SENATE BILL REPORT

SB 5046

BYSenators Bottiger, Metcalf, Moore and Rasmussen

Limiting the use of riders for health and disability insurance.

Senate Committee on Financial Institutions

Senate Hearing Date(s):January 20, 1987; February 5, 1987

Majority Report:  That Substitute Senate Bill No. 5046 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Moore, Chairman; Bender, Vice Chairman; Bottiger, Fleming, McDermott, Metcalf, von Reichbauer.

Senate Staff:Stephanie Yates (786-7416)

                  February 5, 1987

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS, FEBRUARY 5, 1987

BACKGROUND:

Presently, the law neither defines nor addresses the use of riders in health insurance policies, health care service contracts, or health maintenance agreements.

SUMMARY:

Disability insurance contracts, group disability insurance contracts, health care service contracts, and health maintenance agreements must disclose the number of years a rider is in effect.  In no case may a rider be in effect for more than five years if the insured demonstrates full recovery.

A rider is a legal document that modifies coverage.

EFFECT OF PROPOSED SUBSTITUTE:

An insured, subscriber, or enrollee may apply to have a rider cancelled, if during the five-year period from the date of issuance of the rider, no health care services have been received for the condition to which the rider applies.  A physician of the carrier's choice must agree to the full medical recovery of the insured, subscriber, or enrollee.  Such agreement may be subject to review by the Insurance Commissioner.  The option to apply for cancellation must be disclosed on the face of the rider.

A rider is a legal document which modifies coverage by excluding, limiting, or reducing benefits or coverage for pre-existing diseases or physical conditions.

Fiscal Note:      none requested

Senate Committee - Testified: Mel Sorensen, Washington Physicians Service; Ida Karlin, self; Ken Bertrand, Group Health Coop.; Joan Gaumer, Blue Cross