Colorado Supplement

Pre-licensing Course for Colorado Life, Accident and Health State Examination

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License2Go State Supplement Overview

This overview of your state supplement is designed to give you a foundation for understanding the rules and regulations described on the following pages. In 1945 the United States Congress passed the McCarran-Ferguson Act that gave the regulation and control of the insurance industry to individual states. The McCarran-Ferguson Act gave each state their own department of insurance, Superintendent of insurance and unique laws. Most states call their state insurance department head the Superintendent, but some states call them directors or Superintendents. To keep it simple in the License2Go course, we always refer to the head of the state insurance department as the Superintendent and the department of insurance as the Department of insurance. In 1871 the National Association of Insurance Superintendents was formed to provide some uniformity in the regulations of insurers which is why most states have almost exactly the same regulations and controls, but with some variation and emphasis. For instance, all states require that a licensee report a change of address to the Superintendent. In some states the licensee must report the change immediately, and in other states licensees must report anywhere from 10 to 30 days. Some states require that the licensee also report a change in phone number. General outline of Superintendents duties - The Superintendent for the department of insurance is a very powerful person with complete authority over the insurance industry in Colorado. He implements new regulations, enforces the laws and presides over judicial proceedings. Development of regulations Regulations can be developed by the Superintendent at any time to protect the insurance consumers by the issuance of orders or the implementation of new regulations. Regulation Regulation includes licensing individuals (as agents/producers) and insurers (certificate of authority) to transact insurance business in the state of Colorado. Through licensing, the Superintendent sets the rules for attaining and maintaining a license. Enforcement Similar to a law enforcement agency, the Superintendent vigilantly looks for violators and suspected violations of the insurance laws. Enforcement includes examinations of records (more easily understood as an audit of insurers and individuals) for compliance to laws, financial soundness and ethical practices. These examinations can be made at any time the Superintendent deems appropriate. For insurers, the Superintendent performs examinations regularly, and in most states its at least every five years. Judicial Review Judicial reviews are commonly known as hearings. The Superintendent can hold hearings similar to any court and has the authority to subpoena witnesses, issue oaths, make rulings and impose penalties such as fines and imprisonment.

I. COLORADO STATUTES, RULES, AND REGULATIONS COMMON TO LIFE AND SICKNESS & ACCIDENT
A. Insurance Commissioner The Colorado Insurance Commissioner is the head of the Colorado Division of Insurance. He is appointed by the governor with the approval of the Senate. Insurance is regulated by Colorado insurance law, not federally. 1. Power and duties (10-1-104; 10-1-105; 10-1-108; 10-1-109; 10-1-201 through 204; 10-3-105; 10-3-208; 10-3-1106) The Commissioner is responsible for examining the activities, operations, financial conditions, and affairs of all persons transacting insurance business in Colorado. The Commissioner cannot have a direct or indirect financial interest in any insurance company or agency other than as a policy holder. Commissioners duties o Adopting rules and regulations (rules and regulations complement laws) the Commissioner cannot write statutes (laws) but may amend insurance laws o Issuing certificates of authority to insurers eligible to be admitted or authorized insurers that do not need a certificate of authority include excess and surplus lines and reinsurers o Licensing and supervising insurance companies, agents and brokers o Regulating the investment activity of insurers (the terms insurer and insurance company are used interchangeably) o Preparing the annual report which is provided to the governor and legislature o Assuring that insurance rates are not unfairly discriminatory and are appropriate for the risk insured against insurance companies make rates, not the Commissioner o Issues orders such as cease and desist orders o Investigating consumer complaints and perform investigations when necessary o Examines activities and financial status of all persons involved in transacting insurance in Colorado, the cost of which the insurer or person being examined must pay for this includes producers and insurance companies; examinations must be performed at least once every five years (not applicable to non-admitted insurers) Adoption and amendment of rules (regulations) When necessary, the Commissioner may amend or adopt rules which enable him to carry out his duties. The Commissioner may adopt rules in reference to state-sponsored programs funds, such as the Guaranty Association and Workers Compensation, and premiums/deductibles charged to employers for Workers Compensation insurance. Commissioners employees The Commissioner may have one or more deputy Commissioners who are authorized to act as the Commissioner during certain circumstances when the Commissioner must be absent. A staff of examiners will be employed in order to examine the solvency of insurance companies. The examination staff will consist of senior examiners who must have at least three years of insurance company examination experience and as an employee of the Colorado Division of Insurance.

The Commissioner may utilize an experienced actuary within the Division of Insurance. This actuary must be fully capable of performing the actuarial duties of the division and to assisting in insurance company examinations. Definitions Targeted examination An examination involving a review of the insurers underwriting, rating, marketing and sales, complaint-handling, operations and management, advertising materials, licensing, policyholder services, nonforfeitures, claims handling, or policy forms and filings - a targeted examination may be conducted as a desk examination or as an on-site examination. Person Any individual, group of individuals, association, partnership, corporation, agent or affiliate Insurer Any entity doing insurance business and subject to the authority of the Commissioner Division The Colorado Division of Insurance Desk examination An examination conducted by an examiner at a location other than the insurer's premises usually performed in the offices of the division with the insurer providing requested documents by hard copy, microfiche, discs, or other electronic media for review. Company Any entity engaging in insurance business or any person or group who may be subject to administrative, regulatory, or taxing authority of the Commissioner Examiner An entity authorized by the Commissioner to conduct an examination Examination A financial examination or market conduct examination market conduct examinations may include routine, targeted, follow-up, multi-state, or desk examinations. Examinations The Commissioner may examine any insurer as often as necessary to determine whether an insurer has engaged in any unfair method of competition or in any unfair or deceptive act or prohibited practice. The Commissioner must conduct a formal financial examination of all admitted insurers at least once of every 5 years (surplus lines insurers are exempt). The reasonable expenses of market conduct examinations will be paid by the insurer examined. Costs associated with financial examinations of foreign insurers and the executive or branch offices of domestic insurers made outside Colorado will be paid by the insurer examined.

The Commissioner may accept an examination report prepared by the insurance department of any admitted foreign or alien insurer as long as the insurers home state or countrys examination is accredited under the NAIC financial regulation standards or the examination was performed under the supervision of an accredited insurance department. Examination conduct and procedures Examiners must use the guidelines presented in the NAIC examiners' handbook and the Colorado insurance examiners handbook for conducting examinations of insurers. All activities and affairs of the insurance company are subject to examination. The examiners must have access to all records and other documents relating to the property, assets, business, and affairs of an insurer. Any insurer that refuses to submit to an examination or comply with an examiners request is subject to suspension, revocation, denial, or non-renewal of a license or authority. Certificate of authority All foreign or domestic insurers must have a certificate of authority prior to transacting any insurance business in Colorado. The certificate of authority expires on June 30th of each year. Financial statements By March 1 of every year all insurance companies conducting insurance business in Colorado must file a financial statement with the division. The financial statement includes total premiums collected and claims paid during the prior year. 2. Hearings and penalties (10-2-801; 10-2-804; 10-3-104; 10-3-1107; 10-3-1108; 10-31109; 10-3-1111) Penalties for unauthorized companies It is unlawful for any person, company, or corporation in Colorado to procure, receive, or forward applications for insurance in or to issue or deliver policies for any company not legally authorized to do business in Colorado. Any person who violates this law is committing a class 1 misdemeanor. Hearings Whenever the Commissioner has reason to believe that any person in Colorado has been engaged or is currently engaging in any unfair method of competition or any unfair or deceptive act or practice, he will hold a send notice to the person in violation and hold an administrative hearing. Producer licenses may not be suspended or revoked prior to a hearing being held concerning the matter. Orders Cease and desist If after a hearing the Commissioner determines that the person has engaged in an unfair method of competition or an unfair or deceptive act or practice or has violated any other provision, he will issue an order requiring the person to cease and desist. If the Commissioner finds that the person has not committed any of the aforementioned offenses, he issues one or more of the following penalties: a.) Fines For Producers: $1,000 for each single violation with a maximum total of $10,000 for all violations in a 6-month period.

For Insurers: $10,000 for each single violation with a maximum total of $150,000 in a 6-month period. b.) Suspension or revocation If the person in violation should have reasonably known he was in violation of the law, his producers license may be suspended or revoked. c.) Payment of a claim The person in violation may be required to pay a claim to the insured or beneficiary affected by the persons actions. Penalties for violation of cease and desist orders Penalties for violating a cease and desist order may include one or more of the following: a.) Insurer will be fined $10,000 for each violation Producer will be fined $500 for each violation b.) Suspension or revocation of license (certificate of authority for insurer, producer license for producer) 3. License suspension and revocation (10-2-801 through 804; 10-2-401; 10-3-904.6; 10-3-904.7; 10-3-1108) Denial, suspension, termination or revocation of licenses The Commissioner may suspend or revoke a producers license after a hearing and notice provided to the producer for any one or more of the following: Any incorrect, misleading, incomplete, or materially untrue information in the license application; Any cause for which issuance of the license could have been refused had it then existed and been known to the Commissioner at the time of issuance; Violation of, or noncompliance with, any insurance law, or violation of any lawful rule, order, or subpoena of the Commissioner or of the insurance department of another state; Obtaining or attempting to obtain any such license through misrepresentation or fraud; Improperly withholding, misappropriating, or converting to the licensee's or applicant's own use any moneys or property belonging to policyholders, insurers, beneficiaries, or others received in the course of the business of insurance; Misrepresentation of the terms of any actual or proposed insurance contract or application for insurance; Conviction of a felony or misdemeanor involving moral turpitude (sexual offense against a child); Commission of any unfair trade practice or fraud;

The use of fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility in this state or elsewhere; Suspension, revocation, or denial of an insurance producers license in any other state, province, district, or territory; Forgery of another's name to an application for insurance or to any document related to an insurance transaction; Cheating on an examination, including, but not limited to, improperly using notes or any other reference material to complete an examination for an insurance license; Failure to fully meet the licensing requirements; Knowingly accepting insurance business from a person who is not licensed; Failing to comply with an administrative or court order imposing a child support obligation; or Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

Within 30 days after the initial pretrial hearing date, a producer or business entity must report to the Commissioner any criminal prosecution of the producer in any jurisdiction. After a producers license is suspended or revoked, the Commissioner must notify the NAIC and the commissioner in each state in which the licensee held nonresident producer licenses. License surrender An insurance producers license is the property of the state of Colorado, and must be surrendered or returned promptly to the Commissioner by personal delivery or by mail (certified or registered) within 15 days under any of the following conditions: Suspension, revocation, or termination of the license; Discontinuation or non-renewal of the license by the licensee; Discontinuation of a resident producers residency in Colorado, or a nonresident producers residency in the licensee's resident state; or Suspension, termination, or revocation of a nonresident licensee's producer license in his state of residence.

Investigation of producers The Commissioner may investigate any person or entity applying for or currently holding an insurance producer license. If the Commissioner suspects that a person is using unfair of deceptive practices, the Commissioner may require individuals to appear and show cause for why the Commissioner should not

discontinue, revoke, suspend, or refuse to issue the person's license. Failure of the individual to show cause may result in a revocation, suspension, or a refusal to issue a license. The person in violation may also be subject to a civil penalty of $1,000 for each violation. License required No person may act as an insurance producer unless licensed as an insurance producer. Failure to pay penalties or restitution If a person fails to pay a penalty or make complete restitution, the Commissioner may: Refer the matter to the attorney general; or Cancel or revoke any permit, license, certificate of authority, certificate, registration, or other authorization issued to such person.

B. Licensing and producers legal responsibility 1. Persons required to be licensed (10-2-103(6); 10-2-105; 10-2-201; 10-2-401; 10-2404; 10-2-407; 10-2-408; 10-2-412; 10-2-416; 10-2-701; 10-2-702; 10-2-801; Reg. 1-210; Reg. 2-1-9) Insurance producer An insurance producer is someone who solicits, negotiates, effects, procures, delivers, renews, continues, or binds policies of insurance for risks residing, located, or to be performed in Colorado. A person who explains insurance coverage to prospective clients must hold a producers license. A person cannot act or perform the duties of a producer unless he is licensed as an insurance producer. Producers licensed as insurance agents represent the insurance company, while producers licensed as brokers represent the insured. Exemptions from producer licensure The following individuals DO NOT require a producer license: A salaried officer of an insurance company who performs executive, administrative, or clerical duties and does not receive commissions; Salaried employee of insurance producers or insurers who performs clerical and administrative services, including the incidental taking of insurance applications and receipt of premiums as long as commissions are not received customer service representatives that explain policies to clients must be licensed; Third party administrators and employees who are involved with enrollment procedures for group policies as long as the insurance company does not provide compensation to such employees; Employees of insurers who inspect, rate, or classify risks - underwriters who do not transact insurance business; and Producers who only sell prepaid legal or travel accident insurance.

Pre-licensing education 90 hours are required for a Life, Accident and Health license. 50 hours are required for Life Only, and 50 hours are required for Health Only. License required to transact insurance No person may perform the duties and functions of an insurance producer unless he is licensed as an insurance producer. The duties and functions of an insurance producer include any form of transacting insurance (selling, soliciting, and negotiating insurance). Every insurance producer who solicits or negotiates an application for insurance of any kind on behalf of an insurer will be regarded as representing the insurer and not the insured or any beneficiary of the insured in any controversy between the insurer and such insured or beneficiary. Prerequisites for resident producer license An applicant for a resident insurance producer license will make application on a form specified by the Commissioner and will declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. Before approving the application, the Commissioner will verify that: The individual is at least 18 years of age; The individual has not committed any act which is a ground for denial, suspension, or revocation; The individual is a resident of this state or is a resident of another state; If the individual applicant is a nonresident, such applicant has furnished the Commissioner with a current certification of license status; Satisfied minimum pre-licensure education: The individual has successfully passed the examination or has satisfied examination qualification requirements for the line or lines of authority for which the individual has applied; The individual has paid the license fee; and The individual is competent, trustworthy, and of good moral character and good business reputation.

Nonresident producer licenses Only one resident producer license may be held at a time. If a person lives in Colorado and holds a resident producer license in Colorado, he cannot hold a resident producer license in South Dakota. He will need to apply for a nonresident producer license in South Dakota in order to transact insurance in South Dakota. Nonresident licenses do not require the producer to take a written exam as long as the nonresident license sought is in the same lines of authority (type of license) that is held via the resident license. Additionally, Colorado and the other states in which nonresident licensure is sought must have a mutual agreement for approving nonresident licenses. When Colorado resident producers seek nonresident licensure in other states, they must

provide the Colorado Commissioner with a consent to service of process form so that in cases where multi-state lawsuits arise, jurisdiction is established. Appointments and Agency contracts Insurance producers seeking licensure as insurance agents must have at least one appointment with an insurance company. Although producers must have at least one appointment, they may have several appointments, and there is not a limit to how many appointments a producer may hold. Appointments are established as an individual or as an agency. A producers appointment will remain in force and valid as long as the agent holds a current up-to-date producer license and the insurer, Commissioner, or producer has not terminated the producers license. Insurance companies are responsible for renewing producer appointments on a biennial (two-year) basis. Change of address Individual and insurance agency producer licensees will inform the Commissioner in writing of any change of address within 30 days after the change. Any licensee who fails to inform the Commissioner of any change to the licensee's address may be assessed a penalty. Notice of termination for cause An insurer or authorized representative of the insurer that terminates employment, a contract, or other insurance business relationship with a producer will notify the Commissioner within 30 days following the effective date of the termination. Upon the written request of the Commissioner, the insurer will provide additional information, documents, records, or other data pertaining to the termination or activity of the producer. Assumed names Any insurance producer using an assumed name, including a trade or fictitious name, under which the insurance producer conducts business must register the name with the Commissioner prior to using the assumed name. The Commissioner will not accept registration of any name that is similar to another currently on file, that would tend to be misleading to the public, or that is identical or similar to the name of any producer whose license has been revoked or suspended. Every insurance producer licensee will promptly file with the Commissioner a written notice of any change in or discontinuation of the use of any name. License renewal Producer licenses will continue in force as long as they are renewed and have not been revoked. Producer licenses must be renewed by the last day of the month in which the producer was born the second year after the producer license was issued. To illustrate this, take the following example: If Bettys birth month is June and she applies for and is issued her producer license in May of 2009, then she must renew her license in June of 2010; however, if Betty was issued her license in July of 2009, she would not renew her license until June of 2011. After this initial renewal, producer licenses must be renewed biennially by the last day of the month in which the producer was born. The Commissioner must notify the producer 90 days before the producers birth month in a renewal year a notice indicating renewal requirements.

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Probation, suspension and revocation of licenses The Commissioner may place on probation, suspend, revoke, refuse to continue or renew, refuse to issue an insurance producer license, or assess a civil penalty, if, after notice to the insurance producer licensee and after hearing, the Commissioner finds that as to the licensee or applicant any one or more of the following conditions exist: Any incorrect, misleading, incomplete, or materially untrue information in the license application; Any cause for which issuance of the license could have been refused had it then existed and been known to the Commissioner at the time of issuance; Violation of, or noncompliance with, any insurance law, or violation of any lawful rule, order, or subpoena of the Commissioner or of the insurance department of another state; Obtaining or attempting to obtain a license through misrepresentation or fraud; Improperly withholding, misappropriating, or converting to the licensee's or applicant's own use any money or property belonging to policyholders, insurers, beneficiaries, or others received in the course of the business of insurance; Misrepresentation of the terms of any actual or proposed insurance contract or application for insurance; Conviction of a felony or misdemeanor involving moral turpitude. Commission of any unfair trade practice or fraud; The use of fraudulent, coercive, or dishonest practices or demonstrating incompetence, untrustworthiness, or financial irresponsibility; Suspension, revocation, or denial of an insurance license in any other state, province, district, or territory; Forgery of another's name to an application for insurance or to any document related to an insurance transaction; Cheating on an examination by improperly using notes or any other reference material to complete an examination for an insurance license; Failure to fully meet the licensing requirements; Knowingly accepting insurance business from a person who is not licensed; Failing to comply with an administrative or court order imposing a child support obligation; or Failing to pay state income tax or comply with any administrative or court order directing payment of state income tax.

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Licensure as a limited service licensed provider Provider networks desiring to provide only a limited health service, in-patient hospital services, or home health care, may be licensed as a limited service licensed provider. These types of providers include health insurers, nonprofit hospitals, medical-surgical and HMOs. A provider network must be licensed in order to issue insurance contracts. 2. Payment and acceptance of commissions/ fees (10-2-401; 10-2-702; Reg. 1-2-9) Commissions An insurer or insurance producer is prohibited from paying any commission, service fee, brokerage, or other valuable consideration to any person selling, soliciting, or negotiating insurance unless, at the time such services were performed, the person was a licensed insurance producer. Renewal commissions may be received by unlicensed persons (i.e. retired producers) as long as they were licensed at the time of sale. Finders fees paid to people who do not hold a license are prohibited and illegal. Only licensed producers may accept commissions from insurance transactions. However, a licensed producer may pay or assign commissions to a partnership of which he is a member, employee, or agent or to a corporation of which he is an officer, employee, or agent. Fees Agreements between insurers and insurance producers include a commission schedule which lists the producers compensation for soliciting and acquiring insurance business. Insurance producers cannot charge a fee for a service in which they are also receiving a commission from the insurance company; however, the producer may charge a fee for a service for duties beyond the range of insurance producers, such as financial planning. In such cases, producers must provide clients with a disclosure statement which the producer must keep a copy of for a minimum of three years. Insurance producers are prohibited from charging separate fees in addition to those contemplated in the rate filing and included in their commissions for the solicitation and procurement of insurance products and for servicing existing insurance policyholders. 3. Fiduciary/ commingling (10-2-704; Reg. 1-2-1) All premiums belonging to insurers and all unearned premiums belonging to insureds received by an insurance producer licensee will be treated by such insurance producer in a fiduciary capacity. Insurance producers may not commingle premiums belonging to insurers and returned premiums belonging to insureds with the producer's personal funds or with any other funds except those directly connected with the producer's insurance business. If producers work for an agency, they must hold a separate trust account to hold insureds premiums before being remitted to the appropriate insurance company. Producers cannot use the account as collateral for a personal loan, and the agencys operating expenses cannot be paid out of the funds in the trust account. All premiums received, less commissions if authorized, will be remitted to the insurer on or before the contractual due date or, if there is no contractual due date, within 45 days after receipt. If a clients policy is cancelled, the insurance company is required to refund unearned premium to the producer or client within 45 days. All returned premiums received from

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insurers to the producers account must be refunded to the appropriate client within 30 days after such receipt. Upon receipt, the insurance producer must treat all premiums and returned premiums in a fiduciary capacity: 4. Continuing education (10-2-301; Reg. 1-2-4) Nonresident and resident producers must complete a total of 24 hours of continuing education every two years regardless of whether 1 or 2 licenses are held. At least three of the 24 hours must be from a course in ethics. Limited lines licensees are exempt from completing continuing education requirements. Newly licensed producers do not have to complete continuing education until the second license renewal. Continuing education course requirements must be completed within 24 months after the date the producer's license is required to be renewed. A producer may accumulate no more than 12 carry-over credit hours during the 120 days before the licensing renewal due date. Carry-over credits may be applied to the next continuing education period. If a licensee is selling long term care policies, he will need to take a two-hour continuing education course covering long term care ONCE. 5. Unauthorized entities (10-3-903 through 904.5, 906, 908) Any unauthorized entity that is involved in an insurance transaction will be subject to penalties. An insurance transaction includes: The making of, or proposing to make, as an insurer, an insurance contract; The making of, or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety; The taking or receiving of any application for insurance; The receiving or collection of any premium, commission, membership fees, assessments, dues, or other consideration for any insurance; and The issuance or delivery of contracts of insurance.

The Commissioner may issue an emergency cease and desist order if the Commissioner believes that an unauthorized person is engaging in the business of insurance or has violated an insurance law or regulation; and ,it appears to the Commissioner that the alleged conduct is fraudulent, creates an immediate danger to the public safety, or is causing or can be reasonably expected to cause significant, imminent, and irreparable public injury. Insurance contract validity If an unauthorized insurer fails to pay any claim or loss within the provisions the insurance contracts it establishes, the unauthorized insurer and any person who assisted in the establishment of such insurance contract is also liable to the insured for the full amount of the claim or loss as established by the contract. Reporting unauthorized insurance business Every person investigating or adjusting any loss or claim on a subject of insurance must immediately report to the Commissioner every insurance policy or contract which has been entered into by any insurer not authorized to transact such insurance business in Colorado. Every person acting in the capacity of insurance adviser, counselor, or analyst

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will report to the Commissioner every insurance policy or contract which has been entered into by an insurer not authorized to transact insurance in Colorado. C. Unfair competition and deceptive practices 1. Coercion (10-3-1104(1)(d); 10-3-1105) Entering into any agreement to commit any act of boycott, coercion, or intimidation resulting in or tending to result in unreasonable restraint of, or monopoly in, the business of insurance No person may require, as a condition precedent to the lending of money, or extension of credit, or to entering into any lease transaction, or any renewal of any of them, that the person to whom such money or credit is extended, or the lessee, or the person whose obligation the creditor is to acquire or finance any policy or contract of insurance through a particular insurer or group of insurers or agent or broker or group of agents or brokers. 2. Misrepresentation (10-3-1104(1)(a)) Misrepresentations and false advertising of insurance policies: Making, issuing, circulating any statement which: Misrepresents the benefits, advantages, conditions, or terms of any insurance policy; Misrepresents the dividends or share of the surplus to be received on any insurance policy; Makes any false or misleading statements as to the dividends or share of surplus previously paid on any insurance policy; Is misleading or is a misrepresentation as to the financial condition of any person, or as to the legal reserve system upon which any life insurer operates; Uses any name or title of any insurance policy or class of insurance policies misrepresenting its true nature: insurance is for protection, NOT investment; Is a misrepresentation for the purpose of inducing or tending to induce the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy; Is a misrepresentation for the purpose of effecting a pledge or assignment of or effecting a loan against any insurance policy; Misrepresents any insurance policy as being a security; or Using the guaranty association to persuade prospective clients to purchase an insurance policy.

3. Unfair discrimination (10-3-1104(1)(f); 10-3-1104.5) Making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged for any contract of life insurance or of life annuity, or in the dividends or other benefits payable, or in any other of the terms and conditions of such contract unfair discrimination includes: different rates based on race, national origin or religion, marital status, blindness, physical disability, and sexual orientation.

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An insurer cannot require an HIV test of applicants unless they give prior written consent. If applicants are adversely underwritten due to an HIV test, they must be notified in writing. Disclosure is made to the applicants physician, so the applicant must consult his/her physician for such information. Noncompliance with the above HIV testing laws is punishable as a misdemeanor, fine, and or imprisonment. 4. Controlled business (10-2-401(4)) No insurance producer license will be granted or extended to any person if the license is being or will be used for the purpose of writing controlled business. Controlled business is insurance procured upon the person's own life, person, property, or risks, or those of his or her spouse; or the life, person, property, or risks of the person's employer or the person's own business. A producer license cannot be obtained for the sole purpose of writing controlled business. Controlled business is illegal if a producer sells more than 50% of total premiums in a 12-month period to controlled business. Friends and neighbors are not considered controlled business. 5. Defamation (10-1-116; 10-3-1104(1)(c)) It is unlawful to make any statement that is defamatory of any other insurance company and contains false and malicious criticism or false and malicious statement with the intent to injure the company in its reputation or business. For example, a producer who makes a claim that XYZ insurance company is financially unsound is committing defamation UNLESS such statement is factual and true. Any officer, director, clerk, employee, or agent of any insurance company who commits an act of defamation is guilty of a misdemeanor and, upon conviction will be punished by a maximum fine of $500, by imprisonment in the county jail for a term 12 months, or by both fine and imprisonment. 6. Rebates (10-3-1104(1)(g)) Permitting, or offering to make any contract of insurance other than as stated in the insurance contract The following are NOT considered rebates: dividends, commissions. Rebates are illegal and include the following (as examples): flat panel TV, mp3 players, gift certificates, or T-shirts. Anything that has value used as an inducement or incentive to purchase insurance is rebating, and is illegal. 7. Unfair claims practices (10-3-1104(1)(h); 10-16-214) Unfair claim settlement practices: Committing or performing, either in willful violation of or with such frequency as to indicate a tendency to engage in a general business practice, any of the following: Misrepresenting pertinent facts or insurance policy provisions relating to coverage at issue; Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies;

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Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies; Refusing to pay claims without conducting a reasonable investigation based upon all available information; Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear; Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds; Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application; Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured; Making claims payments to insureds or beneficiaries not accompanied by statement setting forth the coverage under which the payments are being made; Making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration; Delaying the investigation or payment of claims by requiring an insured or claimant, or the physician of either of them, to submit a preliminary claim report, and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information; Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage; Failing to 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; Excluding medical benefits under health care coverage subject to article 16 of this title to any covered individual based solely on that individual's casual or nonprofessional participation in the following activities: Motorcycling; snowmobiling; off-highway vehicle riding; skiing; or snowboarding; or Failing to adopt and implement reasonable standards for the prompt resolution of medical payment claims.

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8. Colorado Fraud Statute (10-1-128; 10-1-129) A fraudulent insurance act is committed if a person knowingly and with intent to defraud presents, causes to be presented, or prepares with knowledge or belief that he knows to contain false information concerning any material fact to the policy, and such act is committed with intent to defraud, mislead or conceal information. Fraud needs to be regulated because it is costly and affects everybody. As of Jan 1 1997, each admitted insurer must have an Anti-Fraud plan describing how the insurer plans to prevent, investigate and deal with cases of fraud. The plan will include an outline describing how the insurers employees will be educated about fraud and the companys policies and procedures for fraud, that fraud investigators will be contracted or hired by the insurer, and confirmed or suspected fraud will be reported. This plan must be submitted by the insurer to the Commissioner each year by March 1st. Insurers must put a fraud warning on all insurance applications, forms and policies so that applicants are aware of the penalties that will ensue if fraud is committed. The penalties for committing fraud include: fines, civil damages, imprisonment, and refusal to provide insurance coverage. D. Federal regulation Fair Credit Reporting Act (15 USC 1681-1681d) The purpose of the Fair Credit Reporting Act is to make sure that consumers are aware that their personal credit information is accessed by insurance companies through credit reporting agencies for the purposes of risk selection, classification, and underwriting. Consumers may access their credit reports by directly contacting the credit reporting agency. Fraud and false statements including 1033 waiver (18 USC 1033, 1034) Any person who makes a false statement or documentation that affects interstate commerce with intent to deceive an insurance regulatory official, agency or agent who is examining the affairs of that person, will be punished with a fine or imprisonment for no more than 10 years, or both, except if the fraud jeopardizes the security or soundness of an insurer, then the terms of imprisonment will be 15 years. The Attorney General may bring a civil action in the appropriate United States district court against any person who engages in conduct constituting an offense under section 1033, and upon proof of conduct by substantial evidence, such person will be subject to a civil penalty of not more than $50,000 for each violation or the amount of compensation which the person received or offered for the prohibited conduct, whichever amount is greater. If the Attorney General has reason to believe that a person is engaged in conduct constituting an offense under section 1033, the Attorney General may petition an appropriate United States district court for an order prohibiting that person from engaging in such conduct. The court may issue an order prohibiting that person from engaging in such conduct if the court finds that the conduct constitutes such an offense. The filing of a petition under this section does not preclude any other remedy which is available by law to the United States or any other person. To request a 1033 waiver, a person who has been convicted of an offense under section 1033 can submit an application for written consent to the Colorado Division of Insurance.

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Do Not Call List The Do Not Call list is managed and maintained by the FTC (Federal Trade Commission). The purpose of the Do Not Call list is to restrict unwanted interstate calls with regard to the marketing and selling of products and services by phone. Telemarketers and sellers are prohibited from calling any number on the Do Not Call List. Organizations, sellers, and companies involved in telemarketing must update their call list every 31 days, and drop phone numbers of consumers who have registered with the national Do Not Call List. Once a person adds his/her phone number to the Do Not Call List, telemarketers and solicitors must stop calling him/her within 31 days of registration. Once a person registers a phone number on the Do Not Call List, the number will remain for five years. After five years, the person can register the phone number again. Numbers can be taken off the Do Not Call List at any time. Consumers do not need to add a cell phone number to the Do Not Call List because telemarketers cannot use automatic dialers to call cell phone numbers. Additionally, fax numbers do not need to be added to the Do Not Call List because telemarketers are prohibited from sending unwarranted faxes. Telemarketers cannot make calls before 8am or after 9pm. Telemarketers may call customers with which they have an established business relationship for up to 18 months after the customers last business transaction with the company. If the consumer requests that the company stop calling, the company must honor the customers request and stop calling immediately. Anyone who violates the Do Not Call List requirements by calling a person who is on the list, may be subject to a penalty of $11,000 per violation.

II. COLORADO STATUTES, RULES, AND REGULATIONS PERTINENT TO LIFE INSURANCE ONLY
A. Policy replacement Replacement occurs when a client has a life insurance policy or annuity and is considering the purchase of a new life insurance policy or annuity when the existing policy is about to lapse, be surrendered, converted, has been put on extended term, or policy cash values are used to fund the purchase of a new policy. Replacement transactions are legal as long as the following regulations are adhered to. Considerations in replacing a policy An agent cannot induce a client to replace a policy this is called twisting if the replacement is not in the clients best interest. A new policy issued at a later age may require the applicant to submit to a physical exam in order to establish evidence of insurability. The applicants proposed rate may not be desirable due to the applicants attained age, health conditions or hazardous occupations or hobbies. When a replacement occurs, any unearned premium under the existing policy is not required to be refunded to the applicant. Finally, the suicide and incontestability clauses restart for the replacement policy. Exceptions to replacement policies Keep in mind that replacement regulations do not apply in situations where the client does not currently have insurance, or intends to purchase an additional policy and keep the existing policy in force.

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The following policies are not subject to replacement regulations: group policies (life, annuity and credit), employee benefit plans, guaranteed insurability riders, and nonconvertible and nonrenewable term policies with a policy period of five years or less. 1. Replacement procedures (Reg 4-1-4) Producer duties: A producer who initiates an application will 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 producers duties with respect to replacement are complete. If the applicant answered yes to the question regarding existing coverage, the producer will present and read to the applicant, no later than at the time of taking the application, a Notice Regarding Replacements. The notice will 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. A Statement must be provided to the applicant which the applicant must sign indicating whether or not he would like the insurer of his replaced policy to be notified of the replacement. The statement and notice must be submitted with the replacement policy application to the insurer in addition to any sales materials the producer used in tandem with the application. Insurer duties: Insurers must keep producers aware of all replacement duties. Insurers must review all applications to check if replacement will be involved. Insurers must require that all replacement transactions include a notice and statement with the application. Records and forms dealing with replacement must be kept for a minimum of five years. A free look for replacement policies of at least 30 days must be provided of which the insured must be made aware. 2. Disclosure (10-7-302; Reg. 4-1-4) Required policy provisions a.) In the event of default in any premium payment after premiums have been paid for at least one full year, the company will grant a paid-up nonforfeiture benefit stipulated in the policy. In lieu of a stipulated paid-up nonforfeiture benefit, the company may substitute an alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, a greater amount or earlier payment of endowment benefits. b.) Upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least three full years in the case of ordinary insurance or five full years in the case of industrial insurance, the company will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value.

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c.) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by the insurance laws of Colorado. 3. Record keeping of replacements (Reg. 4-1-4) The producer is responsible for keeping a copy of the notice and statement for a minimum of five years. B. Group Life (10-7-106; 10-7-201 through 207) No policy of group life insurance will be delivered unless: The policy holder was formed for purposes other than obtaining insurance, or is a trust established by one or more employers or by one or more labor unions, or by one or more employers and one or more labor unions; At least three individuals must be covered at the date of group policy issue group life policies cannot be issued to groups of one or two individuals; and An individual eligible for coverage will be subject to such uniformly applied standards of insurability as may be imposed by the insurer. Insurance under any group life insurance policy may be extended to insure dependents. If the policy is contributory, at least 75% of eligible participants must enroll; if the plan is noncontributory, 100% of eligible participants must enroll

Group life required policy provisions (a) Grace period: 31 days (b) Incontestability: 2 years (c) Statements made by insured are considered representations, not warranties (d) Physical exam to establish evidence of insurability is typically not required; however, the insurance company may require all eligible individuals for coverage to enroll into the group policy during the open enrollment period (e) Misstatement of age: adjust benefits if age is misstated; premiums are not adjusted (f) Facility of payment: the insurance company is permitted to pay up to $5,000 to an individual that is financially responsible for the insureds funeral expenses if a beneficiary was not listed on the policy if the insurance company pays more than $5,000 in benefits, the remainder will go to the insureds estate (g) Insureds receive certificates of insurance which show the amount of coverage and terms and conditions of the policy keep in mind that in group policies, the contract is held by the employer and the insurer, and the employer is the policy holder. (h) Rights of conversion must be exercised within 31 days of the insureds termination of employment

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Other features of group life policies: -experience rating is used: premium rates are based on the claims experience of the entire group -lower cost of administering a group policy means premium rates are typically lower -replacement regulations do not apply to group policies -benefits from group life policies cannot be forfeited to pay a debt of the insured employee or the named beneficiary -the insured employee names the beneficiary and possesses ownership rights C. Suicide (10-7-109) The suicide exclusion in Colorado for any life policy may be in effect for a maximum of one year from the date of policy issuance. During this first policy year, death due to suicide will not be covered. If the insured commits suicide during this exclusionary period, the insurer will refund the premiums paid into the policy to the beneficiary less any policy loans. After the suicide exclusionary period ends, suicide is covered regardless of whether it was involuntary or voluntary or if the person was sane or insane (an example of involuntary suicide is death due to drug overdose). The suicide exclusion does not apply to the following policies: AD&D, accidental death riders because such policies require death to be accidental. D. Free Look period (10-7-302) For new life insurance policies, insureds must be provided with a free look period of at least 15 days from the date the policy is delivered or mailed. A notice must be prominently printed on the first page of the policy stating that the policyholder will have the right to return the policy within 15 days of its delivery and to have any premium refunded if, after examination of the policy, the policyholder is not satisfied for any reason and, in the case of a variable life insurance policy, the amount refunded will be the account value calculated as of the date the policy is returned plus any policy fee or charge deducted from the policy. Any refund will be paid directly to the policyholder by the insurer in a timely manner. For replacement policies, the free look period must be at least 30 days. E. Common Disaster Provision The primary beneficiary must die within 10 days for the common disaster provision to take effect. F. Interest on proceeds (10-7-112) All admitted insurers transacting life insurance in Colorado must pay interest on the death benefits for proceeds left on deposit with the insurer which are to be distributed to the beneficiary beginning at the date of the insureds death through 30 days following the date of receipt by the insurer of a complete request for payout including due proof of death. If the beneficiary is to receive proceeds via the cash option, the insurer must pay an interest rate of 2 points above the federal discount rate from the date of the insureds death. If the beneficiary receives proceeds via the cash surrender option, then the insurer must pay the cash value to the beneficiary within 30 days of the insureds death, or will be subject to pay interest at a rate of 2 points above the federal discount rate beginning 30 days after the death claim is filed with the insurer.

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G. Sales and Marketing of Life and Annuities (Reg 4-1-2; 4-1-11; 4-1-12) 1. Suitability requirements 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 will have reasonable grounds for believing that the recommendation is suitable for the consumer based on the facts disclosed by the consumer regarding his investments, other insurance products, financial situation and needs. 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, will make reasonable efforts to obtain information concerning: (1) (2) (3) (4) The consumers financial status; The consumers tax status; The consumers investment objectives; and 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.

2. Disclosures An advertisement must not omit relevant information or use words, phrases, statements, references or illustrations if the omission or use has the capacity of misleading or deceiving purchasers or prospective purchases as to the nature or extent of any policy benefit payable, loss covered, premium payable, or state or federal tax consequences. An advertisement must clearly describe the type of policy being advertised. An advertisement should not describe non-guaranteed elements in a manner that is misleading. Testimonials by third parties must be genuine.

III. COLORADO STATUTES, RULES, AND REGULATIONS, PERTINENT TO SICKNESS AND ACCIDENT INSURANCE ONLY
A. Common requirements for Sickness and Accident 1. Portability (Credit for pre-existing conditions) (10-16-118(1)(b); 10-16-102(13.7); 10-16-105; 10-16-214) A health coverage plan that covers residents of this state will waive any probationary period or pre-existing condition exclusion or limitation period for the period of time an individual was previously covered by creditable coverage if such creditable coverage was continuous to a date not more than 90 days prior to the effective date of the new coverage. Portability provisions apply to individual and group policies. Creditable coverage includes: Medicare, Medicaid, or the children's basic health plan; An employee welfare benefit plan; An individual health plan; A group health plan; A state health benefits risk pool (including but not limited to CoverColorado);

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A medical care program of the federal Indian health service or of a tribal organization, a public health plan, or a health benefit provided to members of the Peace Corps; Indian Health Service; and Military plan.

The following types of policies are not creditable coverage: Illness policies such as cancer and dread disease Nonrenewable health insurance with a policy period of less than six months 2. Maternity/ Newborn coverage (10-16-104(1); (3)) Newborn coverage All group and individual health insurance policies must provide coverage for a dependent newborn child of the insured or subscriber from the moment of birth. Coverage for a hospital stay for a newborn and mom following a normal vaginal delivery will not be limited to less than 48 hours. If 48 hours following delivery falls after 8 p.m., coverage will continue until 8 a.m. the following morning. Coverage for a hospital stay for a newborn and mom following a cesarean section will not be limited to less than 96 hours. If 96 hours following the cesarean section falls after 8 p.m., coverage will continue until 8 a.m. the following morning. Coverage for congenital defects and birth defects is provided on both individual and group policies. Maternity coverage All group health insurance policies providing coverage within the state and issued to an employer, and all group health service contracts issued to an employer will insure against the expense of normal pregnancy and childbirth or provide coverage for maternity care in the same manner as any other sickness, injury, disease, or condition is otherwise covered under the policy or contract. Policies or contracts cannot exclude coverage for pregnancy and delivery as a preexisting condition. Newborn and maternity coverage are subject to the same coinsurance, deductibles and maximum policy limits as other conditions. If an insurance company requires the insured to pay an additional premium to continue dependent coverage of newborns, the premium must be paid by the insured within 31 days of the birth. 3. Complications of pregnancy (10-16-104(2)) Complications of pregnancy must be covered on an individual or group policy the same as any other sickness or disease regardless of whether or not the insured has maternity coverage. 4. Mammography/ prostate screenings (10-16-104(4) and (10)) Mammography All individual and group health policies must provide either a $60 screening cost benefit, or the cost of the actual screening (whichever is less). This benefit is not subject to the policy deductible: One baseline mammogram for a five-year period for women 35 years of age and under 40 years of age;

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Screening at least once every two calendar years or contract years for women 40 years of age and under 50 years of age, as specified in the insured's policy or contract, but at least once every year or contract year for a woman with risk factors to breast cancer as determined by her physician for an entity, or as determined by a participating physician; Annual screening, on a calendar year or contract year basis, for women who are 50 to 65 years of age

Prostate screening All individual and group health policies must provide prostate screenings for all men who are age 50 and up. The benefit is a $65 screening, or the cost of the actual screening (whichever is less). This benefit is not subject to the policy deductible: The screening will be performed by a qualified medical professional, including: urologist, internist, general practitioner, doctor of osteopathy, nurse practitioner, or physician assistant. The screening will consist, at a minimum, of the following tests: o A prostate-specific antigen ("PSA") blood test; o Digital rectal examination. At least one screening per year will be covered for any man 50 years of age or older. At least one screening per year will be covered for any man from 40 to 50years of age who is at increased risk of developing prostate cancer as determined by the man's physician.

5. Diabetes (10-16-104(13)) Coverage for Diabetes cannot be excluded. All individual and group health plans must provide coverage for Diabetes subject to the same deductibles and co-payments as other benefits covered by the policy. 6. Hospice/ home health care offering (10-16-104(8)) Home health services are services which are provided by a home health agency certified by the department of public health and environment. Hospice care is service provided to a terminally ill individual by a hospice care program, licensed and regulated by the department of public health and environment. No individual or group policy of sickness and accident insurance issued by an insurer and no plan issued by an entity which provides hospital, surgical, or major medical coverage on an expense incurred basis will be sold in this state unless a policy holder under such policy or plan is offered the opportunity to purchase coverage for benefits for the costs of home health services and hospice care which have been recommended by a physician as medically necessary. 7. Guaranteed renewability (10-16-201.5) Non-renewal for a group and individual health policy is only permitted for the following: Nonpayment of the required premium; Fraud or intentional misrepresentation;

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The carrier elects to discontinue offering and non-renew all of its individual, small group, or large group health plans. The insurer must notify the insured at least 180 days in advance of discontinuance; Failure of a group to follow required participation rules; The employer no longer is in business; If the Commissioner determines that a carrier should no longer provide individual health insurance plans, and such decision is in the publics best interest, the insurer must notify insureds 90 days prior to the date of discontinuance.

All procedures and rules for guaranteed renewability must be disclosed to all insureds. If an insurer is removed from a certain insurance market, it cannot return to the market for five years. 8. Prompt pay (10-16-103.5; 10-16-106.5) Clean claims are those that are submitted to the carrier on the standard claim forms provided by the carrier to the insured, and are filled out completely. Clean claims are required to be dealt with by the insurer within 30 days after the carrier receipt of the claim is submitted electronically, or within 45 days if submitted by paper or another means. Claims that are not clean must be handled within 90 days once received by the carrier. 9. Utilization review (10-16-112, 10-16-113.5; Reg 4-2-17, 4-2-21) Utilization review is an evaluation of the necessity, appropriateness, and efficiency of the use of health care services, procedures, and facilities, but does not include any independent medical examination provided for in any policy of insurance. If a health claim is denied because the medical treatment is not considered to be medically necessary, the following steps must be followed: An explanation of the specific medical basis for the denial; The specific reasons for the adverse determination; Reference to the specific health coverage plan provisions on which the determination is based; A description of the health coverage plan's review procedures and the time limits applicable to such procedures and will advise the covered person and the covered person's designated representative of the right to appeal such decision; A description of any additional material or information necessary, if any, for the covered person and the covered person's designated representative to perfect the request for benefits and an explanation of why such material or information is necessary; A first-level internal review must be performed by a physician within 20 days; A second-level internal review is performed by a group of three people within 45 days the insured and the insureds lawyer may be present; and After the internal reviews, the carrier may request an independent external review.

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10. Mandated Benefits (10-16-104; Reg. 4-6-5) Newborn children are automatically covered from the moment of birth. Newborn children with congenital birth defects and/or abnormalities will be covered immediately upon birth. Dependent children are covered on their parents health insurance plan(s) until they reach the age of 19, or 24 if they are full-time students. Once children become ineligible for coverage on their parents group plan(s), they can convert their group policy coverage to an individual policy. Therapies for congenital defects and birth abnormalities After the first 31 days of life, policy limitations and exclusions that are generally applicable under the policy may apply; except for medically necessary physical, occupational, and speech therapy for the care and treatment of congenital defects and birth abnormalities for a covered child from the child's third birthday to the child's sixth birthday. Complications of pregnancy and childbirth Coverage will be provided by accident and health policies for complications of pregnancy and childbirth. Mental illness Every group policy or contract providing hospitalization or medical benefits must provide mental illness benefits for at least a period of 45 days for inpatient care or 90 days for partial hospitalization in any one 12-month-benefit period. Biologically based mental illness and mental disorders Biologically based mental illness and mental disorders must be covered on the same basis as physical illness. 11. Commission disclosure (10-16-133) It has been determined that consumers deserve to know the quality and cost of their health care insurance. Health care insurance transparency provides consumers with the information necessary, and the incentive, to choose health plans based on cost and quality. Furthermore, it has been determined to make information regarding the costs of health care insurance readily available to consumers through the division of insurance. B. Individual coverage 1. Required provisions (10-16-202) There are 12 required policy provisions for individual health insurance policies. These provisions must be in each individual health insurance policy in Colorado. Entire contractchanges The policy, including the endorsements and the attached papers, if any, constitute the entire contract of insurance. No change in this policy will be valid until approved by an executive officer of the insurer and unless such approval be endorsed or attached. No agent has authority to change this policy or to waive any of its provisions. Time limit on certain defenses After two years from the date of issue of this policy no misstatements, except fraudulent misstatements, made by the applicant in the application for such policy will be used to void the policy or to deny a claim for loss incurred or disability (as defined in the policy) commencing after the expiration of such two-year period.

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Grace period A grace period of seven days for weekly premium policies, 10 days for monthly premium policies, and 31 days for all other policies will be granted for the payment of each premium falling due after the first premium, during which grace period the policy will continue in force. Reinstatement If any renewal premium is not paid within the time granted the insured for payment, a subsequent acceptance of premium by the insurer or by any agent duly authorized by the insurer to accept such premium will reinstate the policy (an additional application is not necessary). However, if the insurer or agent requires an application for reinstatement and issues a conditional receipt for the premium tendered, the policy will be reinstated upon approval of such application by the insurer or, lacking such approval, upon the 45th day following the date of such conditional receipt unless the insurer has previously notified the insured in writing of its disapproval of such application. The reinstated policy will cover only loss resulting from such accidental injury immediately upon reinstatement of policy, and will begin to cover sickness 10 days after the effective date of the reinstated policy. The 10-day reinstatement probationary period is a 10-day pre-existing condition exclusionary period for sicknesses. Notice of claim Written notice of claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy or as soon as is reasonably possible. Claim forms The insurer, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proofs of loss. If such forms are not furnished within 15 days after the giving of such notice, the claimant will be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character, and the extent of the loss for which claim is made. Proofs of loss Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the insurer is liable and in case of claim for any other loss within 90 days after the date of such loss. Failure to furnish such proof within the time required will not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, if such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than one year from the time proof is otherwise required.

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Time of payment of claims Indemnities payable under this policy for any loss other than loss for which this policy provides any periodic payment will be paid immediately upon receipt of due written proof of such loss. Payment of claims Indemnity for loss of life will be payable in accordance with the beneficiary designation and the provisions respecting such payment which may be effective at the time of payment. If no such designation or provision is then effective, such indemnity will be payable to the estate of the insured. Any other accrued indemnities unpaid at the insured's death may, at the option of the insurer, be paid either to such beneficiary or to such estate. All other indemnities will be payable to the insured. Physical exam and autopsy In order to verify an accidental death in the case of autopsy, and injury/sickness in the case of physical exam, the insurer is permitted to have the insured undergo a physical exam or autopsy at the insurance companys expense. Legal actions The insured cannot bring a lawsuit against the insurer after three years from the date that proof of loss was provided to the insurer. Change of beneficiary Under an AD&D policy, the policy owner may change the beneficiary at any time unless an irrevocable beneficiary has been designated. Proceeds from an AD&D policy are not taxable. 2. Replacement (Reg 4-2-1) Application forms will 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. A Notice Regarding Replacement must be provided to the applicant of which the insurer must keep a signed copy for a minimum of two years. The above replacement regulation does not apply to AD&D and group health insurance policies. 3. Pre-existing condition limitations (10-16-118(1)(a)) In Colorado, there is a maximum allowable pre-existing condition clause for individual policies of 12 months for conditions treated in the prior 12 months. For group policies, the pre-existing condition limitation period is six months prior to the date of coverage, which can only be excluded for a maximum of six months from the effective date of the group policy coverage. Pre-existing conditions apply only to new policies. 4. Sale to self-employed individuals (Reg 4-2-19) Self-employed business group of one means 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/her employees.

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Health benefit plan includes high deductible health savings account (HSA) plans. An individual health benefit plan issued to a self-employed business group of one, together with the dependents of the self-employed business group of one, will 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. The carrier issuing the policy determines whether or not the applicant is a selfemployed business group of one. An applicant who does not meet this test falls into one of two categories. 2. The carrier issuing the individual health benefit plan accepts or rejects a selfemployed business group of one who applies for coverage and, if such person is applying for family coverage, his entire family (all dependents), unless the applicant waives coverage for a family member who has other coverage in effect. If small group coverage is declined, it cannot be purchased until three years later at the earliest. C. Group coverage 1. Continuation (10-7-202; 10-16-108(1)(b), (d)(XVII), (e), (f)) Every group health insurance policy must contain a provision which permits terminated employees to elect to continue the coverage for himself and his dependents. An employee will be eligible to make the election on such employee's own behalf and for such employee's dependents if: The employee's eligibility to receive insurance coverage has ended for any reason other than discontinuance of the group policy in its entirety or with respect to an insured class; Any premium or contribution required from or on behalf of the employee has been paid to the termination date; and The employee has been continuously insured under the group policy, or under any group policy providing similar benefits which it replaces, for at least six months immediately prior to termination

Upon termination of employment of an eligible employee, the death of any such employee, or the change in marital status of any such employee, the employee or dependent has the right to continue the coverage for a period of 18 months after loss of coverage or until such employee or dependent becomes eligible for other group coverage, whichever occurs first. However, should new coverage exclude a condition covered under the continued plan, coverage under the prior employer's plan may be continued for the excluded condition only for the 18 months or until the new plan covers the condition, whichever occurs first. The employer will notify the employee in writing of the employee's right to continue health care coverage upon termination from employment. A written communication signed by the employee or a notice postmarked within 10 days of termination mailed by the employer to the last-known address of the employee will meet the notice requirements. The notification will inform the employee of:

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The employee's right to elect to continue the existing coverage at the applicable rate; The amount such employee must pay monthly to the employer to retain the coverage, which payment will include the employer's contribution for such employee in addition to the employee's own contribution; The manner in which and the office of the employer to which the payment to the employer must be made; The time by which the payments to the employer must be made to retain coverage; and The fact that loss of coverage will result if timely payment is not made to the employer.

If the employer fails to notify an eligible employee of the right to elect to continue the coverage, the employee will have the option to retain coverage if, within 60 days of the date the employment is terminated, the employee makes the proper payment to the employer to provide continuous coverage. After timely receipt of the monthly payment from an eligible employee, if the employer fails to make the payment to the insurer, with the result that the employee's coverage is terminated, the employer will become liable for the employee's coverage, but to no greater extent than the amount of the premium. A group sickness and accident insurance policy that provides for continued coverage after an employee is terminated, will also include a provision allowing a covered employee or surviving spouse or dependent, at the expiration of such continued coverage, to obtain from the insurer underwriting the group policy, at the employee's, spouse's, or dependent's option and expense, without further evidence of insurability and without interruption of coverage, an individual policy of sickness and accident insurance. 2. Conversion (10-16-108 (1)(a), (c), (d)) If the group insurance policy provides hospital, surgical, or major medical insurance or any combination of these coverages on an expense-incurred basis, for other than specified diseases or accidental injuries only, the health benefit plan will also contain a conversion privilege. A member whose insurance under the group policy has been terminated for any reason other than discontinuance of the group policy in its entirety or with respect to an insured class or failure of the employee or member to pay any required contribution and who has been continuously insured under the group policy for at least three months immediately prior to termination is entitled to have issued by the insurer a policy of sickness and accident insurance, referred to as the "converted policy based on the following conditions: Written application for the converted policy will be made and the first premium paid to the insurer no later than 31 days after such termination. The converted policy will be issued without evidence of insurability.

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The initial premium for the converted policy will be determined in accordance with the insurer's table of premium rates applicable to the age and class of risk of each person to be covered under the converted policy and to the type and amount of the insurance provided. The effective date of the converted policy will be the day following the termination of insurance under the group policy. The converted policy will cover the employee or member and any dependents who were covered by the group policy on the date of termination of insurance. At the option of the insurer, a separate converted policy may be issued to cover any dependent. The insurer will not be required to issue a converted policy covering any person if such person is covered by Medicare.

When converting a policy, the insured will have a choice between the basic or standard health plan. 3. Maternity (10-16-104(3)) All group health insurance policies must provide coverage for normal pregnancy expenses and childbirth. 4. Mental health (10-16-104(5)) All group policies must provide at least 45 days for inpatient care or 90 days for partial hospitalization in any one 12-month-benefit period for biologically based mental illnesses. Substance abuse All group policy holders (the employer, in most cases) must provide insureds with the option of purchasing alcoholism and substance abuse coverage. If purchased, substance abuse coverage must provide at least 45 days of inpatient care and $500 of outpatient care benefits. 5. Pre-existing condition limitation (10-16-118(1)(a)) Colorado group health policies may impose a maximum pre-existing exclusionary period of six months. The one exception to this is that a group health policy cannot impose pre-existing condition exclusions if a child that is adopted or placed for adoption before attaining 18 years of age. Additionally, pregnancy cannot be excluded as a preexisting condition. 6. Leasing companies (10-16-104; 10-16-214(5)) A carrier writing health benefit coverage for an employee leasing company will ensure that any health benefit plan marketed or sold to such company that covers employees in Colorado complies with all the provisions of Colorado law that apply to large employer health plans, including consumer and provider protections, mandated benefits, nondiscrimination and fair marketing rules, pre-existing limitations, and other required health plan policy provisions. All health coverage plans sponsored by or marketed through an employee leasing company will be fully insured plans. 7. Late enrollee (10-16-102(26)) A late enrollee is an eligible employee or dependent who requests enrollment in a group health benefit plan following the initial enrollment period for which such individual is entitled to enroll under the terms of the health benefit plan, if such initial enrollment

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period is a period of at least 30 days. An eligible employee or dependent will not be considered a late enrollee if: The individual: o Was covered under other creditable coverage at the time of the initial enrollment period and, if required by the carrier or issuer, the employee stated at the time of initial enrollment that this was the reason for declining enrollment; o Lost coverage under the other creditable coverage as a result of termination of employment or eligibility, reduction in the number of hours of employment, the involuntary termination of the creditable coverage, death of a spouse, legal separation or divorce, or employer contributions towards such coverage was terminated; and Requests enrollment within 30 days after termination of the other creditable coverage; or

The individual is employed by an employer that offers multiple health benefit plans and elects a different plan during an open enrollment period; or A court has ordered that coverage be provided for a dependent under a covered employee's health benefit plan and the request for enrollment is made within 30 days after issuance of such court order; or A person becomes a dependent of a covered person through marriage, birth, adoption, or placement for adoption and requests enrollment no later than 30 days after becoming such a dependent. In such case, coverage will commence on the date the person becomes a dependent if a request for enrollment is received in a timely fashion before such date. The parent or legal guardian of the dependent disenrolls the dependent from the children's basic health plan, and requests enrollment of the dependent no later than 90 days after the disenrollment.

8. Multiple Employer Welfare Association (MEWA) At least two employers cooperate to establish a MEWA which collectively provides their employees with insurance coverage. MEWAs are fundamentally a form of selfinsurance. MEWAs are exempt from Colorados state insurance laws, but are regulated federally by ERISA. D. Small group coverage 1. Definitions (10-16-102, (6), (31), (40); 10-16-105(7); 4-6-8) a. small employer Small employer means any person, firm, corporation, partnership, or association that is actively engaged in business that, on at least 50 percent of its working days during the preceding calendar quarter, employed no more than 50 eligible employees, the majority of whom were employed within this state and that was not formed primarily for the purpose of purchasing insurance. Small employer includes a business group of one. In determining the number of eligible employees, companies that are affiliated companies, or that are eligible to file a

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combined tax return for purposes of state taxation, will be considered one employer. b. eligible employee Eligible employee means an employee who has a regular work week of 24 or more hours and includes a sole proprietor and a partner of a partnership if the sole proprietor or partner is included as an employee under a health benefit plan of a small employer, but does not include an employee who works on a temporary or substitute basis. An eligible employee of a small employer who could also be considered a dependent of the small employer will receive taxable income from such small employer in an amount equivalent to minimum wage for working 24 hours per week on a permanent basis in order for the employer group to be considered a business group of two or more. A late enrollee is an employee is seeks coverage under the employer group health plan after the open enrollment period has lapsed. c. business group of one Business group of one means an individual, a sole proprietor, or a single full-time employee who works 24 hours or more a week on a permanent basis and who has carried on significant business activity for a period of at least one year prior to application for coverage, has gross income as indicated on federal internal revenue service forms 1040, schedule C, F, or SE which generated gross income from which that individual, sole proprietor, or single full-time employee has derived at least a substantial part of such individual's income for one year out of the most recent consecutive three-year period. Business group of one includes a full-time household employee who works 24 hours or more a week on a permanent basis as a household employee, if that employee has derived at least a substantial part of such employee's earned income for one year out of the preceding three-year period from household employment, and if the employee's employer, on at least 50 percent of the days in a normal work week during the preceding calendar quarter, employed at least one household employee. 2. Guaranteed issue (10-16-105(7.3)(a), (c)) Every small employer carrier must actively offer small employers the choice of a basic health benefit plan or a standard health benefit plan. Every small employer carrier will also offer to small employers a choice of all the other small group plans the carrier markets in Colorado; except that this requirement will not apply to a health benefit plan offered by a carrier if such plan is made available in the small group market only through one or more bona fide association plans. A small employer carrier will also issue any of its other small employer plans to any small employer that applies for such a plan; except that this requirement will not apply to a business group of one where the business group of one does not meet the carrier's normal and actuarially-based underwriting criteria. 3. Underwriting restrictions (10-16-105(7)) An individual, corporation, association, partnership, or any other entity engaged in the health insurance business will not request or require from a small group applying for coverage, or from an individual in a small group applying for coverage, medical

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information going back more than five years before the date of application. Medical information that is more than five years old on any of the enrollee members of a small group will not be used by the insurer in underwriting or setting premiums for the group. 4. Rating factors (10-16-105(8)(c), (e); (13)(15)) Small employer carriers will apply rating factors, including case characteristics, consistently with respect to all small employers. Gender cannot be used as a rating factor in small group coverage. A small employer carrier will treat all health benefit plans issued or renewed in the same calendar month as having the same rating period. The small employer carrier will not use case characteristics, other than age, geographic area, and family composition, nor will it use any other rating factors. 5. Participation requirements (10-16-102(40)(a); 10-16-105(7.4); (8)(e), 4-6-8) Small employer means any person, firm, corporation, partnership, or association that is actively engaged in business that, on at least 50 percent of its working days during the preceding calendar quarter, employed no more than 50 eligible employees, the majority of whom were employed within this state and that was not formed primarily for the purpose of purchasing insurance. "Small employer" includes a business group of one. In determining the number of eligible employees, companies that are affiliated companies, or that are eligible to file a combined tax return for purposes of state taxation, will be considered one employer. The requirements used by a small employer carrier to determine whether to provide coverage to a small employer, including requirements for minimum participation of eligible employees and minimum employer contributions, will be applied uniformly among all small employers with the same number of eligible employees applying for coverage or receiving coverage from the small employer carrier. A small employer carrier may vary the application of minimum participation requirements and minimum employer contribution requirements by the size of the small employer group and by product. In applying minimum participation requirements with respect to an employer, a small employer carrier will not consider employees or dependents who have creditable group coverage or individual coverage that has been consistently maintained and that was in force prior to the individual's eligibility for group coverage under an existing group plan when determining whether the applicable percentage of participation is met. However, a small employer carrier may consider employees or dependents of such employer who have coverage under another health benefit plan that is sponsored by such small employer. A small employer carrier will not increase any requirement for minimum employee participation or for minimum employer contribution with respect to a small employer at any time after such employer has been accepted for coverage. 6. Basic and standard benefit health plans (10-16-102; 4-6-5) Basic Plan The form and content of the basic health benefit plan may be one or more of the three plan design options and will constitute the basic health benefit plan design. At least one of these three plan design options, two of which are high deductible, HSA-qualified plan options, will be required for use in Colorados small group market, and as conversion coverage. However, if the carrier chooses to offer more than one basic health benefit plan design, it will offer all of its basic plan options to every small employer that

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expresses an interest in the basic plan or to those individuals purchasing a basic conversion plan. Standard Plan The form and content of the standard health benefit plan will constitute the standard health benefit plan required for use in Colorado's small employer market, and for use as conversion coverage. Basic and standard plans can be in the form of an indemnity policy, an HMO or a PPO. Coverage of basic and standard plans is regulated by law. E. Fair marketing standards (10-16-108.5) Each small employer carrier will actively market health benefit plan coverage, including the basic health benefit plan and the standard health benefit plan, to eligible small employers in the state. If a small employer carrier denies regular coverage to a small employer on the basis of the health status or claims experience of the small employer or its employees or dependents, the carrier will offer the small employer the opportunity to purchase a basic health benefit plan or a standard health benefit plan. No carrier will induce or otherwise encourage a small employer to exclude an employee from health coverage or benefits provided in connection with the employee's employment. No carrier will encourage or direct individuals or small employers to seek coverage from another carrier because of the health status, claims experience, industry, occupation, or geographic location of the individual or small employer. F. Specified products 1. Medicare Supplement (10-18-101(4); 10-18-103; 10-18-106(1), (2); 10-18-107; 1018-109; 10-16-108) ***Please see module 16 of the course to view the Medicare/LTC PDF the information in that document will be on your state test!! Medicare supplement policy means a group or individual policy of sickness and accident insurance or a subscriber contract of a nonprofit hospital and health service corporation or a health maintenance organization, which policy or contract is primarily advertised, marketed, or designed as a supplement to reimbursements under Medicare for the hospital, medical, or surgical expenses of persons eligible for Medicare. A Medicare supplement policy may not deny a claim for losses incurred more than six months from the effective date of coverage for a preexisting condition. The policy 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. In order to provide for full and fair disclosure in the sale of Medicare supplement policies, no individual Medicare supplement policy or certificate will be delivered or issued for delivery in this state unless the outline of coverage is delivered to the applicant for such policy or such certificate at the time application is made. Premiums Medicare Supplement premiums may vary from insurance company to insurance company; however, coverage provided by each plan type is standardized.

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Gaps in Medicare coverage Medigap policies are not obligated to provide coverage for all the gaps in Medicare, but are solely intended to provide coverage for some of the gaps. For example, long term care and dental care are not coverage points in Medigap policies. Outline of coverage The Commissioner will prescribe by regulation the format and content of the outline of coverage. Such outline of coverage will include: A description of the principal benefits and coverage provided in the policy; A statement of the exceptions, reductions, and limitations contained in the policy; A statement of the renewal provisions, including any reservation by the insurer of a right to change premiums; A statement that the outline of coverage is a summary of the policy issued or applied for and that the policy should be consulted to determine governing contractual provisions. The employer will not be required to offer continuation of coverage of any person if such person is covered by Medicare.

Free look 30 days for Medicare Supplement policies 2. Long term care (10-19-101 through 115; Reg 4-4-1) ***Please see module 16 of the course to view the Medicare/LTC PDF the information in that document will be on your state test!! Long-term care insurance means any insurance policy or rider advertised, marketed, offered, or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense-incurred, indemnity, prepaid, or other basis for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services provided in a setting other than an acute care unit of a hospital. Long-term care insurance includes group and individual annuities and life insurance policies or riders that provide directly or that supplement long-term care insurance. Long term care policies are available for purchase and coverage no matter what age the applicant is you dont have to be above a certain age to utilize long term care benefits. Guaranteed renewability A long-term care insurance policy must be guaranteed renewable, and may not: Be cancelled, non-renewed, or otherwise terminated on the grounds of the age or the deterioration of the mental or physical health of the insured individual or certificate holder; or Contain a provision establishing a new waiting period in the event that existing coverage is converted to or replaced by a new or other form within the same company, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder; or Provide coverage for skilled nursing care only or provide significantly more coverage for skilled care in a facility than coverage for lower levels of care. This evaluation of the amount of coverage provided will be based on the total number

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of days of care covered for lower levels of care, when compared to days of care covered for skilled care. Pre-existing conditions A long-term care insurance policy or certificate will not exclude or use waivers or riders of any kind to exclude, limit, or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions beyond the waiting period. A long-term care insurance policy or certificate will not use a definition of "preexisting condition" that is more restrictive than the following: "Preexisting condition" means a condition for which medical advice or treatment was recommended by or received from a provider of health care services within six months preceding the effective date of coverage of an insured person. A long-term care insurance policy or certificate will not exclude coverage for a loss or confinement which is the result of a preexisting condition, unless such loss or confinement begins within six months following the effective date of coverage of an insured person. Prior hospitalization A long-term care insurance policy will not be delivered or issued for delivery in this state if such policy: Conditions the eligibility for any benefits on a prior hospitalization requirement; Conditions the eligibility for benefits provided in an institutional care setting on the receipt of a higher level of institutional care; or Conditions eligibility for any benefits other than waiver of premium, postconfinement, post-acute care, or recuperative benefits on a prior institutionalization requirement. Free look A long-term care insurance applicant has the right to return the policy or certificate within 30 days after its delivery and to have the premium refunded if, after examination of the policy or certificate the applicant is not satisfied for any reason. Outline of coverage The outline of coverage will include all of the following: A description of the principal benefits and coverage provided in the policy; A statement of the principal exclusions, reductions, and limitations contained in the policy; A statement of the terms under which the policy or certificate, or both, may be continued in force or discontinued, including any reservation in the policy of a right to change premium. Continuation or conversion provisions of group coverage will be specifically described. A statement that the outline of coverage is a summary only, not a contract of insurance, and that the policy or group master policy contains the governing contractual provisions; A description of the terms under which the policy or certificate may be returned and premium refunded; A brief description of the relationship of cost of care and benefits; A statement that discloses to the policyholder or certificate holder whether the policy is intended to be a federally tax-qualified long-term care insurance contract.

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Inflation protection No insurer may offer a long-term care insurance policy unless the insurer also offers to the policyholder, in addition to any other inflation protection, the option to purchase a policy that provides for benefit levels to increase with benefit maximums or reasonable durations that are meaningful to account for reasonable anticipated increases in the costs of long-term care services covered by the policy. Insurers must offer to each policyholder, at the time of purchase, the option to purchase a policy with an inflation protection feature. The inflation protection feature increases benefit levels annually in a manner so that the increases are compounded annually at a rate not less than five percent. Evidence of insurability will not be required if the inflation protection feature is selected. Nonforfeiture benefits A long-term care insurance policy may not be delivered or issued for delivery in this state unless the policyholder or certificate holder has been offered the option of purchasing a policy or certificate including a nonforfeiture benefit. The offer of a nonforfeiture benefit may be in the form of a rider that is attached to the policy. If the policyholder or certificate holder declines the nonforfeiture benefit, the insurer will provide a contingent benefit upon lapse that will be available for a specified period. Producer training requirements An individual may not sell, solicit, or negotiate long-term care insurance unless the individual is licensed as an insurance producer for accident and health or sickness or life insurance and has completed a one-time training course on or before January 1, 2009, and ongoing training every 24 months afterward. The one-time training will be no less than 16 hours, eight hours of which will consist of long-term care, generally, and eight hours of which will be specific to long-term care partnerships in a classroom setting. At least five of the 16 hours must be taught in a classroom setting. 3. Basic and standard plans (10-16-105 (7.2)(b) Reg 4-6-5: Section (III) (A through L) and Policy Requirements section (pp. 1-4) All basic and standard health benefit plans will also comply with the following requirements: A. Balance Billing: In-network preferred providers and HMO providers are prohibited from balance billing individuals insured under the basic or standard health benefit plan. Balance billing refers to the practice where 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 preferred provider 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. B. Benefit Modifications: The form and level of coverage 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.

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C. Cost Containment: In their basic and standard health benefit plans, carriers will 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; preadmission and pre-certification; use of non-physician primary care providers; alternative dispute resolution; and managed care. For preferred provider 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 Plan Description Form. Use of gatekeepers is encouraged but not required. Carriers must offer the most managed care version of each indemnity, preferred provider, and/or HMO plan they offer in Colorado. A small employer carrier must offer the same choice of networks for its basic and standard plans as it offers for all 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. Enrollment: To enroll an employee and dependents, the carrier will 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 a 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. F. 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 will include maternity care, prenatal and postnatal care and counseling, treatment and screening as appropriate for sexually transmitted diseases, sterilization, contraceptives, and contraception counseling. G. 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 nonnetwork out-of-pocket maximum amounts are separate from the in-network out-of-pocket maximum amounts. H. Primary Care Providers: Carriers may use non-physician providers, such as certified nurse practitioners and physicians assistants, as primary care providers under the basic and standard health benefit plans. However, carriers are not mandated to include nonphysician providers. I. Copays: All coverages that have any type of flat dollar copay are not subject to the deductible. J. Deductibles: None of the basic and standard plans that include deductibles provide fourth quarter carryover credit. PPO non-network deductibles are separate from innetwork deductibles. K. Usual, Customary and Reasonable Determinations: For all basic and standard plans, each carrier will use the same method of determining usual, customary and

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reasonable charge allowances as it uses for its most frequently sold non-basic, nonstandard group health benefit plan in Colorado. 4. Benefit Description Plan (10-16-105; 10-16-108.5(11); Reg 4-2-20) All carriers offering or providing health benefit plan coverage or Medicare supplemental coverage will 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. A Colorado health benefit plan description form will include information of general interest to purchasers of health plans and persons insured under health plans. Such form will be designed to facilitate comparison of different health benefit plans. Informational materials specifying the plan's cancer screening coverages and their respective parameters will be included with the form. A carrier will provide a completed Colorado health benefit plan description form for each of its health benefit plans. G. CoverColorado (10-3-1108; 10-8-501, 10-8-513, 10-8-516; 10-16-105.5; Reg. 4-6-3) CoverColorado is a nonprofit public entity created to provide health insurance for Colorado residents who are termed "high risk" because they are unable to obtain health insurance or only able to obtain health insurance at prohibitive rates or with restrictive exclusions, including those who are federally eligible individuals under the federal "Health Insurance Portability and Accountability Act of 1996. CoverColorado accepts for enrollment every federally eligible individual who applies for coverage within 62 days after termination of individual's prior coverage and will not impose any preexisting condition exclusions or limitations on the new coverage. An eligible person is someone who resides in Colorado and has been living in the United States for a minimum of six months. A person who is eligible for group health care, Medicare, Medicaid cannot enroll in CoverColorado. Pre-existing conditions Coverage under the program will exclude charges or expenses incurred during the first six months following the effective date of coverage as to any pre-existing condition that is not defined more restrictively than an injury, sickness, or pregnancy for which a person incurred charges, received medical treatment, consulted a health care professional, or took prescription drugs within the six-month period immediately preceding the effective date of coverage. The program will give credit for the period of time an eligible individual had qualifying previous coverage for the pre-existing condition that was continuous to a date not more than 90 days prior to the effective date of enrollment in the program. In the case of an individual eligible for the program, the program will not impose an exclusion on coverage of a pre-existing condition of any such individual if the individual had qualifying previous coverage for at least a threemonth period continuous to a date not more than 90 days prior to enrollment in the program. A federally eligible individual means an individual who, as of the date on which the individual seeks coverage, the total periods of creditable coverage is 18 months or more and whose most recent prior creditable coverage was under a group health plan. The maximum lifetime benefit available through CoverColorado is $1 million.

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