Understanding the 12 Required Provisions in Health Insurance Policies

Health insurance policies in the United States are governed by both federal and state regulations designed to protect policyholders. One of the key regulatory frameworks is the Uniform Individual Accident and Sickness Policy Provisions Law, developed by the National Association of Insurance Commissioners (NAIC). This law mandates 12 required policy provisions that must be included in individual health insurance contracts to ensure transparency, fairness, and consistency.

Below is an overview of each of the 12 required provisions:

1. Entire Contract-  Changes

This provision states that the policy, attached riders, and the application constitute the entire contract. No changes are valid unless made in writing and signed by an authorized officer of the insurer. This protects the insured from unauthorized or verbal policy alterations.

2. Time Limit on Certain Defenses (Incontestability)

After two years from the policy’s issue date, the insurer cannot void coverage or deny a claim due to misstatements (except for fraud). This limits the insurer’s ability to contest coverage indefinitely.

3. Grace Period

A policyholder is granted a 7, 10, or 31-day grace period, depending on the payment frequency (weekly, monthly, or otherwise), to pay overdue premiums without losing coverage. This helps avoid immediate lapse due to minor payment delays.

4. Reinstatement

If a policy lapses due to non-payment, it can be reinstated with approval or automatic acceptance by the insurer. If reinstated, accidents are covered immediately, but sickness coverage may be delayed for 10 days from reinstatement.

5. Notice of Claim

The insured must notify the insurer of a claim within 20 days of a loss or as soon as reasonably possible. This ensures timely claim processing while accommodating unavoidable delays.

6. Claim Forms

Upon receiving a notice of claim, the insurer must provide claim forms to the insured within 15 days. If not, the insured may submit the claim in any written format that outlines the nature and extent of the loss.

7. Proof of Loss

Written proof of loss must be submitted to the insurer within 90 days of the loss, or as soon as reasonably possible. In any case, it must be submitted within 1 year unless legally incapacitated.

8. Time of Payment of Claims

Claims must be paid immediately upon receipt of proof of loss, except for periodic payments (such as disability benefits), which must be paid at least monthly. This ensures timely compensation for covered losses.

9. Payment of Claims

Benefits are typically paid to the insured, but in the event of death, benefits may be paid to a designated beneficiary or the insured’s estate. The insurer may also pay providers directly for medical services.

10. Physical Examination and Autopsy

The insurer has the right to require a physical examination or autopsy, where not prohibited by law, at its own expense, to verify claims. This provision helps verify medical claims’ validity.

11. Legal Actions

Legal actions to recover under a policy cannot be brought within 60 days after submitting proof of loss and must be filed within 3 years (or the time limit defined by state law). This sets a fair timeframe for dispute resolution.

12. Change of Beneficiary

The insured can change the beneficiary unless the designation is irrevocable. This provision ensures policyholders retain control over who receives benefits.