(a) The plan shall offer major medical expense coverage to every eligible person. Major medical expense coverage offered by the plan shall pay an eligible person's covered expenses, subject to limits on the deductible and coinsurance payments authorized under paragraph (3) of subsection (d) of this Code section, up to an annual limit of $100,000.00 and up to a lifetime limit of $500,000.00 per covered individual. The annual limit and maximum lifetime limit provided under this subsection shall not be altered by the board, and no actuarial equivalent benefit may be substituted by the board.

(b) As used in this Code section, the term "covered expenses" shall mean the scheduled benefits established for the following services and articles when determined by the board to be medically necessary:

(1) Hospital services;

(2) Professional services for the diagnosis or treatment of injuries, illnesses, or conditions, other than dental, which services are rendered by a physician or by other licensed professionals at his direction;

(3) Drugs requiring a physician's prescription;

(4) Services of a licensed skilled nursing facility for not more than 120 days during a policy year;

(5) Services of a home health agency for not more than 120 services during a policy year;

(6) Use of radium or other radioactive materials;

(7) Oxygen;

(8) Anesthetics;

(9) Prostheses other than dental;

(10) Rental or purchase of durable medical equipment, other than eyeglasses and hearing aids, for which there is no personal use in the absence of the conditions for which it is prescribed;

(11) Diagnostic X-rays and laboratory tests;

(12) Oral surgery for excision of partially or completely unerupted, impacted teeth or for the gums and tissues of the mouth when not performed in connection with the extraction or repair of teeth;

(13) Services of a licensed physical therapist;

(14) Transportation provided by a licensed ambulance service to the nearest facility qualified to treat the condition;

(15) Services for diagnosis and treatment of mental and nervous disorders; and

(16) Professional services for the diagnosis or treatment of injuries, illnesses, or conditions, which services are rendered by health care professionals licensed pursuant to Chapter 30, 35, or 39 of Title 43.

(c) Covered expenses shall not include the following:

(1) Any charge for treatment for cosmetic purposes other than surgery for the repair or treatment of an injury or a congenital bodily defect to restore normal bodily functions;

(2) Care which is primarily for custodial or domiciliary purposes;

(3) Any charge for confinement in a private room to the extent it is in excess of the institution's charge for its most common semiprivate room, unless a private room is prescribed as medically necessary by a physician;

(4) That part of any charge for services rendered or articles prescribed by a physician, dentist, or other health care personnel which exceeds the scheduled benefits established by the board or for any charge not medically necessary;

(5) Any charge for services or articles the provision of which is not within the scope of authorized practice of the institution or individual providing the services or articles;

(6) Any expense incurred prior to the effective date of coverage by the plan for the person on whose behalf the expense is incurred;

(7) Dental care except as provided in paragraph (12) of subsection (b) of this Code section;

(8) Eyeglasses and hearing aids;

(9) Illness or injury due to acts of war;

(10) Services of blood donors and any fee for failure to replace the first three pints of blood provided to an eligible person each policy year; and

(11) Personal supplies or services provided by a hospital or nursing home or any other nonmedical or nonprescribed supply or service.

(d)

(1) Separate schedules of premium rates based on age, sex, and geographical location may apply for individual risks.

(2) The board of directors shall determine the standard risk rate by calculating the average individual standard rate charged by the five largest insurers offering coverages in the state comparable to the plan coverage. In the event five insurers do not offer comparable coverage, the standard risk rate shall be established using reasonable actuarial techniques and shall reflect anticipated experience and expenses for such coverage. Initial rates for coverage under the plan shall not be less than 125 percent of rates established as applicable for individual standard risks. Subsequent rates shall be established to provide fully for the expected costs of claims, including recovery of prior losses, expenses of operation, investment income of claim reserves, and any other cost factors subject to the limitations described in this chapter; provided, however, that in no event shall plan rates exceed 150 percent of rates applicable to individual standard risks. All rates and rate schedules shall be submitted to the Commissioner for his review and evaluation and he may make recommendations to the board concerning rates for coverage under the plan.

(3) The plan coverage defined in this Code section shall provide optional deductibles of $500.00 or $1,500.00 per annum per individual and coinsurance of 20 percent, such coinsurance and deductibles in the aggregate not to exceed $2,000.00 per individual nor $4,000.00 per family per annum. The deductibles and coinsurance factors may be adjusted annually according to the Medical Component of the Consumer Price Index.

(e) Plan coverage shall exclude all charges or expenses incurred during the first six months following the effective date of coverage and charges or expenses incurred which are in excess of $10,000.00 per insured individual during the seventh through twelfth months following the effective date of coverage as to any condition which during the six-month period immediately preceding the effective date of coverage:

(1) Had manifested itself in such a manner as would cause an ordinarily prudent person to seek diagnosis, care, or treatment; or

(2) For which medical advice, care, or treatment was recommended or received.

Such preexisting condition exclusions shall be waived to the extent to which similar exclusions, if any, have been satisfied under any prior accident and sickness insurance coverage which was involuntarily terminated, provided that application for plan coverage is made not later than 30 days following such involuntary termination, and in such case, coverage under the plan shall be effective from the date on which such prior coverage was terminated.

(f)

(1) Benefits otherwise payable under plan coverage shall be reduced by all amounts paid or payable through any other accident and sickness insurance or insurance arrangement and by all hospital and medical expense benefits paid or payable under any workers' compensation coverage, automobile medical payment, or liability insurance, whether provided on the basis of fault or no-fault, and by any hospital or medical benefits paid or payable under or provided pursuant to any state or federal law or program except Medicaid.

(2) The administrator or the board of directors of the plan shall have a cause of action against an eligible person for the recovery of the amount of benefits paid which are not covered expenses. Benefits due from the plan may be reduced or refused as a setoff against any amount recoverable under this paragraph.