§ 89.1. Definitions.

 The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:

   Act—The Insurance Company Law of 1921 (40 P. S. § §  341—991).

   Advertisement—As defined in §  51.1 (relating to definitions).

   Department—The Insurance Department of the Commonwealth.

   The provisions of this §  89.1 amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); sections 510—514 of The Insurance Company Law (40 P. S. § §  510—514); and section 3(a) of the Accident and Health Filing Reform Act (40 P. S. §  3803(a)).

   The provisions of this §  89.5 reserved November 22, 2002, effective November 23, 2002, 32 Pa.B. 5747. Immediately preceding text appears at serial pages (214541) to (214542).

PREPARATION OF FORMS

§ 89.11. [Reserved].

   The provisions of this §  89.11 reserved November 22, 2002, effective November 23, 2002, 32 Pa.B. 5747. Immediately preceding text appears at serial pages (214542) and (287707).

 (a)  When submitting a policy form to which a copy of the application will be attached when the policy is issued, a copy of the application shall be attached to the policy form. If the form of the application has already been approved, the form number and date of approval shall be shown either on the form or in the transmittal letter.

 (b)  If it is the practice of the insurer to attach a reduced size reproduction of the application to a form when issued, the application should be attached to each copy of the form submitted. The application should be legibly reproduced in the size to be used in the contract.

 (c)  An application which includes a provision for home office endorsements or corrections may not be approved for use unless it is specifically stipulated therein that a change may not be made in the amount of insurance, the age at issue, the plan of insurance or benefits applied for by the endorsements or corrections. This subsection does not apply to group applications.

 (d)  Applications shall contain clear and direct questions by the insurer permitting answers by the applicant only in the form of direct statements of known facts. Applications may not contain questions or representations based on indefinite or ambiguous terms or which are inconsistent with policy provisions and may not require the making of warranties by the applicant.

 (e)  Questions as to race or color are not permitted on the application.

 (a)  The use of policy captions or descriptions such as ‘‘all coverage’’ or ‘‘complete coverage’’ is prohibited. The purpose of this section is to prevent misunderstanding in the minds of the insured public.

 (b)  A policy form bearing a caption or reference that this is a ‘‘Pennsylvania’’ policy or a ‘‘Standard’’ policy will not be considered for approval, except if the forms are so designated by statute or Departmental regulation. The purpose of this section is to prevent misunderstanding in the minds of the insured public. Use of words or abbreviations thereof as a part of the distinguishing form number are acceptable, however, if deemed necessary or convenient to the identification of the form.

 (c)  The word ‘‘special’’ may not be used which might reasonably cause the insured to believe that he is receiving preferential treatment.

 (d)  The word ‘‘compensation’’ may not be used which might reasonably cause the policyholder to be confused with workmen’s compensation coverage.

 In contracts providing specified benefits for dismemberment, death or surgical operations, if the insurer limits its liability to one such loss as a result of a single accident, the contract shall provide that the insured is entitled to receive the largest amount applicable.

   The provisions of this §  89.14 amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412).

 A program which contemplates the simultaneous sale of insurance and equity products shall be submitted to the Department for review in accordance with the following guidelines:

   (1)  The prospective purchaser shall be given the option to purchase either the insurance product or the equity product completely independent of one another, and shall be clearly advised to this effect by the agent and in all sales material.

   (2)  The premium charged for the insurance product shall be a separate identifiable charge and be shown as such on sales material, bill, statement or draft used in connection with the program.

   (3)  Sales material or sales presentation shall separately set forth the matters pertaining to the insurance product.

   (4)  The premium rate for the insurance product may not be dependent upon the purchase of an equity product, fluctuate or vary with the investment experience of an equity product or vary with the amount of equity product purchased or contracted to be purchased.

   (5)  At any time subsequent to a simultaneous sale, the purchaser shall be given the right to divest himself of either the insurance or the equity product.

   (6)  A policy, contract or related form may not contain a provision which would automatically make payable insurance benefits to facilitate payment of an equity product, provided that with the consent of the insurer the beneficiary of the benefit may, by written instruction subsequent to the time he becomes eligible for the benefit, direct that all or part of the benefit be applied toward the purchase of an equity product.

   (7)  The term equity product as used herein may not include a variable annuity.

 (a)  Endorsements, if printed on the form or to be applied by stamp, shall be separately submitted in duplicate on the letterhead of the insurer for approval or filing.

 (b)  ‘‘Open face’’ or ‘‘blank’’ amendment forms, riders or endorsements may be used to change variable or illustrative material without submission to the Department.

 (c)  A rider or endorsement which reduces or eliminates coverage under the policy shall provide for signed acceptance by the policy owner, except in the case of a rider or endorsement which is used only at the time of policy issue.

 (d)  With respect to impairment riders, a representative selection of the type of fill-in material shall be shown when submitting the form. Additional or alternative material which differs in fundamental approach should also be submitted at the time when the material is to be used. The material may not be used with forms delivered in this Commonwealth after receipt of nonacceptance by the Department.

 (a)  Riot injuries. If a policy contains an exception for injuries arising out of riots, the exception should be confined to those instances in which the insured is injured while participating in the riot.

 (b)  Rate books. Rate books and revisions thereof should be submitted for filing. The name of the insurer should appear on revision pages, supplements and the like, in order to facilitate proper filing in the Department. This subsection does not apply to group insurance.

   The provisions of this §  89.18 amended under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); sections 510—514 of The Insurance Company Law (40 P. S. § §  510—514); and section 3(a) of the Accident and Health Filing Reform Act (40 P. S. §  3803(a)).

   The provisions of these §  89.21—89.23 reserved November 22, 2002, effective November 23, 2002, 32 Pa.B. 5747. Immediately preceding text appears at serial pages (214546) to (214547).

Subchapter B. REQUIREMENTS FOR LIFE INSURANCE

INDIVIDUAL POLICIES

Sec.

§ § 89.31—89.37. [Reserved].

 (a)  Incontestable clauses. Under sections 410 and 420C of the act (40 P. S. § §  510 and 574) the permissible exclusions to the incontestable clause are clearly set forth and others are not permitted. Consequently, the hazard of engaging in military or naval services, except in time of war, and the hazard of aviation may not be made exclusions to the incontestable clause.

 (b)  [Reserved].

 (c)  Dividends payable to third parties. If dividends are to be paid to a third party, a statement shall be included showing the right of revocation of the policyholder.

 (d)  Special premium rates. In the case of rated policies calling for higher premiums than the corresponding standard contracts, the words ‘‘Special Premium Class,’’ or a similar designation, shall be included in the brief description or on the specifications page.

 (e)  Work sheets. Because of the multitude of policies with almost infinite variation in nomenclature and language being submitted to the Department, it is requested that companies submitting new forms for approval also submit the work sheets showing the formulae for the net renewal premiums and for the reserves expressed in standard actuarial symbols with all pertinent data as to valuation basis, surrender charges, paid-up options and the like listed. The form shall show the name of the company and its address and identify the individual or firm responsible for the ‘‘certification’’ that the methodology is consistent with the premiums and benefits provided by the policy.

 (a)  General. The nonforfeiture values (for the age for which the form is filled in for a typical plan of insurance) to be issued under a particular policy form should be included. The Department has approved reference to the Commissioners’ Standard Non-Forfeiture Value Method in lieu of explanation of the method of calculating cash values under the Standard Non-Forfeiture Law, section 410A of the act (40 P.S. §  510.1), and insurers using the method may refer thereto in the forms submitted. If no nonforfeiture values develop, the submission letter should so state.

 (b)  Recommended statement in policy. It is suggested that a provision be included in the policy substantially similar to the following:

   The cash values and nonforfeiture benefits available under this policy are equal to or greater than the minimum required by statute of the state in which this policy is delivered.

 (c)  Automatic premium loan. An automatic premium loan provision should be separately captioned and not included under or with the nonforfeiture provisions.

 (d)  Substandard plans. Substandard plans in which the extended insurance option is not available shall indicate by the proper text in the policy and endorsements that such option and values are not applicable. Tables which contain headings and spaces for the insertion of extended insurance values shall be printed, overprinted or stamped in a prominent manner to indicate that, in cases in which the values are not granted, the values are not applicable.

 (e)  Nonforfeiture benefit limitations. Nonforfeiture benefit limitations shall conform with the following:

   (1)  Insurers may offer extended term insurance or paid-up insurance as a nonforfeiture benefit. These benefits need not include supplementary built-in insurance benefits provided for while the policy is in force, nor need they include benefits provided by riders attached thereto.

   (2)  Where the nonforfeiture benefits of a policy do not apply to supplementary benefits which are built into the policy or attached by riders, the policyholder shall be so notified. Notification shall be in the following or comparable form:

     Any insurance continued under these nonforfeiture provisions shall not include benefits which supplement the basic life insurance benefit, whether these supplemental benefits are mentioned in the policy itself or provided by a rider attached to the policy, unless specifically provided otherwise where the supplemental benefit is described.

   (3) The provision set forth in paragraph (2) should be included in the first section of the policy which describes nonforfeiture values.

     (i)   If the provision is located elsewhere in the policy, it shall be in a place where it is equally or more visible.

     (ii)   Where supplemental benefits are described in a rider to the policy and not in the policy itself, notification of nonapplicability of the benefits as a nonforfeiture value may be made in the rider describing the benefit. The notice shall be prominently located.

     (iii)   Policy and rider forms will be disapproved which do not include the provision in a location acceptable to the Department.

   (4)  The provision set forth in paragraph (2) shall be required in life insurance policies or riders issued 90 days after the effective date of this subsection. Compliance may be made by endorsement to policies or riders issued 90 days after the effective date but before January 1, 1976. After January 1, 1976, life insurance forms shall incorporate the provision into the policy or rider itself.

   The provisions of this §  89.42 amended October 11, 1974, effective October 12, 1974, 4 Pa.B. 2173. Immediately preceding text appears at serial page (7752).

 A provision for accidental death benefit may not contain a requirement that death must occur within a specific time period.

   The provisions of this §  89.43 adopted June 23, 1978, effective June 24, 1978, 8 Pa.B. 1678.

   This section cited in 31 Pa. Code §  90d.4 (relating to exclusions and restrictions).

PREMIUM FINANCING FOR COLLEGE STUDENTS

§ 89.51. Promissory notes.

 (a)  If a promissory note is to be executed by the insured in connection with the financing of the insurance premium, this fact shall be set forth in the application immediately preceding the signature of the applicant, showing the amount of the note, the true rate of interest and the amount of down payment made at the time of taking the application.

 (b)  If the insured is a minor and executes a promissory note in connection with his premium payment or payments, the note shall be co-signed by the parent, legal guardian or adult spouse of the insured.

 (c)  If a promissory note is executed in connection with the financing of less than the full first year’s premium, the balance of the premium shall be paid by the applicant at the time the application is taken.

 (d)  A down payment shall be paid by the applicant and the payment directly or indirectly made by the agent under any circumstances shall be deemed a rebate or inducement.

 (a)  A premium financing arrangement shall be fully set forth and described in the policy, and a copy of a promissory note executed by the insured and an assignment thereof shall be attached to the policy.

 (b)  A copy of an assignment of a promissory note executed by the insured subsequent to the issuance of the policy and copies of additional promissory notes executed by the insured subsequent to the issuance of the policy shall be delivered to the insured for attachment to the policy.

 (c)  The maximum amount of premium financing arrangement which may be entered into in connection with the purchase of the policy shall also be set forth in the policy, and shall be in accordance with reasonable and sound underwriting practices as determined by the company.

 (a)  Upon delivery of the policy, a policy receipt or acceptance form shall be executed by the insured acknowledging that:

   (1)  The policy has been issued as presented.

   (2)  The insured understands the provisions and obligations of the premium financing arrangement and the indebtedness which he has incurred.

 (b)  A policy receipt or acceptance form should be registered by number in the home office of the company.

 (c)  The receipts or acceptance forms shall accompany the policy at the time of delivery only, and may not be made available at any other time or for another purpose.

 (d)  Until the executed policy receipt or acceptance form has been received and filed in the home office of the company, no promissory note executed by the insured should be sold or otherwise transferred or assigned, and no commission on the sale should be paid to an agent.

 (a)  Sales materials, including promissory note forms and other forms used in the sale of the insurance programs, shall be submitted to this Department with a letter of transmittal at the time of submitting the policy form in question for approval.

 (b)  Additions or amendments to the materials may not be made by the company unless first submitted and found acceptable to this Department.

GROUP POLICIES

§ 89.61. General filing requirements.

 (a)  Conformity to definition. A group life policy issued for delivery in this Commonwealth will not be approved by the Department which does not apply to a group filing within the definition of a group qualified for the insurance under the Pennsylvania Group Life Statute (40 P. S. § §  532.1—532.9). If any element of doubt exists as to whether a particular group is one authorized by the statute, the question shall be referred to the Department for review in advance of filing.

 (b)  Identification of insured. Group life and annuity certificates filed with the Department shall provide for the identification of the insured. This may be accomplished by having the name of the insured stated on the certificate or any code which could be used in the identification of the certificate holder.

 (c)  Beneficiary. Concerning group life certificates, each employe insured under a form of group life insurance shall be given written evidence of his beneficiary designation, if any.

 (d)  Variations in policies. Group life policies, their certificates and the intended insert pages reflecting possible variations shall be accepted for approval, provided that the filing is accompanied by a statement showing the combinations of pages which will be used for the different types of policies.

 (e)  Dependent policies. Dependent group life is not permissible.

 (f)  Certificates. Certificates shall conform with all of the following:

   (1)  Certificates shall be issued to the policy owner within a reasonable period of time after issuance of the master policy for delivery to each person insured.

   (2)  Certifying language shall be used in certificates.

   (3)  Certificates should state the benefits applicable to the person insured or state the schedule of benefits applicable to the class to which he belongs.

 (g)  Modes of settlement. A statement concerning the availability of optional modes of settlement should appear in the certificate as well as in the master policy.

 (h)  Accidental death benefit. A provision for accidental death benefit may not contain a requirement that death must occur within a specific time period.

 (a)  Variable annuities shall conform with Chapter 85 (relating to variable annuity and variable accumulation annuity contracts).

 (b)  A group annuity master policy should state the type of an annuity funding plan used, such as regular deferred, deposit administration, separate account and the like.

 (c)  A statement concerning the availability of optional modes of settlement shall appear in the certificates as well as in the master policy.

Subchapter C. REQUIREMENTS FOR ACCIDENT AND
HEALTH INSURANCE

INDIVIDUAL POLICIES

Sec.

§ 89.71. General.

 (a)  Opinion-type questions regarding the past or present health of the applicant should provide that the applicant is to answer to the best of his knowledge and belief.

 (a)  There shall be imprinted on the face of the policy the ‘‘Notice of Insured’s Right to Examine Policy for Ten Days,’’ as required by section 617 of the act (40 P. S. §  752). The provision shall be worded that the insured is given the option for a full refund. On booklet-type policies this provision shall appear on the outside cover portion of the policy.

 (a)  Provisions concerning renewability or cancellation by the insurer shall appear on the first page or reference shall be made thereto in a brief description on the face page and on the filing back, if any.

 (b)  Policies which are noncancellable and guaranteed renewable shall state clearly the period of time during which they are to be guaranteed renewable and shall provide that the company cannot cancel the policy and that the company cannot increase the premium.

 (c)  Nonrenewal of individual accident and health policies may not be based upon deterioration of physical or mental health.

 (a)  A policy containing, as part of its title, words such as ‘‘special’’ or ‘‘preferred’’ which are used in a misleading fashion, or words such as ‘‘Union,’’ ‘‘Labor,’’ ‘‘Miner,’’ and the like in its title which could associate it with a particular organization, association or business will not be approved.

 (a)  A policy may not contain a provision for its automatic termination upon the happening of any loss, except a loss which has exhausted all possible benefits under the policy.

 (a)  The following is a list of the maximum applicable exclusions which shall be permitted in addition to those specified under section 618 of the act (40 P. S. §  753). The wording of the exclusions is illustrative and is intended to indicate the general intent of the Department. Alternate wording is permissible as long as the meaning preserves the general intent of the exclusions:

   (1)  General exclusions. General exclusions shall conform with the following:

     (i)   Loss sustained or expenses incurred while a member of the armed forces of any nation, or losses sustained or expenses incurred as a result of enemy action or act of war whether declared or undeclared.

     (ii)   Normal pregnancy, childbirth, miscarriage and abortion.

     (iii)   Suicide or intentionally self-inflicted injuries.

     (iv)   Sickness or injury covered by a workmen’s compensation act or occupational disease law or by United States Longshoreman’s and Harbor Worker’s Compensation Act.

     (v)   Mental or nervous or emotional disorders.

     (vi)   Exclusions which, in the opinion of the Commissioner, are justified by special circumstances or the unique character of the policy.

   (2)  Exclusions pertaining to hospital or basic coverage and major medical policies. Other exclusions shall include the following:

     (i)   Eye examinations, refractions, eye glasses, contact lenses or hearing aids or hearing examinations.

     (ii)   Services, use of a facility or supply which is not recommended or approved by a licensed medical practitioner practicing within the scope of his license.

     (iii)   Charges for services, use of facilities or supplies that neither the insured nor any other covered person is legally obligated to pay.

     (iv)   Routine physical examinations.

     (v)   Dentistry, dental x-rays or dental services, dental prosthetic appliances, except expenses otherwise covered on account of accidental bodily injury to sound natural teeth.

     (vi)   Expenses of a covered person for cosmetic surgery, except expenses otherwise covered which are necessary for repair of an accidental bodily injury.

     (vii)   Elective surgery not to exceed 6 months. The following is a list of surgical procedures which may be considered elective surgery:

       (A)   Cataract operations

       (B)   Strabismus operations

       (C)   Tonsilectomies, adenoidectomies

       (D)   Herniotomies

       (E)   Arthrotomies

       (F)   Hemorrhoidectomies

       (G)   Laminectomies

       (H)   Varicose veins

       (I)   Gall bladder

       (J)   Appendectomies concurrent with a gall bladder operation.

     (viii)   Expenses for transportation except local ambulance service for the insured or covered person.

     (ix)   Sickness or injuries to the extent that any covered person under the policy is indemnified by ‘‘Medicare’’ for the expenses incurred. This exclusion may include other specifically enumerated national, state or other governmental plans. It may not include or be interpreted to include plans which may possibly be enacted at some future time.

     (x)   Services performed by the insured’s spouse, child, parent, brother or sister or persons who ordinarily reside in the insured’s household.

     (xi)   Medical care of members of the armed forces in a United States Government facility.

     (xii)   Specified foot conditions.

   (b)  A policy which contains unusual limitations, reductions or conditions of a restrictive nature that the payment of benefits under the policies is limited in frequency or in amounts should carry the legend ‘‘This Is A Limited Policy—Read It Carefully’’ imprinted in not less than 18-point outline type of contrasting color diagonally across the face and filing back, if any, of the policy.

   (c)  A policy may not provide an exclusion for the use of alcohol and narcotics except as permitted by section 618(b)(11) of the act (40 P. S. §  753(b)(11)).

   Applicability limited

   The exclusions and other provisions of §  89.77 apply only to individual policies and not to group policies. Giangreco v. United States Life Ins. Co., 168 F. Supp. 2d 417 (E.D. Pa. 2001).

 (a)  Policies which contain multiple benefits should not limit the payment of a specific benefit based on the fact that another benefit is paid under the same policy.

 (a)  Loss of time policies may not require that the loss from accidental injury commence within less than 30 days after the date of an accident, nor may the accident policy which the insurer may cancel or refuse to renew require that it be in force at the time the loss commences.

 (b)  A policy of health and accident insurance will not be approved which contains a provision that the disability period shall be considered to commence with the date on which written notice is actually received by the company.

 (c)  Policies which limit benefits for loss of time to specified items, such as business overhead policies, shall provide for a premium refund in accordance with a short rate table in the event that none of the items to be indemnified exist at the time the policy is cancelled, for example, where a professional person discontinues his office, but only if the insured requests cancellation of the policy and gives timely notice. A premium refund may be limited to 1 year’s premium.

 (d)  The definition of total disability should be sufficiently clear so as not to confuse or mislead the insured. Wording in the definition of total disability should be that claim administration will be uniform as possible and the coverage is in the best interests of the insurance buying public.

 (e)  A provision for accidental death benefit may not contain a requirement that death must occur within a specific time period.

 (a)  If the policy provides for a reduction in benefits because of the attainment of a specified age limit, reference thereto shall be set forth on the first or specifications page. For this purpose, a reduction in a benefit period is a reduction in benefits requiring such reference.

 (b)  Policies shall comply with section 617 of the act (40 P. S. §  752), providing for the continuation of coverage for mentally retarded and physically handicapped dependents.

 (c)  A policy which contains a disability income benefit or a similar type benefit may not require an insured person to be confined to his residence due to sickness or injury as a condition for the benefit, a change in the amount of the benefit or a change in duration of coverage of the benefit.

 (d)  A reduction of benefits by reason of a change in employment status or change in income of the insured may be permitted, unless clearly set forth in the policy under an appropriate caption.

 (a)  General. Accident and health insurance rate filings will be examined for actuarial adequacy, consistency and equity, including nondiscrimination aspects. Data required should be broken down by the type of filing as prescribed in subsections (b) and (c). The Department will consider in its rate review, along with other pertinent data, the loss ratios submitted by companies as anticipated to be accumulated over the entire period of coverage.

 (b)  New filings. New filings shall conform with all of the following:

   (1)  With regard to rates for policies which are initially filed for approval, the Department will not consider acceptable anticipated loss ratios which are lower than the following levels:

   (2)  The company shall maintain its records in a condition that loss ratios may be traced on a closed block basis for each calendar year, thus yielding durational loss ratios relative to a given calendar year of underwriting.

   (3)  New filings shall also conform with all of the following:

     (i)   An actuarial memorandum shall be submitted describing how premium rates were computed. The memorandum shall include suitable data indicating the basis for the rates, such as the expected claim costs, the tables or experience, if any, upon which the rates have been based, and an explanation of how the premium rates were obtained.

     (ii)   If modifications have been based on judgment, this should be indicated as well as any other relevant information which the company considers appropriate.

     (iii)   Rates shall be adequate but not excessive, provide for internal equity, and be consistent with rates for any concurrent coverage available.

 (c)  Revision of current rates. Revision of current rates shall conform with the following:

   (1)  With regard to rate revision, the following minimum loss ratios shall be used in establishing an appropriate level of rate increases:

   (2)  Where revision of current rates is involved, benefits should be described, a copy of the appropriate form should be attached and all of the following data shall be furnished:

     (i)   A statement as to the reason for the revision, the nature of the revision, the detailed areas revised, existing rates, revised rates, the percentage increase or decrease in each rating category and an estimate as to the expected average aggregate increase or decrease in premiums, the recent experience under existing rates showing premiums on both a written and earned basis and showing losses on both a paid and incurred basis.

     (ii)   If rate increases are not substantial in amount or percentage and there are no unusual re-rating features, the statement required by subsection (a) shall normally suffice in conjunction with completed rate sheets in dollar amounts for categories submitted in duplicate. If, however, rating revisions are substantial, the Department may request any or all of the following information:

       (A)   Details as to dollar amounts, percentage increases and the effective date of the last increase.

       (B)   Commission scales by duration and additional expense allocations which are available in the records of the company and are deemed appropriate for purposes of determining surplus strain.

       (C)   The following data for every rating category, both nationwide and for this Commonwealth:

         (I)   Premiums written and derivation of premiums earned from changes in unearned premiums and active life reserves. Explicit details as to the type of reserve and basis of its calculation should be supplied for any amounts designated as ‘‘held in reserve.’’ Whether these are accrued claim liabilities or active life reserves or contingency reserves should be specified and a general statement should be made as to the basis of calculation.

         (II)   Claims paid and derivation of claims incurred from accrued claim liabilities identifying reported and unreported accruals separately. Cash, incurred and supplemental loss ratios should be computed. A loss ratio analysis available by duration should be supplied. If separate figures for this Commonwealth are not available, estimates as to amounts applicable in this Commonwealth should be made.

       (D)   The Department will examine requests for rate increases on an individual basis as appropriate. It is realized that there are many factors relative to a determination of a reasonable loss ratio for a given coverage. Some of the factors are type of coverage, level of premiums, loss ratio trends, modal expenses, active life and claim reserves as they pertain to rate increases, statistical significance of experience figures in each rating category, previous history of dividend distribution and absolute size of the most recent loss ratios. A minimum experience period of 3 years will be required prior to the approval of a substantial rate increase.

     (iii)   Data submitted for rate revision should be in agreement with annual statement data filed with this Department.

 If a provision of this chapter or the application thereof to a person is held invalid, the remainder of the chapter and the application of the provision to other persons will not be affected thereby.

GROUP POLICIES

§ 89.91. General filing requirements.

 (a)  Conformity to definition. A group life policy issued for delivery in this Commonwealth will not be approved by the Department which does not apply to a group filing within the definition of a group qualified for the insurance under the act of May 11, 1949 (P. L. 1210, No. 367) (40 P. S. § §  532.1—532.7a), known as the Group Life Insurance Policy Laws. If an element of doubt exists as to whether a particular group is one authorized by the statute, the question shall be referred to the Department for review in advance of filing.

 (b)  Identification of insured. Group life and annuity certificates filed with the Department shall provide for the identification of the insured. This may be accomplished by having the name of the insured stated on the certificate or a code which could be used in the identification of the certificate holder.

 (c)  Variations in policies. Group life policies, their certificates and the intended insert pages reflecting possible variations shall be accepted for approval, provided that the filing is accompanied by a statement showing the combinations of pages which shall be used for the different types of policies.

 (d)  Certificates. Certificates shall conform with all of the following:

   (1)  Certificates shall be issued to the policy owner within a reasonable period of time after issuance of the master policy for delivery to each person insured.

   (2)  Certifying language shall be used in certificates.

 (a)  Master policies, riders and certificates shall contain a clear explanation as to continuance of that coverage after termination of the policy. In the case of maternity benefits, the policy shall clearly define the circumstances under which the coverage ceases and whether the insurer intends to include a pregnancy coverage for 9 months after the policy has expired or whether the coverage ceases with the expiration of the remainder of the policy.

 Exclusions which are ambiguous or unfairly discriminatory are not acceptable.

   Ambiguous Provision

   Insurer’s policy which excludes from coverage persons who are ‘‘totally disabled’’ is ambiguous, and, therefore, must be construed against insurer. Schneider v. UNUM Life Insurance Co. of America, 149 F. Supp.2d 169 (E.D. Pa. 2001).

   Exclusions Limited

   Only exclusions which are ambiguous or unfairly discriminatory are prohibited in group policies. Other limitations, which are barred from individual policies, do not apply to group policies. Giangreco v. United States Life Ins. Co., 168 F. Supp 2d 417 (E.D. Pa. 2001).

   Construction

   In the absence of any statutory language or administrative rulings which interpret the meaning of the term ‘‘ambiguous’’ in a regulation, the court looks to the plain meaning of the term. The meaning of the term ‘‘ambiguous’’ as defined in Northbrook Ins. Co. v. Kuljian Corp., 690 F. 2d 368, 372 (3d Cir. 1982), is consistent with the plain meaning of that term as set forth in 31 Pa. Code §  89.94. Schneider v. UNUM Life Insurance Co. of America, 149 F. Supp.2d. 169 (E.D. Pa. 2001).

   Nonpreemption under ERISA

 (a)  Certifying language shall be used in certificates.

 (a)  Conformity with definition of a group. A group policy of insurance approved by the Department will not be issued for delivery in this Commonwealth by an insurer to a group which does not come within the definition of a group qualified for the insurance.

 (b)  Variations in policies. Because of the many variations possible in group accident and health policies, the policies, their certificates and the intended insert pages reflecting possible variations will be accepted for approval, provided that the filing is accompanied by a statement showing the combination of pages whichwill be used for different types of policies.

 (c)  Coordination with other plans. Nonduplication or coordination of benefit provisions for group medical expense insurance coverages may provide for nonduplication or coordination with a plan or State or Federal program providing benefits or services for or by reason of medical or dental care and treatment which benefits or services are provided by group insurance or another arrangement of coverage of persons in a group whether on an insured or uninsured basis. Policies with these provisions shall stipulate clearly how the provisions will be administered.

 (d)  Accidental death benefit. A provision for accidental death benefit may not contain a requirement that death must occur within a specific time period.

   The provisions of this §  89.97 amended June 23, 1978, effective June 24, 1978, 8 Pa.B. 1678. Immediately preceding text appears at serial page (13326).

   Public Policy

 (a)  Section 621.2 of the act (40 P. S. §  756.2(d)) mandates that every group accident and sickness policy providing hospital, surgical or major medical expense coverage contain a conversion privilege. The converted policy may not contain provisions less favorable to the insured than the group policy.

 (b)  An insurer shall offer a converted policy which includes maternity coverage whenever the group policy contains the coverage. Insurers not offering maternity benefits in converted policies under these circumstances are in violation of Commonwealth law and shall make form and rate filings necessary to comply.

 (a)  An application, enrollment form, policy, certificate or brochure used in lieu of a certificate, rider or endorsement may not be used, sold or issued until the forms of the same have been filed with and approved by the Insurance Commissioner.

 (b)  Applicable premium rates shall be filed with the Department.

 (c)  The insurer shall make known to every individual purchaser the applicable schedule of benefits, premium rates and claim filing procedures and advise where additional information and assistance relating to the benefits, rates and procedures may be obtained.

 (d)  Certificate or brochure used in lieu of a certificate shall set forth the essential features of the coverage, location of the claims office and instructions for filing claims and it shall be delivered or furnished for delivery to the individual purchaser.

 (e)  A provision excluding, limiting or coordinating benefits by reason of other insurance shall be set forth clearly in the policy, be accurately summarized in a certificate or brochure used in lieu of a certificate and in advertising material, and not be applied to the first $100 of any one claim.

 (f)  Prior to its initial use, material used in the direct solicitation of student accident insurance shall be submitted to the Department for review. Within 30 days from the date that the material is received by the Department, the insurer will be notified whether or not the Department has an objection to the same. Thereafter, amended material shall be promptly submitted to the Department; however, review prior to use will be required only in the event of substantial change.

 (g)  Advertising material and direct solicitation material prepared by an agent or broker shall be approved by the insurer prior to use. Material which differs substantially from that already submitted by the insurer to the Department for review shall be submitted under subsection (f).

 (h)  The insurer shall require an enrollment form to be signed by the parents, guardian or person in loco parentis of each student, except in the case of married or adult students, or where the participant is not required to make a premium contribution.

 (i)  An individual application or enrollment form shall clearly indicate that there is no obligation to purchase the insurance.

   The provisions of this §  89.99 adopted October 23, 1970, effective October 24, 1970, 1 Pa.B. 435.

Subchapter D. ADDITIONAL REQUIREMENTS FOR FRATERNAL
BENEFIT SOCIETIES

Sec.

 (a)  General filing requirements. Fraternal benefit society filings shall comply with the requirements and procedures of Subchapters A—C (relating to requirements for all policies and forms; requirements for life insurance; and requirements for accident and health insurance) except where these requirements and procedures are not applicable.

 (b)  General conditions of approval. General conditions of approval shall conform with the following:

   (1)  An approved form may not be used to insure anyone who is not a member or a spouse or dependent of a member of the fraternal benefit society as required by section 301(b) of the Fraternal Benefit Society Code (40 P. S. §  1141-301(b)). Nor may an approved form be used to insure a juvenile except upon the application of an adult as required by section 302(a) of the Fraternal Benefit Society Code (40 P. S. §  1141-302(a)).

   (2)  [Reserved].

   (3)  Forms can contain words such as insurance, insured, premium, policy and other type words usually associated with commercial insurance. In lieu thereof, words such as benefit, member, dues, certificate and the like type may be used. However, the type of wording used in forms shall be consistent. This is not intended to prohibit the use of words to describe different things as long as the wording used in the form is consistent.

   (4)  Approvals are conditioned upon the forms being used lawfully, and in conformity with applicable rules and regulations of the Department.

 (c)  Specific guidelines for certificates. Specific guidelines for certificates shall conform with the following:

   (1)  The words ‘‘A Fraternal Benefit Society’’ will appear in conspicuous type on the first page and filing back under the name of the society, as required by section 403 of the Fraternal Benefit Society Code (40 P. S. §  1141-403).

   (2)  If a certificate is issued on the life of a nonmember as the principal insured, the following or similar terminology shall appear in the certificate:

     (i)   If a certificate is issued in connection with section 301(b) of the Fraternal Benefit Society Code (40 P. S. §  1141-301(b)) it shall contain the following:

     Application Member

     Insured

     (ii)   If a certificate is issued in connection with section 302(a) of the Fraternal Benefit Society Code (40 P. S. §  1141-302(a)) it shall contain the following:

     Applicant Adult

     Insured

   (3)  A certificate shall provide a suspended or expelled member with the opportunity to maintain his certificate or his spouse’s or dependent’s certificate in force, upon timely payment of premium.

   (4)  A certificate shall specify (except with respect to those excluded by section 903 of the Fraternal Benefit Society Code (40 P. S. §  1141-903) the amount of benefits furnished thereunder. A certificate shall provide that the certificate, charter or articles of incorporation or, if a voluntary association, the articles of the association, the constitution and bylaws of the society, the application for membership, medical examination or health certificates signed by the applicant and amendments to the documents, shall constitute the agreement between the society and the member. See section 306(a) of the Fraternal Benefit Society Code (40 P. S. §  1141-306(a)).

   (5)  In order that the membership may be fully aware of their responsibility, certificates shall provide, except with respect to those excluded by section 903 of the Fraternal Benefit Society Code (40 P. S. §  1141-903) for additional or increased contributions from members in the event of financial deficiencies to the extent required in the bylaws and shall provide for the consequences if the contributions are not made.

   (6)  A certificate providing an accidental death benefit may not contain a requirement that death must occur within a specific time period.

 (d)  Specific guidelines for applications. Specific guidelines for applications shall conform with the following:

   (1)  Membership and insurance applications may not be combined into one application. Questions relating to membership may not be included in an insurance application, except as provided in paragraph (5).

   (2)  If proposed insured is adult (18 or over), a member, and is the applicant, the application for insurance shall contain:

   ‘‘Proposed Insured’s Signature

   (3)  If proposed insured is an adult and not a member, the application for insurance shall contain:

   ‘‘Proposed Insured’s Signature

   ‘‘Member Applicant’s Signature

   (4)  If proposed insured is a child, the application for insurance shall contain:

   ‘‘Adult Applicant’s Signature

   (5)  Each application except exchange or conversion applications for insurance on the life of an adult shall contain the following:

   ‘‘Is the applicant a member of (

   ‘‘Yes

   ‘‘If not, apply for membership.’’

   (6)  The words ‘‘A Fraternal Benefit Society’’ shall appear in conspicuous type on the insurance application.

   The provisions of this §  89.102 amended July 22, 1977, effective July 23, 1977, 7 Pa.B. 2060. Immediately preceding text appears at serial page (19984).

 (a)  Advertising used in connection with approved forms shall prominently disclose that the insurance is available only to members, their spouses and dependents, or to juveniles.

 A certified and current copy of the charter and bylaws of the society and rate book shall be filed with the Bureau of Regulation of Rates and Policies.

Subchapter F. COVERAGE FOR NEWBORN CHILDREN

Sec.

 (a)  Forms providing benefits on an expense incurred or service basis shall extend the benefits to newborn children.

 Forms issued or renewed on or after November 29, 1975, shall provide at least the coverage specified in Act 81 as interpreted by this subchapter, either by amendatory rider or endorsement or appropriate revision of the form itself.

   (1)  The form provision shall provide that the newborn child coverage is included automatically for each newborn child for 31 days after birth and that the insured or subscriber shall have the right upon application if such is required by the insurer within the 31 day period to continue coverage beyond the 31 day period if the form provides for coverage of dependents.

 (a)  Insurers subject to Act 81 and this subchapter shall submit for review and approval compliance riders or endorsements to affected, currently approved and in-use forms.

 (a)  An insurer shall provide affected insureds with a compliance rider, which shall be retroactively effective to November 29, 1975, or a later form renewal date that may be applicable.

 (b)  An insurer shall retroactively evaluate claims arising on or after November 29, 1975, for applicability of Act 81 and this subchapter in claims settlement.

Subchapter G. PREEXISTING CONDITION EXCLUSION
IN GROUP CONTRACTS

Sec.

 This subchapter applies to:

   (1)  Policies of group accident, group sickness or group accident and sickness insurance policies, as defined in section 621.2 of the act (40 P. S. §  756.2), issued or issued for delivery in this Commonwealth.

   (2)  Policies of blanket accident and sickness insurance, as defined in section 621.3 of the act (40 P. S. §  756.3) issued or issued for delivery in this Commonwealth.

   (3)  Group master agreements issued by a hospital plan corporation subject to the prior approval of the Department under 40 Pa.C.S. §  6124 (relating to rates and contracts).

   (4)  Group master agreements issued by a professional health services plan corporation subject to the prior approval of the Department under 40 Pa.C.S. §  6329 (relating to rates and contracts).

   (5)  Blanket or group student accident sickness insurance and group mortgage disability insurance policies subject to the prior approval of the Department under section 621.2 of the act (40 P. S. §  756.2) issued or issued for delivery in this Commonwealth.

   The provisions of this §  89.401 amended August 24, 1979, effective November 23, 1979, 9 Pa.B. 2891. Immediately preceding text appears at serial pages (39799) to (39800).

 (a)  A preexisting condition limitation will not be approved for use with a policy or contract which is more restrictive than the following definition: A preexisting condition is a disease or physical condition for which medical advice or treatment has been received within 90 days immediately prior to becoming covered under the group contract. The condition shall be covered after the individual has been covered for more than 12 months under the group contract.

 (b)  Long-term disability benefit provisions may require that the total disability resulting from a preexisting condition commence after the individual has been covered for more than 12 months under the group contract.

   The provisions of this §  89.402 amended August 24, 1979, effective November 23, 1979, 9 Pa.B. 2891. Immediately preceding text appears at serial page (39800).

 (a)  A disclosure statement substantially similar to the following shall be given in writing to a group member at the time of the enrollment under the group contract.

NOTICE

  If you or any dependents have received medical care or advice within the past 90 days for a disease or physical condition, you, he or she will not be covered for such disease or physical condition until you, he or she has been covered for one year under this contract. This exclusion, however, only applies to a disease or physical condition for which medical care or advice has been received in the past 90 days.

 (b) The statement set forth in subsection (a) shall be printed in bold face type.

   The provisions of this §  89.403 issued under The Insurance Company Law of 1921 (40 P. S. § §  1—321); The Insurance Company Law of 1921 (40 P. S. § §  341—991); sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); and 40 Pa.C.S. § §  6124 and 6329.

 (a)  Every group contract issued to a policyholder to replace another group contract shall only exclude a preexisting condition excluded by the other group policy.

 (b)  The provisions of subsection (a) applies to those individuals covered under the group policy being replaced.

 This subchapter applies to policies and agreements set forth in §  89.401 (relating to scope) issued, renewed, substantially altered or amended, on or after November 23, 1979.

   The provisions of this §  89.407 amended August 24, 1979, effective November 23, 1979, 9 Pa.B. 2891. Immediately preceding text appears at serial page (39801).

Subchapter H. STATEMENTS OF POLICY

GENERALLY

Sec.

§ 89.451. Insurance coverage.

 The act of December 23, 1981 (P. L. 583, No. 168) (40 P. S. § §  3001—3003) requires that the services of licensed midwives be covered on the same basis as the services of licensed physicians or osteopaths for those areas of practice for which midwives may be licensed. Effective February 6, 1982, no policy form, subscriber agreement or certificate will be approved by the Insurance Department unless it complies with the act of December 23, 1981 (P. L. 583, No. 168) (40 P. S. § §  3001—3003).

 Section 3101(d) of 20 Pa.C.S. (relating to payments to family and funeral directors) was amended to allow for direct payment to certain statutorily determined recipients of an insurance contract for an amount of $11,000 or less where an appointed personal representative of the decedent has failed to make written demand for payment within 60 days following the death of the insured. The Department construes the insurance contracts specified in 20 Pa.C.S. §  3101(d) to include insurance contracts offered by fraternal benefit societies which are regulated by the Department under the Fraternal Benefit Societies Code (40 P. S. § §  1141-101—1141-1001).

   The provisions of this §  89.461 adopted January 13, 1983, effective January 15, 1983, 13 Pa.B. 464.

STOP-LOSS POLICIES

§ 89.471. Licensed accident and health insurers may write stop-loss coverage.

 (a)  Section 202 of the act (40 P. S. §  382), defines group accident and health coverages that may be written by licensed accident and health companies. In an effort to increase health insurance options available to employers, stop-loss; that is, excess loss, coverage may be written by Pennsylvania licensed accident and health companies, if, before doing so, the Department has determined that the policy serves the interests of the public, and has approved the policy.

 (b)  This coverage may still be written by property and casualty insurers, if they also have the authority to write accident and health insurance. Current, approved policies written by property and casualty insurers may continue in force.

 (a)  Section 354 of the act (40 P. S. §  477b), authorizes the Department to review and approve accident and health policies filed by companies. A stop-loss policy submitted to the Department for approval shall satisfy the following conditions:

   (1)  The stop-loss policy shall be issued to, and insure, the sponsor of the plan, or the plan itself, not the employes, members or participants.

   (2)  Payments by the insurer shall be made to the sponsor of the plan or the plan itself, not the employes, members, participants or providers.

   (3)  The individual stop-loss amount; that is, retention or attachment point per claimant, shall be at least $10,000; the aggregate stop-loss amount for the plan shall be, at a minimum, $100,000 per calendar year.

   (4)  The stop-loss policy shall contain a provision that the plan’s or the plan sponsor’s bankruptcy or insolvency will not relieve the stop-loss carrier from its obligation to pay claims under the stop-loss policy.

   (5)  In addition to the stop-loss policy filed with the Department for approval, filings shall contain a separate document certifying that each of the four requirements listed in paragraphs (1)—(4) have been met.

 (b)  Stop-loss is not equivalent to reinsurance; reinsurance only relates to transactions between commercial insurers. An entity purporting to cover self-insured plans will be treated as a stop-loss insurer and will be subject to insurance laws and regulations of the Commonwealth relating thereto and penalties for violations thereof.

 (c)  If the original self-funded employe benefit plan is exempt from providing State mandated health benefits; that is, if the underlying plan is ERISA exempt, the stop-loss policy should not provide more benefits than the original policy, absent an agreement to the contrary between the employer and the stop-loss insurer. If the stop-loss policy covers excess benefits on an underlying policy or plan which is not ERISA exempt and thus provides State mandated benefits, the stop-loss policy shall include State mandated benefits.

 (a)  Legitimacy of underlying plan. Insurance companies writing stop-loss coverage shall exercise due diligence in ascertaining the legitimacy of the underlying plan before issuing coverage. This includes ensuring that:

   (1)  The underlying plan is a legitimate self-funded plan and not a self-insured or partially insured multiple employer welfare arrangement.

   (2)  The plan is not structured in a manner that is prohibited by this subsection.

 (b)  Pooling of risk prohibited.

   (1)  An underlying plan that aggregates multiple employers’ funds into an account, trust or other funding vehicle shall be capable of demonstrating that there is no pooling of risk between employers in any manner, including one or more of the following:

     (i)   Paying one employer’s claims from another employer or multiple employers’ contributions or premiums.

     (ii)   Aggregating two or more employers’ claims to trigger stop-loss coverage.

   (2)  In any case, an entity that commingles multiple employers’ funds into one account will be subject to scrutiny by the Department and shall be able to demonstrate that each participating employer’s claims and contributions are severable.

 An individual or entity, including third-party administrators, that places stop-loss coverage through an insurer or other entity not licensed to issue stop-loss coverage in this Commonwealth may be found to be in violation of provisions of The Insurance Department Act of one thousand nine hundred and twenty-one (40 P. S. § §  1—297.4) that prohibit unlicensed agent activity. Stop-loss coverage may only be issued by licensed Pennsylvania insurers through their licensed agents or brokers. Other entities who receive, or attempt to receive, a fee, commission or other compensation in connection with the issuance of stop-loss coverage may be found to be in violation of provisions of The Insurance Department Act of one thousand nine hundred and twenty-one that prohibit unlicensed insurance activity. Further, stop-loss coverage may only be issued to valid single employer self-funded ERISA qualified plans, unless the Commissioner determines that other plans may be eligible for the coverage.

   The provisions of this §  89.474 adopted September 25, 1992, effective September 26, 1992, 22 Pa.B. 4785.

Subchapter I. ALCOHOL ABUSE AND DEPENDENCY BENEFITS

GENERAL

§ 89.601. Applicability.

 (a)  This subchapter implements Article VI-A of the act (40 P. S. § §  908-1—908-8) relating to mandatory benefits for the treatment of alcohol abuse and dependency.

 (b)  This subchapter applies to group health or sickness or accident insurance policies providing hospital or medical/surgical coverage and group subscriber contracts for certificates issued by an entity subject to the act, 40 Pa.C.S. Chapters 61 and 63 (relating to hospital plan corporations; and professional health services plan corporations), the Health Maintenance Orgnization Act (40 P. S. § §  1551—1567) or the Fraternal Benefit Society Code (40 P. S. § §  1141.101—1141.905).

 (c)  Every entity that issues the policies, contracts or certificates described in subsection (b) shall submit forms of the contracts in compliance with this subchapter to the Department by May 25, 1988. The obligation to provide alcohol abuse and dependency benefits applies to policies, contracts and certificates issued or renewed on or after December 8, 1986. A policy, contract or certificate is considered renewed on the date of its renewal or, if the contract had no fixed term as of December 8, 1986, on the first anniversary date on or after December 8, 1986.

   The provisions of this §  89.601 issued under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); and The Insurance Company Law of 1921 (40 P. S. § §  341—391).

   The provisions of this §  89.601 adopted March 25, 1988, effective March 26, 1988, 18 Pa.B. 1360.

POLICY REQUIREMENTS

§ 89.611. Deductibles and copayments.

 (a)  Definition. A course of treatment shall be considered to be the full range of detoxification, treatment and supportive services carried out specifically to alleviate the dysfunction of the insured or subscriber.

 (b)  First instance or course of treatment. In the first instance or course of treatment for alcohol abuse and dependency, no deductible or copayment may be less favorable than those applied to similar classes or categories of treatment for other conditions of physical illness or injury.

 (c)  Second and subsequent courses of treatment. For the second and subsequent courses of treatment for alcohol abuse and dependency, the total proportion of payment after the deductibles and copayments may not be less than 50% of the allowance for similar classes or categories of treatment for other conditions of physical illness or injury.

   The provisions of this §  89.611 issued under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); and The Insurance Company Law of 1921 (40 P. S. § §  341—391).

 (a)  Nonhospital, residential alcohol treatment services which are included as a covered benefit under Article VI-A of the act (40 P. S. § §  908-1—908-8) shall be covered for a minimum of 30 days per year. The minimum of 30 days per year may not be exchanged for outpatient alcohol treatment services.

 (b)  Outpatient alcohol treatment services which are included as a covered benefit under Article VI-A of the act shall be covered for a minimum of 30 outpatient, full-session visits or equivalent partial visits per year. The minimum 30 sessions per year may not be exchanged for nonhospital residential alcohol treatment services.

 (c)  Thirty outpatient, full-session visits or equivalent partial visits, which may be exchanged on a two-for-one basis for up to 15 nonhospital, residential alcohol treatment days, shall be available in addition to the minimum required in subsections (a) and (b).

 (d)  Treatment services provided in subsections (a)—(c) may be subject to a lifetime limit, for a covered individual, of 90 days of nonhospital, residential alcohol treatment services and 120 outpatient, full-session visits or equivalent partial visits.

   The provisions of this §  89.612 issued under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); and The Insurance Company Law of 1921 (40 P. S. § §  341—391).

   The provisions of this §  89.612 adopted March 25, 1988, effective March 26, 1988, 18 Pa.B. 1360.

COVERAGE FOR TREATMENT SERVICES

§ 89.621. Inpatient detoxification services.

 Inpatient detoxification services which are included as a covered benefit under Article VI-A of the act (40 P. S. § §  908-1—908-8) shall be provided in a facility which meets Department of Health minimum drug and alcohol standards for client-to-staff ratios and staff qualifications and which is one of the following:

   (1)  A hospital licensed under 28 Pa. Code Chapter 157 (relating to drug and alcohol services) and complying with § §  157.21—157.25 (relating to inpatient hospital activities—detoxification).

   (2)  A psychiatric hospital licensed under 28 Pa. Code Chapter 709 Subchapter K (relating to standards for inpatient hospital drug and alcohol activities offered in a freestanding psychiatric hospital) and complying with §  709.122 (relating to detoxification).

   (3)  A freestanding treatment facility licensed under 28 Pa. Code Chapter 709 (relating to standards for licensure of freestanding treatment facilities) and complying with 28 Pa. Code Chapter 709, Subchapter F (relating to standards for inpatient nonhospital activities—short-term detoxification) and which has a written affiliation agreement with a hospital for emergency, medical and psychiatric or psychological support services.

   (4)  A health care facility issued a certificate of compliance under 28 Pa. Code Chapter 711 (relating to standards for certification of treatment activities which are a part of a health care facility) and complying with 28 Pa. Code Chapter 711, Subchapter E (relating to standards for inpatient nonhospital activities—short-term detoxification) and which has a written affiliation agreement with a hospital for emergency, medical and psychiatric or psychological support services.

   The provisions of this §  89.621 issued under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); and The Insurance Company Law of 1921 (40 P. S. § §  341—391).

 Nonhospital, residential treatment and rehabilitation services which are included as a covered benefit under Article VI-A of the act (40 P. S. § §  908-1—908-8) shall be provided in a facility which meets Department of Health minimum drug and alcohol standards for client-to-staff ratios and staff qualifications and which is one of the following:

   (1)  A freestanding treatment facility licensed under 28 Pa. Code Chapter 709 (relating to standards for licensure of freestanding treatment facilities) and complying with 28 Pa. Code Chapter 709, Subchapter E (relating to standards for inpatient nonhospital activities—residential treatment and rehabilitation).

   (2)  A health care facility issued a certificate of compliance under 28 Pa. Code Chapter 711 (relating to standards for certification of treatment activities which are a part of a health care facility) and complying with 28 Pa. Code Chapter 711, Subchapter D (relating to standards for inpatient nonhospital activities—residential treatment and rehabilitation).

   The provisions of this §  89.622 issued under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); and The Insurance Company Law of 1921 (40 P. S. § §  341—391).

 Outpatient alcohol services which are included as a covered benefit under Article VI-A of the act (40 P. S. § §  908-1—908-8) shall be provided in a facility which is one of the following:

   (1)  A freestanding treatment facility licensed under 28 Pa. Code Chapter 709 (relating to standards for licensure of freestanding treatment facilities) and complying with Chapter 709 Subchapter I (relating to standards for outpatient activities).

   (2)  A psychiatric hospital licensed under 28 Pa. Code Chapter 709.

   (3)  A health care facility issued a certificate of compliance under 28 Pa. Code Chapter 711 (relating to standards for certification of treatment activities which are a part of a health care facility) and complying with 28 Pa. Code Chapter 711, Subchapter H (relating to standards for outpatient activities).

   The provisions of this §  89.623 issued under sections 206, 506, 1501 and 1502 of The Administrative Code of 1929 (71 P. S. § §  66, 186, 411 and 412); and The Insurance Company Law of 1921 (40 P. S. § §  341—391).

   The provisions of this §  89.623 adopted March 25, 1988, effective March 26, 1988, 18 Pa.B. 1360.

Subchapter J. [Reserved]

§ § 89.701—89.714. [Reserved].

   The provisions of these § §  89.721—89.738 adopted November 30, 1990, effective December 1, 1990, 20 Pa.B. 5921; reserved July 24, 1992, effective July 25, 1992, 22 Pa.B. 3841. Immediately preceding text appears at serial pages (154962) and (154989).

Subchapter K. MEDICARE SUPPLEMENT INSURANCE
MINIMUM STANDARDS

Sec.

   The provisions of these §