17:48-6 Contracts; certificates; contents.

6. Every individual contract made by a corporation subject to the provisions of this chapter to furnish services to a subscriber shall provide for the furnishing of services for a period of 12 months, and no contract shall be made providing for the inception of such services at a date later than 1 year after the actual date of the making of such contract. Any such contract may provide that it shall be automatically renewed from year to year unless there shall have been at least 30 days' prior written notice of termination by either the subscriber or the corporation. In the absence of fraud or material misrepresentation in the application for a contract or for reinstatement, no contract with an individual subscriber shall be terminated by the corporation unless all contracts of the same type, in the same group or covering the same classification of persons are terminated under the same conditions.

No contract between any such corporation and a subscriber shall entitle more than one person to services, except that a contract issued as a family contract may provide that services will be furnished to a husband and wife, or husband, wife and their dependent child or children, or the subscriber and his (or her) dependent child or children. Adult dependent(s) of a subscriber may also be included for coverage under the contract of such subscriber.

Whenever, pursuant to the provisions of a subscription certificate or group contract issued by a corporation, the former spouse of a named subscriber under such a certificate or contract is no longer entitled to coverage as an eligible dependent by reason of divorce, separate coverage for such former spouse shall be made available by the corporation on an individual non-group basis under the following conditions:

(a) Application for such non-group coverage shall be made to the corporation by or on behalf of such former spouse no later than 31 days following the date his or her coverage under the prior certificate or contract terminated.

(b) No new evidence of insurability shall be required in connection with the application for such non-group coverage but any health exception, limitation or exclusion applicable to said former spouse under the prior coverage may, at the option of the corporation, be carried over to the new non-group coverage.

(c) The effective date of the new coverage shall be the day following the date on which such former spouse's coverage under the prior certificate or contract terminated.

(d) The benefits provided under the non-group coverage issued to such former spouse shall be at least equal to the basic benefits provided in contracts then being issued by the corporation to new non-group applicants of the same age and family status.

Family type contracts shall provide that the services applicable for children shall be payable with respect to a newly-born child of the subscriber, or his or her spouse from the moment of birth. The services for newly-born children shall consist of coverage of injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and abnormalities. If a subscription payment is required to provide services for a child, the contract may require that notification of birth of a newly-born child and the required payment must be furnished to the service corporation within 60 days after the date of birth in order to have the coverage continue beyond such 60-day period.

Nonfamily type contracts which provide for services to the subscriber but not to family members or dependents of that subscriber, shall also provide services to newly-born children of the subscriber which shall commence with the moment of birth of each child and shall consist of coverage of injury or sickness including the necessary care and treatment of medically diagnosed congenital defects and abnormalities, provided that application therefor and payment of the required subscription amount are made to include in said contract the coverage described in the preceding paragraph of this section within 60 days from the date of birth of a newborn child.

A contract under which coverage of a dependent of a subscriber terminates at a specified age shall, with respect to an unmarried child, covered by the contract prior to attainment of age 19, who is incapable of self-sustaining employment by reason of an intellectual disability or physical handicap and who became so incapable prior to attainment of age 19 and who is chiefly dependent upon such subscriber for support and maintenance, not so terminate while the contract remains in force and the dependent remains in such condition, if the subscriber has within 31 days of such dependent's attainment of the termination age submitted proof of such dependent's incapacity as described herein. The foregoing provisions of this paragraph shall not apply retrospectively or prospectively to require a hospital service corporation to insure as a covered dependent any child with an intellectual disability or physically handicapped child of the applicant where the contract is underwritten on evidence of insurability based on health factors required to be set forth in the application. In such cases any contract heretofore or hereafter issued may specifically exclude such child with an intellectual disability or physically handicapped child from coverage.

Every individual contract entered into by any such corporation with any subscriber thereto shall be in writing and a certificate stating the terms and conditions thereof shall be furnished to the subscriber to be kept by him. No such certificate form shall be made, issued or delivered in this State unless it contains the following provisions:

(a) A statement of the contract rate, or amount payable to the corporation by or on behalf of the subscriber for the original quarter-annual period of coverage and of the time or times at which, and the manner in which, such amount is to be paid; and a provision requiring 30 days' written notice to the subscriber before any change in the contract, including a change in the amount of subscription rate, shall take effect;

(b) A statement of the nature of the services to be furnished and the period during which they will be furnished; and if there are any services to be excepted, a detailed statement of such exceptions printed as hereinafter specified;

(c) A statement of the terms and conditions, if any, upon which the contract may be amended on approval of the commissioner or canceled or otherwise terminated at the option of either party. Any notice to the subscriber shall be effective if sent by mail to the subscriber's address as shown at the time on the plan's record, except that, in the case of persons for whom payment of the contract is made through a remitting agent, any such notice to the subscriber shall also be effective if a personalized notice is sent to the remitting agent for delivery to the subscriber, in which case it shall be the responsibility of the remitting agent to make such delivery. The notice to the subscriber as herein required shall be sent at least 30 days before the amendment, cancellation or termination of the contract takes effect. Any rider or endorsement accompanying such notice, and amending the rates or other provisions of the contract, shall be deemed to be a part of the contract as of the effective date of such rider or endorsement;

(d) A statement that the contract includes the endorsements thereon and attached papers, if any, and contains the entire contract for services;

(e) A statement that no statement by the subscriber in his application for a contract shall void the contract or be used in any legal proceeding thereunder, unless such application or an exact copy thereof is included in or attached to such contract, and that no agent or representative of such corporation, other than an officer or officers designated therein, is authorized to change the contract or waive any of its provisions;

(f) A statement that if the subscriber defaults in making any payment under the contract, the subsequent acceptance of a payment by the corporation or by one of its duly authorized agents shall reinstate the contract, but with respect to sickness and injury may cover such sickness as may be first manifested more than 10 days after the date of such acceptance;

(g) A statement of the period of grace which will be allowed the subscriber for making any payment due under the contract. Such period shall be not less than 10 days.

In every such contract made, issued or delivered in this State:

(a) All printed portions shall be plainly printed in type of which the face is not smaller than 10 point;

(b) There shall be a brief description of the contract on its first page and on its filing back in type of which the face is not smaller than 14 point;

(c) The exceptions of the contract shall appear with the same prominence as the benefits to which they apply; and

(d) If the contract contains any provision purporting to make any portion of the articles, constitution or bylaws of the corporation a part of the contract, such portion shall be set forth in full.

L.1938, c.366, s.6; amended 1956, c.142; 1964, c.104, s.1; 1966, c.236, ss.1,3; 1970, c.110; 1975, c.109, s.1; 1980, c.113, s.3; 2010, c.50, s.3; 2017, c.361, s.1.