filed with the Division of Insurance as a part of CoverColorado’s plan of operations and shall, in accordance with Section 4.6.A above, be included as funds held by CoverColorado when the next projections are made.

E In the event that any insurer fails to pay its special fee as assessed by CoverColorado, CoverColorado shall send one notice of nonpayment thirty (30) days after July 1 or December 1. If CoverColorado has not received payment of all amounts due from an insurer within thirty (30) days after the date of the notice of nonpayment, CoverColorado shall report same to the commissioner.

F An insurer receiving a certificate of authority to do business in the State of Colorado market on or after the date of issuance by CoverColorado of a special fee assessment notice shall receive notice of the special fee at the time of licensure and shall be liable for a prorated amount of the special fee due and owing in the calendar year of licensure. Thereafter, a new insurer shall be liable for the special fee in the normal course of the assessment process. G Any insurer withdrawing from the Colorado market after a special fee assessment notice has been issued shall be liable for a prorated amount of the assessment owing in that calendar year and shall not be liable for any assessment owing thereafter. The date of withdrawal shall be the date on which the last contract or policy of the insurer in Colorado expires, is terminated by the insurer in accordance with Colorado insurance laws or is voluntarily terminated by the policyholder/subscriber, whichever is sooner. Any insurer discontinuing a type of health coverage (e.g. small group coverage) in the Colorado market shall be liable in the calendar year of discontinuation for a prorated amount of the assessment due an owing in that calendar year, and the amount of assessment due and owing shall be calculated pursuant to section 6.B., regardless of any reduction in the number of employees and retired employees or individual policyholders or subscribers in that calendar year by reason of the discontinuation. Section 8 Deferral of or Credit Against Special Fees A. Any insurer that believes that the payment of special fees would endanger its financial ability to fulfill its contractual obligations to its insureds may submit, no later than October 1 of the year preceding the calendar year for which payment is due, a written request for deferral of the payment of its assessed special fees to the commissioner, with a copy sent to CoverColorado. The written request for deferral shall be accompanied by certified copies of statutory annual and quarterly statements and any other documents necessary to demonstrate the claimed adverse financial position. Based on the Division of Insurance’s risk-based capital guidelines, the commissioner may defer, in whole or in part, payment of the special fees owing for the coming the calendar year. The commissioner’s determination regarding deferral shall be made no later than November 1 (e.g.within thirty (30) days of receipt of a written request for deferral), with written notice of the determination sent to CoverColorado. The insurer receiving the deferment shall remain liable to CoverColorado for the deferred amount, and the deferred amount shall be incrementally reassessed to the insurer over such period as is deemed reasonable by CoverColorado, in consultation with the commissioner and the insurer, but in no event longer than three (3) years.

B. In the event a special fee assessed against an insurer is deferred, in whole or in part, the amount by which the special fee is deferred may be assessed against the other insurers in a manner consistent with the basis for assessments set forth in Section 6 above ( the resulting additional special fees shall be called “excess special fees” ). Written notice of excess special fees shall be sent to all insurers no later than January 1 of the calendar year of payment. Such excess special fees amount shall be included by the insurer in its July 1 payment of previously assessed special fees to CoverColorado. As the deferred assessment is repaid in subsequent assessments by the deferring insurer, as provided in subsection 8.A above, each insurer that paid such excess special fees shall receive a pro rata credit for its share of previously paid excess special fees. C. An insurer shall be entitled to a credit, in the amount set forth in 8.D below, against special fees assessed (exclusive of excess special fees) if it meets any of the following criteria and has enrolled the required number of individuals in the health benefit plans described during the previous twelve-month period:

1. Any insurer that voluntarily and actively markets and offers, continuously over the twelve- month period preceding the calendar year in which a special fee assessment is due and owing, two different individual health benefit plans to an applicant who has a medical condition on the presumptive conditions list maintained by the CoverColorado board, with the premium for such plans no higher than 125% of the rate charged for a similarly situated (considering age and geographic location) but medically acceptable applicant. The two different plans shall be either:

a. The two plans that are generally available and actively marketed to the public and are the plans with the largest and next to largest premium volume of all individual health benefit plans offered by the insurer in this state; or b. A lower level health benefit plan design and a higher level benefit plan design, both of which include benefits similar to other individual health benefit plans offered in the state.

2. Any insurer that voluntarily and actively offers, continuously over the twelve-month period preceding the calendar year in which a special fee assessment is due and owing, two different small group health benefit plans to an applicant who is a business group of one under all of the following conditions: (i) outside of the open enrollment periods established by §10-16-105(7.3)(i), C.R.S.; and (ii) without regard to the health status of the applicant or any dependents. The two different plans shall meet either of the criteria set forth in Paragraphs 8.C.1(a) and (b) above, except that the two plans are those offered by the insurer to small groups, including business groups of one, in Colorado. 3. Any insurer that voluntarily and actively offers, continuously over the twelve-month period preceding the calendar year in which a special fee assessment is due and owing, two different individual conversion health benefit plans to an applicant, (i) without regard to the health status of the applicant; and (ii) at a premium rate that is 10% or more below the CoverColorado rate for a similarly situated individual (considering age, sex, smoking status and geographic location). The two different plans shall meet one of the criteria set forth in Paragraphs 8.C.1(a) and (b) above.

D. Under any of the criteria in Paragraphs 8 C.1, 8.C.2 or 8.C.3 above, the insurer shall be entitled to a credit against any special fee assessment due and owing in a calendar year equal to three percent (3%) for enrolling the following number of individuals in the above-described plans during the preceding twelve-month period:

1. If the number of employees/retired employees or individual policyholders/subscribers reported by an insurer on its annual report to CoverColorado (pursuant to Section 5.A above) is 25,000 or less, 25 individuals;

2. If the number of employees/retired employees or individual policyholders/subscribers reported by an insurer on its annual report to CoverColorado is more than 25, 000, but less than 75,000, 50 individuals; or 3. If the number of employees/retired employees or individual policyholders/subscribers reported by an insurer on its annual report to CoverColorado is 75,000 or more, 100 individuals. E. Any insurer that believes that it is entitled to a credit shall submit a written request for credit, along with supporting documentation satisfactory to the commissioner, of compliance with Paragraph 8.C.1, 8 C.2 or 8.C.3 above no later than March 1 of the calendar year in which any assessment is due and owing.

F. The commissioner shall make a determination regarding a credit within sixty (60) days of submission of a written request. All credits will be reported by the commissioner to CoverColorado. Section 9 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 10 Enforcement Noncompliance with the Regulation may result, after proper notice and hearing, in the suspension or revocation of the certificate of authority to transact insurance business in this state of any insurer which fails to pay a special fee assessment.

Section 11 Effective Date This Amended Regulation shall become effective on October 1, 2008. Section 12 History New regulation effective on January 1, 2002.

Amended, effective July 1, 2002.

Amended, effective October 1, 2008.

New Regulation 4-2-23 Procedure for Provider-Carrier Dispute Resolution Section 1 Authority Section 2 Purpose and Background Section 3 Applicability and Scope Section 4 Definitions Section 5 Rules Section 6 Enforcement Section 7 Severability Section 8 Effective Date Section 9 History Section 1. Authority This regulation is promulgated pursuant to § § 10-1-109, 10-3-1110,10-16-109, and 10-16-708, C.R.S. Section 2. Purpose and Background The purpose of this regulation is to establish procedures for resolution of provider-earner disputes, as required by § 10-16-705(13), C.R.S.

Section 3. Applicability and Scope The provisions of tins regulation shall apply to all carriers when they are providing health care services through managed care plans, except workers' compensation and auto insurance contracts. Section 4. Definitions A. “Necessary information” consists of the following: 1) each applicable date of service; 2) subscriber or member name; 3) patient name; 4) subscriber or member number; 5) provider name; 6) provider tax identification number, 7) dollar amount in dispute, if applicable; 8) provider position statement explaining the nature of the dispute; and 9) supporting documentation where necessary, e.g., medical records, proof of timely filing.

B “Participating provider” shall have the same definition as m § 10-16-102(28 5), C.R.S and includes any provider that enters into an agreement with a carrier for the provision of a particular health care service or services to a particular insured or insureds C “Provider-earner dispute” means an administrative, payment or other dispute between a participating provider and a carrier that does not involve a utilization review analysis, but does not include routine provider inquiries that the carrier resolves in a timely fashion through existing informal processes D “Provider-earner dispute log” means a record of provider dispute resolution requests receive d by the carrier and maintained on a calendar year basis by the carrier At a minimum, the log shall include the date of receipt of the dispute resolution request; the provider's name and tax identification number, the subscriber and patient name, the member number; the date of service, the disputed amount, if applicable, the nature of the dispute, the date the request was closed, whether the request was pended for additional information, and the outcome of the request The suggested format and additional elements for the log may be set forth by the Division m a bulletin All provider-carrier dispute logs which are produced obtained by or disclosed to the Commissioner shall be given confidential or privileged treatment to the extent provided by law to protect the privacy of the patient and provider Confidential or privileged information may not be made public by the Commissioner, except that access to such materials may be granted to the National Association of Insurance Commissioners (“NAIC” ) Disclosure of such materials shall be made only upon the prior written agreement of the NAIC to hold such information confidential or upon the prior written consent of the company to which it pertains E “Provider representative” means a person designated by a provider in writing, including other providers or an association of providers, to represent the provider's interest during the dispute resolution process F “Utilization review” means a set of formal techniques designed to monitor the use of, or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of, health care services, procedures, or settings Techniques include, without limitation, ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning, or retrospective review For the purposes of this regulation, utilization review shall also include reviews for the purpose of determining coverage based on whether or not a procedure or treatment is considered experimental or investigational in a given circumstance, and reviews of a covered person's medical circumstances when necessary to determine if an exclusion applies in a given situation. Section 5. Rules A. A carrier shall maintain written procedures for provider-earner disputes The procedures shall specify that requests for resolution of provider-carrier disputes must be m writing All written requests for provider-carrier dispute resolution must be-entered into a carrier's provider-carrier dispute log The log shall be made available to the Commissioner within a reasonable time, upon request B A carrier shall make a determination of a provider dispute resolution request within sixty (60) calendar days of receipt of all necessary information Where the carrier does not receive all necessary information to make a decision, the carrier shall request m writing within thirty (30) calendar days of receipt of the request the additional information needed. The carrier shall allow thirty (30) calendar days from the date of the request to receive the requested information If the provider does not respond within the thirty (30) day timeframe, the carrier shall close the request without further review. Further consideration of the closed provider dispute resolution request must begin with a new request by the provider.

C. Notification requirements 1 For provider dispute resolution requests where all necessary information was provided, the carrier shall send written confirmation of receipt within flurry (30) days of the dispute resolution request The written confirmation must contain. a a description of the carrier's dispute resolution procedures and timeframes, b the procedures and timeframes for the provider or fee provider's representative to present his rationale for the dispute resolution request; and c. the date by which the carrier must resolve the dispute resolution request In the instance where the provider dispute resolution request is resolved in accordance with the requirements of this regulation within thirty (30) days, the notice required by Section 5(E) shall constitute the notice required by this Section 5(C).

2. In cases where the carrier does not receive all necessary information to make a decision, the carrier shall send, within thirty (30) days of receipt of the provider dispute resolution request, a written notice to the provider that must contain: a a description of the additional necessary information required to process the request; b the date that additional information must be provided by the provider, and c a statement that failure to provide the requested information within 30 (thirty) calendar days from the carrier's request for additional information will result m the closure of the request with no further review 3 In cases where the provider does not submit the additional necessary information required by the carrier and the carrier closes the request, the carrier shall notify the provider that the case is closed and that further consideration of the closed dispute resolution request must begin with a new request by the provider.

D. A carrier shall offer the provider the opportunity to designate a provider representative m the dispute resolution process. The carrier shall allow the provider or the provider's representative the opportunity to present her rationale for the dispute resolution request m person. In cases where the provider determines that a face-to-face meeting is not practical, the carrier shall offer the provider the opportunity to utilize alternative methods such as teleconference or videoconference to present her rationale for the dispute resolution request The carrier may require appropriate confidentiality agreements from representatives as a condition to participating in the dispute resolution process. The parties may mutually agree in writing to extend the timeframes beyond the sixty (60) days from receipt of all necessary information timeframe established by this regulation.

E. A carrier shall provide notification of the determination to me provider. In the event the determination is not in favor of the provider, the written notification shall include the principal reasons for the determination. The written notification shall contain: a) the names and titles of the parties evaluating the provider-carrier dispute resolution request, and where the decision was based on a review of medical documentation, the qualifying credentials of the parties evaluating the provider- carrier dispute resolution request; b) a statement of the reviewers' understanding of the reason for the provider's dispute; c) the reviewers' decision in clear terms and the rationale for the carrier's decision; and d) a reference to the evidence or documentation used as the basis for the decision. F. All requirements in this regulation concerning written notification may be met by electronic means, including e-mail or facsimile, as long as confirmation of the transmission can be shown. G. Nothing in this regulation shall be construed to supercede contract provisions that do not directly conflict with the terms of this regulation. For example, after a final determination is made by the carrier in accordance with the requirements set forth in this regulation, any further consideration of the request shall be handled in accordance with the contract provisions between the carrier and the provider, i.e., the request may be subject to mandatory arbitration as stated in the contract Section 6. Enforcement Noncompliance with the requirements and time frames specified in this regulation may result, after proper notice and hearing, in the imposition of any sanctions made available in Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspension or revocation of license. Among others, the penalties provided for in § § 10-3- 1108 and 10-3-1110(2), C.R.S., may be applied. Failure of a carrier to employ the procedures outlined in this regulation constitutes an unfair or deceptive act in the business of insurance under § 10- 3- 1104 ( 1 )(h)(IV),C.R.S.

Section 7. Severability If any provision of this regulation or its application to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 8. Effective Date This regulation is effective on August 1, 2002.

Section 9. History New regulation, effective August 1, 2002.

Amended Regulation 4-2-24 Concerning Clean Claim Requirements for Health Carriers Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Rules Section 5 Required Elements Section 6 Additional Information Section 7 Enforcement Section 8 Severability Section 9 Effective Date Section 10 History Section 1 Authority This regulation is promulgated under the authority of § §10-16-106.3(2), 10-16-109, and 10-1-109, C.R.S. Section 2 Scope and Purpose This regulation was originally promulgated to meet the requirement of Senate Bill 13, enacted during the 2002 General Assembly, that the Commissioner adopt a uniform list of required elements to be included on specified uniform claim forms in order to be considered a “clean claim” . It is being amended to update the list of required elements on the specified claim forms to incorporate the changes made by the federal government and the American Dental Association.

Section 3 Applicability This regulation applies to any entity that provides health coverage in this state including a fraternal benefit society, a health maintenance organization, a nonprofit hospital and health service corporation, a sickness and accident insurance company, and any other entity providing a plan of health insurance or health benefits subject to Article 16 of the insurance laws of Colorado. Section 4 Rules A. Clean claims, as defined in §10-16-106.5(2), C.R.S., shall be submitted on the appropriate uniform claim form (the American Dental Association Dental Claim Form, the CMS 1500, or the CMS 1450) and include all the required elements as specified in Section 5 of this regulation. [Note: Formats for standardized forms CMS 1500 and CMS 1450 (UB-04) can be accessed at http://cms.hhs.gov/medicare/edi/edi5.asp. The dental form can be accessed though the American Dental Association.] B. A carrier shall process clean claims within the time frames specified in statute. C. A carrier shall pay interest pursuant to §10-16-106.5(5), C.R.S., when clean claims are not processed within the specified timeframes.

Section 5 Required Elements A. The following fields of the American Dental Association Dental Claim Form (2006 version) must be completed before a claim can be considered a “clean claim” (See Attachment I): 1. Field 1: Type of Transaction;

2. Field 3: Insurance Company/Dental Benefit Plan Information; 3. Field 4: Other dental or medical coverage;

4. Fields 5-11: Other coverage information (if Field 4 answered “yes” ); 5. Field 12: Policyholder/Subscriber information;

6. Field 15: Policyholder/Subscriber ID;

7. Field 16: Plan/Group number (if group coverage);

8. Field 18: Relationship of patient to policyholder/subscriber; 9. Field 20: Patient name;

10. Field 21: Patient’s date of birth;

11. Field 22: Patient’s gender;

12. Field 24-33: Services provided;

13. Field 36: Information release;

14. Field 37: Assignment of benefits (required if payment is to be made to provider); 15. Field 38: Place of treatment;

16. Field 39: Number of enclosures (if radiographs or models enclosed); 17. Field 40: Treatment for orthodontics indicator;

18. Field 45: Cause of illness/injury;

19. Field 48: Name and address of billing dentist/entity; 20. Field 49: National Provider Identifier (NPI);

21. Field 50: Dentist’s license number;

22. Field 51: Dentist/entity identification number;

23. Field 52: Dentist/entity phone number; and 24. Field 53: Treating dentist’s signature.

B. The following fields of the CMS 1500 Claim Form must be completed before a claim can be considered a “clean claim” (See Attachment II):

1. Field 1: Type of insurance coverage;

2. Field 1a: Insured identification number;

3. Field 2: Patient’s name;

4. Field 3: Patient’s birth date and sex;

5. Field 4: Insured’s name;

6. Field 5: Patient’s address;

7. Field 6: Patient’s relationship to insured;

8. Field 7: Insured’s address (If same as patient address, can indicate “same” .); 9. Field 8: Patient’s status (required only if patient is a dependent); 10. Field 9 (a-d): Other insurance information (only if 11d is answered “yes” ); 11. Field 10 (a-c): Relation of condition to: employment, auto accident or other accident; 12. Field 11: Insured’s policy, group or FECA number;

13. Field 11c: Insurance plan or program name;

14. Field 11d: Other insurance indicator;

15. Field 12: Information release (“signature on file” is acceptable); 16. Field 13: Assignment of benefits (“signature on file” is acceptable); 17. Field 14: Date of onset of illness or condition;

18. Field 17: Name of referring physician (if applicable); 19. Field 21: Diagnosis code(s);

20. Field 23: Prior authorization number (if any);

21. Field 24: Details about services provided; A, B, D, E, F, G (C, H Medicaid only) 21a. Field 24: I, J: Non-NPI provider information;

22. Field 25: Federal tax ID number;

23. Field 28: Total charge;

24. Field 31: Signature of provider including degrees or credentials (provider name sufficient); 25. Field 32: Address of facility where services were rendered; 26. Field 32a: National Provider Identifier (NPI);

27. Field 32b: Non-NPI (QUAL ID), as applicable;

28. Field 33: Provider’s billing information and phone number; 29. Field 33a: National Provider Identifier (NPI); and 30. Field 33b: Non-NPI (QUAL ID), as applicable.

C. The following fields of the CMS 1450 (UB-04) Claim Form must be completed before a claim can be considered a “clean claim” (see Attachment III):

1. Field 1: Servicing provider’s name, address, and telephone number; 2. Field 3: Patient’s control or medical record number; 3. Field 4: Type of bill code;

4. Field 5: Provider’s federal tax ID number;

5. Field 6: Statement Covers Period – From/Through;

6. Field 8: Patient’s name;

7. Field 9: Patient’s address;

8. Field 10: Patient’s birth date;

9. Field 11: Patient’s sex;

10. Field 12: Date of admission;

11. Field 13: Hour of admission;

12. Field 14: Type of admission/visit;

13. Field 15: Admission source code;

14. Field 16: Discharge hour (for maternity only);

15. Field 17: Patient discharge status;

16. Fields 31-36: Occurrence information (accidents only); 17. Field 38: Responsible party’s name and address (If same as patient can indicate “same” .); 18. Fields 39, 40, and 41: Value codes and amounts;

19. Field 42: Revenue codes;

20. Field 43: Revenue descriptions;

21. Field 44: HCPCS/Rates/HIPPS Rate Codes;

22. Field 45: Service/creation date (for outpatient services only); 23. Field 46: Service units;

24. Field 47: Total charges;

25. Field 50: Payer(s) information;

26. Field 52: Information release;

27. Field 53: Assignment of benefits;

28 Field 56: National Provider ID (NPI);

29. Field 58: Insured’s name;

30. Field 59: Relationship of patient to insured;

31. Field 60: Insured’s unique ID number;

32. Field 62: Insurance group number(s) (only if group coverage); 33. Field 63: Prior authorization or treatment authorization number (if any); 34. Field 65: Employer information (for Workers’ Comp. claims only); 35 Field 66: ICD Version Indicator;

36. Field 67: Principal diagnosis code;

37. Field 69: Admission diagnosis code (inpatient only); 38. Field 74: Principal procedure code and date (when applicable); and 39. Field 76: Attending physician’s name and ID (NPI or QUAL ID). Section 6 Additional Information A. A claim with all required fields completed is not considered “clean” if additional information is needed in order to adjudicate the claim. Carriers may request additional information only if the carrier’s claim liability cannot be determined with the existing information on the claim form and the information requested is likely to allow a determination of liability to be made. When additional information is required, the carrier shall make the specific request in writing within thirty calendar days after receipt of the claim form. If information is being requested from a party other than the billing provider, the provider shall be notified that additional information is needed to adjudicate the claim. The specific information requested shall be requested within 30 calendar days after receipt of the claim form and identified for the provider upon request. B. Additional information requested must be related to information in the required fields of the claim forms, although the genesis of the request may be from other sources, e.g., if the carrier has other information that indicates the information in a required field is incorrect, such as previous claims that indicate the treatment was for work-related injuries when the claim form indicates otherwise. Requests for additional information to determine if the treatment is medically necessary or if a pre-existing condition limitation applies would be related to the fields specifying the services provided.

C. A carrier is not permitted to request additional information for the purpose of determining medical necessity when the claim form has all required fields correctly completed and the services were preauthorized pursuant to §10-16-704(4), C.R.S.

D. When all additional information or documentation necessary to resolve the claim is provided with the appropriate claim form that includes all required elements as specified in Section 5 of this regulation, the claim shall be considered a clean claim and processed within the timeframes specified in statute. The following circumstances are those for which additional information is generally required by most health carriers:

1. When the coverage is not primary, an EOB from the primary payer; 2. When service/procedure codes indicate “unusual” procedural services or anesthesia, the medical records to justify medical necessity;

3. When surgical procedures utilize multiple surgeons or surgical assistants, the medical records to justify medical necessity;

4. When the procedure is a repeat procedure, the medical records to justify medical necessity; 5. When supplies and materials are ordered on an outpatient basis, the medical records and/or invoice to justify medical necessity or allowable fee; and 6. When services are billed using a “by report” or unlisted CPT code, the medical records to substantiate the claim.

E. If a managed care plan requires medical or other records on all claims for particular types of services/procedures or diagnosis codes, the carrier must clearly disclose such requirements in the provider contract, provider manual, or provider manual updates. If a carrier contracts with an intermediary, the carrier shall be responsible for making sure the intermediary provides such disclosure to contracted providers in a timely manner.

F. When requesting medical records, carriers must identify the particular component(s) of the medical record being requested or indicate the specific reason for the request, e.g., progress reports for most recent three months, or records to establish the medical necessity of the treatment provided. The records requested must be related to the service/procedure of the claim and limited to the minimum amount of information necessary. Requests for “all medical records” are not specific enough and would not be an appropriate request for claim adjudication. Medical information requested from institutional providers shall be additionally limited to the following:

1. History and physical reports;

2. Consultant reports;

3. Operative reports;

4. Discharge summaries;

5. Emergency department reports;

6. Diagnostic reports; and 7. Progress reports.

Section 7 Enforcement Noncompliance with this regulation may result, after notice and opportunity for hearing, in the imposition of any of the sanctions pertaining to the business of insurance, including the imposition of fines and suspension or revocation of certificate of authority.

Section 8 Severability If any provision of this regulation is for any reason held to be invalid, the remainder of the regulation shall not be affected thereby.

Section 9 Effective Date This regulation is effective February 1, 2008.

Section 10 History 1. Emergency Regulation 02-E-7, effective July 2, 2002. 2. Temporary Regulation 02-T-7, effective October 1, 2002. 3. Regulation 4-2-24 effective February 1, 2003.

4. Amended Regulation 4-2-24 effective February 1, 2008.

Regulation 4-2-25, Repealed in Full [Eff. 04/01/2009] Regulation 4-2-26 - Insurer Assessments for Commission on Mandated Health Insurance Benefits Section 1 Authority Section 2 Background and Purpose Section 3 Assessment Determination Section 4 Enforcement Section 5 Severability Section 6 Effective Date Section 7 History Section 1 Authority This regulation is promulgated under the authority of § § 10-1-109, 10-16-109, and 10-16-103.3, C.R.S. Section 2 Background and Purpose Senate Bill 68, enacted during the 2003 General Assembly, established a Commission on Mandated Health Insurance Benefits to review existing and proposed mandates for their social and financial impact. The Division of Insurance is required to assess reasonable and necessary fees against insurers for the operation of the Commission. The purpose of this regulation is to specify the procedures for determining the amount of the fees, equitably assessing the fees, and timely collecting the fees. Section 3 Assessment Determination A. The Commissioner is required to assess insurers for fees necessary for the operation of the Commission. All licensed entities writing health benefit plans, as defined in § 10-16- 102(21), C.R.S. are subject to assessment under § 10-16-103.3, C.R.S. Any assessment will be allocated equally among those companies who wrote greater than $ 1,000,000 in premium in the combined health markets during the preceding calendar year.

B. In the initial year of operations, the Division anticipates the Commission will conduct eight meetings. The cost associated with these meetings and the portion of .3 FTE allocated to support the Commission are projected to at least equal the $ 20,000.00 maximum assessment provided by § 10-16-103.3(7), C.R.S. Notice of the first assessment shall be provided no later than October 1, 2003 and payment for the assessment shall be made no earlier than January 1, 2004, C. For subsequent years of operation, assessments will be determined after considering the Commission's annual projected income and expenses and any balance or deficit in its account with the State Treasury.

D. The Commissioner will determine the need for an assessment no later than August 1 of each year. Companies will receive an assessment notice prior to October 1 of each year, if an assessment is required.

Section 4 Enforcement Noncompliance with this Regulation may result, after proper notice and hearing, in the imposition of any sanctions) allowed by law, including, with out limitation, any one or more of the following: civil penalties, fines, license suspension, or license revocation.

Section 5 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 6 Effective Date This regulation shall become effective on January 1, 2004. Section 7 History Emergency regulation effective August 14, 2003.

Emergency regulation effective December 13, 2003.

Effective on January 1, 2004.

Regulation 4-2-27 Procedures for Reasonable Modifications to Individual and Small Group Health Benefit Plans Section 1 Authority Section 2 Background and Purpose Section 3 Applicability and Scope Section 4 Definitions Section 5 Rules Section 6 Notice and Disclosure of Reasonable Modifications Section 7 Enforcement Section 8 Severability Section 9 Effective Date Section 10 History Section 1 Authority This regulation is promulgated under the authority of Section 10-1-109, 10-16-109, and 10 -16- 201.5(8) (b), C.R.S.

Section 2 Background and Purpose The purpose of this regulation is to establish procedures for the submission of reasonable modifications to individual and small group health benefit plans, as outlined in Section 10-16-201.5(8), C.R .S. Section 3 Applicability and Scope This regulation applies to any carrier intending on making reasonable modifications to an individual or small group health benefit plan.

Section 4 Definitions “ Reasonable modification ” : An alteration to the benefits of a health benefit plan that is fair and reasonable under the circumstances. The Division of Insurance (Division) determines if a modification is fair and reasonable.

Section 5 Rules A. General Requirements 1. Timing and Submission: The benefit changes must be provided to the Commissioner and policyholders at least ninety days prior to the effective date of the modification. Please note: as the modifications must be determined to be reasonable, entities are encouraged to submit the benefit modification filing to the Division thirty to sixty (30-60) days prior to the date that the first policyholder notifications will be mailed. This will provide an opportunity for the Division and the carrier to resolve any issues that may arise.

2. Duplicates and Return Postage: All filings must be submitted in duplicate, and include an envelope, with sufficient prepaid postage, large enough to contain one complete set of the material. These filings must be collated so that each copy of the filing contains all required documents. If the carrier fails to comply with these requirements, the carrier will be notified that the filing has been returned as incomplete. If a filing is returned due to lack of completeness, the modification may not be used or distributed. 3. Carrier Specific: A separate filing must be submitted for each carrier. A single filing, which is made for more than one carrier or for a group of carriers, is not permitted. This applies even if a product is comprised of components from more than one carrier, such as an HMO/indemnity point-of-service plan.

4. Required Information: A fully completed transmittal sheet, cover letter, side-by-side comparison of the benefit changes, an identification of the rating impact of the benefit changes and a copy of the policyholder notification.

a. Side-by-Side Comparison: Each filing must include a “side-by-side comparison” identifying the proposed change(s). The “side-by-side comparison” should include three columns: the first containing a description of the current benefit; the second column containing the proposed benefit change; and the third column containing the amount of the rating impact for each of the proposed change(s). All changes to the rates must be filed separately in accordance with all rating laws and regulations.

b. All carriers shall submit a separate and fully completed transmittal sheet (the NAIC Uniform Transmittal Sheet may be used) with each benefit modification filing for each carrier. A copy of this document, including an example and the filing code list, is available on the Internet at www.dora.state.co.us/insurance. Additionally, a cover letter should be provided and should contain a complete explanation of what the carrier is proposing to do.

c. Rating Impact: The filing shall discuss or provide the following: (1) The impact on rates of each of the requested modifications and the overall impact on rates.

(2) A narrative stating how each of the rating changes was determined. (3) A certification that the methodology used to determine the rates for these benefit modifications is consistent with the methodology used by the carrier to price similar products.

d. Policy form filings require a forms certification in accordance with § 10-16-107.2, C.R.S., and Colorado Insurance Regulation 1-1-6. Also, the policy form certifications should follow any guidance provided by a published bulletin. B. Specific Requirements Deleting a benefit is generally not considered to be a reasonable modification. However, the division may determine, on a case-by-case basis, if the deletion of a benefit is a reasonable modification after reviewing the supporting documentation. Section 6 Notice and Disclosure of Reasonable Modifications The policyholder notification should be provided no later than 90 days prior to renewal of each policyholder’s benefit plan. It should provide the policyholder an opportunity to purchase any other health benefit plan offered by the carrier in each market. A copy of this notification must be provided to the Division as part of the benefit modification filing. Section 7 Enforcement Noncompliance with this regulation may result, after notice and hearing, in the imposition of any sanctions, including the imposition of fines and suspension or revocation of license. Section 8 Severability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of such provision shall not be affected thereby.

Section 9 Effective Date This regulation is effective January 1, 2005 and applies to all small group and individual health benefit plan modification filings made on or after this date.

Section 10 History Regulation 4-2-27 effective January 1, 2005.

Regulation 4-2-28 CONCERNING THE PAYMENT OF EARLY INTERVENTION SERVICES FOR CHILDREN ELIGIBLE FOR BENEFITS UNDER PART C OF THE FEDERAL “INDIVIDUALS WITH DISABILITIES EDUCATION ACT”

Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Rules Section 6 Severability Section 7 Enforcement Section 8 Incorporated Materials Section 9 Effective Date Section 10 History Section 1 Authority This regulation is being promulgated and adopted by the Commissioner of Insurance under the authority of § § 10-1-109 and 27-10.5-704(2), C.R.S.

Section 2 Background and Purpose The purpose of this regulation is to provide health carriers the guidance necessary to implement Senate Bill 04 enacted in 2007 by the Colorado General Assembly to facilitate the payment of early intervention services by private insurance sources. It replaces Emergency Regulation 07-E-3 in its entirety. Section 3 Applicability and Scope This regulation applies to all individual and group sickness and accident insurance policies and all service or indemnity contracts issued or renewed on or after January 1, 2008 by entities subject to Part 2, Part 3 and Part 4 of Article 16 of Title 10 of the Colorado Revised Statutes, which provide coverage for health care services.

Section 4 Definitions A. “Carrier” shall have the same meaning as set forth in § 10-16-102(8), C.R.S. B. “Case management services” are the service coordination activities as defined in 34 CFR 303.23. C. “Certified early intervention service broker” or “broker” means a community centered board or other entity designated by the Colorado Department of Human Services to perform the specified duties and functions in a particular designated service area and may include the Division for Developmental Disabilities acting as the broker for any service area until another broker has been designated.

D. “Division for Developmental Disabilities” is a division of the Colorado Department of Human Services. E. “Early intervention services” shall have the same meaning as set forth in § 10-16-104(1.3)(a)(II), C.R.S., and include a monthly case management service fee. F. “Eligible child” shall have the same meaning as set forth in § 10-16-104(1.3)(a)(III), C.R.S. G. “Health benefit plan” shall have the same meaning as set forth in § 10-16-102(21), C.R.S. H. “Individualized family service plan” or “IFSP” shall have the same meaning as set forth in § 10-16- 104(1.3)(a)(IV), C.R.S.

I. "Limited benefit health insurance" means a health policy, contract or certificate offered or marketed on an individual or group basis as supplemental health insurance that pays specified amounts according to a schedule of benefits to defray the costs of care, services, deductibles, copayments or coinsurance amounts not covered by a health benefit plan. “Limited benefit health insurance” does not include short-term limited duration health insurance policies, contracts or certificates; high deductible plans; or catastrophic health policies, contracts or certificates. Such non- supplemental plans are included under the term “health benefit plan” . J. “Registry” means a listing of early intervention service providers established by the designated area’s certified early intervention service broker. The broker may provide early intervention services directly or may subcontract the provision of services to other qualified providers in the registry. Section 5 Rules A. Eligible early intervention services specified in the eligible child’s IFSP shall be considered to meet the carrier’s test of medically necessary services. Therefore, carriers shall arrange for the payment of claims for early intervention services provided to an eligible child received from qualified early intervention service providers listed in the registry.

B. The certified early intervention service broker will notify the carrier within ten (10) days of determining that a child, up to age three, is eligible for early intervention services. This notification will include, at a minimum:

1. The eligible child’s name;

2. The eligible child’s date of birth;

3. The policy number; and, 4. The name of the primary insured or policyholder.

C. A managed care plan does not have to pay a reimbursement rate for non-participating providers that exceeds its reimbursement rate for comparable early intervention services provided by a participating provider unless it agrees to do so prior to the provision of early intervention services or unless it does not have participating providers available to provide the required services. D. Managed care plans must ensure that they have an adequate network of providers for all early intervention services or they must contract with a community center board or other entity to ensure that providers are available to provide these services to each eligible child. E. Carriers can, in-lieu of paying benefits directly to brokers or qualified early intervention service providers, pay benefits into the trust established by the Colorado Department of Human Services as provided in § 27-10.5-706, C.R.S.

F. Carrier payment guidelines.

1. Eligible early intervention services do not include: a. Non-emergency medical transportation;

b. Respite care;

c. Service coordination other than case management services; and d. Assistive technology. However, assistive technology may be covered by the policy’s durable medical equipment benefit provisions.

2. Monthly case management service fees shall be paid directly to the certified early intervention service broker that has been designated by the State until the maximum annual benefit has been paid.

3. As of January 1, 2008, the maximum annual benefit payable for all eligible early intervention and case management services will be $5,725.00. Thereafter, on January 1 of each year, the maximum annual benefit payable shall be adjusted based on the consumer price index for the Denver-Boulder-Greeley metropolitan statistical area for the state fiscal year that ends in the preceding calendar year. The new maximum annual benefit amount will be published in a bulletin by the Colorado Division of Insurance. 4. Any covered benefit payable for the following services shall not be subject to the maximum annual benefit specified in paragraph 3. of this subsection F: a. Rehabilitation or therapeutic services that are necessary as the result of an acute medical condition;

b. Services provided to a child who is not participating in Part C and services that are not provided pursuant to an IFSP; and, c. Assistive technology that is covered by the policy’s durable medical equipment benefit provisions.

5. Carriers shall notify the policyholder and the certified early intervention service broker when the maximum annual benefit has been paid. At the beginning of the new plan year, the carrier shall be responsible for paying benefits up to the maximum annual benefit as established in accordance with paragraph 3. of this subsection F. G. The Division for Developmental Disabilities will notify the carrier within 60 days if a child is no longer eligible for early intervention services.

H. Short-term, accident, fixed indemnity, or specified disease policies, disability income contracts, limited benefit health insurance plans, credit disability insurance and Medicare supplement policies are not required to provided the benefits set forth in § 10-16-104(1.3), C.R.S. Section 6 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 7 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of certificates of authority. Among others, the penalties provided for in § 10-3-1108, C.R.S., may be applied.

Section 8 Incorporated Materials The following is hereby incorporated by reference as written on or before the effective date of this regulation:

Section 303.23 of Title 34 (Early Intervention Program for Infants and Toddlers with Disabilities), Code of Federal Regulations.

This rule does not include later amendments to or editions of the incorporated material. A copy of this reference may be examined at any state publications depository library. For additional information regarding how to obtain a copy, please contact the Rulemaking Coordinator, Colorado Division of Insurance, 1560 Broadway, Suite 850, Denver, CO 80202.

Section 9 Effective Date This regulation shall become effective on March 1, 2008. Section 10 History 1. Emergency regulation 07-E-3 is effective December 3, 2007. 2. New regulation effective March 1, 2008.

Regulation 4-2-29 CONCERNING THE RULES FOR STANDARDIZED CARDS ISSUED TO PERSONS COVERED BY HEALTH BENEFIT PLANS [Eff. 07/01/2009] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Rules Section 6 Severability Section 7 Enforcement Section 8 Effective Date Section 9 History Section 1 Authority This regulation is being promulgated pursuant to the authority granted to the Commissioner of Insurance in §10-1-109, C.R.S. and is adopted by the Commissioner of Insurance pursuant to the requirement in §10-16-135, C.R.S.

Section 2 Scope and Purpose The purpose of this regulation is to provide health carriers the guidance necessary to implement Senate Bill 135 enacted in 2008 by the Colorado General Assembly and effective on July 1, 2009. Section 3 Applicability This regulation applies to all individual and group health benefit plans issued or renewed on or after July 1, 2009 by entities subject to Part 2, Part 3 and Part 4 of Article 16 of Title 10 of the Colorado Revised Statutes, and to any person enrolling in an existing plan on or after July 1, 2009. Section 4 Definitions A. “Carrier” shall have the same meaning as set forth in §10-16-102(8), C.R.S. B. “Clear and conspicuous” as used in this regulation means that the placement of the required information will be set apart from other information listed to allow it to be easily located on the card.

C. “Health benefit plan” shall have the same meaning as set forth in §10-16-102(21), C.R.S. D. "Limited benefit health insurance" means a health policy, contract or certificate offered or marketed on an individual or group basis as supplemental health insurance that pays specified amounts according to a schedule of benefits to defray the costs of care, services, deductibles, copayments or coinsurance amounts not covered by a health benefit plan. “Limited benefit health insurance” does not include short-term limited duration health insurance policies, contracts or certificates; high deductible plans; or catastrophic health policies, contracts or certificates. Such non- supplemental plans are included under the term “health benefit plan” . E. “Short-term health benefit plans” shall have the same meaning as §10-16-102(21)(b), CRS, subparagraphs (I) and (II).

Section 5 Rules A. The requirements of this regulation shall apply to identification cards issued to persons covered under health benefit plans. These requirements do not apply to identification cards issued to persons covered by limited benefit health insurance plans.

B. The card size shall be approximately 2.125 inches by 3.370 inches, which is consistent with standard- sized credit cards, and shall be either made of plastic, or laminated. Cards issued in connection with coverage provided by short-term health benefit plans do not have to be made of plastic or be laminated.

C. The colors used for the card and font shall be legible and conducive to black and white photocopying. D. The following information shall appear on the front side of the identification card, in no less than 8 point font:

1. The legal name of the carrier underwriting the policy, but a “dba” may also be included; 2. The covered person’s first name, middle initial (if applicable), and last name; 3. Any applicable policy, certificate, or group numbers, and the subscriber’s or covered person’s identifying number, as applicable, which is sufficient to identify the covered person with the policy;

4. The specific plan number or name;

5. The plan type (such as HMO (Health Maintenance Organization), POS (Point-of-Service), PPO (Preferred Provider Organization), or Indemnity (non-managed care plan)); 6. Coverage levels for the following services. If all services are subject to the plan’s deductible and applicable coinsurance, a non-specific amount notation of “Deductible and coinsurance” is sufficient; otherwise, the required copayments shall be specified. If both a deductible and copayment apply, a non-specific amount notation of “Deductible” is sufficient, followed by the specified copayment amount. a. Primary care;

b. Specialty care;

c. After hours/urgent care;

d. Emergency room; and e. Inpatient hospital.

7. The designation “CO-DOI” for any and all plans regulated in whole or in part by the State of Colorado’s Division of Insurance. This designation shall be placed on the card in a clear and conspicuous manner.

E. The following information shall appear on either the front or reverse side of the identification card at the carrier’s discretion, in no less than 8 point font: 1. Contact information for the carrier or plan administrator which includes: a. Name and address for claim submissions;

b. Telephone number(s) for member/customer service;

c. Website address;

d. If applicable, a statement that preauthorization or notification for hospitalization or other services may be required and the telephone number to obtain such preauthorization or to make notification.

e. If the carrier does not use its own managed care provider network, the logo, name of the network, website, or toll-free number where provider network information can be readily obtained.

2. “Card issued” date; however, this date shall be displayed in a clear and conspicuous manner. F. The card may include other information at the carrier’s discretion. G. Carriers may utilize commonly-known abbreviations or acronyms for the purposes of displaying the information required by paragraph 6. of subsection D., such as: 1. “PCP” to describe or refer to primary care physician benefits; 2. “SCP” to describe or refer to specialty care physician benefits; 3. “Urgent” to describe or refer to after hours/urgent care benefits; 4. “ER” to describe or refer to “emergency room” benefits; 5. “Hospital” to describe or refer to inpatient hospital benefits; 6. “Ded” or “deduct” to describe the application of the policy’s deductible; or, 7. “Co-ins” to describe the application of the policy’s coinsurance requirements. H. Carriers choosing to utilize commonly known abbreviations or acronyms in accordance with subsection G. shall provide an explanation of the abbreviations and/or acronyms displayed on the card in the information provided when the card is sent to the covered person. Section 6 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 7 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of certificates of authority. Among others, the penalties provided for in §10-3-1108, C.R.S., may be applied.

Section 8 Effective Date This regulation shall become effective on July 1, 2009. Section 9 History New regulation effective October 1, 2008.

Amended effective July 1, 2009.

Regulation 4-2-30 CONCERNING THE RULES FOR COMPLYING WITH MANDATED COVERAGE OF HEARING AIDS AND PROSTHETICS [Eff. 02/01/2009] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Rules Section 6 Severability Section 7 Enforcement Section 8 Effective Date Section 9 History Section 1 Authority This regulation is being promulgated pursuant to the authority granted to the Commissioner of Insurance in §10-1-109, C.R.S.

Section 2 Scope and Purpose The purpose of this regulation is to provide health carriers the guidance necessary to implement Senate Bill 57 enacted in 2008 by the Colorado General Assembly and effective on January 1, 2009. In addition, it is to clarify the coverage mandated for prosthetics by §10-16-104(14), C.R.S. This regulation replaces Emergency Regulation 08-E-11 in its entirety.

Section 3 Applicability This regulation applies to all individual and group health benefit plans issued or renewed on or after January 1, 2009 by entities subject to Part 2, Part 3 and Part 4 of Article 16 of Title 10 of the Colorado Revised Statutes.

Section 4 Definitions A. “Carrier” shall have the same meaning as set forth in §10-16-102(8), C.R.S. B. “Health benefit plan” shall have the same meaning as set forth in §10-16-102(21), C.R.S. C. “Hearing aid” shall have the same meaning as set forth in §10-16-102(24.7), C.R.S. D. "Limited benefit health insurance" means a health policy, contract or certificate offered or marketed on an individual or group basis as supplemental health insurance that pays specified amounts according to a schedule of benefits to defray the costs of care, services, deductibles, copayments or coinsurance amounts not covered by a health benefit plan. “Limited benefit health insurance” does not include short-term limited duration health insurance policies, contracts or certificates; high deductible plans; or catastrophic health policies, contracts or certificates. Such non- supplemental plans are included under the term “health benefit plan” . E. “Minor child” shall have the same meaning as set forth in §10-16-102(27.3), C.R.S. Section 5 Rules A. Hearing aids.

1. For the purposes of §10-16-104(19), C.R.S., hearing aids do not meet the traditional definition of durable medical equipment; therefore, any benefits paid for a minor child’s hearing aid(s) in accordance with the coverage mandated by Colorado law shall not be used to exhaust a health benefit plan’s annual or lifetime durable medical equipment maximum, if any.

2. The mandated coverage of hearing aids for a minor child shall be provided subject to the same annual deductible and/or copayment/coinsurance levels established for other covered benefits. Benefits shall be determined by where the hearing aid is accessed (i.e. an office visit copay will apply if the hearing aid is provided as part of an office visit). These benefits are subject to the policy’s general annual and/or lifetime maximum benefit amounts. Hearing aids are subject to utilization review as provided in § §10-16-112, 10- 16-113, and 10-16-113.5, C.R.S.

3. The coverage includes the initial assessment, fitting, adjustments, and the required auditory training. Initial hearing aids and replacement hearing aids are not covered more frequently than every five (5) years; however, a new hearing aid is covered when alterations to the existing hearing aid cannot adequately meet the needs of the child. This requirement shall apply to each hearing aid if the minor child has two hearing aids. B. For the purposes of §10-16-104(14), C.R.S., prosthetics do not meet the traditional definition of durable medical equipment; therefore, any benefits paid for prosthetics in accordance with the coverage mandated by Colorado law shall not be used to exhaust a health benefit plan’s annual or lifetime durable medical equipment maximum, if any.

Section 6 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 7 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of certificates of authority. Among others, the penalties provided for in §10-3-1108, C.R.S., may be applied.

Section 8 Effective Date This regulation shall become effective on February 1, 2009. Section 9 History 1. Emergency Regulation 08-E-11 is effective January 1, 2009. 2. New regulation is effective February 1, 2009.

Regulation 4-3-1 MINIMUM STANDARDS FOR MEDICARE SUPPLEMENT POLICIES [Eff. 06/01/2009] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Policy Definitions and Terms Section 6 Policy Provisions Section 7 Minimum Benefit Standards for Policies or Certificates issued for Delivery Prior to May 1, 1992 Section 8 Minimum Benefit Standards for Policies or Certificates Issued for Delivery on or after February 1, 2005 and with an Effective Date for Coverage prior to June 1, 2010 Section 8.1 Benefit Standards for 2010 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery with an Effective Date for Coverage on or after June 1, 2010 Section 9 Standard Medicare Supplement Benefit Plans for Standardized Medicare Supplement Benefit Policies or Certificates Issued for Delivery on or after February 1, 2005 and prior to June 1, 2010 Section 9.1 Standardized Medicare Supplement Plans for 2010 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery with an Effective Date for Coverage on or after June 1, 2010 Section 10 Open Enrollment Section 11 Guaranteed Issue for Eligible Persons Section 12 Standard for Claims Payment Section 13 Loss Ratio Standards and Refund or Credit of Premium Section 14 Filing and Approval of Policies and Certificates and Premium Rates Section 15 Permitted Compensation Arrangements Section 16 Required Disclosure Provisions Section 17 Requirements for Application Forms and Replacement Coverage Section 18 Filing Requirements for Advertising Section 19 Standards for Marketing Section 20 Appropriateness of Recommended Purchase and Excessive Insurance Section 21 Reporting of Multiple Policies Section 22 Prohibition Against Preexisting Conditions, Waiting Periods, Elimination Periods and Probationary Periods in Replacement Policies or Certificates Section 23 Readability Standards Section 24 Medicare Select Policies and Certificates Section 25 Incorporated Materials Section 26 Severability Section 27 Enforcement Section 28 Effective Date Section 29 History Appendix A Reporting Form for Calculation of Loss Ratios Appendix B Outline of Coverage Forms Appendix C Replacement Forms Appendix D Form for Reporting Duplicate Policies Appendix E Disclosure Statements Section 1 Authority This regulation is promulgated under the authority of Sections 10-1-108 (8), 10-1-109 and Article 18 of Title 10, Colorado Revised Statutes (C.R.S.).

Section 2 Scope and Purpose The purpose of this regulation is to provide for the reasonable standardization of coverage and simplification of terms and benefits of Medicare supplement policies; to facilitate public understanding and comparison of such policies; to eliminate provisions contained in such policies which may be misleading or confusing in connection with the purchase of such policies or with the settlement of claims; and to provide for full disclosure in the sale of accident and sickness insurance coverage to persons eligible for Medicare.

Section 3 Applicability A. Except as otherwise specifically provided in Sections 7, 11, 12, 13, 16 and 21, this regulation shall apply to:

1. All Medicare supplement policies delivered or issued for delivery in this state on or after the effective date hereof, and 2. All certificates issued under group Medicare supplement policies or subscriber contracts, which certificates have been delivered or issued for delivery in this state. B. This regulation shall not apply to a policy or contract of one or more employers or labor organizations, or of the trustees of a fund established by one or more employers or labor organization, or combination thereof, for employees or former employees, or a combination thereof, or for members or former members, or a combination thereof, of the labor organization. C. Except as specifically provided by statute, Medicare supplement polices are regulated under Section 10-18-101 to 109, C.R.S., and any regulations promulgated there under, including this Division of Insurance Regulation 4-3-1. Nothing in this regulation shall be construed as conflicting with statutes that are not specifically applicable to Medicare supplement insurance. Section 4 Definitions For the purposes of this regulation:

A. "Applicant" means:

1. In the case of an individual Medicare supplement policy, the person who seeks to contract for insurance benefits, and 2. In the case of a group Medicare supplement policy, the proposed certificateholder. B. “Bankruptcy” means when a Medicare Advantage organization that is not an issuer has filed, or has filed against it, a petition for declaration of bankruptcy and has ceased doing business in the state.

C. "Certificate" means any certificate delivered or issued for delivery in this state under a group Medicare supplement policy.

D. "Certificate form" means the form on which the certificate is delivered or issued for delivery by the issuer.

E. “Continuous period of creditable coverage” means the period during which an individual was covered by creditable coverage, if during the period of the coverage the individual had no breaks in coverage greater than sixty-three (63) days for voluntary terminations and six (6) months for involuntary terminations (other than non payment of premium or fraud). F. Creditable Coverage 1. “Creditable coverage” means, with respect to an individual, coverage of the individual provided under any of the following:

a. A group health plan;

b. Health insurance coverage;

c. Part A or Part B of Title XVIII of the Social Security Act (Medicare); d. Title XIX of the Social Security Act (Medicaid), other than coverage consisting solely of benefits under Section 1928;

e. Chapter 55 of Title 10 United States Code (CHAMPUS); f. A medical care program of the Indian Health Service or of a tribal organization; g. A state health benefits risk pool;

h. A health plan offered under chapter 89 of Title 5 United States Code (Federal Employees Health Benefits Program);

i. A public health plan as defined in federal regulations; and j. A health plan under Section 5(e) of the Peace Corps Act (22 United States Code 2504(e).

2. “Creditable coverage” shall not include one or more, or any combination of, the following: a. Coverage only for accident or disability income insurance, or any combination thereof; b. Coverage issued as a supplement to liability insurance; c. Liability insurance, including general liability insurance and automobile liability insurance;

d. Workers’ compensation or similar insurance;

e. Automobile medical payment insurance;

f. Credit-only insurance;

g. Coverage for on-site medical sites; and h. Other similar insurance coverage, specified in federal regulations, under which benefits for medical coverage are secondary or incidental to other insurance benefits.

3. “Creditable coverage” shall not include the following benefits if they are provided under a separate policy, certificate, or contract of insurance or are otherwise not an integral part of the plan:

a. Limited scope dental or vision benefits;

b. Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof; and c. Such other similar, limited benefits as are specified in federal regulations. 4. “Creditable coverage” shall not include the following benefits if offered as independent, non- coordinated benefits:

a. Coverage only for a specified disease or illness; and b. Hospital indemnity or other fixed indemnity insurance. 5. “Creditable coverage” shall not include the following if it is offered as a separate policy, certificate or contract of insurance:

a. Medicare supplemental health insurance as defined under Section 1882(g)(1) of the Social Security Act;

b. Coverage supplemental to the coverage provided under chapter 55 of Title 10, United States Code; and c. Similar supplemental coverage provided to coverage under a group health plan. G. “Employee welfare plan” means a plan, fund or program of employee benefits as defined in 29 U.S.C. Section 1002 (Employee Retirement Income Security Act). H. “Insolvency” means when an issuer, licensed to transact the business of insurance in this state, has had a final order of liquidation entered against it with a finding of insolvency by court of competent jurisdiction in the issuer’s state of domicile.

I. "Issuer" includes insurance companies, fraternal benefit societies, health care service plans, health maintenance organizations, and any other entity delivering or issuing for delivery in this state Medicare supplement policies or certificates.

J. "Medicare" means "The Health Insurance for the Aged Act," Title XVIII of the federal "Social Security Act" as amended. This rule does not cover amendments to this statute that were promulgated later than the effective date of this rule. [For more detailed information pertinent to this statute, please contact the Colorado Division of Insurance at 1560 Broadway, Suite 850, Denver, CO 80202, (303) 894-7531.] K. “Medicare Advantage plan” means a plan of coverage for health benefits under Medicare Part C as defined in the definition of Medicare Advantage plan in 42 U.S.C. 1395w-28(b)(1). Included are: 1. Coordinated care plans, which provide health care services, including but not limited to health maintenance organization plans (with or without a point-of-service option), plans offered by provider-sponsored organizations, and preferred provider organization plans; 2. Medical savings account plans coupled with a contribution into a Medicare Advantage medical savings account; and 3. Medicare Advantage private fee-for-service plans.

L. "Medicare supplement policy" means a group or individual policy of sickness and accident insurance or a subscriber contract of a hospital and medical service association or a health maintenance organization, other than a policy issued pursuant to a contract under Section 1876 of the Federal Social Security Act (42 U.S.C. Section 1395 et. seq.), or an issued policy under a demonstration project, specified in 42 U.S.C. § 1395ss(G)(1), which is advertised, marketed, or designed primarily as a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible for Medicare. “Medicare supplement policy” does not include Medicare Advantage plans established under Medicare Part C, Outpatient Prescription Drug plans established under Medicare Part D, or any Health Care Prepayment Plan (HCPP) that provides benefits pursuant to an agreement under §1833(a)(1)(A) of the Social Security Act. M. “Nurse” means a “graduate nurse” , “practical nurse” , “trained practical nurse” , “licensed vocational nurse” , “licensed practical nurse” , “registered nurse” or “registered professional nurse” as defined under Section 12-38-103, C.R.S.

N. 2010 Standardized Medicare supplement benefit plan,” “2010 Standardized benefit plan” or “2010 plan” means a group or individual policy of Medicare supplement insurance with an Effective Date for Coverage issued on or after June 1, 2010.

O. "Policy form" means the form on which the policy is delivered or issued for delivery by the issuer. P. “Secretary” means the Secretary of the United States Department of Health and Human Services. Section 5 Policy Definitions and Terms No policy or certificate may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy or certificate unless such policy or certificate contains definitions or terms that conform to the requirements of this Section.

A. "Accident," "accidental injury," or "accidental means" shall be defined to employ "result" language and shall not include words, which establish an accidental means test or use words such as "external, violent, visible wounds" or similar words of description or characterization. 1. The definition shall not be more restrictive than the following: "Injury or injuries for which benefits are provided means accidental bodily injury sustained by the insured person who is the direct result of an accident, independent of disease or bodily infirmity or any other cause, and occurs while insurance coverage is in force." 2. Such definition may provide that injuries shall not include injuries for which benefits are provided or available under any workers' compensation, employer's liability or similar law, or motor vehicle no-fault plan, unless prohibited by law. B. "Benefit period" or "Medicare benefit period" shall not be defined more restrictively than as defined in the Medicare Program.

C. "Convalescent nursing home," "extended care facility," or "skilled nursing facility" shall not be defined more restrictively than as defined in the Medicare Program. D. "Health care expenses" means, for the purposes of Section 13, expenses of health maintenance organizations associated with the delivery of health care services, which expenses are analogous to incurred losses of insurers.

E. "Hospital" may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals, but not more restrictively than as defined in the Medicare Program.

F. "Medicare" shall be defined in the policy and certificate. Medicare may be substantially defined as "The Health Insurance for the Aged Act," Title XVIII of the federal "Social Security Act," as amended by the Social Security amendments of 1965, and as later amended or "Title I, Part I of Public Law 89-97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as "The Health Insurance for the Aged Act," as then constituted and any later amendments or substitutes thereof, or words of similar import.

G. "Medicare eligible expenses" shall mean expenses of the kinds covered by Medicare, to the extent recognized as reasonable and medically necessary by Medicare. H. "Physician" shall not be defined more restrictively than as defined in the Medicare Program. I. "Sickness" shall not be defined to be more restrictive than the following: "Sickness means illness or disease of an insured person which first manifests itself after the effective date of insurance and while the insurance is in force." The definition may be further modified to exclude sicknesses or diseases for which benefits are provided under any workers' compensation, occupational disease, employer's liability or similar law.

Section 6 Policy Provisions A. Except for permitted preexisting conditions clauses as described in Section 7A(1) and Section 8 A(1) of this regulation, no policy or certificate may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy if such policy or certificate contains limitations or exclusions on coverage that are more restrictive than those of Medicare. B. No Medicare supplement policy or certificate may use waivers to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions. C. No Medicare supplement policy or certificate in force in the state shall contain benefits that duplicate benefits provided by Medicare.

D. Rules for Prescription Drugs 1. Subject to Sections 7 A(4), (5) and (7) and 8 A(4) and (5), a Medicare supplement policy with benefits for outpatient prescription drugs in existence prior to January 1, 2006 shall be renewed for current policyholders who do not enroll In Medicare Part D at the option of the policyholder.

2. A Medicare supplement policy with benefits for outpatient prescription drugs shall not be issued after December 31, 2005.

3. After December 31, 2005, a Medicare supplement policy with benefits for outpatient prescription drugs may not be renewed after the policyholder enrolls in Medicare Part D unless:

a. The policy is modified to eliminate outpatient prescription coverage for expenses of outpatient prescription drugs incurred after the effective date of the individual’s coverage under Medicare Part D and:

b. Premiums are adjusted to reflect the elimination of outpatient prescription drug coverage at the time of Medicare Part D enrollment, accounting for any claims paid, if applicable.

E. All Medicare supplement insurance policies shall provide for a refund of unearned premium, when the policy is replaced by another Medicare supplement carrier or given a request for cancellation by the insured.

Section 7 Minimum Benefit Standards for Policies or Certificates issued for Delivery Prior to May 1, 1992 No policy or certificate may be advertised, solicited or issued for delivery in this state as a Medicare supplement policy or certificate unless it meets or exceeds the following minimum standards. These are minimum standards and do not preclude the inclusion of other provisions or benefits, which are not inconsistent with these standards.

A. General Standards The following standards apply to Medicare supplement policies and certificates and are in addition to all other requirements of this regulation.

1. A Medicare supplement policy or certificate shall not exclude or limit benefits for losses incurred more than six (6) months from the effective date of coverage because it involved a preexisting condition. The policy or certificate shall not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six (6) months before the effective date of coverage.

2. A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents. 3. A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible amount and copayment percentage factors. Premiums may be modified to correspond with such changes. 4. A "non-cancelable," "guaranteed renewable," or "non-cancelable and guaranteed renewable" Medicare supplement policy shall not:

a. Provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium; or b. Be canceled or nonrenewed by the issuer solely on the grounds of deterioration of health.

5. Replacement, Termination, Nonrenewal a. Except as authorized by the Commissioner of Insurance of this state, an issuer shall neither cancel nor nonrenew a Medicare supplement policy or certificate for any reason other than nonpayment of premium or material misrepresentation. b. If a group Medicare supplement insurance policy is terminated by the group policyholder and not replaced as provided in Paragraph (5)(d) of this Section, the issuer shall offer certificateholders an individual Medicare supplement policy. The issuer shall offer the certificateholder at least the following choices: (1) An individual Medicare supplement policy currently offered by the issuer having comparable benefits to those contained in the terminated group Medicare supplement policy; and (2) An individual Medicare supplement policy, that provides only such benefits as are required to meet the minimum standards as defined in Section 8 B of this regulation.

c. If membership in a group is terminated, the issuer shall: (1) Offer the certificateholder such conversion opportunities as are described in Paragraph (b); or (2) At the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy.

d. If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new group policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

6. Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be predicated upon the continuous total disability of the insured, limited to the duration of the policy benefits period, if any, or to payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining a continuous loss. 7. If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this subsection.

B. Minimum Benefit Standards 1. Coverage of Medicare Part A eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period. 2. Coverage for either all or none of the Medicare Part A inpatient hospital deductible amount. 3. Coverage of Medicare Part A eligible expenses incurred as daily hospital charges during use of Medicare's lifetime hospital inpatient reserve days. 4. Upon exhaustion of all Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of ninety percent (90%) of all Medicare Part A eligible expenses for hospitalization not covered by Medicare subject to a lifetime maximum benefit of an additional 365 days.

5. Coverage under Medicare Part A for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations), unless replaced in accordance with federal regulations or already paid for under Medicare Part B;

6. Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Medicare Part B regardless of hospital confinement, subject to a maximum calendar year out-of-pocket amount equal to the Medicare Part B deductible one hundred dollars ($100).

7. Effective January 1, 1990, coverage under Medicare Part B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations), unless replaced in accordance with federal regulations or already paid for under Medicare Part A, subject to the Medicare deductible amount. Section 8 Minimum Benefit Standards for Policies or Certificates Issued for Delivery on or after February 1, 2005 and with an Effective Date for Coverage Prior to June 1, 2010. The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state on or after February 1, 2005 and with an Effective Date for Coverage Prior to June 1, 2010. No policy or certificate may be advertised, solicited, delivered or issued for delivery in this state as a Medicare supplement policy or certificate unless it complies with these benefit standards. A. General Standards. The following standards apply to Medicare supplement policies and certificates and are in additional to all other requirements of this regulation: 1. A Medicare supplement policy or certificate shall not exclude or limit benefits for losses incurred more than six months from the effective date of coverage because it involved a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six months before the effective date of coverage.

2. A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents. 3. A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible amount and copayment percentage factors. Premiums may be modified to correspond with such changes. 4. No Medicare supplement policy or certificate shall provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium. 5. Each Medicare supplement policy shall be guaranteed renewable and: a. The issuer shall not cancel or nonrenew the policy solely on the ground of health status of the individual; and b. The issuer shall not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.

c. If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under Section 8 A (5)(e), the issuer shall offer certificateholders an individual Medicare supplement policy which (at the option of the certificateholder):

(1) Provides for continuation of the benefits contained in the group policy, or (2) Provides for such benefits as otherwise meets the requirements of this subsection.

d. If an individual is a certificateholder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall: (1) Offer the certificateholder the conversion opportunity described in Section 8 A(5)(c), or (2) At the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy.

e. If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

f. If a Medicare supplement policy eliminates an outpatient prescription drug benefit as a result of requirements imposed by the Medicare Prescription Drug, Improvement and Modernization Act of 2003, the modified policy shall be deemed to satisfy the guaranteed renewal requirements of this paragraph.

6. Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining continuous loss.

7. Suspension and reinstitution of Medicare supplement policies shall be in accordance with the following:

a. A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificateholder for the period (not to exceed twenty-four months) in which the policyholder or certificateholder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act (Medicaid), but only if the policyholder or certificateholder notifies the issuer of such policy or certificate within ninety days after the date the individual becomes entitled to such assistance.

b. If such suspension occurs and if the policyholder or certificateholder loses entitlement to such medical assistance, such policy or certificate shall be automatically reinstituted (effective as of the date of termination of such entitlement) as of the termination of such entitlement if the policyholder or certificateholder provides notice of loss of such entitlement within ninety (90) days after the date of such loss and pays the premium attributable to the period, effective as of the date of termination of such entitlement.

c. Each Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended (for any period that may be provided by federal regulation) at the request of the policyholder if the policyholder is entitled to benefits under Section 226(b) of the Social Security Act and is covered under a group health plan (as defined in Section 1862(b)(1)(A)(v) of the Social Security Act) [If suspension occurs and if the policyholder or certificateholder loses coverage under the group health plan, the policy shall be automatically reinstituted (effective as of the date of loss of coverage) if the policyholder provides notice of the loss of coverage within ninety (90) days after the date of the loss.

d. Reinstitution of such coverages as described in Subparagraphs (b) and (c): (1) Shall not provide for any waiting period with respect to treatment of preexisting conditions;

(2) Shall provide for resumption of coverage which coverage, which is substantially equivalent to coverage in effect before the date of such suspension. If the suspended Medicare supplement policy provided coverage for outpatient prescription drugs, reinstitution of the policy for Medicare Part D enrollees shall be without coverage for outpatient prescription drugs and shall otherwise provide substantially equivalent coverage to the coverage in effect before the date of suspension; and (3) Shall provide for classification of premiums on terms at least as favorable to the policyholder or certificateholder as the premium classification terms that would have applied to the policyholder or certificateholder had the coverage not been suspended.

8. If an issuer makes a written offer to the Medicare Supplement policyholders or certificateholders of one or more of its plans, to exchange during a specified period from his or her 1992 Standardized plan as described in Section 9 of this regulation to a 2010 Standardized plan as described in Section 9.1 of this regulation, the offer and subsequent exchange shall comply with the following requirements:

a. An issuer need not provide justification to the Commissioner if the insured replaces a 1992 Standardized policy or certificate with an issue age rated 2010 Standardized policy or certificate at the insured’s original issue age and duration. If an insured’s policy or certificate is to be replaced is priced on an issue age rate schedule at the time of such offer, the rate charged to the insured for the new exchanged policy shall recognize the policy reserve buildup, due to the pre- funding inherent in the use of an issue age rate basis, for the benefit of the insured. The method proposed to be used by an issuer must be filed with the Commissioner.

b. The rating class of the new policy or certificate shall be the class closest to the insured’s class of the replaced coverage.

c. An issuer may not apply new preexisting condition limitations or a new contestability period to the new policy for those benefit contained in the exchanged 1992 Standardized policy or certificate of the insured, but may apply pre-existing condition limitations of no more than six (6) months to any added benefits contained in the new 2010 Standardized policy or certificate not contained in the exchanged policy.

d. The new policy or certificate shall be offered to all policyholders or certificateholders within a given plan; except where the offer or issue would be in violation of state or federal law.

B. Standards for Basic ("Core") Benefits Common to All Benefit Plans A-J Every issuer shall make available a policy or certificate including only the following basic "Core" package of benefits to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare Supplement Insurance Benefit Plans in addition to the basic "Core" package, but not in lieu thereof:

1. Coverage of Medicare Part A eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period; 2. Coverage of Medicare Part A eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used; 3. Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider must accept the issuer’s payment as payment in full and may not bill the insured for any balance.

4. Coverage under Medicare Parts A and B for the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations; 5. Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a prospective payment system, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible;

C. Standards for Additional Benefits. The following additional benefits shall be included in Medicare Supplement Benefit Plans "B" through "J" only as provided by Section 9 of this regulation: 1. Medicare Part A Deductible: Coverage for all of the Medicare Part A inpatient hospital deductible amounts per benefit period.

2. Skilled Nursing Facility Care: Coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post hospital skilled nursing facility care eligible under Medicare Part A. 3. Medicare Part B Deductible: Coverage for all of the Medicare Part B deductible amount per calendar year regardless of hospital confinement.

4. Eighty percent (80%) of the Medicare Part B Excess Charges: Coverage for eighty percent (80%) of the differences between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge.

5. One hundred percent (100%) of the Medicare Part B Excess Charges: Coverage for all of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare-approved Part B charge.

6. Basic Outpatient Prescription Drug Benefit: Coverage for fifty percent (50%) of outpatient prescription drug charges, after a two hundred fifty dollar ($250) calendar year deductible, to a maximum of one thousand two hundred fifty dollars ($1,250) in benefits received by the insured per calendar year, to the extent not covered by Medicare. The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006.

7. Extended Outpatient Prescription Drug Benefit: Coverage for fifty percent (50%) of outpatient prescription drug charges, after a two hundred fifty dollar ($250) calendar year deductible to a maximum of three thousand dollars ($3,000) in benefits received by the insured per calendar year, to the extent not covered by Medicare. The outpatient prescription drug benefit may be included for sale or issuance in a Medicare supplement policy until January 1, 2006.

8. Medically necessary emergency care in a foreign country: Coverage to the extent not covered by Medicare for eighty percent (80%) of the billed charges for Medicare-eligible expenses for medically necessary emergency hospital, physician and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first sixty (60) consecutive days of each trip outside the United States subject to calendar year deductible of two hundred fifty dollars ($250) and a lifetime maximum benefit of fifty thousand dollars ($50,000). For purposes of this benefit, "emergency care" shall mean care needed immediately because of an injury or an illness of sudden and unexpected onset. 9. Preventive Medical Care Benefit: Coverage for the following preventive health services not covered by Medicare:

a. An annual clinical preventive medical history and physical examination that may include tests and services from subparagraph (b) and patient education to address preventive health care measures.

b. Preventive screening tests or preventive services, the selection and frequency of which is determined to be medically appropriate by the attending physician. Reimbursement shall be for the actual charges up to one hundred percent (100%) of the Medicare-approved amount for each service, as if Medicare were to cover the service as identified in American Medical Association Current Procedural Terminology (AMA CPT) codes, to a maximum of one hundred twenty dollars ($120) annually under this benefit. This benefit shall not include payment for any procedure covered by Medicare. 10. At-Home Recovery Benefit: Coverage for services to provide short term, At-Home assistance with activities of daily living for those recovering from an illness, injury or surgery. a. For the purposes of this benefit, the following definitions shall apply: (1) "Activities of daily living" include, but are not limited to bathing, dressing, personal hygiene, transferring, eating, ambulating, assistance with drugs that are normally self-administered, and changing bandages or other dressings.

(2) "Care provider" means a duly qualified or licensed home health aide/homemaker, personal care aide or nurse provided through a licensed home health care agency or referred by a licensed referral agency or licensed nurse’s registry.

(3) "Home" shall mean any place used by the insured as a place of residence, provided that such place would qualify as a residence for home health care services covered by Medicare. A hospital or skilled nursing facility shall not be considered the insured's place of residence. (4) "At-Home recovery visit" means the period of a visit required to provide at home recovery care, without limit on the duration of the visit, except each consecutive four (4) hours in a 24-hour period of services provided by a care provider is one (1) visit.

b. Coverage Requirements and Limitations:

(1) At-Home recovery services provided must be primarily services, which assist in activities of daily living.

(2) The insured's attending physician must certify that the specific type and frequency of At-Home recovery services are necessary because of a condition for which a home care plan of treatment was approved by Medicare.

(3) Coverage is limited to:

(a) No more than the number and type of At-Home recovery visits certified as necessary by the insured's attending physician. The total number of At-Home recovery visits shall not exceed the number of Medicare approved home health care visits under a Medicare approved home care plan of treatment.

(b) The actual charges for each visit up to a maximum reimbursement of forty dollars ($40) per visit.

(c) One thousand six hundred dollars ($1,600) per calendar year. (d) Seven (7) visits in any one week.

(e) Care furnished on a visiting basis in the insured's home. (f) Services provided by a care provider as defined in this Section. (g) At-Home recovery visits while the insured is covered under the policy or certificate and not otherwise excluded.

(h) At-Home recovery visits received during the period the insured is receiving Medicare approved home care services or no more than eight (8) weeks after the service date of the last Medicare approved home health care visit.

c. Coverage is excluded for:

(1) Home care visits paid for by Medicare or other government programs; and (2) Care provided by family members, unpaid volunteers or providers who are not care providers.

D. Standards for Plans K and L:

1. Standardized Medicare supplement benefit plan “K” shall consist of the following: a. Coverage of one hundred percent (100%) of the Medicare Part A hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period;

b. Coverage of one hundred percent (100%) of the Medicare Part A hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through the 150th day in any Medicare benefit period;

c. Upon exhaustion of the Medicare hospital inpatient coverage, including reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable prospective payment system (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer’s payment as payment in full and may not bill the insured for any balance; d. Medicare Part A Deductible: Coverage for fifty percent (50%) of the Medicare Part A inpatient hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in Subparagraph (j);

e. Skilled Nursing Facility Care: Coverage for fifty percent (50%) of the coinsurance amount for each day used from the 21st through the 100th day in a Medicare benefit period for post-hospital skilled nursing care eligible under Medicare Part A until the out-of-pocket limitation is met as described in Subparagraph (j); f. Hospice care: Coverage for fifty percent (50%) of cost sharing for all Medicare Part A eligible expenses and respite care until the out-of-pocket limitation is met as described in Subparagraph (j);

g. Coverage for fifty percent (50%), under Medicare Part A or B, of the reasonable cost of the first three (3) pints of blood (or equivalent quantities of packed red blood cells, as defined under federal regulations) unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in Subparagraph (j);

h. Except for coverage provided in subparagraph (i) below, coverage for the fifty percent (50%) of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Medicare Part B deductible until the out-of-pocket limitation is met as described in Subparagraph (j) below;

i. Coverage of one hundred percent (100%);of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and j. Coverage of one hundred percent (100%) of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of four thousand dollars ($4,000) in 2006, indexed each year by the appropriate inflation adjustment by the Secretary of the U.S. Department of Health and Human Services.

2. Standardized Medicare Supplement plan “L” shall consist of the following: a. The benefits described in Subparagraphs 1(a)(b)(c) and (i); b. The benefit described in Subparagraphs 1(d)(e)(f)(g) and (h), but substituting seventy five percent (75%) for fifty percent (50%); and c. The benefit described in Subparagraph 1(j), but substituting two thousand dollars ($2,000) for four thousand dollars ($4,000).

Section 8.1 Benefit Standards for 2010 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery with an Effective Date for Coverage on or after June 1, 2010 The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state with an Effective Date for Coverage on or after June 1, 2010. No policy or certificate may be advertised, solicited, delivered or issued for delivery in this state as a Medicare supplement policy or certificate unless it complies with these benefit standards. No issuer may offer any 1992 Standardized Medicare supplement benefit plan for sale on or after June 1, 2010. Benefit standards applicable to Medicare supplement policies and certificates issued with an Effective Date for Coverage before June 1, 2010 remain subject to the requirements of Section 8 of this regulation. A. General Standards. The following standards apply to Medicare supplement policies and certificates and are in addition to all other requirements of this regulation: 1. A Medicare supplement policy or certificate shall not exclude or limit benefits for losses incurred more than six months from the effective date of coverage because it involved a preexisting condition. The policy or certificate may not define a preexisting condition more restrictively than a condition for which medical advice was given or treatment was recommended by or received from a physician within six months before the effective date of coverage.

2. A Medicare supplement policy or certificate shall not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents. 3. A Medicare supplement policy or certificate shall provide that benefits designed to cover cost sharing amounts under Medicare will be changed automatically to coincide with any changes in the applicable Medicare deductible amount and copayment percentage factors. Premiums may be modified to correspond with such changes. 4. No Medicare supplement policy or certificate shall provide for termination of coverage of a spouse solely because of the occurrence of an event specified for termination of coverage of the insured, other than the nonpayment of premium. 5. Each Medicare supplement policy shall be guaranteed renewable and: a. The issuer shall not cancel or nonrenew the policy solely on the ground of health status of the individual; and b. The issuer shall not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.

c. If the Medicare supplement policy is terminated by the group policyholder and is not replaced as provided under Section 8.1 A (5)(e), the issuer shall offer certificateholders an individual Medicare supplement policy which (at the option of the certificateholder):

(1) Provides for continuation of the benefits contained in the group policy, or (2) Provides for such benefits as otherwise meets the requirements of this subsection.

d. If an individual is a certificateholder in a group Medicare supplement policy and the individual terminates membership in the group, the issuer shall: (1) Offer the certificateholder the conversion opportunity described in Section 8 A (5)(c), or (2) At the option of the group policyholder, offer the certificateholder continuation of coverage under the group policy.

e. If a group Medicare supplement policy is replaced by another group Medicare supplement policy purchased by the same policyholder, the issuer of the replacement policy shall offer coverage to all persons covered under the old group policy on its date of termination. Coverage under the new policy shall not result in any exclusion for preexisting conditions that would have been covered under the group policy being replaced.

6. Termination of a Medicare supplement policy or certificate shall be without prejudice to any continuous loss which commenced while the policy was in force, but the extension of benefits beyond the period during which the policy was in force may be conditioned upon the continuous total disability of the insured, limited to the duration of the policy benefit period, if any, or payment of the maximum benefits. Receipt of Medicare Part D benefits will not be considered in determining continuous loss.

7. Suspension and reinstatement of Medicare supplement policies shall be in accordance with the following:

a. A Medicare supplement policy or certificate shall provide that benefits and premiums under the policy or certificate shall be suspended at the request of the policyholder or certificateholder for the period (not to exceed twenty-four (24) months) in which the policyholder or certificateholder has applied for and is determined to be entitled to medical assistance under Title XIX of the Social Security Act (Medicaid), but only if the policyholder or certificateholder notifies the issuer of such policy or certificate within ninety (90) days after the date the individual becomes entitled to such assistance.

b. If such suspension occurs and if the policyholder or certificateholder loses entitlement to such medical assistance, such policy or certificate shall be automatically reinstituted (effective as of the date of termination of such entitlement) as of the termination of such entitlement if the policyholder or certificateholder provides notice of loss of such entitlement within ninety (90) days after the date of such loss and pays the premium attributable to the period, effective as of the date of termination of such entitlement.

c. Each Medicare supplement policy shall provide that benefits and premiums under the policy shall be suspended (for any period that may be provided by federal regulation) at the request of the policyholder if the policyholder is entitled to benefits under Section 226(b) of the Social Security Act and is covered under a group health plan (as defined in Section 1862(b)(1)(A)(v) of the Social Security Act). [This rule does not cover amendments to this statute which were promulgated later than the effective date of this rule. A copy of this law may be examined at any state publications depository library. For more detailed information pertinent to this statute, please contact the Colorado Division of Insurance at 1560 Broadway, Suite 850, Denver, CO 80202, (303) 894-7531.] If suspension occurs and if the policyholder or certificateholder loses coverage under the group health plan, the policy shall be automatically reinstated (effective as of the date of loss of coverage) if the policyholder provides notice of the loss of coverage within ninety (90) days after the date of the loss. d. Reinstatement of such coverages as described in Subparagraphs (b) and (c): (1) Shall not provide for any waiting period with respect to treatment of preexisting conditions;

(2) Shall provide for resumption of coverage which coverage plan which is substantially equivalent to coverage in effect before the date of such suspension.

(3) Shall provide for classification of premiums on terms at least as favorable to the policyholder or certificateholder as the premium classification terms that would have applied to the policyholder or certificateholder had the coverage not been suspended.

B. Standards for Basic ("Core") Benefits Common to All Medicare Supplement Insurance Benefit Plans A, B, C, D, F, F with High Deductible, G, M and N. Every issuer of Medicare supplement insurance benefit plans shall make available a policy or certificate including only the following basic "Core" package of benefits to each prospective insured. An issuer may make available to prospective insureds any of the other Medicare Supplement Insurance Benefit Plans in addition to the basic "Core" package, but not in lieu of it:

1. Coverage of Medicare Part A eligible expenses for hospitalization to the extent not covered by Medicare from the 61st day through the 90th day in any Medicare benefit period; 2. Coverage of Medicare Part A eligible expenses incurred for hospitalization to the extent not covered by Medicare for each Medicare lifetime inpatient reserve day used; 3. Upon exhaustion of the Medicare hospital inpatient coverage, including the lifetime reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable Prospective Payment System (PPS) rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider must accept the issuer’s payment as payment in full and may not bill the insured for any balance;

4. Coverage under Medicare Parts A and B for the reasonable cost of the first three (3) pints of blood or equivalent quantities of packed red blood cells, as defined under federal regulations unless replaced in accordance with federal regulations; 5. Coverage for the coinsurance amount, or in the case of hospital outpatient department services paid under a PPS, the copayment amount, of Medicare eligible expenses under Part B regardless of hospital confinement, subject to the Medicare Part B deductible; 6. Hospice Care: Coverage of cost sharing for all Part A Medicare eligible hospice care and respite care expenses.

C. Standards for Additional Benefits. The following additional benefits shall be included in Medicare Supplement Benefit Plans B, C, D, F, F with High Deductible, G, M and N as provided by Section 9.1 of this regulation:

1. Medicare Part A Deductible: Coverage for one hundred percent (100%) of the Medicare Part A inpatient hospital deductible amounts per benefit period. 2. Medicare Part A Deductible: Coverage for fifty percent (50%) of the Medicare Part A inpatient hospital deductible amounts per benefit period.

3. Skilled Nursing Facility Care: Coverage for the actual billed charges up to the coinsurance amount from the 21st day through the 100th day in a Medicare benefit period for post hospital skilled nursing facility care eligible under Medicare Part A. 4. Medicare Part B Deductible: Coverage for all of the Medicare Part B deductible amount per calendar year regardless of hospital confinement.

5. One hundred percent (100%) of the Medicare Part B Excess Charges: Coverage for all of the difference between the actual Medicare Part B charge as billed, not to exceed any charge limitation established by the Medicare program or state law, and the Medicare approved Part B charge.

6. Medically necessary emergency care in a foreign country: Coverage to the extent not covered by Medicare for eighty percent (80%) of the billed charges for Medicare eligible expenses for medically necessary emergency hospital, physician and medical care received in a foreign country, which care would have been covered by Medicare if provided in the United States and which care began during the first sixty (60) consecutive days of each trip outside the United States subject to calendar year deductible of two hundred fifty dollars ($250) and a lifetime maximum benefit of fifty thousand dollars ($50,000). For purposes of this benefit, "emergency care" shall mean care needed immediately because of an injury or an illness of sudden and unexpected onset. Section 9 Standard Medicare Supplement Benefit Plans for Standardized Medicare Supplement Benefit Policies or Certificates Issued for Delivery on or After 2005 and with an Effective Date for Coverage Prior to June 1, 2010 A. An issuer shall make available to each prospective policyholder and certificate holder a policy form or certificate form containing only the basic "Core" benefits, as defined in Section 8 B of this regulation.

B. No groups, packages or combinations of Medicare supplement benefits other than those listed in this Section shall be offered for sale in this state, except as may be permitted in Sections 9 G and 24 of this regulation.

C. Benefit plans shall be uniform in structure, language, designation and format to the standard benefit plans "A" through "L" listed in this subsection and conform to the definitions in Section 4 of this regulation. Each benefit shall be structured in accordance with the format provided in Section 8 B, 8 C or 8 D and list the benefits in the order shown in this subsection. For the purposes of this Section, "structure, language, and format" means style, arrangement and overall content of a benefit.

D. An issuer may use, in addition to the benefit plan designations required in subsection C of this Section, other designations to the extent permitted by law. E. Make-up of benefit plans:

1. Standardized Medicare Supplement Benefit Plan "A" shall be limited to the Basic ("Core") Benefits Common to All Benefit Plans, as defined in Section 8 B of this regulation. 2. Standardized Medicare Supplement Benefit Plan "B" shall include only the following: The Basic ("Core") Benefits as defined in Section 8 B of this regulation, plus the Medicare Part A Deductible as defined in Section 8 C(1).

3. Standardized Medicare Supplement Benefit Plan "C" shall include only the following: The Basic ("Core") Benefits as defined in Section 8 B of this regulation, plus the Part A Deductible, Skilled Nursing Facility Care, Medicare Part B Deductible and Medically Necessary Emergency Care in a Foreign Country as defined in Sections 8 C(1), (2), (3) and (8) respectively.

4. Standardized Medicare Supplement Benefit plan "D" shall include only the following: The Basic ("Core") Benefits as defined in Section 8 B. of this regulation, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medically Necessary Emergency Care in an Foreign Country and the At-Home Recovery Benefit as defined in Sections 8 C(1), (2), (8) and (10) respectively.

5. Standardized Medicare Supplement Benefit plan "E" shall include only the following: The Basic ("Core") Benefits as defined in Section 8 B of this regulation, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medically necessary emergency care in a foreign country and Preventive Medical Care as defined in Sections 8 C(1), (2), (8) and (9) respectively.

6. Standardized Medicare Supplement Benefit Plan "F" shall include only the following: The Basic ("Core") Benefits as defined in Section 8 B of this regulation, plus the Medicare Part A Deductible, the Skilled Nursing Facility Care, the Part B Deductible, One hundred percent (100%) of the Medicare Part B Excess Charges, and Medically necessary emergency care in a foreign country as defined in Sections 8 C(1), (2), (3), (5) and (8) respectively.

7. Standardized Medicare Supplement Benefit High Deductible Plan “F” shall include only the following: one hundred percent (100%) of covered expenses following the payment of the annual high deductible Plan “F” deductible. The covered expenses include the “Core” benefit as defined in Section 8 B of this regulation, plus the Medicare Part A deductible, skilled nursing facility care, the Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, and medically necessary emergency care in a foreign country as defined in Section 8 C(1), (2), (3), (5) and (8) respectively. The annual high deductible Plan “F” deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by the Medicare supplement plan “F” policy, and shall be in addition to any other specific benefit deductibles. The annual high deductible Plan “F” deductible shall be one thousand and five hundred dollars ($1,500) for 1998 and 1999, and shall be based on the calendar year. It shall be adjusted annually thereafter by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($10).

8. Standardized Medicare Supplement Benefit Plan "G" shall include only the following: The Basic ("Core") Benefits as defined in Section 8 B of this regulation, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Eighty percent (80%) of the Medicare Part B Excess Charges, Medically necessary emergency care in a foreign country, and the At-Home Recovery Benefit as defined in Sections 8 C(1), (2), (4), (8) and (10) respectively.

9. Standardized Medicare Supplement Benefit Plan "H" shall consist of only the following: The Basic ("Core") Benefits as defined in Section 8 B of this regulation, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Basic Prescription Drug Benefit and Medically necessary emergency care in a foreign country as defined in Sections 8 C(1), (2), (6) and (8) respectively. The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005. 10. Standardized Medicare Supplement Benefit Plan "I" shall consist of only the following: The Basic ("Core") Benefits as defined in Section 8 B of this regulation, plus the Medicare Part A Deductible, Skilled Nursing Care, One hundred percent (100%) of the Medicare Part B Excess Charges, Basic Prescription Drug Benefit, Medically necessary emergency care in a foreign country and At-Home Recovery Benefit as defined in Sections 8 C(1), (2), (5), (6), (8) and (10) respectively. The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005. 11. Standardized Medicare Supplement Benefit Plan "J" shall consist of only the following: The Basic ("Core") Benefits as defined in Section 8 B of this regulation, plus the Medicare Part A Deductible, Skilled Nursing Facility Care, Medicare Part B Deductible, One hundred percent (100%) of the Medicare Part B Excess Charges, Extended Prescription drug benefit, medically necessary emergency care in a foreign country, Preventative Medical Care and At-Home Recovery Benefit as defined in Sections 8 C(1), (2), (3), (5), (7), (8), (9) and (10) respectively. The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005. 12. Standardized Medicare Supplement Benefit High Deductible Plan “J” shall consist of only the following: One hundred percent (100%) of covered expenses following the payment of annual high deductible Plan “J” deductible. The covered expenses include the “Core” benefit as defined in Section 8 B of this regulation, plus the Medicare Part A deductible, skilled nursing facility care, Medicare Part B deductible, one hundred percent (100%) of the Medicare Part B excess charges, extended outpatient prescription drug benefit, medically necessary emergency care in a foreign country, preventive medical care benefit and at-home recovery benefit as defined in Sections 8 C(1), (2), (3), (5), (7), (8), (9) and (10) respectively. The annual high deductible Plan “J” deductible shall consist of out-of- pocket expenses, other than premiums, for services covered by the Medicare supplement Plan “J” policy, and shall be in addition to any other specific benefit deductibles. The annual deductible shall be one thousand and five hundred dollars ($1,500) for 1998 and 1999, and shall be based on a calendar year. It shall be adjusted annually thereafter by the Secretary to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($10). The outpatient prescription drug benefit shall not be included in a Medicare supplement policy sold after December 31, 2005. F. Make-up of benefit plans “K” and “L” :

1. Standardized Medicare supplement benefit plan “K” shall consist only those benefits described in Section 8 D(1).

2. Standardized Medicare supplement benefit plan “L” shall consist only those benefits described in Section 8 D(2).

G. New or Innovative Benefits: An issuer may, with the prior approval of the Commissioner, offer policies or certificates with new or innovative benefits in addition to the benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits may include benefits that are appropriate to Medicare supplement insurance, new or innovative, not otherwise available, cost-effective, and offered in a manner which is consistent with the goal of simplification of Medicare supplement policies. After December 31, 2005, the innovative benefit shall not include an outpatient prescription drug benefit. Section 9.1 Standard Medicare Supplement Plans for 2010 Standardized Medicare Supplement Benefit Plan Policies or Certificates Issued for Delivery with an Effective Date for Coverage on or After June 1, 2010 The following standards are applicable to all Medicare supplement policies or certificates delivered or issued for delivery in this state with an Effective Date for Coverage on or after June 1, 2010. No policy or certificate maybe advertised, solicited, delivered or issued for delivery in this state as Medicare Supplement policy or certificate unless it complies with these benefit plan standards. Benefit plan standards applicable to Medicare Supplement policies and certificates with an Effective Date for Coverage issued before June 1, 2010 remain subject to the requirements of Section 9. A. Standard Plans issued on or after June 1, 2010 shall comply with the following standards: 1. An issuer shall make available to each prospective policyholder and certificate holder a policy or certificate form containing only the basic "Core" benefits, as defined in Section 8.1.B. of this regulation.

2. If an issuer makes available any of the additional benefits described in Section 8.1 C or offers Standardized Benefit Plans K or L (as described in Section 9.1 E(8) and (9) of this regulation, then the issuer shall make available to each prospective policyholder and certificateholder, in addition to a policy form or certificate form with only the basic (“Core” ) benefits as described in 9.1 E(3) of this regulation or Standardized Plan F (as described in 9.1 E(5) of this regulation.

B. No groups, packages or combinations of Medicare supplement benefits other than those listed in this Section shall be offered for sale in this state, except as may be permitted in Section 9 G of this regulation.

C. Benefit plans shall be uniform in structure, language, designation and format to the standard benefit plans "A" through "L" listed in this subsection and conform to the definitions in Section 4 of this regulation. Each benefit shall be structured in accordance with the format provided in Section 8.1 B and 8.1 C of this regulation, or, in the case of plans K or L, in Section 9.1 E(8) or (9) of this regulation and list the benefits in the order show. For purposes of this Section, “structure, language, and format” means style, arrangement and overall content of a benefit. D. In addition to the benefit plan designations required in Subsection C of this section, an issuer may use other designations to the extent permitted by law.

E. Make-up of 2010 Standardized Benefit Plans:

1. Standardized Medicare Supplement Benefit Plan "A" shall include only the following: The basic (“Core” ) benefits as described in Section 8.1B. of this regulation. 2. Standardized Medicare Supplement Benefit Plan "B" shall include only the following: The Basic ("Core") Benefits as defined in Section 8.1B. of this regulation, plus one hundred percent (100%) of the Medicare Part A Deductible as defined in Section 8.1C(1) of this regulation.

3. Standardized Medicare Supplement Benefit Plan "C" shall include only the following: The Basic ("Core") Benefits as defined in Section 8.1B. of this regulation, plus one hundred percent (100%) of the Medicare Part A Deductible, Skilled Nursing Facility Care, One hundred percent (100%) of the Medicare Part B Deductible and Medically necessary emergency care in a foreign country as defined in Sections 8 C(1), (2), (3), (4) and (6) of this regulation respectively.

4. Standardized Medicare Supplement Benefit plan "D" shall include only the following: The Basic ("Core") Benefits as defined in Section 8.1 B of this regulation, plus one hundred percent (100%) of the Medicare Part A Deductible, Skilled Nursing Facility Care, and Medically necessary emergency care in an foreign country as defined in Sections 8 C(1), (2),(3) and (6) of this regulation respectively.

5. Standardized Medicare Supplement Benefit Plan "F" shall include only the following: The Basic ("Core") Benefits as defined in Section 8.1B. of this regulation, plus the Medicare Part A Deductible, the Skilled Nursing Facility Care, one hundred percent (100%) of the Medicare Part B Deductible, One hundred percent (100%) of the Medicare Part B Excess Charges, and Medically necessary emergency care in a foreign country as defined in Sections 8 C(1), (3), (4), (5) and (6) of this regulation respectively. 6. Standardized Medicare Supplement Benefit High Deductible Plan “F” shall include only the following: One hundred percent (100%) of covered expenses following the payment of the annual high deductible a. The Basic ("Core") Benefits as defined in Section 8.1B. of this regulation, plus the Medicare Part A Deductible, the Skilled Nursing Facility Care, one hundred percent (100%) of the Medicare Part B Deductible, One hundred percent (100%) of the Medicare Part B Excess Charges, and Medically necessary emergency care in a foreign country as defined in Sections 8 C(1),(3),(4),(5) and (6) respectively.

b. The annual deductible in Plan F with High Deductible shall consist of out-of-pocket expenses, other than premiums, for services covered by regular plan “F” policy, and shall be in addition to any other specific benefit deductibles. The basis for the deductible shall be annual one thousand and five hundred dollars ($1,500) and shall be adjusted annually from 1999 by the Secretary of the U.S. Department of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers for the twelve-month period ending with August of the preceding year, and rounded to the nearest multiple of ten dollars ($10). 7. Standardized Medicare Supplement Benefit Plan "G" shall include only the following: The basic ("Core") Benefits as defined in Section 8.1 B of this regulation, plus one hundred percent (100%) of the he Medicare Part A Deductible, the Skilled Nursing Facility Care, One hundred percent (100%) of the Medicare Part B Excess Charges, and Medically necessary emergency care in a foreign country as defined in Sections 8 C(1),(3),(5) and (6) respectively.

8. Standardized Medicare Supplement Benefit Plan K is mandated by the Medicare Prescription Drug Improvement and Modernization Act of 2003, and shall include only the following: a. Part A Hospital Coinsurance 61st to 90th days. Coverage of one hundred percent (100%) of the Part A Hospital coinsurance amount for each day used from the 61st through the 90th day in any Medicare benefit period; b. Part A Hospital Coinsurance, 91sth to 150th days. Coverage for one hundred percent (100%) of the Part A Hospital coinsurance amount for each Medicare lifetime inpatient reserve day used from the 91st through 150th day in any Medicare benefit period;

c. Part A Hospitalization After 150 Days: Upon exhaustion of the Medicare Hospital Inpatient coverage, including the lifetime reserve days, coverage of one hundred percent (100%) of the Medicare Part A eligible expenses for hospitalization paid at the applicable PPS rate, or other appropriate Medicare standard of payment, subject to a lifetime maximum benefit of an additional 365 days. The provider shall accept the issuer’s payment as payment in full and may not bill the insured for any balance;

d. Medicare Part A Deductible: Coverage for fifty percent (50%) of the Medicare Part A Inpatient Hospital deductible amount per benefit period until the out-of-pocket limitation is met as described in Subparagraph (j) of this regulation; e. Skilled Nursing Facility Care: Coverage for fifty percent (50%) of the coinsurance amount for each day used from the 21st day through the 100th day in a Medicare benefit period for post hospital Skilled Nursing Facility care eligible under Medicare Part A until the out-of-pocket limitation is met as described in Subparagraph (j) of this regulation;

f. Hospice Care: Coverage for fifty percent (50%) of cost sharing for all Part A Medicare eligible expenses and respite care until the out-of-pocket limitation is met as described in Subparagraph (j) of this regulation;

g. Blood: Coverage for fifty percent (50%), under Medicare Part A or B, of the reasonable cost of the first three (3) pints of blood or equivalent quantities of packed red blood cells, as defined under federal regulations unless replaced in accordance with federal regulations until the out-of-pocket limitation is met as described in Subparagraph (j) of this regulation;

h. Part B Cost Sharing: Except for coverage provided in Subparagraph (i) of this regulation, coverage for fifty percent (50%) of the cost sharing otherwise applicable under Medicare Part B after the policyholder pays the Part B deductible until the out-of-pocket limitation is met as described in Subparagraph (j) of this regulation;

i. Part B Preventive Services: Coverage of one hundred percent (100%) of the cost sharing for Medicare Part B preventive services after the policyholder pays the Part B deductible; and j. Cost Sharing After Out-of-Pocket Limits: Coverage of one hundred percent (100%) of all cost sharing under Medicare Parts A and B for the balance of the calendar year after the individual has reached the out-of-pocket limitation on annual expenditures under Medicare Parts A and B of four thousand dollars ($4,000) in 2006, indexed each year by the appropriate inflation adjustment specified by the Secretary of the U.S. Department of Health and Human Services. 9. Standardized Medicare Supplement Benefit Plan L is mandated by The Medicare Prescription Drug, Improvement and Modernization Act of 2003, and shall include only the following: a. The benefits described in Paragraphs 9.1 E(8)(a), (b), (c) and (i) of this regulation; b. The benefit described in Paragraphs 9.1 E(8)(d), (e), (f), (g) and (h), but substituting seventy-five percent (75%) for fifty percent (50%); and c. The benefit described in Paragraph 9.1 E(8)(j) of this regulation, but substituting two thousand dollars ($2000) for four thousand dollars ($4000). 10. Standardized Medicare Supplement Benefit Plan M shall include only the following: The basic (“Core” ) benefit as defined in Section 8.1B of this regulation, plus fifty percent (50%) of the Medicare Part A deductible, skilled nursing facility care, and Medically necessary emergency care in a foreign country as defined in Sections 8.1 C(2),(3) and (6) of this regulation, respectively.

11. Standardized Medicare Supplement Benefit Plan N shall include only the following: The Basic (“Core” ) Benefit as defined in Section 8.1 B of this regulation, plus one hundred percent (100%) of the Medicare Part A deductible, Skilled Nursing Facility Care, and Medically necessary emergency care in a foreign country as defined in Sections 8.1 C(1),(3) and (6) of this regulation, respectively, with copayments in the following amounts: a. The lesser of twenty dollars ($20) or the Medicare Part B coinsurance or copayment for each covered health care provider office visit (including visits to medical specialists); and b The lesser of fifty dollars ($50) or the Medicare Part B coinsurance or copayment for each covered emergency room visit, however, this copayment shall be waived if the insured is admitted to any hospital and the emergency visit is subsequently covered as a Medicare Part A expense.

F. New or Innovative Benefits: An issuer may, with the prior approval of the Commissioner offer policies or certificates with new or innovative benefits, in addition to the standardized benefits provided in a policy or certificate that otherwise complies with the applicable standards. The new or innovative benefits shall include only benefits that are appropriate to Medicare supplement insurance, are new or innovative, are not otherwise available, and are cost-effective. Approval of new or innovative benefits must not adversely impact the goal of Medicare supplement simplification. New or innovative benefits shall not include an outpatient prescription drug benefit. New or innovative benefits shall not be used to change or reduce benefits, including a change of any cost-sharing provision, in any Standardized plan.

Section 10 Open Enrollment A. No issuer shall deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of such policy or certificate because of the health status, claims experience, receipt of health care, or medical condition of an applicant in the case of an application for a policy or certificate that is submitted prior to or during the six (6) month period beginning with the first day of the first month in which an individual is both 65 years of age or older and is enrolled for benefits under Medicare Part B. Each Medicare supplement policy and certificate currently available from an insurer shall be made available to all applicants who qualify under this subsection regardless of age. B. No issuer shall deny or condition the issuance or effectiveness of any Medicare supplement policy or certificate available for sale in this state, nor discriminate in the pricing of that policy or certificate because of the health status, claims experience, receipt of health care or medical condition of an applicant under age sixty-five (65), if;

1. The application for the policy or certificate is submitted prior to or during the six (6)-month period beginning with the first day of the first month during which the applicant becomes enrolled for benefits under Medicare Part B, without regard to age, after September 1, 2003; or 2. The applicant was enrolled for benefits under Medicare Part B without regard to age on or prior to September 1, 2003, and the application for a policy or certificate is submitted during the six (6)-month period beginning with September 1, 2003. C. Conditions under which benefits may be reduced or excluded: 1. If the applicant qualifies under either Subsection 10 A. or 10 B, submits an application during the applicable time period referenced in those subsections, and, as of the date of application, has had a continuous period of creditable coverage of at least six (6) months, the issuer shall not exclude benefits based on a preexisting condition. 2. If the applicant qualifies under either Subsection 10 A or 10 B, submits an application during the applicable time period referenced in those subsections, and, as of the date of application, has had a continuous period of creditable coverage that is less than six (6) months, the issuer shall reduce the period of any preexisting condition exclusion by aggregate of the period of creditable coverage applicable to the applicant as of the enrollment date. The Secretary shall specify the manner of the reduction under this subsection.

D. Each Medicare supplement policy and certificate currently available from an issuer shall be made available to all applicants to whom an issuer is required to issue a policy or certificate of Medicare supplement insurance E. An issuer must demonstrate compliance with this section for each plan, type, and form level permitted under Subsection 14.C. by either:

1. Charging a premium rate for persons under age sixty-five (65) that does not exceed the lowest available premium rate for each plan, type, and form level; or 2. Charging a premium rate for persons under age sixty-five (65) that does not exceed the “credibility-weighted average age premium rate” (C-W AAPR), for each plan, type and form level. The data used to calculate the (C-W AAPR), for each plan, type and form level, is subject to the Colorado credibility requirement (See Section 14(I)). The (C-W AAPR), for each plan, type and form level, is calculated as: (C-W AAPR) = ( < 65 CO IP) * (WT < 65 CO IP) + ( < 65 AD IP) * (WT < 65 AD IP) + ( > 65 CO IP) * (WT > 65 CO IP) + ( > 65 AD IP) * (1- (WT < 65 CO IP) – (WT < 65 AD IP) – (WT > 65 CO IP), Subject to the following conditions:

a. ( < 65 CO IP) or ( < 65 AD IP) - The indicated premium (IP) for the under age sixty-five (65) insureds is the premium the issuer would charge each of the under age sixty-five (65) insureds using the Colorado data (CO), or acceptable alternative data (AD), for each plan, type or form level. An example of acceptable alternative data is the issuer’s national data for the under age sixty-five (65) insureds for each plan, type or form level. While an issuer may use data from the most recent three-year period to enhance credibility, it may not be possible to achieve full credibility for the under age 65 population, (see Section 14(I)), even using the acceptable alternative data, and it may be necessary to supplement this data with the over age 65 indicated premium (see Part (b)).

b. ( > 65 CO IP) or ( > 65 AD IP) - The indicated premium (IP) for the over age sixty-five (65) insureds is the premium the issuer would charge each of the over age sixty- five (65) insureds using the Colorado data (CO), or acceptable alternative data (AD), for each plan, type or form level. It may be necessary to calculate the ( > 65 CO IP) and the ( > 65 AD IP) to help meet the Colorado credibility requirement (See Section 14(I)).

c. (WT < 65 CO IP), (WT < 65 AD IP) and (WT > 65 CO IP) are calculated using the Colorado credibility requirement (see Section 14(I)). These weights (WT), for each plan, type or form level, should be calculated by taking the square root of the quantity (the number of life-years used to calculate each indicated premium, for each plan, type or form level, divided by 2000).

(1) The (WT < 65 CO IP), the (WT < 65 AD IP), the (WT > 65 CO IP), and the (WT > 65 AD IP) must each be less than or equal to one, and the ((WT < 65 CO IP) + the (WT < 65 AD IP) + the (WT > 65 CO IP) + the (WT > 65 AD IP)) must equal one.

(2) If (WT < 65 CO IP) =1, then the (WT < 65 AD IP) and the (WT > 65 CO IP) = 0.

(3) If (WT < 65 CO IP) < 1, then the (WT < 65 AD IP) cannot exceed (1 – (WT < 65 CO IP)) and the (WT > 65 CO IP) cannot exceed (1 – (WT < 65 CO IP) – (WT < 65 AD IP)).

d. Special Cases.

(1) If an issuer has ten or fewer Colorado lives under age 65 currently insured in a given plan, it is acceptable for the issuer to use its national data (NA) and industry data/studies (AD) to calculate the (C-W AAPR), for each plan, type or form level, provided the industry data/studies are: 1) applicable, 2) current, and 3) credible. In this case the (C-W AAPR), for each plan, type or form level, becomes:

(C-W AAPR) = ( < 65 NA IP) * (WT < 65 NA IP) + ( < 65 AD IP) * (WT < 65 AD IP) + ( > 65 NA IP) * (WT > 65 NA IP) + ( > 65 AD IP) * (1- (WT < 65 NA IP) – (WT < 65 AD IP) – (WT > 65 NA IP)), with the weights as described in part (c) above.

(2) Full data credibility is required to calculate the (C-W AAPR) for each plan, type or form level. If full credibility cannot be achieved using the above methods, an issuer may have to aggregate data over similar policy forms and then calculate the (C-W AAPR), for each plan, type or form level, using the methodology described in (a), (b) and (c) in this subsection. Data aggregation is only permitted in this case and the issuer should use the smallest number of similar forms possible to calculate the (C-W AAPR) for each plan, type or form level. The rate filing should discuss any data aggregation, demonstrate why it was necessary, and discuss how the final premiums were determined for each plan, type or form level.

F. Each Medicare supplement carrier shall actively market Medicare supplement insurance during the open enrollment periods described in Subsection 10 B.

G. No Medicare supplement carrier shall directly or indirectly engage in the following activities respecting persons enrolled in Medicare Part B by reason of disability during the open enrollment periods described in Subsection 10 B:

1. Encouraging of directing such persons to refrain from filing an application for Medicare supplement insurance because of the health status, claims experience, receipt of health care or medical condition of the person; and 2. Encouraging or directing such persons to seek coverage from another carrier because of the health status, claims experience, receipt of health care or medical condition of the person.

H. Carriers may not vary the commission paid on the sale or renewal of a Medicare Supplement insurance policy due to any factor, except first year or renewal status, including, but not limited to, the plan marketed, the insured’s age, health status, claims experience, location of residence, receipt of health care or medical condition. However, carriers may pay a different commission on a policy transferred to a different agent for servicing purposes, following the initial sale, or on a policy sold over the internet, providing there is no variation for any other reason. I. A Medicare supplement carrier shall provide reasonable compensation, as provided under the plan of operation of the program, to a producer, if any, for the sale, during the open enrolment periods described in Subsection 10 B, of a Medicare supplement insurance policy or certificate. J. No Medicare supplement insurance carrier shall terminate, fail to renew or limit its contract or agreement of representation with a producer for any reason related to the age, health status, claims experience, receipt of health care or medical condition of an applicant, eligible by reason of Subsection 10 B for Medicare supplement insurance, placed by a producer with the Medicare supplement insurance carrier.

K. Except as provided in Subsection 10 C. and Section 22, Subsection 10 A and 10 B shall not be construed as preventing the exclusion of benefits under a policy, during the first six (6) months, based on a preexisting condition for which the policyholder or certificateholder received treatment or was otherwise diagnosed during the six (6) months before the coverage became effective. L. Except as provided in Subsection 10 B. and Section 22, Subsection10 A shall not be construed as preventing the exclusion of benefits under a policy, during the first six (6) months, based on a preexisting condition for which the policyholder or certificateholder received treatment or was otherwise diagnosed during the six (6) months before the coverage became effective. Section 11 Guaranteed issue for Eligible Persons A. Guaranteed Issue 1. Eligible persons are those individuals described in Subsection 11 B who, seek to enroll under the policy during the period specified in Subsection 11 C, and who submit evidence of the date of termination, or disenrollment, or Medicare Part D enrollment with the application for a Medicare supplement policy.

2. With respect to eligible persons, an issuer shall not deny or condition the issuance or effectiveness of a Medicare supplement policy described in Subsection 11 E that is offered and is available for issuance to new enrollees by the issuer, shall not discriminate in the pricing of such a Medicare supplement policy because of health status, claims experience, receipt of health care, or medical condition, and shall not impose an exclusion of benefits based on a preexisting condition under such a Medicare supplement policy.

B. Eligible Persons An eligible person is an individual described in any of the following examples: 1. The individual is enrolled under an employee welfare benefit plan that provides health benefits that supplement the benefits under Medicare and the plan terminates, or the plan ceases to provide all such supplemental health benefits to the individual; or the individual is enrolled under an employee welfare benefit plan that is primary to Medicare and the plan terminates or the plan ceases to provide all health benefits to the individual because the individual leaves the plan;

2. The individual is enrolled with a Medicare Advantage organization under a Medicare Advantage plan under Medicare Part C, and any of the following circumstances apply, or the individual is 65 years of age or older and is enrolled with a Program of All-Inclusive Care for the Elderly (PACE) provider under Section 1894 of the Social Security Act, and there are circumstances similar to those described below that would permit discontinuance of the individual’s enrollment with such provider if such individual were enrolled in a Medicare Advantage plan:

a. The certification of the organization or plan under this part has been terminated; or b. The organization has terminated or otherwise discontinued providing the plan in the area in which the individual resides;

c. The individual is no longer eligible to elect the plan because of a change in the individual's place of residence or other change in circumstances specified by the Secretary, but not including termination of the individual's enrollment on the basis described in Section 1851(g)(3)(B) of the federal Social Security Act (where the individual has not paid premiums on a timely basis or has engaged in disruptive behavior as specified in standards under Section 1856), or the plan is terminated for all individuals within a residence [This rule does not cover amendments to this statute which were promulgated later than the effective date of this rule. For more detailed information pertinent to this statute, please contact the Colorado Division of Insurance at 1560 Broadway, Suite 850, Denver, CO 80202, (303) 894-7531.]; d. The individual demonstrates, in accordance with guidelines established by the Secretary, that:

(1) The organization offering the plan substantially violated a material provision of the organization's contract under this part in relation to the individual, including the failure to provide an enrollee on a timely basis medically necessary care for which benefits are available under the plan or the failure to provide such covered care in accordance with applicable quality standards; or (2) The organization, or agent or other entity acting on the organization's behalf, materially misrepresented the plan's provisions in marketing the plan to the individual; or e. The individual meets such other exceptional conditions as the Secretary may provide. 3. The individual is enrolled with:

a. An eligible organization under a contract under Section 1876 of the Social Security Act (Medicare or cost);

b. A similar organization operating under demonstration project authority, effective for periods before April 1, 1999;

c. An organization under an agreement under Section 1833(a)(1)(A) of the Social Security Act (health care prepayment plan); or d. An organization under a Medicare Select Policy.

e. The enrollment ceases under the same circumstances that would permit discontinuance of an individual's election of coverage under Section 11 B(2). 4. The individual is enrolled under a Medicare supplement policy and the enrollment ceases because:

a. Of the insolvency of the issuer or bankruptcy of the non-issuer organization: or b. Of other involuntary termination of coverage or enrollment under the policy: c. The issuer of the policy substantially violated a material provision of the policy: or d. The issuer, or an agent or other entity acting on the issuer's behalf, materially misrepresented the policy's provisions in marketing the policy to the individual: 5. Terminations and Reenrollments a. The individual was enrolled under a Medicare supplement policy and terminates enrollment and subsequently enrolls, for the first time, with any Medicare Advantage organization under a Medicare Advantage plan under Medicare Part C, any eligible organization under a contract under Section 1876 of the Social Security Act (Medicare cost), any similar organization operating under demonstration project authority, any PACE provider under Section 1894 of the Social Security Act, or a Medicare Select policy; and b. The subsequent enrollment under Subparagraph (a) is terminated by the enrollee during any period within the first twelve (12) months of such subsequent enrollment (during which the enrollee is permitted to terminate such subsequent enrollment under Section 185 (e) of the federal Social Security Act) [This rule does not cover amendments to this statute which were promulgated later than the effective date of this rule. For more detailed information pertinent to this statute, please contact the Colorado Division of Insurance at 1560 Broadway, Suite 850, Denver, CO 80202, (303) 894-7531.];

6. The individual, upon first becoming eligible for benefits under Medicare Part A, enrolls in a Medicare Advantage plan under Medicare Part C, or with a PACE provider under Section 1894 of the Social Security Act, and disenrolls from the plan or program by not later than twelve (12) months after the effective date of enrollment; or 7. The individual enrolls in a Medicare Part D plan during the initial enrollment period and, at the time of enrollment in Part D, was enrolled under a Medicare supplement policy that covers outpatient prescription drugs and the individual terminates enrollment in the Medicare supplement policy and submits evidence of enrollment in Medicare Part D along with the application for a policy described in Subsection 11 E(4). C. Guaranteed Issue Time Periods 1. In the case of an individual described in Subsection 11 B(1), the guaranteed issue period begins on the later of:

a. the date the individual receives a notice of termination or cessation of all supplemental health benefits (or, if a notice is not received, notice that a claim has been denied because of a termination or cessation); or b. the date that the applicable coverage terminates or ceases; and ends six (6) months thereafter if they leave the plan involuntarily or sixty three (63) days if voluntary; and c. the individual cancellation was not due to nonpayment of premiums or fraud. 2. In the case of an individual described in Subsections 11 B(2), (3), (5) or (6) whose enrollment is terminated involuntarily, the guaranteed issue period begins on the date the individual receives notice of termination and six (6) months after the date the applicable coverage terminated;

3. In the case of an individual described in Subsection 11 B(4)(a), the guaranteed issue period begins on the earlier of:

a. the date that the individual receives notice of termination, a notice of the issuer’s bankruptcy or insolvency, or other similar notice if any, and b. the date that the applicable coverage is terminated, and ends on the date that is (6) months after the date the coverage is terminated;

4. In the case of an individual described in Subsections 11 B(2), (4)(b), (4)(c), (5) or (6) who disenrolls voluntarily, the guaranteed issue period begins on the date that is sixty (60) days before the disenrollment and ends on that date that is sixty-three (63) days after the effective date;

5. In the case of an individual described in Subsection 11 B(7), the guaranteed issue period begins on the date the individual receives notice pursuant to Section 1882(v)(2)(B) of the Social Security Act from the Medicare supplement issuer during the sixty-day period immediately preceding the initial Part D enrollment period and ends on the date that is sixty-three (63) days after the effective date of the individual’s coverage under Medicare Part D [This rule does not cover amendments to this statute which were promulgated later than the effective date of this rule. For more detailed information pertinent to this statute, please contact the Colorado Division of Insurance at 1560 Broadway, Suite 850, Denver, CO 80202, (303) 894-7531.]; and 6. In the case of an individual described in Subsection 11 B but not described in the preceding provisions of this Subsection, the guaranteed issue period begins on the effective date of the voluntary disenrollment and ends on the date that is sixty-three (63) days after the effective date. If the termination is involuntary (also, not due to nonpayment of premium or fraud)), the guaranteed issue period begins at the end of the disenrollment and ends on the date that is six (6) months after the effective date. D. Extended Medigap Access for Interrupted Trial Periods 1. In the case of an individual described in Subsection 11 B(5) (or deemed to be so described, pursuant to this paragraph) whose enrollment with an organization or provider described in Subsection 11 B(5)(a) is involuntarily terminated within the first twelve (12) months of enrollment, and who, without an intervening enrollment, enrolls with another such organization or provider, the subsequent enrollment shall be deemed to be an initial enrollment described in Subsection 11 B(6); and 2. In the case of an individual described in Subsection 11 B(6) (or deemed to be so described, pursuant to this paragraph) whose enrollment with a plan or in a program described in Subsection 11 B(6) is involuntarily terminated within the first twelve (12) months of enrollment, and who, without an intervening enrollment, enrolls in another such plan or program, the subsequent enrollment shall be deemed to be an initial enrollment described in Subsection 11 B(6); and 3. For the purposes of Subsections 11 B(5) and (6), no enrollment of an individual with an organization or provider described in Subsection 11 B(5)(a), or with a plan or in a program described in Subsection 11 B(6), may be deemed to be an initial enrollment under this paragraph after the two-year period beginning on the date on which the individual first enrolled with such an organization, provider, plan or program. E. Products to Which Eligible Persons are Entitled. The Medicare supplement policy to which eligible persons are entitled under:

1. Subsections 11 B(1), (2), (3) and (4), is a Medicare supplement policy which has a benefit package classified as Plan A, B, C, F (including F with a high deductible), K or L offered by any issuer.

a. Subject to Subparagraph (b), Subsection 11 B(5) is the same Medicare supplement policy in which the individual was most recently previously enrolled, if available from the same issuer, or, if not so available, a policy described in Paragraph (1). b. After December 31, 2005, if the individual was most recently enrolled in a Medicare supplement policy with an outpatient prescription drug benefit, a Medicare supplement policy described in this subparagraph is:

(1) The policy available from the same issuer but modified to remove outpatient prescription drug coverage; or (2) At the election of the policyholder, an A, B, C, F (including F with a high deductible), K, or L policy that is offered by the any issuer; 2. Subsection 11 B(6) shall include any Medicare supplement policy offered by any issuer. 3. Subsection 12 B(7) is a Medicare supplement policy that has a benefit package classified as Plan A, B, C, F (including F with a high deductible), K, or L, and that is offered and is available for issuance to new enrollees by the same issuer that issued the individual’s Medicare supplement policy with outpatient drug coverage. F. Notification Provisions 1. At the time of an event described in Subsection 11 B causing an individual to lose coverage or benefits due to the termination of a contract or agreement, policy, or plan, the organization that terminates the contract or agreement, the issuer terminating the policy, or the administrator of the plan being terminated, respectively, shall notify the individual of his or her rights under this Section, and of the obligations of issuers of Medicare supplement policies under Subsection 11 A. Such notice shall be communicated contemporaneously with the notification of termination. 2. At the time of an event described in Subsection 11 B causing an individual to cease enrollment under a contract of agreement, policy, or plan, the organization that offers the contract or agreement, regardless of the basis for the cessation of enrollment, the issuer offering the policy, or the administrator of the plan, respectively, shall notify the individual of his or her rights under this Section, and of the obligations of issuers of Medicare supplement policies under Subsection 11 A. Such notice shall be communicated within ten (10) working days of the issuer receiving notification of disenrollment. Section 12 Standards for Claims Payment A. An insurer shall comply with Section 1882(c)(3) of the Social Security Act (as enacted by Section 4081(b)(2)(C) of the Omnibus Budget Reconciliation Act of 1987 (OBRA) 1987, Pub, L, No. 100- 203) by: [This rule does not cover amendments to this statute which were promulgated later than the effective date of this rule. For more detailed information pertinent to this statute, please contact the Colorado Division of Insurance at 1560 Broadway, Suite 850, Denver, CO 80202, (303) 894-7531.] 1. Accepting notice from a Medicare carrier on dually assigned claims submitted by participating physicians and suppliers as a claim for benefits in place of any other claim form otherwise required and making a payment determination on he basis of the information contained in the notice;

2. Notifying the participating physician or supplier and the beneficiary of the payment determination;

3. Paying the participating physician or supplier directly; 4. Furnishing, at the time of enrollment, each enrollee with a card listing the policy name, number and a central mailing address to which notices from a Medicare carrier may be sent; 5. Paying user fees for claim notices that are transmitted electronically or otherwise; and 6. Providing to the Secretary of Health and Human Services, at least annually, a central mailing address to which all claims may be sent by Medicare carriers. B. Compliance with the requirement set forth in Subsection 12 A above shall be certified on the Medicare supplement insurance experience reporting form.

Section 13 Loss Ratio Standards and Refund or Credit of Premium A. Loss Ratio Standards 1. Lifetime Requirements a. Indemnity Forms - A Medicare supplement policy form or certificate form shall not be delivered or issued for delivery unless the policy form or certificate form can be expected, as estimated for the entire period for which rates are computed to provide coverage, to return to policyholders and certificateholders in the form of aggregate benefits (not including anticipated refunds or credits) provided under the policy form or certificate forms:

(1) Group Policies - At least seventy-five percent (75%) of the aggregate amount of premiums earned in the case of group policies, or (2) Individual Policies - At least sixty-five (65%) percent of the aggregate amount of premiums earned in the case of individual policies, b. HMOs - Calculated on the basis of incurred claims experience or incurred health care expenses where coverage is provided by a health maintenance organization on a service rather than reimbursement basis and earned premiums for such period and in accordance with accepted actuarial principles and practices. Incurred health care expenses where coverage is provided by a health maintenance organization shall not include:

(1) Home office and overhead costs;

(2) Advertising costs;

(3) Commissions and other acquisition costs;

(4) Taxes;

(5) Capital costs;

(6) Administrative costs; and (7) Claims processing costs.

2. Historical Requirement (Standardized Forms): All filings of rates and rating schedules shall demonstrate that the ratio of incurred claims to earned premiums from inception of the form(s) to the last date of the experience period (historical loss ratio) comply with the requirements of Paragraph (1) of this Section or provide acceptable justification as to why this historical requirement has not yet been met. If this requirement has not been demonstrated, the rate filing will be disapproved.

3. Future Period Requirement (Standardized Forms): All filings of proposed rate revisions shall also demonstrate that the anticipated loss ratio for each year of the entire future period for which the revised rates are computed to provide coverage can be expected to meet or exceed the loss ratio requirements from Paragraph (1) of this Section, or provide acceptable justification as to why this future period requirement has not been met. All assumptions underlying the projected future experience should be clearly supported. These include lapse, mortality, morbidity, etc. If this requirement has not been demonstrated, the rate filing will be disapproved.

4. For purposes of applying Subsection 13 A(1) and Subsection 14 C(3) only, group certificates issued as a result of solicitations of individuals through the mails or by mass media advertising (including both print and broadcast advertising) shall be required to comply with the group Medicare Supplement requirements.

5. Pre-Standardized Plans: For policies issued prior to May 1, 1992, the ratio of incurred claims to earned premiums (loss ratio) shall comply with all of the following requirements. If compliance with these requirements is not demonstrated, the rate filing will be disapproved.

a. Historical Requirement: All filings of rates and rating schedules shall demonstrate that the ratio of incurred claims to earned premiums from inception of the form(s) to the last date of the experience period (historical loss ratio) is greater than or equal to the originally filed loss ratio for the form(s), or provide acceptable justification as to why this historical requirement has not yet been met; b. Historical Requirement Since April 1, 1996: All filings of rates and rating schedules shall demonstrate that the historical loss ratio since April 1, 1996 meets the appropriate loss ratio requirement from Paragraph (1) of this Section as applied to the actual experience beginning with April 1, 1996 to the last date of the experience period;

c. Future Period Requirement: All filings of proposed rate revisions shall also demonstrate that the anticipated loss ratio for each year of the entire future period for which the revised rates are computed to provide coverage can be expected to meet or exceed the loss ratio requirements from Paragraph (1) of this Section. All assumptions underlying the projected future experience should be clearly supported. These include lapse, mortality, morbidity, etc.; and d. Lifetime Requirement: All filings of rates and rating schedules shall also demonstrate that the ratio of incurred claims to earned premiums from inception of the form(s) to the last date of the entire future period for which the revised rates are computed to provide coverage can be expected to meet or exceed the originally filed loss ratio for the form(s). All assumptions underlying the projected future experience should be clearly supported. These include lapse, mortality, morbidity, etc.

6. Rate filings for each plan, type, and form level permitted under Subsection 10 C for standardized plans marketed after February 1, 2005, must demonstrate compliance with the requirements of subsection 10 E. The “weighted average aged premium,” must be recalculated for each filing using current data, unless the issuer demonstrates compliance under Subparagraph 10 E(1)(a).

B. Refund or Credit Calculation 1. An issuer shall collect and file with the Commissioner by May 31 of each year the data contained in the applicable reporting form contained in Appendix A for each type in a standard Medicare supplement benefit plan.

2. If, on the basis of the experience as reported, the benchmark ratio since inception (ratio 1) exceeds the adjusted experience ratio since inception (ratio 3), then a refund or credit calculation is required. The refund calculation shall be done on a statewide basis for each type in a standard Medicare Supplement Benefit Plan. For purposes of the refund or credit calculation, experience on policies issued within the reporting year shall be excluded.

3. For the purposes of this Subsection, policies or certificates issued prior to May 1, 1992, the issuer shall make the refund or credit calculation separately for all individual policies combined and all other group policies combined for experience after April 1, 1996. Reports are due by May 31 of each calendar year.

4. A refund or credit shall be made only when the benchmark loss ratio exceeds the adjusted experience loss ratio and the amount to be refunded or credit exceeds a de minimis level. Such refund shall include interest from the end of the calendar year to the date of the refund or credit at a rate specified by the Secretary of Health and Human Services, but in no event shall it be less than the average rate of interest for 13-week Treasury notes. A refund or credit against premiums due shall be made by September 30 following the experience year upon which the refund or credit is based. C. Annual Filing of Premium Rates An issuer of Medicare supplement policies and certificates issued before or after the effective date of May 1, 1992, in this state shall file annually its rates, rating schedule and supporting documentation including ratios of incurred losses to earned premiums by policy duration for approval by the Commissioner in accordance with the filing requirements and procedures prescribed by the Commissioner. The supporting documentation shall also demonstrate, in accordance with actuarial standards of practice using reasonable assumptions, that the appropriate loss ratio standards can be expected to be met over the entire period for which rates are computed. Such demonstration shall exclude active life reserves. An expected third-year, and each subsequent year, loss ratio, which is greater than or equal to the applicable percentage, shall be demonstrated for policies or certificates in force less than three years. As soon as practicable, but prior to the effective date of enhancements in Medicare benefits, every issuer of Medicare supplement policies or certificates in this state shall file with the Commissioner in accordance with the applicable filing procedures of this state: 1. Appropriate premium adjustments necessary to produce loss ratios as anticipated for current premium for the applicable policies or certificates. Such supporting documents as necessary to justify the adjustment shall accompany the filings. 2. An issuer shall make such premium adjustments as are necessary to produce an expected loss ratio under such policy or certificate as will conform with minimum loss ratio standards for Medicare supplement policies and which are expected to result in a loss ratio at least as great as that originally anticipated in the rates used to produce current premiums by the issuer for such Medicare supplement policies or certificates. No premium adjustment, which would modify the loss ratio experience under the policy, other than the adjustments described herein, shall be made with respect to a policy at any time other than upon its renewal date or anniversary date.

3. If an issuer fails to make premium adjustments acceptable to the Commissioner, the Commissioner may order premium adjustments, refunds or premium credits deemed necessary to achieve the loss ratio required by this Section. 4. Any appropriate riders, endorsements or policy forms needed to accomplish the Medicare supplement policy or certificate modifications necessary to eliminate benefit duplications with Medicare. Such riders, endorsements or policy forms shall provide a clear description of the Medicare supplement benefits provided by the policy or certificates. D. Public Hearings The Commissioner may conduct a public hearing to gather information concerning a request by an issuer for an increase in a rate for a policy form or certificate form issued before or after the effective date of May 1, 1992, if the experience of the form for the previous reporting period is not in compliance with the applicable loss ratio standard. The determination of compliance is made without consideration of any refund or credit for such reporting period. Public notice of such hearing shall be furnished in a manner deemed appropriate by the Commissioner. Section 14 Filing and Approval of Policies and Certificates and Premium Rates A. An issuer shall not deliver or issue for delivery a policy or certificate to a resident of this state unless the policy form or certificate form has been filed with and approved by the Commissioner in accordance with filing requirements and procedures prescribed by the Commissioner. B. An issuer shall file any riders or amendments to policy or certificate forms to delete outpatient prescription drug benefits as required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 only with the Commissioner in the state in which the policy of certificate was issued.

C. An issuer shall not use or change premium rates for a Medicare supplement policy or certificate unless the rates, rating schedule and supporting documentation have been filed with and approved by the Commissioner in accordance with the filing requirements and procedures prescribed by the Commissioner.

1. Except as provided in Paragraph (2) of this subsection, an issuer shall not file for approval more than one form of a policy or certificate of each type for each standard Medicare supplement benefit plan.

2. An issuer may offer, with the approval of the Commissioner, up to four (4) additional policy forms or certificate forms of the same type for the same standard Medicare supplement benefit plan, one for each of the following cases:

a. The inclusion of new or innovative benefits;

b. The addition of either direct response or producer marketing methods; c. The addition of either guaranteed issue or underwritten coverage; d. The offering of coverage to individuals eligible for Medicare by reason of disability. 3. For the purposes of this Section, a "type" means an individual policy or a group policy, an individual Medicare Select policy, or a group Medicare Select policy. 4. Except as provided in Paragraph (1)(a) below, an issuer shall continue to make available for purchase any policy form or certificate form issued after the effective date of this regulation that has been approved by the Commissioner. A policy form or certificate form shall not be considered to be available for purchase unless the issuer has actively offered it for sale in the previous twelve (12) months.

a. An issuer may discontinue the availability of a policy form or certificate form if the issuer provides to the Commissioner in writing its decision at least thirty (30) days prior to discontinuing the availability of the form of the policy or certificate. After receipt of the notice by the Commissioner, the issuer shall no longer offer for sale the policy form or certificate form in this state. b. An issuer that discontinues the availability of a policy form or certificate form pursuant to Subparagraph (1)(a) shall not file for approval a new policy form or certificate form of the same type for the same standard Medicare supplement benefit plan as the discontinued form for a period of five (5) years after the issuer provides notice to the Commissioner of the discontinuance. The period of discontinuance may be reduced if the Commissioner determines that a shorter period is appropriate.

5. The sale or other transfer of Medicare supplement business to another issuer shall be considered a discontinuance for the purposes of this subsection. 6. A change in the rating structure or methodology shall be considered a discontinuance under Paragraph (1) unless the issuer complies with the following requirements: a. The issuer provides an actuarial memorandum, in a form and manner prescribed by the Commissioner, describing the manner in which the revised rating methodology and resultant rates differ from the existing rating methodology and resultant rates.

b. The issuer does not subsequently put into effect a change of rates or rating factors that would cause the percentage differential between the discontinued and subsequent rates as described in the actuarial memorandum to change. The Commissioner may approve a change to the differential, which is in the public interest.

7. Except as provided in Paragraph (2), the experience of all policy forms or certificate forms of the same type in a standard Medicare supplement benefit plan shall be combined for purposes of the refund or credit calculation prescribed in Section 13 of this regulation. 8. Forms assumed under an assumption reinsurance agreement shall not be combined with the experience of other forms for purposes of the refund or credit calculation. G. Each filing of premium rates is expected to include the following items for each policy form included in the filing. Filings not containing these items may be returned to the filing company as incomplete. 1. The expected loss ratio by duration for the life of the policy form. These durational expected loss ratios will be evaluated for reasonableness.

2. Each rate filing shall compare the actual to the expected loss ratio by duration since inception of the policy form. This comparison should:

a. Be prepared on a calendar year basis including a row for each duration and a total row including the expected overall loss ratio for that calendar year; and b. Include a summary comparison over all durations, including the overall expected loss ratio over all durations.

This analysis is considered to be most important in the final decision to approve or disapprove a rate increase request.

3. Each rate filing shall demonstrate that the third year, and each subsequent year, loss ratio, for policies in force for three years or longer, is greater than or equal to the applicable percentage in Section 13 A(1)(i) or (ii), or provide acceptable justification as to why this requirement has not yet been met.

4. Each rate filing is expected to include all required items from Section 5 A of Colorado Insurance Regulation 4-2-11.

H. Each Medicare Supplement rate filing submitted in Colorado, including annual rate filings, shall include the following Actuarial Certification on a separate page of the rate filing: 1. To the best of my knowledge and judgment, the following are true with respect to this Medicare Supplement rate filing:

2. The assumptions present my best judgment as to the expected value for each assumption and are consistent with the Company’s business plan at the time of the filing; 3. The anticipated lifetime loss ratio, future loss ratios, and third year loss ratios all equal or exceed the applicable required loss ratio in Colorado;

4. The filed rates maintain the proper relationship between policies which were originally filed with differing rating methodologies;

5. The filing was prepared based on current standards of practice as promulgated by the Actuarial Standards Board, including the data quality standard of practice; 6. The filing is in compliance with applicable Colorado laws and regulations; and 7. The rates are reasonable in relationship to benefits. 8. A qualified actuary should sign and date the certification. The actuary’s professional credentials and company affiliation should be included below the signature. I. The full credibility standard for Medicare supplement policies is 2000 life-years, and 2000 claims, for rating purposes. These standards must be met in a maximum of three years. Any filing which bases its conclusions on data not meeting these standards is considered not fully credible unless the company can justify a lesser standard of full credibility. If the underlying data is not fully credible, for purposes of rate filings only, the filing should aggregate the underlying data according to the following requirements. Once the data has been aggregated, for purposes of rate filings, the data is expected to be aggregated in the same manner for all future rate filings unless further aggregation is necessary to achieve full credibility. Each rate filing must discuss how the data relied upon for the rate revision meets the Colorado data credibility requirement. 1. Pre-standardized Forms: If experience for the pre-standardized forms is not fully credible by form, the experience should be combined over all pre-standardized forms. If the combined experience is still not fully credible, the experience must be; a. combined with the experience for similar prestandardized forms marketed by an affiliated company; or b. combined with experience for the standardized forms. 2. Standardized Forms: If experience for a standardized form is not fully credible, experience should be either aggregated with the experience of the most similar standardized form(s) to achieve full credibility; or aggregated over all standardized forms. If the experience has been aggregated over all standardized forms to achieve the credibility standard, the indicated increase, following the aggregate analysis, may be allocated over the standardized forms in a manner to be determined by the company, providing that the sum of the proposed increases over all forms, is numerically equal to the indicated amount from the aggregate analysis.

a. This allows the rate relationships over forms to remain reasonable. b. Rate changes for all affected standardized forms should be made concurrently. 3. Alternative Means: If full credibility cannot be achieved used the above methodology, a weighted average approach should be incorporated in determining a reasonable rate increase. The company should assign the maximum weight possible to the Colorado data and use an acceptable alternative data source for the compliment of this data. J. The following items will be evaluated in determining the acceptability of a rate change request: 1. All of the required items from Colorado Insurance Regulation 4-2-11, in particular support for each of the underlying rating assumptions, such as the persistency and trend assumptions, used to calculate the earned premiums and incurred claims. 2. A discussion as to how the underlying data meets the Colorado credibility requirement. Please see Section 14 (I) of this regulation. Any rate change request, which bases its conclusions on data that is not fully credible, must discuss how the rate change request was modified for less than fully credible data. If the data is aggregated to meet the credibility requirement, the aggregated data should be used in the demonstrations that parts (3) through (5) of this subsection J have been met. 3. The presentation as to how the rates for each year of the projection period were determined. These rates must be calculated using expected loss ratios greater than or equal to the composite expected loss ratios by duration that were derived from the expected loss ratios included in the original rate filing for the block of business, unless the Company provides acceptable justification and support as to why these ratios are inappropriate. A composite weighted average of loss ratios that are greater than or equal to the originally filed expected loss ratios may be used for aggregated blocks of business, with an explanation as to how the expected loss ratios were determined. 4. A demonstration that the historical loss ratio, the loss ratios for each year of the projection period and the lifetime loss ratio are greater than or equal to the minimum loss ratio requirements from Section 13 (A) of this regulation must be included as part of the rate change request.

5. The actual-to-expected loss ratio analysis for each calendar year by issue year, required by Section 14 G of this regulation, must be included as part of the rate change request. In order for the rate change request to be considered, the overall actual-to-expected loss ratio for the most recent full calendar year, and for the current partial calendar year if historical data is provided, must be greater than or equal to 1.0 or, in cases where this ratio is less than 1.0, an acceptable reason(s) as to why the rate change request should be considered must accompany the rate change request.

6. Rates for the category “under age 65” must be calculated using Section 10 E(2) of this regulation and the expected loss ratio as described in (5) of this subsection must be used to calculate the “indicated premiums” for each plan.

K. Rates and policy forms shall be submitted electronically in a form specified by the Colorado Division of Insurance.

Section 15 Permitted Compensation Arrangements A. An issuer or other entity may provide commission or other compensation to a producer or other representative for the sale of a Medicare supplement policy or certificate only if the first year commission or other first year compensation is no more than two hundred percent (200%) of the commission or other compensation paid for selling or servicing the policy or certificate in the second year or period.

B. The commission or other compensation provided in subsequent (renewal) years must be the same as that provided in the second year or period and must be provided for at least five renewal years. C. No issuer or other entity shall provide compensation to its producers shall receive compensation greater than the renewal compensation payable by the replacing issuer on renewal policies or certificates if an existing policy or certificate is replaced. D. For purposes of this Section, "compensation" includes pecuniary or non-pecuniary remuneration of any kind relating to the sale or renewal of the policy or certificate including but not limited to bonuses, gifts, prizes, awards, and finders fees.

Section 16 Required Disclosure Provisions A. General Rules 1. Medicare supplement policies and certificates shall include a renewal or continuation provision. The language or specifications of such provision shall be consistent with the type of contract to be issued. Such provision shall be appropriately captioned, and shall appear on the first page of the policy and shall include any reservation by the issuer of the right to change premiums and any automatic renewal premium increases based on the policyholder's age.

2. Except for riders or endorsements by which the issuer effectuates a request made in writing by the insured or exercises a specifically reserved right under a Medicare supplement policy, or is required to reduce or eliminate benefits to avoid duplication of Medicare benefits; all riders or endorsements added to a Medicare supplement policy after date of issue or at reinstatement or renewal which reduce or eliminate benefits or coverage in the policy shall require a signed acceptance by the insured. After the date of policy or certificate issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term shall be agreed to in writing signed by the insured, unless the benefits are required by the minimum standards for Medicare supplement policies, or if the increased benefits or coverage is required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, such premium charge shall be set forth in the policy. 3. A Medicare supplement policy or certificate shall not provide for the payment of benefits based on standards described as "usual and customary," "reasonable and customary" or words of similar import.

4. If a Medicare supplement policy or certificate contains any limitations with respect to preexisting conditions, such limitations shall appear as a separate paragraph of the policy and be labeled as "Preexisting Condition Limitations."

5. Medicare supplement policies and certificates shall have a notice prominently printed on the first page of the policy or certificate or attached thereto stating in substance that the policyholder or certificateholder shall have the right to return the policy or certificate within thirty (30) days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the insured person is not satisfied for any reason. Such notice shall include in bold face type the address and telephone number of the Colorado Division of Insurance and a statement that in the event the insurer does not refund the premium within thirty (30) days from the date such refund is requested, the Division of Insurance should be informed accordingly.

6. Guide to Health Insurance for People with Medicare a. Issuers of accident and sickness policies or certificates which provide hospital or medical expense coverage on an expense incurred or indemnity basis, other than incidentally, to a person(s) eligible for Medicare shall provide to those applicants a Guide to Health Insurance for People with Medicare in the form developed jointly by the National Association of Insurance Commissioners and CMS and in a type size no smaller than 12 point type. Delivery of the Guide shall be made whether applicant at the time of application and acknowledgment of receipt of the Guide shall be obtained by the issuer. Direct response issuers shall deliver the Guide to the applicant upon request but not later than at the time the policy is delivered or not such policies or certificates are advertised, solicited or issued as Medicare supplement policy or certificate as defined in this regulation. Except in the case of direct response issuers, delivery of the Guide shall be made to the applicant at the time of application and acknowledgment of receipt of the Guide shall be obtained by the issuer. Direct response issuers shall deliver the Guide to the applicant upon request but not later than the time the policy is delivered.

b. For the purposes of this Section, “form” means the language, format, size, type size, type proportional spacing, bold character, and line spacing. B. Notice Requirements 1. As soon as practicable, but no later than thirty (30) days prior to the annual effective date of any Medicare benefit changes, an issuer shall notify its policyholders and certificateholders of modifications it has made to Medicare supplement policies or certificates in a format acceptable to the Commissioner. Such notice shall: a. Include a description of revisions to the Medicare program and a description of each modification made to the coverage provided under the Medicare supplement policy or certificate, and b. Inform each policyholder or certificateholder as to when any premium adjustment is to be made due to changes in Medicare.

2. The notice of benefit modifications and any premium adjustments shall be in outline form and in clear and simple terms so as to facilitate comprehension. 3. Such notices shall not contain or be accompanied by any solicitation. C. MMA Notice Requirements Insurer shall comply with any and all notice requirements of the Medicare Prescription Drug Improvement, and Modernization Act of 2003.

D. Outline of Coverage Requirements for Medicare Supplement Policies 1. Issuers shall provide an outline of coverage to all applicants at the time application is presented to the prospective applicant and, except for direct response policies, shall obtain an acknowledgment of receipt of such outline from the applicant; and 2. If an outline of coverage is provided at the time of application and the Medicare supplement policy or certificate is issued on a basis which would require revision of the outline, a substitute outline of coverage properly describing the policy or certificate shall accompany such policy or certificate when it is delivered and contain the following statement, in no less than twelve (12) point type, immediately above the company name. "NOTICE: Read this outline of coverage carefully. It is not identical to the outline of coverage provided upon application and the coverage provided upon application and the coverage originally applied for has not been issued."

3. The outline of coverage provided to applicants pursuant to this Subsection consists of four parts: cover page, premium information, disclosure pages, and charts displaying the features of each benefit plan offered by the issuer. The outline of coverage shall be in the language and format prescribed below in no less than twelve (12) point type. All plans A-L shall be shown on the cover page, and the plans that are offered by the issuer shall be prominently identified. Premium information for plans that are offered shall be shown on the cover page or immediately following the cover page and shall be prominently displayed. The premium and mode shall be stated for all plans that are offered to the prospective applicant. All possible premiums for the prospective applicant shall be illustrated.

4. The outline of coverage shall include items contained in Appendix B. E. Notice Regarding Policies or Certificates Which Are Not Medicare Supplement Policies 1. Any accident and sickness insurance policy or certificate, other than a Medicare supplement policy or a policy issued pursuant to a contract under Section 1876 of the Federal Social Security Act (42 U.S.C. 1395 et seq.); disability income policy; or other policy identified in Section 3 B of this regulation, issued for delivery in this state to persons eligible for Medicare shall notify insureds under the policy that the policy is not a Medicare supplement policy or certificate. The notice shall either be printed or attached to the first page of the outline of coverage delivered to insured under the policy, or if no outline of coverage is delivered, to the first page of the policy or certificate delivered to insureds. The notice shall be in no less than twelve (12) point type and shall contain the following language:

THIS [POLICY, OR CERTIFICATE] IS NOT A MEDICARE SUPPLEMENT [POLICY OR CONTRACT]. If you are eligible for Medicare, review the Guide to Health Insurance for People with Medicare available from the company."

2. Applications provided to persons eligible for Medicare for the health insurance policies or certificates described in Subsection 16 E(1) shall disclose, using the applicable statement in Appendix E, the extent to which the policy duplicates Medicare. The disclosure statement shall be provided as a part of, or together with, the application for the policy or certificate.

Section 17 Requirements for Application Forms and Replacement Coverage A. Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant currently has a Medicare supplement, Medicare Advantage, Medicaid coverage, or another health insurance policy or certificate in force or whether a Medicare supplement policy or certificate is intended to replace or be in addition to any other accident and sickness policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and producer containing such questions and statements may be used.

[Statements] 1. You do not need more than one Medicare supplement policy. 2. If you purchase this policy, you may want to evaluate your existing health coverage and decide if you need multiple coverages.

3. You may be eligible for benefits under Medicaid or may not need a Medicare supplement policy.

4. If, after purchasing the policy, you become eligible for Medicaid, the benefits and premiums under your Medicare supplement policy can be suspended, if requested during your entitlement to benefits under Medicaid for twenty four (24) months. You must request this suspension within 90 days of becoming eligible for Medicaid. If you are no longer entitled to Medicaid, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within 90 days of losing Medicaid eligibility. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

5. If you are eligible for, and have enrolled in a Medicare supplement policy by reason of disability and you later become covered by an employer or union-based group health plan, the benefits and premiums under your Medicare supplement policy can be suspended, if requested, while you are covered under the employer or union-based group health plan. If you suspend your Medicare supplement policy under these circumstances, and later lose your employer or union-based group health plan, your suspended Medicare supplement policy (or, if that is no longer available, a substantially equivalent policy) will be reinstituted if requested within 90 days of losing your employer or union-based group health plan. If the Medicare supplement policy provided coverage for outpatient prescription drugs and you enrolled in Medicare Part D while your policy was suspended, the reinstituted policy will not have outpatient prescription drug coverage, but will otherwise be substantially equivalent to your coverage before the date of the suspension.

6. Counseling services may be available in your state to provide advice concerning your purchase of Medicare supplement insurance and concerning medical assistance through the state Medicaid program, including benefits as a Qualified Medicare Beneficiary (QMB) and a Specified Low-Income Medicare Beneficiary (SLMB). [Questions] If you lost or are losing other health insurance coverage and received a notice from your prior insurer saying you were eligible for guaranteed issue of a Medicare supplement insurance policy, or that you had certain rights to buy such a policy, you may be guaranteed acceptance in one or more of our Medicare supplement plans. Please include a copy of the notice from your prior insurer with your application. PLEASE ANSWER ALL QUESTIONS.

[Please mark “Yes” or “No” below with an “X” ] (1) To the best of your knowledge, (a) Did you turn age 65 in the last 6 months? Yes____ No____ (b) Did you enroll in Medicare Part B in the last 6 months? Yes____ No____ If yes, what is the effective date? _______________ (2) Are you covered for medical assistance through the state Medicaid program? [NOTE TO APPLICANT: If you are participating in a “Spend-Down Program” and have not met your “Share of Cost,” please answer NO to this question.] Yes____ No____ If yes, (1) Will Medicaid pay your premiums for this Medicare supplement policy? Yes____ No____ (2) Do you receive any benefits from Medicaid OTHER THAN payments toward your Medicare Part B premium? Yes____ No____ (3) If you had coverage from any Medicare plan other than original Medicare within the past 6 months (for example, a Medicare Advantage plan, or a Medicare HMO or PPO), fill in your start and end dates below. If you are still covered under this plan, leave “END” blank.

START __/__/__ END __/__/__ (a) If you are still covered under the Medicare plan, do you intend to replace your current coverage with this new Medicare supplement policy? Yes____ No____ (b) Was this your first time in this type of Medicare plan? Yes____ No____ (c) Did you drop a Medicare supplement policy to enroll in this Medicare plan? Yes____ No____ (d) Has your coverage under the previous plan been involuntarily terminated for reasons other than nonpayment of premiums or for fraud? Yes____ No ___ (4.) Do you have another Medicare supplement policy in force? Yes____ No____ (a) If so, with what company, and what plan do you have [optional for Direct Mailers]? __________________________________________________ (b) If so, do you intend to replace your current Medicare supplement policy with this policy? Yes____ No____ (5) Have you had coverage under any other health insurance within the past 6 months? (For example, an employer, union, or individual plan)

Yes____ No____ (a) If so, with what company and what kind of policy? ________________________________________________ ________________________________________________ ________________________________________________ ________________________________________________ (b) What are your dates of coverage under the other policy? START __/__/__ END __/__/__ (If you are still covered under the other policy, leave “END” blank.) (c) Has your coverage under a previous policy been involuntarily terminated for reasons other than nonpayment of premiums or for fraud? Yes____ No ___ B. Producers shall list any other health insurance policies they have sold to the applicant. 1. List policies sold which are still in force.

2. List policies sold in the past five (5) years which are no longer in force. C. In the case of a direct response issuer, a copy of the application or supplemental form, signed by the applicant, and acknowledged by the insurer, shall be returned to the applicant by the insurer upon delivery of the policy.

D. Upon determining that a sale will involve replacement, of a Medicare supplement coverage, any issuer, other than a direct response issuer, or its producer, shall furnish the applicant, prior to issuance or delivery of the Medicare supplement policy or certificate, a notice regarding replacement of Medicare supplement coverage. One (1) copy of such notice signed by the applicant and producer, except where the coverage is sold without a producer, shall be provided to the applicant and an additional signed copy shall be retained by the issuer. direct response issuer shall deliver to the applicant at the time of the issuance of the policy the notice regarding replacement of Medicare supplement coverage.

E. The Notice to Applicant Regarding Replacement of Medicare Supplement Insurance or Medicare Advantage, in Appendix C, required by Subsection 17.D for an issuer, shall be provided in the format prescribed and separately adopted by the Commissioner of Insurance, in no less than twelve (12) point type.

F. Paragraphs 1 and 2, contained in such Notice to the Applicant Regarding Replacement of Medicare Supplement Insurance, (applicable to preexisting conditions), in Appendix C, may be deleted by an issuer if the replacement does not involve the application of a new preexisting condition limitation.

Section 18 Filing Requirements for Advertising An issuer shall provide a copy of any Medicare supplement advertisement intended for use in this state whether through written, radio or television media to the Commissioner of Insurance of this state for review by the Commissioner to the extent it may be required under state law. Such advertisement shall comply with all applicable requirements of Division of Insurance Regulation 4-2-3, 3 C.C.R. 702-4 and related guidelines as amended. Such advertisements shall also include a statement that all Medicare supplement standardized plans are offered to qualified individuals under the age of 65, or a statement that all Medicare supplement standardized plans are offered to Medicare qualified individuals due to disability. Advertising shall be submitted electronically in a format specified by the Colorado Division of Insurance.

Section 19 Standards for Marketing A. An issuer, directly or through its producers, shall: 1. Establish marketing procedures to assure that any comparison of policies by its producers will be fair and accurate.

2. Establish marketing procedures to assure excessive insurance is not sold or issued. 3. Display prominently by type, stamp or other appropriate means, on the first page of the policy the following:

"Notice to buyer. This policy may not cover all of your medical expenses." 4. Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for Medicare supplement insurance already has accident and sickness insurance and the types and amounts of any such insurance. 5. Establish auditable procedures for verifying compliance with this Subsection 19 A. B. In additional to the practices prohibited in Section 10-3-1104, C.R.S., the following acts and practices are prohibited.

1. Twisting. Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or issuers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another issuer.

2. High pressure tactics. Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance. 3. Cold lead advertising. Making use directly or indirectly of any method of marketing which fails to disclose in conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance producer or insurance company.

C. The terms "Medicare Supplement," "Medigap," "Medicare Wrap-Around" and words of similar import shall not be used unless the policy is being marketed and issued in compliance with this regulation.

Section 20 Appropriateness of Recommended Purchase and Excessive Insurance A. In recommending the purchase or replacement of any Medicare supplement policy or certificate a producer shall make reasonable efforts to determine the appropriateness of a recommended purchase or replacement.

B. Any sale of a Medicare supplement policy or certificate that will provide an individual more than one Medicare supplement policy or certificate is prohibited. C. An issuer shall not issue a Medicare supplement policy or certificate to an individual enrolled in Medicare Part C unless the effective date of the coverage is after the termination date of the individual’s Medicare Part C coverage.

Section 21 Reporting of Multiple Policies A. On or before March 1 of each year, an issuer shall report to the Division of Insurance, using the Reporting Medicare Supplement Policies Form prescribed and separately adopted by the Commissioner of Insurance, which provides the following information for every individual resident of this state for which the issuer has in force more than one Medicare supplement policy or certificate.

1. Policy and certificate number, and 2. Date of issuance.

B. The items set forth above must be grouped by individual policyholder. Section 22 Prohibition Against Preexisting Conditions, Waiting Periods, Elimination Periods and Probationary Periods in Replacement Policies or Certificates A. If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate, the replacing issuer shall waive any time periods applicable to preexisting conditions, waiting periods, elimination periods and probationary periods in the new Medicare supplement policy for similar benefits to the extent such period had elapsed under the original policy or certificate for similar benefits to the extent such time was spent under the original policy. B. If a Medicare supplement policy or certificate replaces another Medicare supplement policy or certificate which has been in effect for at least six (6) months, the replacing policy shall not provide any time period applicable to preexisting conditions, waiting periods, elimination periods and probationary periods for benefits similar to those contained in the original policy or certificate. Section 23 Readability Standards A Medicare supplement policy shall meet the following readability standards: A. The text must achieve a minimum score of 40 on the Flesch reading ease test; B. The policy shall be printed, except for specification pages, schedules and tables, in not less than 10 point type, one point leaded;

C. The style, arrangement and overall appearance of the policy shall not give undue prominence to any portion of the text of the policy to any endorsement or riders; and D. The policy shall contain a table of contents or an index of the principal sections of the policy if the policy has more than 3,000 words printed on three (3) or fewer pages of text or if the policy has more than three (3) pages regardless of the number of words. For the purposes of this Section, the Flesch reading ease test shall be governed by the provisions of the National Association of Insurance Commissioners (NAIC) Life and Health Insurance Policy Language Simplification Act adopted by the NAIC as a Model Act at its January, 1993, meeting. This rule does not cover amendments to this model act which were promulgated later than January 1, 2001 Section 24 Medicare Select Policies and Certificates A. This Section shall apply to Medicare Select policies and certificates, as defined in this Section. B. No policy or certificate may be advertised as a Medicare Select policy or certificate unless it meets the requirements of this Section.

C. For the purposes of this Section:

1. "Complaint" means any dissatisfaction expressed by an individual concerning a Medicare Select issuer or its network providers.

2. "Grievance" means dissatisfaction expressed in writing by an individual insured under a Medicare Select policy or certificate with the administration, claims practices, or provision of services concerning a Medicare Select issuer or its network providers. 3. "Medicare Select issuer" means an issuer offering, or seeking to offer, a Medicare Select policy or certificate.

4. "Medicare Select policy" or "Medicare Select certificate" mean, respectively, a Medicare supplement policy or certificate that contains restricted network provisions. 5. "Network provider" means a provider of health care, or a group of providers of health care, which has entered into a written agreement with the issuer to provide benefits insured under a Medicare Select policy.

6. "Restricted network provision" means any provision, which conditions the payment of benefits, in whole or in part, on the use of network providers.

7. "Service area" means the geographic area approved by the Commissioner within which an issuer is authorized to offer a Medicare Select policy. D. The Commissioner may authorize an issuer to offer a Medicare Select policy or certificate, pursuant to this Section and Section 4358 of the Omnibus Budget Reconciliation Act (OBRA) of 1990 if the Commissioner finds that the issuer has satisfied all of the requirements of this regulation. [This rule does not cover amendments to this statute which were promulgated later than the effective date of this rule. For more detailed information pertinent to this statute, please contact the Colorado Division of Insurance at 1560 Broadway, Suite 850, Denver, CO 80202, (303) 894- 7531.] E. A Medicare Select issuer shall not issue a Medicare Select policy or certificate in this state until its plan of operation has been approved by the Commissioner.

F. A Medicare Select issuer shall file a proposed plan of operation with the Commissioner in a format prescribed by the Commissioner. The plan of operation shall contain at least the following information:

1. Evidence that all covered services that are subject to restricted network provisions are available and accessible through network providers, including a demonstration that: a. Services can be provided by network providers with reasonable promptness with respect to geographic location, hours of operation and after-hour care. The hours of operation and availability of after-hour care shall reflect usual practice in the local area. Geographic availability shall reflect the usual travel times within the community.

b. The number of network providers in the service area is sufficient, with respect to current and expected policyholders, either:

(1) To deliver adequately all services that are subject to a restricted network provision; or (2) To make appropriate referrals.

c. There are written agreements with network providers describing specific responsibilities.

d. Emergency care is available twenty-four (24) hours per day and seven (7) days per week.

e. In the case of covered services that are subject to a restricted network provision and are provided on a prepaid basis, there are written agreements with network providers prohibiting the providers from billing or otherwise seeking reimbursement from or recourse against any individual insured under a Medicare Select policy or certificate. This paragraph shall not apply to supplemental charges or coinsurance amounts as stated in the Medicare Select policy or certificate.

2. A statement or map providing a clear description of the service area. 3. A description of the grievance procedure to be utilized. 4. A description of the quality assurance program, including: a. The formal organizational structure;

b. The written criteria for selection, retention and removal of network providers; and c. The procedures for evaluating quality of care provided by network providers, and the process to initiate corrective action when warranted.

5. A list and description, by specialty, of the network providers. 6. Copies of the written information proposed to be used by the issuer to comply with Subsection 24.I.

7. Any other information requested by the Commissioner. G. A Medicare Select issuer shall file any proposed changes to the plan of operation, except for changes to the list of network providers, with the Commissioner prior to implementing the changes. Changes shall be considered approved by the Commissioner after thirty (30) days unless specifically disapproved. An updated list of network providers shall be filed with the Commissioner at least quarterly.

H. A Medicare Select policy or certificate shall not restrict payment for covered services provided by non- network providers if:

1. The services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury or a condition; and 2. It is not reasonable to obtain services through a network provider. I. A Medicare Select policy or certificate shall provide payment for full coverage under the policy for covered services that are not available through network providers. J. A Medicare Select issuer shall make full and fair disclosure in writing of the provisions, restrictions and limitations of the Medicare Select policy or certificate to each applicant. This disclosure shall include at least the following:

1. An outline of coverage sufficient to permit the applicant to compare the coverage and premiums of the Medicare Select policy or certificate with: a. Other Medicare supplement policies or certificates offered by the issuer; and b. Other Medicare Select policies or certificates.

2. A description (including address, phone number and hours of operation) of the network providers, including primary care physicians, specialty physicians, hospitals and other providers.

3. A description of the restricted network provisions, including payments for coinsurance and deductibles when providers other than network providers are utilized. Except to the extent specified in the policy or certificate, expenses incurred when using out-of-network providers do not count toward the out-of-pocket annual limit contained in plans K and L. 4. A description of coverage for emergency and urgently needed care and other out-of-service area coverage.

5. A description of limitations on referrals to restricted network providers and to other providers. 6. A description of the policyholder's rights to purchase any other Medicare supplement policy or certificate otherwise offered by the issuer.

7. A description of the Medicare Select issuer's quality assurance program and grievance procedure.

K. Prior to the sale of a Medicare Select policy or certificate, a Medicare Select issuer shall obtain from the applicant a signed and dated form stating that the applicant has received the information provided pursuant to subsection I of this Section and that the applicant understands the restrictions of the Medicare Select policy or certificate. L. A Medicare Select issuer shall have and use procedures for hearing complaints and resolving written grievances from the subscribers. The procedures shall be aimed at mutual agreement for settlement and may include arbitration procedures.

1. The grievance procedure shall be described in the policy and certificates and in the outline of coverage.

2. At the time the policy or certificate is issued, the issuer shall provide detailed information to the policyholder describing how a grievance may be registered with the issuer. 3. Grievances shall be considered in a timely manner and shall be transmitted to appropriate decision-makers who have authority to fully investigate the issue and take corrective action.

4. If a grievance is found to be valid, corrective action shall be taken promptly. 5. All concerned parties shall be notified about the results of a grievance. 6. The issuer shall report to the Commissioner, no later than each March 31 of each year, regarding its grievance procedure. The report shall be in a format prescribed by the Commissioner and shall contain the number of grievances filed in the past year and a summary of the subject, nature and resolution of such grievances. M. At the time of initial purchase, a Medicare Select issuer shall make available to each applicant for a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate otherwise offered by the issuer.

N. At the request of an individual insured under a Medicare Select policy or certificate, a Medicare Select issuer shall make available to the individual insured the opportunity to purchase a Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make the policies or certificates available without requiring evidence of insurability after the Medicare Select policy or certificate has been in force for six (6) months.

O. For the purposes of this subsection, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced. For the purposes of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for at-home recovery services or coverage for Medicare Part B excess charges. P. Medicare Select policies and certificates shall provide for continuation of coverage in the event the Secretary of Health and Human Services determines that Medicare Select policies and certificates issued pursuant to this Section should be discontinued due to either the failure of the Medicare Select Program to be reauthorized under law or its substantial amendment. 1. Each Medicare Select issuer shall make available to each individual insured under a Medicare Select policy or certificate the opportunity to purchase any Medicare supplement policy or certificate offered by the issuer which has comparable or lesser benefits and which does not contain a restricted network provision. The issuer shall make the policies and certificates available without requiring evidence of insurability. 2. For the purposes of this subsection, a Medicare supplement policy or certificate will be considered to have comparable or lesser benefits unless it contains one or more significant benefits not included in the Medicare Select policy or certificate being replaced. For the purposes of this paragraph, a significant benefit means coverage for the Medicare Part A deductible, coverage for prescription drugs, coverage for at-home recovery services or coverage for Medicare Part B excess charges. Q. A Medicare Select issuer shall comply with reasonable requests for data made by state or federal agencies, United States Department of Health and Human Services, for the purpose of evaluating the Medicare Select Program.

Section 25 Incorporated Materials The relevant portions of the Section 1882 (42 U.S.C. 1395ss) and the NAIC Association of Insurance Commissioners (NAIC) Life and Health Insurance Policy Simplication Act are incorporated by reference, but this rule does not cover amendments to this law or model act that were promulgated later than the effective date of this rule. A copy of the relevant portions of the Section 1882 (42 U.S.C. 1395ss) and the NAIC Association of Insurance Commissioners (NAIC) Life and Health Insurance Policy Simplication Act may be examined at any state publications depository library. For additional information regarding how relevant portions of the this law or the reference NAIC Model Act can be obtained or examined contact the Rates and Forms Supervisor, Colorado Division of Insurance, 1560 Broadway, Ste 850, Denver, CO 80202.

Section 26 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected Section 27 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocations of license. Among others, the penalties provided for in § 10-3-1108, C.R.S. may be applied. Section 28 Effective Date This amended regulation shall be effective June 1, 2009. Section 29 History New Regulation 81-1 effective January 1, 1982.

Regulation 81-1 repealed and replaced by 89-7.

Regulation 89-7 repealed and replaced by 90-4, effective January 1, 1991. Regulation 90-4 repealed and replaced by 91-18.

Regulation 91-18 repealed and replaced by 4-3-1 effective May 1, 1992. Regulation 4-3-1 was amended effective April 1, 1996.

Regulation 4-3-1 was amended effective September 1, 1996. Regulation 4-3-1 was amended effective April 1, 1999 Regulation 4-3-1 was amended effective January 1, 2001. Regulation 4-3-1 was amended effective September 1, 2003. Sections 10 (E)(2), 27 and 28 were amended effective December 1, 2003 Regulation 4-3-1 was amended effective February 1, 2005. Regulation 4-3-1 was amended effective December 1, 2005. Regulation 4-3-1 was amended effective February 1, 2006. Emergency regulation 08-E-8 is effective January 1, 2009. Regulation 4-3-1 was amended effective February 1, 2009. Regulation 4-3-1 was amended effective June 1, 2009.

APPENDIX A MEDICARE SUPPLEMENT REFUND CALCULATION FORM

APPENDIX B OUTLINE OF MEDICARE SUPPLEMENT COVERAGE PREMIUM INFORMATION [Boldface Type] We [insert issuer’s name] can only raise your premium if we raise the premium for all policies like yours in this State. [If the premium is based on the increasing age of the insured, include information specifying when premiums will change.] DISCLOSURES [Boldface Type] Use this outline to compare benefits and premiums among policies. This outline shows benefits and premiums of policies sold for effective dates on or after [insert effective date] June 1, 2010. Policies sold for effective dates prior to [insert effective date] June 1, 2010 have different benefits and premiums. Plans E, H, I, and J are no longer available for sale. [This paragraph shall not appear after 12 month following the effective date of adoption of Sections 8.1 and 9.1 of this regulation June 1, 2011.].

READ YOUR POLICY VERY CAREFULLY [Boldface Type] This is only an outline describing your policy’s most important features. The policy is your insurance contract. You must read the policy itself to understand all of the rights and duties of both you and your insurance company.

RIGHT TO RETURN POLICY [Boldface Type] If you find that you are not satisfied with your policy, you may return it to [insert issuer’s address]. If you send the policy back to us within 30 days after you receive it, we will treat the policy as if it had never been issued and return all of your payments.

POLICY REPLACEMENT [Boldface Type] If you are replacing another health insurance policy, do NOT cancel it until you have actually received your new policy and are sure you want to keep it.

NOTICE [Boldface Type] This policy may not fully cover all of your medical costs. [for agents:] Neither [insert company’s name] nor its agents are connected with Medicare. [for direct response:] [insert company’s name] is not connected with Medicare. This outline of coverage does not give all the details of Medicare coverage. Contact your local Social Security Office or consult Medicare and You for more details. COMPLETE ANSWERS ARE VERY IMPORTANT [Boldface Type] When you fill out the application for the new policy, be sure to answer truthfully and completely all questions about your medical and health history. The company may cancel your policy and refuse to pay any claims if you leave out or falsify important medical information. [If the policy or certificate is guaranteed issue, this paragraph need not appear.] Review the application carefully before you sign it. Be certain that all information has been properly recorded.

[Include for each plan prominently identified in the cover page, a chart showing the services, Medicare payments, plan payments and insured payments for each plan, using the same language, in the same order, using uniform layout and format as shown in the charts below. No more than four plans may be shown on one chart. For purposes of illustration, charts for each plan are included in this regulation. An issuer may use additional benefit plan designations on these charts pursuant to Section 9.1D of this regulation.] [Include an explanation of any innovative benefits on the cover page and in the chart, in a manner approved by the Commissioner.] PLAN A: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanA-pg1'PART .jpg PLAN A: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR; PARTS A & B 702_4_20090601_AppendixB-PlanA-pg2'PART .jpg PLAN B: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanB-pg1'PART .jpg PLAN B: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR; PARTS A & B 702_4_20090601_AppendixB-PlanB-pg2'PART .jpg PLAN C: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanC-pg1'PART .jpg PLAN C: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR; PARTS A & B; OTHER BENEFITS—NOT COVERED BY MEDICARE 702_4_20090601_AppendixB-PlanC-pg2'PART .jpg PLAN D: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanD-pg1'PART .jpg PLAN D: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR 702_4_20090601_AppendixB-PlanD-pg2'PART .jpg PLAN F or HIGH DEDUCTIBLE PLAN F: MEDICARE (PART A) – HOSPITAL SERVICES – PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanF-pg1'PART .jpg PLAN F or HIGH DEDUCTIBLE PLAN F: MEDICARE (PART B) - MEDICAL SERVICES - PER CALENDAR YEAR 702_4_20090601_AppendixB-PlanF-pg2'PART .jpg PLAN G: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanG-pg1'PART .jpg PLAN G: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR 702_4_20090601_AppendixB-PlanG-pg2'PART .jpg PLAN K: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanK-pg1'PART .jpg PLAN K: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR 702_4_20090601_AppendixB-PlanK-p2'PART .jpg PLAN L: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanL-pg1'PART .jpg PLAN L: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR 702_4_20090601_AppendixB-PlanL-pg2'PART .jpg PLAN M: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanM-pg1'PART .jpg PLAN M: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR 702_4_20090601_AppendixB-PlanM-pg2'PART .jpg PLAN N: MEDICARE (PART A)—HOSPITAL SERVICES—PER BENEFIT PERIOD 702_4_20090601_AppendixB-PlanN-pg1'PART .jpg PLAN N: MEDICARE (PART B)—MEDICAL SERVICES—PER CALENDAR YEAR 702_4_20090601_AppendixB-PlanN-pg2'PART .jpg APPENDIX C NOTICE TO APPLICANT REGARDING REPLACEMENT OF MEDICARE SUPPLEMENT INSURANCE OR MEDICARE ADVANTAGE

APPENDIX D FORM FOR REPORTING MEDICARE SUPPLEMENT POLICIES APPENDIX E DISCLOSURE STATEMENTS Instructions for Use of the Disclosure Statements for Health Insurance Policies Sold to Medicare Beneficiaries that Duplicate Medicare 1. Section 1882 (d) of the federal Social Security Act [42 U.S.C. 1395ss] prohibits the sale of a health insurance policy (the term policy includes certificate) to Medicare beneficiaries that duplicates Medicare benefits unless it will pay benefits without regard to a beneficiary’s other health coverage and it includes the prescribed disclosure statement on or together with the application for the policy.

2. All types of health insurance policies that duplicate Medicare shall include one of the attached disclosure statements, according to the particular policy type involved, on the application or together with the application. The disclosure statement may not vary from the attached statements in terms of language or format (type size, type proportional spacing, bold character, line spacing, and usage of boxes around text).

3. State and federal law prohibits insurers from selling a Medicare supplement policy to a person that already has a Medicare supplement policy except as a replacement policy. 4. Property/casualty and life insurance policies are not considered health insurance. 5. Disability income policies are not considered to provide benefits that duplicate Medicare. 6. Long-term care insurance policies that coordinate with Medicare and other health insurance are not considered to provide benefits that duplicate Medicare. 7. The federal law does not preempt state laws that are more stringent than the federal requirements. 8. The federal law does not preempt existing state form filing requirements. 9. Section 1882 of the federal Social Security Act was amended in Subsection (d)(3)(A) to allow for alternative disclosure statements. The disclosure statements already in Appendix C remain. Carriers may use either disclosure statement with the requisite insurance product. However, carriers should use either the original disclosure statements or the alternative disclosure statements and not use both simultaneously.

Regulation 4-4-1 CONCERNING REQUIREMENTS FOR LONG-TERM CARE INSURANCE [Eff. 02/01/2009] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Policy Definitions Section 6 Policy Practices and Provisions Section 7 Unintentional Lapse Section 8 Required Disclosure Provisions Section 9 Required Disclosure of Rating Practices to Consumers Section 10 Initial Filing Requirements Section 11 Prohibition Against Post-Claims Underwriting Section 12 Minimum Standards for Home Health and Community Care Benefits in Long-Term Care Insurance Policies Section 13 Requirements for Application Forms and Replacement Coverage Section 14 Reporting Requirements Section 15 Licensing Section 16 Reserve Standards Section 17 Loss Ratio Section 18 Premium Rate Schedule Increases Section 19 Filing Requirement Section 20 Filing Requirements for Advertising Section 21 Standards for Marketing Section 22 Suitability Section 23 Prohibition Against Preexisting Conditions and Probationary Periods in Replacement Policies or Certificates Section 24 Standard Format Outline of Coverage Section 25 Requirement to Deliver Shopper’s Guide Section 26 Discretionary Powers of Commissioner Section 27 Availability of New Services or Providers Section 28 Right to Reduce Coverage and Lower Premiums Section 29 Nonforfeiture Benefit Requirement Section 30 Standards for Benefit Triggers Section 31 Additional Standards for Benefit Triggers for Qualified Long-Term Care Insurance Contracts Section 32 Filing of Long-Term Care Policy Forms and Rates Section 33 Incorporated Materials Section 34 Severability Section 35 Enforcement Section 36 Effective Date Section 37 History Appendix A Rescission Reporting Form Appendix B Personal Worksheet Appendix C Things You Should Know Before You buy Long-Term Care Insurance Appendix D Long-Term Care Insurance Suitability Letter Appendix E Claims Denial Reporting Form Appendix F Potential Rate Increase Disclosure Form Appendix G Replacement and Lapse Reporting Form Appendix H Notice To Applicant Regarding Replacement Of Individual Accident And Sickness Or Long- Term Care Insurance Appendix I Notice To Applicant Regarding Replacement Of Accident And Sickness Or Long-Term Care Insurance Appendix J Outline of Coverage Section 1 Authority This regulation is promulgated under the authority of § § 10-1-109(1), 10-7-113(3), 10-16-107(1), 10 19 106, 10-19-113.7 and 10-3-1110(1), Colorado Revised Statutes (C.R.S.). Section 2 Scope and Purpose The purpose of this regulation is to promote the public interest and the availability of long-term care insurance policies, to protect applicants for long-term care insurance, as defined, from unfair or deceptive sales or enrollment practices, to establish standards for long-term care insurance, to facilitate public understanding and comparison of long-term care insurance coverages, and to facilitate flexibility and innovation in the development of long-term care coverage. Section 3 Applicability The requirements of this regulation shall apply to long-term care policies delivered or issued for delivery in this state, on or after the effective date hereof. This regulation also applies to any acceleration of benefits provided by a life or annuity policy, unless otherwise specifically exempted in this regulation. Section 4 Definitions For the purposes of this regulation, the terms "long-term care insurance," "group long-term care insurance," "commissioner," "applicant," "policy" and "certificate" shall have the meanings set forth in § § 10-1-102 and 10-19-103, C.R.S. In addition, the following definitions apply: A. “Exceptional Increase” :

1. “Exceptional increase” means only those increases filed by an insurer as exceptional for which the commissioner determines the need for the premium rate increase is justified: a. Due to changes in laws or regulations applicable to long-term care coverage in this state; or b. Due to increased and unexpected utilization that affects the majority of insurers of similar products.

2. Except as provided in Section 18, exceptional increases are subject to the same requirements as other premium rate schedule increases.

3. The commissioner may request a review by an independent actuary or a professional actuarial body of the basis for a request that an increase be considered an exceptional increase. 4. The commissioner, in determining that the necessary basis for an exceptional increase exists, shall also determine any potential offsets to higher claims costs. B. “Incidental,” as used in Section 18(J), means that the value of the long-term care benefits provided is less than ten percent (10%) of the total value of the benefits provided over the life of the policy. These values shall be measured as of the date of issue. C. “Qualified actuary” means a member in good standing of the American Academy of Actuaries. D. “Qualified long-term care insurance” means an insurance policy that qualifies for favorable tax treatment.

E. “Similar policy forms” means all of the long-term care insurance policies and certificates issued by an insurer in the same long-term care benefit classification as the policy form being considered. Certificates of groups that meet the definition in §10-19-103(4)(a), C.R.S., are not considered similar to certificates or policies otherwise issued as long-term care insurance, but are similar to other comparable certificates with the same long-term care benefit classifications. For purposes of determining similar policy forms, long-term care benefit classifications are defined as follows: institutional long-term care benefits only, non-institutional long-term care benefits only, or comprehensive long-term care benefits.

Section 5 Policy Definitions No long-term care insurance policy delivered or issued for delivery in this state shall use the terms set forth below, unless the terms are defined in the policy and the definitions satisfy the following requirements:

A. “Activities of daily living” means at least bathing, continence, dressing, eating, toileting and transferring.

B. “Acute condition” means that the individual is medically unstable. Such an individual requires frequent monitoring by medical professionals, such as physicians and registered nurses, in order to maintain his or her health status.

C. “Adult day care” means a program for six (6) or more individuals, of social and health-related services provided during the day in a community group setting for the purpose of supporting frail, impaired elderly or other disabled adults who can benefit from care in a group setting outside the home. D. “Bathing” means washing oneself by sponge bath or in either a tub or shower, including the task of getting into or out of the tub or shower.

E. “Cognitive impairment” means a deficiency in a person’s short or long-term memory, orientation as to person, place and time, deductive or abstract reasoning, or judgment as it relates to safety awareness.

F. “Company” or “Carrier” means an insurance company, non-profit hospital, medical-surgical and health service corporation, health maintenance organization or fraternal benefit society, which is authorized by the Commissioner to transact long term care insurance in Colorado. G. “Continence” means the ability to maintain control of bowel and bladder function; or, when unable to maintain control of bowel or bladder function, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag).

H. “Dressing” means putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.

I. “Eating” means feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously.

J. “Hands-on assistance” means physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activity of daily living. K. “Home health care services” means medical and nonmedical services provided to ill, disabled or infirm persons in their residences. Such services may include homemaker services, assistance with activities of daily living, and respite care services. L. “Medicare” means “The Health Insurance for the Aged Act, Title XVIII of the Social Security Amendments of 1965 as Then Constituted or Later Amended,” or “Title I, Part I of Public Law 89- 97, as Enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the Health Insurance for the Aged Act, as then constituted and any later amendments or substitutes thereof,” or words of similar import.

M. “Mental or nervous disorder” shall not be defined to include more than neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder. N. “Personal care” means the provision of hands-on services to assist an individual with activities of daily living.

O. “Skilled nursing care,” “personal care,” “home care” “specialized care” , “assisted living care” and other services shall be defined in relation to the level of skill required, the nature of the care and the setting in which care must be delivered.

P. “Toileting” means getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene.

Q. “Transferring” means moving into or out of a bed, chair or wheelchair. R. All providers of services, including but not limited to “skilled nursing facility,” “extended care facility,” “convalescent nursing home,” “personal care facility,” “specialized care provider,” “assisted living facility,” and “home care agency” , shall be defined in relation to the services and facilities required to be available and the licensure, certification, registration or degree status of those providing or supervising the services. When the definition requires that the provider be appropriately licensed, certified or registered, it shall also state what requirements a provider must meet in lieu of licensure, certification or registration when the state in which the service is to be furnished does not require a provider of these services to be licensed, certified or registered, or when the state licenses, certifies or registers the provider of services under another name. Section 6 Policy Practices and Provisions A. Renewability. The terms “guaranteed renewable” and “noncancellable” shall not be used in any individual long-term care insurance policy without further explanatory language in accordance with the disclosure requirements of Section 9 of this regulation. 1. A policy issued to an individual shall not contain renewal provisions other than “guaranteed renewable” or “noncancellable.”

2. The term “guaranteed renewable” may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums and when the insurer has no unilateral right to make any change in any provision of the policy or rider while the insurance is in force, and cannot decline to renew, except that rates may be revised by the insurer on a class basis.

3. The term “noncancellable” may be used only when the insured has the right to continue the long-term care insurance in force by the timely payment of premiums during which period the insurer has no right to unilaterally make any change in any provision of the insurance or in the premium rate.

4. The term “level premium” may only be used when the insurer does not have the right to change the premium.

5. In addition to the other requirements of this subsection, a qualified long-term care insurance contract shall be guaranteed renewable, within the meaning of Section 7702B(b)(1)(C) of the Internal Revenue Code of 1986, as amended.

B. Limitations and Exclusions. A policy may not be delivered or issued for delivery in this state as long- term care insurance if the policy limits or excludes coverage by type of illness, treatment, medical condition or accident, except as follows:

1. Preexisting conditions or diseases;

2. Mental or nervous disorders; however, this shall not permit exclusion or limitation of benefits on the basis of Alzheimer’s Disease, senile dementia, other organic brain syndromes or other types of senility;

3. Alcoholism and drug addiction;

4. Illness, treatment or medical condition arising out of: a. War or act of war (whether declared or undeclared);

b. Participation in a felony, riot or insurrection;

c. Service in the armed forces or units auxiliary thereto; d. Suicide, attempted suicide or intentionally self-inflicted injury while insane; or e. Aviation (this exclusion applies only to non-fare-paying passengers). 5. Treatment provided in a government facility (unless otherwise required by law), services for which benefits are available under Medicare or other governmental programs (except Medicaid), any state or federal workers’ compensation, employer’s liability or occupational disease law, or any motor vehicle no-fault law, services provided by a member of the covered person’s immediate family and services for which no charge is normally made in the absence of insurance;

6. Expenses for services or items available or paid under another long-term care insurance or health insurance policy;

7. In the case of a qualified long-term care insurance contract, expenses for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount.

8.

a. This subsection is not intended to prohibit exclusions and limitations by type of provider. However, no long-term care issuer may deny a claim because services are provided in a state other than the state of policy issued under the following conditions:

(1) When the state other than the state of policy issue does not have the provider licensing, certification or registration required in the policy, but where the provider satisfies the policy requirements outlined for providers in lieu of licensure, certification or registration; or (2) When the state other than the state of policy issue licenses, certifies or registers the provider under another name.

b. For purposes of this paragraph, “state of policy issue” means the state in which the individual policy or certificate was originally issued. 9. This subsection is not intended to prohibit territorial limitations. C. Extension of Benefits. Termination of long-term care insurance shall be without prejudice to any benefits payable for institutionalization if the institutionalization began while the long-term care insurance was in force and continues without interruption after termination. The extension of benefits beyond the period the long-term care insurance was in force may be limited to the duration of the benefit period, if any, or to payment of the maximum benefits and may be subject to any policy waiting period, and all other applicable provisions of the policy. D. Continuation or Conversion.

1. Group long-term care insurance issued in this state on or after the effective date of this section shall provide covered individuals with a basis for continuation or conversion of coverage. 2. For the purposes of this section, “a basis for continuation of coverage” means a policy provision that maintains coverage under the existing group policy when the coverage would otherwise terminate and which is subject only to the continued timely payment of premium when due. Group policies that restrict provision of benefits and services from, or contain incentives to use, certain providers or facilities may provide continuation benefits that are substantially equivalent to the benefits of the existing group policy. The commissioner shall make a determination as to the substantial equivalency of benefits, and in doing so, shall take into consideration the differences between managed care and non-managed care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity. 3. For the purposes of this section, “a basis for conversion of coverage” means a policy provision that an individual whose coverage under the group policy would otherwise terminate or has been terminated for any reason, including discontinuance of the group policy in its entirety or with respect to an insured class, and who has been continuously insured under the group policy (and any group policy which it replaced), for at least six months immediately prior to termination, shall be entitled to the issuance of a converted policy by the insurer under whose group policy he or she is covered, without evidence of insurability.

4. For the purposes of this section, “converted policy” means an individual policy of long-term care insurance providing benefits identical to or benefits determined by the commissioner to be substantially equivalent to or in excess of those provided under the group policy from which conversion is made. Where the group policy from which conversion is made restricts provision of benefits and services from, or contains incentives to use, certain providers or facilities, the commissioner, in making a determination as to the substantial equivalency of benefits, shall take into consideration the differences between managed care and non-managed care plans, including, but not limited to, provider system arrangements, service availability, benefit levels and administrative complexity. 5. Written application for the converted policy shall be made and the first premium due, if any, shall be paid as directed by the insurer not later than thirty-one (31) days after termination of coverage under the group policy. The converted policy shall be issued effective on the day following the termination of coverage under the group policy, and shall be renewable annually.

6. Unless the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured’s age at inception of coverage under the group policy from which conversion is made. Where the group policy from which conversion is made replaced previous group coverage, the premium for the converted policy shall be calculated on the basis of the insured’s age at inception of coverage under the group policy replaced.

7. Continuation of coverage or issuance of a converted policy shall be mandatory, except where: a. Termination of group coverage resulted from an individual’s failure to make any required payment of premium or contribution when due; or b. The terminating coverage is replaced not later than thirty-one (31) days after termination, by group coverage effective on the day following the termination of coverage:

(1) Providing benefits identical to or benefits determined by the commissioner to be substantially equivalent to or in excess of those provided by the terminating coverage; and (2) The premium for which is calculated in a manner consistent with the requirements of Paragraph 6 of this section.

8. Notwithstanding any other provision of this section, a converted policy issued to an individual who at the time of conversion is covered by another long-term care insurance policy that provides benefits on the basis of incurred expenses, may contain a provision that results in a reduction of benefits payable if the benefits provided under the additional coverage, together with the full benefits provided by the converted policy, would result in payment of more than 100 percent of incurred expenses. The provision shall only be included in the converted policy if the converted policy also provides for a premium decrease or refund which reflects the reduction in benefits payable.

9. The converted policy may provide that the benefits payable under the converted policy, together with the benefits payable under the group policy from which conversion is made, shall not exceed those that would have been payable had the individual’s coverage under the group policy remained in force and effect.

10. Notwithstanding any other provision of this section, an insured individual whose eligibility for group long-term care coverage is based upon his or her relationship to another person shall be entitled to continuation of coverage under the group policy upon termination of the qualifying relationship by death or dissolution of marriage. 11. For the purposes of this section a “managed-care plan” is a health care or assisted living arrangement designed to coordinate patient care or control costs through utilization review, case management or use of specific provider networks. E. Discontinuance and Replacement If a group long-term care policy is replaced by another group long-term care policy issued to the same policyholder, the succeeding insurer shall offer coverage to all persons covered under the previous group policy on its date of termination. Coverage provided or offered to individuals by the insurer and premiums charged to persons under the new group policy: 1. Shall not result in an exclusion for preexisting conditions that would have been covered under the group policy being replaced; and 2. Shall not vary or otherwise depend on the individual’s health or disability status, claim experience or use of long-term care services.

F.

1. The premium charged to an insured shall not increase due to either: a. The increasing age of the insured at ages beyond sixty-five (65); or b. The duration the insured has been covered under the policy. 2. The purchase of additional coverage shall not be considered a premium rate increase, but for purposes of the calculation required under Section 29, the portion of the premium attributable to the additional coverage shall be added to and considered part of the initial annual premium.

3. A reduction in benefits shall not be considered a premium change, but for purposes of the calculation required under Section 29, the initial annual premium shall be based on the reduced benefits.

G. Electronic Enrollment for Group Policies 1. In the case of a group defined in §10-19-103(4)(a), C.R.S., any requirement that a signature of an insured be obtained by an agent or insurer shall be deemed satisfied if: a. The consent is obtained by telephonic or electronic enrollment by the group policyholder or insurer. A verification of enrollment information shall be provided to the enrollee;

b. The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure the accuracy, retention and prompt retrieval of records; and c. The telephonic or electronic enrollment provides necessary and reasonable safeguards to assure that the confidentiality of individually identifiable information and “privileged information” as defined by §24-71.3-101, C.R.S., et. seq., is maintained.

2. The insurer shall make available, upon request of the commissioner, records that will demonstrate the insurer’s ability to confirm enrollment and coverage amounts. Section 7 Unintentional Lapse Each insurer offering long-term care insurance shall, as a protection against unintentional lapse, comply with the following:

A.

1. Notice before lapse or termination. No individual long-term care policy or certificate shall be issued until the insurer has received from the applicant either a written designation of at least one person, in addition to the applicant, who is to receive notice of lapse or termination of the policy or certificate for nonpayment of premium, or a written waiver dated and signed by the applicant electing not to designate additional persons to receive notice. The applicant has the right to designate at least one person who is to receive the notice of termination, in addition to the insured. Designation shall not constitute acceptance of any liability on the third party for services provided to the insured. The form used for the written designation must provide space clearly designated for listing at least one person. The designation shall include each person’s full name and home address . In the case of an applicant who elects not to designate an additional person, the waiver shall state: “Protection against unintended lapse. I understand that I have the right to designate at least one person other than myself to receive notice of lapse or termination of this long-term care insurance policy for nonpayment of premium. I understand that notice will not be given until thirty (30) days after a premium is due and unpaid. I elect NOT to designate a person to receive this notice.” The insurer shall notify the insured of the right to change this written designation, no less often than once every two (2) years. 2. When the policyholder or certificateholder pays premium for a long-term care insurance policy or certificate through a payroll or pension deduction plan, the requirements contained in Subsection A(1) need not be met until sixty (60) days after the policyholder or certificateholder is no longer on such a payment plan. The application or enrollment form for such policies or certificates shall clearly indicate the payment plan selected by the applicant.

3. Lapse or termination for nonpayment of premium. No individual long-term care policy or certificate shall lapse or be terminated for nonpayment of premium unless the insurer, at least thirty (30) days before the effective date of the lapse or termination, has given notice to the insured and to those persons designated pursuant to Subsection A(1) of this section, at the address provided by the insured for purposes of receiving notice of lapse or termination. Notice shall be given by first class United States mail, postage prepaid; and notice may not be given until thirty (30) days after a premium is due and unpaid. Notice shall be deemed to have been given as of five (5) days after the date of mailing. B. Reinstatement. In addition to the requirement in Subsection A of this section, a long-term care insurance policy or certificate shall include a provision that provides for reinstatement of coverage, in the event of lapse if the insurer is provided proof that the policyholder or certificateholder was cognitively impaired or had a loss of functional capacity before the grace period contained in the policy expired. This option shall be available to the insured if requested within five (5) months after termination and shall allow for the collection of past due premium, where appropriate. The standard of proof of cognitive impairment or loss of functional capacity shall not be more stringent than the benefit eligibility criteria on cognitive impairment or the loss of functional capacity contained in the policy and certificate. Section 8 Required Disclosure Provisions A. Renewability. Individual long-term care insurance policies shall contain a renewability provision. 1. The provision shall be appropriately captioned, shall appear on the first page of the policy, and shall clearly state that the coverage is guaranteed renewable or noncancellable. This provision shall not apply to policies that do not contain a renewability provision, and under which the right to nonrenew is reserved solely to the policyholder. 2. A long-term care insurance policy or certificate, other than one where the insurer does not have the right to change the premium, shall include a statement that premium rates may change.

B. Riders and Endorsements. Except for riders or endorsements by which the insurer effectuates a request made in writing by the insured under an individual long-term care insurance policy, all riders or endorsements added to an individual long-term care insurance policy after date of issue or at reinstatement or renewal that reduce or eliminate benefits or coverage in the policy shall require signed acceptance by the individual insured. After the date of policy issue, any rider or endorsement which increases benefits or coverage with a concomitant increase in premium during the policy term must be agreed to in writing signed by the insured, except if the increased benefits or coverage are required by law. Where a separate additional premium is charged for benefits provided in connection with riders or endorsements, the premium charge shall be set forth in the policy, rider or endorsement.

C. Payment of Benefits. A long-term care insurance policy that provides for the payment of benefits based on standards described as “usual and customary,” “reasonable and customary” or words of similar import shall include a definition of these terms and an explanation of the terms in its accompanying Outline of Coverage.

D. Limitations. If a long-term care insurance policy or certificate contains any limitations with respect to preexisting conditions, the limitations shall appear as a separate paragraph of the policy or certificate and shall be labeled as “Preexisting Condition Limitations.” E. Other Limitations or Conditions on Eligibility for Benefits. A long-term care insurance policy or certificate shall set forth a description of the limitations or conditions, including any required number of days of confinement, in a separate paragraph of the policy or certificate and shall label such paragraph “Limitations or Conditions on Eligibility for Benefits.” F. Disclosure of Tax Consequences. With regard to life insurance policies that provide an accelerated benefit for long-term care, a disclosure statement is required at the time of application for the policy or rider and at the time the accelerated benefit payment request is submitted that receipt of these accelerated benefits may be taxable, and that assistance should be sought from a personal tax advisor. The disclosure statement shall be prominently displayed on the first page of the policy or rider and any other related documents. This subsection shall not apply to qualified long- term care insurance contracts.

G. Benefit Triggers. Activities of daily living and cognitive impairment shall be used to measure an insured’s need for long-term care and shall be described in the policy or certificate in a separate paragraph and shall be labeled “Eligibility for the Payment of Benefits.” Any additional benefit triggers shall also be explained in this section. If these triggers differ for different benefits, explanation of the trigger shall accompany each benefit description. If an attending physician or other specified person must certify a certain level of functional dependency in order to be eligible for benefits, this too shall be specified.

H. A qualified long-term care insurance contract shall include a disclosure statement in the policy and in the Outline of Coverage that the policy is intended to be a qualified long-term care insurance contract under Section 7702B(b) of the Internal Revenue Code of 1986, as amended. I. A nonqualified long-term care insurance contract shall include a disclosure statement in the policy and in the Outline of Coverage that the policy is not intended to be a qualified long-term care insurance contract.

J. At the time of policy delivery, a policy summary shall be delivered for an individual life insurance policy that provides long-term care benefits within the policy or by rider. In the case of direct response solicitations, the insurer shall deliver the policy summary upon the applicant’s request, but regardless of request shall make delivery no later than at the time of policy delivery. In addition to complying with all applicable requirements, the summary shall also include: 1. An explanation of how the long-term care benefit interacts with other components of the policy, including deductions from death benefits;

2. An illustration of the amount of benefits, the length of benefit, and the guaranteed lifetime benefits if any, for each covered person;

3. Any exclusions, reductions and limitations on benefits of long-term care; 4. If applicable to the policy type, the summary shall also include: a. A disclosure of the effects of exercising other rights under the policy; b. A disclosure of the guarantees related to long-term care costs of insurance charges; and c. Current and projected maximum lifetime benefits; and 5. The provisions of the policy summary listed above may be incorporated into a basic illustration required to be delivered in accordance with Colorado Regulation 4-1-8. K. Any time a long-term care benefit, funded through a life insurance vehicle by the acceleration of the death benefit, is in the benefit payment status, a monthly report shall be provided to the policyholder. The report shall include:

1. Any long-term care benefits paid out during the month; 2. An explanation of any changes in the policy, e.g. death benefits or cash values, due to long- term care benefits being paid out; and 3. The amount of long-term care benefits existing or remaining. L. If a claim under a long-term care insurance contract is denied, the issuer, shall, within sixty (60) days of the date of a written request by the policyholder or certificateholder, or a representative thereof: 1. Provide a written explanation of the reasons for the denial; and 2. Make available all information directly related to the denial. M. A certificate issued pursuant to a group long-term care insurance policy that is delivered or issued for delivery in this state shall include:

1. A description of the principal benefits and coverage provided in the policy; 2. A statement of the principal exclusions, reductions and limitations contained in the policy; and 3. A statement that the group master policy determines contractual provisions. N. If an application for a long-term care insurance contract or certificate is approved, the issuer shall deliver the contract or certificate of insurance to the applicant no later than thirty (30) days after the date of approval.

Section 9 Required Disclosure of Rating Practices to Consumers A. This section shall apply as follows:

1. Except as provided in Paragraph 2, this section applies to any long-term care policy or certificate issued in this state on or after July 1, 2007. 2. For certificates issued on or after the effective date of this amended regulation under a group long-term care insurance policy as defined in §10-19-103(4)(a), C.R.S., which policy was in force at the time this amended regulation became effective, the provisions of this section shall apply on the policy anniversary following January 1, 2008. B. Other than policies for which no applicable premium rate or rate schedule increases can be made, insurers shall provide all of the information listed in this subsection to the applicant at the time of application or enrollment, unless the method of application does not allow for delivery at that time. In such a case, an insurer shall provide all of the information listed in this subsection to the applicant no later than at the time of delivery of the policy or certificate. 1. A statement that the policy may be subject to rate increases in the future; 2. An explanation of potential future premium rate revisions, and the policyholder’s or certificateholder’s option in the event of a premium rate revision; 3. The premium rate or rate schedules applicable to the applicant that will be in effect until a request is made for an increase;

4. A general explanation for applying premium rate or rate schedule adjustments that shall include:

a. A description of when premium rate or rate schedule adjustments will be effective (e.g., next anniversary date, next billing date, etc.); and b. The right to a revised premium rate or rate schedule as provided in Paragraph 3 if the premium rate or rate schedule is changed;

5.

a. Information regarding each premium rate increase on this policy form or similar policy forms over the past ten (10) years for this state or any other state that, at a minimum, identifies:

(1) The policy forms for which premium rates have been increased; (2) The calendar years when the form was available for purchase; and (3) The amount or percent of each increase. The percentage may be expressed as a percentage of the premium rate prior to the increase, and may also be expressed as minimum and maximum percentages if the rate increase is variable by rating characteristics.

b. The insurer may, in a fair manner, provide additional explanatory information related to the rate increases.

c. An insurer shall have the right to exclude from the disclosure premium rate increases that only apply to blocks of business acquired from other nonaffiliated insurers or the long-term care policies acquired from other nonaffiliated insurers when those increases occurred prior to the acquisition.

d. If an acquiring insurer files for a rate increase on a long-term care policy form acquired from nonaffiliated insurers or a block of policy forms acquired from nonaffiliated insurers on or before the later of the effective date of this section or the end of a twenty-four-month period following the acquisition of the block or policies, the acquiring insurer may exclude that rate increase from the disclosure. However, the nonaffiliated selling company shall include the disclosure of that rate increase in accordance with Subparagraph (a) of this paragraph.

e. If the acquiring insurer in Subparagraph (d) above files for a subsequent rate increase, even within the twenty-four-month period, on the same policy form acquired from nonaffiliated insurers or block of policy forms acquired from nonaffiliated insurers referenced in Subparagraph (d), the acquiring insurer shall make all disclosures required by Paragraph 5, including disclosure of the earlier rate increase referenced in Subparagraph (d).

C. An applicant shall sign an acknowledgement at the time of application, unless the method of application does not allow for signature at that time, that the insurer made the disclosure required under Subsection B (1) through (5). If due to the method of application the applicant cannot sign an acknowledgement at the time of application, the applicant shall sign no later than at the time of delivery of the policy or certificate.

D. An insurer shall use the forms in Appendices B and F to comply with the requirements of Subsections B and C of this section.

E. An insurer shall provide notice of an upcoming premium rate schedule increase to all policyholders or certificateholders, if applicable, at least forty-five (45) days prior to the implementation of the premium rate schedule increase by the insurer. The notice shall include the information required by Subsection B when the rate increase is implemented.

Section 10 Initial Filing Requirements A. This section applies to any long-term care policy issued in this state on or after June 30, 2007. B. An insurer shall provide the information listed in this subsection to the commissioner at least sixty (60) days prior to making a long-term care insurance form available for sale. Long-term care insurance rates are prior approval for rate increases effective on or after January 1, 2009 (see §10-16- 107(1), C.R.S.).

1. A copy of the disclosure documents required in Section 9; and 2. An actuarial certification consisting of at least the following: a. A statement that the initial premium rate schedule is sufficient to cover anticipated costs under moderately adverse experience and that the premium rate schedule is reasonably expected to be sustainable over the life of the form with no future premium increases anticipated;

b. A statement that the policy design and coverage provided have been reviewed and taken into consideration;

c. A statement that the underwriting and claims adjudication processes have been reviewed and taken into consideration;

d. A complete description of the basis for contract reserves that are anticipated to be held under the form, to include:

(1) Sufficient detail or sample calculations provided so as to have a complete depiction of the reserve amounts to be held;

(2) A statement that the assumptions used for reserves contain reasonable margins for adverse experience;

(3) A statement that the net valuation premium for renewal years does not increase (except for attained-age rating where permitted); and (4) A statement that the difference between the gross premium and the net valuation premium for renewal years is sufficient to cover expected renewal expenses; or if such a statement cannot be made, a complete description of the situations where this does not occur; (a) An aggregate distribution of anticipated issues may be used as long as the underlying gross premiums maintain a reasonably consistent relationship; and (b) If the gross premiums for certain age groups appear to be inconsistent with this requirement, the commissioner may request a demonstration under Subsection C based on a standard age distribution.

e.

(1) A statement that the premium rate schedule is not less than the premium rate schedule for existing similar policy forms also available from the insurer except for reasonable differences attributable to benefits; or (2) A comparison of the premium schedules for similar policy forms that are currently available from the insurer with an explanation of the differences. C.

1. The commissioner may request an actuarial demonstration that benefits are reasonable in relation to premiums. The actuarial demonstration shall include either premium and claim experience on similar policy forms, adjusted for any premium or benefit differences, relevant and credible data from other studies, or both. 2. In the event the commissioner asks for additional information under this provision, the period in Subsection B does not include the period during which the insurer is preparing the requested information.

D. Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums provided the expected lifetime loss ratio is at least sixty percent (60%). Section 11 Prohibition Against Post-Claims Underwriting A. All applications for long-term care insurance policies or certificates except those that are guaranteed issue shall contain clear and unambiguous questions designed to ascertain the health condition of the applicant.

B.

1. If an application for long-term care insurance contains a question that asks whether the applicant has had medication prescribed by a physician, it must also ask the applicant to list the medication that has been prescribed.

2. If the medications listed in the application were known by the insurer, or should have been known at the time of application, to be directly related to a medical condition for which coverage would otherwise be denied, then the policy or certificate shall not be rescinded for that condition.

C. Except for policies or certificates, which are guaranteed issue: 1. The following language shall be set out conspicuously and in close conjunction with the applicant’s signature block on an application for a long-term care insurance policy or certificate:

Caution: If your answers on this application are incorrect or untrue, [company] has the right to deny benefits or rescind your policy.

2. The following language, or language substantially similar to the following, shall be set out conspicuously on the long-term care insurance policy or certificate at the time of delivery: Caution: The issuance of this long-term care insurance [policy] [certificate] is based upon your responses to the questions on your application. A copy of your [application] [enrollment form] [is enclosed] [was retained by you when you applied]. If your answers are incorrect or untrue, the company has the right to deny benefits or rescind your policy. The best time to clear up any questions is now, before a claim arises! If, for any reason, any of your answers are incorrect, contact the company at this address: [insert address] 3. Prior to issuance of a long-term care policy or certificate to an applicant age eighty (80) or older, the insurer shall obtain one of the following:

a. A report of a physical examination;

b. An assessment of functional capacity;

c. An attending physician’s statement; or d. Copies of medical records.

D. A copy of the completed application or enrollment form (whichever is applicable) shall be delivered to the insured no later than at the time of delivery of the policy or certificate unless it was retained by the applicant at the time of application.

E. Every insurer or other entity selling or issuing long-term care insurance benefits shall maintain a record of all policy or certificate rescissions, both state and countrywide, except those that the insured voluntarily effectuated and shall annually furnish this information to the insurance commissioner in the format prescribed by the National Association of Insurance Commissioners in Appendix A.

Section 12 Minimum Standards for Home Health and Community Care Benefits in Long-Term Care Insurance Policies A. A long-term care insurance policy or certificate shall not, if it provides benefits for home health care or community care services, limit or exclude benefits:

1. By requiring that the insured or claimant would need care in a skilled nursing facility if home health care services were not provided;

2. By requiring that the insured or claimant first or simultaneously receive nursing or therapeutic services, or both, in a home, community or institutional setting before home health care services are covered;

3. By limiting eligible services to services provided by registered nurses or licensed practical nurses;

4. By requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide, or other licensed or certified home care worker acting within the scope of his or her licensure or certification; 5. By excluding coverage for personal care services provided by a home health aide; 6. By requiring that the provision of home health care services be at a level of certification or licensure greater than that required by the eligible service; 7. By requiring that the insured or claimant have an acute condition before home health care services are covered;

8. By limiting benefits to services provided by Medicare-certified agencies or providers; or 9. By excluding coverage for adult day care services.

B. A long-term care insurance policy or certificate, if it provides for home health or community care services, shall provide total home health or community care coverage that is a dollar amount equivalent to at least one-half of one year’s coverage available for nursing home benefits under the policy or certificate, at the time covered home health or community care services are being received. This requirement shall not apply to policies or certificates issued to residents of continuing care retirement communities.

C. Home health care coverage may be applied to the non-home health care benefits provided in the policy or certificate when determining maximum coverage under the terms of the policy or certificate.

Section 13 Requirements for Application Forms and Replacement Coverage A. Application forms shall include the following questions designed to elicit information as to whether, as of the date of the application, the applicant has another long-term care insurance policy or certificate in force or whether a long-term care policy or certificate is intended to replace any other accident and sickness or long-term care policy or certificate presently in force. A supplementary application or other form to be signed by the applicant and agent, except where the coverage is sold without an agent, containing the questions may be used. With regard to a replacement policy issued to a group defined by §10-19-103 (4)(a), C.R.S., the following questions may be modified only to the extent necessary to elicit information about health or long-term care insurance policies other than the group policy being replaced, provided that the certificateholder has been notified of the replacement.

1. Do you have another long-term care insurance policy or certificate in force (including health care service contract, health maintenance organization contract)? 2. Did you have another long-term care insurance policy or certificate in force during the last twelve (12) months? a. If so, with which company? b. If that policy lapsed, when did it lapse? 3. Are you covered by Medicaid? 4. Do you intend to replace any of your medical or health insurance coverage with this policy [certificate]? B. Agents shall list any other health insurance policies they have sold to the applicant. 1. List policies sold that are still in force.

2. List policies sold in the past five (5) years that are no longer in force. C. Solicitations Other than Direct Response. Upon determining that a sale will involve replacement, an insurer, other than an insurer using direct response solicitation methods, or its agent, shall furnish the applicant, prior to issuance or delivery of the individual long-term care insurance policy, a notice regarding replacement of accident and sickness or long-term care coverage. One copy of the notice shall be retained by the applicant and an additional copy signed by the applicant shall be retained by the insurer. The required notice shall be provided in the manner set forth in Appendix H D. Direct Response Solicitations. Insurers using direct response solicitation methods shall deliver a notice regarding replacement of accident and sickness or long-term care coverage to the applicant upon issuance of the policy. The required notice shall be provided in the manner set forth in Appendix I.

E. Where replacement is intended, the replacing insurer shall notify, in writing, the existing insurer of the proposed replacement. The existing policy shall be identified by the insurer, name of the insured and policy number or address including zip code. Notice shall be made within five (5) working days from the date the application is received by the insurer or the date the policy is issued, whichever is sooner.

F. Life Insurance policies that accelerate benefits for long-term care shall comply with this section if the policy being replaced is a long-term care insurance policy. If the policy being replaced is a life insurance policy, the insurer shall comply with the replacement requirements of Colorado Insurance Regulation 4-1-4. If a life insurance policy that accelerates benefits for long-term care is replaced by another such policy, the replacing insurer shall comply with both the long-term care and the life insurance replacement requirements.

Section 14 Reporting Requirements A. Every insurer shall maintain records for each agent of that agent’s amount of replacement sales as a percent of the agent’s total annual sales and the amount of lapses of long-term care insurance policies sold by the agent as a percent of the agent’s total annual sales. B. Every insurer shall report annually by June 30 the ten percent (10%) of its agents with the greatest percentages of lapses and replacements as measured by Subsection A above. (Appendix G) C. Reported replacement and lapse rates do not alone constitute a violation of insurance laws or necessarily imply wrongdoing. The reports are for the purpose of reviewing more closely agent activities regarding the sale of long-term care insurance. D. Every insurer shall report annually by June 30 the number of lapsed policies as a percent of its total annual sales and as a percent of its total number of policies in force as of the end of the preceding calendar year. (Appendix G)

E. Every insurer shall report annually by June 30 the number of replacement policies sold as a percent of its total annual sales and as a percent of its total number of policies in force as of the preceding calendar year. (Appendix G)

F. Every insurer shall report annually by June 30, for qualified long-term care insurance contracts, the number of claims denied for each class of business, expressed as a percentage of claims denied. (Appendix E)

G. For purposes of this section:

1. “Policy” means only long-term care insurance;;

2. “Claim” (Subject to Paragraph 3), means a request for payment of benefits under an in force policy regardless of whether the benefit claimed is covered under the policy or any terms or conditions of the policy have been met;

3. “Denied” means the insurer refuses to pay a claim for any reason other than for claims not paid for failure to meet the waiting period or because of an applicable preexisting condition; and 4. “Report” means on a statewide basis.

H. Reports required under this section shall be filed with the commissioner. Section 15 Licensing A producer is not authorized to sell, solicit or negotiate with respect to long-term care insurance except as authorized by §10-2-103(6), C.R.S. However, a life producer is not required to be a licensed health producer in order to sell a life product that contains an acceleration of benefit rider that complies with §10-7-113, C.R.S.

Section 16 Reserve Standards A. When long-term care benefits are provided through the acceleration of benefits under group or individual life policies or riders to such policies, policy reserves for the benefits shall be determined in accordance with Part 3 of Article 7 of Title 10, C.R.S. Claim reserves shall also be established in the case when the policy or rider is in claim status. Reserves for policies and riders subject to this subsection should be based on the multiple decrement models utilizing all relevant decrements except for voluntary termination rates. Single decrement approximations are acceptable if the calculation produces essentially similar reserves, if the reserve is clearly more conservative, or if the reserve is immaterial. The calculations may take into account the reduction in life insurance benefits due to the payment of long-term care benefits. However, in no event shall the reserves for the long-term care benefit and the life insurance benefit be less than the reserves for the life insurance benefit assuming no long-term care benefit.

In the development and calculation of reserves for policies and riders subject to this subsection, due regard shall be given to the applicable policy provisions, marketing methods, administrative procedures and all other considerations which have an impact on projected claim costs, including, but not limited to, the following:

1. Definition of insured events;

2. Covered long-term care facilities;

3. Existence of home convalescence care coverage;

4. Definition of facilities;

5. Existence or absence of barriers to eligibility;

6. Premium waiver provision;

7. Renewability;

8. Ability to raise premiums;

9. Marketing method;

10. Underwriting procedures;

11. Claims adjustment procedures;

12. Waiting period;

13. Maximum benefit;

14. Availability of eligible facilities;

15. Margins in claim costs;

16. Optional nature of benefit;

17. Delay in eligibility for benefit;

18. Inflation protection provisions; and 19. Guaranteed insurability option.

Any applicable valuation morbidity table shall be certified as appropriate as a statutory valuation table by a member of the American Academy of Actuaries. B. When long-term care benefits are provided other than as in Subsection A above, reserves shall be determined in accordance with Colorado Insurance Regulation 3-1-9. Section 17 Loss Ratio A. This section shall apply to all long-term care insurance policies or certificates except those covered under Sections 10 and 18.

B. Benefits under long-term care insurance policies shall be deemed reasonable in relation to premiums provided the expected loss ratio is at least sixty percent (60%), calculated in a manner which provides for adequate reserving of the long-term care insurance risk. In evaluating the expected loss ratio, due consideration shall be given to all relevant factors, including: 1. Statistical credibility of incurred claims experience and earned premiums; 2. The period for which rates are computed to provide coverage; 3. Experienced and projected trends;

4. Concentration of experience within early policy duration; 5. Expected claim fluctuation;

6. Experience refunds, adjustments or dividends;

7. Renewability features;

8. All appropriate expense factors;

9. Interest;

10. Experimental nature of the coverage;

11. Policy reserves;

12. Mix of business by risk classification; and 13. Product features such as long elimination periods, high deductibles and high maximum limits. C. Subsection B shall not apply to life insurance policies that accelerate benefits for long-term care. A life insurance policy that funds long-term care benefits entirely by accelerating the death benefit is considered to provide reasonable benefits in relation to premiums paid, if the policy complies with all of the following provisions:

1. The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy; 2. The portion of the policy that provides life insurance benefits meets the nonforfeiture requirements of Part 3 of Article 7 of Title 10, C.R.S.; 3. The policy meets the disclosure requirements of Sections 8 of this regulation; 4. Any policy illustration that meets the applicable requirements of Colorado Insurance Regulation 4-1-8, Concerning the Disclosure Requirements for Life Illustrations; and 5. An actuarial memorandum is filed with the insurance department that includes: a. A description of the basis on which the long-term care rates were determined; b. A description of the basis for the reserves;

c. A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

d. A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

e. A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

f. The estimated average annual premium per policy and the average issue age; g. A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and h. A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying life insurance policy, both for active lives and those in long-term care claim status. Section 18 Premium Rate Schedule Increases A. This section shall apply as follows:

1. Except as provided in Paragraph 2 of this subsection, this section applies to any long-term care policy or certificate issued in this state on or after July 1, 2007. 2. For certificates issued on or after the effective date of this amended regulation under a group long-term care insurance policy as defined in §10-19-103 (4)(a), C.R.S., which policy was in force at the time this amended regulation became effective, the provisions of this section shall apply on the policy anniversary following January 1, 2008. B. An insurer shall request approval of a premium rate schedule increase, including an exceptional increase, to the commissioner at least sixty (60) days prior to the proposed implementation of a rate increase and shall include:

1. Information required by Section 9;

2. Certification by a qualified actuary that:

a. If the requested premium rate schedule increase is implemented and the underlying assumptions, which reflect moderately adverse conditions, are realized, no further premium rate schedule increases are anticipated; b. The premium rate filing is in compliance with the provisions of this section; 3. An actuarial memorandum justifying the rate schedule change request that includes: a. Lifetime projections of earned premiums and incurred claims based on the filed premium rate schedule increase; and the method and assumptions used in determining the projected values, including reflection of any assumptions that deviate from those used for pricing other forms currently available for sale; (1) Annual values for each year of the life of the policy form on both a durational and calendar year basis;

(2) The projections shall include the development of the lifetime loss ratio, unless the rate increase is an exceptional increase;

(3) The projections shall demonstrate compliance with Subsection C; and (4) For exceptional increases, (a) The projected experience should be limited to the increases in claims expenses attributable to the approved reasons for the exceptional increase; and (b) In the event the commissioner determines as provided in Section 4(A)(4) that offsets may exist, the insurer shall use appropriate net projected experience;

b. Disclosure of how reserves have been incorporated in this rate increase whenever the rate increase will trigger contingent benefit upon lapse; c. Disclosure of the analysis performed to determine why a rate adjustment is necessary, which pricing assumptions were not realized and why, and what other actions taken by the company have been relied on by the actuary; d. A statement that policy design, underwriting and claims adjudication practices have been taken into consideration; and e. In the event that it is necessary to maintain consistent premium rates for new certificates and certificates receiving a rate increase, the insurer will need to file composite rates reflecting projections of new certificates; 4. A statement that renewal premium rate schedules are not greater than new business premium rate schedules except for differences attributable to benefits, unless sufficient justification is provided to the commissioner; and 5. Sufficient information for review of the premium rate schedule increase by the commissioner. C. All premium rate schedule increases shall be determined in accordance with the following requirements:

1. Exceptional increases shall provide that seventy percent (70%) of the present value of projected additional premiums from the exceptional increase will be returned to policyholders in benefits;

2. Premium rate schedule increases shall be calculated such that the sum of the accumulated value of incurred claims, without the inclusion of active life reserves, and the present value of future projected incurred claims, without the inclusion of active life reserves, will not be less than the sum of the following:

a. The accumulated value of the initial earned premium times fifty-eight percent (58%); b. Eighty-five percent (85%) of the accumulated value of prior premium rate schedule increases on an earned basis;

c. The present value of future projected initial earned premiums times fifty-eight percent (58%); and d. Eighty-five percent (85%) of the present value of future projected premiums not in Subparagraph (c) on an earned basis;

3. In the event that a policy form has both exceptional and other increases, the values in Paragraph 2(b) and (d) will also include seventy percent (70%) for exceptional rate increase amounts; and 4. All present and accumulated values used to determine rate increases shall use the maximum valuation interest rate for contract reserves as specified Colorado Insurance Regulation 3-1-9. The actuary shall disclose as part of the actuarial memorandum the use of any appropriate averages.

D. For each rate increase that is implemented, the insurer shall file for review by the commissioner updated projections, as defined in Subsection B(3)(a), annually for the next three (3) years and include a comparison of actual results to projected values. The commissioner may extend the period to greater than three (3) years if actual results are not consistent with projected values from prior projections. For group insurance policies that meet the conditions in Subsection K, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the commissioner.

E. If any premium rate in the revised premium rate schedule is greater than 200 percent of the comparable rate in the initial premium schedule, lifetime projections, as defined in Subsection B(3)(a), shall be filed for review by the commissioner every five (5) years following the end of the required period in Subsection D. For group insurance policies that meet the conditions in Subsection K, the projections required by this subsection shall be provided to the policyholder in lieu of filing with the commissioner.

F.

1. If the commissioner has determined that the actual experience following a rate increase does not adequately match the projected experience and that the current projections under moderately adverse conditions demonstrate that incurred claims will not exceed proportions of premiums specified in Subsection C, the commissioner may require the insurer to implement any of the following:

a. Premium rate schedule adjustments; or b. Other measures to reduce the difference between the projected and actual experience.

2. In determining whether the actual experience adequately matches the projected experience, consideration should be given to Subsection B(3)(e), if applicable. G. If the majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse, the insurer shall file:

1. A plan, subject to commissioner approval, for improved administration or claims processing designed to eliminate the potential for further deterioration of the policy form requiring further premium rate schedule increases, or both, or to demonstrate that appropriate administration and claims processing have been implemented or are in effect; otherwise the commissioner may impose the condition in Subsection H of this section; and 2. The original anticipated lifetime loss ratio, and the premium rate schedule increase that would have been calculated according to Subsection C had the greater of the original anticipated lifetime loss ratio or fifty-eight percent (58%) been used in the calculations described in Subsection C(2)(a) and (c).

H.

1. For a rate increase filing that meets the following criteria, the commissioner shall review, for all policies included in the filing, the projected lapse rates and past lapse rates during the twelve (12) months following each increase to determine if significant adverse lapsation has occurred or is anticipated:

a. The rate increase is not the first rate increase requested for the specific policy form or forms;

b. The rate increase is not an exceptional increase; and c. The majority of the policies or certificates to which the increase is applicable are eligible for the contingent benefit upon lapse 2. In the event significant adverse lapsation has occurred, is anticipated in the filing or is evidenced in the actual results as presented in the updated projections provided by the insurer following the requested rate increase, the commissioner may determine that a rate spiral exists. Following the determination that a rate spiral exists, the commissioner may require the insurer to offer, without underwriting, to all in force insureds subject to the rate increase the option to replace existing coverage with one or more reasonably comparable products being offered by the insurer or its affiliates. a. The offer shall:

(1) Be subject to the approval of the commissioner;

(2) Be based on actuarially sound principles, but not be based on attained age; and (3) Provide that maximum benefits under any new policy accepted by an insured shall be reduced by comparable benefits already paid under the existing policy.

b. The insurer shall maintain the experience of all the replacement insureds separate from the experience of insureds originally issued the policy forms. In the event of a request for a rate increase on the policy form, the rate increase shall be limited to the lesser of:

(1) The maximum rate increase determined based on the combined experience; and (2) The maximum rate increase determined based only on the experience of the insureds originally issued the form plus ten percent (10%). I. If the commissioner determines that the insurer has exhibited a persistent practice of filing inadequate initial premium rates for long-term care insurance, the commissioner may, in addition to the provisions of Subsection H of this section, prohibit the insurer from either of the following: 1. Filing and marketing comparable coverage for a period of up to five (5) years; or 2. Offering all other similar coverages and limiting marketing of new applications to the products subject to recent premium rate schedule increases.

J. Subsections A through I, shall not apply to policies for which the long-term care benefits provided by the policy are incidental, as defined in Section 4(B), if the policy complies with all of the following provisions:

1. The interest credited internally to determine cash value accumulations, including long-term care, if any, are guaranteed not to be less than the minimum guaranteed interest rate for cash value accumulations without long-term care set forth in the policy; 2. The portion of the policy that provides insurance benefits other than long-term care coverage meets the nonforfeiture requirements as applicable in any of the following: a. Part 3 of Article 7 of Title 10, C.R.S.;

b. Part 5 of Article 7 of Title 10, C.R.S., and 3. The policy meets the disclosure requirements of Section 8 of this regulation. 4. The portion of the policy that provides insurance benefits other than long-term care coverage meets the requirements as applicable in the following:

a. Policy illustrations as required by Colorado Insurance Regulation 4-1-8. b. Disclosure requirements in Colorado Insurance Regulation 4-1-12; and c. Disclosure requirements in Colorado Insurance Regulation 4-1-1. 5. An actuarial memorandum is filed with the insurance department that includes: a. A description of the basis on which the long-term care rates were determined; b. A description of the basis for the reserves;

c. A summary of the type of policy, benefits, renewability, general marketing method, and limits on ages of issuance;

d. A description and a table of each actuarial assumption used. For expenses, an insurer must include percent of premium dollars per policy and dollars per unit of benefits, if any;

e. A description and a table of the anticipated policy reserves and additional reserves to be held in each future year for active lives;

f. The estimated average annual premium per policy and the average issue age; g. A statement as to whether underwriting is performed at the time of application. The statement shall indicate whether underwriting is used and, if used, the statement shall include a description of the type or types of underwriting used, such as medical underwriting or functional assessment underwriting. Concerning a group policy, the statement shall indicate whether the enrollee or any dependent will be underwritten and when underwriting occurs; and h. A description of the effect of the long-term care policy provision on the required premiums, nonforfeiture values and reserves on the underlying insurance policy, both for active lives and those in long-term care claim status. K. Subsections F and H, shall not apply to group insurance policies as defined in §10-19-103 (4)(a), C.R.S. where:

1. The policies insure 250 or more persons and the policyholder has 5,000 or more eligible employees of a single employer; or 2. The policyholder, and not the certificateholders, pays a material portion of the premium, which shall not be less than twenty percent (20%) of the total premium for the group in the calendar year prior to the year a rate increase is filed. Section 19 Filing Requirement Prior to an insurer or similar organization offering group long-term care insurance to a resident of this state, pursuant to CRS 10-19-105, it shall file with the commissioner evidence that the group policy or certificate thereunder has been approved by a state having statutory or regulatory long-term care insurance requirements substantially similar to those adopted in this state. Section 20 Filing Requirements for Advertising A. Every insurer, health care service plan or other entity providing long-term care insurance or benefits in this state shall provide a copy of any long-term care insurance advertisement intended for use in this state whether through written, radio or television medium to the Commissioner of Insurance of this state for review or approval by the commissioner to the extent it may be required under state law. In addition, all advertisements shall be retained by the insurer, health care service plan or other entity for at least three (3) years from the date the advertisement was first used. B. This section does not apply to acceleration of benefit riders sold in connection with a life or annuity policy. In addition, the commissioner may exempt from these requirements any advertising form or material when, in the commissioner’s opinion, this requirement may not be reasonably applied. Section 21 Standards for Marketing A. Every insurer, health care service plan or other entity marketing long-term care insurance coverage in this state, directly or through its producers, shall:

1. Establish marketing procedures and agent training requirements to assure that: a. Any marketing activities, including any comparison of policies, by its agents or other producers will be fair and accurate; and b. Excessive insurance is not sold or issued.

2. Display prominently by type, stamp or other appropriate means, on the first page of the Outline of Coverage and policy the following:

“Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations.”

3. Provide copies of the disclosure forms required in Section 9(C), (Appendices B and F), to the applicant.

4. Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of any such insurance, except that in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance is not required.

5. Every insurer or entity marketing long-term care insurance shall establish auditable procedures for verifying compliance with this Subsection A. 6. If the state in which the policy or certificate is to be delivered or issued for delivery has a senior insurance counseling program approved by the commissioner, the insurer shall, at solicitation, provide written notice to the prospective policyholder and certificateholder that the program is available and the name, address and telephone number of the program.

7. For long-term care health insurance policies and certificates, use the terms “noncancellable” or “level premium” only when the policy or certificate conforms to Section 6(A)(3) of this regulation.

B. In addition to the practices prohibited in §10-3-1104, C.R.S., the following acts and practices are prohibited:

1. Twisting. Knowingly making any misleading representation or incomplete or fraudulent comparison of any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on or convert any insurance policy or to take out a policy of insurance with another insurer.

2. High pressure tactics. Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance. 3. Cold lead advertising. Making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.

4. Misrepresentation. Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.

C.

1. With respect to the obligations set forth in this subsection, the primary responsibility of an association, as defined in §10-19-103 (4)(b), C.R.S., when endorsing or selling long-term care insurance shall be to educate its members concerning long-term care issues in general so that its members can make informed decisions. Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by such associations to ensure that members of such associations receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold.

2. The insurer shall file with the insurance department the following material: a. The policy and certificate, b. A corresponding Outline of Coverage, and c. All advertisements requested by the insurance department. 3. The association shall disclose in any long-term care insurance solicitation: a. The specific nature and amount of the compensation arrangements (including all fees, commissions, administrative fees and other forms of financial support) that the association receives from endorsement or sale of the policy or certificate to its members; and b. A brief description of the process under which the policies and the insurer issuing the policies were selected.

4. If the association and the insurer have interlocking directorates or trustee arrangements, the association shall disclose that fact to its members.

5. The board of directors of associations selling or endorsing long-term care insurance policies or certificates shall review and approve the insurance policies as well as the compensation arrangements made with the insurer.

6. The association shall also:

a. At the time of the association’s decision to endorse, engage the services of a person with expertise in long-term care insurance not affiliated with the insurer to conduct an examination of the policies, including its benefits, features, and rates and update the examination thereafter in the event of material change; b. Actively monitor the marketing efforts of the insurer and its agents; and c. Review and approve all marketing materials or other insurance communications used to promote sales or sent to members regarding the policies or certificates. d. Subparagraphs (a) through (c) shall not apply to qualified long-term care insurance contracts.

7. No group long-term care insurance policy or certificate may be issued to an association unless the insurer files with the state insurance department the information required in this subsection.

8. The insurer shall not issue a long term care policy or certificate to an association or continue to market such a policy or certificate unless the insurer certifies annually that the association has complied with the requirements set forth in this subsection. 9. Failure to comply with the filing and certification requirements of this section constitutes an unfair trade practice in violation of §10-3-1104, C.R.S. Section 22 Suitability A. This section shall not apply to life insurance policies that accelerate benefits for long-term care. B. Every insurer, health care service plan or other entity marketing long-term care insurance (the “issuer” ) shall:

1. Develop and use suitability standards to determine whether the purchase or replacement of long-term care insurance is appropriate for the needs of the applicant; 2. Train its agents in the use of its suitability standards; and 3. Maintain a copy of its suitability standards and make them available for inspection upon request by the commissioner.

C.

1. To determine whether the applicant meets the standards developed by the issuer, the agent and issuer shall develop procedures that take the following into consideration: a. The ability to pay for the proposed coverage and other pertinent financial information related to the purchase of the coverage;

b. The applicant’s goals or needs with respect to long-term care and the advantages and disadvantages of insurance to meet these goals or needs; and c. The values, benefits and costs of the applicant’s existing insurance, if any, when compared to the values, benefits and costs of the recommended purchase or replacement.

2. The issuer, and where an agent is involved, the agent shall make reasonable efforts to obtain the information set out in Paragraph 1 above. The efforts shall include presentation to the applicant, at or prior to application, the “Long-Term Care Insurance Personal Worksheet.” The personal worksheet used by the issuer shall contain, at a minimum, the information in the format contained in Appendix B, in not less than twelve (12) point type (type size is not applicable to internet based worksheets). The issuer may request the applicant to provide additional information to comply with its suitability standards. A copy of the issuer’s personal worksheet shall be filed with the commissioner. 3. A completed personal worksheet shall be returned to the issuer prior to the issuer’s consideration of the applicant for coverage, except the personal worksheet need not be returned for sales of employer group long-term care insurance to employees and their spouses.

4. The sale or dissemination outside the company or agency by the issuer or agent of information obtained through the personal worksheet in Appendix B is prohibited. D. The issuer shall use the suitability standards it has developed pursuant to this section in determining whether issuing long-term care insurance coverage to an applicant is appropriate. E. Agents shall use the suitability standards developed by the issuer in marketing long-term care insurance.

F. At the same time as the personal worksheet is provided to the applicant, the disclosure form entitled “Things You Should Know Before You Buy Long-Term Care Insurance” shall be provided. The form shall be in the format contained in Appendix C, in not less than twelve (12) point type. G. If the issuer determines that the applicant does not meet its financial suitability standards, or if the applicant has declined to provide the information, the issuer may reject the application. In the alternative, the issuer shall send the applicant a letter similar to Appendix D. However, if the applicant has declined to provide financial information, the issuer may use some other method to verify the applicant’s intent. Either the applicant’s returned letter or a record of the alternative method of verification shall be made part of the applicant’s file. H. The issuer shall report annually to the commissioner the total number of applications received from residents of this state, the number of those who declined to provide information on the personal worksheet, the number of applicants who did not meet the suitability standards, and the number of those who chose to confirm after receiving a suitability letter. Section 23 Prohibition Against Preexisting Conditions and Probationary Periods in Replacement Policies or Certificates If a long-term care insurance policy or certificate replaces another long-term care policy or certificate, the replacing insurer shall waive any time periods applicable to preexisting conditions and probationary periods in the new long-term care policy for similar benefits to the extent that similar exclusions have been satisfied under the original policy.

Section 24 Standard Format Outline of Coverage This section of the regulation implements, interprets and makes specific, the provisions of §10-19-112, C.R.S. in prescribing a standard format and the content of an Outline of Coverage. A. The Outline of Coverage shall be a freestanding document, using no smaller than ten-point type. B. The Outline of Coverage shall contain no material of an advertising nature. C. Text that is capitalized or underscored in the standard format Outline of Coverage may be emphasized by other means that provide prominence equivalent to the capitalization or underscoring. D. Use of the text and sequence of text of the standard format Outline of Coverage is mandatory, unless otherwise specifically indicated.

E. The Outline of Coverage shall be formatted as demonstrated in Appendix J. Section 25 Requirement to Deliver Shopper’s Guide A. A long-term care insurance shopper’s guide in the format developed by the National Association of Insurance Commissioners, or a guide developed or approved by the commissioner, shall be provided to all prospective applicants of a long-term care insurance policy or certificate. 1. In the case of agent solicitations, an agent must deliver the shopper’s guide prior to the presentation of an application or enrollment form.

2. In the case of direct response solicitations, the shopper’s guide must be presented in conjunction with any application or enrollment form.

B. Life insurance policies or riders containing accelerated long-term care benefits are not required to furnish the above-referenced guide, but shall furnish the policy summary required under Section 8 of this Regulation.

Section 26 Discretionary Powers of the Commissioner The commissioner may upon written request and after an administrative hearing, issue an order to modify or suspend a specific provision or provisions of this regulation with respect to a specific long-term care insurance policy or certificate upon a written finding that: A. The modification or suspension would be in the best interest of the insureds; B. The purposes to be achieved could not be effectively or efficiently achieved without the modification or suspension; and C.

1. The modification or suspension is necessary to the development of an innovative and reasonable approach for insuring long-term care; or 2. The policy or certificate is to be issued to residents of a life care or continuing care retirement community or some other residential community for the elderly and the modification or suspension is reasonably related to the special needs or nature of such a community; or 3. The modification or suspension is necessary to permit long-term care insurance to be sold as part of, or in conjunction with, another insurance product. Section 27 Availability of New Services or Providers A. An insurer shall notify policyholders of the availability of a new long-term care policy series that provides coverage for new long-term care services or providers material in nature and not previously available through the insurer to the general public. The notice shall be provided within twelve (12) months of the date the new policy series is made available for sale in this state. B. Notwithstanding Subsection A above, notification is not required for any policy issued prior to the effective date of this section or to any policyholder or certificateholder who is currently eligible for benefits, within an elimination period or on claim, or who previously has been in claim status, or who would not be eligible to apply for coverage due to issue age limitations under the new policy. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers. C. The insurer shall make the new coverage available in one of the following ways: 1. By adding a rider to the existing policy and charging a separate premium for the new rider based on the insured’s attained age;

2. By exchanging the existing policy or certificate for one with an issue age based on the present age of the insured and recognizing past insured status by granting premium credits toward the premiums for the new policy or certificate. The premium credits shall be based on premiums paid or reserves held for the prior policy or certificate; 3. By exchanging the existing policy or certificate for a new policy or certificate in which consideration for past insured status shall be recognized by setting the premium for the new policy or certificate at the issue age of the policy or certificate being exchanged. The cost for the new policy or certificate may recognize the difference in reserves between the new policy or certificate and the original policy or certificate; or 4. By an alternative program developed by the insurer that meets the intent of this section if the program is filed with and approved by the Commissioner. D. An insurer is not required to notify policyholders of a new proprietary policy series created and filed for use in a limited distribution channel. For purposes of this subsection, “limited distribution channel” means through a discrete entity, such as a financial institution or brokerage, for which specialized products are available that are not available for sale to the general public. Policyholders that purchased such a proprietary policy shall be notified when a new long-term care policy series that provides coverage for new long-term care services or providers material in nature is made available to that limited distribution channel.

E. Policies issued pursuant to this section shall be considered exchanges and not replacements. These exchanges shall not be subject to Sections 13 and 22, and the reporting requirements of Section 14A to E of this regulation.

F. Where the policy is offered through an employer, labor organization, professional, trade or occupational association, the required notification in Subsection A above shall be made to the offering entity. However, if the policy is issued to a group defined in §10-19-103(4)(d), C.R.S., the notification shall be made to each certificateholder.

G. Nothing in this section shall prohibit an insurer from offering any policy, rider, certificate or coverage change to any policyholder or certificateholder. However, upon request any policyholder may apply for currently available coverage that includes the new services or providers. The insurer may require that policyholders meet all eligibility requirements, including underwriting and payment of the required premium to add such new services or providers. H. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

I. This section shall become effective on or after July 1, 2008. Section 28 Right to Reduce Coverage and Lower Premiums A.

1. Every long-term care insurance policy and certificate shall include a provision that allows the policyholder or certificateholder to reduce coverage and lower the policy or certificate premium in at least one of the following ways:

a. Reducing the maximum benefit; or b. Reducing the daily, weekly or monthly benefit amount. 2. The insurer may also offer other reduction options that are consistent with the policy or certificate design or the carrier’s administrative processes. B. The provision shall include a description of the ways in which coverage may be reduced and the process for requesting and implementing a reduction in coverage. C. The age to determine the premium for the reduced coverage shall be based on the age used to determine the premiums for the coverage currently in force. D. The insurer may limit any reduction in coverage to plans or options available for that policy form and to those for which benefits will be available after consideration of claims paid or payable. E. If a policy or certificate is about to lapse, the insurer shall provide a written reminder to the policyholder or certificateholder of his or her right to reduce coverage and premiums in the notice required by Section 7A(3) of this regulation.

F. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

G. The requirements of this section shall apply to any long-term care policy issued in this state on or after July 1, 2008.

Section 29 Nonforfeiture Benefit Requirement A. This section does not apply to life insurance policies or riders containing accelerated long-term care benefits.

B. To comply with the requirement to offer a nonforfeiture benefit pursuant to the provisions of § 10 19- 113.4, C.R.S.:

1. A policy or certificate offered with nonforfeiture benefits shall have coverage elements, eligibility, benefit triggers and benefit length that are the same as coverage to be issued without nonforfeiture benefits. The nonforfeiture benefit included in the offer shall be the benefit described in Subsection E; and 2. The offer shall be in writing if the nonforfeiture benefit is not otherwise described in the Outline of Coverage or other materials given to the prospective policyholder. C. If the offer is rejected, the insurer shall provide the contingent benefit upon lapse described in this section. Even if this offer is accepted for a policy with a fixed or limited premium paying period, the contingent benefit on lapse in Subsection D(4) shall still apply. D.

1. After rejection of an offer of non-forfeiture benefits, for individual and group policies without nonforfeiture benefits issued after the effective date of this section, the insurer shall provide a contingent benefit upon lapse.

2. In the event a group policyholder elects to make the nonforfeiture benefit an option to the certificateholder, a certificate shall provide either the nonforfeiture benefit or the contingent benefit upon lapse.

3. A contingent benefit on lapse shall be triggered every time an insurer increases the premium rates to a level which results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured’s initial annual premium set forth below based on the insured’s issue age, and the policy or certificate lapses within 120 days of the due date of the premium so increased. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase Issue Age Percent Increase Over Initial Premium 29 and under 200% 30-34 190% 35-39 170% 40-44 150% 45-49 130% 50-54 110% 55-59 90% 60 70% 61 66% 62 62% 63 58% 64 54% 65 50% 66 48% 67 46% 68 44% 69 42% 70 40% 71 38% 72 36% 73 34% 74 32% 75 30% 76 28% 77 26% 78 24% 79 22% 80 20% 81 19% 82 18% 83 17% 84 16% 85 15% 86 14% 87 13% 88 12% 89 11% 90 and over 10% 4. A contingent benefit on lapse shall also be triggered for policies with a fixed or limited premium paying period every time an insurer increases the premium rates to a level that results in a cumulative increase of the annual premium equal to or exceeding the percentage of the insured’s initial annual premium set forth below based on the insured’s issue age, the policy or certificate lapses within 120 days of the due date of the premium so increased, and the ratio in Paragraph 6(b) is forty percent (40%) or more. Unless otherwise required, policyholders shall be notified at least thirty (30) days prior to the due date of the premium reflecting the rate increase.

Triggers for a Substantial Premium Increase Issue Age Percent Increase Over Initial Premium Under 65 50% 65-80 30% Over 80 10% This provision shall be in addition to the contingent benefit provided by Paragraph 3 above and where both are triggered, the benefit provided shall be at the option of the insured.

5. On or before the effective date of a substantial premium increase as defined in Paragraph 3 above, the insurer shall:

a. Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;

b. Offer to convert the coverage to a paid-up status with a shortened benefit period in accordance with the terms of Subsection E. This option may be elected at any time during the 120-day period referenced in Subsection D(3); and c. Notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in Subsection D(3) shall be deemed to be the election of the offer to convert in Subparagraph (b) above unless the automatic option in Paragraph 6(c) applies.

6. On or before the effective date of a substantial premium increase as defined in Paragraph 4 above, the insurer shall:

a. Offer to reduce policy benefits provided by the current coverage without the requirement of additional underwriting so that required premium payments are not increased;

b. Offer to convert the coverage to a paid-up status where the amount payable for each benefit is ninety percent (90%) of the amount payable in effect immediately prior to lapse times the ratio of the number of completed months of paid premiums divided by the number of months in the premium paying period. This option may be elected at any time during the 120-day period referenced in Subsection D(4); and c. Notify the policyholder or certificateholder that a default or lapse at any time during the 120-day period referenced in Subsection D(4) shall be deemed to be the election of the offer to convert in Subparagraph (b) above if the ratio is forty percent (40%) or more.

E. Benefits continued as nonforfeiture benefits, including contingent benefits upon lapse in accordance with Subsection D(3) but not Subsection D(4), are described in this subsection: 1. For purposes of this subsection, attained age rating is defined as a schedule of premiums starting from the issue date which increases by age at least one percent per year prior to age fifty (50), and at least three percent (3%) per year beyond age fifty (50). 2. For purposes of this subsection, the nonforfeiture benefit shall be of a shortened benefit period providing paid-up long-term care insurance coverage after lapse. The same benefits (amounts and frequency in effect at the time of lapse but not increased thereafter) will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits shall be determined as specified in Paragraph 3.

3. The standard nonforfeiture credit will be equal to 100% of the sum of all premiums paid, including the premiums paid prior to any changes in benefits. The insurer may offer additional shortened benefit period options, as long as the benefits for each duration equals or exceeds the standard nonforfeiture credit for that duration. However, the minimum nonforfeiture credit shall not be less than thirty (30) times the daily nursing home benefit at the time of lapse. In either event, the calculation of the nonforfeiture credit is subject to the limitation of Subsection F.

4.

a. The nonforfeiture benefit shall begin not later than the end of the third year following the policy or certificate issue date. The contingent benefit upon lapse shall be effective during the first three (3) years as well as thereafter. b. Notwithstanding Subparagraph (a), for a policy or certificate with attained age rating, the nonforfeiture benefit shall begin on the earlier of: (1) The end of the tenth year following the policy or certificate issue date; or (2) The end of the second year following the date the policy or certificate is no longer subject to attained age rating.

5. Nonforfeiture credits may be used for all care and services qualifying for benefits under the terms of the policy or certificate, up to the limits specified in the policy or certificate. F. All benefits paid by the insurer while the policy or certificate is in premium paying status and in the paid up status will not exceed the maximum benefits that would be payable if the policy or certificate had remained in premium paying status.

G. There shall be no difference in the minimum nonforfeiture benefits as required under this section for group and individual policies.

H. The requirements set forth in this section shall become effective January 1, 2009, and shall apply as follows:

1. Except as provided in Paragraph 2 below, the provisions of this section apply to any long-term care policy issued in this state on or after the effective date of this section. 2. For certificates issued on or after the effective date of this section, under a group long-term care insurance policy as defined in §10-19-103 (4)(a), C.R.S., which policy was in force at the time this amended regulation became effective, the provisions of this section shall not apply.

I. Premiums charged for a policy or certificate containing nonforfeiture benefits or a contingent benefit on lapse shall be subject to the loss ratio requirements of Sections 10, 17 or 18, whichever is applicable, treating the policy as a whole.

J. To determine whether contingent nonforfeiture upon lapse provisions are triggered under Subsection D(3) or D(4), a replacing insurer that purchased or otherwise assumed a block or blocks of long- term care insurance policies from another insurer shall calculate the percentage increase based on the initial annual premium paid by the insured when the policy was first purchased from the original insurer.

K. A nonforfeiture benefit for qualified long-term care insurance contracts that are level premium contracts shall be offered that meets the following requirements: 1. The nonforfeiture provision shall be appropriately captioned; 2. The nonforfeiture provision shall provide a benefit available in the event of a default in the payment of any premiums and shall state that the amount of the benefit may be adjusted subsequent to being initially granted only as necessary to reflect changes in claims, persistency and interest as reflected in changes in rates for premium paying contracts approved by the commissioner for the same contract form; and 3. The nonforfeiture provision shall provide at least one of the following: a. Reduced paid-up insurance;

b. Extended term insurance;

c. Shortened benefit period; or d. Other similar offerings approved by the commissioner. Section 30 Standards for Benefit Triggers A. A long-term care insurance policy shall condition the payment of benefits on a determination of the insured’s ability to perform activities of daily living and on cognitive impairment. Eligibility for the payment of benefits shall not be more restrictive than requiring either a deficiency in the ability to perform not more than three (3) of the activities of daily living or the presence of cognitive impairment.

B.

1. Activities of daily living shall include at least the following as defined in Section 5 and in the policy:

a. Bathing;

b. Continence;

c. Dressing;

d. Eating;

e. Toileting; and f. Transferring;

2. Insurers may use activities of daily living to trigger covered benefits in addition to those contained in Paragraph 1 as long as they are defined in the policy. C. An insurer may use additional provisions for the determination of when benefits are payable under a policy or certificate; however the provisions shall not restrict, and are not in lieu of, the requirements contained in Subsections A and B.

D. For purposes of this section the determination of a deficiency shall not be more restrictive than: 1. Requiring the hands-on assistance of another person to perform the prescribed activities of daily living; or 2. If the deficiency is due to the presence of a cognitive impairment, supervision or verbal cueing by another person is needed in order to protect the insured or others. E. Assessments of activities of daily living and cognitive impairment shall be performed by licensed or certified professionals, such as physicians, nurses or social workers. F. Long-term care insurance policies shall include a clear description of the process for appealing and resolving benefit determinations.

G. The requirements set forth in this section shall be effective January 1, 2008, and shall apply as follows:

1. Except as provided in Paragraph 2 below, the provisions of this section apply to any long term care policy issued in this state on or after the effective date of this section. 2. For certificates issued on or after the effective date of this section, under a group long-term care insurance policy as defined in §10-19-103 (4)(a), C.R.S., that was in force at the time this amended regulation became effective, the provisions of this section shall not apply.

Section 31 Additional Standards for Benefit Triggers for Qualified Long-Term Care Insurance Contracts A. For purposes of this section the following definitions apply: 1. “Qualified long-term care services” means services that meet the requirements of Section 7702(c)(1) of the Internal Revenue Code of 1986, as amended, as follows: necessary diagnostic, preventive, therapeutic, curative, treatment, mitigation and rehabilitative services, and maintenance or personal care services which are required by a chronically ill individual, and are provided pursuant to a plan of care prescribed by a licensed health care practitioner.

2.

a. “Chronically ill individual” has the meaning prescribed for this term by Section 7702B(c)(2) of the Internal Revenue Code of 1986, as amended. Under this provision, a chronically ill individual means any individual who has been certified by a licensed health care practitioner as:

(1) Being unable to perform (without substantial assistance from another individual) at least two (2) activities of daily living for a period of at least ninety (90) days due to a loss of functional capacity; or (2) Requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment.

b. The term “chronically ill individual” shall not include an individual otherwise meeting these requirements unless within the preceding twelve-month period a licensed health care practitioner has certified that the individual meets these requirements.

3. “Licensed health care practitioner” means a physician, as defined in Section 1861(r)(1) of the Social Security Act, a registered professional nurse, licensed social worker or other individual who meets requirements prescribed by the Secretary of the Treasury. 4. “Maintenance or personal care services” means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual (including the protection from threats to health and safety due to severe cognitive impairment).

B. A qualified long-term care insurance contract shall pay only for qualified long-term care services received by a chronically ill individual provided pursuant to a plan of care prescribed by a licensed health care practitioner.

C. A qualified long-term care insurance contract shall condition the payment of benefits on a determination of the insured’s inability to perform activities of daily living for an expected period of at least ninety (90) days due to a loss of functional capacity or to severe cognitive impairment. D. Certifications regarding activities of daily living and cognitive impairment required pursuant to Subsection C shall be performed by the following licensed or certified professionals: physicians, registered professional nurses, licensed social workers, or other individuals who meet requirements prescribed by the Secretary of the Treasury. E. Certifications required pursuant to Subsection C may be performed by a licensed health care professional at the direction of the carrier as is reasonably necessary with respect to a specific claim, except that when a licensed health care practitioner has certified that an insured is unable to perform activities of daily living for an expected period of at least ninety (90) days due to a loss of functional capacity and the insured is in claim status, the certification may not be rescinded and additional certifications may not be performed until after the expiration of the ninety-day period. F. Qualified long-term care insurance contracts shall include a clear description of the process for appealing and resolving disputes with respect to benefit determinations. Section 32 Filing of Long-Term Care Policy Forms and Rates A. Policy forms for long-term care insurance must be submitted for certification in accordance with §10- 16-107.2, C.R.S. However, long-term care policy forms (application, Long-term Care Insurance Potential Rate Increase Disclosure Form, Outline of Coverage, policy summary, Long-Term Care Insurance Personal Worksheet, Things You Should Know Before You Buy Long-Term Care Insurance disclosure, any riders/endorsements and Colorado Long-Term Care Partnership Notice) must be filed with the Division of Insurance for Colorado Long-Term Care Partnership Certification pursuant to the Deficit Reduction Act of 2005, Pub. L. No. 109-171 (“DRA” ), which requires the Insurance Commissioner to ensure policies identified as Qualified Partnership Policies meet certain consumer requirements set forth in the DRA. B. Long-term care insurance rate increases are prior approval for rate increases effective on or after January 1, 2009, pursuant to §10-16-107(1), C.R.S.

Section 33 Incorporated Materials The relevant portions of the DRA are incorporated by reference, but this rule does not cover amendments to this DRA that were promulgated later than the effective date of this rule. A copy of the relevant portions of the DRA may be examined at any state publications depository library. For additional information regarding how relevant portions of the DRA can be obtained or examined contact the Rates and Forms Supervisor, Colorado Division of Insurance, 1560 Broadway, Ste 850, Denver, CO 80202. Section 34 Severability If any provision of this regulation or application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 35 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocations of licenses. Among others, the penalties provided for in §10-3-1108, C.R.S. may be applied. Section 36 Effective Date This regulation shall be effective February 1, 2009.

Section 37 History New Colorado Regulation 85-6.

Colorado Regulation 90-15, effective January 1, 1991.

Colorado Regulation 4-4-1, effective January 1, 1997.

Repealed and Repromulgated regulation 4-4-1 effective January 1, 2007. Amended, effective January 1, 2008.

Amended, effective October 1, 2008.

Amended effective February 1, 2009.

APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F Appendix G APPENDIX H APPENDIX I APPENDIX J

Regulation 4-4-2 Implementation of Basic and Standard Long-Term Care Insurance Plans (Repealed effective 08/30/05)

(Repealed effective 08/30/05)

REGULATION 4-4-3 – SUITABILITY STANDARDS FOR LONG-TERM CARE INSURANCE PRODUCTS - REPEALED [Repealed eff 1/1/2007. Replaced, in part, by Reg. 4-4-1 ] Amended Regulation 4-6-2 Group Coordination of Benefits Section 1. Authority Section 2. Background and Purpose Section 3. Applicability and Scope Section 4. Definitions Section 5. Model COB Contract Provisions Section 6. Rules for Coordination of Benefits Section 7. Procedure to be Followed by Secondary Plan Section 8. Notice to Covered Persons Section 9. Miscellaneous Provisions Section 10. Effective Date; Existing Contracts Section 11. Enforcement Section 12. Severability Section 13. Effective Date Section 14. History Appendix A. Model COB Contract Provisions Appendix B. Consumer Explanatory Booklet Section 1. Authority This regulation is promulgated under the authority of § § 10-1-109 and 10-16-109, C.R.S. Section 2. Background and Purpose The purpose of this regulation is to:

A. Permit, but not require, plans to include a coordination of benefits (COB) provision unless prohibited by federal law;

B. Establish a uniform order-of-benefit determination under which plans pay claims; C. Provide authority for the orderly transfer of necessary information and funds between plans; D. Reduce duplication of benefits by permitting a reduction of the benefits to be paid by plans that, pursuant to rules established by this regulation, do not have to pay their benefits first; E. Reduce claims payment delays; and F. Require that COB provisions be consistent with this regulation. Section 3. Applicability and Scope This regulation shall apply to all group health coverage plans issued by carriers licensed to do business in Colorado under Article 14, 16 and 19 of Title 10, C.R.S. Section 4. Definitions As used in this regulation, these words and terms have the following meanings: A. “Allowable expense” means a health care service or expense including deductibles, coinsurance or copayments, that is covered in foil or in part by any of the plans covering the person, except as set forth below or where a statute requires a different definition. This means that an expense or service or a portion of an expense or service that is not covered by any of the plans is not an allowable expense.

(1) The following are examples of expenses or services that are not an allowable expense: (a) If a covered person is confined in a private hospital room, the difference between the cost of a semi-private room in the hospital and the private room, (unless the patient's stay in the private hospital room is medically necessary in terms of generally accepted medical practice or one of the plans routinely provides coverage for private hospital rooms) is not an allowable expense. (b) If a person is covered by two (2) or more plans that compute their benefit payments on the basis of usual and customary fees, any amount in excess of the highest of the usual and customary fee for a specified benefit is not an allowable expense. (c) If a person is covered by two (2) or more plans that provide benefits or services on the basis of negotiated fees, any amount in excess of the highest of the negotiated fees is not an allowable expense.

(d) If a person is covered by one plan that calculates its benefits or services on the basis of usual and customary fees and another plan that provides its benefits or services on the basis of negotiated fees, the primary plan's payment arrangement shall be the allowable expense for all plans. (2) The definition of “allowable expense” may exclude certain types of coverage or benefits such as dental care, vision care, prescription drug or hearing aids. A plan that limits the application of COB to certain coverages or benefits may limit the definition of allowable expenses in its contract to services or expenses that are similar to the services or expenses that it provides. When COB is restricted to specific coverages or benefits in a contract, the definition of “allowable expense” shall include similar services or expenses to which COB applies.

(3) When a plan provides benefits in the form of services, the reasonable cash value of each service will be considered an allowable expense and a benefit paid. (4) The amount of the reduction may be excluded from allowable expense when a covered person's benefits are reduced under a primary plan, because the covered person does not comply with the plan provisions concerning second surgical opinions or precertification of admissions or services.

(5) If the primary plan is a closed panel plan with no out-of-network benefits and the secondary plan is not a closed panel plan, the secondary plan shall pay or provide benefits as it were primary when no benefits are available from the primary plan because the covered person uses a non-panel provider, except for emergency services that are paid or provided by the primary.

(6) If the two plans are closed panels:

(a) The two plans will coordinate benefits for services that are covered services for both plans, including emergency services, authorized referrals, or services from providers that are participating in both plans.

(b) COB does not occur if there is no covered benefit from either plan. This may occur in various circumstances including, if the enrollee did not go to either plan's closed panel of providers, unless there is a covered benefit (i.e. medical emergency, authorized out of network referral, etc).

(c) If the enrollee obtains services that are covered benefits of the primary plan, the secondary carrier shall coordinate benefits only to the extent that there are benefits or reserves available.

(d) If the service is not a covered benefit of the primary plan but the service is a covered benefit of the secondary plan (i.e. the Covered Person went to a provider who does not participate with the primary plan and the service is not due to a medical emergency), (i.e., the Covered Person went to a provider who does not participate with the primary plan the services is not due to a medical emergency), the secondary plan will pay benefits as though they are primary. B. “Claim” means a request that benefits of a plan be provided or paid. The benefits claimed may be in the form of:

(1) Services (including supplies);

(2) Payment for all or a portion of the expenses incurred; (3) A combination of Paragraphs (1) and (2) above; or (4) An indemnification.

C. “Claim determination period” means a period of not less than twelve (12) consecutive months, over which allowable expenses shall be compared with total benefits payable in the absence of COB, to determine whether overinsurance exists and how much each plan will pay or provide. (1) The claim determination period is usually a calendar year, but a plan may use some other period of time that fits the coverage of the group contract. A person is covered by a plan during a portion of a claim determination period if that person's coverage starts or ends during the claim determination period.

(2) As each claim is submitted, each plan determines its liability and pays or provides benefits based upon allowable expenses incurred to that point in the claim determination period. That determination is subject to adjustment as later allowable expenses are incurred in the same claim determination period.

D. “Closed panel plan” means a health maintenance organization (HMO), preferred provider organization (PPO) or other plan that provides health benefits to covered persons primarily in the form of services through a panel of providers that have contracted with either directly or indirectly or are employed by the plan, and that limits or excludes benefits for services provided by other providers, except in cases of emergency or referral by a panel provider. E. “Coordination of benefits” means a provision establishing an order in which plans pay their claims, and permitting secondary plans to reduce their benefits so that the combined benefits of all plans do not exceed total allowable expenses.

F. “Custodial parent” means the parent awarded sole custody of a child by a court decree. In the absence of a court decree awarding sole custody, the parent with whom the child resides for more than one half of the calendar year without regard to any temporary visitation is the custodial parent.

G. “Hospital indemnity benefits” means benefits not related to expenses incurred. The term does not include reimbursement-type benefits even if they are designed or administered to give the insured the right to elect indemnity-type benefits at the time of claim. H. “Plan” means a form of coverage with which coordination is allowed or required. The definition of plan in the group contract must state the types of coverage that will be considered in applying the COB provision of that contract. The right to include a type of coverage is limited by the rest of this definition. Separate parts of a plan for members of a group that are provided through alternative contracts that are intended to be part of a coordinated package of benefits are considered one plan and there is no COB among the separate parts of the plan. (1) The definition shown in the model COB provision in Appendix A is an example but any definition that satisfies this subsection may be used.

(2) This regulation uses the term “plan.” However, a contract may use “program” or some other term that meets the definition of a plan.

(3) Plan may include:

(a) Group insurance contracts and group subscriber contracts; (b) Uninsured arrangements of group or group-type coverage; (c) Group or group-type coverage through closed panel plans; (d) Group-type contracts. Group-type contracts are contracts, which are not available to the general public and can be obtained and maintained only because of membership in or connection with a particular organization or group, including blanket coverage;

(e) The amount by which group or group-type hospital indemnity benefits exceed $200 per day;

(f) The medical care components of .group long-term care contracts, such as skilled nursing care;

(g) The medical benefits coverage in group, group-type and individual automobile “no fault” and traditional automobile “fault” type contracts; and (h) Medicare or other governmental benefits, as permitted by law, except as provided in Paragraph (4)(i) below. That part of the definition of plan may be limited to the hospital, medical and surgical benefits of the governmental program. (4) Plan shall not include:

(a) Individual or family insurance contracts;

(b) Individual or family subscriber contracts;

(c) Individual or family coverage through closed panel plans; (d) Individual or family coverage under other prepayment, group practice and individual practice plans;

(e) Group or group-type hospital indemnity benefits of $200 per day or less; (f) School accident-type coverages. These contracts cover students for accidents only, including athletic injuries, either on a twenty-four-hour basis or on a “to and from school” basis;

(g) Benefits provided in group long-term care insurance policies for non-medical services, for example, personal care, adult day care, homemaker services, assistance with activities of daily living, respite care and custodial care or for contracts that pay a fixed daily benefit without regard to expenses incurred or the receipt of services;

(h) Medicare supplement policies;

(i) A state plan under Medicaid; or (j) A governmental plan which, by law, provides benefits that are in excess of those of any private insurance plan or other non-governmental plan. I. “Primary plan” means a plan whose benefits for a person's health care coverage must be determined without taking the existence of any other plan into consideration. A plan is a primary plan if either of the following is true:

(1) The plan either has no order of benefit determination rules, or its rules differ from those permitted by this regulation; or (2) All plans that cover the person use the order of benefit determination rules required by this regulation, and under those rules the plan determines its benefits first. J. “Secondary plan” means a plan that is not a primary plan. If a person is covered by more than one secondary plan, the order of benefit determination rules of this regulation decide the order in which secondary plans benefits are determined in relation to each other. Each secondary plan shall take into consideration the benefits of the primary plan or plans and the benefits of any other plan which, under the rules of this regulation, has its benefits determined before those of that secondary plan.

K. “This plan” means, in a COB provision, the part of the group contract providing the health care benefits to which the GOB provision applies and which may be reduced because of the benefits of other plans. Any other part of the group contract providing health care benefits is separate from this plan. A group contract may apply one COB provision to certain of its benefits (such as dental benefits), coordinating only with similar benefits, and may apply another COB provision to coordinate with other benefits.

Section 5. Use of Model COB Contract Provision A. Appendix A contains a model COB provision for use in group contracts. That use is subject to the provisions of Subsections B, C and D below and to the provisions of Section 6. B. Appendix B is a plain language description of the COB process that explains to the covered person how carriers will implement coordination of benefits. It is not intended to replace or change the provisions that are set forth in the contract. Its purpose is to explain the process by which the two (or more) plans will pay for or provide benefits, how the benefit reserve is accrued and how the covered person may use the benefit reserve.

C. The COB provision (Appendix A) and the plain language explanation (Appendix B) do not have to use the specific words and format shown in Appendix A or Appendix B. Changes may be made to fit the language and style of the rest of the group contract or to reflect differences among plans that provide services, that pay benefits for expenses incurred and that indemnify. No substantive changes are permitted.

D. A COB provision may not be used that permits a plan to reduce its benefits on the basis that: (1) Another plan exists and the covered person did not enroll in that plan; (2) A person is or could have been covered under another plan, except with respect to Part B of Medicare; or (3) A person has elected an option under another plan providing a lower level of benefits than another option that could have been elected.

E. No plan may contain a provision that its benefits are “always excess” or “always secondary” except in accord with the rules permitted by this regulation.

F. Under the terms of a closed panel plan, benefits are not payable if the covered person does not use the services of a closed panel provider, with the exceptions of medical emergencies and if there are allowable benefits available. In most instances, COB does not occur if a covered person is enrolled in two (2) or more closed panel plans and obtains services from a provider in one of the closed panel plans because the other closed panel plan (the one whose providers were not used) has no liability. However, COB may occur during the claim determination period when the covered person receives emergency services that would have been covered by both plans. Then the secondary plan must use the benefit reserve to pay any unpaid allowable expense. See Section 4.A. (6).

Section 6. Rules for Coordination of Benefits When a person is covered by two (2) or more plans, the rules for determining the order of benefit payments are as follows:

A. The primary plan must pay or provide its benefits as if the secondary plan or plans did not exist. B. A plan that does not contain a coordination of benefits provision that is consistent with this regulation is always primary. There is one exception: coverage that is obtained by virtue of membership in a group and designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance-type coverages that are written in connection with a closed panel plan to provide out-of-network benefits. C. A plan may consider the benefits paid or provided by another plan only when it is secondary to that other plan.

D. Order-of-Benefit Determination The first of the following rules that describes which plan pays its benefits before another plan is the rule to use:

(1) Non-Dependent or Dependent The plan that covers the person other than as a dependent, for example as an employee, member, subscriber or retiree, is primary and the plan that covers the person, as a dependent is secondary. However, if the person is a Medicare beneficiary, and, as a result of the provisions of Title XVIII of the Social Security Act and implementing regulations, Medicare is: (a) Secondary to the plan covering the person as a dependent; and (b) Primary to the plan covering the person as other than a dependent (e.g. a retired employee), then the order of benefits is reversed so that the plan covering the person as an employee, member, subscriber or retiree is secondary and the other plan is primary.

(2) Child Covered Under More Than One Plan (a) The primary plan is the plan of the parent whose birthday is earlier in the year if: (i) The parents are married;

(ii) The parents are not separated (whether or not they ever have been married); or (iii) A court decree awards joint custody without specifying that one parent has the responsibility to provide health care coverage.

(b) If both parents have the same birthday, the plan that has covered either of the parents longer is primary.

(c) If the specific terms of a court decree state that one of the parents is responsible for the child's health care expenses or health care coverage and the plan of that parent has actual knowledge of those terms, that plan is primary. If the parent with financial responsibility has no coverage for the child's health care services or expenses, but that parent's spouse does, the spouse's plan is primary. (d) If the parents are separated (whether or not they ever were married) or are divorced, and there is no court decree allocating responsibility for the child's health care services or expenses, the order of benefit determination among the plans of the parents and the parents1 spouses (if any) is:

(i) The plan of the custodial parent;

(ii) The plan of the spouse of the custodial parent;

(iii) The plan of the noncustodial parent; and then (iv) The plan of the spouse of the noncustodial parent. (3) Active or Inactive Employee The plan that covers a person as an employee who is neither laid off nor retired (or as that employee's dependent) is primary. If the other plan does not have this rule and if, as a result, the plans do not agree on the order of benefits, this rule is ignored. Coverage provided an individual as a retired worker and as a dependent of that individual's spouse who as an active worker will be determined under Subsection D( 1 ). Also, see Appendix A.

(4) Continuation Coverage If a person whose coverage is provided under a right of continuation pursuant to federal or state law and also is covered under another plan, the plan covering the person as an employee, member, subscriber or retiree (or as that person's dependent) is primary and the continuation coverage is secondary.

If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this rule is ignored.

(5) Longer or Shorter Length of Coverage If the preceding rules do not determine the order of benefits, the plan that covered the person for the longer period of time is primary.

(a) To determine the length of time a person has been covered under a plan, two plans shall be treated as one if the covered person was eligible under the second within twenty-four (24) hours after the first ended.

(b) The start of a new plan does not include:

(i) A change in the amount or scope of a plan's benefits; (ii) A change in the entity that pays, provides or administers the plan's benefits; or (iii) A change from one type of plan to another (such as, from a single employer plan to that of a multiple employer plan).

(c) The person's length of time covered under a plan is measured from the person's first date of coverage under that plan. If that date is not readily available for a group plan, the date the person first became a member of the group shall be used as the date from which to determine the length of time the person's coverage under the present plan has been in force.

(6) If none of the preceding rules determines the primary plan, the allowable expenses shall be shared equally between the plans.

Section 7. Procedure to be Followed by Secondary Plan A.

(1) When a plan is secondary, it shall reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than 100 percent of total allowable expenses. The secondary plan shall calculate its savings by subtracting the amount that it paid as a secondary plan from the amount it would have paid had it been primary. These savings shall be recorded as a benefit reserve for the covered person and shall be used by the secondary plan to pay any allowable expenses, not otherwise paid, that are incurred by the covered person during the claim determination period. As each claim is submitted, the secondary plan must: (a) Determine its obligation, pursuant to its contract; (b) Determine whether a benefit reserve has been recorded for the covered person; and (c) Determine whether there are any unpaid allowable expenses during that claim determination period.

(2) If there is a benefit reserve, the secondary plan shall use the covered person's recorded benefit reserve to pay up to 100 percent of total allowable expenses incurred during the claim determination period. At the end of the claim determination period, the benefit reserve returns to zero. A new benefit reserve must be created for each new claim determination period.

B. The benefits of the secondary plan shall be reduced when the sum of the benefits that would be payable for the allowable expenses under the secondary plan in the absence of this COB provision and the benefits that would be payable for the allowable expenses under the other plans, in the absence of provisions with a purpose like that of this COB provision, whether or not a claim is made, exceeds the allowable expenses in a claim determination period. In that case, the benefits of the secondary plan shall, be reduced so that they and the benefits payable under the other plans do not total more than the allowable expenses. (1) When the benefits of a plan are reduced as described above, each benefit is reduced in proportion. It is then charged against any applicable benefit limit of the plan. (2) The requirements of Paragraph B( 1 ) do not apply if the plan provides only one benefit, or may be altered to suit the coverage provided.

Section 8. Notice to Covered Persons A plan shall, in its explanation of benefits provided to covered persons, include the following language: “If you are covered by more than one health benefit plan, you should file all your claims with each plan.” Section 9. Miscellaneous Provisions A. A secondary plan that provides benefits in the form of services may recover the reasonable cash value of the services from the primary plan, to the extent that benefits for the services are covered by the primary plan and have not already been paid or provided by the primary plan. Nothing in this provision shall be interpreted to require a plan to reimburse a covered person in cash for the value of services provided by a plan that provides benefits in the form of services. B.

(1) A plan with order of benefit determination rules that comply with this regulation (complying plan) may coordinate its benefits with a plan that is “excess” or “always secondary” or that uses order of benefit determination rules that are inconsistent with those contained in this regulation (noncomplying plan) on the following basis: (a) If the complying plan is the primary plan, it shall pay or provide its benefits first; (b) If the complying plan is the secondary plan, it shall, nevertheless, pay or provide its benefits first, but the amount of the benefits payable shall be determined as if the complying plan were the secondary plan. In such a situation, the payment shall be the limit of the complying plan's liability; and (c) If the noncomplying plan does not provide the information needed by the complying plan to determine its benefits within a reasonable time after it is requested to do so, the complying plan shall assume that the benefits of the noncomplying plan are identical to its own, and shall pay its benefits accordingly. If, within two (2) years of payment, the complying plan receives information as to the actual benefits of the noncomplying plan, it shall adjust payments accordingly. (2) If the noncomplying plan reduces its benefits so that the covered person receives less in benefits than he or she would have received had the complying plan paid or provided its benefits as the secondary plan and the noncomplying plan paid or provided its benefits as the primary plan, and governing state law, allows the right of subrogation set forth below, then the complying plan shall advance to or on behalf of the covered person an amount equal to the difference.

(3) In no event shall the complying plan advance more than the complying plan would have paid had it been the primary plan less any amount it previously paid for the same expense or service. In consideration of the advance, the complying plan shall be subrogated to all rights of the covered person against the noncomplying plan. The advance by the complying plan shall also be without prejudice to any claim it may have against a noncomplying plan in the absence of subrogation.

C. COB differs from subrogation. Provisions for one may be included in health care benefits contracts without compelling the inclusion or exclusion of the other. D. If the plans cannot agree on the order of benefits within thirty (30) calendar days after the plans have received all of the information needed to pay the claim, the plans shall immediately pay the claim in equal shares and determine their relative liabilities following payment, except that no plan shall be required to pay more than it would have paid had it been primary. Section 10. Effective Date For Existing Contracts A. This regulation is applicable to every group contract that provides health care benefits and that is issued on or after the effective date of this regulation. B. A group contract that provides health care benefits and that was issued before the effective date of this regulation shall be brought into compliance with this regulation by the later of: (1) The next anniversary date or renewal date of the group contract; or (2) The expiration of any applicable collectively-bargained contract pursuant to which it was written.

Section 11. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado Statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocations of license.

Section 12. Severability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the regulation and the application of such provision to other persons or circumstances shall not be affected thereby. Section 13. Effective Date A. This regulation is applicable to all health coverage plans that are issued on or after February 1, 2004. Section 14. History Regulation 78-6, was effective March 1, 1972.

Regulation 78-6, was amended and reenacted July 1, 1979. Regulation 78-6, was amended effective May 15, 1986.

Regulation 78-6 was repealed and replaced by Regulation 4-6-2, effective July 1, 1993. Regulation 4-6-2 was repealed and repromulgated effective July 1, 2002. Sections 2, 4(3)(g), 13 and 14 amended effective February 1, 2004. Appendix A Model COB Contract Provisions Coordination of This Group Contract's Benefits with Other Benefits This coordination of benefits (COB) provision applies when a person has health care coverage under more than one plan. “Plan” is defined below.

The order of benefit determination rules below determine which plan will pay as the primary plan. The primary plan that pays first pays without regard to the possibility that another plan may cover some expenses. A secondary plan pays after the primary plan and may reduce the benefits it pays so that payments from all group plans do not exceed 100% of the total allowable expense. Definitions A. A “plan” is any of the following that provides benefits or services for medical or dental care or treatment. However, if separate contracts are used to provide coordinated coverage for members of a group, the separate contracts are considered parts of the same plan and there is no COB among those separate contracts.

(1) “Plan” includes: group insurance, closed panel or other forms of group or group-type coverage (whether insured or uninsured); hospital indemnity benefits in excess of $200 per day; medical care components of group long-term care contracts, such as skilled nursing care; medical benefits under group or individual automobile contracts; and Medicare or other governmental benefits, as permitted by law. (2) “Plan” does not include: individual or family insurance; closed panel or other individual coverage (except for group-type coverage); amounts of hospital indemnity insurance of $200 or less per day; school accident type coverage, benefits for non-medical components of group long-term care policies; Medicare supplement policies; Medicaid policies and coverage under other governmental plans, unless permitted by law. Each contract for coverage under (1) or (2) is a separate plan. If a plan has two parts and COB rules apply only to one of the two, each of the parts is treated as a separate plan. B. The order of benefit determination rules determine whether this plan is a “primary plan” or “secondary plan” when compared to another plan covering the person. When this plan is primary, its benefits are determined before those of any other plan and without considering any other plan's benefits. When this plan is secondary, its benefits are determined after those of another plan and may be reduced because of the primary plan's benefits. C. “Allowable expense” means a health care service or expense, including deductibles and copayments, that is covered at least in part by any of the plans covering the person. When a plan provides benefits in the form of services, (for example an HMO) the reasonable cash value of each service will be considered an allowable expense and a benefit paid. An expense or service that is not covered by any of the plans is not an allowable expense. The following are examples of expenses or services that are not allowable expenses:

(1) If a covered person is confined in a private hospital room, the difference between the cost of a semi-private room in the hospital and the private room, (unless the patient's stay in a private hospital room is medically necessary in terms of generally accepted medical practice, or one of the plans routinely provides coverage for hospital private rooms) is not an allowable expense.

(2) If a person is covered by 2 or more plans that compute their benefit payments on the basis of usual and customary fees, any amount in excess of the highest of the usual and customary fees for a specific benefit is not an allowable expense. (3) If a person is covered by 2 or more plans that provide benefits or services on the basis of negotiated fees, an amount in excess of the highest of the negotiated fees is not an allowable expense.

(4) If a person is covered by one plan that calculates its benefits or services on the basis of usual and customary fees and another plan that provides its benefits or services on the basis of negotiated fees, the primary plan's payment arrangements shall be the allowable expense for all plans.

(5) The amount a benefit is reduced by the primary plan because a covered person does not comply with the plan provisions. Examples of these provisions are second surgical opinions and precertification of admissions.

D. “Claim determination period” is usually a calendar year, but a plan may use some other period of time that fits the coverage of the group contract. A person is covered by a plan during a portion of a claim determination period if that person's coverage starts or ends during the claim determination period. However, it does not include any part of a year during which a person has no coverage under this plan, or before the date this COB provision or a similar provision takes effect. E. “Closed panel plan” is a plan that provides health benefits to covered persons primarily in the form of services through a panel of providers that have contracted with either directly or indirectly or are employed by the plan, and that limits or excludes benefits for services provided by other providers, except in cases of emergency or referral by a panel member. F. “Custodial parent” means a parent awarded custody by a court decree. In the absence, of a court decree,-it is the parent with whom the child resides more than one half of the calendar year without regard to any temporary visitation.

Order-of-Benefit Determination Rules When two or more plans pay benefits, the rules for determining the order of payment are as follows: A. The primary plan pays or provides its benefits as if the secondary plan or plans did not exist. B. A plan that does not contain a coordination of benefits provision that is consistent with this regulation is always primary. There is one exception: coverage that is obtained by virtue of membership in a group that is designed to supplement a part of .a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder. Examples of these types of situations are major medical coverages that are superimposed over base plan hospital and surgical benefits, and insurance type coverages that are written in connection with a closed panel plan to provide out-of-network benefits. C. A plan may consider the benefits paid or provided by another plan in determining its benefits only when it is secondary to that other plan.

D. The first of the following rules that describes which plan pays its benefits before another plan is the rule to use.

(1) Non-Dependent or Dependent. The plan that covers the person other than as a dependent, for example as an employee, member, subscriber or retiree is primary and the plan that covers the person as a dependent is secondary. However, if the person is a Medicare beneficiary and, as a result of federal law, Medicare is secondary to the plan covering the person as a dependent; and primary to the plan covering the person as other than a dependent (e.g. a retired employee); then the order of benefits between the two plans is reversed so that the plan covering the person as an employee, member, subscriber or retiree is secondary and the other plan is primary.

(2) Child Covered Under More Than One Plan. The order of benefits when a child is covered by more than one plan is:

(a) The primary plan is the plan of the parent whose birthday is earlier in the year if: - The parents are married;

- The parents are not separated (whether or not they ever have been married); or - A court decree awards joint custody without specifying that one party has the responsibility to provide health care coverage.

If both parents have the same birthday, the plan that covered either of the parents longer is primary.

(b) If the specific terms of a court decree state that one of the parents is responsible for the child's health care expenses or health care coverage and the plan of that parent has actual knowledge of those terms, that plan is primary. This rule applies to claim determination periods or plan years commencing after the plan is given notice of the court decree.

(c) If the parents are separated (whether or not they ever have been married) or are divorced, the order of benefits is:

- The plan of the custodial parent;

- The plan of the spouse of the custodial parent;

- The plan of the noncustodial parent; and then - The plan of the spouse of the noncustodial parent.

(3) Active or inactive employee. The plan that covers a person as an employee who is neither laid off nor retired, is primary. The same would hold true if a person is a dependent of a person covered as a retiree and an employee. If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this rule is ignored. Coverage provided an individual as a retired worker and as a dependent of an actively working spouse will be determined under the rule labeled D(l). (4) Continuation coverage. If a person whose coverage is provided under a right of continuation provided by federal or state law also is covered under another plan, the plan covering the person as an employee, member, subscriber or retiree (or as that person's dependent) is primary, and the continuation coverage is secondary. If the other plan does not have this rule, and if, as a result, the plans do not agree on the order of benefits, this rule is ignored.

(5) Longer or shorter length of coverage. The plan that covered the person as an employee, member, subscriber or retiree longer is primary.

(6) If the preceding rules do not determine the primary plan, the allowable expenses shall be shared equally between the plans meeting the definition of plan under this regulation. Li addition, this plan will not pay more than it would have paid had it been primary. Effect on the Benefits of This Plan A. When this plan is secondary, it may reduce its benefits so that the total benefits paid or provided by all plans during a claim determination period are not more than 100 percent of total allowable expenses. The difference between the benefit payments that this plan would have paid had it been the primary plan, and the benefit payments that it actually paid or provided shall be recorded as a benefit reserve for the covered person and used by this plan to pay any allowable expenses, not otherwise paid during the claim determination period. As each claim is submitted, this plan will:

(1) Determine its obligation to pay or provide benefits under its contract; (2) Determine whether a benefit reserve has been recorded for the covered person; and (3) Determine whether there are any unpaid allowable expenses during that claims determination period.

If there is a benefit reserve, the secondary plan will use the covered person's benefit reserve to pay up to 100% of total allowable expenses incurred during the claim determination period. At the end of the claim determination period, the benefit reserve returns to zero. A new benefit reserve must be created for each new claim determination period.

B. If a covered person is enrolled in two or more closed panel plans the following coordination of benefits rules will apply:

(1) COB does not occur if the enrollee did not go to either plan's closed panel, unless there is a covered benefit (i.e. medical emergency, etc.).

(2) The two plans will coordinate benefits for covered services that are covered services for both plans (i.e. emergency services, services from providers that are participating in both plans, etc.).

(3) If the covered person goes to the primary plan's closed panel providers for covered services, the secondary carrier shall coordinate benefits only to the extent that there are benefits or reserves available.

(4) If the primary closed panel has no liability because the covered person did not use the closed panel providers, but the covered person used the secondary closed panel providers, the secondary plan will pay benefits as though they are primary. Right to Receive and Release Needed Information Certain facts about health care coverage and services are needed to apply these COB rules and to determine benefits payable under this plan and other plans. [Organization responsibility for COB administration] may get the facts it needs from or give them to other organizations or persons for the purpose of applying these rules and determining benefits payable under this plan and other plans covering the person claiming benefits. [Organization responsibility for COB administration] need not tell, or get the consent of, any person to do this. Each person claiming benefits under this plan must give [Organization responsibility for COB administration] any facts it needs to apply those rules and determine benefits payable.

Facility of Payment A payment made under another plan may include an amount that should have been paid under this plan. If it does, [Organization responsibility for COB administration] may pay that amount to the organization that made that payment. That amount will then be treated as though it were a benefit paid under this plan. [Organization responsibility for COB administration] will not have to pay that amount again. The term “payment made” includes providing benefits in the form of services, in which case “payment made” means reasonable cash value of the benefits provided in the form of services. Right of Recovery If the amount of the payments made by [Organization responsibility for COB administration] is more than it should have paid under this COB provision, it may recover the excess from one or more of the persons it has paid or for whom it has paid; or any other person or organization that may be responsible for the benefits or services provided for the covered person. The “amount of the payments made” includes the reasonable cash value of any benefits provided in the form of services. Appendix B Consumer Explanatory Booklet Coordination of Benefits IMPORTANT NOTICE This is a summary of only a few of the provisions of your health plan to help you understand coordination of benefits, which can be very complicated. This is not a complete description of all of the coordination rules and procedures, and does not change or replace the language contained in your insurance contract, which determines your benefits.

Double Coverage It is common for family members to be covered by more than one health care plan. This happens, for example, when a husband and wife both work and choose to have family coverage through both employers.

When you are covered by more than one group health plan, state law permits your carriers to follow a procedure called “coordination of benefits” to determine how much each should pay when you have a claim. The aim is to make sure that the combined payments of all plans do not add up to more than your covered health care expenses.

Coordination of benefits (COB) is complicated, and covers a wide variety of circumstances. This is only an outline of some of the most common ones. If your situation is not described, read your evidence of coverage or contact your state insurance department.

Primary or Secondary? You will be asked to identify all the plans that cover family members. We need this information to determine whether we are “primary” or “secondary.” The primary plan always pays first. Any plan which does not contain your state's coordination of benefits rules will always be primary. When This Plan is Primary If you or a family member are covered under another plan in addition to this one, we will be primary when; Your Own Expenses - The claim is for your own health care expenses, unless you are covered by Medicare and both you and your spouse are retired.

Your Spouse's Expenses - The claim is for your spouse, who is covered by Medicare, and you are not both retired. Your Child's Expenses - The claim is for the health care expenses of a child covered by this plan and - your birthday is earlier in the year than your spouse's. This is known as the “birthday rule” ; or - you are not married and you have informed us of a court decree that makes you responsible for the child's health care expenses;

or - there is no court decree, but you have custody of the child. Other Situations We will be primary when any other provisions of state or federal law require us to be. How We Pay Claims When We Are Primary When we are the primary plan, we will pay the benefits provided by your contract, just as if you had no other coverage.

How We Pay Claims When We Are Secondary We will be secondary whenever the rules do not require us to be primary. When we are the secondary plan, we do not pay until after the primary plan has paid its benefits. We will then pay part or all of the allowable expenses left unpaid. An “allowable expense” is a health care service or expense covered by one of the plans, including copayments and deductibles. - If there is a difference between the amount the plans allow, we will base our payment on the higher amount. However, if the primary plan has a contract with the provider, our combined payments will not be more than the contract calls for. Health maintenance organizations (HMO) and preferred provider organizations (PPO) usually have contracts with their providers. - We will determine our payment by subtracting the amount the primary plan paid from the amount we would have paid if we had been primary. We will use any savings to pay the balance of any unpaid allowable expenses covered by either plan.

- If the primary plan covers similar kinds of health care, but allows expenses that we do not cover, we will pay for those items as long as there is a balance in your benefit reserve, as explained below. - We will not pay an amount the primary plan didn't cover because you didn't follow its rules and procedures. For example, if your plan has reduced its benefit because you did not obtain pre-certification, we will not pay the amount of the reduction, because it is not an allowable expense. Benefit Reserve When we are secondary we often will pay less than we would have paid if we had been primary. Each time we “save” by paying less, we will put that savings into a benefit reserve. Each family member covered by this plan has a separate benefit reserve.

- We use the benefit reserve to pay allowable expenses that are covered only partially by both plans. To obtain a reimbursement, you must show us what the primary plan has paid so we can calculate the savings.

- To make sure you receive the full benefit or coordination, you should submit all claims to each of your plans.

- Savings can build up in your reserve for one year. At the end of the year any balance is erased, and a fresh benefit reserve begins for each person the next year as soon as there are savings on their claims. Questions About Coordination of Benefits?Colorado Division of Insurance1560 Broadway, Ste 850 Denver, CO 80202 Phone Number: 303-894-7490 or 1-800-930-3745 Amended Regulation 4-6-3 Concerning CoverColorado Standardized Notice Form And Eligibility Requirements Section 1 Authority Section 2 Basis and Purpose Section 3 Applicability and Scope Section 4 Rules Section 5 Enforcement Section 6 Severability Section 7 Effective Date Section 8 History Section 1. Authority This regulation is promulgated by the Commissioner of Insurance under the authority of § § 10-1 -109 and 10-8-520, C.R.S. “ Section 2. Basis and Purpose The purpose of this amended regulation is to specify standardized notice requirements to be used to notify individuals of their eligibility for CoverColorado. Section 3. Applicability and Scope This regulation applies to all carriers offering health benefit plans to residents of Colorado. Section 4. Rules A. Definitions 1. “Carrier” means an insurance company, non-profit hospital, medical-surgical and health service corporation, health maintenance organization or fraternal benefit society, which is authorized by the Commissioner to transact health insurance in Colorado. 2. “Federally eligible individual” shall have the same meaning as defined in Colorado Revised Statute 10-16-105.5(1).

B. Notification Requirements for Individuals with Adverse Underwriting Decisions 1. In order to comply with § 10-8-521, C.R.S., all carriers giving notice to an applicant or insured of one or more of the following adverse underwriting determinations shall be required to give notice to the applicant or insured that he or she may be eligible for coverage under CoverColorado. Dependents of participants are also eligible for coverage under the program. The adverse underwriting decisions which require the carrier to notify the applicant/insured are:

a. The applicant is rejected for insurance because of the medical condition or history of the applicant; or b. The application was accepted, but the premium rate for insurance exceeds the rate available through CoverColorado; or c. Coverage will be reduced, limited by a restrictive rider or by the exclusion of coverage for a pre-existing condition for longer than six months. 2. Carriers shall be required to complete the CoverColorado Notice Form for every adverse underwriting determination listed above. Carriers may print the CoverColorado Notice Form on their own stationery but shall use the order, format and content of the CoverColorado Notice Form, as prescribed by the Commissioner of Insurance. 3. The carrier shall attach a copy of the CoverColorado Program Notice Form to the notice of adverse underwriting determination sent to an applicant for insurance. The carrier shall attach a copy of the Notice Form to a copy of the policy and endorsement when it is sent to the insured in the case of an individual being accepted for health insurance coverage but at a premium rate exceeding the rate available through the CoverColorado Program. 4. Insurers should inform individuals they may be eligible for participation in the plan, without first requiring application to a carrier for health coverage, if a licensed physician has diagnosed the individual with a medical condition that is on the list of presumptive medical conditions established by the CoverColorado Board of Directors. C. Elements of the CoverColorado Notice Form for Adverse Underwriting Decisions The elements of notification as determined by the Commissioner, which must be given to individuals with adverse underwriting decisions are:

Applicant/Insureds:

1. Name.

2. Policy number (if applicable).

3. Reasons for notice: rejection of coverage, health rate higher than the rate available through Cover-Colorado or coverage that will be reduced by a restrictive rider or by excluding coverage for a pre-existing condition longer than six months or involuntarily terminated for reasons other than nonpayment of premium. 4. That the individual and dependents are eligible for the health care coverage through CoverColorado.

5. Name, address, contact person, and telephone number of CoverColorado Administrative Office to which interested persons should be referred. 6. Name and telephone number of underwriter or other contact at the carrier's office. 7. A statement that the applicant may receive information about the available CoverColorado benefits and exclusions by contacting the CoverColorado Administrative Office.

D. Notification Requirements for Federally Eligible Individuals 1. Individuals who meet the definition of a federally eligible individual under 10-16-105.5, C.R.S., are automatically eligible for CoverColorado. A dependent of a federally eligible individual shall also be eligible for coverage under CoverColorado if the dependent satisfies the definition of “dependent” under § 10-16-102(14) C.R.S.

2.

a. When a termination of coverage results in a federally eligible individual, the group carrier shall provide notice to the individual as specified in paragraph E. Notice, to the extent practicable, shall be provided at a time consistent with notice required for certification of creditable coverage.

b. When an individual carrier receives an application for coverage from a federally eligible individual, the individual carrier shall provide notice to the individual as specified in paragraph E.

E. Elements of the CoverColorado Notice Form for Federally Eligible Individuals The elements of notification as determined by the Commissioner, which must be given to federally eligible individuals:

Applicant/Insureds:

1. Name.

2. Policy number (if applicable).

3. Notice that-the individual and dependents if applicable, may qualify for health insurance from CoverColorado, as a federally eligible individual. 4. Name, address, contact person, and telephone number of CoverColorado Administrative Office to which interested persons should be referred. 5. A statement that the applicant may receive information about the available CoverColorado benefits and exclusions by contacting the CoverColorado Administrative Office.

Section 5. Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. Section 6. Severability If any provision of this regulation or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of such provision shall not be affected thereby.

Section 7. Effective Date This regulation shall become effective on February 1, 2002. Section 8. History 1. New Regulation 91-3 effective April 1, 1991.

2. Regulation 91-3 was renumbered 4-6-3, effective June 1, 1992. 3. Amended effective April 1, 1994.

4. Amended effective November 1, 1997.

5. Amended effective September 1, 2000.

6. Emergency Regulation 01-E-l, effective January 1, 2002. 7. Amended effective February 1, 2002.

Regulation 4-6-5 CONCERNING SMALL EMPLOYER GROUP HEALTH BENEFIT PLANS AND THE BASIC AND STANDARD HEALTH BENEFIT PLANS [Eff. 02/01/2009] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Rules Section 5 Enforcement Section 6 Severability Section 7 Effective Date Section 8 History Section 1 Authority This regulation is promulgated and adopted by the Commissioner of Insurance under the authority of § § 10-1-109, 10-16-105(7.2), 10-16-108.5(8), and 10-16-109, C.R.S. Section 2 Scope and Purpose The purpose of the amendment to this regulation is to comply with the enactment of Senate Bill 08-057, which mandates coverage of hearing aids for children under the age of 18 and House Bill 08-1410, concerning the coverage of colorectal cancer prevention services. This regulation specifies the requirements for the basic and standard health benefit plans as well as other requirements for small employer carriers. This regulation replaces Emergency Regulation 08-E-12 in its entirety. Section 3 Applicability This regulation shall apply to all small employer carriers as defined in §10-16-102(41), C.R.S., and to all carriers required to provide conversion products pursuant to §10-16-108, C.R.S. Section 4 Rules A. Plans 1. Basic Plan. The form and content of the basic health benefit plan may be one or more of the three plan design options as appended to this regulation and shall constitute the basic health benefit plan design pursuant to §10-16-105(7.2), C.R.S. At least one of these three plan design options, two of which are high deductible, HSA-qualified plan options, shall be required for use in Colorado’s small employer group market pursuant to §10-16- 105(7.3), C.R.S., and as conversion coverage pursuant to §10-16-108, C.R.S. However, if the carrier chooses to offer more than one basic health benefit plan design, it shall offer all of its basic plan options to every small employer that expresses an interest in the basic health benefit plan or to those individuals purchasing a basic conversion plan. 2. Standard Plan. The form and content of the standard health benefit plan, as appended to this regulation, shall constitute the standard health benefit plan required for use in Colorado's small employer group market pursuant to §10-16-105(7.3), C.R.S., and for use as conversion coverage pursuant to §10-16-108, C.R.S. B. The basic and standard health benefit plans shall be identified as specified below. 1. Each small employer carrier shall title and market its basic health benefit plan as follows: “[Carrier name] [Type of plan (i.e., Indemnity, Preferred Provider or HMO) (Basic Limited Mandate Health Benefit Plan, Basic HSA Health Benefit Plan or Basic HSA Limited Mandate Health Benefit Plan)] for Colorado” .

2. Each small employer carrier shall title and market the standard health benefit plan as follows: “[Carrier name] [Type of plan (i.e., Indemnity, Preferred Provider, or HMO)] Standard Health Benefit Plan for Colorado” .

C. A small employer carrier shall actively market the basic and standard health benefit plans to small employers in this state.

D. In marketing the basic and standard health benefit plans to small employers, a small employer carrier shall use at least the same sources and methods of distribution that it uses to market other health benefit plans to small employers. Any producer authorized by a small employer carrier to market health benefit plans to small employers in the state shall also be authorized to market the basic and standard health benefit plans.

E. Disclosure Statement 1. The following disclosure statement, prominently displayed in bold face capital letters no smaller than 14 point font for printed materials or in a clear and conspicuous manner for printed materials, electronic or internet-based communications shall appear on all small employer marketing materials (except the Colorado Health Benefit Plan Description Form pursuant to Colorado Insurance Regulation 4-2-20), the Colorado Small Group Uniform Employee Application form, small employer renewal notices, and on all written refusals to insure that are related to health coverage for a business group of one. “Colorado insurance law requires all carriers in the small group market to issue any health benefit plan it markets in Colorado to small employers of 2-50 employees, including a basic or standard health benefit plan, upon the request of a small employer to the entire small group, regardless of the health status of any of the individuals in the group. Business groups of one cannot be rejected under a basic or standard health benefit plan during open enrollment periods as specified by law.” 2. “Clear and conspicuous” means with respect to a disclosure that the disclosure is reasonably understandable and designed to call attention to the nature and significance of the information it contains. A disclosure is considered designed to call attention to the nature and significance of the information in it if the carrier: a. Uses a typeface and type size that are easy to read; b. Provides wide margins and ample line spacing;

c. Uses boldface, underscoring, capitals or italics for key words and phrases; and d. In a form that combines the disclosure with other information, uses a plain-language heading to call attention to the disclosure portion of the document and uses a type size that is greater than the type size predominantly used in the rest of the document or uses style and graphic devices, such as shading or sidebars. 3. If a disclosure is provided on a web page, the carrier must design its disclosure to call attention to the nature and significance of the information in it. For example, the carrier uses text or visual cues to encourage scrolling down the page, if necessary, to view the entire disclosure. The carrier must ensure that other elements on the web site (such as text, graphics, hyperlinks or sound) do not distract attention from the disclosure, and the carrier either:

a. Places the disclosure on a screen that consumers frequently access, such as a page on which transactions are conducted; or b. Places a link on a screen that consumers frequently access, such as a page on which transactions are conducted, that connects directly to the disclosure and is labeled appropriately to convey the importance, nature and relevance of the disclosure. F. Except as specified in §10-16-105.2(3), C.R.S., a small employer carrier shall offer the basic and standard health benefit plans along with all of its other small group plans to any small employer that applies for or makes an inquiry regarding health coverage from the small employer carrier. The offer may be provided directly to the small employer or delivered through a producer. The offer shall be in writing and shall include information as required by §10-16-105(5), C.R.S. G. Quotes 1. A small employer carrier shall provide a price quote to a small employer (directly or through an authorized producer) within five (5) business days of receiving all information necessary to provide a requested quote. Each price quote must be calculated using the carrier’s filed rate, as defined in Colorado Insurance Regulation 4-6-7. 2. A small employer carrier shall notify a small employer (directly or through an authorized producer) within five (5) business days of receiving a request for a price quote if any additional information is needed. If a small employer carrier provides a price quote prior to receiving all information necessary to calculate any premium adjustments allowed under §10-16-105(8.5)(a), C.R.S., that quote must be the filed rate. The quote shall include a statement indicating that the rate is not final, and once all information is received, the rate will be recalculated using rating factors allowable by law, and may vary from the initial price quote.

3. A price quote shall be provided without requiring verification of the eligibility of the small group, including business groups of one. The fact that a price quote has been issued shall not prevent the small employer carrier from verifying the group’s eligibility before issuing the coverage.

4. A small employer carrier shall not apply more stringent or detailed requirements related to the price quote or application process for the basic and standard health benefit plans than are applied for other small group health benefit plans offered by the small employer carrier, except as allowed for underwriting business groups of one. 5. Quotes for the basic and standard health benefit plans shall include quotes for each type of basic and standard health benefit plan the carrier markets (e.g., PPO, indemnity, HMO, HSA-qualified).

H. If a small employer carrier denies coverage to a business group of one for any of its health benefit plans on the basis of risk characteristics, the denial shall be in writing and shall state with specificity the reasons for the denial (subject to any restrictions related to the confidentiality of medical information). The written denial shall be accompanied by a written explanation of the availability of the basic and standard health benefit plans from the small employer carrier. The explanation shall include at least the following:

1. A copy of the Colorado Health Benefit Plan Description Form for each basic and standard health benefit plan offered by the small employer carrier; 2. A price quote, in the manner required by Section 4.G. of this regulation, for each such plan if the business group of one is in its open enrollment period or a sample price quote reflecting current rates if the business group of one is not in its open enrollment period. In the case of a sample price quote, the small employer carrier shall disclose that the actual rates may be different than the sample rates if there are changes in the small employer carrier’s filed rates or application of rating factors; and 3. Information describing how the business group of one can enroll in such plans. The explanation shall be provided directly to the business group of one or through an authorized producer within the time frames provided in Paragraphs G.1 and G.2. I. A small employer carrier shall establish and maintain a toll-free telephone service to provide information to small employers regarding the availability of small employer health benefit plans in this state. The service shall provide information to callers on how to apply for coverage from the carrier. The information may include the names and phone numbers of producers located geographically proximate to the caller or other such information that is reasonably designed to assist the caller to locate an authorized producer or otherwise apply for coverage through the carrier. J. A small employer carrier may not require, as a condition for the offer or sale of a basic or standard health benefit plan, that the small employer purchase or qualify for any other product, service, or association.

K. A small employer carrier shall conform to the renewability requirements specified in §10-16-201.5, C.R.S.

L. Small employer carriers shall elicit, at the time of application, information from applicants necessary to determine whether or not small group laws apply pursuant to §10-16-105.2(1), C.R.S. If a small employer carrier fails to elicit this information, it shall be deemed to be on notice of any information that could reasonably have been attained if the small employer carrier had done so. M. Annual Report 1. A small employer carrier shall file annually, on a form or in the manner specified by the Commissioner, information related to health benefit plans issued by the small employer carrier to small employers in this state. This information may include, but is not limited to: a. The number of small employers that were issued health benefit plans in the previous calendar year;

b. The number of small employers that were issued the basic health benefit plan and the standard health benefit plan in the previous calendar year; c. The number of individuals issued coverage under small employer plans who were uninsured for at least three months prior to their effective date of coverage; d. The total number of individuals, separated as to employees and dependents, insured under basic and standard health benefit plans in the previous calendar year; and e. The total number of individuals, separated as to employees and dependents, insured under all small employer health benefit plans.

2. The information described in Paragraph M.1. shall be filed no later than March 1 of each year on the form or in the manner specified by the Commissioner. Section 5 Enforcement Noncompliance with this regulation is a violation of §10-3-1104, C.R.S., and subject to the sanctions specified in §10-3-1108, C.R.S., including the imposition of fines and the suspension or revocation of the certificate of authority.

Section 6 Severability If any provision of this regulation is for any reason held to be invalid, the remainder of the regulation shall not be affected thereby.

Section 7 Effective Date This amended regulation is effective on February 1, 2009. Section 8 History 1. Original regulation effective January 1, 1995.

2. Amended regulation adopted recommended changes from Health Benefit Plan Advisory Committee to be effective January 1, 1996.

3. Emergency amendment for exclusion of work related illnesses and injuries effective January 1, 1996. 4. Amended regulation adopting emergency amendment as permanent effective April 1, 1996. 5. Amended regulation adopting recommended changes from the Health Benefit Plan Advisory Committee effective January 1, 1997.

6. Amended regulation incorporating changes required by 1997 legislation and recommendations of the Health Benefit Plan Advisory Committee effective January 1, 1998. 7. Amended regulation incorporating recommendations from the Health Benefit Plan Advisory Committee effective January 1, 1999.

8. Amended regulation incorporating recommendations from the Health Benefit Plan Advisory Committee effective January 1, 2000.

9. Amended regulation, correcting errors in the Basic Indemnity Out-of-Pocket Maximum, the Basic PPO In-network Family Coinsurance, and the Standard Indemnity and PPO Maternity benefit. Corrections effective January 1, 2000.

10. Amended regulation incorporating recommendations from the Health Benefit Plan Advisory Committee effective January 1, 2001.

11. Amended regulation incorporating recommendations from the Health Benefit Plan Advisory Committee effective January 1, 2002.

12. Emergency regulation, effective January 1, 2003.

13. Amended regulation effective February 1, 2003.

14. Amended regulation effective January 1, 2004.

15. Emergency Regulation 04-E-4 effective July 1, 2004. 16. Emergency Regulation 04-E-9 effective September 29, 2004. 17. Amended regulation effective November 1, 2004.

18. Amended regulation effective January 1, 2006.

19. Amended regulation effective January 1, 2008.

20. Attachment 1 amended effective March 1, 2008.

21. Emergency Regulation 08-E-12 effective January 1, 2009. 22. Amended regulation effective February 1, 2009.

BASIC AND STANDARD HEALTH BENEFIT PLAN POLICY REQUIREMENTS FOR THE STATE OF COLORADO Colorado Division of Insurance Effective February 1, 2009 1. The basic health benefit plan as defined by the Commissioner pursuant to §10-16-105(7.2)(b), C.R.S., for an indemnity, preferred provider organization (PPO), and health maintenance organization (HMO) plan shall include the specific benefits and coverages outlined in one of the attached tables labeled “Basic Limited Mandate Health Benefit Plan” , “Basic HSA Health Benefit Plan” , or “Basic HSA Limited Mandate Health Benefit Plan” .

2. The standard health benefit plan for an indemnity, PPO, and HMO plan shall include the specific benefits and coverages outlined in the attached table labeled “Standard Health Benefit Plan” . 3. All provisions of Title 10, Article 16 of the Colorado Revised Statutes that apply to small employer group plans shall apply to the basic and standard health benefit plans. All other provisions of Title 10 which apply to group sickness and accident insurers, nonprofit health and hospital service corporations, and health maintenance organizations, and all rules and regulations related to those provisions, as they relate to small employer group plans, shall also apply.

4. Modifications to the basic and standard health benefit plans (unless specifically stated otherwise in statute) shall apply to any basic or standard health benefit plan, whether group or conversion, when issued or renewed on or after the effective date specified above. 5. All basic and standard health benefit plans shall also comply with the following requirements: A. Balance Billing: In-network providers are prohibited from balance billing individuals covered under the basic or standard health benefit plan. “Balance billing” refers to the practice whereby a provider bills an individual covered under the basic or standard health benefit plan for the difference between the amount the provider normally charges for a service and the amount the plan, policy, or contract recognizes as the allowable charge or negotiated price for the services delivered.

In the case of indemnity plans and out-of-network PPO plan benefits, carriers must alert those covered under the basic and standard health benefit plans to the fact that their provider is not prohibited from balance billing except as proscribed in §10-16-704, C.R.S. Consumers should be encouraged to discuss the issue with their provider. B. Benefit Modifications: The form and level of coverages specified in the tables labeled “Basic Limited Mandate Health Benefit Plan” , “Basic HSA Health Benefit Plan” , “Basic HSA Limited Mandate Health Benefit Plan” and “Standard Health Benefit Plan” may be expanded to add additional coverage through a rider or endorsement at the option of the policyholder only.

C. Cost Containment: In their basic and standard health benefit plans, carriers shall disclose whether or not, and to what extent, they use or require the use of the following cost containment approaches: utilization review; second surgical opinions; pre-admission and pre-certification; use of non-physician primary care providers; alternative dispute resolution; and managed care. For PPO plans, accumulations for deductibles and out-of- pocket maximums are calculated separately for in-network and out-of-network. Carriers must disclose deductible and out-of-pocket maximum calculations on the Colorado Health Benefit Plan Description Form as required in Colorado Insurance Regulation 4-2- 20.

Use of gatekeepers is encouraged but not required. Carriers must offer the most managed care version of each indemnity, PPO, and/or HMO plan they offer in Colorado. A small employer carrier must offer the same choice of networks for its basic and standard health benefit plans as it offers for all of its other small group health benefit plans (e.g., if a carrier markets to small employers both a PPO plan with a broad network and one with a limited network, it must provide basic and standard PPO options using each of the networks).

D. Eligibility: “Actively at work” and “non-confinement” provisions are prohibited. E. Employer Contribution and Participation Requirements: The employer contribution and participation requirements applied to the basic and standard health benefit plans shall be in compliance with §10-16-105(7.4), C.R.S.

F. Enrollment: To enroll an employee and dependents, the carrier shall require that: 1. Employers:

a. Submit a written request for coverage;

b. Provide information necessary to determine eligibility; and c. Agree to pay the required premium.

2. Eligible employees, on the Colorado Small Group Uniform Employee Application form made available by the employer:

a. Submit a written request for coverage for himself/herself and any dependents; and b. Provide information necessary to determine eligibility, if it is required. G. Family Planning Services: Family planning services must be included as a covered benefit under both the basic and standard health benefit plans. At a minimum, family planning services shall include maternity care, prenatal and postnatal care and counseling, treatment and screening as appropriate for sexually transmitted diseases, sterilization, contraceptives, and contraception counseling.* H. Out-of-pocket Maximum: All cost sharing (deductibles, coinsurance, copays), unless specifically noted otherwise, apply toward the annual out-of-pocket maximum. After the out-of-pocket maximum is satisfied, benefits are paid at 100%. PPO out-of-network, out- of-pocket maximum amounts are separate from the in-network, out-of-pocket maximum amounts.

I. Primary Care Providers: Carriers may use non-physician providers, such as certified nurse practitioners and physician’s assistants, as primary care providers under the basic and standard health benefit plans. However, carriers are not mandated to include non- physician providers.

J. Copays: All coverages that have any type of flat dollar copay are not subject to the deductible except for the Basic Limited Mandate Health Benefit Plan’s prescription drug deductible.

K. Deductibles: None of the basic and standard health benefit plans that include deductibles provide fourth quarter carryover credit. PPO out-of-network deductibles are separate from in-network deductibles.

L. Usual, Customary and Reasonable Determinations: For all basic and standard health benefit plans, each carrier shall use the same method of determining usual, customary and reasonable charge allowances as it uses for its most frequently sold non-basic, non- standard group health benefit plan in Colorado.

* Infertility treatment and counseling, and abortion services shall be covered by a carrier under the basic and standard health benefit plans if such services are covered by the carrier under its most frequently sold non-basic, non-standard group health benefit plan in Colorado. Benefits, including deductibles and copayments, shall be provided in accordance with the appropriate level of benefits in the Basic and Standard plans based on the type and location of the services provided (e.g., office visit, lab, X-ray, etc.). [NOTE: This benefit grid has been formatted to more closely conform to the Colorado Health Benefit Plan Description Form. However, it does not reflect full compliance with that form as the intent is to provide carriers with a description of the plan benefits.] JANUARY 1, 2009 COLORADO BASIC LIMITED MANDATE HEALTH BENEFIT PLANS: INDEMNITY, PPO AND HMO

[NOTE: This benefit grid has been formatted to more closely conform to the Colorado Health Benefit Plan Description Form. However, it does not reflect full compliance with that form as the intent is to provide carriers with a description of the plan benefits.] JANUARY 1, 2009 COLORADO BASIC HSA HEALTH BENEFIT PLANS: INDEMNITY, PPO, AND HMO

[NOTE: This benefit grid has been formatted to more closely conform to the Colorado Health Benefit Plan Description Form. However, it does not reflect full compliance with that form as the intent is to provide carriers with a description of the plan benefits.] JANUARY 1, 2009 COLORADO BASIC HSA LIMITED MANDATE HEALTH BENEFIT PLANS: INDEMNITY, PPO, AND HMO

[NOTE: This benefit grid has been formatted to more closely conform to the Colorado Health Benefit Plan Description Form. However, it does not reflect full compliance with that form as the intent is to provide carriers with a description of the plan benefits.] JANUARY 1, 2009 COLORADO STANDARD HEALTH BENEFIT PLANS: INDEMNITY, PPO, AND HMO

Attachment 1 . Covered Preventive 1 Services All Persons 1 smoking cessation education program benefit under physician supervision or as authorized by plan per lifetime, not to exceed $150 payment by insurer.

. Chicken pox vaccination for all persons who have not had chicken pox.

Females Full cost of cervical 1a cancer vaccine All Children Immunizations.

Immunization deficient children are not bound by “recommended ages” .

Age 0-12 months 1 newborn home visit during first week of life if newborn released from hospital less than 48 hours after delivery.

. 2 6 well-child visits . 1 PKU Age 13-35 months 3 well-child visits Age 3-6 4 well-child visits Age 7-12 4 well-child visits Age 13-18 .

1 age appropriate health .

3 maintenance visit every year . 1 Td . Females: screening pap smears not to exceed 1 per year . 1 hepatitis B vaccination if not given previously 1 Not all preventive services and screenings are specifically listed, but the list is considered to include all services and screenings deemed to be preventive by the Federal Department of the Treasury for HSA (health savings account) compliant plans. 1a Age limitations as recommended by the U.S. Department of Health and Human Services’ Advisory Committee on Immunization Practices.

2 "Well-child visit" means a visit to a primary care provider that includes the following elements: age appropriate physical exam (but not a complete physical exam unless this is age appropriate), history, anticipatory guidance and education (e.g., examine family functioning and dynamics, injury prevention counseling, discuss dietary issues, review age appropriate behaviors, etc.), and growth and development assessment. For older children, this also includes safety and health education counseling. The schedule of these visits, through age 12, is based on the recommendations of the American Academy of Pediatrics. 3 “Age appropriate health maintenance visit” means an exam which includes the following components: age appropriate physical exam (but not a complete physical exam unless this is age appropriate), history, anticipatory guidance and education (e.g., examine family functioning and dynamics, discuss dietary issues, review health promotion activities of the patient, etc.), and exercise and nutrition counseling (including folate counseling for women of child bearing age). Age 19-39 1 Td every ten years . 1 age appropriate health maintenance visit every three years . 1 fasting lipid panel . Females ages 35-39: 1 baseline screening mammogram and clinical breast exam (Mammograms are not covered under the Basic Limited Mandate Health Benefit Plans and the Basic HSA Limited Mandate Health Benefit Plans.)

. Females: screening pap smears not to exceed 1 per year Age 40-64 1 Td every ten years . 1 fasting lipid panel every five years . Either annual fecal occult blood testing or 2 colorectal visualizations 4 between ages 50 and 75 . 1 age appropriate health maintenance visit every 24 months . Females ages 40-49: 1 screening mammogram and clinical breast exam every 2 years (annually, if high risk)

(Mammograms are not covered under the Basic Limited Mandate Health Benefit Plans and the Basic HSA Limited Mandate Health Benefit Plans.)

. Females ages 50-64: 1 screening mammogram and clinical breast exam every 12 months (Mammograms are not covered under the Basic Limited Mandate Health Benefit Plans and the Basic HSA Limited Mandate Health Benefit Plans.)

. Females: screening pap smears not to exceed 1 per year . Males: Prostate screening as specified in state law (Not covered under the Basic Limited Mandate Health Benefit Plans and the Basic HSA Limited Mandate Health Benefit Plans.)

Age 65 and older 1 influenza immunization every year . 1 pneumococcal vaccine at or after age 65 . Females: screening pap smears not to exceed 1 per year . 1 Td every ten years . 1 age appropriate health maintenance visit every year . Females age 65 to 74: 1 screening mammogram and clinical breast exam every 12 months (Mammograms are not covered under the Basic Limited Mandate Health Benefit Plans and the Basic HSA Limited Mandate Health Benefit Plans.)

. Either annual fecal occult blood testing or 2 colorectal visualizations 4 between ages 50 and 75 . Males: Prostate screening as specified in state law (Not covered under the Basic Limited Mandate Health Benefit Plans and the Basic HSA Limited Mandate Health Benefit Plans.)

4 For policies delivered, issued, renewed or reinstated on or after July 1, 2009, the following colorectal screening services shall be provided: In compliance with §10-16-104(18), C.R.S., coverage shall be provided for the preventive health care services for asymptomatic, average risk adults who are 50 years of age or older and covered persons who are at high risk for colorectal cancer, including covered persons who have a family medical history of colorectal cancer; a prior occurrence of cancer or precursor neoplastic polyps; a prior occurrence of a chronic digestive disease condition such as inflammatory bowel disease, Crohn’s disease, or ulcerative colitis; or other predisposing factors as determined by the provider. Colorectal cancer screenings are covered prior to July 1, 2009; however, the requirements mandated by §10-16-104(18), C.R.S., do not apply until July 1, 2009. Benefits are provided for the following tests as determined by the provider that detect adenomatous polyps or colorectal cancer: modalities that are currently included in an “A” recommendation or a “B” recommendation of the U.S. Preventive Services Task Force, or any successor organization, sponsored by the Agency for Healthcare Research and Quality, the health services research arm of the federal Department of Health and Human Services.

Coverage shall not be subject to policy deductibles, but copayments and/or coinsurance will apply as specified. For an HMO that provides health care services directly to its enrollees, a 10% copay shall be assessed. Services are covered only if they are rendered by a provider who is designated by and affiliated with the HMO.

Regulation 4-6-7 CONCERNING PREMIUM RATE SETTING FOR SMALL GROUP HEALTH PLANS [Eff. 02/01/2009] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Premium Rate Setting Section 6 Use of Composite Rates Section 7 Rate Filings and Actuarial Certifications Section 8 Enforcement Section 9 Severability Section 10 Effective Date Section 11 History Section 1 Authority This regulation is promulgated under the authority of § §10-1-109(1), 10-16-102(10)(b)(II), 10-16-104.9, 10-16-105(6.5), 10-16-105(7.2), 10-16-105(8)(f), 10-16-105(8.5) and 10-16-109, C.R.S. Section 2 Scope and Purpose The purpose of this regulation is to establish and implement rules for setting premiums for small group health benefit plans. This regulation concerns: applicability and scope of Colorado’s small group health rating laws; carriers’ obligations to provide coverage; premium rate setting; use of composite rates; rate filings; and actuarial certifications.

Section 3 Applicability This regulation shall apply to all small group carriers and health benefit plans subject to the small group laws of Colorado.

Section 4 Definitions A. “Filed rate” means the Index Rate as adjusted for plan design and the case characteristics of age, geographic location, and family size only. The “filed rate” does not include the Index Rate as further adjusted for any other case characteristic (See Section 5(A)(3) of this regulation). B. "Metropolitan statistical area (MSA)" is a relatively freestanding area of the state determined by one or more large population nuclei, together with adjacent communities, that have a high degree of economic and social integration with the nuclei. Each MSA is not closely associated with another MSA. An MSA is a statistical standard developed for use by the Federal Office of Management and Budget, following a set of officially published standards, including, but not limited to, the acceptable underlying population base.

C. "Premium rate," "rate" and "premium" mean all moneys paid by a small employer and eligible employees as a condition of receiving coverage from a carrier, including any fees or other contributions associated with obtaining or administering the health benefit plan. D. “Primary metropolitan statistical area (PMSA)” is a possible subcategory of an MSA, which has a million or more persons living in that MSA. The PMSA consists of a large urbanized county or cluster of counties that demonstrate very strong internal economic and social links, in addition to close ties, to other portions of the larger area. Each PMSA is also determined by the Federal Office of Management and Budget following a set of officially published standards, including, but not limited to, the acceptable underlying population base. E. "Qualified actuary" means an actuary who meets the requirements of Colorado Insurance Regulation 1-1-1.

F. “Renewed." A health benefit plan is deemed renewed upon the occurrence of the earliest of: the anniversary date of issue; or the date on which premium rates can be or are changed according to the terms of the plan; or the date on which benefits can be or are changed according to the terms of the plan.

Section 5 Premium Rate Setting A. Calculating Premium Rates Adjusted for Case Characteristics 1. Index Rate - Each carrier offering a health benefit plan to groups in Colorado shall develop a single index rate for all small group plans it offers. This single index rate is identical to a community rate for the company’s universe of small group plans offered for new issue or renewal. It should be calculated using the experience for all small group plans. The premium rate charged during a rating period, applicable to all small employers, shall be based upon this index rate, adjusted for case characteristics and coverage as allowed in this Section 5.

2. Plan Design Adjustment - The Index Rate may be adjusted to reflect differences attributable to different plan designs. If the small employer carrier elects to make this adjustment, the small employer carrier should calculate a rate adjustment factor for each small group plan design. Differences in the rates for different benefit plans, for persons with the same case characteristics of age, geographic location and family size, shall be attributable to plan design only. Using this methodology, a carrier's rates for a plan with richer benefits than the Colorado Standard Health Benefit Plan should be higher than the rates for its Colorado Standard Health Benefit Plan, and a carrier's rates for a plan with leaner benefits than the Colorado Standard Health Benefit Plan should be lower than the rates for its Colorado Standard Health Benefit Plan.

3. Acceptable Case Characteristic Factor Categories - For all small employer policies carriers choosing to modify the unique index rate by the use of case characteristics must utilize one or more of the categories listed below. Carriers shall develop a rating factor for each category, which is actuarially based.

a. Age - if a carrier uses age to calculate rates, then it shall use the following 12 mandatory age categories. Rates must be based on employee age only, not employee and spouse ages.

Mandatory Age Categories Children ages newborn through age 19 (or through age 24 if the child is a full-time student covered as a dependent), excluding emancipated minors Emancipated minors and persons ages 20 through 24 Age 25 through 29 Age 30 through 34 Age 35 through 39 Age 40 through 44 Age 45 through 49 Age 50 through 54 Age 55 through 59 Age 60 through 64 Age 65 and older:

Medicare is primary payer Age 65 and older:

Medicare is secondary payer b. Geographic Location - if a carrier uses geographic location to calculate rates, then it shall use the 9 mandatory categories listed below. In determining that these geographic location categories best serve the public interest, the commissioner considered the key issues of accessibility, availability, consumer choice and the cost of health care in all areas of the state. Public and consumer input was solicited, received, and evaluated. The commissioner determined that these area groupings best serve the public interest by maximizing consumer choice options and health care availability in all areas of the state at the lowest possible cost and will ensure that the rates charged are not excessive, inadequate or unfairly discriminatory. The appropriate population base for these categories is the base as determined by the federal government in establishing MSAs, except for the last two categories listed below. No MSA exists for these counties and consequently these counties were grouped by population size. Carriers may, with the prior written approval of the commissioner, establish one or more additional categories by further subdividing the last two categories. Rates must be based on the primary physical location of the small employer’s business, except that an employer with multiple business locations in separate geographic categories may be provided with separate rates for each physical business location. There cannot be a separate factor for a small employer’s out-of-state employees, if any. These individuals shall be rated as if they are working in the small employer’s primary physical business location. Mandatory Geographic Location Categories Boulder County (known as the Boulder-Longmont PMSA)

Adams, Arapahoe, Broomfield, Denver, Douglas, and Jefferson counties (known as the Denver MSA)

Weld County (known as the Greeley PMSA)

El Paso County (known as the Colorado Springs MSA)

Larimer County (known as the Fort Collins- Loveland MSA)

Mesa County (known as the Grand Junction MSA)

Pueblo County (known as the Pueblo MSA)

Counties in Colorado with a population of 20,000 or fewer residents: Alamosa, Archuleta, Baca, Bent, Chaffee, Cheyenne, Clear Creek, Conejos, Costilla, Crowley, Custer, Dolores, Gilpin, Grand, Gunnison, Hinsdale, Huerfano, Jackson, Kiowa, Kit Carson, Lake, Las Animas, Lincoln, Mineral, Moffat, Otero, Ouray, Park, Phillips, Pitkin, Prowers, Rio Blanco, Rio Grande, Saguache, San Juan, San Miguel, Sedgwick, Washington, and Yuma counties. (Such counties may be grouped into one or more geographic location categories based on differences in medical costs of the carrier with the prior written approval of the Commissioner.)

All other Colorado counties: Delta, Eagle, Elbert, Fremont, Garfield, La Plata, Logan, Montezuma, Montrose, Morgan, Routt, Summit, and Teller counties. (Such counties may be grouped into one or more geographic location categories based on differences in medical costs of the carrier with the prior written approval of the Commissioner.)

PMSA = Primary Metropolitan Statistical Area MSA = Metropolitan Statistical Area (1) Geographic rating factors must be determined on the same basis, reflect the relative differences in expected costs, and produce rates that are not excessive, inadequate, or unfairly discriminatory in such geographic areas. For example, a geographic factor of 1.2 for the Colorado Springs MSA and a factor of 1.0 for the Denver MSA would imply that costs can reasonably be expected to be 20% higher in the Colorado Springs MSA than they are in the Denver MSA. All changes in the geographic rating factors must be supported on this basis. (2) Approval to subdivide categories eight and nine above into two or more subcategories must be obtained in advance. The material provided to support the subdivision(s) shall be based upon statistically-credible data using the Division of Insurance’s credibility standard and/or other actuarially-determined standards. The Division’s credibility standard is 2,000 life-years and 2,000 claims per year. (See Section 6(M) of Amended Colorado Insurance Regulation 4-2-11).

c. Family Size - if a carrier uses family size to calculate rates, then it shall use the 4 mandatory categories listed below. If age is also used as a rating factor, rates must be based on employee age only, not employee and spouse ages. Mandatory Family Size Categories 1 adult 2 adults 1 adult plus any number of children who are dependents of the primary insured or for whom the primary insured is legally required to provide health insurance coverage.

2 adults plus any number of children who are dependents of the primary insured or for whom the primary insured is legally required to provide health insurance coverage.

d. Nonsmoking Discount and/or Tobacco Use - A carrier may adjust rates uniformly for all individuals under a small employer policy based on tobacco use. A carrier may apply an increase or decrease of up to fifteen percent (15%) rating adjustment to particular individuals related to tobacco use. Any individual who does not qualify for a lower rate may be offered the option of participating in a bona fide wellness program as defined under the federal “Health Insurance Portability and Accountability Act of 1996” , as amended. Any individual who participates in a bona fide wellness program may be allowed the lower rate. A carrier may also offer small group policies that include a premium discount not to exceed ten percent (10%) for those individuals that have refrained from smoking for more than twelve (12) consecutive months prior to the effective date or renewal date of the small group nonsmoker policy. Proof of nonsmoking status, acceptable to the carrier, may be requested when the policy is issued or renewed. Carriers are advised that there are other requirements under federal law as to the use of smoking status as a small group rating variable. e. Standard Industrial Classifications – If the carrier uses the standard industrial classifications to calculate rates, only one factor is permitted for each small group. No enrolled employee should be charged directly for any such adjustment. f. All rating adjustments due to the application of any of these case characteristics must be applied consistently in the calculation of all small employers’ rates. Any adjustments made due to standard industrial classification should be applied uniformly to the rates charged for all employees enrolled under each small group policy.

g. All rate filings must contain adequate and acceptable detail information as to how each of the rating factors used for tobacco use and standard industrial classification is determined and the combined maximum and minimum effect of applying these rating factors.

h. Health status and claims experience may not be used as case characteristics. A health questionnaire, requesting reasonable information, may be used to obtain information about the health status of group enrollees. However, the health questionnaire may not be used in any way to determine the premium rate or any rating factor that is used in the determination of the premium rate that is charged to the group, except as provided in Subparagraph (d) of this paragraph. 4. Limits on Certain Case Characteristic Adjustments - For all small group health benefit plans issued or renewed for a small employer on or after January 1, 2008, rating adjustments based on standard industrial classification shall not result in a rate that deviates from the carrier’s filed rate by more than a ten percent (10%) increase or a twenty-five percent (25%) decrease.

5. Limits on Renewal Rates – A small employer carrier may make an upward adjustment to a small employer’s renewal premium not to exceed fifteen percent annually due to standard industrial classification or tobacco use. The final rate is subject to the limits on rating adjustments specified under Section 5(A)(4) of this regulation. 6. Additional Premium Adjustments – Small employer groups may be subject to premium adjustment for health status of no more than 35% above the modified community rate, for a period of no more than twelve months, in certain instances. (See §10-16-105 (13)(a) (I) and §10-16-105(14)(a), C.R.S.) Adequate and acceptable detail information as to how the carrier determines the rating factor(s) for this adjustment should be included in each rate filing.

B. Rating Period The rating period for all small group health plans shall be twelve (12) months unless: 1. A small employer carrier specifies in its rate filings a different rating period, which shall be the same for all its small group health benefit plans issued or renewed in the same calendar month, pursuant to §10-16-105(8)(c)(II), C.R.S.; and 2. The small employer carrier clearly discloses in all its small employer solicitation and sales materials exactly what the different rating period is, pursuant to §10-16-105(5)(b), C.R.S. C. Administrative and Other Fees Carriers and producers shall not charge any fees in addition to premium, except for amounts charged as necessary to recoup assessments paid for CoverColorado. Separate administrative, processing, renewal, enrollment, and other special charges are prohibited. Such charges must be built into the index rate and are not an allowable rate adjustment factor. Reasonable late payment penalties may be imposed by a small group carrier if the policy discloses the carrier’s right to, the amount of, and circumstances under which late payment penalties will be imposed. Section 6 Use of Composite Rates A. Small employer carriers may offer the small employer rates calculated by use of the following methods subject to the following restrictions:

1. Four-tier family, age-banded rates calculated pursuant to Section 5 of this regulation; OR 2. A choice between four-tier, age-banded rates, calculated pursuant to Section 5 of this regulation, and composite rates. It shall be construed that the small employer carrier has offered the small employer a choice between the two methods if, at initial application and at each renewal:

a. Both methods are offered to the small employer, with the differences clearly explained in writing; OR b. The small employer is given a written option to indicate that: 1) both rating methods need be presented; or 2) only age-banded rates need be presented; or 3) only the composite rate need be presented. This indication may be a check-off on the application or renewal form or other similar form that complies with this section.

B. Small employer carriers may offer small employers composite rates as an alternative to four-tier, age- banded rates calculated pursuant to Section 5 of this regulation if all of the following conditions are met:

1. The small employer carrier makes the same offer across its entire book of Colorado small group business where an employer has ten (10) or more eligible employees. If the small employer carrier makes this offer to all small employers having ten (10) or more eligible employees, then the small employer carrier may also offer composite rates to small employers having fewer than ten (10) eligible employees. The small employer carrier must establish a pre-determined minimum size for offering composite rates. The same offer must be made available to all small employers having at least this pre- determined number of eligible employees.

2. The small employer carrier must clearly state on its application and renewal forms for all of its small group products the differences between age-banded and composite rates and that either:

a. The minimum number of eligible employees for calculating composite rates is ten (10) and that all small employers with ten (10) or more eligible employees are entitled to a choice of composite rates or four-tier family, age-banded rates, and have the right to see them calculated either or both ways; OR b. If the number of minimum eligible employees is less than ten (10), the small employer carrier shall state the minimum number and that all small employers with at least this minimum number of eligible employees are entitled to a choice of composite rates or four-tier, age-banded rates, and have the right to see them calculated either or both ways.

3. Calculating Composite Rates:

a. New Policies - At the time of the initial application by the small employer, composite rates must be calculated separately for each small employer, based upon the small employer’s actual enrollment as of the effective date. b. Renewing Groups - At renewal, composite rates must be calculated for each small employer group based on enrollment as of the date of the renewal calculation, or as of the effective date for the renewal rates, which shall be consistent for all small employers. A second quote, subsequent to the date of the renewal calculation, may be calculated IF the demographics of the small group have changed significantly since the date of the original renewal quote, and the carrier recalculates the composite rates in all similar circumstances. If the carrier retains the right to revise the original calculation, this right must be clearly disclosed. Despite changes in the demographic composition of the small employer group, composite rates shall be set, as of the renewal date, for a particular small employer for the entire rating period. 4. The small employer carrier uses the same composite rating methodology for all small employers. The small employer carrier may offer composite rates on a two tier (i.e. employee and employee plus dependents), three tier or four tier composition basis. If the small employer carrier elects to offer these three choices, it is at the employer’s sole discretion whether the composite rates are set on the two-tier, three-tier, or four-tier family composition basis. However, the basis for the calculation of initial premiums before composite rating for a particular employer must be based on four-tier family, age-banded rates calculated pursuant to Section 5 of this regulation. 5. At the time of the initial application by the small employer, the composite rating and four-tier family, age-banded rating for a particular small employer must result in identical total premium collections due from that employer for the first month of the rating period. At renewal, the composite rating method and four-tier family, age-banded rating methods for each small employer must result in identical total premium amounts as of the date of the renewal calculation. Assuming there is no change in the demographic composition of the small employer group, composite rating and four-tier family, age-banded rating for a particular employer must result in identical total premium collections due from that employer for a given rating period.

C. Nothing in this section shall be construed to require carriers to provide other than four-tiered, age- banded rates.

Section 7 Rate Filings and Actuarial Certification A. The provisions of § §10-16-105(6), 10-16-105(6.5) and 10-16-107, C.R.S., and Colorado Insurance Regulation 4-2-11 shall apply to the filing of rates for small employer health benefit plans. Expected rate increases for small employer health benefit plans shall be submitted for approval to the Division of Insurance at least 60 days prior to the proposed implementation of the rates. B. Small employer health benefit plan rate filings shall not be combined with either individual or large group rates. Additionally, they shall be filed separately by type of coverage (indemnity, preferred provider organization, or health maintenance organization). C. Pursuant to §10-16-105(6.5), C.R.S., all carriers who sell, or offer for sale, policies subject to the requirements of this regulation, must submit an annual actuarial rate certification to the Division of Insurance prior to March 1 of each calendar year. Note - this certification may be combined with the Company’s Annual Rate Report. (See Section 8 of Amended Colorado Insurance Regulation 4-2-11.) Certifications shall be sent to the Colorado Division of Insurance, Attention: Rates and Forms Section. The certification must be signed by a qualified actuary and must contain at least the following:

1. The name of the carrier and the identification number assigned by the National Association of Insurance Commissioners;

2. A list of all plans of health benefits and policy forms to which the certification applies; 3. A statement that covers at least the points listed in the following illustration: "I am familiar with the small group rating laws and regulations of the state of Colorado. In my opinion, as of January 1 of the year of this certification, the premium rates and rating methodology to which this certification applies are neither excessive, inadequate nor unfairly discriminatory, and they meet the requirements of the insurance laws and regulations of Colorado;"

4. The name and title of the qualified actuary signing the certification, and the name of the firm with which he or she is associated; and 5. The original signature of the qualified actuary and the date of the signature. Signature stamps or signatures on behalf of the actuary are not acceptable. Section 8 Enforcement Noncompliance with this regulation may result, after notice and opportunity for hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. Section 9 Severability If any provision of this regulation or the application thereof to any other person or circumstance is for any reason held to be invalid, the remainder of the regulation shall not be affected thereby. Section 10 Effective Date This regulation is amended effective February 1, 2009.

Section 11 History Emergency Regulation 94-E-4; Effective October 20, 1994. Emergency Regulation 95-E-2; Effective January 20, 1995. Hearing date: December 8, 1994; Effective March 1, 1995. Hearing date: April 2, 1998; Effective June 1, 1998, Amended Sections 2, 3, 4, 5, 6, 7 & 10. Hearing date: October 2, 2000; Effective January 1, 2001, Amended Sections 5 & 6. Hearing date: September 4, 2002; Effective January 1, 2003. Hearing date: February 4, 2003; Effective March 31, 2003, Amended Sections 1, 5, 10 & 11. Emergency Regulation 03-E-6, Effective September 1, 2003. Hearing date: October 1, 2003; Effective December 1, 2003, Amended Sections 4, 5, 6, 7, 10 11. Hearing date: February 2, 2004; Effective April 1, 2004, Amended Sections 5, 10, & 11. Hearing date: August 4, 2004; Effective September 30, 2004. Hearing date: October 10, 2007; Effective January 1, 2008, Amended Sections 5, 7, 10, & 11. Hearing date: August 5, 2008; Effective October 1, 2008, Amended Sections 5, 7, 10 & 11. Emergency Regulation 08-E-10, Effective January 1, 2009 (filed w/ SOS on Nov. 4, 2008 and superceded by Emergency Regulation 08-E-13 adopted by the Division on Dec. 10, 2008). Emergency Regulation 08-E-13, Effective January 1, 2009. Hearing date: December 9, 2008; Effective February 1, 2009, Amended Sections 5, 10 & 11. Amended Regulation: 4-6-8 Concerning Small Employer Health Plans Section 1. Authority Section 2. Purpose and Background Section 3. Applicability and Scope Section 4. Definitions Section 5. Issuance of Coverage Section 6. Restrictive Riders Section 7. Rules Relating to Fair Marketing Section 8. Special Provisions For Business Groups Of One Section 9. Disclosure Requirements Section 10. Notice Of Intent To Participate As A Small Employer Carrier Section 11. Enforcement Section 12. Severability Section 13. Effective Date Section 14. History Section 1. Authority This regulation is promulgated under the authority of Sections 10-1-109(1), 10-16-105.2(1)(a)(IV) and (3), 10-16-105(5), 10-16-108.5(8), 10-16-109, and 10-16-708, C.R.S. Section 2. Purpose and Background The purpose of this regulation is to establish rules for implementing Colorado’s small group laws. This regulation concerns the applicability and scope of the small group provisions; carriers’ obligations to provide coverage; employee eligibility requirements; the use of restrictive riders; rules relating to fair marketing; special provisions that apply to business groups of one; and carrier disclosure requirements The purpose of the 2004 amendments is to bring the regulation into compliance with recent statutory changes.

Section 3. Applicability And Scope A. This regulation shall apply to any health benefit plan, whether provided on a group, group association, or individual basis, (1) Meets one or more of the conditions set forth in Section 10-16-105.2(1)(a)(I) through (IV) C.R.S., except as provided in Section 10-16-105.2(1)(d), C.R.S., and Section 4.J. of this regulation; and (2) Provides coverage to a business group of one or to one or more employees of a Colorado small employer, without regard to whether the policy or certificate was issued in this state, except as provided in Sections 10-3-903(2)(h), and 10-16-105.2(1)(c) and (3), C.R.S. B. A carrier that provides individual or group health insurance coverage to one or more of the employees of a small employer or to a person or entity that meets the definition of a business group of one shall be considered a small employer carrier subject to the provisions of this regulation if it meets any of the conditions found in Section 10-16-105.2(1)(a)(I) through (IV), C.R.S., except as provided in Section 10-16-105.2(1)(c), (d) and (3), C.R.S. C. The provisions of this regulation shall apply to a health benefit plan provided to a small employer or to the employees of a small employer without regard to whether the health benefit plan is offered under or provided through a group policy or trust arrangement of any size or is sponsored by an association, health care coverage cooperative or discretionary group, except as provided in Sections 10-16-105.2(1)(b) and 10-16-214(5), C.R.S.

D. If a small employer is issued a health benefit plan subject to the small group health insurance laws of Colorado, the provisions of this regulation and statutes concerning small group health insurance shall continue to apply to the health benefit plan in the event that the small employer subsequently employs more than fifty (50) eligible employees. A carrier providing coverage to such an employer shall, within sixty (60) days of becoming aware that the employer no longer meets the definition of a small employer, but no later than the anniversary date of the employer's health benefit plan, notify the employer that the small employer health insurance provisions of Colorado law shall cease to apply to the employer if such employer fails to renew its current health benefit plan or elects to enroll in a different health benefit plan. E. If a health benefit plan is issued to an employer with more than fifty (50) eligible employees that is not a small employer but subsequently the employer becomes a small employer (e.g., due to the loss or change of work status of one or more employees), the provisions of this regulation and statutes concerning small group health insurance shall not apply to the health benefit plan. The carrier providing a health benefit plan to such an employer shall not become a small employer carrier solely because the carrier continues to provide coverage under the health benefit plan to the employer. A carrier providing coverage to such an employer shall, within sixty (60) days of becoming aware that the employer has fifty (50) or fewer eligible employees, notify the employer of the options and protections that may be available to the employer under the small group health insurance laws of Colorado, including the employer's option to purchase a small employer health benefit plan from any small employer carrier.

F.

(1) If a small employer has employees in more than one state, with no state containing a numerical majority of its employees, and if the primary business location of the small employer is in this state, then the provisions of this regulation and statutes concerning small group health insurance shall apply to the health benefit plan issued to such a small employer, except as provided under Section 10-3-903(2)(h), C.R.S. The number of employees in each state shall be determined as of the date the health benefit plan was issued to the small employer for the period that the health benefit plan remains in effect. (2) If a health benefit plan is subject to the small group health insurance laws of Colorado, this regulation and relevant statutes shall apply to all individuals covered under the health benefit plan.

G. A carrier that is not operating as a small employer carrier in this state shall not become subject to Colorado's small group health insurance laws solely because a small employer that was issued a health benefit plan in another state by that carrier moves to this state. H. A plan marketed to individual employees through an employer or at a place of business is subject to this regulation and all applicable small group laws unless a carrier can demonstrate that the circumstances of the sale, marketing, and continuation of such plan coverage meet the conditions established in Section 10-16-105.2(1)(a)(IV), (c) or (d), C.R.S., as further defined in Section 3.J. of this regulation.

I. A health benefit plan that meets the criteria listed in Section 3.A. of this regulation shall be subject to small group requirements even if it covers only one person. Examples include but are not limited to: a health benefit plan that covers the only employee of a small employer; a health benefit plan that covers just one employee because the other employees of a small employer have coverage under another health benefit plan and have waived off the plan; or a health benefit plan that covers the only employer-determined eligible employee of a small employer. J. Pursuant to the authority granted to the Division of Insurance under Section 10-16-105.2(1)(a)(IV), C.R.S., this regulation shall not apply to health benefit plans marketed by producers through an employer or at an employer’s place of business to individual employees if ALL of the following conditions are met both at the time of marketing and sale, and continuously during the period of coverage:

(1) No portion of the premium or benefit is paid by or on behalf of a small employer; (2) No person covered by the health benefit plan is reimbursed, whether through wage adjustments or otherwise, by or on behalf of a small employer for any portion of premium; (3) The health benefit plan is not treated by the employer or anyone covered by the plan who meets the definition of an eligible employee or dependent of an eligible employee as part of a plan or program for the purposes of Section 106, 125, or 162 of the Federal Internal Revenue Code of 1986, as amended, except as permitted in Section 10-16-105.2(1)(d), C.R.S.;

(4) If the health benefit plan is marketed to an employer’s ineligible employees through an employer or at a place of business this marketing occurs only with the written permission or at the written request of the employer;

(5) There is an employer-sponsored health benefit plan already in place at the place of business where the health benefit plan is being marketed, except that this requirement shall not apply to a self-employed person;

(6) Except in the case of a self-employed person working out of the home, no billings, premium collections or other correspondence regarding the health benefit plan are sent to the place of business or otherwise involve the employer, except with respect to the initial marketing or administration of a Section 125 plan as permitted in Section 10-16-105.2(d). C.R.S; and (7) The employee being marketed and/or sold the health benefit plan meets one or more of the following criteria:

(a) The employee will be terminating employment within thirty-one (31) days; (b) The individual is a self-employed person with no employees; (c) The employee is a seasonal employee with an employment contract that is shorter than the waiting period for coverage or is not eligible for coverage under his/her employer’s health benefit plan;

(d) The employee is a temporary or substitute employee; (e) The employee works less than twenty-four (24) hours a week on a regular basis; (f) The employee has a dependent who was covered under the employee’s employer- sponsored health benefit plan but that dependent is no longer eligible for such coverage, in which case an individual health benefit plan for such dependent may be marketed to the employee at the workplace;

(g) The employee is a late enrollee who is completely excluded from his/her employer’s health benefit plan for a year; or (h) The employee is in a waiting period for coverage under an employer-sponsored health benefit plan and all the following conditions are met: the individual health benefit plan marketed to such an employee is a short-term health benefit plan that can be rewritten by the short-term carrier or any other carrier for a combined total of no more than twelve (12) months; the producer selling such a plan gives the employee an explanation of the employee’s continuation rights under his/her prior employer’s plan; and the employee is alerted by the same producer that, depending on the terms and conditions of the short-term policy, the employee may lose his/her right to credit for pre-existing condition periods met under a prior policy when he/she does become eligible for employer-sponsored coverage. K. Nothing in Paragraph J. above shall prohibit a small group carrier that provides coverage to a small employer group from offering individual health benefit plans to dependents of the eligible employees; however, the small employer carrier must also offer the group coverage to all of the dependents. Such group coverage could specify different levels of coverage for eligible employees and dependents.

Section 4. Definitions A. "Actively marketed" means with respect to a small employer health benefit plan offered by a carrier that the carrier uses at least the same sources and methods of distribution that it routinely uses in Colorado to market its most frequently sold small employer health benefit plan. B. “Clear and conspicuous” means with respect to a disclosure that the disclosure is reasonably understandable and designed to call attention to the nature and significance of the information it contains A disclosure is considered designed to call attention to the nature and significance if the information in it if the carrier:

(1) Uses a typeface and type size that are easy; to read (2) Provides wide margins and ample line spacing;

(3) Uses boldface, italics, underscoring, or capitals for key words and phrases; and (4) In a form that combines the disclosure with other information, uses a plain-language heading to call attention to the disclosure portion of the document, and uses a type size that is greater than the type size predominantly used in the rest of the document. C. "Limited benefit health insurance" means a health policy, contract or certificate offered or marketed as supplemental health insurance that pays specified amounts according to a schedule of benefits to defray the costs of care, services, deductibles, copayments or coinsurance amounts not covered by a health benefit plan. “Limited benefit health insurance” does not include short-term limited duration health insurance policies, contracts or certificates; or catastrophic health policies, contracts or certificates. Such non-supplemental plans are included under the term “health benefit plan” as defined in Section 10-16-102(21), C.R.S. D. "Renewed," for the purposes of this regulation, means that a health benefit plan is continued upon the occurrence of the earliest of: the anniversary date of the employer’s plan; the date on which premium rates are changed or by the terms of the plan can be changed; or the date on which benefits are changed or by the terms of the plan can be changed. Section 5. Issuance Of Coverage A. Providing Coverage (1) A small employer carrier shall actively offer to all small employers in the carrier’s service area a choice of all small group plans the carrier markets in Colorado, as set forth in Section 10-16-105(7.3)(a), C.R.S. A small employer carrier shall issue coverage under any of its small group plans for which a small employer makes application, except: (a) Pursuant to Section 10-16-105.2(3), C.R.S., a small employer carrier is not required to offer coverage to a self-employed business group of one or sole proprietor who elects coverage under an individual policy issued pursuant to Section 10-16- 105.2(1)(c), C.R.S., and who is covered under that policy for less than three years. To determine whether an individual has been covered under an individual policy issued pursuant to Section 10-16-105.2(3), C.R.S., for less than three years, small employer carriers shall refer to Colorado Division of Insurance Regulation 4-2-19.

(b) A small employer carrier is not required to issue coverage to a business group of one that does not meet the carrier’s normal and actuarially-based underwriting criteria except during the open enrollment period, which is defined as the 31 days following the birth date of the person qualifying as a business groups of one, or within 31 days of a special business group’s of one qualifying event as defined in Section 10-16-105(7.3)(i), C.R.S. If the business group of one does not meet the company’s underwriting criteria, the only coverage that must be issued during these periods is the applicant’s choice of the Colorado Basic or Standard Health Benefit Plan.

(c) A small employer carrier shall be considered to have met the requirement to offer its small group product at the time a policy has been issued. In the event that a small employer’s coverage is terminated due to non-payment of premiums, the carrier that issued the policy can deny a new application for the same small employer on the basis of this termination, except that: (I) If the small employer is a group of 2-50 the application can be denied for six months after termination for non-payment or at the end of the original policy period, whichever is greater, or, (II) If the small employer is a business group of one, the application can be denied for six months after termination or until the next open enrollment period, whichever is greater.

This provision shall not relieve the employer of its responsibility for payment of any outstanding premiums or late charges owed for the prior period of coverage.

(d) A small employer carrier shall be considered to have met the requirement to offer its small group product at the time a policy has been issued; therefore, a carrier does not have to honor requests to change policy provisions during the policy term.

(2) A small employer carrier shall offer to provide coverage to each eligible employee and to each dependent of an eligible employee. For managed care plans, an employee must either work or reside in the carrier’s service area to be considered an eligible employee, except as provided in Section 10-16-704(2)(g), C.R.S (3) A small employer carrier may offer the employees of a small employer the option of choosing among one or more health benefit plans, provided that each employee may choose any of the offered plans, except as provided in paragraph 5.A. 5 of this regulation. The choice among benefit plans may not be limited, restricted or conditioned based upon health status-related factors of the employees or their dependents. Nothing in this section limits the ability of a small employer carrier to set participation rules based upon group size that may limit the availability of multi-option plans to a single employer as long as any of the component plans offered could be accessed individually by any small employer. (4) Small employer carriers may make the sale of any small group policy, except the basic and standard plans, conditional upon the sale of group life insurance if: (a) The carrier prominently discloses in all of its sales and promotional materials, official offerings, and proposals that the offering of such coverage to all small employers is conditional upon the purchase of a specified level of group life insurance coverage;

(b) The carrier agrees to guarantee issue group life insurance; and (c) The carrier includes with any small group plan proposal of coverage to a small employer the additional premium he or she will be required to pay for life insurance.

(d) The carrier makes the same offer to all small employers. (5) A small employer carrier that only offers managed care plans may offer an indemnity plan to a small employer’s out-of-area employees only (instead of to all employees). However, the following conditions may apply:

(a) An HMO may offer coverage through an arrangement with an insurance carrier as long as the coverage is only made available to the out-of-area employees of a small employer. The use of insurance coverage for this purpose only will not result in a requirement that the HMO or other carrier actively market the basic and standard indemnity health benefit plan and will not result in the other carrier being considered a small employer carrier.

(b) An HMO may offer coverage to the out-of-area employees of a small employer or a small employer located outside of the HMO’s approved service area pursuant to the notice, disclosure, and reimbursement provisions as described in Sections 10-16-704(2) and (2.5), C.R.S. If an HMO offers coverage to one or more out-of- area employees of a small employer or small employers, it must offer it to all small employers.

(c) A carrier offering a managed care plan may offer indemnity coverage as long as the coverage is only made available to the out-of-area employees of the small employer. For these plans, out-of-area employees are those working and residing outside of the state of Colorado. The use of insurance coverage for this purpose only will not result in the carrier being required to actively market the basic and standard indemnity health benefit plans.

(d) If a carrier offers indemnity out-of-area coverage to one or more small employers, it must offer it to all small employers.

B. Determining Who is an Eligible Employee, Dependent (1) The Colorado Division of Insurance finds that, when defining "eligible employee" in Section 10-16-102(15), C.R.S., the sole intent of the General Assembly was to create a maximum weekly work requirement which small employer carriers may impose as a requirement for an employee's participation in a health benefit plan. Nothing in the definition of "eligible employee" was intended to limit an employer's traditional ability to set valid and acceptable standards for employee eligibility based upon the terms and conditions of employment, including a minimum weekly work requirement in excess of twenty-four (24) hours and eligibility based upon salaried versus hourly workers and management versus non-management employees.

(2) The Division finds that, subject to other statutory restrictions and the provisions of this regulation, a small employer carrier may offer a health benefit plan to the eligible employees of a small employer as that employer defines its eligible employees (herein after referred to as "employer-determined eligible employees"). However, a carrier must offer coverage to all small employers for all employees with a regular work week of at least 24 hours on a regular basis. The decision of a small employer to limit eligibility for coverage as provided for in subparagraph (1) of this subsection B shall be solely at the small employer's discretion, without direct or indirect pressure or suggestion by the carrier, producer, or their representatives. The small employer carrier may offer coverage only to such employer-determined eligible employees and their dependents and may apply its minimum participation and contribution criteria solely to such employer- determined eligible employees.

(3) A small employer carrier shall require each small employer that applies for coverage, as part of the application process, to provide a complete list of eligible employees and dependents of eligible employees, and a list of employer-determined eligible employees and dependents, if this is a different list. The small employer carrier may require the small employer to provide appropriate supporting documentation, such as the Unemployment Insurance Quarterly Wage and Tax Report (UITR) often referred to as a W-2 Summary Wage and Tax Form, to verify the information required under this paragraph. In the event that a UITR form is not available because the employer was not in business during the preceding quarter or the employer has outsourced payroll functions, the carrier shall accept reasonable alternate documentation for this information. Alternate documentation includes, but is not limited to, payroll documentation from the company or the company’s payroll administrator or employee leasing company; organizational documents; or other reasonable proof. (4) A small employer carrier shall secure a waiver with respect to each eligible employee and each dependent of such an eligible employee (or each employer-determined eligible employee and their dependents if this is different than the list of eligible employees) who declines an offer of coverage under a health benefit plan provided to a small employer. The waiver shall be signed by the eligible employee (on behalf of such employee or the dependent of such employee) and shall certify that the individual who declined coverage was informed of the availability of coverage under the health benefit plan. The waiver form shall require that the reason for declining coverage (e.g., covered under spouse's plan, cannot afford coverage, etc.) be stated on the form and shall include a written warning of the penalties imposed on late enrollees. Waiver forms shall be maintained by the small employer carrier.

Section 6. Restrictive Riders A. Small employer carriers shall not place restrictive riders, endorsements or other policy provisions on a small group plan that would restrict coverage of particular individuals, except with respect to late enrollees as provided for in Section 10-16-118(1)(c), C.R.S. If a small employer carrier offers coverage to a small employer, such carrier shall offer the coverage under terms and conditions (including provisions related to pre-existing conditions) that are consistent with Colorado law to all eligible employees of the small employer and their dependents. B. Except as permitted in Section 10-16-118(1)(c), C.R.S., concerning late enrollees, a small employer carrier shall not modify or restrict any health benefit plan with respect to any eligible employee or dependent of an eligible employee, through riders, endorsements or otherwise, for the purpose of restricting or excluding the coverage or benefits provided to such employee or dependent for specific diseases, medical conditions or services otherwise covered by the plan. Section 7. Rules Related To Fair Marketing A. A small employer carrier shall actively market each of its health benefit plans to Colorado small employers in all areas where the carrier is authorized to conduct business. B. Every health benefit plan offered by a small employer carrier to new groups with less than fifty-one (51) eligible employees shall be actively marketed to all groups that meet the definition of a small employer pursuant to Section 10-16-102 (40), C.R.S. Managed care plans are required to maintain an adequate network pursuant to Section 10-16-704(1), C.R.S., and must have a participating provider for all covered benefits.

(1) HMOs are authorized to conduct business in the specific counties and/or zip codes approved by the Division of Insurance.

(2) A carrier offering a managed care plan that is not an HMO or HMO POS (Point-of-Service) plan must actively market its small group plans across the service area, which is defined as the entire state of Colorado.

(3) Carriers that are not able to maintain a sufficient network after good-faith efforts to contract may employ certain remedies as described in Sections 10-16-704(2) and (2.5), C.R.S. C. Small employer carriers cannot deny an application for coverage from a group based on its size, if the group satisfies the definition of a small employer, except as permitted by law for business groups of one, unless, pursuant to Section 4 of this regulation, such small employer group is not subject to the provisions of this regulation.

D. Small employer carriers may establish participation rules that vary based upon group size as allowed in Section 10-16-105(7.4), C.R.S.; however, the required participation level shall not exceed 75% of eligible employees who are not covered by existing creditable group coverage or individual coverage that was legally obtained prior to the individual’s eligibility for group coverage under the employer’s existing group plan and consistently maintained by the individual. For the purpose of determining participation, “group coverage” shall mean: (1) Medicare or Medicaid;

(2) An employee welfare benefit plan or group health insurance or health benefit plan; (3) A state health benefits risk pool (including, but not limited to, CoverColorado); or (4) Chapter 55 of title 10 of the United States Code, a medical care program of the federal Indian health service or of a tribal organization, a health plan offered under chapter 89 of title 5, United States Code, a public health plan, or a health benefit plan under section 5 (e) of the federal "Peace Corps Act" (22 U.S.C. Sec. 2504 (e)).

E. A small employer carrier shall not apply more stringent or detailed requirements related to the price quote or application process for the basic and standard health benefit plans than it applies to other small group health benefit plans offered by the small employer carrier, except as allowed for cut-off dates and medically underwriting business groups of one. F. A small employer carrier may establish underwriting rules that allow cut-off dates for business groups of one that are different from the cut-off dates for other small employers to the extent that additional time is needed to determine eligibility and perform medical underwriting. Such dates shall be consistent with the cut-off dates for similar medically underwritten business (e.g. individual products), if applicable. Under no circumstance shall the cut-off date be earlier than the first of the month prior to the requested effective date of coverage. G.

1. A small employer carrier shall provide a price quote to a small employer (directly or through an authorized producer) within five (5) business days of receiving all information necessary to provide a requested quote. Each price quote must be calculated using the carrier’s filed rate, as defined in Regulation 4-6-7.

2. A small employer carrier shall notify a small employer (directly or through an authorized producer) within five (5) business days of receiving a request for a price quote if any additional information is needed. If a small employer carrier provides a price quote prior to receiving all information necessary to calculate any premium adjustments allowed under §10-16-105 (8.5)(a), C.R.S., that quote must be of the filed rate. The quote shall include a statement indicating that the rate is not final, and once all information is received, the rate will be recalculated using rating factors allowable by law, and may vary from the initial price quote.

3. A price quote shall be provided without requiring verification of the eligibility of the small group, including business groups of one. The fact that a price quote has been issued shall not prevent the small employer carrier from verifying the group’s eligibility before issuing the coverage.

H. A small employer carrier shall not establish small group producer commission or bonus programs in a manner that discourages marketing to very small groups. A commission or bonus program that establishes a lower payment rate such as a lower flat fee per employee or member or percentage of premiums for smaller employers based upon a group’s size shall be considered risk avoidance and an unfair trade practice.

I. No producer or carrier shall advise, induce or encourage a small employer to arrange for coverage for an employee or dependent through CoverColorado or another mechanism for the purposes of separating such person from the group policy, except as allowed under Section 3.K of this regulation.

Section 8. Special Provisions Applicable To Business Groups Of One A. A small employer carrier may request documentation as necessary to determine whether a small employer meets the definition of a business group of one for purposes of obtaining and maintaining small group health coverage.

1. In order to determine whether a business group of one qualifies for small group health coverage, the business group of one must provide sufficient documentation that it has carried on significant business activity in the past year, and has gross income from active participation in the business for at least one year out of the most recent consecutive three-year period that is sufficient to pay for annual health insurance premiums for the business group of one.

2. In order to determine whether a business group of one has sufficient income to qualify for a carrier’s small group plans, the business group of one must provide tax documentation of the business’s gross income. The amount shall be determined using the gross income for the business as indicated on the appropriate forms recognized by the Federal Internal Revenue Service for business income reporting. For corporations, the gross income is equal to total income reported to the Federal Internal Revenue Service. 3. If the business group of one meets all eligibility requirements but the gross income is insufficient for the specific plan requested, the carrier shall determine if the income is sufficient for another small group plan offered by the carrier. The carrier shall notify the employer and provide an opportunity to enroll in another plan for the same effective date. 4. A business group of one must provide sufficient information to show that the individual works full time (24 hours or more per week on a regular basis). In most situations, the nature of the business and the business income information should be sufficient to verify that the business group on one is working full time. In the event that the nature of the business or the tax information would indicate that the individual may not be actively engaged in business on a full-time basis, the carrier may request additional information to reasonably determine whether the individual is employed on a full-time basis. Additional information that may be requested includes:

(a) Invoices, billing records, general ledgers or similar information for a portion of the past year not to exceed 3 months;

(b) Additional tax documentation substantiating that business activities are not passive; (c) Organizational documents including business license, articles of incorporation, and by-laws as appropriate for the type of business; and (d) In the absence of the information listed above, the carrier may request business collateral materials including marketing materials, business forms, website addresses, or similar information in an effort to verify eligibility. Section 9. Disclosure Requirements A. Pursuant to Sections 10-16-105(5) and 10-16-704(9), C.R.S., small employer carriers shall provide a disclosure in all small employer marketing and solicitation materials, in a clear and conspicuous manner, that:

(1) Specifies that the employer will not be considered part of a separate class of business; (2) Specifies all factors, including case characteristics, utilized in setting premium rates for a specific employer;

(3) Explains the employer's right to renew;

(4) Explains pre-existing condition exclusions;

(5) Discloses that rates for any and all small group products being marketed by the carrier in the Colorado small group market will be given to a small employer, upon either oral or written request of such employer, within five (5) working days of the request; and (6) In the case of a managed care plan, explains the existence, availability and general nature of an access plan (e.g., that an access plan exists for every managed care plan and that it lists hospitals, providers, referral procedures, grievance procedures and emergency coverage provisions).

B. Pursuant to Section 10-16-105(5), C.R.S., small employer carriers shall also include in all printed marketing and solicitation materials the following:

(1) Information as to the benefits and premiums available under all health benefit plans for which the employer is qualified. This requirement shall be satisfied if the carrier provides the following information:

(a) The policy number (if any), policy name and policy type (e.g., HMO, indemnity, point of service plan) for all the plans for which the employer qualifies; and (b) A summary of the benefits available under all the plans for which the employer qualifies that highlights the most salient differences among the plans as required in Colorado Insurance Regulation 4-2-20.

(2) When marketing any small group plan other than the Basic Health Benefit Plan, carriers are required to make the following disclosure in a clear and conspicuous manner: “Small employers purchasing any health benefit plan other than a basic plan must pay for all of the mandated benefits pursuant to section 10-16-104. The premium for this plan includes the cost of these mandated benefits, specifically: coverages for newborn, maternity, pregnancy, childbirth, complications from pregnancy and childbirth, therapies for congenital defects and birth abnormalities, low-dose mammography, mental illness, biologically-based mental illness, the availability of alcoholism treatment, the availability of hospice care, prostate cancer screening, child health supervision, hospitalization and general anesthesia for dental procedures for dependent children, diabetes, and prosthetic devices.”

(3) When marketing a Basic Health Benefit Plan that does not include certain mandated benefits cited by statute, carriers are required to make the following disclosure in a clear and conspicuous manner:

“Interested policyholders, certificate holders, and enrollees are hereby given notice that this small group policy does not cover all the health services and benefits, specifically, mammography, prostate screenings, mental health, alcoholism, hospice care, and dental anesthesia for children, which the Colorado Revised Statutes usually require group plans to cover.”

C. Small employer carriers are not required to include the disclosure information set forth in Sections 9A and 9B(1) of this regulation on the Colorado Health Benefit Plan Description Forms described in Colorado Division of Insurance Regulation 4-2-20.

Section 10. Notice Of Intent To Participate As A Small Employer Carrier A carrier shall not offer health benefit plans to small employers in this state, unless the carrier has filed with the Commissioner a notice of intent to operate as a small employer carrier. Section 11. Enforcement Noncompliance with this regulation is a violation of Section 10-3-1104, C.R.S., and subject to the sanctions specified in Section 10-3-1108, C.R.S., including the imposition of fines and the suspension or revocation of license.

Section 12. Severability If any provision of this regulation or the application thereof to any other person or circumstance is for any reason held to be invalid, the remainder of the regulation shall not be affected thereby. Section 13. Effective Date This amended regulation will be effective as of October 1, 2004. Section 14. History - Originally issued as Emergency Regulation 94-E-5, effective October 20, 1994. - Reissued as Emergency Regulation 95-E-3, effective January 20, 1995. - Issued as Regulation 4-6-8, effective March 1, 1995.

- Amended sections 1, 2, 4, 9, and 15 of Regulation 4-6-8, effective December 31, 1995. - Amended sections 1 through 12 and 15 of Regulation 4-6-8, effective November 1, 1997. - Amended Regulation 4-6-8, effective March 2, 2003.

- Amended regulation 4-6-8 effective October 1, 2004.

Regulation 4-6-9 Concerning Conversion Coverage Section 1. Authority This regulation is promulgated under the authority of Sections 10-1-109(1) and 10-16-109, C.R.S. Section 2. Purpose The purpose of this regulation is to establish rules for implementing the statutory requirement that group carriers offer a choice of a basic and standard health benefit plan to persons entitled to conversion coverage.

Section 3. Applicability and Scope This regulation shall apply to small group and large group health benefit plans subject to the group laws of Colorado and to all policies, plans and certificates subject to the provisions of Sections 10-16-108(1 )(c), 10-16-108(2)(d), and 10-16-108(4), C.R.S.

Section 4. Definitions A. “Conversion coverage” means that coverage provided by carriers pursuant to Sections 10- 16-108(l) (c), 10-16-108(2)(d), and 10-16-108(4), C.R.S.

B. “Renewed.” A plan of health benefits is deemed renewed upon the occurrence of the earliest of: the anniversary date of issue; the date on which premium rates are or by the terms of the plan can be changed; or the date on which benefits are or by the terms of the plan can be changed. Section 5. Choice of Basic or Standard Health Benefit Plans A. All persons entitled to elect conversion coverage pursuant to Sections 10-16-108(l)(c), or 10-16-108(2) (d) and 10-16-108(4), C.R.S., shall be offered a choice of the basic or standard health benefit plans only. (The basic and standard health benefit plans and rules for their implementation are described in Colorado insurance regulation No. 4-6-5, C.C.R.) B. All persons entitled to elect conversion coverage pursuant to Section 10-16-108(4), C.R.S., shall be offered a choice of the basic or standard health benefit plans only, except that, pursuant to Section 10-16-108(4)(b), C.R.S., a small employer carrier may offer as conversion coverage the basic health benefit plan only (instead of a choice of the basic or the standard health benefit plan) if all the following conditions are met:

(1) The applicant for conversion coverage is eligible for conversion coverage pursuant to Section 10-l6-108(4)(b), C.R.S., but is not eligible for conversion coverage under Section 10-16- 108(1 )(c) or (2)(a), C.R.S., and (2) The small employer health benefit plan from which the applicant is converting had benefits which provided coverage for hospital and physician services which, in most respects, were significantly less generous than the standard plan and comparable to or less generous than the basic health benefit plan.

C. A carrier shall, at minimum, offer to an applicant for conversion coverage at least one basic conversion coverage health benefit plan and at least one standard conversion health benefit plan of the same type (i.e., traditional indemnity, preferred provider or health maintenance organization) as the coverage from which the applicant is converting. Carriers may also offer the other types of standard or basic health benefit plan conversion coverage to applicants. If a carrier offers several preferred provider or health maintenance organization plans, it may meet this requirement by offering the most managed care version of its preferred provider plans and the most managed care version of its health maintenance organization plans. For the purposes of this subsection B, ''most managed care version” is that plan which, when compared to the carrier's other preferred provider plans or HMOs offers the consumer the greatest financial incentive for the utilization of network participating providers.

D. Carriers shall not offer other conversion coverage policies either in addition to or in lieu of the basic and standard health benefit plans. Conversion coverage under the basic and standard health benefit plans shall not be modified in any way, except that carriers may offer optional riders to the basic or standard health benefit plans which would add additional coverage, so long as such coverage is offered to all applicants for conversion coverage and guarantee issued to any such person requesting additional coverage.

Section 6. Conversion Coverage Policies Issued Prior to January 1, 1995 A.

(1) All persons covered on a conversion coverage health benefit plan issued before January 1,1995, shall be notified by the carrier in writing each time their policy renews after the effective date of this regulation of their right to change from their existing policy of conversion coverage to conversion coverage under a choice of the basic or standard health benefit plans. Such notification shall:

(a) At the first such renewal after the effective date of this regulation, include the premium amounts the person would have to pay for his or her current conversion coverage plan, and for conversion coverage under the basic and standard health benefit plans;

(b) At the first such renewal after the effective date of this regulation, include a comparison of benefits under their current conversion coverage plan and conversion coverage under the basic and standard health benefit plans; (c) At each renewal, allow a person on a conversion policy issued prior o January 1, 1995, thirty (30) days from the date the notice is issued to change from their existing conversion coverage plan to conversion coverage under a basic or standard health benefit plan.

(2) The decision to change conversion coverage shall be solely at the discretion of the policyholder.

B. Persons electing to change from a conversion coverage plan originally issued prior to January 1,1995, to conversion coverage under a basic or standard health benefit plan shall not be subject to any new pre-existing condition exclusion periods when they change plans. C. Once a person has elected to change his or her conversion coverage to a basic or standard health benefit plan, a carrier shall not allow such person to change his or her conversion coverage again.

(1) A carrier shall not allow persons electing to change their conversion coverage to a basic health benefit plan to subsequently change their coverage to either a standard health benefit plan or to their prior conversion coverage, once they have been enrolled under a basic health benefit plan for conversion coverage.

(2) A carrier shall not allow persons electing to change conversion coverage to a standard health benefit plan to subsequently change their conversion coverage to either a basic health benefit plan or to their prior conversion coverage, once they have been enrolled under a standard health benefit plan for conversion coverage.

D. Carriers shall require all persons who elect to change conversion coverage pursuant to subsection A of this section 6 to sign a statement certifying that:

(1) The person understands that the decision to switch his or her conversion coverage to basic or standard health benefit plan coverage is solely his or hers to make; (2) The person has not been encouraged or induced by the carrier, a broker, agent or their representative to switch coverage; and (3) The person understands that once made, the decision to switch to conversion coverage under the basic or standard health benefit plan is irrevocable. Section 7. Enforcement Noncompliance with this regulation may result, after notice and opportunity for hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license. Section 8. Severability If any provision of this regulation or the application thereof to any other person or circumstance is for any reason held to be invalid, the remainder of the regulation shall not be affected thereby. Section 9. Effective Date This regulation will be effective as of March 1, 1995.

Regulation 4-6-10 Employee Leasing Companies And Health Care Coverage Section 1 Authority Section 2 Basis and Purpose Section 3 Applicability and Scope Section 4 Definitions Section 5 Rules Section 6 Enforcement Section 7 Severability Section 8 Effective Date Section 9 History Section 1 Authority This regulation is promulgated pursuant to § § 10-1-109,10-3-1110 and 10-16-109, C.R.S. Section 2 Basis and Purpose The purpose of this regulation is to establish and implement rules for health carriers that issue and renew health plans to employee leasing companies and client employers. Section 3 Applicability and Scope This regulation shall apply to all health carriers.

Section 4 Definitions A. “Employee leasing company” shall have the same meaning as set forth in 8-70- 114(2)(a)(l),C.R.S. B. “Employee leasing contract1' shall have the same meaning as set forth in 8-70- 114(2)(a)(II),C.R.S. C. “Work-site employer” and “client employer” shall have the same meaning as set forth in § 8-70- 114(2)(a)(III), C.R.S.

Section 5 Rules A. Carriers shall ensure that health plans issued or renewed to employee leasing companies that have aggregated their work-site employers for purposes of sponsoring health coverage as permitted by § 8-70-114(2)(a)(VIII), C.R.S., conform with all laws applicable to large group health coverage products, where the total aggregated employees exceeds fifty. B. Carriers shall issue or renew group health coverage directly to work-site employers, where the client employer meets the definition of a small group as required by law, where the employee leasing company does not sponsor a health plan for its client employers. 1. If the employee leasing company does not provide access to a group plan to work-site employers, then providing only administrative functions related to health coverage does not constitute “sponsoring” a health coverage plan. An employee leasing company shall not be considered to be sponsoring a health coverage plan where the employee leasing company performs only administrative functions related to health coverage purchased directly by work-site employers. Examples of administrative functions include, but are not limited to deducting premiums from work-site employer payrolls for delivery to the carrier; and administering premium collection for COBRA continuation coverage. 2. Employee leasing companies shall not be considered to be sponsoring a health coverage plan under this Subsection B of Section 5 where the employee leasing company provides health coverage solely for its own staff who are separate and distinct from the client employer employees.

C. Carriers may issue or renew health plans directly to work-site employers where the employee leasing company has aggregated work-site employees for purposes of sponsoring health coverage, but the client employer has declined the coverage, provided the employee leasing company offers to sponsor health coverage for the client employer at the time of initial contracting with the client employer and at least at each open enrollment period, and the carrier obtains access to the certification specified below.

1. An employee leasing company is sponsoring a health coverage plan where the employee leasing company is directly involved in the negotiation or procurement of the health plan for the work-site employers. An example of involvement in the negotiation or procurement of the health plan includes, but is not limited to instances where the employee leasing company requires the work- site employer to use a particular producer or carrier in order to obtain particular services or benefits through the employee leasing company. 2. The carrier providing the employee leasing company sponsored coverage shall retain access to the certification required pursuant to this Subsection C of Section 5. This access may be via contract or oral agreement with the employee leasing company, or by other means. The carrier shall make this certification available within a reasonable time upon request by the Commissioner. The certification shall be in writing, dated, signed and verified by an officer or other employee that has legal authority to bind the employee leasing company and by an officer or other employee that has legal authority to bind the client employer, and shall provide the following information:

a. A statement confirming that the employee leasing company sponsors large group health coverage for its client employers.

b. A statement confirming that the employee leasing company offered to sponsor the large group health coverage for the client employer but the client employer declined the offer.

c. A statement setting forth the reason the client employer declined the coverage offered to be sponsored by the employee leasing company.

d. A statement informing the client employer that it is eligible for the employee leasing company sponsored plan at least annually during the plan's open enrollment period.

e. A statement confirming that to the extent the client employer has or will seek health coverage that is not sponsored by the employee leasing company, the employee leasing company was not involved in any way in the procurement of this other coverage.

D. Carriers may offer health coverage to the employee leasing company's administrative staff separately from the coverage offered to the employees of the work- site employer; even where the employee leasing company aggregates client employer employees under § 8-70-114(2)(b)(VIII), C.R.S. The carrier may consider only the number of employee leasing company administrative employees for purposes of determining the applicability of small group or large group laws applicable to the particular plan offered to the employee leasing company's administrative employees. E. Carriers providing employee leasing company sponsored health plans may require the employee leasing company to apply the carrier's contribution and participation requirements to discrete potential client employer groups prior to contracting, where: 1. The participation and contribution requirements are in writing and are developed by the carrier and not by the employee leasing company;

2. The participation and contribution requirements are the same for all potential client employers of that employee leasing company, and 3. The participation and contribution requirements are applied uniformly and in a non- discriminatory fashion to all potential client employers by the employee leasing company. Section 6 Enforcement Noncompliance with this regulation shall be considered an unfair method of competition and unfair or deceptive act or practice in the business of insurance pursuant to § 10-3-1104, C.R.S. and may result, after notice and opportunity for hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines and/or suspension or revocation of license.

Section 7 Severability If any provision of this regulation is for any reason held to be invalid, the remainder of the regulation shall not be affected.

Section 8 Effective Date This regulation is effective March 31, 2003.

Section 9 History New regulation, effective June 1, 2001.

Amended regulation, repealing section 5E and reformatting, effective March 31, 2003. Regulation 4-6-11 CONCERNING COVERCOLORADO STANDARDIZED NOTICE FORM TO BE USED TO NOTIFY CERTAIN INDIVIDUALS, ELIGIBLE FOR MEDICARE, OF ELIGIBLITY FOR COVERCOLORADO Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Rules Section 6 Enforcement Section 7 Severability Section 8 Effective Date Section 9 History Section 1 Authority This regulation is promulgated by the Commissioner of Insurance under the authority of § § 10-1-109 and 10-8-520, C.R.S.

Section 2 Scope and Purpose The purpose of this regulation is to specify the standardized notice requirements to be used to notify certain individuals, eligible for Medicare, of their eligibility for a CoverColorado coordination plan. Section 3 Applicability This regulation applies to all carriers offering Medicare Supplemental plans Section 4 Definitions “Eligible Person” means an individual who is:

A.. Under age sixty-five;

B. Eligible for Medicare by reason of disability;

C. Enrolled in Parts A and B of Medicare; and D. Not applying during the open enrollment period for a Medicare Supplement Policy. Section 5 Rules A. Notification Requirements for Individuals with Adverse Underwriting Decisions 1. In order to comply with §10-8-521, C.R.S., all Medicare supplement carriers, shall provide a notice to an eligible person who have been rejected for a Medicare supplement plan that he or she may be eligible for coverage under CoverColorado. 2. Medicare supplement carriers shall be required to provide the CoverColorado Coordination Plan Notice Form to an eligible person who has been rejected for coverage. Carriers may print the CoverColorado Coordination Plan Notice Form on their own stationery but shall use the order and content prescribed in Section 5B below. 3. The carrier shall attach a copy of the CoverColorado Plan Notice form to the rejection letter sent to an applicant for a Medicare supplement plan.

B. Elements of the CoverColorado Notice Coordination Plan Notice Form: The elements of notification as determined by the Commissioner, which must be given to individuals with adverse underwriting decisions, must include: 1. Applicant/Insured's Name 2. Policy # (if applicable)

3. Reason for notice: rejection of coverage 4. Name, address, contact person and telephone number of CoverColorado Administrative Office to whom interested persons should be referred.

5. CoverColorado website URL.

6. Name and phone number of underwriter or other contact at the insurer's office. 7. The statement: You may receive information about the available CoverColorado benefits and exclusions by telephoning the CoverColorado administrative office at the above listed number.

Section 6 Enforcement Noncompliance with this regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws, which include the imposition of fines and/or suspension or revocation of license. Section 7 Severability If any provision of this regulation or the application thereof to any person or circumstances is for any reason held to be invalid, the remainder of the regulation and the application of such provision shall not be affected thereby.

Section 8 Effective Date This regulation shall become effective on August 1, 2007. Section 9 History New Regulation 4-6-11 effective August 1, 2007.

New Regulation 4-6-12 MANDATORY COVERAGE OF MENTAL ILLNESSES PURSUANT TO §10- 16-104 (5) AND (5.5), C.R.S. [Emer. Rule eff. 1/1/08, Perm. Rule eff. 2/1/08] Section 1 Authority Section 2 Scope and Purpose Section 3 Applicability Section 4 Definitions Section 5 Rules Section 6 Severability Section 7 Enforcement Section 8 Effective Date Section 9 History Section 1 Authority This regulation is promulgated and adopted by the Commissioner of Insurance under the authority of § § 10-1-109 and 10-16-104 (5) and (5.5), C.R.S.

Section 2 Scope and Purpose The purpose of this regulation is to clarify the implementation of SB07-36 and the coordination of subsections (5) and (5.5) of §10-16-104, C.R.S.

Section 3 Applicability and Scope This regulation applies to every entity issuing group health benefit plans, except for an exemption for small group health benefit plans related to the inclusion of mental disorders as defined in § 10-16- 104(5.5)(IV)(B), C.R.S.

Section 4 Definitions Biologically based mental illness (BBMI) and mental disorders shall have the same meaning as in §10- 16-104 (5.5), C.R.S.

Section 5 Rules A. Section 10-16-104 (5), C.R.S., applies broadly to all mental illness conditions or disorders and includes the following mandated benefits:

1. At least 45 inpatient (90 partial hospitalization) days in any one twelve-month period; 2. No less than 20 outpatient visits or no less than $1,000 paid for outpatient visits in any twelve- month period; and 3. Copayment or coinsurance shall not exceed a 50% requirement. B. Section 10-16-104 (5.5), C.R.S., applies to a defined subset of mental illness conditions for BBMI and mental disorders. Section 10-16-104 (5.5), C.R.S., provides coverage for treatment that is no less extensive than coverage provided for any other physical illness. C. Based on sections (A) and (B) of this section 5, the following findings are made: 1. Section 10-16-104 (5.5), C.R.S., recognizes that BBMI are biologically based and more akin to other physical illnesses and should be differentiated from other forms of mental illness; 2. The General Assembly determined that insurance coverage for BBMI under §10-16-104 (5), C.R.S., was inadequate and therefore enacted § 10-16-104 (5.5), C.R.S., to attain some parity for BBMI with insurance coverage for other types of physical illness; 3. The General Assembly determined that insurance coverage for mental disorders under § 10- 16-104(5), C.R.S., was inadequate and therefore expanded the coverage being provided under § 10-16-104(5.5), C.R.S., to include coverage for these conditions in non-small employer group health benefit plans.

4. The increased insurance coverage of § 10-16-104 (5.5) C.R.S., was not intended to duplicate coverage provided in § 10-16-104 (5), C.R.S. or provide a double benefit; 5. Treatment for BBMI and mental disorders under subsection (5.5) might permit “different” types of treatment than would be permitted under subsection (5) but will provide “additional” insurance benefits above the limitations set out in subsection (5) 6. Benefits in accordance with § 10-16-104 (5.5), C.R.S. reduce or exhaust the benefits mandated by § 10-16-104 (5), C.R.S.

7. The copayment or coinsurance protections of § 10-16-104 (5) (c), C.R.S., apply to benefits provided in accordance with § 10-16-104 (5.5), C.R.S.

8. Benefits provided in accordance with § 10-16-104 (5.5), C.R.S., must be provided at the more generous of the physical illness or mental illness benefits of section 10-16-104 (5), C.R.S., through the 20th visit. Thereafter, only the copayment or coinsurance protections continue to apply to BBMI and mental disorders pursuant to § 10-16-104 (5.5), C.R.S., and the mental illness benefit of § 10-16-104 (5), C.R.S. Section 6 Severability If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected. Section 7 Enforcement Noncompliance with this Regulation may result, after proper notice and hearing, in the imposition of any of the sanctions made available in the Colorado statutes pertaining to the business of insurance or other laws that include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of license. Among others, the penalties provided for in §10-3-1108, C.R.S. may be applied. Section 8 Effective Date This regulation shall become effective on February 1, 2008. Section 9 History Emergency regulation 08-E-2 effective January 1, 2008.

New regulation effective February 1, 2008.

Amended Regulation 4-7-1 Health Maintenance Organizations Section 1 Authority Section 2 Background And Purpose Section 3 Scope Section 4 Definitions Section 5 Authorization Of Insurers And Nonprofit Hospital, Medical-Surgical And Health Service Corporations Section 6 Application For Licensure Section 7 Organizational Changes Section 8 Fidelity Bond Section 9 Reinsurance Section 10 Subordinated Debentures Section 11 Guarantees For Uncovered Expenditures Section 12 Provider Agreements Section 13 Administrative And Other Service Agreements Section 14 Financial Reports Section 15 Property Acquisition Section 16 Complaint Records Section 17 Confidentiality Section 18 Enforcement Section 19 Severability Section 20 Effective Date Section 21 History Section 1 Authority This regulation is promulgated under the authority of § § 10-16-109, 10-16-401(4)(O); and 10-15- 403(2) (b), C.R.S.

Section 2 Background And Purpose The purposes of this regulation are to provide the requirements for licensure as a health maintenance organization (HMO) and establish standards for HMO organization and operations. Section 3 Scope This regulation applies to licensed HMOs or persons seeking to become licensed to operate an HMO in Colorado.

Section 4 Definitions As used in this regulation, and unless the context requires otherwise: A. “NAIC” means the National Association of Insurance Commissioners. B. “Material modification of the plan of operations” includes a change in service area, or the initial entrance or withdrawal from the Medicare, Medicaid or commercial market, or any other transaction or series of related transactions which the HMO could reasonably predict would involve a net increase or decrease of 20% or more in the number of HMO enrollees or result in a 20% increase or decrease in the HMO's net worth over a 12 month period based upon projected financial statements. Section 5 Authorization Of Insurers And Nonprofit Hospital, Medical-Surgical And Health Service Corporations .

A. Any licensed health carrier may apply to the Division of Insurance to become licensed as an HMO, as defined in article 16 of title 10, C.R.S. If a licensed health carrier is authorized to hold a certificate of authority to operate as an HMO, the requirements of part 4, article 16, title 10, C.R.S., will apply in addition to the other requirements for its health carrier certificate of authority. B. Nothing herein shall be deemed to amend the intent or provisions of article 20 of title 10, C.R.S. Any HMO product offered by a licensed health carrier is not provided coverage and protection by the Colorado Life and Health Insurance Protection Association Act. Section 6 Application For Licensure Any person seeking licensure as an HMO shall submit two copies of an application to the Corporate Affairs Section of the Division of Insurance (Division). Applications shall include all items as required under § 10-16-401(4), C.R.S., and the following:

A. A list of all persons who will ultimately control the proposed HMO. If the proposed HMO is organized as a stock company, the application.must identify, all persons who .directly or indirectly will own or control ten percent or more of the outstanding stock. B. Biographical sketches of all the official persons of the organization, including all members of the board of directors, board of trustees, executive committee, or other governing board or committee, the principal officers in the case of a corporation, and the partners or members in the case of a partnership or association, officers, directors, organizers and controlling individuals. Biographical information shall be submitted on the NAIC Biographical Affidavit (form available upon request). A complete fingerprint set, as may be obtained from local law enforcement sources may be requested at the discretion of the Commissioner. Any person who has been involved with any adverse administrative action within the prior five years shall disclose such activity in the biographical affidavit. C. The addresses of company offices and the HMO functions to be performed by each office, including sufficient information to verify compliance with the provisions of § 10-3-128, C.R.S.

D. A statement as to whether the HMO will be seeking Federal qualification. E. Current financial information and three (3) year financial projections, including balance sheets and income statements, conforming to the format of the NAIC convention blank. The projections shall also contain projected member-month enrollment at calendar year end and a detailed summary of all assumptions used to generate the projections. F. A description of the method of marketing including, at a minimum, proposed advertisements, solicitation material, use of brokers and agents, use of HMO staff, and marketing research that will indicate the ability to meet the enrollment projections. G. Proposed enrollment and/or application forms.

H. An actuarial opinion supporting the proposed premiums or rates to be charged and the underlying actuarial report reflecting the methodology and assumptions used in arriving at the rates used within the projections. The opinion and report must be prepared using generally accepted actuarial standards and principles.

I. A description of the geographic service area by county. Where the service area will be a part of a county, appropriate zip codes may be used to describe the service area. J. A list of contracting providers, by specific geographic area and by specialty within each geographic area along with a map clearly indicating the service area. If there are no providers or specialty providers within a specific geographic service area, a separate description of the method of providing covered services in said service area, or part thereof, shall be provided.

K. An access plan for each separate network.

L. A description of the provider network arrangements, including copies of specimen contracts. This description should include the due diligence procedures to be performed by the HMO to ensure performance of the- services by the participating providers. M. A detailed description of the sources of funding of the HMO. N. The filing fees as required by § 10-3-207, C.R.S.

O. An application for licensure as a foreign HMO must also include the following: 1. The most recent financial examination report conducted by the state of domicile. 2. The most recent market conduct report conducted by the state of domicile. 3. An original certificate of compliance or a certified copy of the certificate of authority from the state of domicile referencing the approved lines of authority. 4. An explanation of any limitations imposed by the state of domicile. 5. Disclosure of any administrative action currently pending or taken against the company within the last five (5) years.

Section 7 Organizational Changes A. An HMO requesting a material modification in the plan of operations on file with the Division, shall provide two copies of the following:

1. The financial statement for the HMO prepared within 90 days prior to the date of request for a modification in the plan of operations.

2. To the extent applicable with regard to the modification, a list of providers under contract or who have committed to contracting with the HMO and a description of the provider network arrangements, including specimen copies of provider contracts. This description shall provide due diligence procedures to be performed by the HMO to ensure performance of the services by the participating providers. 3. Three year financial projections disclosing the impact of the modification in the HMO operations. Include balance sheets and income statements which conforms to the format of the NAIC convention blank. The projections shall also contain projected member- month enrollment at calendar year end and a detailed summary of all assumptions used to generate the projections.

4. To the extent applicable with regard to the modification, a Memorandum and certification by a qualified actuary, supporting the proposed premiums or rates to be charged in the new service area(s) or for the new market.

a. The certification shall include a statement that the rates are not excessive, inadequate or unfairly discriminatory.

b. In the Memorandum, the actuary shall discuss the differences in provider agreements to the extent that the agreements affect the underlying premium or rate requirements.

c. The Memorandum shall include justification and support for the difference, or lack of difference, between the rates to be charged for the new market or service area(s) and the existing rate(s).

d. If the new operations include Medicaid business or other business in which the premium is set by the contract holder and not the HMO, the Memorandum shall provide justification that the premium received will be at least equal to the company's medical and administrative costs. If the actuary cannot provide such a justification the HMO shall provide an adequate explanation as to why the HMO would accept a premium which is not at least equal to the company's medical and administrative costs.

B. An HMO requesting to modify its approved plan of operations on file with the Division by withdrawing from the geographic service area or a market, shall provide two copies of the following: 1. A statement as to why the HMO is withdrawing from a service area or market. 2. Evidence that there will no longer be any enrollment in the portion of the service area at the time of the proposed withdrawal. Such elimination of enrollment in the affected area may be accomplished by nonrenewal according to Colorado statutes and regulations or by any other means acceptable to the Commissioner.

3. An affidavit that the HMO will honor existing coverage for any enrollee hospitalized on the date of such withdrawal from the portion of the geographic service until the date of discharge or arrangements are made for alternative coverage.

C. Changes to the basic organizational documents, such as articles of incorporation and related documents, shall be filed with the Corporate Affairs Section and approved by the Commissioner before filing appropriate documents with the Colorado Secretary of State. Section 8 Fidelity Bond Pursuant to § 10-16-405, C.R.S., the funds received from enrollees must be treated in a fiduciary capacity. In order to protect the HMO enrollees from misuse of enrollee funds, an HMO licensed in Colorado shall have fidelity coverage, meeting the requirements of Regulation 3-1-1, for all officers, directors and employees who have access to the HMO funds. Section 9 Reinsurance A. An HMO may enter into reinsurance agreements under which its risks are indemnified by an insurer. Such agreements must conform to the provisions of § 10-3-118 et seq., C.R.S., and Colorado Insurance Regulation 3-3-2 (3 CCR 702-3).

B. Section 10-3-118, C.R.S., provides that an HMO may assume risks from another HMO provided it is licensed or authorized to write the type of coverage assumed. C. An HMO may only assume contract obligations from another HMO with the Commissioner's prior written approval. Any assumption transaction shall follow the provisions of § 10-3-701, et seq., C.R.S., and Colorado Insurance Regulation 3-3-1 3 CCR 702-3. In all transactions subject to the provisions of § 10-3-701, et seq., the assuming HMO must be licensed in the ceding HMO's service area and must demonstrate the ability to service the proposed acquisition and continue to meet compliance with the availability, accessibility and quality of care requirements. F. The guarantor must agree to file audited financial statements with the Division of Insurance for each year the guarantee is in place. Upon initial filing for approval for the guarantee, the most recent audit report must be submitted.

Section 12 Provider Agreements A. An HMO must establish that executed agreements between the HMO and the providers; exist prior to licensure or granting of approval for an increase in geographic service area. Provider agreements must be maintained in Colorado in the HMO's administrative office or other designated office for examination and shall be made available to the Commissioner upon request. B. In order to qualify as a covered expenditure, a provider, intermediary, IPA or other provider group contract or provider subcontract must have a “hold harmless” provision which substantially complies with the following:

1. Provider agrees that in no event, including but not limited to nonpayment by the HMO, insolvency of the HMO or breach of this agreement, shall the provider bill, charge, collect a deposit from, seek compensation, remuneration or reimbursement from, or have any recourse against a subscriber, an enrollee or persons (other than the HMO) acting on his/their behalf for services provided pursuant to this agreement. This provision does not prohibit the provider from collecting supplemental charges or copayments or fees for uncovered services delivered on a 'fee- for-service' basis to HMO subscribers/enrollees. 2. Provider agrees that this provision shall survive the termination of this agreement, for authorized services rendered prior to the termination of this agreement, regardless of the cause giving rise to termination and shall be construed to be for the benefit of the HMO subscriber/enrollees. This provision is not intended to apply to services provided after this agreement has been terminated.

3. Provider agrees that this provision supersedes any oral or written contrary agreement now or existing hereafter entered into between the provider and the subscriber, enrollee, or persons acting on fees behalf insofar- as such contrary agreement relates to liability for payment of services provided under the terms and conditions of this agreement. 4. Any modification, addition, or deletion to this provision shall become effective on a date no earlier than thirty (30) days after the Commissioner has received written notification of proposed changes.

C. Every contract between an HMO and a provider shall contain a provision clearly setting forth the HMO's reimbursement arrangements with the participating provider, including any financial risk assumed by the participating provider. An HMO shall maintain evidence that it took reasonable steps to ascertain that the provider understands such arrangements and that the HMO has determined that the provider is capable of undertaking the financial risk assumed. D. HMOs may only transfer financial risk to providers for services which the provider performs, or services which such provider controls, directs or influences. Out of network emergency services are not controlled, directed or influenced by the provider and financial risk for such services may not be transferred. Any individual arrangement may be submitted to the Commissioner to be reviewed on a case by case basis to determine its acceptability. E. An HMO shall have available a continuous program and procedure for review of providers ensuring their ability to provide contracted services. At a minimum this program must include the following: 1. Financial review of intermediaries and providers accepting risk for services which they do not control, direct or influence directly from the HMO.

2. Review all provider subcontract specimen forms for compliance with applicable insurance statutes and regulations, availability of services and evaluation of risk transfers. 3. Procedures for review of the timely and accurate compensation of providers pursuant to contract.

4. Review of quality management, utilization review, credentialing and other health care management services, if being conducted by the intermediary, provider or subcontracting provider. The procedures and practices used must be the same as those approved for the HMO by the Executive Director of the Colorado Department of Public Health and Environment.

5. Procedures for assuring continuity of care and for making payments to subcontracting providers in the event of the insolvency of an intermediary or provider 6. The reviews in subsections 1 through 5, above, shall occur upon initial contracting with the intermediary, provider or subcontracting provider. Subsequent reviews shall be undertaken at least annually. Additional reviews should be undertaken as necessary based upon: (1) the results of previous reviews of the intermediary, provider or subcontracting provider; or (2) complaints from enrollees or .providers-or (3) other information which may impact the intermediary's ability to provide services or pay subcontractors.

Section 13 Administrative And Other Service Agreements A. An HMO may contract for the performance of administrative functions. Any contract for administrative functions shall contain the following:

1. Ninety (90) days written notice of cancellation to the Commissioner; 2. A provision that the contract may not restrict the HMO's Board of Directors from appointing, removing or changing officers or employees of the HMO;

3. A statement of the administrator's compensation, duties and responsibilities; 4. State that all books, records, assets, and liabilities of the HMO shall, at all times, remain the property of the HMO; and 5. If the HMO contracts for Electronic Data Processing (EDP) and/or Management information Systems (MIS), a provision providing appropriate access to the system upon examination by the Commissioner, and a mechanism under which the system is available to the HMO or its successor upon insolvency of the HMO, or termination or cancellation of the contract.

B. All management agreements and any material amendments thereto shall be filed with the Division of Insurance for review 30 days prior to the effective date. Agreements filed in compliance with § 10-3-805(4)(a)(IV), C.R.S., need not be filed under this regulation. For purposes of this regulation, management agreements means any agreements between the HMO and any entity or person not employed by the HMO for the purpose of managing the day to day operations of the HMO. C. An HMO may offer administrative or other services to another person to the extent nor inconsistent with the provisions of article 16 of title 10, C.R.S., provided that: 1. The provider network is sufficient to absorb any enrollment from such action and the availability, accessibility and quality of the services to the HMO's enrollees are not impaired;

2. The arrangement entered into may be terminated by the HMO if such obligation substantially interferes with the HMO's operations or its ability to maintain compliance with law; and 3. The contract shall constitute the HMO's entire service obligation and shall be filed with the Commissioner.

Section 14 Financial Reports A licensed health carrier also licensed as an HMO shall include the following exhibits of the EMO Convention blank detailing their HMO activities-as appendices to its NAIC convention blank fling;: A. The income and loss statement for total business and Colorado business; B. The enrollment report for total business and for Colorado business; C. The schedule reflecting health care receivables for total business and Colorado business; D. The claims payable analysis for total business and Colorado business; E. The summary of transactions with providers for total business and Colorado business; and F. Any other form of the NAIC blank the Commissioner requires to analyze the business of the HMO including, but not limited to, electronic filing.

Section 15 Property Acquisition Section 10-16-403(1), C.R.S., provides that an HMO may acquire property which may reasonably be required for its administrative offices or for such other purposes as may be necessary to accomplish the business of the organization. The following rules apply in order to meet the requirements of § 10-16- 403(2), C.R.S., regarding the prior approval of property purchases. Any property acquired without filing a notification, other than as outlined herein, shall be nonadmitted for statutory accounting purposes. A. For acquiring real property, e.g. hospitals, medical facilities, nursing care and intermediate care facilities, an HMO must file, at least 30 days prior to acquisition, notice of its intent to acquire property. The filing shall include a description of: 1. The nature of the real property;

2. The location of the real property;

3. Method of acquisition (build new facility, remodel existing facility, etc.); 4. How the property contributes to the accomplishment of the nature of the HMO's business; and 5. An estimate of the amount to be expended and source of funding (i.e. loans, operating funds, etc.).

B. Electronic data processing equipment and software shall be admitted and valued in accordance with the statements of statutory accounting principles contained in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual.

C. The HMO may acquire property which is other than real property and which is used in the direct delivery of health care services, such as Pharmaceuticals and surgical supplies, durable medical equipment, furniture, medical-equipment and fixtures, and leasehold improvements -in health care facilities.

1. Furniture, medical equipment and fixtures and leasehold improvements in health care facilities must meet the following conditions in order to qualify as an admitted asset a. useful life of at least two (2) years; and b. cost of more than $500.00.

2. The aggregate admitted value of all property other than real property is limited to the lesser of 5% of assets or 25% of surplus.

3. The Commissioner may waive the aggregate limitations of subsection 2 above. A request for waiver must include:

a. A detailed list and cost of each item;

b. An explanation of why the property is necessary for the conduct of the business of the HMO;

c. A statement as to why the request would not result in a deterioration of the liquidity or solvency of the HMO; and 4. Property other than real property shall be carried at the lesser of cost at the time of request less accumulated depreciation or the market value at the time of valuation, unless it is an asset whose method of valuation is specified in the insurance laws, regulations, or nationally recognized insurance statutory accounting principles.

5. The admissibility of property other than real property is subject to review and restriction of admissibility when the net worth of an HMO, less the admitted value of property subject to this section, is below the statutory minimum net worth as required by § 10-16-411, C.R. S., or if such property will cause a hazardous financial condition as determined by Colorado Insurance Regulation 3-1-7 (3 CCR 702-3).

6. A licensed health carrier, also authorized to hold a certificate of authority directly 1o operate an HMO, is restricted to the property which is admitted under rules applicable for the certificate of authority of the licensed health carrier. D. The admitted value of property, other than real property acquired and admitted prior to January 1, 2001, which is not used in the direct delivery of health care services, may be phased out over a period not to exceed three years. The rate for phasing out the admitted value of such property shall be documented in the HMO's records, available for examination by the Division.

Section 16 Complaint Records Pursuant to § 10-16-409, C.R.S., a complaint system is to be maintained by an HMO. As part of the complaint system, an HMO shall maintain a Complaint Record Maintenance which has the information required in Colorado Insurance Regulation 6-2-1, (3 CCR 702-6) and information regarding malpractice claims as required by § 10-16-409(l)(b)(III), C.R.S.

Section 17 Confidentiality A. Except for the information submitted in compliance with § 10-16-107, C.R.S., (annual actuarial rate certification filing), documents filed with the Division of Insurance shall generally be considered public records under the Public Records Act, § 24-72-201, et. seq., C.R.S. B. If an HMO considers a document to be confidential, it must submit the document under separate cover or in a file clearly labeled “CONFIDENTIAL” and a typed explanation of why the document is considered confidential.

C. Documents found to be confidential by the Division of Insurance, will be maintained in a separate, confidential file and will not be released to the general public for inspection or copying. Section 18 Enforcement Noncompliance with this regulation may result in an administrative action pursuant to 16-4 19, C.R.S., or as otherwise provided by statute.

Section 19 Severability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected thereby. Section 20 Effective Date This regulation shall be effective January 3 1, 2003.

Section 21 History Originally issued as regulation 74-21, effective 1974.

Re-codified as Regulation 4-7-l) effective December 1, 1993. Regulation Amended, Effective September 1, 1999.

Regulation amended effective July 1, 2001.

Regulation amended effective January 3 1, 2003.

Amended Regulation 4-7-2 Concerning The Laws Regulating Health Maintenance Organization Benefit Contracts And Services In Colorado Section 1 Authority Section 2 Purpose Section 3 Applicability and Scope Section 4 Definitions Section 5 Requirements for Benefit Contracts and Evidence of Coverage Section 6 Prohibited Practices Section 7 Services Section 8 Other Requirements Section 9 Severability Section 10 Effective Date Section 11 History Section 1 Authority This rule is promulgated and adopted by the Commissioner of Insurance under the authority of § 10-16- 109, C.R.S.

Section 2 Purpose The purpose of this regulation is to provide reasonable standards for the terms and provisions contained in Health Maintenance Organization's (“HMOs” ) benefit contracts and evidences of coverage. Section 3 Applicability and Scope This regulation shall apply to all HMOs that are required to obtain or maintain a certificate of authority in this state. This regulation shall apply to all benefit contracts and evidences of coverage that are issued or renewed on or after the effective date of this regulation, In the event of conflict between the provisions of this regulation and the provisions of any earlier regulation issued by the Commissioner, the provisions of this regulation shall be controlling as to HMOs.

Section 4 Definitions No contract or evidence of coverage delivered or issued for delivery to any person by an HMC required to obtain a certificate of authority in this state shall contain definitions respecting the matters set forth below and in § 10-16-102, C.R.S. unless such definitions comply with the requirements of this section. Definitions other than those set forth herein and in § 10-16-102, C.R.S. may be used as appropriate providing that they do not contradict these requirements. As used in this regulation and for the purpose of any terms used in a benefit contract of evidence of coverage: A. “Copayment” means the predetermined amount, whether stated as a percentage or a fixed dollar, an enrollee must pay, to receive a specific service or benefit. B. “Deductible” means the amounts to be paid by the enrollee for covered services, other than a co- payment, before the enrollee is entitled to benefits from a health benefit plan. C. “Emergency services” means health care services provided in connection with any event that a prudent lay person would believe threatens his or her life or limb in such a manner that a need for immediate medical care is created to prevent death or serious impairment of health.

D. “Group” means a) a bona fide employer covering employees of such employer for the benefit of persons other than the employer; b) an association, including a labor union, which has a constitution and bylaws and which is organized and maintained in good faith for purposes other than that of obtaining insurance; or c) a business group of one (does not include a business group of one that lawfully elects an individual health plan). E. “Group contract” means a contract for health care services, which by its terms limits eligibility to members of a specified group. The group contract may include coverage for dependents.

F. “Group contractholder” means the person to which a group contract has been issued. G. “HMO service area” means the geographical area within which the HMO is authorized to provide or arrange for health care services that are available and accessible to enrollees and may include contracted providers physically located across state or county lines. H. “Individual contract” or “nongroup contract” means a contract for health care services issued to and covering an individual or a family that is not a group. I. “Out-of-area services” means the health care services that an HMO covers when its enrollees are outside of the enrollee service area.

J. “Point-of-service plan contract” means a Health Maintenance Organization contract which includes coverage for both in-network services and coverage for services provided by non-contracted providers. The term “point-of-service plan contract” shall also apply to a plan contract where the indemnity coverage or service is underwritten by a non-HMO carrier in this state and is offered in conjunction with an HMO contract. K. “Primary care physician” means a physician designated by the enrollee, subject to the policies and procedures of the HMO, who supervises, coordinates, and provides initial and basic care to members, initiates their referral for specialist care and maintains continuity of patient care.

L. “Subscriber” means the. individual whose employment or other status, except for family dependency, is the basis for eligibility for enrollment in the HMO. M. “Supplemental health care services” means any health care services other than basic health care services as defined in § 10-16-102(5), C.R.S.

N. “Temporarily absent” means circumstances where the enrollee has left the HMO's service area but intends to return within a reasonable period of time, such as a vacation trip. O. “Urgently needed services” means covered services which enrollees require in order 1o prevent a serious deterioration in their health while they are temporarily absent from the enrollee service area.

P. “Variable Copayment” means a copayment that varies based on the enrollee's use of certain providers.

Q. “Variable Deductible” means a deductible that varies based on the enrollee's use of certain providers.

Section 5 Requirements for Benefit Contracts and Evidences of Coverage Each enrollee shall be entitled to receive an individual contract and/or evidence of coverage. Each group contractholder shall be entitled to receive a group contract and/or evidence of coverage. Group contracts, individual contracts and evidences of coverage shall be delivered or issued for delivery to enrollees or group contractholders within a reasonable time after enrollment, but not more than fifteen working days from the later of the effective date of coverage or the date on which the HMO is notified of enrollment. The contract and/or evidence of coverage shall include the following: A. HMO Information The contract and/or evidence of coverage shall contain the name, address and telephone number of the HMO and shall describe how services may be obtained. A toll free or collect call phone number within the service area for calls, without charge to enrollees, to the Ham's administrative office shall be made available and disseminated to enrollees to adequately provide telephone access for member services, problems or questions. B. Entire Contract The contract shall contain a statement that the contract, evidence of coverage, all applications and any amendments thereto shall constitute the entire agreement between the parties.

C. Term of coverage The contract and/or evidence of coverage shall contain the time and date or occurrence upon which coverage takes effect and include any applicable waiting periods. The contract and/or evidence of coverage shall contain the time and date or occurrence upon which coverage will terminate.

D. Benefits and Services within the HMO's Service Area The contract and/or evidence of coverage shall contain a specific description of benefits and services available within the HMO's service area.

E. Emergency Care Services The contract and/or evidence of coverage shall contain a specific description of emergency services available twenty-four hours a day, seven days a week, including disclosure of how emergency care services will be accessible within the HMO's service area by affiliated providers and nonaffiliated providers. F. Out of Area Benefits and Services The contract and/or evidence of coverage shall contain a specific description of benefits and services available out of the HMO's service area including situations where balance billing could apply, variable deductibles, variable co-payments and notice if individuals may need to travel into the HMO's service area to receive covered health benefits. G. Cancellation or Termination The contract and/or evidence of coverage shall contain the conditions upon which cancellation or termination may be effected by the HMO or the enrollee. H. Renewal The contract and/or evidence of coverage shall contain the conditions for, and any restrictions upon, the enrollee's right to renewal.

I. Reinstatement The contract and/or evidence of coverage shall contain the conditions for, and any restrictions upon, the enrollee's right to reinstate.

J. Claims The contract and/or evidence of coverage shall contain procedures for filing claims that include:

(1) any required notice to the HMO;

(2) if any claim forms are required, how, when and where to obtain and submit them;

(3) any requirements for filing proper proofs of loss;

(4) any time limit of payment of claims;

(5) notice of any requirement for resolving disputed claims including arbitration; and (6) a statement of restrictions, if any, on assignment of sums payable to the enrollee by the HMO.

K. Complaint System In compliance with § 10-16-409, C.R.S., the contract and/or evidence of coverage shall contain a description of the HMO's method for resolving enrollee complaints, incorporating procedures to be followed by the enrollee in the event any dispute arises under the contract. The mechanism for recording complaints shall substantially comply with Colorado Insurance Regulation 6-2-1, 3 CCR 702-6, and shall include the number, amount and disposition of malpractice claims as they relate to the HMO and the providers who provide health care services to the HMO enrollees.

L. Coordination of Benefits A group contract and/or evidence of coverage must contain a provision for coordination of benefits that shall be consistent with Colorado Insurance Regulation 4-6-2, 3 CCR 702-4. An individual contract/or evidence of coverage may have an “insurance with other insurers provision.” Additionally, an HMO must coordinate benefits with private passenger automobile coverage, as required under § 10-4-709, C.R.S. M. Point-of-service plan contract There is no requirement that POS coverage be offered to groups or individuals. However, if an HMO offers a point-of-service plan, it must be offered to all individuals and/or groups that qualify for the point- of-service plan, based upon the HMO's underwriting standards. If the point-of-service plan is offered to a group, it must be offered to all eligible members of that group. Additionally, an employer may set standards as to which employees are eligible for POS coverage.

1 .Point-of-service plan mandatory contract provisions. A point-of-service plan contract must, at a minimum:

a. Provide all basic health care services required by law to be provided by an HMO as in-plan coverage services, including emergency and urgent care; and b. Provide incentives for enrollees to use in-plan covered services. 2. Point-of-service plan optional contract provisions.

A point-of-service plan may:

a. Limit or exclude specific types of services from coverage when obtained out-of-plan;

b. Include annual out-of-pocket limits and annual and/or lifetime maximum benefit allowances for out-of-plan covered services that are separate from any limits and allowances applied to in- plan covered services; and c. Include those services that an enrollee obtains from a medical provider for which proper authorization or referral was not given. 3. Point-of-service plan limitations.

An HMO is subject to the following requirements:

a. An HMO may not expend more than 20% of its total annual net medical and hospital expenses (net of reinsurance and coordination of benefit recoveries) for indemnity benefits. b. If compliance with the amount specified in subparagraph a. of this subsection 3 is not demonstrated on the annual health rate filing required by Division of Insurance Regulation 4-2-11, 5(C), 3 CCR 702-4, the commissioner may prohibit the HMO from offering a point-of-service product for new issues or for the renewal of existing contracts until compliance has been demonstrated. 4. An HMO must comply with the form and rate filing requirements contained in statute and regulation. In complying with these statutes and regulations, the HMO will: a. Design the benefit levels for in-plan covered services and out-of-plan covered services to achieve the desired level of in-plan utilization; and b. Provide or arrange for-adequate systems to:

i. Process and pay claims for out-of-plan covered services; ii. Meet the requirements of a point-of-service product as set by this section; and iii. Generate accurate financial and regulatory reports on a timely basis in order for the commissioner to evaluate experience with the point-of-service plan and monitor compliance with the point-of- service plan provisions.

5. Disclosure.

All HMO benefit contracts and evidence of coverage must contain a clear and concise explanation of point-of-service health care services. The explanation must include:

a. The method of reimbursement to enrollees, where applicable; b. Applicable copayments, coinsurance and deductibles;

c. Exclusions;

d. The services that an enrollee is permitted to obtain on an allowed self- referral basis; and e. Instructions regarding submission of claims for self-referred health care services.

N. Indemnity Benefits Basic health care services are required to be offered through providers that are contracted or employed by the HMO. Coverage offered by non-contracted providers may be provided on an indemnity basis, as permitted by law. Section 6 Prohibited Practices A. Unfair discrimination No HMO shall unfairly discriminate against any enrollee based on the age, sex, race, color, creed, national origin, ancestry, religion or marital status. However, nothing shall prohibit an HMO from setting rates or establishing a schedule of charges in accordance with relevant actuarial data. No HMO shall expel or refuse to offer a continuation or conversion contract to individual members of a group based on the health status or health care needs of the individual enrollee or member. Section 7 Services A. Out-of-Area Services and Benefits 1. Out-of-area services shall be subject to copayment or deductible requirements set forth in Subsection C of Section 8 of this regulation.

2. When an enrollee is temporarily absent from the HMO's service area, an HMO shall provide benefits for reimbursement for emergency care or urgent care services, or, at the HMO's discretion, transportation which is medically necessary and appropriate under the circumstances to return the enrollee to an HMO provider, subject to the following conditions:

a. The condition could not reasonably have been foreseen; b. The enrollee could not reasonably arrange to return to the HMO's service area to receive treatment from the HMO's provider;

c. The temporary absence must be for some purpose other than the receipt of medical treatment; and d. If the HMO requires notification, the HMO is notified as required by the evidence of coverage unless it is shown that it was not reasonably possible to communicate with the HMO in such time limits, For urgently needed services, the HMO is notified prior to the commencement of care, unless it is shown that it was not reasonably possible to communicate with the HMO in such time limits. B. Supplemental Health Care Services In addition to the basic health care services as defined in § 10-16-102(5), C.R.S., an HMO may offer to its enrollees any supplemental health care services it chooses to provide. Limitations as to time and cost may vary from those applicable to basic health care services. Section 8 Other Requirements A. Description of Providers 1. An HMO shall provide its enrollees with access to a list of the names and locations of all of its current primary care physicians and hospitals in an enrollee's service area, no later than the time of enrollment or the time the contract and evidence of coverage are issued and .upon request thereafter.

2. Any list of providers shall contain a notice regarding the availability of the listed primary care physicians. Such notice shall be in not less than ten-point type and be placed in a prominent place on the list of providers. The notice shall contain the following or similar language:

“Enrolling in (name of HMO) does not guarantee services by a particular provider on this list. If you wish to be sure of receiving care from specific providers listed, you should contact those providers to be sure that they are accepting additional patients for (name- of-HMO). Also, we may--add physicians on a periodic basis and will provide you with a listing of newly added doctors in your local area, if you request it. “ B. Description of the Service Area A HMO shall provide its enrollees with a description of the HMO's service area no later than the time of enrollment or the time the contract and evidence of coverage is issued and upon request thereafter. If the description of the HMO's service area is changed, the HMO shall provide, at such time, a new description of the HMO's service area to its enrollees. C. Copayments or Deductibles 1. An HMO may require copayments and/or deductibles of enrollees as a condition for the receipt of specific health care services. Copayments and deductibles for basic health care services shall be shown in the contract and/or evidence of coverage or an addendum thereof as a percentage or as a specified dollar amount. 2. Copayments or deductibles can vary by provider as a means of encouraging an enrollee to obtain services from a particular provider.

D. Complaint System 1. A complaint system shall be established and maintained by an HMO to provide reasonable procedures for the prompt and effective resolution of written complaints. 2. An HMO shall provide complaint forms to be given to enrollees who wish to register written complaints. Such forms shall include the address and telephone number to which complaints must be directed and shall specify any required time limits imposed by the HMO.

3. The complaint system shall provide for (i) written acknowledgment of complaints and (ii) complaints to be resolved or to have a final determination of the complaint by the HMO complaint system within a reasonable period of time, but not more than ninety days from the date the complaint is registered. This period may be extended (i) in the event of a delay in obtaining the documents or records necessary for the resolution of the complaint, or (ii) by the mutual written agreement of the HMO and the enrollee. However, the requirements of Division of Insurance Regulation 4-2-7, 3, CCR 702-4, including the sixty (60) day time limit, shall continue to be applicable to complaints regarding failure to pay claims unless there is a reasonable dispute between the parties concerning the claim. 4. Membership may not be terminated solely as a result of filing a complaint against the HMO. 5. If an enrollee's complaints and grievances may be resolved through a specified arbitration agreement, the enrollee shall be advised in writing of his rights and duties under the agreement at the time the complaint is registered. Any such agreement must be accompanied by a statement setting forth in writing the terms and conditions of binding arbitration. Any HMO that makes such binding arbitration a condition of enrollment must fully disclose this, requirement to its enrollees in the contract and evidence of coverage. Section 9 Severability If any provision of this regulation or the application thereof to any person or circumstance; is for any reason held to be invalid, the remainder of the regulation and the application for such provision to other persons or circumstances shall not be affected thereby. Section 10 Effective Date This regulation is hereby amended shall be effective for policies issued or renewed on January 31, 2003. Section 11 History Originally issued as Regulation 90-6, effective October 1, 1990. Amended Regulation, effective December 1, 1992.

Amended Regulation, effective July 1, 2000.

Amended Regulation effective January 31, 2003.

Amended regulation 4-9-2 CREDIT INSURANCE Section 1 Authority Section 2 Scope and Purpose Section 3 Definitions Section 4 Multiple Plans of Insurance Section 5 Substitution Section 6 Benefit Standards/Policy Requirements Section 7 Premium Payment Section 8 Termination of Coverage Section 9 Refunds Section 10 Claims Section 11 Policy Forms and Related Material Section 12 Rates Section 13 Compliance Section 14 Severability Section 15 Enforcement Section 16 Effective Date Section 17 History Appendix 1 Summary of Component b ased rates Section 1 Authority This regulation is promulgated under the authority of § §10-1-109, 10-10-109(2.5)(c) and 10-10-114, C.R.S.

Section 2 Scope and Purpose The purpose of this regulation is to implement component rating and provide standards to enforce the provisions of Article 10 of Title 10, C.R.S., regarding all forms of credit insurance. Section 3 Definitions A. “Annual Report for Credit Insurance” means a list of all policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and riders delivered or issued for delivery in this state, including the titles of the programs or products or name of the lending institutions affected by the forms (required if marketed, serviced or rated differently). B. "Credit Insurance" means the same as defined in §10-10-103(2), C.R.S. and includes all insurance written in connection with a loan but does not include insurance written as an isolated transaction on the part of the insurer not related to an agreement or plan for insuring debtors of a creditor. C. “Credit Insurance Forms” means policy forms, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and other forms issued by the insurer to be delivered or issued for delivery in Colorado.

D. "Disability" means the inability to perform the substantial and material duties of one's own occupation during the first twelve months of disability. After the first twelve months, disability is defined as the inability to perform the substantial and material duties of one's own occupation or any other occupation for which one is reasonably qualified by education, experience or by training obtained prior to the date of disability or by subsequent training at the insurer's option and expense. This definition shall not apply to lump sum disability coverage. E. "Dismemberment" means, at a minimum, the actual loss of use of a hand or foot, or irrecoverable loss of sight of an eye.

F. “Listing of New Policy Forms for Credit Insurance” means a list of any new policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and riders delivered or issued for delivery in this state including the titles of the programs or products or type of lending institutions (required if marketed, serviced or rated differently) affected by the forms and the effective date the form will be used.

G. "Loss Ratio" means incurred losses divided by earned premiums. No expenses, including loss adjustment expenses, may be included as losses in this ratio. H. "Property" means all property, such as household furnishings, appliances, business furniture and fixtures and effects pledged as collateral or security acquired as a result of a contract that is related to a credit transaction. Such property may not include automobiles, boats, airplanes, recreational vehicles, trucks, and tractors or like vehicles. I. The "Pro Rata Refund Method " means a method of calculating a credit insurance refund which is calculated as 1 multiplied by 2 divided by 3, where 1, 2, and 3 are defined as follows: 1. The original amount of the premium paid for the coverage period. 2. The number of days or months in the coverage period remaining for which the premium was paid.

3. The number of days or months in the initial coverage period covered by the premium. J. The "Rule of 78 Refund Method” means a method of calculating a credit insurance refund which is calculated as the original amount of the premium paid for the period multiplied by the quantity (T) times (T+1), then divided by the quantity (N) times (N+1). "T" is the remaining term of the insurance, commonly measured in months, and "N" is the original term of the insurance, commonly measured in months.

K. The “Rule of Anticipation Refund Method” means a method of calculating a credit insurance refund in which the refund is equal to the single premium for the remaining originally scheduled amount(s) of coverage for the remaining term of coverage using the table of premium rates and formulas that applied when the coverage being cancelled was written. Section 4 Multiple Plans of Insurance If a creditor makes available to the debtors more than one plan of credit insurance applicable to the credit insurance transaction, each debtor must be informed of each plan for which he or she is eligible. Section 5 Substitution When a creditor requires insurance as additional security for indebtedness, the debtor shall be given the option of furnishing the required amount of insurance either: A. Through existing policies of insurance owned or controlled by the debtor; or B. By procuring and furnishing the required coverage through any insurer authorized to transact insurance business in Colorado.

Section 6 Benefit Standards/Policy Requirements A. Minimum Insurance Amounts 1. For other than monthly outstanding balance coverage, the amount of credit insurance at any point in the insurance coverage can never bear a lesser percentage to the scheduled outstanding balance than the percentage that the original amount of coverage bears to the initial loan balance.

2. A group certificate or individual policy providing coverage for less than the term of the loan elected (truncated coverage) shall disclose both the term of the insurance coverage and that the insurance will terminate prior to the scheduled maturity date of indebtedness. The termination disclosure shall appear in prominent type on the first page of the group certificate or individual policy. At the time of election of truncated coverage, the debtor shall be provided with written notification that the term of the insurance coverage is less than the scheduled maturity of the loan.

The notification regarding truncated coverage may be included in the application, enrollment form, notice of proposed insurance, certificate, policy, or any other document provided to the debtor at the time coverage is elected. B. Coverage Increases With respect to coverages, such as monthly outstanding balance coverage, that permit increases in the amount of coverage after the initial effective date of the individual policy or group certificate, the suicide exclusion and the preexisting condition exclusion, if any, may be applied separately with respect to each increase in the amount of coverage from the date of and in the amount of the increase. Under no circumstances, however, may a new pre-existing condition limitation or new suicide exclusion be applied to coverage in force immediately prior to such increase in coverage. C. Cancellation Notice All individual policies and group insurance certificates must state that the insurance is cancelable at any time during the term of the contract at the debtor's advance written request to the insurer. D. Actively-At-Work Requirement Unless specifically included in the rate development, no actively-at-work requirement more restrictive than one requiring that the debtor be actively at work at a full-time gainful occupation on the effective date of coverage may be included in any credit accident and health insurance policy or contract. "Full-time" means a regular work week of not less than thirty hours, for a period of not less than one month. A debtor shall be considered to be actively at work if absent from work due solely to regular days off, holidays or paid vacation. E. Allowable Restrictions All exclusions and restrictions included in any credit insurance policy or contract must be considered in determining whether or not the rate will fulfill the loss ratio requirement when rates are determined according to Section 12 (B) or (C) of this regulation. In addition, all exclusions and restrictions must be adequately disclosed to the insured. F. Credit Life Insurance Except as permitted in Subsection B of this Section 6, a credit life insurance contract must contain no exclusion other than for suicide within one year of the effective date of the insurance in compliance with §10-7-109, C.R.S., and the incontestability clause as defined in §10-7-102(1) (b), C.R.S., unless such additional exclusions are specifically included in the rate development. Under no circumstances, however, may the contract exclude loss due to commercial aviation or foreign travel.

G. Credit Accident and Health Insurance 1. Unless specifically included in the rate development, no credit accident and health policy shall contain a provision excluding or denying a claim for disability resulting from pre-existing conditions except for those conditions for which the insured debtor received medical advice, diagnosis or treatment within six months preceding the effective date of the debtor's coverage, and which caused loss within the six months following the effective date of coverage.

2. Except as provided in Subsection G (1) of this Section 6, credit accident and health policies may contain no exclusions more restrictive than normal pregnancy, elective surgery, intentionally and self-inflicted injury, flight in non-commercial aircraft, or war. 3. Any credit insurance policy that identifies itself as providing coverage in the case of disability shall define disability no more restrictively than the definition included in Section 3 (D) of this regulation, unless specifically included in the rate development. 4. The policy or certificate shall provide for a daily benefit equal in amount to no less than one- thirtieth of the monthly benefit payable under the policy or certificate. H. Credit Unemployment Insurance Credit unemployment insurance policies must clearly define unemployment within the policy and certificate and must contain provisions not less favorable to insur ed debtors than the following: 1. Coverage for unemployment for any reason, except that coverage may be excluded for unemploymen t due to the insured debtor’s:

Voluntary forfeiture of salary, w age or other employment income; a. Resignation;

b. Retirement;

c. General strike;

d. Illegal walkout;

e. War;

f. Separation from the military;

g. Willful misconduct or criminal miscon duct or unlawful behavior; and h. Disability caused by injury, sickness or pregnancy.

2. For credit unemployment insurance which provides for a monthly benefit in the event of unemployment, benefits must start after a waiting period of not longer than thirty (30) days, but need not be retroactive to the first day of unemployment and must have a maximum benefit period that is no shorter than one month. Coverage may include unemployment under the Federal Family Medical Leave Act 29 USC 2602 et. seq. 3. Credit unemployment insurance policies may not contain eligibility require ments more than the following:

a. Exclusion from qualification for coverage: 1) self-employed individuals; 2) workers in seasonal or temporary jobs designed to last six (6) months or less; and 3) debtors who have been notified at the time of election of coverage either orally or in writing of any layoff from employment within the next sixty (60) days. These exclusions must be disclosed to all prospe ctive insureds, if applicable. b. No employment requirement shall be more restrictive than one requiring that the debtor actually be at work and employed in a full-time gainful occupation on the effective date of coverage and for at least six (6) consecutive months prior to t he effective date of coverage.

I. Credit Property Insurance 1. Where premiums are collected on a single premium basis, the premium charge for credit property insurance shall be calculated based on the total replacement value or original amount of indebtedness, whichever is less, of each item of insured property. Premium calculations must be based on purchases of durable goods only and shall not include the cost of any service, meals, entertainment, or any other non-durable item. 2. Coverage shall be not less than that provided by the standard fire policy with coverage attachment, extended coverage endorsement and replacement cost provision endorsement, or such other appropriate standard policy form for the underlying risk and hazard.

3. If the debtor has or obtains additional personal property coverage, the debtor may retain the additional coverage or may substitute coverage at any time and, upon such substitution, shall be entitled to a refund of the unearned premium on the policy. Where this insurance was not initially required by the creditor, the debtor may cancel at any time and shall be entitled to a refund of any premium paid. If such substitution or cancellation occurs within thirty (30) days of the extension of credit, the entire premium shall be refunded, provided that a compensable claim does not occur prior to the date substitution or cancellation occurs.

4. Valuation of losses shall be the replacement cost of the property up to the original amount of indebtedness.

5. "Property" shall be defined no more restrictively than the definition of Section 3 (H) of this regulation.

6. Coverage may be issued only as long as compliance with §5-4-301(3), C.R.S., is maintained. J. Credit Dismemberment Insurance Any credit insurance policy, which identifies itself as providing coverage against dismemberment, shall define dismemberment no more restrictively than the definition included in Section 3 (E) of this regulation.

Section 7 Premium Payment A. Single Premium Basis If the creditor adds identifiable insurance charges or premiums for credit insurance to the total amount of the indebtedness, and makes any direct or indirect finance, carrying, credit or service charges whatever to the debtor in connection with such insurance charge or premiums, the creditor has loaned the premium or the insurance charge to the debtor. This loaned premium will be deemed collected by the insurer as soon as it is added to the indebtedness. In this event, the coverage is deemed to be on a single premium basis. However, credit insurance issued in connection with a covered loan cannot be financed, either directly or indirectly. A “covered loan” is defined in §5-3.5-101(2), C.R.S.

B. Monthly Basis A creditor may remit and an insurer may collect on the monthly basis if the insurance charge or premium is not added to the initial amount financed and does not constitute part of the initial outstanding indebtedness, and if no direct or indirect finance, carrying, credit or service charge is made to the debtor in connection with the insurance charge or premium. Section 8 Termination of Coverage A. Continuation of Coverage - Group Insurance If the debtor is covered by a group credit insurance policy and has paid a single premium for the coverage, then, in the event of termination of the group policy for any reason, insurance coverage shall be continued for the entire period for which the single premium has been paid. This provision shall not limit the debtor's right to cancel the insurance at any time at the debtor's written request, nor shall it prevent cancellation of insurance as permitted by Section 8 (D) of this regulation.

B. Extension of Coverage - Group Insurance If a debtor is covered by a group credit insurance policy providing for the payment of premiums by the insured on a basis other than single premium, then the policy shall provide that, in the event of termination of such group policy for whatever reason, a written termination notice shall be given to the insured debtor at least thirty (30) days prior to the effective date of the termination. This thirty (30) day notice is not required if the existing insurer replaces coverage in the same or greater amount without a lapse of coverage, or if another insurer charging the same or lower premium rate replaces coverage in the same or greater amount without a lapse in coverage. C. Cancellation of Individual Policies If a debtor is covered by a contract of individual credit insurance, neither the insurer nor the creditor may cancel the policy without the debtor's express written consent. However, this prohibition is not applicable in the following situations: 1. Non-payment of premium, subject to the insurance contract's mandatory grace period; or 2. Default on the scheduled loan payments; or 3. The creditor no longer has an insurable interest in the debtor (such as due to a pre-payment of the loan); or 4. For open-end coverage on open-end loans, the insurer may non-renew the coverage by giving notice of its intent to non-renew thirty (30) days prior to the renewal date. D. Cancellation of Group Certificates If a debtor is covered by a group certificate and has the collateral legally repossessed, the certificate coverage shall terminate on the date of the repossession. Section 9 Refunds A. Refund Methodology 1. For policies issued or renewed on or after December 1, 2002, and except as otherwise permitted in Subsection 9 (A)(2) of this regulation, the amount of the refund shall not be less than that calculated using the Rule of Anticipation Refund Method. For policies issued prior to December 1, 2002, it is acceptable to use the Pro-rata Refund Method. For level benefit plans over the premium payment period, the method used must produce a refund no less favorable to the insured than the Pro-rata Refund Method. For other plans, it is acceptable, at the insurers option, to request the use of alternative methodologies which must reflect the fact that premiums are earned proportionately to the coverage.

2. Alternative methods in specified instances.

a. The Actuarial Refund Method. Actuarial Refund Method means the method in which the refund is equal to A multiplied by B, divided by C, where: A = the premium paid for the total coverage originally scheduled, B = the sum of the originally scheduled amounts of insurance for each month in the term of insurance following the date of termination, and C = the sum of the amounts of insurance for each month in the term of coverage originally scheduled. The Actuarial Refund Method may be used for all types of credit life insurance and credit property insurance.

b. The Rule of 78 (sum of the digits) Refund Method. The Rule of 78 Refund Method may be used for credit life insurance in which the amount of coverage decreases by approximately the same amount each month, and the amount of coverage in the final month is equal to or less than the approximate amount by which coverage decreases each month.

c. The Pro-rata Refund Method. The Pro-rata Refund Method may be used for all credit insurance in which the amount of coverage remains level throughout the entire duration of the coverage.

d. The Mean Method. The Mean Method is the average of the Sum of Digits Refund Method and the Pro-rata Refund Method and may be used for credit accident and health insurance and credit unemployment insurance in which the maximum total indemnity amount decreases by a uniform amount each month throughout the term of coverage and the amount of indemnity in the final month of coverage is equal to or less than the amount by which the maximum total indemnity amount decreases each month.

B. Partial Month Calculation In the event that the insurer is using a refund methodology that requires the use of complete months, no charge for credit insurance may be made for a partial month of fifteen (15) days or less. A full month may be charged for sixteen (16) days or more of a loan month. C. Minimum Refund No refund of less than or equal to $5.00 must be made.

D. Involuntary Prepayment of Indebtedness If an indebtedness is prepaid by the proceeds of one distinct benefit type of the credit insurance policy or policies covering the debtor, then it shall be the responsibility of the insurer issuing another kind of coverage, upon notification by the creditor or by the insurer if the insurer issued additional kinds of insurance, that the indebtedness has been paid off and to refund the unearned premium, if any. The refund must be calculated according to the acceptable methodologies of this Section 9, and must be paid or credited to the debtor, the beneficiary named by the debtor other than the creditor, or to the debtor's estate, as appropriate. For example, if the indebtedness is prepaid by the proceeds of a life insurance policy or benefit, the unearned premium of the accident and health, unemployment, and property benefits or policies must be refunded.

E. Voluntary Prepayment of Indebtedness If a debtor prepays the indebtedness other than through the proceeds of a credit insurance policy, all credit insurance policies or distinct benefits covering the indebtedness shall be terminated and a refund of the unearned premium shall be paid or credited to the debtor. However, if a claim under such coverage is in progress at the time of prepayment, the claim shall continue as if there had been no prepayment. Under this circumstance, no refund of unearned credit insurance premium should be made until the claim has been finalized and the refund for that coverage shall be calculated from the date the event or occurrence giving rise to the claim ended. F. Refund of Creditor Contribution to Payment of Premium If a creditor pays, from the creditor’s own funds, a portion of the premium for any coverage for which an unearned premium refund becomes payable, the insurer may pay to the creditor and the creditor may retain an amount of the refund for the coverage that is equal to the refund as calculated in Section 9 of this regulation, multiplied by the proportion of the total premium paid by the creditor to the total amount of premium originally paid for the coverage. Section 10 Claims A. Responsibility of the Insurer Section 10-10-108 (2)(d), C.R.S., requires that the policy or certificate "state that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness, ... that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate." Proper payment of the entire claim is the contractual responsibility of the insurer and the simple act of forwarding a check for the entire claim to the creditor cannot relieve the insurer of this responsibility where excess fund exist.

B. Claims Processing 1. For policies and certificates which provide for a maximum amount of insurance, if 1) the debtor becomes insured for an amount in excess of the stated maximum, or 2) two or more individual policies or group certificates are issued in error and an insurance charge or premium has been separately paid by the debtor, then the total amount insured under each individual policy or certificate must be paid in the event of a valid claim. If the error is discovered prior to the incurrence of a claim, the insurer may notify the debtor, refund the excess premium paid and correct or cancel the excess coverage. 2. Except when the scheduled termination of the insurance coverage is more than thirty (30) days before the scheduled termination of the indebtedness, all policies and certificates shall provide for an extension of the maturity date to coincide with the end of the payment period, when the debtor is not obligated to begin monthly payments to the creditor on the effective date of the loan.

3. When an identifiable charge is made to the debtor for insurance, any provision in a policy or certificate that sets a maximum limit on the total payments must apply only to that policy or certificate.

Section 11 Policy Forms and Related Material A. Filing Requirements 1. At least thirty-one (31) days prior to using any new form, subject to the provisions of this regulation, each entity must file in a format prescribed by the Commissioner, a listing of new policy forms including a fully executed certificate of compliance. Any such listing and the applicable certificate of compliance must be prepared individually for each program. 2. No later than July 1 of each year, each credit insurer must file an annual report of all policy forms in use including a fully executed certificate of compliance. B. Elements of Certification The elements of certification as determined by the Commissioner, which must be included in the Colorado credit insurance certification form are as follows: 1. The name of the insurer, the form number(s) and the type of creditors who will be using the forms (e.g. banks, credit unions, auto dealers);

2. A statement that the officer signing the certification form is knowledgeable about credit insurance;

3. A statement that the officer signing the certification form has carefully reviewed the policy forms, subscription certificates, membership certificates or other evidences of credit insurance coverage identified on the listing of new policy forms or annual report; 4. A statement that the officer signing the certification form has read and understands each applicable law, regulation and bulletin;

5. A statement that the officer signing the certification form is aware of the applicable penalties for certification of a non-complying form;

6. A statement that the officer signing the certification form certifies: For listings of new policy forms for credit insurance, that to the best of the officer’s knowledge, the documents identified on the Listing of New Policy Forms or Annual Report provide all applicable mandated benefits and are in full compliance with all Colorado Insurance Laws and Regulations.

7. The name and title of the officer signing the certification form and the date the certification form is signed;

8. The original signature of the officer. Signature stamps, photocopies or signatures on behalf of the officer are not acceptable.

C. Evidence of Coverage All credit insurance shall be evidenced by an individual policy, or in the case of group insurance, by a certificate of insurance. It is the responsibility of the insurer that these policies or certificates are provided to the debtor.

Section 12 Rates With the exception of the use of component based rates as permitted in Section 12 (B) of this regulation, the maximum permissible premium rates for credit insurance must be filed concurrent with the effective date with the Commissioner. An insurer may at any time use rates lower than those that are filed. A. Credit Insurance Directly Written by a State or National Bank All credit insurance written directly by a state or national bank may, at the insurer’s option, be rated by either of the methods described in Subsection B and D of this Section 12. However, if the insurer chooses to rate according to Subsection D of this Section 12, the insurer must file, with the Division of Insurance, a listing of the policy forms for which the rates will be determined according to Subsection D of this Section 12. This filing must be submitted to the Division of Insurance prior to any use of the rates.

B. Component Rates As permitted by §10-10-109(2.5)(c)(I), C.R.S., rates for certain benefits and types of business have been established by the Commissioner after giving due consideration to the individual components listed in that section of law. With the exception of the exemptions provided by Subsection A and C of this Section 12, and Appendix 1 of this regulation, all insurers must use premium rates that are no higher than the rates listed in Appendix 1. An insurer may at any time use rates lower than those rates listed in Appendix 1. The rates in Appendix 1, when used in accordance with the provisions of this Section 12 (B), are deemed to be reasonable in relation to the benefits provided and are not excessive, inadequate nor unfairly discriminatory.

The rates for the specific plans included in Appendix 1 are subject to the following maximum conditions:

1. Credit life insurance may contain no exclusions other than those listed in Section 6 (F) of this regulation.

2. Credit insurance may include an age restriction providing that no insurance need to be offered to debtors over 65 on the effective date or over 66 on the scheduled maturity date of the debt. In the case of loans, such as revolving credit loans, which have no scheduled maturity date of the debt, credit insurance must be offered to all debtors not older than the attained age of 66. The premium rate to all debtors eligible for coverage shall be the same regardless of age. Coverage may be terminated upon the debtor’s attainment of a specified age not less than 66.

3. Credit accident and health insurance may contain no exclusions other than those listed in Section 6 (G) of this regulation.

4. Credit property insurance must cover all perils excluding theft without evidence of forced entry. 5. The rates for credit life insurance and credit disability insurance do not apply to credit union accounts.

C. Rating for Other Benefits Rates for benefits and plans that are materially different than those listed in Subsection B of this Section 12, must be rated in accordance with the loss ratio standard of Subsection D of this Section 12. In determining whether a particular benefit or plan is materially different from the plans listed in Subsection B of this Section 12, the commissioner will give consideration to such justification as the insurer may submit. Such justification may include, but need not be limited to the following: The amount of the benefit in relation to the amount of the insured loan balance, the use or nonuse of exclusionary or retroactive waiting periods, the age of the debtor or debtors, the degree of underwriting used, the coverage or exclusion of causes of loss, or the coverage of risks other than those set forth in this regulation.

D. Loss Ratio Standard All rate or rating plan filings subject to Subsection D of this Section 12, must demonstrate compliance with the 40% loss ratio standard and must be certified by a qualified actuary. In evaluating such filings, the Commissioner will give consideration to such justification as the insurer may submit. Such justification may include, but need not be limited to, relevant available mortality, morbidity, bodily injury, or unemployment data pertaining to the debtors of a creditor or a class or classes of debtors of a creditor or creditors, previous experience of the same or similar plans of insurance or group of creditors, debtors, or an analysis of the credibility of such data. Use of the credibility standard as promulgated or produced by the National Association of Insurance Commissioners (NAIC) are expressly permitted, but not required. The benefits provided to Colorado policy and contract holders by the coverage must be reasonable in relation to the premium rates charged and must be such that the 40% loss ratio standard of §10-10-109(2.5)(b), C.R.S., may be reasonably expected to be met or exceeded. Rates and rating data for all benefit types must accurately reflect the benefits provided Separate rates by age are allowable.

1. Coverage may be limited to debtors aged 65 and younger or age 66 on the scheduled maturity date of the indebtedness.

2. In the case of open-ended loans, coverage must be provided or offered to all debtors not older than attained age 65, and coverage may be canceled or reduced upon attainment of not less than age 66 by giving notice thirty (30) days prior to such cancellation or reduction. All rate filings must be accompanied by adequate supporting documentation, which shall include, at a minimum:

1. Experience of earned premiums, incurred losses and calculated loss ratios for the prior three years, or all available experience, if less than three (3) years. Rates and rating data must be based on Colorado data to the extent that it is credible. 2. Target or expected loss ratio.

3. Quantification of any benefit changes.

4. Rate development.

5. Analysis of credibility, and use of collateral data such as company experience in other states for similar policies, industry experience, mortality tables or morbidity tables. 6. Demonstration of compliance with the loss ratio standard. 7. Certification of a qualified actuary.

Section 13 Compliance Credit insurance rated according to Subsection D of this Section 13 of this regulation, is generally required to separately satisfy the loss ratio requirement for each type of coverage or plan, e.g., life, accident and health, property and unemployment. However, experience for a combined coverage, which is sold as a single product for a combined, indivisible premium, may separately satisfy the loss ratio requirement. If the cumulative loss ratio for all Colorado business rated according to Subsection D of this Section 13 and issued or renewed by the insurer for a consecutive three year calendar year period falls below the minimum loss ratio as defined in §10-10-109, C.R.S., the insurer shall either promptly file adjusted rates that can be prospectively expected to produce a loss ratio greater than or equal to the minimum standards, or submit reasons acceptable to the Commissioner as to why it should not be required to do so.

If the Commissioner, by the insurer's failure to maintain the required minimum loss ratio, determines that a delinquency of an insurer exists under the provisions of §10-3-401 et. seq., C.R.S., the insurer shall justify its past practice and provide to the Commissioner an explanation, or plan of abatement or correction. Corrective measures, which the Commissioner may accept in a plan of abatement or correction, may include:

A. Implementation of a rate decrease or benefit increase such that the premiums collected within the following two (2) calendar years will generate a future loss ratio in excess of the statutory minimum, and such that the cumulative five (5) year loss ratio at the end of this two year period will be at least equal to the minimum statutory loss ratio. B. Payment of a stipulated settlement to the Division of Insurance equal to one hundred and ten percent of the premiums collected in excess of the premium necessary to generate the minimum loss ratio.

C. Refund of any premiums collected in excess of the premium necessary to generate the past minimum loss ratio, such refund to be paid to or applied to the benefit of the insured debtors. D. Voluntary suspension of credit insurance sales.

Section 14 Severability If any provision of this regulation or the application thereof to any person or circumstance is for any reason held invalid, the remainder of this regulation shall not be affected. Section 15 Enforcement Noncompliance with this Regulation may result, after proper notice and hearing, in the imposition of any sanction(s) made available in the Colorado statutes pertaining to the business of insurance or other laws which include the imposition of fines, issuance of cease and desist orders, and/or suspensions or revocation of license. Among others, the penalties provided for in § §10-3-1108 and 10-10-114 C.R.S. may be applied.

Section 16. Effective Date This regulation shall become effective on December 31, 2007. Section 17. History New Regulation 74-1 effective March 15, 1974.

Amended effective December 22, 1975.

Amended effective July 1, 1979.

Amended effective January 1, 1985.

Regulation 74-1 was renumbered 4-9-1, effective June 1, 1992. Regulation 4-9-1 was repealed effective October 9, 1992. New Regulation 4-9-2, effective October 9, 1992.

Amended effective April 1, 1993.

Amended effective November 1, 2000.

Amended effective December 1, 2002.

Amended effective January 1, 2006.

Amended effective December 31, 2006.

Amended effective December 31, 2007.

Appendix I All Rates Listed in Section 1 through 10 are for Single Life Coverage. 1. Single Premium Life Insurance – Not for use by Credit Union Accounts 1A. Gross decreasing term coverage: The rate is $0.38 per $100 per year. 1B. Net decreasing term coverage: The rate is the sum of the component based Monthly Outstanding Balance Life Insurance rate for All Other as in 2.B. below, applied to the amount of coverage in force during each month.

1C. Truncated coverage: The rate is the sum of the component based Monthly Outstanding Balance Life Insurance rate for All Other as in 2.B. below, applied to the amount of net coverage in force during each month.

1D. Level Term coverage: The component based rate is $.70 per $100 per year. 2. Monthly Outstanding Balance Life Insurance – Not for use by Credit Union Accounts 2A. Revolving charge accounts : The component based rate is $.58 per $1,000 per month. 2B. All other : The component based rate is $.58 per $1,000 per month. 3. Level Monthly Premium Decreasing Term Life Insurance – Not for use by Credit Union Accounts 3A. Gross coverage : Rates per $1,000 initial balance by number of years: Years Rate 1 0.33 2 0.33 3 0.33 4 0.34 5 0.35 6 0.36 7 0.37 8 0.38 9 0.39 10 0.40 3B. Net coverage: Rates per $1,000 initial balance by number of years: Years Rate 1 0.33 2 0.34 3 0.35 4 0.36 5 0.38 6 0.39 7 0.40 8 0.42 9 0.43 10 0.44 3C. Truncated coverage: Net Pay Truncated coverage rates are as follows: Term (Yrs) 1Yr 2 Yr 3 Yr 1 0.33 . .

2 0.46 0.34 .

3 0.51 0.43 0.35 4 0.53 0.47 0.42 5 0.54 0.50 0.46 6 0.55 0.52 0.48 7 0.56 0.53 0.50 8 0.56 0.54 0.51 9 0.56 0.54 0.53 10 0.57 0.55 0.53 4. Single Premium Disability Insurance – Rates per $100 of Initial Insurance - Not for use by Credit Union accounts 4A. Full Benefit Rates or the End of the Loan Term. Rates per $100 of Initial Insurance - Not for use by Credit Union Accounts Months 14 Retro 14 Non-Retro 30 Retro 6 1.37 0.76 0.98 12 1.67 1.06 1.29 24 2.28 1.67 1.90 36 2.88 2.28 2.50 48 3.26 2.66 2.88 60 3.57 2.96 3.18 72 3.87 3.26 3.49 84 4.18 3.57 3.79 96 4.48 3.87 4.09 108 4.78 4.18 4.40 120 5.09 4.48 4.70 4B. Benefit Limited to the Lesser of 12 months or the End of the Loan Term. Rates per $100 of Initial Insurance - Not for use by Credit Union Accounts Months 14 Retro 14 Non-Retro 30 Retro 6 1.37 0.76 0.98 12 1.67 1.06 1.29 24 2.13 1.55 1.76 36 2.48 1.92 2.10 48 2.59 2.05 2.23 60 2.65 2.12 2.28 72 2.70 2.17 2.34 84 2.75 2.24 2.39 96 2.80 2.29 2.44 108 2.85 2.35 2.49 120 2.90 2.39 2.54 4C. Benefit Limited to the Lesser of 24 months or the End of the Loan Term. Rates per $100 of Initial Insurance - Not for use by Credit Union Accounts Months 14 Retro 14 Non-Retro 30 Retro 6 1.37 0.76 0.98 12 1.67 1.06 1.29 24 2.28 1.67 1.90 36 2.80 2.20 2.41 48 2.99 2.42 2.62 60 3.10 2.53 2.73 72 3.19 2.63 2.82 84 3.27 2.72 2.90 96 3.35 2.80 2.97 108 3.42 2.88 3.05 120 3.49 2.95 3.12 4D. Benefit Limited to the Lesser of 36 months or the End of the Loan Term. Rates per $100 of Initial Insurance - Not for use by Credit Union Accounts Months 14 Retro 14 Non-Retro 30 Retro 6 1.37 0.76 0.98 12 1.67 1.06 1.29 24 2.28 1.67 1.90 36 2.88 2.28 2.50 48 3.20 2.57 2.82 60 3.37 2.75 2.99 72 3.51 2.89 3.14 84 3.63 3.03 3.25 96 3.73 3.14 3.36 108 3.83 3.24 3.46 120 3.92 3.34 3.55 5. Monthly Premium Disability Insurance (premium base = sum of remaining payments) Rates per $1,000 of Remaining Payments - Not for use by Credit Union Accounts 5A. Full Benefit Rates or the End of the Loan Term. Rates per $1,000 of Remaining Payments - Not for use by Credit Union Accounts a. Duration specific rates Months 14 Retro 14 Non-Retro 30 Retro 6 3.91 2.17 2.81 12 2.56 1.63 1.99 24 1.82 1.33 1.52 36 1.56 1.23 1.35 48 1.33 1.09 1.18 60 1.17 0.97 1.04 72 1.06 0.89 0.96 84 0.98 0.84 0.89 96 0.92 0.80 0.84 108 0.88 0.77 0.81 120 0.84 0.74 0.78 b. Composite term rates for all durations.

14 Retro 14 Non-Retro 30 Retro 30 Non-Retro 1.39 1.10 1.21 0.89 5B. Benefit Limited to the Lesser of 12 months or the End of the Loan Term. Rates per $1,000 of Remaining Payments - Not for use by Credit Union Accounts a. Duration specific rates Months 14 Retro 14 Non-Retro 30 Retro 6 3.91 2.17 2.81 12 2.56 1.63 1.99 24 1.70 1.24 1.41 36 1.34 1.04 1.14 48 1.06 0.84 0.91 60 0.87 0.69 0.75 72 0.74 0.60 0.64 84 0.65 0.53 0.56 96 0.58 0.47 0.50 108 0.52 0.43 0.46 120 0.48 0.40 0.42 b. Composite term rates for all durations.

14 Retro 14 Non-Retro 30 Retro 30 Non-Retro 1.14 0.88 0.97 0.67 5C. Benefit Limited to the Lesser of 24 months or the End of the Loan Term. Rates per $1,000 of Remaining Payments - Not for use by Credit Union Accounts a. Duration specific rates Months 14 Retro 14 Non-Retro 30 Retro 6 3.91 2.17 2.81 12 2.56 1.63 1.99 24 1.82 1.33 1.52 36 1.51 1.19 1.30 48 1.22 0.99 1.07 60 1.02 0.83 0.89 72 0.87 0.72 0.77 84 0.77 0.64 0.68 96 0.69 0.58 0.61 108 0.63 0.53 0.56 120 0.58 0.49 0.52 b. Composite term rates for all durations.

14 Retro 14 Non-Retro 30 Retro 30 Non-Retro 1.29 1.01 1.11 0.80 5D. Benefit Limited to the Lesser of 36 months or the End of the Loan Term. Rates per $1,000 of Remaining Payments - Not for use by Credit Union Accounts a. Duration specific rates Months 14 Retro 14 Non-Retro 30 Retro 6 3.91 2.17 2.81 12 2.56 1.63 1.99 24 1.82 1.33 1.52 36 1.56 1.23 1.35 48 1.31 1.05 1.15 60 1.11 0.90 0.98 72 0.96 0.79 0.86 84 0.85 0.71 0.77 96 0.77 0.65 0.69 108 0.70 0.60 0.63 120 0.65 0.55 0.59 b. Composite term rates for all durations.

14 Retro 14 Non-Retro 30 Retro 30 Non-Retro 1.35 1.06 1.17 0.85 6. Monthly Premium Disability Insurance (premium base = remaining principal balance) Rates per $1,000 of Remaining Principal Balance - Not for use by Credit Union Accounts. 6A. Full Benefit Rates or the End of the Loan Term. Rates per $1,000 of Remaining Principal Balance - Not for use by Credit Union Accounts a. Duration specific rates Months 14 Retro 14 Non-Retro 30 Retro 6 3.99 2.22 2.87 12 2.67 1.69 2.07 24 1.95 1.43 1.63 36 1.73 1.36 1.50 48 1.52 1.24 1.35 60 1.38 1.14 1.23 72 1.29 1.09 1.16 84 1.23 1.05 1.12 96 1.19 1.03 1.09 108 1.16 1.02 1.07 120 1.15 1.01 1.06 b. Composite term rates for all durations.

14 Retro 14 Non-Retro 30 Retro 30 Non-Retro 1.58 1.26 1.38 1.01 6B. Benefit Limited to the Lesser of 12 months or the End of the Loan Term. Rates per $1,000 of Remaining Principal Balance - Not for use by Credit Union Accounts a. Duration specific rates Months 14 Retro 14 Non-Retro 30 Retro 6 3.99 2.22 2.87 12 2.67 1.69 2.07 24 1.83 1.33 1.51 36 1.48 1.15 1.26 48 1.21 0.96 1.04 60 1.02 0.82 0.88 72 0.90 0.72 0.78 84 0.81 0.66 0.70 96 0.74 0.61 0.65 108 0.69 0.57 0.61 120 0.65 0.54 0.57 b. Composite term rates for all durations.

14 Retro 14 Non-Retro 30 Retro 30 Non-Retro 1.29 0.99 1.09 0.76 6C. Benefit Limited to the Lesser of 24 months or the End of the Loan Term. Rates per $1,000 of Remaining Principal Balance - Not for use by Credit Union Accounts a. Duration specific rates Months 14Retro 14 Non-Retro 30 Retro 6 3.99 2.22 2.87 12 2.67 1.69 2.07 24 1.95 1.43 1.63 36 1.67 1.32 1.45 48 1.40 1.13 1.22 60 1.20 0.98 1.05 72 1.06 0.88 0.94 84 0.96 0.80 0.85 96 0.89 0.74 0.79 108 0.83 0.70 0.74 120 0.79 0.67 0.70 b. Composite term rates for all durations.

14 Retro 14 Non-Retro 30 Retro 30 Non-Retro 1.46 1.15 1.26 0.91 6D. Benefit Limited to the Lesser of 36 months or the End of the Loan Term. Rates per $1,000 of Remaining Principal Balance - Not for use by Credit Union Accounts a. Duration specific rates Months 14 Retro 14 Non-Retro 30 Retro 6 3.99 2.22 2.87 12 2.67 1.69 2.07 24 1.95 1.43 1.63 36 1.73 1.36 1.50 48 1.49 1.20 1.32 60 1.30 1.06 1.16 72 1.17 0.96 1.04 84 1.07 0.89 0.96 96 0.99 0.83 0.89 108 0.93 0.79 0.84 120 0.88 0.75 0.80 b. Composite term rates for all durations.

14 Retro 14 Non-Retro 30 Retro 30 Non-Retro 1.53 1.21 1.33 0.97 7. Monthly Premium Disability Insurance (premium base = monthly payment amount) Rates per $100 of Monthly Payment - Not for use by Credit Union Accounts. 7A. Full Benefit Rates or the End of the Loan Term - Rates per $100 of Monthly Payment - Not for use by Credit Union Accounts a. Duration specific rates . 14 14 30 Months Retro Non-Retro Retro 6 1.55 1.08 1.21 12 2.07 1.55 1.72 24 2.65 2.08 2.28 36 3.07 2.47 2.69 48 3.45 2.83 3.06 60 3.81 3.17 3.42 72 4.17 3.50 3.76 84 4.52 3.82 4.10 96 4.86 4.14 4.44 108 5.21 4.46 4.78 120 5.54 4.77 5.11 b. Composite term rates for all durations 14 14 30 30 Retro Non-Retro Retro Non-Retro 3.47 2.85 3.08 2.38 7B. Benefit Limited to the Lesser of 12 months or the End of the Loan Term - Rates per $100 of Monthly Payment - Not for use by Credit Union Accounts a. Duration specific rates . 14 14 30 Months Retro Non-Retro Retro 6 1.55 1.08 1.21 12 2.07 1.55 1.72 24 2.45 1.92 2.09 36 2.58 2.03 2.21 48 2.64 2.09 2.27 60 2.67 2.12 2.30 72 2.69 2.15 2.32 84 2.71 2.16 2.34 96 2.72 2.17 2.35 108 2.73 2.18 2.35 120 2.73 2.18 2.36 b. Composite term rates for all durations 14 14 30 30 Retro Non-Retro Retro Non-Retro 2.60 2.06 2.23 1.62 7C. Benefit Limited to the Lesser of 24 months or the End of the Loan Term - Rates per $100 of Monthly Payment - Not for use by Credit Union Accounts a. Duration specific rates . 14 14 30 Months Retro Non-Retro Retro 6 1.55 1.08 1.21 12 2.07 1.55 1.72 24 2.65 2.08 2.28 36 2.95 2.37 2.58 48 3.10 2.52 2.72 60 3.19 2.60 2.81 72 3.24 2.65 2.86 84 3.28 2.69 2.89 96 3.31 2.71 2.92 108 3.32 2.73 2.94 120 3.34 2.74 2.95 b. Composite term rates for all durations 14 14 30 30 Retro Non-Retro Retro Non-Retro 3.03 2.45 2.65 2.00 7D. Benefit Limited to the Lesser of 36 months or the End of the Loan Term - Rates per $100 of Monthly Payment - Not for use by Credit Union Accounts a. Duration specific rates . 14 14 30 Months Retro Non-Retro Retro 6 1.55 1.08 1.21 12 2.07 1.55 1.72 24 2.65 2.08 2.28 36 3.07 2.47 2.69 48 3.36 2.71 2.98 60 3.53 2.88 3.14 72 3.64 2.98 3.25 84 3.71 3.05 3.32 96 3.76 3.10 3.37 108 3.80 3.14 3.40 120 3.83 3.16 3.43 b. Composite term rates for all durations 14 14 30 30 Retro Non-Retro Retro Non-Retro 3.26 2.64 2.88 2.20 8. Single Premium Unemployment Insurance (Note – this is a per claim benefit, but is refreshable after a 31 day back to work event.)

8 A. 30 Day Retroactive, 6 Month Benefit – Without coverage for family leave: $2.15 per $100 initial gross indebtedness per year.

8 B. 30 Day Retroactive, 6 month Benefit - With coverage for family leave: $2.34 per $100 initial gross indebtedness per year.

8 C. 30 Day Retroactive, 9 Month Benefit – Without coverage for family leave. $2.76 per $100 Initial gross indebtedness per year.

8 D. 30 Day Retroactive, 9 Month Benefit – With coverage for family leave. $2.95 per $100 initial gross indebtedness per year.

8 E. 90 Day lump sum benefit:

$2.79 per $100 initial gross indebtedness per year.

9. Monthly Outstanding Balance Unemployment Insurance 9 A. 30 Day Retroactive, 6 Month Benefit – Without coverage for family leave: $1.79 per $1,000 of remaining principal balance $1.52 per $1,000 of remaining payments 9 B. 30 Day Retroactive, 6 month Benefit - With coverage for family leave: $1.95 per $1,000 of remaining principal balance $1.66 per $1,000 of remaining payments 9 C. 30 Day Retroactive, 9 Month Benefit – Without coverage for family leave. $2.30 per $1,000 of remaining principal balance $1.95 per $1,000 of remaining payments 9 D. 30 Day Retroactive, 9 Month Benefit – With coverage for family leave. $2.46 per $1,000 of remaining principal balance $2.08 per $1,000 of remaining payments 9 E. 90-day lump sum benefit:

$2.33 per $1,000 of remaining principal balance $1.97 per $1,000 of remaining payments 10. Property – Dual Interest 10 A. Single premium:

$2.18 per $100 Initial Gross Indebtedness per year.

10 B. Monthly outstanding balance:

$3.35 per $1,000 of remaining principal balance, $2.85 per $1,000 of remaining payments.

11 . Joint Life Factors for Life and Disability Coverages Life and disability coverages may be offered on a joint life basis.

11 A. For life coverage identified in Sections 1, 2, and 3. The component based rate for joint lives, for the life insurance coverage listed in section 1, 2 and 3, is obtained by multiplying the listed single life rate by 1.65.

11 B. For life coverage identified in Sections 4, 5, 6, and 7. The component based rate for joint lives, for the disability insurance coverages listed in Section 4., 5.,6., and 7., is obtained by multiplying the listed single life rate by 1.75.

_____________________________________________________ Editor’s Notes History Regulation 4-2-11 eff. 12/01/2007.

Regulation 4-9-2 eff. 12/31/2007.

Regulations 4-1-14, 4-4-1, 4-6-5, 4-6-7 eff. 01/01/2008. Emer. Regulation 07-E-3 eff. 12/03/2007.

Emer. Regulation 08-E-2 eff. 1/1/2008.

Regulations 4-2-24; 4-6-12 eff. 2/1/2008.

Regulations 4-2-28, 4-6-5 eff. 03/01/2008.

Emer. Regulations 08-E-4 and 08-E-5 eff. 07/01/2008.

Emer. Rule 08-E-6- eff. 09/01/2008.

Regulations 4-2-11, 4-2-22, 4-2-29, 4-4-1, 4-6-7 eff. 10/01/2008. Emer. Rules 08-E-9, 08-E-10, 08-E-12 eff. 11/04/2008.

Emer. Rules 08-E-8, 08-E-11, 08-E-13 eff. 01/01/2009.

Regulations 4-1-15, 4-2-11, 4-2-30, 4-3-1, 4-4-1, 4-6-5, 4-6-7 eff. 02/01/2009. Regulation 4-2-25 repealed eff. 04/01/2009.

Regulation 4-3-1 eff. 06/01/2009.

Regulations 4-2-11, 4-2-29 eff. 07/01/2009.