Oregon Statute | Act | Code |Title 56 Insurance| US Code - US Statute

In addition to all other powers of the Director of
the Department of Consumer and Business Services with respect thereto,
the director may issue rules with respect to policy forms and health
benefit plan forms described in ORS 742.005 (6)(a) and (b):

(1) Establishing minimum benefit standards;

(2) Requiring the ratio of benefits to premiums to be not less than
a specified percentage in order to be considered reasonable, and
requiring the periodic filing of data that will demonstrate the insurer’s
compliance; and

(3) Establishing requirements intended to discourage duplication or
overlapping of coverage and replacement, without regard to the advantage
to policyholders, of existing policies by new policies. [1979 c.857 §2;
1997 c.96 §1; 1999 c.987 §4a](1) The
Director of the Department of Consumer and Business Services shall adopt
by rule requirements for disclosure by group and individual health
insurers to individual and group health insurance policyholders the
difference between coverage under the existing policy and coverage being
offered to replace that coverage.

(2) The provisions of this section do not apply to disability
income insurance.

(3) The director shall adopt by rule requirements for
nonduplication and replacement of major medical, Medicare supplement,
long term care and special illness policies for applicants 65 years of
age and older. The insurance producer shall offer to compare for any
applicants 65 years of age and older the applicant’s existing policy or
policies and coverage being offered to replace or supplement the
applicant’s existing coverage. [1989 c.474 §2; 2003 c.364 §106](1) All credit life and credit health
insurance policies subject to ORS 743.371 to 743.380, and all
certificates of insurance, notices of proposed insurance, applications
for insurance, indorsements and riders used in connection with such kinds
of policies, delivered or issued for delivery in this state and the
schedules of premium rates pertaining thereto shall be filed with the
Director of the Department of Consumer and Business Services. Such forms
are subject to approval, disapproval or withdrawal of approval by the
director as provided in ORS 742.003, 742.005 and 742.007.

(2) An insurer may revise the schedules of premium rates from time
to time and shall file the revised schedules with the director. An
insurer may not issue any credit life or credit health insurance policy
for which the premium rate exceeds that determined by the schedules of
the insurer as then on file with the director.

(3) If a group policy of credit life or credit health insurance has
been or is delivered in another state, the insurer shall file only the
group certificate, the individual application and the notice of proposed
insurance delivered or issued for delivery in this state as specified in
ORS 743.377 (2) and (4). The director shall approve the group
certificate, the individual application and the notice of proposed
insurance if the forms conform with the requirements specified in ORS
743.377 (2) and (4) and the schedules of premium rates applicable to the
insurance evidenced by the certificate or notice are not in excess of the
insurer’s schedules of premium rates filed with the director. [Formerly
739.595; 1969 c.336 §12; 1971 c.231 §20; 2005 c.185 §3] Except for group
life and health insurance, and except as provided in ORS 743.015, every
insurer shall file with the Director of the Department of Consumer and
Business Services all schedules and tables of premium rates for life and
health insurance to be used on risks in this state, and shall file any
amendments to or corrections of such schedules and tables. [1967 c.359
§340]

(1) Any individual of competent legal capacity may procure or effect an
insurance policy on the individual’s own life or body for the benefit of
any person. However, except as provided in ORS 743.030, no person shall
procure or cause to be procured any insurance policy upon the life or
body of another unless the benefits under such policy are payable to the
individual insured or the personal representatives of the individual, or
to a person having, at the time such policy was entered into, an
insurable interest in the individual insured.

(2) If the beneficiary, assignee or other payee under any policy
made in violation of this section receives from the insurer any benefits
thereunder accruing upon the death, disablement or injury of the
individual insured, the individual insured or the individual’s executor
or administrator, as the case may be, may maintain an action to recover
such benefits from the person so receiving them.

(3) An insurer shall be entitled to rely upon all statements,
declarations and representations made by an applicant for insurance
relative to the matter of insurable interest. No insurer shall incur
legal liability, except as set forth in the policy, by virtue of any
untrue statements, declarations or representations so relied upon in good
faith by the insurer.

(4) This section does not apply to annuity policies. [1967 c.359
§342]No life or health insurance policy upon an
individual, except a policy of group life insurance or of group or
blanket health insurance, shall be made or effectuated unless at the time
of the making of the policy the individual insured, being of competent
legal capacity to contract, applies therefor or has consented thereto in
writing, except in the following cases:

(1) A spouse may effectuate such insurance upon the other spouse.

(2) Any person having an insurable interest in the life of a minor,
or any person upon whom a minor is dependent for support and maintenance,
may effectuate insurance upon the life of or pertaining to such minor.

(3) Family policies may be issued insuring any two or more members
of a family on an application signed by either parent, a stepparent, or
by a husband or wife.

(4) A person may effectuate insurance that provides for the final
expenses of an adult who is dependent upon the person for support and
maintenance. [1967 c.359 §342a; 1991 c.182 §2] The Director of the
Department of Consumer and Business Services shall prescribe uniform
health insurance claim forms which shall be used by all insurers
transacting health insurance in this state and by all state agencies that
require health insurance claim forms for their records. [1973 c.109 §2] (1) Life insurance
policies may be effected although the person paying the consideration has
no insurable interest in the life of the person insured if a charitable,
benevolent, educational or religious institution is designated
irrevocably as the beneficiary.

(2) In making such policies the person paying the premium shall
make and sign the application therefor as owner. The application also
must be signed by the person whose life is to be insured. Such a policy
shall be valid and binding between and among all of the parties thereto.

(3) The person paying the consideration for such insurance shall
have all rights conferred by the policy to loan value at any time during
the premium-paying period, but not at maturity, notwithstanding such
person has no insurable interest in the life of the person insured.
[Formerly 739.420] (1)
An application for a life insurance policy may not provide for
alterations by any person other than the applicant in either the
application or the policy to be issued thereon with respect to the amount
of insurance, classification of risk, plan of insurance or the benefits
unless the application contains a statement that no such changes are
effective until approved in writing by the applicant.

(2) No alteration of any written application for any health
insurance policy shall be made by any person other than the applicant
without the written consent of the applicant, except that insertions may
be made by the insurer, for administrative purposes only, in such manner
as to indicate clearly that such insertions are not to be ascribed to the
applicant. [1967 c.359 §346] Whenever the proceeds of or
payments under a life or health insurance policy become payable in
accordance with the terms of such policy, or the exercise of any right or
privilege under such policy, and the insurer makes payment in accordance
with the terms of the policy or in accordance with any written assignment
of the policy, the person so designated as being entitled to the proceeds
or payments shall be entitled to receive them and to give full
acquittance therefor, and such payments shall fully discharge the insurer
from all claims under the policy unless, before payment is made, the
insurer has received at its home office written notice by or on behalf of
some other person that such other person claims to be entitled to such
proceeds or payments or some interest in the policy. [Formerly 743.084] A policy may be assignable or not
assignable, as provided by its terms. Subject to its terms relating to
assignability, any life or health insurance policy, under the terms of
which the beneficiary may be changed upon the sole request of the insured
or owner, may be assigned either by pledge or transfer of title, by an
assignment executed by the insured or owner alone and delivered to the
insurer, whether or not the pledgee or assignee is the insurer. Any such
assignment shall entitle the insurer to deal with the assignee as the
owner or pledgee of the policy in accordance with the terms of the
assignment, until the insurer has received at its home office written
notice of termination of the assignment or pledge, or written notice by
or on behalf of some other person claiming some interest in the policy in
conflict with the assignment. [Formerly 743.087](1) When a policy of insurance is effected by any person
on any person’s own life or on another life in favor of some person other
than that person having an insurable interest in the life insured, the
lawful beneficiary thereof, other than that person or that person’s legal
representative, is entitled to its proceeds against the creditors or
representatives of the person effecting the policy.

(2) The person to whom a policy of life insurance is made payable
may maintain an action thereon in the person’s own name.

(3) A policy of life insurance payable to a beneficiary other than
the estate of the insured, having by its terms a cash surrender value
available to the insured, is exempt from execution issued from any court
in this state and in the event of bankruptcy of such insured is exempt
from all demands in legal proceeding under such bankruptcy.

(4) Subject to the statute of limitations, the amount of any
premiums paid in fraud of creditors for such insurance, with interest
thereon, shall inure to their benefit from the proceeds of the policy.
The insurer issuing the policy shall be discharged of all liability
thereon by payment of its proceeds in accordance with its terms unless,
before such payment, the insurer has received at its home office written
notice by or in behalf of some creditor, with specifications of the
amount claimed, claiming to recover for certain premiums paid in fraud of
creditors.

(5) The insured under any policy within this section shall not be
denied the right to change the beneficiary when such right is expressly
reserved in the policy.

(6) This section does not apply to annuity policies. [Formerly
739.405 and then 743.099] (1) A policy
of group life insurance or the proceeds thereof payable to a person or
persons other than the individual insured or the individual’s estate
shall be exempt from debts and claims of creditors or representatives of
the individual insured and, in the event of bankruptcy of the individual
insured, from all demands in legal proceedings under such bankruptcy.

(2) The provisions of subsection (1) of this section do not apply
to group life insurance issued to a creditor covering the creditor’s
debtors to the extent that such proceeds are applied to payment of the
obligation for the purpose of which the insurance was so issued.
[Formerly 743.102](1) The benefits, rights, privileges and options which are due or
prospectively due an annuitant under any annuity policy issued before, on
or after June 8, 1967, shall not be subject to execution, nor shall the
annuitant be compelled to exercise any such rights, powers or options,
nor shall creditors be allowed to interfere with or terminate the policy,
except:

(a) As to amounts paid for or as premium on any such annuity with
intent to defraud creditors, with interest thereon, and of which the
creditor has given the insurer written notice at its home office prior to
the making of the payments to the annuitant out of which the creditor
seeks to recover. Any such notice shall specify the amount claimed or
such facts as will enable the insurer to ascertain such amount, and shall
set forth such facts as will enable the insurer to ascertain the annuity
policy, the annuitant and the payments sought to be avoided on the ground
of fraud.

(b) The total exemption of benefits presently due and payable to
any annuitant periodically or at stated times under all annuity policies
under which the person is an annuitant shall not at any time exceed $500
per month for the length of time represented by such installments. Such
periodic payments in excess of $500 per month shall be subject to
garnishee execution to the same extent as are wages and salaries.

(c) If the total benefits presently due and payable to any
annuitant under all annuity policies under which the person is an
annuitant shall at any time exceed payment at the rate of $500 per month,
the court may order such annuitant to pay to a judgment creditor or apply
on the judgment, in installments, the portion of such excess benefits as
to the court may appear just and proper, after due regard for the
reasonable requirements of the judgment debtor and family, if dependent
upon the judgment debtor, as well as any payments required to be made by
the annuitant to other creditors under prior court orders.

(2) If the policy so provides, the benefits, rights, privileges or
options accruing under the policy to a beneficiary or assignee shall not
be transferable nor subject to commutation, and if the benefits are
payable periodically or at stated times, the same exemptions and
exceptions contained in this section for the annuitant shall apply with
respect to such beneficiary or assignee. [Formerly 743.105; 1991 c.182 §3] Except as may
otherwise be expressly provided by the policy, the proceeds or avails of
all health insurance policies and of provisions providing benefits on
account of the insured’s disability which are supplemental to life
insurance policies, issued before, on or after June 8, 1967, shall be
exempt from all liability for any debt of the insured, and from any debt
of the beneficiary existing at the time the proceeds are made available
for the use of the beneficiary. [Formerly 743.108]A life insurance policy or
health insurance policy, whether group or individual, that contains
provisions providing benefits in case of death or dismemberment by
accident shall not require that the death or dismemberment occur less
than 180 days after the date of the accident in order for benefits to be
paid under the policy. [1991 c.182 §8]POLICY LANGUAGE SIMPLIFICATIONORS 743.100 to 743.109 may be cited as the
Life and Health Insurance Policy Language Simplification Act. [Formerly
743.350] (1) The purpose of the Life and Health Insurance
Policy Language Simplification Act is to establish minimum standards for
language used in policies and certificates of life insurance and health
insurance delivered or issued for delivery in this state in order to
facilitate ease of reading.

(2) ORS 743.100 to 743.109 is not intended to increase the risk
assumed by insurers or to supersede their obligation to comply with the
substance of other Insurance Code provisions applicable to insurance
policies. ORS 743.100 to 743.109 is not intended to impede flexibility
and innovation in the development of policy forms or content or to lead
to the standardization of policy forms or content. [Formerly 743.353] As used in ORS
743.100 to 743.109, “policy” has the meaning given in ORS 731.122 and, in
addition, includes a certificate issued pursuant to a group insurance
policy delivered or issued for delivery in this state. [Formerly 743.357](1) ORS 743.100 to 743.109
apply to all policies delivered or issued for delivery in this state,
except:

(a) Any policy that is a security subject to federal jurisdiction.

(b) Any group policy covering a group of 1,000 or more lives at
date of issue, other than a group credit life insurance policy or a group
credit health insurance policy. However, this paragraph shall not exempt
any certificate issued pursuant to a group policy.

(c) Any group annuity contract that serves as a funding vehicle for
a pension, profit-sharing or deferred compensation plan.

(d) Any form used in connection with, as a conversion from, as an
addition to, or, pursuant to a contractual provision, in exchange for, a
policy delivered or issued for delivery on a form approved or permitted
to be issued prior to the date the form must be approved under section 9,
chapter 708, Oregon Laws 1979.

(e) The renewal of a policy delivered or issued for delivery prior
to the date the policy form must be approved under section 9, chapter
708, Oregon Laws 1979.

(f) Any certificate issued pursuant to a group policy not delivered
or issued for delivery in this state.

(2) A non-English language policy will be deemed to comply with ORS
743.106 if the insurer certifies that the policy is translated from an
English language policy that complies with ORS 743.106. [Formerly 743.362](1) No policy form shall be delivered or issued
for delivery in this state unless:

(a) The policy text achieves a score of 40 or more on the Flesch
reading ease test, or an equivalent score on any comparable test as
provided in subsection (3) of this section;

(b) The policy, except for specification pages, schedules and
tables is printed in not less than 10-point type, one point leaded;

(c) The style, arrangement and overall appearance of the policy
give no undue prominence to any portion of the text, including the text
of any indorsements or riders; and

(d) The policy contains a table of contents or an index of the
principal sections of the policy, if the policy has more than 3,000 words
of text printed on three or less pages, or regardless of the number of
words if the policy has more than three pages.

(2) For the purposes of this section, a Flesch reading ease test
score shall be calculated as follows:

(a) For policy forms containing 10,000 words or less of text, the
entire form shall be analyzed. For policy forms containing more than
10,000 words, two 200-word samples per page may be analyzed instead of
the entire form. The samples shall be separated by at least 20 printed
lines.

(b) The number of words and sentences in the text shall be counted
and the total number of words divided by the total number of sentences.
The figure obtained shall be multiplied by a factor of 1.015.

(c) The total number of syllables in the text shall be counted and
divided by the total number of words. The figure obtained shall be
multiplied by a factor of 84.6.

(d) The sum of the figures computed under paragraphs (b) and (c) of
this subsection subtracted from 206.835 equals the Flesch reading ease
test score for the policy form.

(e) For purposes of paragraphs (b) and (c) of this subsection, the
following procedures shall be used:

(A) A contraction, hyphenated word or numbers and letters, when
separated by spaces, shall be counted as one word.

(B) A unit of words ending with a period, semicolon or colon shall
be counted as a sentence.

(C) A “syllable” means a unit of spoken language consisting of one
or more letters of a word as divided by an accepted dictionary. If the
dictionary shows two or more equally acceptable pronunciations of a word,
the pronunciation containing fewer syllables may be used.

(f) As used in this section, “text” includes all written matter
except the following:

(A) The name and address of the insurer; the name, number or title
of the policy; the table of contents or index; captions and subcaptions;
specification pages; schedules or tables; and

(B) Policy language drafted to conform to the requirements of any
state or federal law, regulation or agency interpretation; policy
language required by any collectively bargained agreement; medical
terminology; and words that are defined in the policy. However, the
insurer shall identify the language or terminology excepted by this
subparagraph and shall certify in writing that the language or
terminology is entitled to be excepted by this subparagraph.

(3) Any other reading test may be approved by the Director of the
Department of Consumer and Business Services as an alternative to the
Flesch reading ease test if it is comparable in result to the Flesch
reading ease test.

(4) Each policy filing shall be accompanied by a certificate signed
by an officer of the insurer stating that the policy meets the minimum
required reading ease score on the test used, or stating that the score
is lower than the minimum required but should be authorized in accordance
with ORS 743.107. To confirm the accuracy of a certification, the
director may require the submission of further information.

(5) At the option of the insurer, riders, indorsements,
applications and other forms made a part of the policy may be scored as
separate forms or as part of the policy with which they may be used.
[Formerly 743.365] The Director
of the Department of Consumer and Business Services may authorize a lower
score than the Flesch reading ease test score required by ORS 743.106
when, in the director’s sole discretion, the director finds that a lower
required score:

(1) Will provide a more accurate reflection of the readability of a
policy form;

(2) Is warranted by the nature of a particular policy form or type
or class of policy forms; or

(3) Is caused by certain policy language drafted to conform to the
requirements of any state law, regulation or agency interpretation.
[Formerly 743.368]A policy form meeting the
requirements of ORS 743.106 shall not be disapproved because of other
provisions of the Insurance Code that specify the content of policies, if
the policy form provides the policyholders and claimants protection not
less favorable than they would be entitled to under such provisions.
[Formerly 743.370]INDIVIDUAL LIFE INSURANCE AND ANNUITIES(Generally) This section and
ORS 743.153 and 743.156 apply only to policies of life insurance, other
than group life insurance. [1967 c.359 §372] A life insurance policy shall
contain a provision stating the amount of benefits payable or the method
to be used or procedure to be followed in determining such amount, the
manner of payment and the consideration therefor. [Formerly 739.310] (1) A life insurance
policy or a rider to a life insurance policy may provide for the
acceleration of death benefits as part of the life insurance coverage.
For purposes of this section, accelerated death benefits are benefits
that:

(a) Are payable to the policy owner or certificate holder during
the lifetime of the insured, in anticipation of death or upon the
occurrence of specified life-threatening or catastrophic conditions as
defined by the policy or rider;

(b) Reduce the death benefit otherwise payable under the life
insurance policy; and

(c) Are payable upon the occurrence of a single qualifying event
that results in the payment of a benefit amount fixed at the time of
acceleration.

(2) For purposes of this section, a qualifying event is one or more
of the following:

(a) A medical condition that will result in a drastically limited
life span, as specified in the policy or rider, not exceeding 24 months.

(b) A medical condition that has required or requires extraordinary
medical intervention, such as a major organ transplant or continuous
artificial life support, without which the insured would die.

(c) Any condition that usually requires continuous confinement in
an eligible institution, as defined in the policy or rider, if the
insured is expected to remain there for the rest of the insured’s life.

(d) A medical condition that in the absence of extensive or
extraordinary medical treatment will result in a drastically limited life
span. Such conditions may include but are not limited to one or more of
the following:

(A) Coronary artery disease resulting in an acute infarction or
requiring surgery;

(B) Permanent neurological deficit resulting from cerebral vascular
accident;

(C) End-stage renal failure; or

(D) Acquired Immune Deficiency Syndrome.

(e) Any other event determined by the Director of the Department of
Consumer and Business Services to be life-threatening.

(3) A policy or rider that provides for the acceleration of death
benefits:

(a) Must also provide for the continuation of the policy as to the
amount of the death benefit that is not accelerated.

(b) Must allow the policy owner or the certificate holder to
request payment at any time during the period that the qualifying event
continues.

(4) A policy or rider that provides for the acceleration of death
benefits under this section shall not be described or marketed by an
insurer as long term care insurance or as providing long term care
benefits.

(5) The director shall adopt rules establishing minimum benefits,
criteria for the payment of accelerated benefits, disclosure requirements
and actuarial standards. [1991 c.571 §2; 1993 c.17 §1] A life insurance policy shall contain
a provision separately stating the premium for each benefit provision of
the policy for which such separate statement is necessary, as determined
by the Director of the Department of Consumer and Business Services, to
give adequate disclosure of the terms of the policy. [1967 c.359 §374](Individual Life Insurance Policies)ORS 743.162 to 743.243
apply only to policies of life insurance other than group life insurance,
and do not apply to annuity or pure endowment policies. Such sections
apply to such policies that are policies of variable life insurance,
except to the extent the provisions of such sections are obviously
inapplicable to variable life insurance or are in conflict with other
provisions of such sections that are expressly applicable to variable
life insurance. [1967 c.359 §375; 1973 c.435 §16] A life insurance policy shall contain a
provision relating to the time and place of payment of premium. [1967
c.359 §376] A life insurance policy shall contain a
provision that a grace period of 30 days, or, at the option of the
insurer, of one month of not less than 30 days, or of four weeks in the
case of industrial life insurance policies the premiums for which are
payable more frequently than monthly, shall be allowed within which the
payment of any premium after the first may be made, during which period
of grace the policy shall continue in full force. The insurer may impose
an interest charge not in excess of six percent per annum for the number
of days of grace elapsing before the payment of the premium. If a claim
arises under the policy during such period of grace the amount of any
premium due or overdue, together with interest and any deferred
installment of the annual premium, may be deducted from the policy
proceeds. [1967 c.359 §377] (1) A life insurance policy shall contain
a provision that the policy shall be incontestable after it has been in
force for two years from its date of issue during the lifetime of the
insured, except for nonpayment of premiums. At the option of the insurer
the two-year limit within which the policy may be contested shall not
apply to the provisions for benefits in the event of total and permanent
disability and provisions which grant additional insurance specifically
against death by accident.

(2) A provision in a life insurance policy providing that such
policy shall be incontestable after a specified period shall preclude
only a contest of the validity of the policy, and shall not preclude the
assertion at any time of defenses based upon provisions in the policy
which exclude or restrict coverage, whether or not such restrictions or
exclusions are excepted in such provision. [1967 c.359 §378](1) A reinstated policy of life insurance may be contested
on account of fraud or misrepresentation of facts material to the
reinstatement only for the same period following reinstatement, and with
the same conditions and exceptions, as the policy provides with respect
to contestability after original issuance.

(2) When any policy of life insurance is reinstated, such
reinstated policy may exclude or restrict liability to the same extent
that such liability could have been or was excluded or restricted when
the policy was originally issued, and such exclusion or restriction shall
be effective from the date of reinstatement. [1967 c.359 §379] A life insurance policy shall contain a
provision that the policy constitutes the entire contract between the
parties. [1967 c.359 §380] A life insurance policy shall
contain a provision that all statements made by or on behalf of the
insured shall, in the absence of fraud, be deemed representations and not
warranties, and that no such statement shall be used in defense of a
claim under the policy unless contained in a written application and
unless a copy of such application is indorsed upon or attached to the
policy when issued. [1967 c.359 §381] A life insurance policy shall contain
a provision that if it is found at any time before final settlement under
the policy that the age of the insured or of any other person whose age
is considered in determining the premium or benefit accruing under the
policy has been misstated, the amount payable or benefit accruing under
the policy shall be such as the premium would have purchased at the
correct age or ages, or the premium may be adjusted and credit given to
the insured or to the insurer, according to the insurer’s published rate
at date of issue. [1967 c.359 §382] (1) A life insurance policy other than a
nonparticipating policy shall contain a provision that the policy shall
participate in the divisible surplus of the insurer annually, beginning
not later than the end of the third policy year. Any policy containing
provision for participation beginning at the end of the first or the
second policy year may provide that dividends for either or both of such
years shall be paid subject to the payment of the premium for the next
ensuing year. The owner of the policy shall have the right each year to
have the dividend arising from such participation paid in cash, and if
the policy provides other dividend options, it shall further provide
which dividend option is effective if the owner does not elect one of
such options on or before the expiration of the period of grace allowed
for the payment of the premium.

(2) In participating industrial life insurance policies, in lieu of
the provision required in subsection (1) of this section, there shall be
a provision that, beginning not later than the end of the fifth policy
year, the policy shall participate annually in the divisible surplus in
the manner set forth in the policy.

(3) This section does not apply to any form of paid-up insurance or
temporary insurance or endowment insurance issued or granted in exchange
for lapsed or surrendered policies. [1967 c.359 §383] (1) A life insurance policy shall contain a
provision that after three full years’ premiums have been paid and after
the policy has a cash surrender value and while no premium is in default
beyond the grace period for payment, the insurer will advance, on proper
assignment or pledge of the policy and on the sole security thereof, an
amount equal to or, at the option of the party entitled thereto, less
than the loan value of the policy, at a rate of interest not exceeding
the maximum rate permitted by the policy loan provision. The interest
rate provision shall comply with ORS 743.187. The loan value of the
policy shall be equal to the cash surrender value at the end of the then
current policy year, less any existing indebtedness not already deducted
in determining such cash surrender value including any interest then
accrued but not due, any unpaid balance of the premium for the current
policy year, and interest on the loan to the end of the current policy
year. The policy may also provide that:

(a) Interest on any indebtedness that is 90 or more days past due
shall be added to the existing indebtedness and shall bear interest at
the rate applicable to the existing indebtedness; and

(b) Except as provided in ORS 743.187, if the total indebtedness on
the policy, including interest due or accrued, equals or exceeds the
amount of the loan value of the policy, the policy shall terminate and
become void upon 30 days’ notice by the insurer mailed to the last-known
address of the insured or other policy owner and of any assignee of
record at the home office of the insurer.

(2) The policy shall reserve to the insurer the right to defer the
granting of a loan, other than for the payment of any premium to the
insurer, for six months after application therefor.

(3) The policy, at the insurer’s option, may provide for automatic
premium loan.

(4) This section does not apply to term insurance policies or term
insurance benefits provided by rider or supplemental policy provisions,
or to industrial life insurance policies. [1967 c.359 §384; 1975 c.575
§1; 1981 c.412 §18; 2001 c.318 §12](1) Except as provided otherwise in this section, the maximum
interest rate in the policy loan provision required by ORS 743.186 shall
be eight percent per year. The insurer may include in the policy loan
provision, in lieu of a fixed maximum interest rate, a provision for an
adjustable interest rate. The adjustable interest rate provision must
comply with this section. A limitation on interest rates under state law,
other than a limitation contained in the Insurance Code, shall not apply
to interest rates for life insurance policy loans unless the limitation
specifically applies to life insurance policy loans.

(2) The adjustable interest rate provision:

(a) Shall state in substance that in accordance with the policy and
the law of the jurisdiction in which the policy is delivered, the insurer
will establish from time to time the interest rate for an existing or a
new policy loan; and

(b) Shall set forth the dates on which the insurer will determine
policy loan interest rates. These determination dates shall be at regular
intervals no longer than one year and no shorter than three months.

(3) The maximum interest rate permitted for a policy loan under the
adjustable interest rate provision shall be established by the provision
as the higher of:

(a) The interest rate used to calculate cash surrender values under
the policy during the same period, plus one percent; and

(b) The Moody’s Corporate Bond Yield Average - Monthly Average
Corporates, as published by Moody’s Investors Service, Inc., for the
calendar month which precedes by two months the month in which the
determination date for the policy loan interest rate falls. However, if
the Moody’s Corporate Bond Yield Average - Monthly Average Corporates is
no longer published by Moody’s Investors Service, Inc., or if the
National Association of Insurance Commissioners determines that the
Moody’s Corporate Bond Yield Average - Monthly Average Corporates is no
longer an appropriate rate for this purpose, the Director of the
Department of Consumer and Business Services by rule may establish the
method of determining the rate under this paragraph. The director’s rule,
to the maximum extent reasonable, shall be consistent with the pertinent
actions of the National Association of Insurance Commissioners.

(4) On any date specified in the adjustable interest rate provision
of the policy for determining the policy loan interest rate:

(a) The insurer may increase the existing rate if the maximum rate
permitted by the provision exceeds the existing rate by at least one-half
of one percent. The increase shall not be less than one-half of one
percent or more than the amount by which the permitted maximum rate
exceeds the existing rate; and

(b) The insurer shall decrease the existing rate if the existing
rate exceeds the maximum rate permitted by the provision by at least
one-half of one percent. The decrease shall not be less than the amount
by which the existing rate exceeds the permitted maximum rate.

(5) The insurer under the adjustable interest rate provision shall
give notice of the policy loan interest rate and related matters to the
policy owner and all other persons entitled to notice by the policy, as
follows:

(a) In the case of a loan other than for payment of a premium to
the insurer, the insurer shall give notice of the initial interest rate
on the loan when the loan is made.

(b) In the case of a loan for payment of a premium to the insurer,
the insurer shall give notice of the initial interest rate on the loan as
soon as reasonably practicable after the loan is made. However, the
insurer need not give this notice when an additional premium loan is made
at the same interest rate then applicable to an existing premium loan to
the borrower.

(c) In the case of a policy with an outstanding loan, the insurer
shall give notice of each increase in the loan interest rate reasonably
in advance of the increase.

(d) Notices given under this subsection shall include in substance
the information required by subsection (2) of this section.

(6) Notwithstanding ORS 743.186, a policy shall not terminate in a
particular policy year solely because a change in the policy loan
interest rate during that year caused the total indebtedness under the
policy to reach the policy loan value. The policy shall remain in force
during that year unless and until it would have terminated in the absence
of any policy loan interest rate change during that year. [1981 c.412 §20] A life insurance policy shall contain a
provision that if in the event of a default in premium payments the value
of the policy has been applied to provide a paid-up nonforfeiture
benefit, and if this benefit is currently in force and the original
policy has not been surrendered to the insurer and canceled, and if a
period of not more than three years has elapsed since the default (or two
years in the case of an industrial life insurance policy), the policy may
be reinstated upon furnishing evidence of insurability satisfactory to
the insurer and payment of arrears of premiums and payment or
reinstatement of any other indebtedness to the insurer under the policy,
with interest at a rate not exceeding the maximum permitted by the policy
loan provision. [1967 c.359 §385; 1981 c.412 §21](1) A life insurance policy shall contain a provision that when
the policy becomes a claim by the death of the insured, settlement shall
be made upon receipt of due proof of death and of the interest of the
claimant.

(2) If the insurer fails to pay the proceeds of or make payment
under the policy within 30 days after receipt of due proof of death and
of the interest of the claimant, and if the beneficiary elects to receive
a lump sum settlement, the insurer shall pay interest on any money due
and unpaid after expiration of the 30-day period. The insurer shall
compute the interest from the date of the insured’s death until the date
of payment, at a rate not lower than that paid by the insurer on other
withdrawable policy owner funds. At the end of the 30-day period, the
insurer shall notify the named beneficiary or beneficiaries at their
last-known address that interest at the applicable rate will be paid on
the lump sum proceeds from the date of death of the insured.

(3) Nothing in this section shall be construed to allow an insurer
to withhold payment of money payable under a life insurance policy to any
named beneficiary for a period longer than reasonably necessary to
transmit the payment. [1967 c.359 §386; 1983 c.754 §2] A life insurance policy shall contain
a table showing the amounts of installments, if any, by which its
proceeds may be payable. [1967 c.359 §387] A life insurance policy shall contain a title
briefly and correctly describing the policy. If an industrial life
insurance policy, it shall have the words “industrial policy” imprinted
on the face thereof as part of the descriptive matter. [1967 c.359 §388] An industrial life
insurance policy shall have the name of the beneficiary designated
thereon, or in the application or other form if attached to the policy,
with a reservation of the right to designate or change the beneficiary
after the issuance of the policy unless such beneficiary has been
irrevocably designated. The policy may also provide that no designation
or change of beneficiary shall be binding on the insurer until indorsed
on the policy by the insurer, and that the insurer may refuse to indorse
the name of any proposed beneficiary who does not appear to the insurer
to have an insurable interest in the life of the insured. The policy may
also provide that if the beneficiary designated in the policy does not
make a claim under the policy or does not surrender the policy with due
proof of death within the period stated in the policy, which shall not be
less than 30 days after the death of the insured, or if the beneficiary
is the estate of the insured, or is a minor, or dies before the insured,
or is not legally competent to give a valid release, then the insurer may
make any payment thereunder to the executor or administrator of the
insured, or to any relative of the insured by blood or legal adoption or
connection by marriage, or to any person appearing to the insurer to be
equitably entitled thereto by reason of having been named beneficiary, or
by reason of having incurred expense for the maintenance, medical
attention or burial of the insured. The policy may also include a similar
provision applicable to any other payment due under the policy. [1967
c.359 §389](1) ORS 743.204 to 743.222 may be cited as the Standard
Nonforfeiture Law for Life Insurance.

(2) The operative date of the Standard Nonforfeiture Law for Life
Insurance as to any policy is the earlier of:

(a) January 1, 1948; or

(b) The date specified in a written notice, filed with the Director
of the Department of Consumer and Business Services by the insurer, of
election to comply with the Standard Nonforfeiture Law for Life Insurance
as to such policy as of the specified date.

(3) The Standard Nonforfeiture Law for Life Insurance shall not
apply to:

(a) Any reinsurance, group insurance, pure endowment, annuity or
reversionary annuity policy.

(b) Any term policy or renewal thereof, of uniform amount, which
provides no guaranteed nonforfeiture or endowment benefits, of 20 years
or less expiring before age 71, for which uniform premiums are payable
during the entire term of the policy. For this purpose, the age at death
for a joint term life insurance policy shall be the age at death of the
oldest life.

(c) Any term policy of decreasing amount, which provides no
guaranteed nonforfeiture or endowment benefits, if each adjusted premium,
calculated as specified in ORS 743.215 and 743.216, is less than the
adjusted premium so calculated on a term policy or renewal thereof of
uniform amount, which provides no guaranteed nonforfeiture benefits or
endowment benefits, which is issued at the same age, for the same initial
amount of insurance and for a term of 20 years or less that expires
before age 71 and for which uniform premiums are payable during the
entire term of the policy. For this purpose, the age at death for a joint
term life insurance policy shall be the age at death of the oldest life.

(d) Any policy which provides no guaranteed nonforfeiture or
endowment benefits, and for which policy the cash surrender value or
present value of paid-up nonforfeiture benefit calculated for the
beginning of any policy year as specified in ORS 743.210, 743.213,
743.215 and 743.216 does not exceed two and one-half percent of the
amount of insurance at the beginning of such year. [Formerly 739.340;
1977 c.320 §13; 1981 c.609 §12] (1) A life
insurance policy shall contain in substance the following provisions, or
corresponding provisions which in the opinion of the Director of the
Department of Consumer and Business Services are at least as favorable to
the defaulting or surrendering policyholder as are the minimum
requirements specified in this section, and which are essentially in
compliance with ORS 743.221:

(a) That in the event of default in any premium payment the insurer
will grant, upon proper request not later than 60 days after the due date
of the premium in default, a paid-up nonforfeiture benefit on a plan
stipulated in the policy, effective as of such due date, of the amount
required by ORS 743.213. In lieu of this stipulated benefit the insurer
may substitute, upon proper request made not later than 60 days after the
due date of the premium in default, another paid-up nonforfeiture benefit
which is actuarially equivalent and provides a greater amount or longer
period of death benefit or, if applicable, a greater amount or earlier
payment of endowment benefit.

(b) That upon surrender of the policy within 60 days after the due
date of any premium payment in default after premiums have been paid for
at least three full years in the case of ordinary life insurance or five
full years in the case of industrial life insurance, the insurer will
pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value
of the amount required by ORS 743.210.

(c) That a specified paid-up nonforfeiture benefit will become
effective as specified in the policy unless the person entitled to make
such election elects another available option not later than 60 days
after the due date of the premium in default.

(d) That, if the policy has become paid up by completion of all
premium payments or if it is continued under any paid-up nonforfeiture
benefit which became effective on or after the third policy anniversary
in the case of ordinary life insurance or the fifth policy anniversary in
the case of industrial life insurance, the insurer will pay, upon
surrender of the policy within 30 days after any policy anniversary, a
cash surrender value of the amount required by ORS 743.210.

(e)(A) In the case of all policies other than those provided for in
subparagraph (B) of this paragraph, a statement of the mortality table
and interest rate used in calculating the cash surrender values and the
paid-up nonforfeiture benefits available under the policy, together with
a table showing the cash surrender value, if any, and paid-up
nonforfeiture benefit, if any, available under the policy on each policy
anniversary either during the first 20 policy years or during the term of
the policy, whichever is shorter. Such values and benefits shall be
calculated on the assumption that there are no dividends or paid-up
additions credited to the policy and that there is no indebtedness to the
insurer on the policy. At the option of the insurer such table may also
show such values and benefits for any year or years beyond the 20th
policy year.

(B) In the case of policies which provide, on a basis guaranteed in
the policy, for unscheduled changes in benefits or premiums, or which
provide an option for changes in benefits or premiums other than by
change to a new policy, a statement of the mortality table, interest rate
and method used in calculating cash surrender values and paid-up
nonforfeiture benefits available under the policy.

(f)(A) A statement that the cash surrender values and the paid-up
nonforfeiture benefits available under the policy are not less than the
minimum values and benefits required by or pursuant to the insurance law
of the state in which the policy is delivered.

(B) An explanation of the manner in which the cash surrender values
and the paid-up nonforfeiture benefits are altered by the existence of
any paid-up additions credited to the policy or any indebtedness to the
insurer on the policy.

(C) If a detailed statement of the method of computation of the
cash surrender values and paid-up nonforfeiture benefits shown in the
policy is not stated in the policy, a statement that the method of
computation has been filed with the insurance supervisory official of the
state in which the policy is delivered.

(D) A statement of the method to be used in calculating the cash
surrender value and paid-up nonforfeiture benefit available under the
policy on any policy anniversary beyond the last anniversary for which
such values and benefits are shown for consecutive years in the policy.

(2) Any of the provisions set forth in subsection (1) of this
section, or portions of the provisions, not applicable by reason of the
particular plan of insurance may, to the extent inapplicable, be omitted
from the policy.

(3) The insurer shall reserve the right to defer the payment of any
cash surrender value for a period of six months after demand therefor
with surrender of the policy. [Formerly 739.345; 1981 c.609 §13](1) Except as otherwise provided in subsections (2) and
(3) of this section, any cash surrender value available under a life
insurance policy in the event of default in a premium payment due on any
policy anniversary, whether or not required by ORS 743.207, shall be an
amount not less than the excess, if any, of the present value, on such
anniversary, of the future guaranteed benefits which would have been
provided for by the policy, including any existing paid-up additions, if
there had been no default, over the sum of:

(a) The present value on such anniversary of the adjusted premiums,
as defined in ORS 743.215 and 743.216, corresponding to premiums which
would have fallen due on and after such anniversary; and

(b) The amount of any indebtedness to the insurer on the policy.

(2) This subsection applies to a life insurance policy issued on or
after the operative date defined in ORS 743.215 which provides
supplemental life insurance or annuity benefits by rider or supplemental
policy provision at the option of the insured and for an identifiable
additional premium. For such a policy, the cash surrender value shall be
an amount not less than the cash surrender value required by subsection
(1) of this section for a policy otherwise similar to the subject policy
but without such rider or supplemental policy provision, plus the cash
surrender value required by subsection (1) of this section for a policy
which provides only the benefits provided by such rider or supplemental
policy provision in the subject policy.

(3) This subsection applies to a family life insurance policy
issued on or after the operative date defined in ORS 743.215 which policy
defines a primary insured and provides term insurance on the life of the
spouse of the primary insured with a term that expires before age 71 of
the spouse. For such a policy, the cash surrender value shall be an
amount not less than the cash surrender value required by subsection (1)
of this section for a policy otherwise similar to the subject policy but
without such term insurance on the life of the spouse, plus the cash
surrender value required by subsection (1) of this section for a policy
which provides only the benefits provided by such term insurance on the
life of the spouse in the subject policy.

(4) Any cash surrender value available within 30 days after any
policy anniversary under any policy which has been paid up by completion
of all premium payments or any policy which has been continued under any
paid-up nonforfeiture benefit, whether or not required by ORS 743.207,
shall be an amount not less than the present value, on such anniversary,
of the future guaranteed benefits provided for by the policy, including
any existing paid-up additions, decreased by the amount of any
indebtedness to the insurer on the policy. [Formerly 739.350; 1981 c.609
§14] Any
paid-up nonforfeiture benefit available under a life insurance policy in
the event of default in a premium payment due on any policy anniversary
shall be such that its present value as of such anniversary shall be at
least equal to the cash surrender value then provided for by the policy
or, if none is provided for, that cash surrender value which would have
been required by ORS 743.207 in the absence of the condition that
premiums have been paid for at least a specified period. [Formerly
739.355; 1981 c.609 §15] (1) This section applies
to all life insurance policies issued on or after the operative date
defined in this subsection for the issuing insurer. After January 1,
1982, any insurer may file with the Director of the Department of
Consumer and Business Services a written notice of its election to comply
with the provisions of this section with regard to any number of plans of
insurance after a specified date before January 1, 1989. The specified
date shall be the operative date of this subsection for the plan or
plans, but if an insurer elects to make this subsection operative before
January 1, 1989, for fewer than all plans, the insurer must comply with
rules adopted by the director. There is no limit to the number of times
that an insurer may make the election. If an insurer makes no such
election, the operative date of this section for the insurer shall be
January 1, 1989.

(2) Except as provided in subsection (8) of this section, the
adjusted premiums referred to in ORS 743.210 for any life insurance
policy to which this section applies shall be calculated as provided in
this subsection, on an annual basis, as a uniform percentage of the
respective premiums specified in the policy for each policy year,
excluding amounts payable as extra premiums to cover impairments or
special hazards and excluding any uniform annual contract charge or
policy fee specified in the policy statement of the method to be used in
calculating the cash surrender values and paid-up nonforfeiture benefits.
This percentage shall be such that the present value, at the date of
issue of the policy, of all such adjusted premiums shall equal the sum of:

(a) The present value at the policy issue date of the future
guaranteed benefits provided for by the policy;

(b) One percent of either the amount of insurance, if the insurance
is uniform in amount, or the average of the amounts of insurance at the
beginning of each of the first 10 policy years; and

(c) One hundred twenty-five percent of the nonforfeiture net level
premium as defined in subsection (3) of this section. For this purpose,
any excess of the nonforfeiture net level premium over four percent of
such uniform or average amount of insurance shall be disregarded.

(3) The nonforfeiture net level premium referred to in subsection
(2) of this section shall equal the present value, at the date of issue
of the policy, of the guaranteed benefits provided for by the policy
divided by the present value, at the date of issue of the policy, of an
annuity of one per annum payable on the date of issue and on each
anniversary of the policy on which a premium falls due.

(4) In the case of policies which provide, on a basis guaranteed in
the policy, for unscheduled changes in benefits or premiums, or which
provide an option for changes in benefits or premiums other than by
change to a new policy, the adjusted premiums and present values shall
initially be calculated on the assumption that future benefits and
premiums do not change from those stipulated by the policy at the date of
issue. At the time of any such change in the benefits or premiums the
future adjusted premiums, nonforfeiture net level premiums and present
values shall be recalculated as provided in subsection (5) of this
section on the assumption that future benefits and premiums do not change
from those stipulated by the policy immediately after the change.

(5) Except as otherwise provided in subsection (8) of this section,
the recalculated future adjusted premiums referred to in subsection (4)
of this section shall be calculated as provided in this subsection, on an
annual basis, as a uniform percentage of the respective future premiums
specified in the policy for each policy year, excluding amounts payable
as extra premiums to cover impairments and special hazards and excluding
any uniform annual contract charge or policy fee specified in the policy
statement of the method to be used in calculating the cash surrender
values and paid-up nonforfeiture benefits. This percentage shall be such
that the present value, at the date of change to the newly defined
benefits or premiums, of all such future adjusted premiums shall equal A
plus B minus C, where these amounts are defined as follows:

(a) “A” equals the present value, as of the date of change, of the
future guaranteed benefits provided for by the policy.

(b) “B” equals the additional expense allowance, if any, for the
policy, as defined in subsection (6) of this section.

(c) “C” equals the cash surrender value under the policy, if any,
or present value of any paid-up nonforfeiture benefit under the policy,
as of the date of change.

(6) The additional expense allowance at the date of the change to
the newly defined benefits or premiums, as referred to in subsection (5)
of this section, shall equal the sum of:

(a) One percent of the excess, if positive, of the average of the
amounts of insurance at the beginning of each of the first 10 policy
years subsequent to the change, over the average of the amounts of
insurance, as defined before the change, at the beginning of each of the
first 10 policy years subsequent to the last previous change or the
policy issue date if there has been no change.

(b) One hundred twenty-five percent of the change, if positive, in
the amount of the nonforfeiture net level premium from the amount
applicable prior to the change in policy benefits or premiums to the
amount of the recalculated nonforfeiture net level premium determined
from subsection (7) of this section as of the date of the change in
policy benefits or premiums.

(7) The recalculated nonforfeiture net level premium referred to in
subsection (6) of this section shall equal Y divided by Z, where these
amounts are defined as follows:

(a) “Y” equals the sum of:

(A) The nonforfeiture net level premium applicable prior to the
change times the present value at the date of change of an annuity of one
per annum payable on each anniversary of the policy, on or subsequent to
the date of the change, on which a premium would have fallen due had the
change not occurred; and

(B) The present value at the date of change of the increase in
future guaranteed benefits provided for by the policy.

(b) “Z” equals the present value at the date of change of an
annuity of one per annum payable on each anniversary of the policy, on or
subsequent to the date of change, on which a premium falls due.

(8) Notwithstanding any other provisions of this section, the
provisions of this subsection shall apply in the case of a policy issued
on a substandard basis which provides reduced graded amounts of insurance
determined so that, in each policy year, the policy has the same tabular
mortality cost as for an otherwise similar policy of a higher nongraded
amount or amounts of insurance issued on the standard basis. Adjusted
premiums and present values for a policy on such a substandard basis may
be calculated as if the policy were issued to provide such a higher
nongraded amount or amounts of insurance on the standard basis.

(9) Except as provided in subsection (10) of this section, all
adjusted premiums and present values referred to in the Standard
Nonforfeiture Law for Life Insurance shall, for all policies of life
insurance to which this section applies, be calculated on the mortality
and interest bases as follows:

(a) For ordinary life insurance mortality:

(A) The Commissioners 1980 Standard Ordinary Mortality Table shall
be used; or

(B) At the option of the insurer for any one or more specified
plans of life insurance, the Commissioners 1980 Standard Ordinary
Mortality Table with Ten-Year Select Mortality Factors may be used
instead of such table without Ten-Year Select Mortality Factors.

(b) For industrial life insurance mortality, the Commissioners 1961
Standard Industrial Mortality Table shall be used.

(c) For all policies issued in a particular calendar year, an
interest rate shall be used which does not exceed the nonforfeiture
interest rate, as defined in subsection (11) of this section, for
policies issued in that year.

(10) The following provisions shall also apply, for policies to
which this section applies, to the calculation of premiums and values
referred to in the Standard Nonforfeiture Law for Life Insurance:

(a) At the option of the insurer, such calculations for all
policies issued in a particular calendar year may be made on the basis of
an interest rate which does not exceed the nonforfeiture interest rate,
as defined in subsection (11) of this section, for policies issued in the
last preceding calendar year.

(b) Under any paid-up nonforfeiture benefit, including any paid-up
dividend additions, any cash surrender value available, whether or not
required by ORS 743.207, shall be calculated on the basis of the
mortality table and interest rate used in determining the amount of such
paid-up nonforfeiture benefit and paid-up dividend additions.

(c) An insurer shall calculate the amount of any guaranteed paid-up
nonforfeiture benefit, including any paid-up additions, on the basis of
an interest rate no lower than that specified in the policy for
calculating cash surrender values.

(d) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than those shown
in the Commissioners 1980 Extended Term Insurance Table for policies of
ordinary life insurance, and not more than those shown in the
Commissioners 1961 Industrial Extended Term Insurance Table for policies
of industrial life insurance.

(e) For insurance issued on a substandard basis, the calculation of
premiums and values may be based on appropriate modifications of the
mortality tables referred to in subsection (9) of this section and in
this subsection.

(f) Any ordinary life mortality tables adopted after 1980 by the
National Association of Insurance Commissioners that are approved under
rules issued by the director for use in determining the minimum
nonforfeiture standard may be substituted for the Commissioners 1980
Standard Ordinary Mortality Table with or without Ten-Year Select
Mortality Factors, or for the Commissioners 1980 Extended Term Insurance
Table.

(g) Any industrial life mortality tables adopted after 1980 by the
National Association of Insurance Commissioners that are approved under
rules issued by the director for use in determining the minimum
nonforfeiture standard may be substituted for the Commissioners 1961
Standard Industrial Mortality Table or the Commissioners 1961 Industrial
Extended Term Insurance Table.

(11) The nonforfeiture interest rate for any policy issued in a
particular calendar year shall equal 125 percent of the calendar year
statutory valuation interest rate for such policy as defined in the
Standard Valuation Law, rounded to the nearer one-quarter of one percent.

(12) Notwithstanding any other provision in this chapter, for any
previously approved policy form, any refiling of nonforfeiture values or
their methods of computation which involves only a change in the interest
rate or mortality table used to compute nonforfeiture values shall not of
itself require refiling of any other provisions of that policy form.
[1981 c.609 §17; 1983 c.282 §1] This section applies only
to life insurance policies issued before the operative date defined in
ORS 743.215. For such policies:

(1) Except as provided in subsection (3) of this section, the
adjusted premiums referred to in ORS 743.210 shall be calculated on an
annual basis and shall be such uniform percentage of the respective
premiums specified in the policy for each policy year, excluding any
extra premiums charged because of impairments or special hazards, that
the present value, at the date of issue of the policy, of all such
adjusted premiums shall be equal to the sum of:

(a) The present value at the policy issue date of the future
guaranteed benefits provided for by the policy.

(b) Two percent of the amount of insurance if the insurance is
uniform in amount, or of the equivalent uniform amount as defined in
subsection (2) of this section if the amount of insurance varies with
duration of the policy.

(c) Forty percent of the adjusted premium for the first policy
year. For this purpose, any excess of the adjusted premium over four
percent of the amount of insurance or equivalent uniform amount shall be
disregarded.

(d) Twenty-five percent of either the adjusted premium for the
first policy year or the adjusted premium for a whole life policy for the
same uniform or the same equivalent uniform amount of insurance with
uniform premiums for the whole of life issued at the same age, whichever
is less. For this purpose, any excess of the adjusted premium over four
percent of the amount of insurance or equivalent uniform amount shall be
disregarded.

(2) In the case of a policy providing an amount of insurance
varying with duration of the policy, the equivalent uniform amount of the
subject policy for the purpose of this section shall be the uniform
amount of insurance provided by an otherwise similar policy, containing
the same endowment benefit or benefits, if any, issued at the same age
and for the same term, the amount of which does not vary with duration
and the benefits under which have the same present value at the date of
issue as the benefits under the subject policy. However, in the case of a
policy providing a varying amount of insurance issued on the life of a
child under age 10, the equivalent uniform amount may be computed as
though the amount of insurance provided by the subject policy prior to
the attainment of age 10 were the amount provided by the subject policy
at age 10.

(3) The adjusted premiums for any policy providing term insurance
benefits by rider or supplemental policy provision shall be calculated in
accordance with this subsection. The amounts specified in paragraphs (a)
and (b) of this subsection shall be calculated separately. Each such
amount shall be calculated as specified in subsections (1) and (2) of
this section. However, for the purposes of subsection (1)(b), (c) and (d)
of this section, the amount of insurance or equivalent uniform amount of
insurance used in the calculation of the adjusted premiums referred to in
paragraph (b) of this subsection shall be equal to the excess of the
uniform or equivalent uniform amount determined for the entire policy
over the amount used in the calculation of the adjusted premiums in
paragraph (a) of this subsection. The adjusted premiums for the entire
policy shall equal the sum of:

(a) The adjusted premiums for an otherwise similar policy issued at
the same age without such term insurance benefits; and

(b) During the period for which premiums for such term insurance
benefits are payable, the adjusted premiums for such term insurance
benefits.

(4) Except as provided in paragraphs (a) and (b) of this subsection
and subsection (5) of this section, all adjusted premiums and present
values referred to in the Standard Nonforfeiture Law for Life Insurance
shall for all policies of ordinary life insurance to which this section
applies be calculated on the basis of the Commissioners 1941 Standard
Ordinary Mortality Table. Such calculations for any category of ordinary
life insurance issued on female lives may, however, be based on an age
not more than six years younger than the actual age of the insured.
Except as provided in paragraphs (a) and (b) of this subsection and
subsection (7) of this section, such calculations of adjusted premiums
and present values for all policies of industrial life insurance shall be
made on the basis of the 1941 Standard Industrial Mortality Table. All
calculations shall be made on the basis of the rate of interest, not
exceeding three and one-half percent per annum, specified in the policy
for calculating cash surrender values and paid-up nonforfeiture benefits.
The following exceptions pertain:

(a) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than 130 percent
of the rates of mortality according to the respective table.

(b) For insurance issued on a substandard basis, the calculation of
adjusted premiums and present values may be based on such other table of
mortality as may be specified by the insurer and approved by the Director
of the Department of Consumer and Business Services.

(5) This subsection applies only to policies of ordinary life
insurance to which this section applies and which are issued on or after
the operative date of this subsection as defined in subsection (6) of
this section. For such policies, all adjusted premiums and present values
referred to in the Standard Nonforfeiture Law for Life Insurance shall,
except as provided in paragraphs (a) and (b) of this subsection, be
calculated on the basis of the Commissioners 1958 Standard Ordinary
Mortality Table and the rate of interest specified in the policy for
calculating cash surrender values and paid-up nonforfeiture benefits.
Such calculations for any category of ordinary life insurance issued on
female lives may, however, be based on an age not more than six years
younger than the actual age of the insured. Such rate of interest shall
not exceed three and one-half percent, except that a rate of interest not
exceeding four percent may be used for policies issued from January 1,
1974, to December 31, 1977, and a rate of interest not exceeding five and
one-half percent may be used for policies issued on or after January 1,
1978, and with the further exception that for any single premium whole
life or endowment insurance policy a rate of interest not exceeding six
and one-half percent may be used. The following exceptions pertain:

(a) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than those shown
in the Commissioners 1958 Extended Term Insurance Table.

(b) For insurance issued on a substandard basis, the calculation of
adjusted premiums and present values may be based on such other table of
mortality as may be specified by the insurer and approved by the director.

(6) After August 9, 1961, any insurer may file with the director a
written notice of its election to comply with the provisions of
subsection (5) of this section after a specified date before January 1,
1966. After the filing of such notice, such specified date shall be the
operative date of subsection (5) of this section for the insurer with
respect to the ordinary life policies it thereafter issues. If an insurer
makes no such election, such operative date for the insurer shall be
January 1, 1966.

(7) This subsection applies only to policies of industrial life
insurance to which this section applies and which are issued on or after
the operative date of this subsection as defined in subsection (8) of
this section. For such policies, all adjusted premiums and present values
referred to in the Standard Nonforfeiture Law for Life Insurance shall,
except as provided in paragraphs (a) and (b) of this subsection, be
calculated on the basis of the Commissioners 1961 Standard Industrial
Mortality Table and the rate of interest specified in the policy for
calculating cash surrender values and paid-up nonforfeiture benefits.
Such rate of interest shall not exceed three and one-half percent, except
that a rate of interest not exceeding four percent may be used for
policies issued from January 1, 1974, to December 31, 1977, and a rate of
interest not exceeding five and one-half percent may be used for policies
issued on or after January 1, 1978, and with the further exception that
for any single premium whole life or endowment insurance policy a rate of
interest not exceeding six and one-half percent may be used. The
following exceptions pertain:

(a) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than those shown
in the Commissioners 1961 Industrial Extended Term Insurance Table.

(b) For insurance issued on a substandard basis, the calculation of
adjusted premiums and present values may be based on such other table of
mortality as may be specified by the insurer and approved by the director.

(8) After September 2, 1963, any insurer may file with the director
a written notice of its election to comply with the provisions of
subsection (7) of this section after a specified date before January 1,
1968. After the filing of such notice, such specified date shall be the
operative date of subsection (7) of this section for the insurer with
respect to the industrial life insurance policies it thereafter issues.
If an insurer makes no such election, such operative date for the insurer
shall be January 1, 1968. [Formerly 739.360; 1973 c.636 §6; 1977 c.320
§14; 1981 c.609 §16]In the case of policies of life insurance which provide
for determination of future premium amounts by the insurer on the basis
of current estimates of future experience, or policies of life insurance
which are of such a nature that minimum values cannot in the judgment of
the Director of the Department of Consumer and Business Services be
determined by the methods otherwise described in the Standard
Nonforfeiture Law for Life Insurance, the following requirements shall
apply:

(1) The director must be satisfied that the policy benefits are
substantially as favorable to policyholders and insureds as the minimum
benefits otherwise required by the Standard Nonforfeiture Law for Life
Insurance;

(2) The director must be satisfied that the benefits and the
pattern of premiums of the policy are not misleading to prospective
policyholders or insureds; and

(3) The cash surrender values and paid-up nonforfeiture benefits
provided by the policy must not be less than the minimum values and
benefits required for the policy as calculated by a method consistent
with the principles of the Standard Nonforfeiture Law for Life Insurance,
as determined under rules issued by the director. [1981 c.609 §18]
(1) Any cash surrender value and any paid-up nonforfeiture benefit
available under a life insurance policy in the event of default in a
premium payment due at any time other than on the policy anniversary date
shall be calculated with allowance for the lapse of time and the payment
of fractional premiums beyond the last preceding policy anniversary.

(2) All values referred to in the Standard Nonforfeiture Law for
Life Insurance may be calculated on the assumption that any death benefit
is payable at the end of the policy year of death.

(3) The net value of any paid-up additions, other than paid-up term
additions, shall not be less than the amounts used to provide the
additions. [Formerly 739.365; 1981 c.609 §19] (1)
This section shall apply to all life insurance policies issued on or
after January 1, 1986.

(2) Any cash surrender value available in the event of default in a
premium payment due on any policy anniversary under a life insurance
policy to which this section applies shall be in an amount which does not
differ, by more than two-tenths of one percent of the amount of
insurance, if uniform, or the average of the amounts of insurance at the
beginning of each of the first 10 policy years, from A plus B minus C,
where these amounts are defined as follows:

(a) “A” equals the basic cash value on such anniversary as defined
in subsection (3) of this section.

(b) “B” equals the present value on such anniversary of any
existing paid-up additions.

(c) “C” equals the amount of any indebtedness to the insurer under
the policy on such anniversary.

(3)(a) The basic cash value referred to in subsection (2) of this
section shall equal the present value, on a particular subject policy
anniversary, of the future guaranteed benefits which would have been
provided for by the policy if there had been no premium default,
excluding any existing paid-up additions and before deduction of any
indebtedness to the insurer, less the present value on such anniversary
of the nonforfeiture factors, as defined in subsection (4) of this
section, corresponding to premiums which would have fallen due on and
after such anniversary. The basic cash value shall be taken as zero if
this calculation produces a negative result.

(b) Supplemental life insurance or annuity benefits and family
coverage, as described in ORS 743.210 or 743.216, whichever is applicable
to the policy, shall affect the basic cash value in the same manner as is
provided in ORS 743.210 or 743.216 for their effect on the cash surrender
values.

(4)(a) Except as provided in paragraph (b) of this subsection, the
nonforfeiture factor referred to in subsection (3) of this section shall
for each policy year equal a percentage of the adjusted premium for that
policy year as defined in ORS 743.215 or 743.216, whichever is applicable
to the policy. This percentage must:

(A) Be uniform for each policy year between the second policy
anniversary and the later of:

(i) The fifth policy anniversary; and

(ii) The first policy anniversary at which there is available under
the policy a cash surrender value in an amount, before including any
paid-up additions and before deducting any indebtedness, at least equal
to two-tenths of one percent of the amount of insurance, if uniform, or
of the average of the amounts of insurance at the beginning of each of
the first 10 policy years; and

(B) Be such that no percentage after the later policy anniversary
defined in subparagraph (A) of this paragraph applies to fewer than five
consecutive policy years.

(b) No basic cash value may be less than the value which would be
obtained if the adjusted premiums for the policy as defined in ORS
743.215 or 743.216, whichever is applicable to the policy, were
substituted for the nonforfeiture factors defined in this subsection in
the calculation of the basic cash value.

(5) All adjusted premiums and present values referred to in this
section shall for a particular policy be calculated on the same mortality
and interest bases as are used in demonstrating the compliance of the
policy with the Standard Nonforfeiture Law for Life Insurance. The cash
surrender values referred to in this section shall include any endowment
benefits provided for by the policy.

(6)(a) Any cash surrender value available other than in the event
of default in a premium payment due on a policy anniversary, and the
amount of any paid-up nonforfeiture benefit available under the policy in
the event of default in a premium payment, shall be determined in a
manner consistent with the manner specified for determining the analogous
minimum amounts under the Standard Nonforfeiture Law for Life Insurance.

(b) The amounts of any cash surrender values and any paid-up
nonforfeiture benefits granted in connection with additional benefits
such as those described in ORS 743.222 shall conform with the principles
of this section. [1981 c.609 §21](1)
Notwithstanding ORS 743.210, in ascertaining minimum cash surrender
values and paid-up nonforfeiture benefits required by the Standard
Nonforfeiture Law for Life Insurance, benefits and their respective
premiums provided for in a life insurance policy shall be disregarded
where the benefits are payable:

(a) In the event of death or dismemberment by accident or
accidental means;

(b) In the event of total and permanent disability;

(c) As reversionary annuity or deferred reversionary annuity
benefits;

(d) As term insurance benefits provided by a rider or supplemental
policy provision to which, if issued as a separate policy, the Standard
Nonforfeiture Law for Life Insurance would not apply;

(e) As term insurance on the life of a child or on the lives of
children provided in a policy on the life of a parent of the child, if
such term insurance expires before the child’s age is 26, is uniform in
amount after the child’s age is one, and has not become paid up by reason
of the death of a parent of the child; or

(f) As other policy benefits additional to life insurance and
endowment benefits.

(2) No benefits such as are described in subsection (1) of this
section are required to be included in any paid-up nonforfeiture
benefits. [Formerly 739.370; 1981 c.609 §20] No life insurance policy shall
contain any of the following provisions:

(1) A provision limiting the time within which any action at law or
suit in equity may be commenced to less than three years after the cause
of action or suit accrues.

(2) A provision by which the policy purports to be issued or to
take effect more than six months before the original application for the
insurance was made.

(3) A provision for forfeiture of the policy for failure to repay
any loan on the policy or any interest on such loan while the total
indebtedness on the policy is less than the loan value thereof. [Formerly
739.315](1) Whenever a corporation organized under the laws of this state
or qualified to do business in this state has caused to be insured the
life of any director, officer, agent or employee, or whenever such
corporation is named as a beneficiary in or assignee of any life
insurance policy, due authority to effect, assign, release, relinquish,
convert, surrender, change the beneficiary or take any other or different
action with reference to such insurance shall be sufficiently evidenced
to the insurer by a written statement under oath showing that such action
has been approved by a majority of the board of directors. Such a
statement shall be signed by the president and secretary of the
corporation and bear the corporate seal.

(2) Such a statement shall be binding upon the corporation and
shall protect the insurer concerned in any act done or suffered by it
upon the faith thereof without further inquiry into the validity of the
corporate authority or the regularity of the corporate proceedings.

(3) No person shall be disqualified by reason of interest in the
subject matter from acting as a director or as a member of the executive
committee of such a corporation on any corporate act touching such
insurance. [Formerly 739.415] A variable life insurance
policy shall contain in substance the following provisions:

(1) A provision that there will be a period of grace of 30 days
within which payment of any premium after the first may be made, during
which period of grace the policy will continue in full force. If a claim
arises under the policy during such period of grace, the amount of any
premiums due or overdue, together with interest not in excess of six
percent per annum and any deferred installment of the annual premium, may
be deducted from the policy proceeds. The policy may contain a statement
of the basis for determining any variation in benefits that may occur as
a result of the payment of premium during the period of grace.

(2) A provision that the policy will be reinstated at any time
within three years from the date of a default in premium payments, unless
the cash surrender value has been paid or the period of extended
insurance has expired, upon the production of evidence of insurability
satisfactory to the insurer and the payment of an amount not exceeding
the greater of:

(a) All overdue premiums and any other indebtedness to the insurer
upon said policy with interest at a rate not exceeding six percent per
annum; and

(b) One hundred ten percent of the increase in cash surrender value
resulting from reinstatement.

(3) A provision for cash surrender values and paid-up insurance
benefits available as nonforfeiture options in the event of default in a
premium payment after premiums have been paid for a specified period. If
the policy does not include a table of figures for the options so
available, the policy shall provide that the insurer will furnish, at
least once in each policy year, a statement showing the cash value as of
a date no earlier than the next preceding policy anniversary.

(a) The method of computation of cash values and other
nonforfeiture benefits shall be as described either in the policy or in a
statement filed with the Director of the Department of Consumer and
Business Services, and shall be actuarially appropriate to the variable
nature of the policy.

(b) The method of computation must result, if the net investment
return credited to the policy at all times from the date of issue equals
the specified investment increment factor, with premiums and benefits
determined accordingly under the terms of the policy, in cash values and
other nonforfeiture benefits at least equal to the minimum values
required by the Standard Nonforfeiture Law for a policy with such
premiums and benefits. The method of computation may disregard incidental
minimum guarantees as to the dollar amounts payable. Incidental minimum
guarantees include, but are not limited to, a guarantee which provides
that the amount payable at death or maturity shall be at least equal to
the amount that would be payable if the net investment return credited to
the policy at all times from the date of issue is equal to the specified
investment increment factor.

(4) A provision specifying the investment increment factor to be
used in computing the dollar amount of variable benefits or other
variable payments or values under the policy, and guaranteeing that
expense and mortality results will not adversely affect such dollar
amounts. [1973 c.435 §18] “Profit-sharing policy”
means:

(1) A life insurance policy which by its terms expressly provides
that the policyholder will participate in the distribution of earnings or
surplus other than earnings or surplus attributable, by reasonable and
nondiscriminatory standards, to the participating policies of the insurer
and allocated to the policyholder on reasonable and nondiscriminatory
standards; or

(2) A life insurance policy the provisions of which, through sales
material or oral presentations, are interpreted by the insurer to
prospective policyholders as entitling the policyholder to the benefits
described in subsection (1) of this section. [Formerly 739.705] “Charter
policy” or “founders policy” means:

(1) A life insurance policy which by its terms expressly provides
that the policyholder will receive some preferential or discriminatory
advantage or benefit not available to persons who purchase insurance from
the insurer at future dates or under other circumstances; or

(2) A life insurance policy the provisions of which, through sales
material or oral presentations, are interpreted by the insurer to
prospective policyholders as entitling the policyholder to the benefits
described in subsection (1) of this section. [Formerly 739.710] “Coupon policy” means a life
insurance policy which provides a series of pure endowments maturing
periodically in amounts not exceeding the gross annual policy premiums.
The term “pure endowment” or “endowment” is used in its accepted
actuarial sense, meaning a benefit becoming payable at a specific future
date if the insured person is then living. [Formerly 739.715] No
profit-sharing, charter or founders policy shall be issued or delivered
in this state. [Formerly 739.720] Coupon policies
issued or delivered in this state shall be subject to the following
provisions:

(1) No detachable coupons or certificates or passbooks may be used.
No other device may be used which tends to emphasize the periodic
endowment benefits or which tends to create the impression that the
endowments represent interest earnings or anything other than benefits
which have been purchased by part of the policyholder’s premium payments.

(2) Each endowment benefit must have a fixed maturity date and
payment of the endowment benefit shall not be contingent upon the payment
of any premium becoming due on or after such maturity date.

(3) The endowment benefits must be expressed in dollar amounts
rather than as percentages of other quantities or in other ways, both in
the policy itself and in the sale thereof.

(4) A separate premium for the periodic endowment benefits must be
shown in the policy adjacent to the rest of the policy premium
information and must be given the same emphasis in the policy and in the
sale thereof as that given the rest of the policy premium information.
This premium shall be calculated with mortality, interest and expense
factors which are consistent with those for the basic policy premium.
[1967 c.359 §403] A variable life
insurance policy shall contain a provision stating the essential features
of the procedures to be followed by the insurer in determining benefits
thereunder. Such a policy, and any certificate evidencing such a policy,
shall contain on its first page a clear and prominent statement to the
effect that benefits thereunder are variable. [1973 c.435 §14] An insurer
issuing individual variable life insurance policies shall mail to each
policyholder at least once in each policy year after the first, at the
last address of the policyholder known to the insurer:

(1) A statement reporting the investments held in the applicable
separate account.

(2) A statement reporting as of a date not more than four months
preceding the date of mailing:

(a) In the case of an annuity policy under which payments have not
yet commenced, the number of accumulation units credited to such policy
and the dollar value of a unit, or the value of the policyholder’s
account; and

(b) In the case of a life insurance policy, the dollar amount of
the death benefit. [1973 c.435 §15](Individual Annuity and Pure Endowment Policies)ORS 743.255 to 743.273
apply only to annuity and pure endowment policies, other than
reversionary annuity policies except as provided in ORS 743.273, and
other than group annuity policies, and shall not apply to reversionary or
deferred annuity benefits included in life insurance policies. Such
sections apply to such policies that are variable annuity policies,
except to the extent the provisions of such sections are obviously
inapplicable to variable annuities or are in conflict with other
provisions of such sections that are expressly applicable to variable
annuities. [1967 c.359 §404; 1973 c.435 §19] An annuity or pure endowment
policy shall contain a provision that there shall be a period of grace of
one month, but not less than 30 days, within which any stipulated payment
to the insurer falling due after the first such payment may be made,
subject at the option of the insurer to an interest charge thereon at the
rate specified in the policy but not exceeding six percent per annum for
the number of days of grace elapsing before such payment, during which
period of grace the policy shall continue in full force. In case a claim
arises under the policy on account of death prior to expiration of the
period of grace before the overdue payment to the insurer or the deferred
payments of the current policy year, if any, are made, the amount of such
payments, with interest on any overdue payments, may be deducted from any
amount payable under the policy in settlement. [1967 c.359 §405] If any statement other than those
relating to age, sex and identity are required as a condition to issuing
an annuity or pure endowment policy, the policy shall contain a provision
that the policy shall be incontestable after it has been in force during
the lifetime of the person or of each of the persons as to whom such
statements are required, for a period of two years from its date of
issue, except for nonpayment of stipulated payments to the insurer. At
the option of the insurer the two year limit within which the policy may
be contested shall not apply to any provisions relative to benefits in
the event of disability and any provisions which grant insurance
specifically against death by accident or accidental means. [1967 c.359
§406] An annuity or pure endowment policy shall
contain a provision that the policy, including a copy of the application
if indorsed upon or attached to the policy when issued, shall constitute
the entire contract between the parties. [1967 c.359 §407] An annuity or pure endowment
policy shall contain a provision that if the age or sex of the person or
persons upon whose life or lives the policy is made, or of any of them,
has been misstated, the amount payable or benefits accruing under the
policy shall be such as the stipulated payment or payments to the insurer
would have purchased according to the correct age or sex, and that if the
insurer has made any overpayment or overpayments on account of any such
misstatement, the amount thereof with interest at the rate specified in
the policy but not exceeding six percent per annum may be charged against
the current or next succeeding payment or payments to be made by the
insurer under the policy. [1967 c.359 §408] If an annuity or pure endowment policy is
participating, it shall contain a provision that the insurer shall
annually ascertain and apportion any divisible surplus accruing on the
policy. [1967 c.359 §409] (1) An insurer may advance a
policy loan equal to or less than the loan value of an annuity policy or
a pure endowment policy if:

(a) The policy premium is not in default beyond the grace period
for payment;

(b) The insured has properly assigned or pledged the policy on the
sole security thereof; and

(c) The interest rate provision complies with ORS 743.187 and does
not exceed the maximum interest rate permitted by the policy loan
provision.

(2) An insurer may establish a minimum loan amount that may not
exceed $1,000.

(3) Except as provided in subsection (4) of this section, the loan
value of the policy shall be equal to the cash surrender value of the
policy, less any existing indebtedness and interest due that is not
already deducted in determining the cash surrender value, plus any
interest then accrued but not credited.

(4) Subsection (3) of this section does not apply to a policy for
which the loan value is established by federal law. When the loan value
is established by federal law, the policy shall indicate the loan value
as a dollar amount, a percentage of the cash surrender value or a
combination of both.

(5) Except as provided in ORS 743.187, if the total indebtedness on
the policy, including interest due or accrued, equals or exceeds the
amount of the loan value of the policy, the policy shall terminate and
become void upon 30 days’ notice by the insurer mailed to the last-known
address of the insured or other policy owner and of any assignee of
record at the home office of the insurer. However, if there is any
remaining cash surrender value under the policy after deducting the total
indebtedness on the policy, an insurer may not terminate the policy.

(6) A insurer may provide for automatic premium loans in an annuity
policy or a pure endowment policy.

(7) An annuity policy or a pure endowment policy may reserve to the
insurer the right to defer the granting of a loan, other than for payment
of any premium to the insurer, for six months after application for the
loan if the insurer makes a written request to and receives written
approval from the chief insurance regulator of the state of domicile of
the insurer prior to exercising a deferral. [2005 c.185 §5] An annuity policy
meeting the requirements of this section may provide that periodic
payments shall be made under the policy for a period certain. Payments
under such a policy shall begin on a date less than 13 months after the
date on which the insurer issues the policy. The policy shall provide
that payments will be made for a period of five years or more. The
periodic payments may be fixed or variable in amount. If such policy
offers commuted values on the annuity, such values must be based on an
interest rate not more than one percent in excess of the interest rates
that were used in determining the payments when the annuity was
purchased. [1995 c.632 §2] An annuity or pure endowment policy shall
contain a provision that the policy may be reinstated at any time within
one year from a default in making stipulated payments to the insurer,
unless the cash surrender value has been paid, but all overdue stipulated
payments and any indebtedness to the insurer on the policy shall be paid
or reinstated with interest at the rate specified in the policy but not
exceeding six percent per annum, and in cases where applicable the
insurer may also include a requirement of evidence of insurability
satisfactory to the insurer. [1967 c.359 §410] A
variable annuity policy requiring periodic stipulated payments to the
insurer shall contain in substance the following provisions:

(1) A provision that there will be a period of grace of 30 days
within which any stipulated payment to the insurer after the first may be
made, during which period of grace the policy will continue in full
force. The policy may include a statement of the basis for determining
the date as of which any such payment received during the period of grace
will be applied.

(2) A provision that, at any time within one year from the date of
a default in making periodic stipulated payments to the insurer during
the life of the annuitant, and unless the cash surrender value has been
paid, the policy may be reinstated upon payment to the insurer of the
overdue payments and all indebtedness to the insurer on the policy, with
interest. The policy may include a statement of the basis for determining
the date as of which the amount to cover such overdue payments and
indebtedness will be applied.

(3) A provision specifying the options available in the event of a
default in a periodic stipulated payment. Such options may include an
option to surrender the policy for a cash value as determined by the
policy, and shall include an option to receive a paid-up annuity if the
policy is not surrendered for cash, the amount of the paid-up annuity
being determined by applying the value of the policy at the annuity
commencement date in accordance with the terms of the policy. [1973 c.435
§21] (1) A variable annuity policy shall
specify the investment increment factors to be used in computing the
dollar amount of variable benefits or other variable payments or values
under the policy, and may guarantee that expense or mortality results or
both will not adversely affect such dollar amounts. In the case of an
individual variable annuity policy under which the expense or mortality
results may adversely affect the dollar amount of benefits, the expense
and mortality factors shall be correspondingly specified in the policy.
“Expense” as used in this subsection may exclude some or all taxes, as
specified in the policy.

(2) In computing the dollar amount of variable benefits or other
policy payments or values:

(a) The annual net investment increment assumption shall not exceed
five percent, except with the approval of the Director of the Department
of Consumer and Business Services; and

(b) To the extent that the level of benefits may be affected by
future mortality results, the mortality factor shall be determined from
the Annuity Mortality Table for 1949, Ultimate, or any modification of
that table not having a lower life expectancy at any age or, if approved
by the director, from another table. [1973 c.435 §22] A policy of
reversionary annuity shall contain in substance the following provisions:

(1) The provisions specified in ORS 743.255 to 743.267, except that
under ORS 743.255 the insurer may at its option provide for an equitable
reduction of the amount of the annuity payments in settlement of an
overdue payment in lieu of providing for deduction of the overdue payment
from an amount payable upon settlement under the policy.

(2) A provision that the policy may be reinstated at any time
within three years from the date of default in making stipulated payments
to the insurer, upon production of evidence of insurability satisfactory
to the insurer, and upon the condition that all overdue payments and any
indebtedness to the insurer on account of the policy be paid or
reinstated with interest at the rate specified in the policy but not
exceeding six percent per annum. [1967 c.359 §411](1) ORS 743.275 to 743.295 may be cited as the
Standard Nonforfeiture Law for Individual Deferred Annuities.

(2) The Standard Nonforfeiture Law for Individual Deferred
Annuities does not apply to:

(a) Reinsurance.

(b) A group annuity policy purchased under a retirement or deferred
compensation plan established or maintained by an employer, including a
partnership or sole proprietorship, or by an employee organization, or by
both. This exclusion does not apply, however, to a plan providing
individual retirement accounts or individual retirement annuities under
section 408 of the federal Internal Revenue Code.

(c) A premium deposit fund.

(d) A variable annuity policy.

(e) An investment annuity policy.

(f) An immediate annuity policy.

(g) A deferred annuity policy after annuity payments have commenced.

(h) A reversionary annuity.

(i) A policy delivered outside this state through an agent or other
representative of the insurer issuing the policy. [1977 c.320 §2; 2003
c.370 §1] (1) An
annuity policy shall contain in substance the following provisions, or
corresponding provisions that in the opinion of the Director of the
Department of Consumer and Business Services are at least as favorable to
the policyholder:

(a) That upon the termination of considerations under the policy,
or upon the written request of the policyholder, the insurer shall grant
a paid-up annuity benefit on a plan stipulated in the policy, of the
value specified in ORS 743.284 and 743.287.

(b) That, if the policy provides for a lump sum settlement at
maturity or any other time, the insurer shall pay upon surrender of the
policy on or before the start of annuity payments, in lieu of a paid-up
annuity benefit, a cash surrender benefit of the amount specified in ORS
743.284 and 743.287. The insurer may reserve the right to defer the
payment of the cash surrender benefit for a period not to exceed six
months after demand therefor with surrender of the policy, if the insurer
makes a written request and receives written approval from the director.
The request shall address the necessity and equitability to all
policyholders of the deferral.

(c) A statement of the mortality table, if any, and interest rates
used in calculating any minimum guaranteed paid-up annuity, cash
surrender or death benefits that are guaranteed under the policy,
together with sufficient information to determine the amount of the
benefits.

(d) A statement that any paid-up annuity, cash surrender or death
benefits available under the policy are not less than the minimum
benefits required by any statute of the state in which the policy is
delivered and an explanation of the manner in which the benefits are
altered by the existence of any additional amounts credited by the
insurer to the policy, any indebtedness to the insurer on the policy or
any prior withdrawals from or partial surrenders of the policy.

(2) Notwithstanding subsection (1) of this section, a deferred
annuity policy may provide that if no considerations have been received
for two full years and the portion of the paid-up annuity benefit at
maturity on the plan stipulated in the policy arising from prior
considerations paid would be less than $20 monthly, the insurer at its
option may terminate the policy by payment in cash of the then present
value of the portion of the paid-up annuity benefit. The value shall be
calculated on the basis of the mortality table, if any, and the interest
rate specified in the policy for determining the paid-up annuity benefit.
By this payment the insurer shall be relieved of further obligations
under the policy. [1977 c.320 §3; 2003 c.370 §2] (1) Any paid-up annuity benefit
available under an annuity policy shall be such that its present value on
the date annuity payments are to commence is at least equal to the
minimum nonforfeiture amount on that date. The present value shall be
computed using the mortality table, if any, and the interest rate
specified in the policy for determining the minimum paid-up annuity
benefits guaranteed in the policy.

(2) For annuity policies that provide cash surrender benefits, the
cash surrender benefits available prior to maturity shall not be less
than the present value as of the date of surrender of the portion of the
policy maturity value of the paid-up annuity benefit that would be
provided under the policy at maturity arising from considerations paid
prior to the time of cash surrender, reduced by appropriate amounts
reflecting any previous withdrawals from or partial surrenders of the
policy. The present value shall be calculated using an interest rate not
more than one percent higher than the interest rate specified in the
policy for accumulating the net considerations to determine maturity
value, shall be decreased by the amount of any indebtedness to the
insurer on the policy, including interest due and accrued, and shall be
increased by any existing additional amounts credited by the insurer to
the policy. In no event shall the cash surrender benefit be less than the
minimum nonforfeiture amount on the date of surrender. The death benefit
under an annuity policy that provides cash surrender benefits shall be at
least equal to the cash surrender benefit.

(3) For annuity policies that do not provide cash surrender
benefits, the present value of the paid-up annuity benefit available as a
nonforfeiture option at any time prior to maturity may not be less than
the present value of the portion of the maturity value of the paid-up
annuity benefits provided under the policy arising from considerations
paid before the policy is surrendered in exchange for, or changed to, a
deferred paid-up annuity. The present value shall be calculated for the
period prior to the maturity date on the basis of the interest rate
specified in the policy for accumulating the net considerations to
determine the value, and shall be increased by any additional amounts
credited by the insurer to the policy. For annuity policies that do not
provide any death benefits before annuity payments start, present values
shall be calculated on the basis of such interest rate and the mortality
table specified in the policy for determining the maturity value of
paid-up annuity benefit. In no event, however, shall the present value of
a paid-up annuity benefit be less than the minimum nonforfeiture amount
at that time. [1977 c.320 §5; 2003 c.370 §5](1) For the purpose of determining the
benefits calculated under ORS 743.284 (2) and (3) in the case of annuity
policies under which an election may be made to have annuity payments
commence at optional maturity dates, the maturity date shall be
considered to be the latest date for which such election is permitted by
the policy, but not later than the policy anniversary next following the
annuitant’s 70th birthday or the 10th anniversary of the policy,
whichever is later.

(2) Any paid-up annuity, cash surrender or death benefits available
at any time, other than on the policy anniversary of a policy with fixed
scheduled considerations, shall be calculated with allowance for the
lapse of time and the payment of any scheduled considerations beyond the
start of the policy year in which termination of considerations occurs.
[1977 c.320 §6; 2003 c.370 §6]An annuity policy that does not provide cash surrender
benefits or does not provide death benefits at least equal to the minimum
nonforfeiture amount prior to the start of annuity payments shall include
a statement in a prominent place in the policy that the benefits are not
provided. [1977 c.320 §7; 2003 c.370 §7] (1)
The minimum values as specified in ORS 743.284 and 743.287 of any paid-up
annuity, cash surrender or death benefits available under an annuity
policy shall be based on minimum nonforfeiture amounts as described in
this section.

(2) The minimum nonforfeiture amount at or prior to the
commencement of any annuity payments shall be equal to an accumulation up
to that time at rates of interest as indicated in subsection (4) of this
section of the net considerations previously paid, decreased by the sum
of the following:

(a) Any prior withdrawals from or partial surrenders of the
contract accumulated at rates of interest as indicated in subsection (4)
of this section;

(b) An annual contract charge of $50, accumulated at rates of
interest as indicated in subsection (4) of this section;

(c) Any premium tax paid by the insurer for the policy, accumulated
at rates of interest as indicated in subsection (4) of this section; and

(d) The amount of any indebtedness to the insurer on the policy,
including interest due and accrued.

(3) For purposes of subsection (2) of this section, the net
considerations for a given policy year used to define the minimum
nonforfeiture amount shall be an amount equal to 87.5 percent of the
gross considerations credited to the policy during that policy year.

(4)(a) The interest rate used in determining minimum nonforfeiture
amounts shall be an annual rate of interest determined as the lesser of
three percent per annum and the rate established under paragraph (b) of
this subsection. The rates established shall be specified in the policy
if the interest rate is reset.

(b) The following provisions apply to the rate:

(A) The rate shall be the five-year constant maturity treasury rate
reported by the Federal Reserve as of a date certain or an average over a
period, rounded to the nearest one-twentieth of one percent, that is
specified in the policy and that is no longer than 15 months prior to the
policy issue date or redetermination date under paragraph (c) of this
subsection, reduced by 125 basis points.

(B) The resulting interest rate under subparagraph (A) of this
paragraph may not be less than one percent.

(c) The interest rate shall apply to an initial period and may be
redetermined for additional periods. The redetermination date, basis and
period, if any, shall be stated in the policy. The basis is the date
certain or an average over a specified period that produces the value of
the five-year constant maturity treasury rate to be used at each
redetermination date.

(5) During the period or term that a policy provides substantive
participation in an equity indexed benefit, it may increase the reduction
described in subsection (4)(b) of this section by up to an additional 100
basis points to reflect the value of the equity index benefit. The
present value on the policy issue date and at each redetermination date
thereafter, may not exceed the market value of the benefit. The Director
of the Department of Consumer and Business Services may require a
demonstration that the present value of the additional reduction does not
exceed the market value of the benefit. If a demonstration is not
acceptable to the director, the director may disallow or limit the
additional reduction.

(6) The director may adopt rules to implement subsection (5) of
this section and to provide for further adjustments to the calculation of
minimum nonforfeiture amounts for policies that provide substantive
participation in an equity index benefit and for other policies that the
director determines justify an adjustment. [2003 c.370 §4](1) For an annuity policy that includes,
by rider or supplemental contract provision, both annuity benefits and
life insurance benefits that exceed the greater of cash surrender
benefits or a return of the gross considerations with interest, the
minimum nonforfeiture benefits shall equal the sum of the minimum
nonforfeiture benefits for the annuity portion and the minimum
nonforfeiture benefits, if any, for the life insurance portion, computed
as if each portion were a separate policy.

(2) Notwithstanding ORS 743.284 and 743.287, additional benefits
payable in the event of total and permanent disability, as reversionary
annuity or deferred reversionary annuity benefits, or as other policy
benefits additional to life insurance, endowment and annuity benefits,
and considerations for all such additional benefits, shall be disregarded
in ascertaining the minimum nonforfeiture amounts and paid-up annuity,
cash surrender and death benefits required by the Standard Nonforfeiture
Law for Individual Deferred Annuities. The inclusion of such benefits may
not be required in any paid-up benefits unless the additional benefits
would separately require minimum nonforfeiture amounts and paid-up
annuity, cash surrender and death benefits. [1977 c.320 §8; 2003 c.370 §8]GROUP LIFE INSURANCE
Policies of group life insurance are subject to the following
requirements:

(1) The policy shall be issued upon the lives of persons who are
associated in a common group formed for purposes other than the obtaining
of insurance, except that either of the following kinds of policies may
be issued to persons other than those in a common group:

(a) Group policies of credit life insurance; or

(b) Group policies of mortgage life insurance on first and second
mortgages secured by real estate;

(2) Not less than 75 percent of the eligible members of the group
or 10 lives, whichever is the greater, are insured at the date of issue
of the policy;

(3) The amounts of insurance under the policy shall be based on
some plan precluding individual selection, except that optional
supplemental insurance may be available to persons insured under the
policy, if the amounts of such supplemental insurance are based upon age,
salary, rank or similar objective standards;

(4) The person contracting for the group coverage shall be
responsible for the payment of premiums;

(5) For the purposes of this section, the term “mortgage” includes
trust deeds; and

(6) As used in this section, “trust deed” has the meaning given in
ORS 86.705. [1967 c.359 §412; 1971 c.231 §44; 1991 c.182 §4; 1993 c.426
§1] (1)
Except as provided in subsection (2) of this section a group life
insurance policy shall contain in substance the provisions described in
ORS 743.309 to 743.342.

(2) The provisions described in ORS 743.327 to 743.339 shall not
apply to policies of group credit life insurance. [1967 c.359 §413] If a group life insurance policy
is on a plan of insurance other than the term plan, it shall contain
nonforfeiture provision or provisions which in the opinion of the
Director of the Department of Consumer and Business Services are
equitable to the insured persons and to the policyholder, but nothing in
this section shall be construed to require that group life insurance
policies contain the same nonforfeiture provisions as are required for
individual life insurance policies. [1967 c.359 §414] A group life insurance policy shall contain a
provision that the policyholder is entitled to a grace period of 31 days
for the payment of any premium due except the first, during which grace
period the death benefit coverage shall continue in force, unless the
policyholder shall have given the insurer written notice of
discontinuance in advance of the date of discontinuance and in accordance
with the terms of the policy. The policy may provide that the
policyholder shall be liable to the insurer for the payment of a pro rata
premium for the time the policy was in force during such grace period.
[1967 c.359 §415] A group life insurance policy shall
contain a provision that the validity of the policy shall not be
contested, except for nonpayment of premiums, after it has been in force
for two years from its date of issue; and that no statement made by any
person insured under the policy relating to the insurability of the
person shall be used in contesting the validity of the insurance with
respect to which such statement was made after such insurance has been in
force prior to the contest for a period of two years during such person’s
lifetime nor unless it is contained in a written instrument signed by the
person. [1967 c.359 §416]
A group life insurance policy shall contain a provision that a copy of
the application, if any, of the policyholder shall be attached to the
policy when issued, that all statements made by the policyholder or by
the persons insured shall be deemed representations and not warranties,
and that no statement made by any person insured shall be used in any
contest unless a copy of the instrument containing the statement is or
has been furnished to such person or the beneficiary of the person. [1967
c.359 §417] A group life insurance policy
shall contain a provision setting forth the conditions, if any, under
which the insurer reserves the right to require a person eligible for
insurance to furnish evidence of individual insurability satisfactory to
the insurer as a condition to part or all of the coverage. [1967 c.359
§418] A group life insurance policy shall
contain a provision specifying an equitable adjustment of premiums or of
benefits or of both to be made in the event the age of a person insured
has been misstated, such provision to contain a clear statement of the
method of adjustment to be used. [1967 c.359 §419](1) A group life insurance policy shall contain a provision
that any sum becoming due by reason of the death of a person insured
shall be payable to the beneficiary designated by the person insured,
subject to the provisions of the policy in the event there is no
designated beneficiary, as to all or any part of such sum, living at the
death of the person insured, and subject to any right reserved by the
insurer in the policy and set forth in the certificate to pay at its
option a part of such sum not exceeding $500 to any person appearing to
the insurer to be equitably entitled thereto by reason of having incurred
funeral or other expenses incident to the last illness or death of the
person insured.

(2) If the insurer fails to pay the proceeds of or make payment
under the policy within 30 days after receipt of due proof of death and
of the interest of the claimant, and if the beneficiary elects to receive
a lump sum settlement, the insurer shall pay interest on any money due
and unpaid after expiration of the 30-day period. The insurer shall
compute the interest from the date of the insured’s death until the date
of payment, at a rate not lower than that paid by the insurer on other
withdrawable policy owner funds. At the end of the 30-day period, the
insurer shall notify the designated beneficiary or beneficiaries at their
last-known address that interest at the applicable rate will be paid on
the lump sum proceeds from the date of death of the insured.

(3) Nothing in this section shall be construed to allow an insurer
to withhold payment of money payable under a group life insurance policy
to any designated beneficiary for a period longer than reasonably
necessary to transmit the payment. [1967 c.359 §420; 1983 c.754 §3] A group life insurance policy
shall contain a provision that the insurer will issue to the policyholder
for delivery to each person insured an individual certificate setting
forth a statement as to the insurance protection to which the person is
entitled, to whom the insurance benefits are payable, and the rights and
conditions set forth in ORS 743.333, 743.336 and 743.339. [1967 c.359
§421] A group life insurance
policy shall contain a provision that if the insurance, or any portion of
it, on a person covered under the policy ceases because of termination of
employment or of membership in the class or classes eligible for coverage
under the policy, such person shall be entitled to have issued by the
insurer, without evidence of insurability, an individual policy of life
insurance without disability or other supplementary benefits, provided
application for the individual policy shall be made, and the first
premium paid to the insurer, within 31 days after such termination, and
provided further that:

(1) The individual policy shall, at the option of such person, be
on any one of the forms, except term insurance, then customarily issued
by the insurer at the age and for the amount applied for;

(2) The individual policy shall be in an amount not in excess of
the amount of life insurance which ceases because of such termination,
less the amount of any life insurance for which such person is or becomes
eligible under the same or any other group policy within 31 days after
such termination, provided that any amount of insurance which shall have
matured on or before the date of such termination as an endowment payable
to the person insured, whether in one sum or in installments or in the
form of an annuity, shall not, for the purposes of this provision, be
included in the amount which is considered to cease because of such
termination; and

(3) The premium on the individual policy shall be at the insurer’s
then customary rate applicable to the form and amount of the individual
policy, to the class of risk to which such person then belongs, and to
the age attained on the effective date of the individual policy. [1967
c.359 §422] A group
life insurance policy shall contain a provision that if the group policy
terminates or is amended so as to terminate the insurance of any class of
insured persons, every person insured thereunder at the date of such
termination whose insurance terminates and who has been so insured for at
least five years prior to such termination date shall be entitled to have
issued by the insurer an individual policy of life insurance, subject to
the same conditions and limitations as are provided by ORS 743.333,
except that the group policy may provide that the amount of such
individual policy shall not exceed the smaller of:

(1) The amount of the person’s life insurance protection ceasing
because of the termination or amendment of the group policy, less the
amount of any life insurance for which the person is or becomes eligible
under any group policy issued or reinstated by the same or another
insurer within 31 days after such termination; and

(2) $10,000. [1967 c.359 §423; 1989 c.784 §16] A
group life insurance policy shall contain a provision that if a person
insured under the group policy dies during the period within which the
person would have been entitled to have an individual policy issued in
accordance with ORS 743.333 or 743.336 and before such an individual
policy shall have become effective, the amount of life insurance which
the person would have been entitled to have issued under such individual
policy shall be payable as a claim under the group policy, whether or not
application for the individual policy or the payment of the first premium
therefor has been made. [1967 c.359 §424]A group credit life insurance policy shall contain a provision
that the insurer will furnish to the policyholder for delivery to each
debtor insured under the policy a form which will contain a statement
that the life of the debtor is insured under the policy and that any
death benefit paid thereunder by reason of death shall be applied to
reduce or extinguish the indebtedness. [1967 c.359 §425] Nothing in the
Insurance Code or in any other law shall be construed to prohibit any
person insured under a group life insurance policy from making an
assignment of all or any part of the incidents of ownership under such
policy, including but not limited to the privilege to have issued an
individual policy of life insurance pursuant to the provisions of ORS
743.333 to 743.339 and the right to name a beneficiary. Subject to the
terms of the policy or an agreement between the insured, the group
policyholder and the insurer relating to assignment of incidents of
ownership under the policy, such an assignment by an insured is valid for
the purpose of vesting in the assignee, in accordance with any provisions
included in the assignment as to the time at which it is to be effective,
all of such incidents of ownership so assigned, but without prejudice to
the insurer on account of any payment it may make, or individual policy
it may issue in accordance with ORS 743.333 to 743.339, prior to receipt
of notice of the assignment. [1971 c.231 §6; 2005 c.22 §491] (1) No person selling
group life insurance is authorized to sell membership in a common group
for the purpose of qualifying an applicant who is an individual for group
life insurance.

(2) No person selling membership in a common group is authorized to
offer group life insurance for the purpose of selling membership in the
common group. [1989 c.784 §6](1) An insurer shall not offer a policy of group life insurance in
this state to an association as the policyholder or offer coverage under
such a policy, whether the policy is issued in this or another state,
unless the Director of the Department of Consumer and Business Services
determines that the association satisfies the following requirements:

(a) The association must have had an active existence for at least
one year;

(b) The association must insure under the policy the employees or
members of the association, or employees of members of the association,
for the benefit of persons other than the association or its officers or
trustees; and

(c) The association must be maintained primarily for purposes other
than the procurement of insurance.

(2) An insurer shall submit evidence to the director that the
association satisfies the requirements of subsection (1) of this section.
The director shall review the evidence and may request additional
evidence as needed.

(3) An insurer shall submit to the director any changes in the
evidence submitted under subsection (2) of this section.

(4) The director may order an insurer to cease offering group life
insurance to an association if the director determines that the
association does not meet the requirements under subsection (1) of this
section.

(5) For purposes of this section:

(a) An association includes a labor union.

(b) “Employees” may include retired employees.

(6) The director may adopt rules to carry out this section. [1989
c.784 §7](1) An insurer shall not offer in this
state a policy of group life insurance that is described in this section
and insures persons in this state, or shall not offer coverage under such
a policy, whether the policy is to be issued in this or another state,
unless the Director of the Department of Consumer and Business Services
determines that the requirements of subsections (2) and (3) of this
section are satisfied. This section applies to a policy to be issued to
the trustees of a fund established for:

(a) Two or more employers in the same or related industry;

(b) One or more labor unions;

(c) One or more employers and one or more labor unions; or

(d) An association determined by the director to satisfy the
requirements of ORS 743.351 (1).

(2) A policy of group life insurance shall provide coverage for the
benefit of employees of the employers, members of the unions or members
of the association. The policy may include as employees the officers and
managers of the employer, and the individual proprietor or partners if
the employer is an individual proprietor or a partnership. In addition to
such employees, the policy may also insure retired employees and the
trustees or their employees, or both, if their duties are principally
connected with the trust.

(3) The director shall determine with respect to a policy whether
the trustees are the policyholder. If the director determines that the
trustees are the policyholder and if the policy is issued or proposed to
be issued in this state, the policy is subject to the Insurance Code. If
the director determines that the trustees are not the policyholder, the
evidence of coverage that is issued or proposed to be issued in this
state to a participating employer, labor union or association shall be
deemed to be a group life insurance policy subject to the Insurance Code.
For purposes of this section, the director may determine that the
trustees are not the policyholder if:

(a) The evidence of coverage issued or proposed to be issued to a
participating employer, labor union or association is in fact the primary
statement of coverage for the employer, labor union or association; and

(b) The trust arrangement is under the actual control of the
insurer.

(4) An insurer shall submit evidence to the director showing that
the requirements of subsections (2) and (3) of this section are
satisfied. The director shall review the evidence and may request
additional evidence as needed.

(5) An insurer shall submit to the director any changes in the
evidence submitted under subsection (4) of this section.

(6) The director may adopt rules to carry out this section. [1989
c.784 §8]
When coverage under a group life insurance policy is replaced by coverage
under another group life insurance policy, the insurer offering the
policy that is replaced shall continue to provide coverage for each
certificate holder under the replaced policy whose premium payments are
suspended because the certificate holder is disabled. [1989 c.784 §9]Note: 743.356 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 743 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.
(1) An insurer of a group life insurance policy may authorize certificate
holders under the policy to borrow upon the policy, subject to the
following provisions:

(a) The insurer may require a certificate holder, in order to
borrow on the policy, to have been a certificate holder under the policy
for a minimum period specified by the insurer.

(b) The insurer may require that no premium on the policy be in
default beyond the grace period for payment.

(2) An insurer authorizing a certificate holder under a group life
insurance policy may establish a minimum loan amount, but the amount may
not exceed $1,000.

(3) An insurer may charge a fixed interest rate not exceeding eight
percent per year, or an adjustable interest rate. The policy provision
establishing an adjustable interest rate must comply with ORS 743.187.
The exemption from a limitation on interest rates under state law
established in ORS 743.187 for individual life insurance policies also
applies to interest rates established pursuant to this section.

(4) The loan value of a certificate shall be equal to 90 percent of
the cash surrender value of the certificate at the time of the loan, less
any existing indebtedness not already deducted, including any unpaid
interest. This subsection does not apply to certificates issued under a
group policy for which the loan value is established by federal law.
[1991 c.182 §9] (1) Group life
insurance coverage offered to a resident in this state under a group life
insurance policy issued to a group other than one described in ORS
743.351 or 743.354 may be delivered if:

(a) The Director of the Department of Consumer and Business
Services finds that:

(A) The issuance of the policy is in the best interest of the
public;

(B) The issuance of the policy would result in economies of
acquisition or administration; and

(C) The benefits are reasonable in relation to the premiums charged;

(b) The premium for the policy is paid either from funds of a
policyholder, from funds contributed by a covered person or from both; and

(c) An insurer has the discretion to exclude or limit coverage for
a voluntary plan on any person for whom evidence of individual
insurability is not satisfactory to the insurer.

(2) The requirements of ORS 743.303 do not apply to a policy
authorized under subsection (1) of this section. [2001 c.943 §3]CREDIT LIFE AND CREDIT HEALTH INSURANCE(1) “Credit life insurance” means insurance on the life of a
debtor pursuant to or in connection with a specific loan or other credit
transaction.

(2) “Credit health insurance” means insurance on a debtor to
provide indemnity for payments becoming due on a specific loan or other
credit transaction while the debtor is disabled as defined in the policy.

(3) “Creditor” means the lender of money or vendor or lessor of
goods, services, property, rights or privileges for which payment is
arranged through a credit transaction, or any successor to the right,
title or interest of any such lender, vendor or lessor, and an affiliate,
associate or subsidiary of any of them or any director, officer or
employee of any of them or any other person in any way associated with
any of them.

(4) “Debtor” means a borrower of money or a purchaser or lessee of
goods, services, property, rights or privileges for which payment is
arranged through a credit transaction.

(5) “Indebtedness” means the total amount payable by a debtor to a
creditor in connection with a loan or other credit transaction. [Formerly
739.565 and then 743.561](1) All life or health insurance in connection with loans or
other credit transactions shall be subject to ORS 743.371 to 743.380,
except:

(a) Insurance in connection with a loan or other credit transaction
of more than 10 years’ duration; or

(b) Insurance, the issuance of which is an isolated transaction on
the part of the insurer not related to an agreement or a plan for
insuring debtors of the creditor.

(2) Notwithstanding subsection (1) of this section, credit life and
credit health insurance may be issued for up to 10 years in connection
with a loan or other credit transaction of any duration. [Formerly
739.570 and then 743.564] Credit
life and credit health insurance shall be issued only in the following
forms:

(1) Individual policies of life insurance issued to debtors on the
term plan.

(2) Individual policies of health insurance issued to debtors on a
term plan, or disability benefit provisions in individual policies of
credit life insurance.

(3) Group policies of life insurance issued to creditors providing
insurance upon the lives of debtors on the term plan.

(4) Group policies of health insurance issued to creditors on a
term plan insuring debtors, or disability benefit provisions in group
credit life insurance policies. [Formerly 739.575 and then 743.567] (1) The initial
amount of credit life insurance shall not exceed the total amount
repayable under the contract of indebtedness and, where an indebtedness
is repayable in substantially equal installments, the amount of insurance
shall at no time exceed the scheduled or actual amount of unpaid
indebtedness, whichever is greater.

(2) Notwithstanding the provisions of subsection (1) of this
section, insurance on agricultural credit transaction commitments not
exceeding 18 months in duration may be written up to the amount of the
loan commitment, on a nondecreasing or level term plan.

(3) Notwithstanding the provisions of subsection (1) of this
section, insurance on educational credit transaction commitments may
include the portion of such commitment that has not been advanced by the
creditor. [Formerly 743.570] The total
amount of periodic indemnity payable by credit health insurance in the
event of disability, as defined in the policy, shall not exceed the
aggregate of the periodic scheduled unpaid installments of the
indebtedness; and the amount of each periodic indemnity payment shall not
exceed the original indebtedness divided by the number of periodic
installments. [Formerly 741.425 and then 743.573] (1)
The term of any credit life or credit health insurance shall, subject to
acceptance by the insurer, commence on the date when the debtor becomes
obligated to the creditor, except that, where a group policy provides
coverage with respect to existing obligations, the insurance on a debtor
with respect to such indebtedness shall commence on the effective date of
the policy. Where evidence of insurability is required and such evidence
is furnished more than 30 days after the date when the debtor becomes
obligated to the creditor, the term of the insurance may commence on the
date on which the insurer determines the evidence to be satisfactory, and
in such event there shall be an appropriate refund or adjustment of any
charge to the debtor for insurance.

(2) The term of the insurance shall not extend more than 15 days
beyond the scheduled maturity date of the indebtedness except when
extended without additional cost to the debtor.

(3) If the indebtedness is discharged because of renewal or
refinancing prior to the scheduled maturity date, the insurance in force
shall be terminated before any new insurance may be issued in connection
with the renewed or refinanced indebtedness.

(4) In all cases of termination of the insurance prior to the
scheduled maturity date of the indebtedness, a refund shall be paid or
credited as provided in ORS 743.378. [Formerly 739.585 and then 743.576](1) All credit life or credit health insurance shall be
evidenced by an individual policy or, in the case of group insurance, by
a certificate of insurance, which individual policy or group certificate
of insurance shall be delivered to the debtor.

(2) Each individual policy or group certificate of credit life or
credit health insurance, or both shall, in addition to other requirements
of law, set forth:

(a) The name and home-office address of the insurer;

(b) The name or names of the debtor, or in the case of a
certificate under a group policy, the identity by name or otherwise of
the debtor;

(c) The premium or amount of payment by the debtor separately for
credit life insurance and for credit health insurance;

(d) A description of the coverage including the amount and term
thereof, and any exceptions, limitations and restrictions; and

(e) A statement that the benefits shall be paid to the creditor to
reduce or extinguish the unpaid indebtedness and, wherever the amount of
insurance may exceed the unpaid indebtedness, that any such excess shall
be payable to a beneficiary, other than the creditor, named by the debtor
or to the estate of the debtor.

(3) Such individual policy or group certificate of insurance shall
be delivered to the insured debtor at the time the indebtedness is
incurred except as provided in subsection (4) of this section.

(4) If such individual policy or group certificate of insurance is
not delivered to the debtor at the time the indebtedness is incurred, a
copy of the application for insurance or a notice of proposed insurance,
signed by the debtor and setting forth the name and home-office address
of the insurer, the name or names of the debtor, the premium or amount of
payment by the debtor separately for credit life insurance and for credit
health insurance, and the amount, term and a brief description of the
coverage provided, shall be delivered to the debtor at the time the
indebtedness is incurred. The copy of the application for insurance or
notice of proposed insurance shall also refer exclusively to insurance
coverage, and shall be separate and apart from the loan, sale or other
credit statement of account, instrument or agreement, unless the
information required by this subsection is prominently set forth therein.
Upon acceptance of the insurance by the insurer and within 30 days of the
date upon which the indebtedness is incurred, the insurer shall cause the
individual policy or group certificate of insurance to be delivered to
the debtor. The application for insurance or notice of proposed insurance
shall state that upon acceptance by the insurer, the insurance shall
become effective as provided in ORS 743.376.

(5) If an insurer other than the named insurer accepts the risk,
then the debtor shall receive a policy or certificate of insurance
setting forth the name and home-office address of the substituted insurer
and the amount of the premium to be charged, and if the amount of premium
is less than that set forth in the notice of proposed insurance an
appropriate refund shall be made. [Formerly 739.590 and then 743.579] (1) Each individual policy
or group certificate of credit life or credit health insurance, or both,
shall provide that in the event of termination of the insurance prior to
the scheduled maturity date of the indebtedness, any refund of an amount
paid by the debtor for insurance shall be paid or credited promptly to
the person entitled thereto. However, the Director of the Department of
Consumer and Business Services shall prescribe a minimum refund and no
refund which would be less than such minimum need be made. The formula to
be used in computing such refund shall be filed with and approved by the
director.

(2) If a creditor requires a debtor to make any payment for credit
life insurance or credit health insurance and an individual policy or
group certificate of insurance is not issued, the creditor shall
immediately give written notice to such debtor and shall promptly make an
appropriate credit to the account.

(3) The amount charged to a debtor for credit life insurance and
for credit health insurance shall not exceed the respective premiums
charged by the insurer, as computed at the time the charge to the debtor
is determined. [Formerly 739.600 and then 743.582] Notwithstanding the
provisions of any other law of this state which may expressly or by
construction provide otherwise, any commission or service fee or other
benefit or return to any creditor arising out of the sale or provision of
credit life and credit health insurance shall not be deemed interest or
charges in connection with loans or credit transactions. [Formerly
739.603 and then 743.585] (1) All claims under policies of
credit life or credit health insurance, or both, shall be promptly
reported to the insurer or its designated claim representative and the
insurer shall maintain adequate claim files. All claims shall be settled
as soon as possible and in accordance with the terms of the policy.

(2) All claims shall be paid either by draft drawn upon the insurer
or by check of the insurer to the order of the claimant to whom payment
is due pursuant to the policy provisions or, upon direction of such
claimant, to the one specified. [Formerly 739.610 and then 743.588]HEALTH INSURANCE(Individual)Nothing in ORS 743.405 to 743.498 shall apply to or affect:

(1) Any workers’ compensation insurance policy or any liability
insurance policy with or without supplementary expense coverage therein;

(2) Any policy of reinsurance;

(3) Any blanket or group policy of insurance; or

(4) Any life insurance policy, or policy supplemental thereto which
contains only such provisions relating to health insurance as:

(a) Provide additional benefits in case of death or dismemberment
or loss of sight by accident; or

(b) Operate to safeguard such policy against lapse, or to give a
special surrender value or special benefit or an annuity in the event the
insured shall become totally and permanently disabled, as defined by the
policy or supplemental policy.

(5) Coverage under ORS 735.600 to 735.650. [Formerly 741.022; 2001
c.356 §5]An individual health insurance policy must meet the following
requirements:

(1) The entire money and other considerations therefor shall be
expressed therein.

(2) The time at which the insurance takes effect and terminates
shall be expressed therein.

(3) It shall purport to insure only one person, except that a
policy may insure, originally or by subsequent amendment, upon the
application of an adult member of a family who shall be deemed the
policyholder, any two or more eligible members of that family, including
husband, wife, dependent children or any children under a specified age
which shall not exceed 19 years and any other person dependent upon the
policyholder.

(4) The policy may not be issued individually to an individual in a
group of persons as described in ORS 743.522 for the purpose of
separating the individual from health insurance benefits offered or
provided in connection with a group health benefit plan.

(5) Except as provided in ORS 743.498, the style, arrangement and
overall appearance of the policy may not give undue prominence to any
portion of the text, and every printed portion of the text of the policy
and of any indorsements or attached papers shall be plainly printed in
lightfaced type of a style in general use, the size of which shall be
uniform and not less than 10 point with a lower case unspaced alphabet
length not less than 120 point. Captions shall be printed in not less
than 12-point type. As used in this subsection, “text” includes all
printed matter except the name and address of the insurer, name or title
of the policy, the brief description if any, and captions and subcaptions.

(6) The exceptions and reductions of indemnity must be set forth in
the policy. Except those required by ORS 743.411 to 743.480, exceptions
and reductions shall be printed at the insurer’s option either included
with the applicable benefit provision or under an appropriate caption
such as EXCEPTIONS, or EXCEPTIONS AND REDUCTIONS. However, if an
exception or reduction specifically applies only to a particular benefit
of the policy, a statement of the exception or reduction must be included
with the applicable benefit provision.

(7) Each form constituting the policy, including riders and
indorsements, must be identified by a form number in the lower left-hand
corner of the first page of the policy.

(8) The policy may not contain provisions purporting to make any
portion of the charter, rules, constitution or bylaws of the insurer a
part of the policy unless such portion is set forth in full in the
policy, except in the case of the incorporation of or reference to a
statement of rates or classification of risks, or short rate table filed
with the Director of the Department of Consumer and Business Services.
[Formerly 741.120; 1999 c.987 §5]
Except as provided in ORS 742.021, a health insurance policy shall
contain the provisions set forth in ORS 743.411 to 743.444. Such
provisions shall be preceded individually by the caption appearing in
such sections or, at the option of the insurer, by such appropriate
individual or group captions or subcaptions as the Director of the
Department of Consumer and Business Services may approve. [1967 c.359
§428] A health insurance policy shall
contain a provision as follows: “ENTIRE CONTRACT; CHANGES: This policy,
including the indorsements and the attached papers, if any, constitutes
the entire contract of insurance. No change in this policy shall be valid
until approved by an executive officer of the insurer and unless such
approval be indorsed hereon or attached hereto. No insurance producer has
authority to change this policy or to waive any of its provisions.” [1967
c.359 §429; 2003 c.364 §107]A health insurance policy providing coverage for
hospital or medical expenses not limited to expenses from accidents or
specified sicknesses shall provide, at the request of the applicant,
coverage for expenses arising from treatment for alcoholism. The
following conditions apply to the requirement for such coverage:

(1) The applicant shall be informed of the applicant’s option to
request this coverage.

(2) The inclusion of the coverage may be made subject to the
insurer’s usual underwriting requirements.

(3) The coverage may be made subject to provisions of the policy
that apply to other benefits under the policy, including but not limited
to provisions relating to deductibles and coinsurance.

(4) The policy may limit hospital expense coverage to treatment
provided by the following facilities:

(a) A health care facility licensed as required by ORS 441.015.

(b) A health care facility accredited by the Joint Commission on
Accreditation of Hospitals.

(5) Except as permitted by subsection (3) of this section, the
policy shall not limit payments thereunder for alcoholism to an amount
less than $4,500 in any 24-consecutive month period and the policy shall
provide coverage, within the limits of this subsection, of not less than
80 percent of the hospital and medical expenses for treatment for
alcoholism. [1977 c.632 §2; 1981 c.319 §1; 2001 c.900 §230] (1) A
health insurance policy shall contain a provision as follows: “TIME LIMIT
ON CERTAIN DEFENSES: After two years from the date of issue of this
policy no misstatements, except fraudulent misstatements, made by the
applicant in the application for such policy shall be used to void the
policy or to deny a claim for loss incurred or disability, as defined in
the policy, commencing after the expiration of that period.”

(2) The policy provision set forth in subsection (1) of this
section shall not be so construed as to affect any legal requirement for
avoidance of a policy or denial of a claim during such initial two-year
period, or to limit the application of ORS 743.450 to 743.462 in the
event of misstatement with respect to age or occupation or other
insurance.

(3) A policy which the insured has the right to continue in force
subject to its terms by the timely payment of premium until at least age
50 or, in the case of a policy issued after age 44, for at least five
years from its date of issue, may contain in lieu of the provision set
forth in subsection (1) of this section the following provision, from
which the clause in parentheses may be omitted at the insurer’s option:
“INCONTESTABLE: After this policy has been in force for a period of two
years during the lifetime of the insured (excluding any period during
which the insured is disabled), it shall become incontestable as to the
statements contained in the application.”

(4) The policy shall contain a provision as follows, which shall be
a separate paragraph under the same caption as, and immediately
following, the provision set forth in subsection (1) or (3) of this
section: “No claim for loss incurred or disability, as defined in the
policy, commencing after two years from the date of issue of this policy
shall be reduced or denied on the ground that a disease or physical
condition not excluded from coverage by name or specific description
effective on the date of loss had existed prior to the effective date of
coverage of this policy.” [1967 c.359 §430; 1969 c.159 §1] (1) An individual health insurance policy
shall contain a provision as follows: “GRACE PERIOD: A minimum grace
period of 10 days after the premium due date will be granted for the
payment of each premium falling due after the first premium, during which
grace period the policy shall continue in force.”

(2) A policy that contains a cancellation provision may add the
following clause at the end of the provision set forth in subsection (1)
of this section: “subject to the right of the insurer to cancel in
accordance with the cancellation provision hereof.”

(3) A policy in which the insurer reserves the right to refuse
renewal shall have the following clause at the beginning of the provision
set forth in subsection (1) of this section: “Unless not less than 30
days prior to the premium due date the insurer has delivered to the
insured or has mailed to the last address of the insured as shown by the
records of the insurer written notice of its intention not to renew this
policy beyond the period for which the premium has been accepted. The
insurer shall state in the notice the reason for its refusal to renew
this policy.” [1967 c.359 §431; 1989 c.784 §19; 2001 c.943 §9] (1) A health insurance policy shall contain
a provision as follows: “REINSTATEMENT: If any renewal premium is not
paid within the grace period, a subsequent acceptance of premium by the
insurer or by any insurance producer duly authorized by the insurer to
accept such premium, without requiring in connection therewith an
application for reinstatement, shall reinstate the policy; provided,
however, that if the insurer or such insurance producer requires an
application for reinstatement and issues a conditional receipt for the
premium tendered, the policy will be reinstated upon approval of such
application by the insurer or, lacking such approval, upon the 45th day
following the date of such conditional receipt unless the insurer has
previously notified the insured in writing of its disapproval of such
application. The reinstated policy shall cover only loss resulting from
such accidental injury as may be sustained after the date of
reinstatement and loss due to such sickness as may begin more than 10
days after such date. In all other respects the insured and insurer shall
have the same rights thereunder as they had under the policy immediately
before the due date of the defaulted premium, subject to any provisions
indorsed hereon or attached hereto in connection with the reinstatement.
Any premium accepted in connection with a reinstatement shall be applied
to a period for which premium has not been previously paid, but not to
any period more than 60 days prior to the date of reinstatement.”

(2) The last sentence of the provision set forth in subsection (1)
of this section may be omitted from any policy which the insured has the
right to continue in force subject to its terms by the timely payment of
premiums until at least age 50 or, in the case of a policy issued after
age 44, for at least five years from its date of issue. [1967 c.359 §432;
2001 c.943 §10; 2003 c.364 §108] (1) A health insurance policy shall
contain a provision as follows: “NOTICE OF CLAIM: Written notice of claim
must be given to the insurer within 20 days after the occurrence or
commencement of any loss covered by the policy, or as soon thereafter as
is reasonably possible. Notice given by or on behalf of the insured or
the beneficiary to the insurer at ___ (insert the location of such office
as the insurer may designate for the purpose), or to any authorized agent
of the insurer, with information sufficient to identify the insured,
shall be deemed notice to the insurer.”

(2) In a policy providing a loss-of-time benefit which may be
payable for at least two years, an insurer may at its option insert the
following between the first and second sentences of the provision set
forth in subsection (1) of this section: “Subject to the qualifications
set forth below, if the insured suffers loss of time on account of
disability for which indemnity may be payable for at least two years, the
insured shall, at least once in every six months after having given
notice of claim, give to the insurer notice of continuance of such
disability, except in the event of legal incapacity. The period of six
months following any filing of proof by the insured or any payment by the
insurer on account of such claim or any denial of liability in whole or
in part by the insurer shall be excluded in applying this provision.
Delay in the giving of such notice shall not impair the insured’s right
to any indemnity which would otherwise have accrued during the period of
six months preceding the date on which such notice is actually given.”
[1967 c.359 §433] A health insurance policy shall contain a
provision as follows: “CLAIM FORMS: The insurer, upon receipt of a notice
of claim, will furnish to the claimant such forms as are usually
furnished by it for filing proof of loss. If such forms are not furnished
within 15 days after the giving of such notice, the claimant shall be
deemed to have complied with the requirements of this policy as to proof
of loss upon submitting, within the time fixed in the policy for filing
proofs of loss, written proof covering the occurrence, the character and
the extent of the loss for which claim is made.” [1967 c.359 §434] A health insurance policy shall contain a
provision as follows: “PROOFS OF LOSS: Written proof of loss must be
furnished to the insurer at its office in case of claim for loss for
which this policy provides any periodic payment contingent upon
continuing loss within 90 days after the termination of the period for
which the insurer is liable and in case of claim for any other loss
within 90 days after the date of such loss. Failure to furnish such proof
within the time required shall not invalidate or reduce any claim if it
was not reasonably possible to give proof within such time, provided such
proof is furnished as soon as reasonably possible and in no event, except
in the absence of legal capacity, later than one year from the time proof
is otherwise required.” [1967 c.359 §435] A health insurance policy shall
contain a provision as follows: “TIME OF PAYMENT OF CLAIMS: Indemnities
payable under this policy for any loss other than loss for which this
policy provides any periodic payment will be paid immediately upon
receipt of due written proof of such loss. Subject to due written proof
of loss, all accrued indemnities for loss for which this policy provides
periodic payment will be paid ______ (insert period for payment which
must not be less frequently than monthly) and any balance remaining
unpaid upon the termination of liability will be paid immediately upon
receipt of due written proof.” [1967 c.359 §436] (1) A health insurance policy shall
contain a provision as follows: “PAYMENT OF CLAIMS: Indemnity for loss of
life will be payable in accordance with the beneficiary designation and
the provisions respecting such payment which may be prescribed herein and
effective at the time of payment. If no such designation or provision is
then effective, such indemnity shall be payable to the estate of the
insured. Any other accrued indemnities unpaid at the insured’s death may,
at the option of the insurer, be paid either to such beneficiary or to
such estate. All other indemnities will be payable to the insured.”

(2) The following provisions, or either of them, may be included
with the provision set forth in subsection (1) of this section at the
option of the insurer:

(a) “If any indemnity of this policy shall be payable to the estate
of the insured, or to an insured or beneficiary who is a minor or
otherwise not competent to give a valid release, the insurer may pay such
indemnity, up to an amount not exceeding $___ (insert an amount which
shall not exceed $1,000), to any relative by blood or connection by
marriage of the insured or beneficiary who is deemed by the insurer to be
equitably entitled thereto. Any payment made by the insurer in good faith
pursuant to this provision shall fully discharge the insurer to the
extent of such payment.”

(b) “Subject to any written direction of the insured in the
application or otherwise all or a portion of any indemnities provided by
this policy on account of hospital, nursing, medical or surgical services
may, at the insurer’s option and unless the insured requests otherwise in
writing not later than the time of filing proofs of such loss, be paid
directly to the hospital or person rendering such services; but it is not
required that the service be rendered by a particular hospital or
person.” [1967 c.359 §437] A health insurance
policy shall contain a provision as follows: “PHYSICAL EXAMINATIONS AND
AUTOPSY: The insurer at its own expense shall have the right and
opportunity to examine the person of the insured when and as often as it
may reasonably require during the pendency of a claim hereunder and to
make an autopsy in case of death where it is not forbidden by law.” [1967
c.359 §438] A health insurance policy shall contain a
provision as follows: “LEGAL ACTIONS: No action at law or in equity shall
be brought to recover on this policy prior to the expiration of 60 days
after written proof of loss has been furnished in accordance with the
requirements of this policy. No such action shall be brought after the
expiration of three years after the time written proof of loss is
required to be furnished.” [1967 c.359 §439] (1) A health insurance policy shall
contain a provision as follows: “CHANGE OF BENEFICIARY: Unless the
insured makes an irrevocable designation of beneficiary, the right to
change of beneficiary is reserved to the insured and the consent of the
beneficiary or beneficiaries shall not be requisite to surrender or
assignment of this policy or to any change of beneficiary or
beneficiaries or to any other changes in this policy.”

(2) The first clause of the provision set forth in subsection (1)
of this section, relating to the irrevocable designation of beneficiary,
may be omitted at the insurer’s option. [1967 c.359 §440] Except as
provided in ORS 742.021, provisions in a health insurance policy
respecting the matters set forth in ORS 743.450 to 743.480 shall be in
the words which appear in such sections. Any such provision contained in
the policy shall be preceded individually by the appropriate caption
appearing in such sections or, at the option of the insurer, by such
appropriate individual or group captions or subcaptions as the Director
of the Department of Consumer and Business Services may approve. [1967
c.359 §441] A health insurance policy may contain
a provision as follows: “CHANGE OF OCCUPATION: If the insured be injured
or contract sickness after having changed occupation to one classified by
the insurer as more hazardous than that stated in this policy or while
doing for compensation anything pertaining to an occupation so
classified, the insurer will pay only such portion of the indemnities
provided in this policy as the premium paid would have purchased at the
rates and within the limits fixed by the insurer for such more hazardous
occupation. If the insured changes occupation to one classified by the
insurer as less hazardous than that stated in this policy, the insurer,
upon receipt of proof of such change of occupation, will reduce the
premium rate accordingly, and will return the excess pro rata unearned
premium from the date of change of occupation or from the policy
anniversary date immediately preceding receipt of such proof, whichever
is the more recent. In applying this provision, the classification of
occupational risk and the premium rates shall be such as have been last
filed by the insurer prior to the occurrence of the loss for which the
insurer is liable or prior to date of proof of change in occupation with
the state official having supervision of insurance in the state where the
insured resided at the time this policy was issued; but if such filing
was not required, then the classification of occupational risk and the
premium rates shall be those last made effective by the insurer in such
state prior to the occurrence of the loss or prior to the date of proof
of change in occupation.” [1967 c.359 §442] A health insurance policy may contain
a provision as follows: “MISSTATEMENT OF AGE: If the age of the insured
has been misstated, all amounts payable under this policy shall be such
as the premium paid would have purchased at the correct age.” [1967 c.359
§443] (1) A health insurance
policy may contain a provision as follows: “OTHER INSURANCE IN THIS
INSURER: If an accident or sickness or accident and sickness policy or
policies previously issued by the insurer to the insured be in force
concurrently herewith, making the aggregate indemnity for _____ (insert
type of coverage or coverages) in excess of $___ (insert maximum limit of
indemnity or indemnities), the excess insurance shall be void and all
premiums paid for such excess shall be returned to the insured or to the
estate of the insured.”

(2) In lieu of the provisions set forth in subsection (1) of this
section, the policy may contain a provision as follows: “OTHER INSURANCE
IN THIS INSURER: Insurance effective at any one time on the insured under
a like policy or policies in this company is limited to the one such
policy elected by the insured, the beneficiary or the estate of the
insured, as the case may be, and the insurer will return all premiums
paid for all other such policies.” [1967 c.359 §444]
(1) A health insurance policy may contain a provision as follows:
“INSURANCE WITH OTHER INSURERS: If there be other valid coverage, not
with this insurer, providing benefits for the same loss on a provision of
service basis or on an expense incurred basis and of which this insurer
has not been given written notice prior to the occurrence or commencement
of loss, the only liability under any expense incurred coverage of this
policy shall be for such proportion of the loss as the amount which would
otherwise have been payable hereunder plus the total of the like amounts
under all such other valid coverages for the same loss of which this
insurer had notice bears to the total like amounts under all valid
coverages for such loss, and for the return of such portion of the
premiums paid as shall exceed the pro rata portion for the amount so
determined. For the purpose of applying this provision when other
coverage is on a provision of service basis, the ‘like amount’ of such
other coverage shall be taken as the amount which the services rendered
would have cost in the absence of such coverage.”

(2) If the policy provision set forth in subsection (1) of this
section is included in a policy which also contains the policy provision
set forth in ORS 743.462, there shall be added to the caption of the
provision set forth in subsection (1) of this section the phrase “EXPENSE
INCURRED BENEFITS.” The insurer may, at its option, include in this
provision a definition of “other valid coverage,” approved as to form by
the Director of the Department of Consumer and Business Services, which
definition shall be limited in subject matter to coverage provided by
organizations subject to regulation by insurance law or by insurance
authorities of this or any other state of the United States or any
province of Canada, and by hospital or medical service organizations, and
to any other coverage the inclusion of which may be approved by the
director. In the absence of such definition such term shall not include
group insurance, automobile medical payments insurance or coverage
provided by hospital or medical service organizations or by union welfare
plans or employer or employee benefit organizations. For the purpose of
applying the policy provision set forth in this section with respect to
any insured, any amount of benefit provided for such insured pursuant to
any compulsory benefit statute (including any workers’ compensation or
employer’s liability statute), whether provided by a governmental agency
or otherwise, shall in all cases be deemed to be “other valid coverage”
of which the insurer has had notice. In applying the policy provision set
forth in this section no third party liability coverage shall be included
as “other valid coverage.” [1967 c.359 §445](1) A health insurance policy may contain a provision as
follows: “INSURANCE WITH OTHER INSURERS: If there be other valid
coverage, not with this insurer, providing benefits for the same loss on
other than an expense incurred basis and of which this insurer has not
been given written notice prior to the occurrence or commencement of
loss, the only liability for such benefits under this policy shall be for
such proportion of the indemnities otherwise provided hereunder for such
loss as the like indemnities of which the insurer had notice (including
the indemnities under this policy) bear to the total amount of all like
indemnities for such loss, and for the return of such portion of the
premium paid as shall exceed the pro rata portion for the indemnities
thus determined.”

(2) If the policy provision set forth in subsection (1) of this
section is included in a policy which also contains the policy provision
set forth in ORS 743.459, there shall be added to the caption of the
provision set forth in subsection (1) of this section the phrase “OTHER
BENEFITS.” The insurer may, at its option, include in this provision a
definition of “other valid coverage,” approved as to form by the Director
of the Department of Consumer and Business Services, which definition
shall be limited in subject matter to coverage provided by organizations
subject to regulation by insurance law or by insurance authorities of
this or any other state of the United States or any province of Canada,
and to any other coverage the inclusion of which may be approved by the
director. In the absence of such definition such term shall not include
group insurance, or benefits provided by union welfare plans or by
employer or employee benefit organizations. For the purpose of applying
the policy provision set forth in this section with respect to any
insured, any amount of benefit provided for such insured pursuant to any
compulsory benefit statute (including any workers’ compensation or
employer’s liability statute), whether provided by a governmental agency
or otherwise, shall in all cases be deemed to be “other valid coverage”
of which the insurer has had notice. In applying the policy provision set
forth in this section no third party liability coverage shall be included
as “other valid coverage.” [1967 c.359 §446] (1) A health insurance
policy may contain a provision as follows: “RELATION OF EARNINGS TO
INSURANCE: If the total monthly amount of loss of time benefits promised
for the same loss under all valid loss of time coverage upon the insured,
whether payable on a weekly or monthly basis, shall exceed the monthly
earnings of the insured at the time disability commenced or the average
monthly earnings of the insured for the period of two years immediately
preceding a disability for which claim is made, whichever is the greater,
the insurer will be liable only for such proportionate amount of such
benefits under this policy as the amount of such monthly earnings or such
average monthly earnings of the insured bears to the total amount of
monthly benefits for the same loss under all such coverage upon the
insured at the time such disability commences and for the return of such
part of the premiums paid during such two years as shall exceed the pro
rata amount of the premiums for the benefits actually paid hereunder; but
this shall not operate to reduce the total monthly amount of benefits
payable under all such coverage upon the insured below the sum of $200 or
the sum of the monthly benefits specified in such coverages, whichever is
the lesser, nor shall it operate to reduce benefits other than those
payable for loss of time.”

(2) The policy provision set forth in subsection (1) of this
section may be inserted only in a policy which the insured has the right
to continue in force subject to its terms by the timely payment of
premiums until at least age 50 or, in the case of a policy issued after
age 44, for at least five years from its date of issue. The insurer may,
at its option, include in this provision a definition of “valid loss of
time coverage,” approved as to form by the Director of the Department of
Consumer and Business Services, which definition shall be limited in
subject matter to coverage provided by governmental agencies or by
organizations subject to regulation by insurance law or by insurance
authorities of this or any other state of the United States or any
province of Canada, or to any other coverage the inclusion of which may
be approved by the director or any combination of such coverages. In the
absence of such definition such term shall not include any coverage
provided for such insured pursuant to any compulsory benefit statute
(including any workers’ compensation or employer’s liability statute), or
benefits provided by union welfare plans or by employer or employee
benefit organizations. [1967 c.359 §447] A health insurance policy may contain a
provision as follows: “UNPAID PREMIUM: Upon the payment of a claim under
this policy, any premium then due and unpaid or covered by any note or
written order may be deducted therefrom.” [1967 c.359 §448] A health insurance policy may
contain a provision as follows: “CANCELLATION: The insurer may cancel
this policy by written notice delivered to the insured, or mailed to the
last address of the insured as shown by the records of the insurer. The
notice must state the reason for cancellation and the date on which the
cancellation shall be effective. Except as provided under the ‘GRACE
PERIOD’ provision of this policy for nonpayment of premium, cancellation
shall not become effective earlier than the 30th day after the date of
the notice. After the policy has been continued beyond its original term,
the insured may cancel this policy at any time by written notice
delivered or mailed to the insurer, effective upon receipt or on such
later date as may be specified in such notice. In the event of
cancellation, the insurer will return promptly the unearned portion of
any premium paid. If the insured cancels, the earned premium shall be
computed by the use of the short rate table last filed with the state
official having supervision of insurance in the state where the insured
resided when the policy was issued. If the insurer cancels, the earned
premium shall be computed pro rata. Cancellation shall be without
prejudice to any claim originating prior to the effective date of
cancellation.” [1967 c.359 §449; 1989 c.784 §20]
An insurer selling individual health insurance policies may cancel or
refuse to renew an individual health insurance policy only if the insurer
makes a determination to cancel or not to renew all policies of the same
type and form as the individual policy, or if the ground for cancellation
or nonrenewal is any of the following and is stated as a provision of the
policy:

(1) A fraudulent or material misstatement made by the applicant in
an application for the health policy. A material misstatement is subject
to any time limit, as specified by law and included in the policy, for
voiding the policy on the basis of a misstatement. For purposes of this
subsection, a misstatement may include an incorrect statement or a
misrepresentation, omission or concealment of fact;

(2) Excess or other insurance in the same insurer, as described in
ORS 743.456;

(3) Nonpayment of premium; or

(4) Any other reason specified by the Director of the Department of
Consumer and Business Services by rule. [1989 c.784 §18; 1991 c.182 §5]Note: 743.472 was added to and made a part of 743.405 to 743.498 by
legislative action but was not added to any smaller series therein. See
Preface to Oregon Revised Statutes for further explanation. A health insurance policy
may contain a provision as follows: “CONFORMITY WITH STATE STATUTES: Any
provision of this policy which, on its effective date, is in conflict
with the statutes of the state in which the insured resides on such date
hereby is amended to conform to the minimum requirements of such
statutes.” [1967 c.359 §450] A health insurance policy may contain a
provision as follows: “ILLEGAL OCCUPATION: The insurer shall not be
liable for any loss to which a contributing cause was the insured’s
commission of or attempt to commit a felony or to which a contributing
cause was the insured’s being engaged in an illegal occupation.” [1967
c.359 §451] A health insurance
policy may contain a provision as follows: “INTOXICANTS AND CONTROLLED
SUBSTANCES: The insurer shall not be liable for any loss sustained or
contracted in consequence of the insured’s being intoxicated or under the
influence of any controlled substance unless administered on the advice
of a physician.” [1967 c.359 §452; 1979 c.744 §64] The provisions of a health
insurance policy which are the subject of ORS 743.408 to 743.480, or any
corresponding provisions which are used in lieu thereof in accordance
with the Insurance Code, shall be printed in the consecutive order of
such sections or, at the option of the insurer, any such provision may
appear as a unit in any part of the policy, with other provisions to
which it may be logically related, provided the resulting policy shall
not be in whole or in part unintelligible, uncertain, ambiguous,
abstruse, or likely to mislead a person to whom the policy is offered,
delivered or issued. [1967 c.359 §453] As
used in ORS 743.402 to 743.498, the word “insured” shall not be construed
as preventing a person other than the insured with a proper insurable
interest from making application for and owning a policy covering the
insured or from being entitled under such a policy to any indemnities,
benefits and rights provided therein. [1967 c.359 §454]If any health insurance policy contains a provision
establishing, as an age limit or otherwise, a date after which the
coverage provided by the policy will not be effective, and if such date
falls within a period for which premium is accepted by the insurer or if
the insurer accepts a premium after such date, the coverage provided by
the policy shall continue in force subject to any right of cancellation
until the end of the period for which premium has been accepted. In the
event the age of the insured has been misstated and if, according to the
correct age of the insured, the coverage provided by the policy would not
have become effective, or would have ceased prior to the acceptance of
such premium or premiums, then the liability of the insurer shall be
limited to the refund, upon request, of all premiums paid for the period
not covered by the policy. [Formerly 741.170] Every health
insurance policy except single premium nonrenewable policies shall have
printed on its face or attached thereto a notice stating in substance
that the person to whom the policy is issued shall be permitted to return
the policy within 10 days of its delivery to the purchaser and to have
the premium paid refunded if, after examination of the policy, the
purchaser is not satisfied with it for any reason. If a policyholder or
purchaser pursuant to such notice returns the policy to the insurer at
its home or branch office or to the insurance producer through whom it
was purchased, it shall be void from the beginning and the parties shall
be in the same position as if no policy had been issued. [Formerly
741.180; 2003 c.364 §109](1) No health insurance policy shall contain the
following unqualified terms except as provided in this subsection:

(a) The unqualified terms “noncancelable” or “noncancelable and
guaranteed renewable” may be used only in a policy which the insured has
the right to continue in force for life by the timely payment of premiums
set forth in the policy, during which period the insurer has no right to
make unilaterally any change in any provision of the policy while the
policy is in force.

(b) The unqualified term “guaranteed renewable,” except as provided
in paragraph (a) of this subsection, may be used only in a policy which
the insured has the right to continue in force for life by the timely
payment of premiums, during which period the insurer has no right to make
unilaterally any change in any provision of the policy while the policy
is in force, except that the insurer may make changes in premium rates by
classes.

(2) The limitations prescribed in subsection (1) of this section on
the use of the term “noncancelable” shall also apply to any synonymous
term such as “not cancelable” and such limitations on the use of the term
“guaranteed renewable” shall also apply to any synonymous term such as
“guaranteed continuable.” [Formerly 741.190] (1) A
health insurance policy which is noncancelable or guaranteed renewable as
those terms are used in ORS 743.495, except that the insured’s right is
for a limited period of more than one year rather than for life, shall
contain the applicable one of the following statements, or such other
statement which, in the opinion of the Director of the Department of
Consumer and Business Services, is equally clear or more definite as to
the subject matter:

(a) “THIS POLICY IS NONCANCELABLE______” (designating the
applicable period such as, for example, “to age ___ (specify),” or “for
the period of ___ (specify) years from date of issuance”) if the policy
is noncancelable for such period.

(b) “THIS POLICY IS GUARANTEED RENEWABLE______” (designating the
applicable period such as, for example, “to age ___ (specify),” or “for
the period of ___ (specify) years from date of issuance”) if the policy
is guaranteed renewable for such period.

(2) Except for policies meeting the conditions specified in ORS
743.495 or subsection (1) of this section, and except as provided in
subsection (3) of this section, a health insurance policy shall contain
the applicable one of the following statements, or such other statement
which, in the opinion of the director, is equally clear or more definite
as to the subject matter:

(a) “THIS POLICY MAY BE CANCELED BY THE INSURER ONLY FOR A REASON
PERMITTED BY LAW” if the policy contains a provision for cancellation by
the insurer.

(b) “THE INSURER MAY REFUSE TO RENEW THIS POLICY ONLY FOR A REASON
PERMITTED BY LAW” if the policy is not guaranteed renewable.

(3) The limitations and requirements as to the use of terms
contained in ORS 743.495 and this section shall not prohibit the use of
other terms for policies having other guarantees of renewability,
provided such terms, in the opinion of the director are accurate, clear
and not likely to be confused with the terms contained in ORS 743.495 and
this section, and are incorporated in a concise statement relating to the
guarantees of renewability.

(4) The statement required by this section shall be printed in a
type not smaller than the type used for captions. It shall appear
prominently on the first page of the policy and shall be a part of the
brief description if the policy has a brief description on its first
page. [Formerly 741.200; 1989 c.784 §20a](Group and Blanket) (1) “Group health
insurance” means that form of health insurance covering groups of persons
described in this section, with or without one or more members of their
families or one or more of their dependents, or covering one or more
members of the families or one or more dependents of such groups of
persons, and issued upon one of the following bases:

(a) Under a policy issued to an employer or trustees of a fund
established by an employer, who shall be deemed the policyholder,
insuring employees of such employer for the benefit of persons other than
the employer. As used in this paragraph, “employees” includes:

(A) The officers, managers and employees of the employer;

(B) The individual proprietor or partners if the employer is an
individual proprietor or partnership;

(C) The officers, managers and employees of subsidiary or
affiliated corporations;

(D) The individual proprietors, partners and employees of
individuals and firms, if the business of the employer and such
individual or firm is under common control through stock ownership,
contract or otherwise;

(E) The trustees or their employees, or both, if their duties are
principally connected with such trusteeship;

(F) The leased workers of a client employer; and

(G) Elected or appointed officials if a policy issued to insure
employees of a public body provides that the term “employees” includes
elected or appointed officials.

(b) Under a policy issued to an association, including a labor
union, that has an active existence for at least one year, that has a
constitution and bylaws and that has been organized and is maintained in
good faith primarily for purposes other than that of obtaining insurance,
which shall be deemed the policyholder, insuring members, employees or
employees of members of the association for the benefit of persons other
than the association or its officers or trustees.

(c) Under a policy issued to the trustees of a fund established by
two or more employers in the same or related industry or by one or more
labor unions or by one or more employers and one or more labor unions or
by an association as described in paragraph (b) of this subsection,
insuring employees of the employers or members of the unions or of such
association, or employees of members of such association for the benefit
of persons other than the employers or the unions or such association. As
used in this paragraph, “employees” may include the officers, managers
and employees of the employer, and the individual proprietor or partners
if the employer is an individual proprietor or partnership. The policy
may provide that the term “employees” includes the trustees or their
employees, or both, if their duties are principally connected with such
trusteeship.

(d) Under a policy issued to any person or organization to which a
policy of group life insurance may be issued or delivered in this state,
to insure any class or classes of individuals that could be insured under
such group life policy.

(2) Group health insurance offered to a resident of this state
under a group health insurance policy issued to a group other than one
described in subsection (1) of this section may be delivered if:

(a) The Director of the Department of Consumer and Business
Services finds that:

(A) The issuance of the policy is in the best interest of the
public;

(B) The issuance of the policy would result in economies of
acquisition or administration; and

(C) The benefits are reasonable in relation to the premiums
charged; and

(b) The premium for the policy is paid either from funds of a
policyholder, from funds contributed by a covered person or from both.

(3) As used in this section and ORS 743.533:

(a) “Client employer” means an employer to whom workers are
provided under contract and for a fee on a leased basis by a worker
leasing company licensed under ORS 656.850.

(b) “Employee” may include a retired employee.

(c) “Leased worker” means a worker provided by a worker leasing
company licensed under ORS 656.850. [1967 c.359 §461; 1975 c.229 §1; 1989
c.784 §13; 2001 c.943 §4; 2005 c.22 §492] (1) No person selling
group health insurance is authorized to sell membership in an
association, including a labor union, for the purpose of qualifying an
applicant who is an individual for group health insurance.

(2) No person selling membership in an association, including a
labor union, is authorized to offer group health insurance for the
purpose of selling membership in the association. [1989 c.784 §10](1) An insurer may not offer a policy of group health insurance to
an association as the policyholder or offer coverage under such a policy,
whether issued in this or another state, unless the Director of the
Department of Consumer and Business Services determines that the
association satisfies the requirements of an association under ORS
743.522 (1)(b).

(2) An insurer shall submit evidence to the director that the
association satisfies the requirements under ORS 743.522 (1)(b). The
director shall review the evidence and may request additional evidence as
needed.

(3) An insurer shall submit to the director any changes in the
evidence submitted under subsection (2) of this section.

(4) The director may order an insurer to cease offering health
insurance to an association if the director determines that the
association does not meet the standards under ORS 743.522 (1)(b).

(5) The director may adopt rules to carry out this section. [1989
c.784 §11; 2005 c.22 §493](1) An insurer may not offer a policy of group
health insurance described in ORS 743.522 (1)(c) that insures persons in
this state or offer coverage under such a policy, whether the policy is
to be issued in this or another state, unless the Director of the
Department of Consumer and Business Services determines that the
requirements of this section and ORS 743.522 (1)(c) are satisfied.

(2) The director shall determine with respect to a policy whether
the trustees are the policyholder. If the director determines that the
trustees are the policyholder and if the policy is issued or proposed to
be issued in this state, the policy is subject to the Insurance Code. If
the director determines that the trustees are not the policyholder, the
evidence of coverage that is issued or proposed to be issued in this
state to a participating employer, labor union or association shall be
deemed to be a group health insurance policy subject to the provisions of
the Insurance Code. The director may determine that the trustees are not
the policyholder if:

(a) The evidence of coverage issued or proposed to be issued to a
participating employer, labor union or association is in fact the primary
statement of coverage for the employer, labor union or association; and

(b) The trust arrangement is under the actual control of the
insurer.

(3) An insurer shall submit evidence to the director showing that
the requirements of subsection (2) of this section and ORS 743.522 (1)(c)
are satisfied. The director shall review the evidence and may request
additional evidence as needed.

(4) An insurer shall submit to the director any changes in the
evidence submitted under subsection (3) of this section.

(5) The director may adopt rules to carry out this section. [1989
c.784 §12; 2005 c.22 §494](1) Every group health insurance policy delivered
or issued for delivery in this state shall contain in substance the
following provisions, applicable to the coverage for hospital or medical
services or expenses provided under the policy:

(a) A provision that, when the premium for the policy or any part
thereof is paid by an employer under the terms of a collective bargaining
agreement, if there is a cessation of work by employees insured under the
policy due to a strike or lockout, the policy, upon timely payment of the
premium, will continue in effect with respect to those employees insured
by the policy on the date of the cessation of work who continue to pay
their individual contribution and who assume and pay the contribution due
from the employer.

(b) A provision that, when an employee insured under the policy
pays a contribution pursuant to paragraph (a) of this subsection, if the
policyholder is not a trustee of a fund established or maintained in
whole or in part by an employer, the employee’s individual contribution
shall be:

(A) The rate in the policy, on the date cessation of work occurs,
applicable to an individual in the class to which the employee belongs as
set forth in the policy; or

(B) If the policy does not provide for a rate applicable to
individuals, an amount equal to the amount determined by dividing the
total monthly premium in effect under the policy at the date of cessation
of work by the total number of persons insured under the policy on such
date.

(c) A provision that, when an employee insured under the policy
pays a contribution pursuant to paragraph (a) of this subsection, if the
policyholder is a trustee of a fund established or maintained in whole or
in part by an employer, the employee’s individual contribution shall be
the amount which the employee and employer would have been required to
contribute if the cessation of work had not occurred.

(2) Every group health insurance policy delivered or issued for
delivery in this state may contain in substance the following provisions
applicable to the coverage for hospital or medical services or expenses
provided under the policy:

(a) A provision that, when employees insured under the policy pay
contributions pursuant to subsection (1)(a) of this section, the
continuation of insurance under the policy is contingent upon the
collection of individual contributions by the union representing the
employees when the policyholder is not a trustee and by the policyholder
or the policyholder’s agent when the policyholder is a trustee.

(b) A provision that, when employees insured under the policy pay
contributions pursuant to subsection (1)(a) of this section, the
continuation of insurance under the policy on each employee is contingent
upon timely payment of contributions by the employees and timely payment
of the premium by the entity responsible for collecting the individual
contributions.

(c) A provision that, when employees insured under the policy pay
contributions pursuant to subsection (1)(a) of this section, each
individual premium rate under the policy may be increased by not more
than 20 percent, or by any higher percentage approved by the Director of
the Department of Consumer and Business Services, during the period of
cessation of work in order to provide sufficient compensation to the
insurer for increased administrative costs and increased mortality and
morbidity. If the policy contains the provision allowed under this
paragraph, an employee’s contribution paid under subsection (1)(a) of
this section shall be increased by the same percentage.

(d) A provision that, when the policy is a policy insuring
employees and which may continue in effect as provided in subsection
(1)(a) of this section, if the premium is unpaid at the date of cessation
of work and the premium became due prior to such cessation of work, the
continuation of insurance is contingent upon payment of the premium prior
to the date the next premium becomes due under the terms of the policy.

(e) Any provision with respect to the continuation of the policy as
provided in subsection (1)(a) of this section that the director may
approve.

(3) Nothing in this section shall be deemed to limit any right
which the insurer may have in accordance with the terms of a policy to
increase or decrease the premium rates before, during or after a
cessation of work by employees insured under the policy when the insurer
had the right to increase the premium rates even if the cessation of work
did not occur. If such a premium rate change is made, it shall be
effective on such date as the insurer shall determine in accordance with
the terms of the policy.

(4) Nothing in this section shall be deemed to require continuation
of any coverage in a group health insurance policy insuring employees and
which may continue in effect as provided in subsection (1)(a) of this
section for longer than:

(a) The time that 75 percent of insured employees continue such
coverage;

(b) For an individual employee, the time at which the employee
takes full-time employment with another employer; or

(c) Six months after cessation of work by the insured employees.
[1979 c.797 §2; 1981 c.395 §1] A
group health insurance policy shall contain in substance the following
provisions:

(1) A provision that, in the absence of fraud, all statements made
by applicants, the policyholder or an insured person shall be deemed
representations and not warranties, and that no statement made for the
purpose of effecting insurance shall avoid the insurance or reduce
benefits unless contained in a written instrument signed by the
policyholder or the insured person, a copy of which has been furnished to
the policyholder or to the person or the beneficiary of the person.

(2) A provision that the insurer will furnish to the policyholder
for delivery to each employee or member of the insured group a statement
in summary form of the essential features of the insurance coverage of
the employee or member, to whom the insurance benefits are payable, and
the applicable rights and conditions set forth in ORS 743.527, 743.529,
743.600 to 743.610 and 743.760. If dependents are included in the
coverage, only one statement need be issued for each family unit.

(3) A provision that to the group originally insured may be added
from time to time eligible new employees or members or dependents, as the
case may be, in accordance with the terms of the policy. [1967 c.359
§463; 1981 c.752 §13; 1997 c.716 §23](1) Every group health insurance policy that
provides coverage for hospital or medical services or expenses shall
provide that the insurer shall continue its obligation for benefits under
the policy for any person insured under the policy who is hospitalized on
the date of termination if the policy is terminated and immediately
replaced by a group health insurance policy issued by another insurer.
Any payment required under this section is subject to all terms,
limitations and conditions of the policy except those relating to
termination of benefits. Any obligation by an insurer under this section
continues until the hospital confinement ends or hospital benefits under
the policy are exhausted, whichever is earlier.

(2) The Director of the Department of Consumer and Business
Services may adopt rules providing for uninterrupted coverage for
individuals insured under a group health insurance policy providing
coverage for hospital or medical expenses, when such a policy is replaced
by a policy of similar benefits, whether issued by the same insurer or
another. [1977 c.402 §5; 1991 c.182 §6]Every policy of group health insurance delivered
or issued for delivery in this state shall contain a provision applicable
to the coverage for hospital or medical services or expenses provided
under the policy that if an employee incurs an injury or illness for
which a workers’ compensation claim is filed, that policy will continue
in effect with respect to that employee upon timely payment by the
employee of the premium that includes the individual contribution and the
contribution due from the employer under the applicable benefit plan. The
employee may maintain such coverage until whichever of the following
events first occurs:

(1) The employee takes full-time employment with another employer;
or

(2) Six months from the date that the employee first makes payment
under this section. [1985 c.634 §2](1) A group health insurance policy may on request by the
group policyholder provide that all or any portion of any indemnities
provided by such policy on account of hospital, nursing, medical or
surgical services may, at the insurer’s option, be paid directly to the
hospital or person rendering such services. However, the amount of any
such payment shall not exceed the amount of benefit provided by the
policy with respect to the service or billing of the provider of aid. The
amount of such payments pursuant to one or more assignments shall not
exceed the amount of expenses incurred on account of such hospitalization
or medical or surgical aid.

(2) Nothing in this section is intended to authorize an insurer to:

(a) Furnish or provide directly services of hospitals or physicians
and surgeons; or

(b) Direct, participate in or control the selection of the specific
hospital or physician and surgeon from whom the insured secures services
or who exercises medical or dental professional judgment.

(3) Nothing in subsection (2) of this section prevents an insurer
from negotiating and entering into contracts for alternative rates of
payment with providers and offering the benefit of such alternative rates
to insureds who select such providers. An insurer may utilize such
contracts by offering a choice of plans at the time an insured enrolls,
one of which provides benefits only for services by members of a
particular provider organization with whom the insurer has an agreement.
If an insured chooses such a plan, benefits are payable only for services
rendered by a member of that provider organization, unless such services
were requested by a member of such organization or are rendered as the
result of an emergency.

(4) Payment so made shall discharge the insurer’s obligation with
respect to the amount of insurance so paid.

(5) Insurers shall provide group policyholders with a current
roster of institutional and professional providers under contract to
provide services at alternative rates under their group policy and shall
also make such lists available for public inspection during regular
business hours at the insurer’s principal office within this state. [1967
c.359 §464; 1985 c.747 §71; 1989 c.784 §23] (1) A
leasing company may offer group health insurance to its leased workers.
If the leasing company does not offer group health insurance to its
leased workers, the client employer may offer group health insurance to
the leased workers.

(2) If a leasing company offers group health insurance to its
leased workers, the leasing company shall offer group health insurance to
all its leased workers in the same manner. [2001 c.943 §5] “Blanket health
insurance” means that form of a health insurance covering groups of
persons defined in this section and issued on one of the following bases:

(1) Under a policy issued to a common carrier or to an operator,
owner or lessee of a means of transportation, who shall be deemed the
policyholder, insuring a group of persons who may become passengers and
which group is defined by reference to their travel status on such common
carrier or means of transportation.

(2) Under a policy issued to an employer, who shall be deemed the
policyholder, insuring any group of employees, dependents or guests,
defined by reference to specified hazards incident to an activity or
activities or operations of the policyholder.

(3) Under a policy issued to a college, school or other institution
of learning, a school district or districts, or school jurisdictional
unit, or to the head, principal or governing board of any such
educational unit, who or which shall be deemed the policyholder, insuring
students, teachers or employees.

(4) Under a policy issued to a religious, charitable, recreational,
educational, or civic organization, or branch thereof, which shall be
deemed the policyholder, insuring any group of members or participants
defined by reference to specified hazards incident to an activity or
activities or operations sponsored or supervised by such policyholder.

(5) Under a policy issued to a sports team, camp or sponsor
thereof, who shall be deemed the policyholder, insuring members, campers,
employees, officials or supervisors.

(6) Under a policy issued to a volunteer fire department, first
aid, civil defense, or other such volunteer organization, which shall be
deemed the policyholder, insuring any group of members or participants
defined by reference to specified hazards incident to an activity or
activities or operations sponsored or supervised by such policyholder.

(7) Under a policy issued to a newspaper or other publisher, which
shall be deemed the policyholder, insuring its carriers.

(8) Under a policy issued to an association, including a labor
union, which has a constitution and bylaws and which has been organized
and is maintained in good faith for purposes other than that of obtaining
insurance, which shall be deemed the policyholder, insuring any group of
members or participants defined by reference to specified hazards
incident to an activity or activities or operations sponsored or
supervised by such policyholder.

(9) Under a policy issued to cover any other risk or class of risks
which, in the discretion of the Director of the Department of Consumer
and Business Services, may be properly eligible for blanket health
insurance. The discretion of the director may be exercised on an
individual risk basis or class of risks basis, or both. [1967 c.359 §465]
A blanket health insurance policy shall contain provisions which in the
opinion of the Director of the Department of Consumer and Business
Services are not less favorable to the policyholder and the individual
insureds than the provisions described in ORS 743.411, 743.423, 743.426,
743.429, 743.432, 743.438 and 743.441. [1967 c.359 §466]An individual application need not be required
from a person insured under a blanket health insurance policy, nor shall
it be necessary for the insurer to furnish each person a certificate.
[1967 c.359 §467]All benefits under a blanket health insurance policy shall be
payable to the person insured, or to the designated beneficiary or
beneficiaries of the person, or to the estate of the person, except that
if the person insured is a minor or otherwise not competent to give a
valid release, such benefits may be made payable to the parent, guardian
or other person actually supporting the person. However, the policy may
provide that all or a portion of any indemnities provided by such policy
on account of hospital, nursing, medical or surgical services may, at the
option of the insurer and unless the insured requests otherwise in
writing not later than the time of filing proofs of such loss, be paid
directly to the hospital or person rendering such services; but the
policy may not require that the services be rendered by a particular
hospital or person. Payment so made shall discharge the obligation of the
insurer with respect to the amount of insurance so paid. [1967 c.359 §468]The Director of the Department of Consumer and
Business Services may exempt from the policy form filing and approval
requirements of ORS 742.003, for so long as the director deems proper,
any blanket health insurance policy to which in the opinion of the
director such requirements may not practicably be applied, or may
dispense with such filing and approval whenever, in the opinion of the
director, it is not desirable or necessary for the protection of the
public. [1967 c.359 §469]No group or blanket health
insurance policy providing hospital, medical or surgical expense
benefits, and which contains a provision for the reduction of benefits
otherwise payable thereunder on the basis of other existing coverages,
shall provide that such reduction operates to reduce total benefits
payable below an amount equal to 100 percent of total allowable expenses,
except as provided for in a collective bargaining agreement. [1973 c.143
§2; 1989 c.1080 §2](1)
Student health insurance is subject to ORS 743.537, 743.540, 743.543,
743.546 and 743.549, except as provided in this section.

(2) Coverage under a student health insurance policy may be
mandatory for all students at the institution, voluntary for all students
at the institution, or mandatory for defined classes of students and
voluntary for other classes of students. As used in this subsection,
“classes” refers to undergraduates, graduate students, domestic students,
international students or other like classifications. Any differences
based on a student’s nationality may be established only for the purpose
of complying with federal law in effect when the policy is issued.

(3) When coverage under a student health insurance policy is
mandatory, the policyholder may allow any student subject to the policy
to decline coverage if the student provides evidence acceptable to the
policyholder that the student has similar health coverage.

(4) A student health insurance policy may provide for any student
to purchase optional supplemental coverage.

(5) Student health insurance coverage for athletic injuries may:

(a) Exclude coverage for injuries of students who have not obtained
medical release for a similar injury; and

(b) Be provided in excess of or in addition to any other coverage
under any other health insurance policy, including a student health
insurance policy.

(6) A student health insurance policy may provide that coverage
under the policy is secondary to any other health insurance for purposes
of guidelines established under ORS 743.552.

(7) A student health insurance policy may provide, on request by
the policyholder, that all or any portion of any indemnities provided by
such policy on account of hospital, nursing, medical or surgical services
may, at the insurer’s option, be paid directly to the hospital or person
rendering such services. However, the amount of any such payment shall
not exceed the amount of benefit provided by the policy with respect to
the service or billing of the provider of aid. The amount of such
payments pursuant to one or more assignments shall not exceed the amount
of expenses incurred on account of such hospitalization or medical or
surgical aid.

(8) An insurer providing student health insurance as primary
coverage may negotiate and enter into contracts for alternative rates of
payment with providers and offer the benefit of such alternative rates to
insureds who select such providers. An insurer may utilize such contracts
by offering a choice of plans at the time an insured enrolls, one of
which provides benefits only for services by members of a particular
provider organization with whom the insurer has an agreement. If an
insured chooses such a plan, benefits are payable only for services
rendered by a member of that provider organization, unless such services
were requested by a member of such organization or are rendered as the
result of an emergency.

(9) Payments made under subsection (8) of this section shall
discharge the insurer’s obligation with respect to the amount of
insurance paid.

(10) An insurer shall provide each student health insurance
policyholder with a current roster of institutional and professional
providers under contract to provide services at alternative rates under
the group policy and shall also make such lists available for public
inspection during regular business hours at the insurer’s principal
office within this state.

(11) As used in this section, “student health insurance” means that
form of health insurance under a policy issued to a college, school or
other institution of learning, a school district or districts, or school
jurisdictional unit, or recognized student government at an institution
of higher education within the Oregon University System, or to the head,
principal or governing board of any such educational unit, who or which
shall be deemed the policyholder, that is available exclusively to
students at the college, school or other institution. [1995 c.623 §2] The
Director of the Department of Consumer and Business Services shall by
rule establish guidelines for the application of ORS 743.549, including:

(1) The procedures by which persons insured under such policies are
to be made aware of the existence of such a provision;

(2) The benefits which may be subject to such a provision;

(3) The effect of such a provision on the benefits provided;

(4) Establishment of the order of benefit determination; and

(5) Reasonable claim administration procedures to expedite claim
payments under such a provision which shall include a time limit of 14
days beyond which the insurer shall not delay payment of a claim by
reason of the application of coordination of benefits provision. [1973
c.143 §3]A group health insurance policy providing coverage for hospital or
medical expenses shall provide coverage for expenses arising from
treatment for chemical dependency including alcoholism and for mental or
nervous conditions. The following conditions apply to the requirement for
such coverage:

(1) The coverage may be made subject to provisions of the policy
that apply to other benefits under the policy, including but not limited
to provisions relating to deductibles and coinsurance. Deductibles and
coinsurance for treatment in health care facilities or residential
programs or facilities shall be no greater than those under the policy
for expenses of hospitalization in the treatment of illness. Deductibles
and coinsurance for outpatient treatment shall be no greater than those
under the policy for expenses of outpatient treatment of illness.

(2) Treatment provided in health care facilities, residential
programs or facilities, day or partial hospitalization programs or
outpatient services shall be considered eligible for reimbursement if it
is provided by:

(a) Programs or providers described in ORS 430.010 or approved by
the Department of Human Services under subsection (3) of this section.

(b) Programs accredited for the particular level of care for which
reimbursement is being requested by the Joint Commission on Accreditation
of Hospitals or the Commission on Accreditation of Rehabilitation
Facilities.

(c) Inpatient programs provided by health care facilities as
defined in ORS 442.015. Residential, outpatient, or day or partial
hospitalization programs offered by or through a health care facility
must meet the requirements of either paragraph (a) or (b) of this
subsection in order to be eligible for reimbursement.

(d) Residential programs or facilities described in subsection (3)
of this section if the patient is staying overnight at the facility and
is involved in a structured program at least eight hours per day, five
days per week.

(e) Programs in which staff are directly supervised or in which
individual client treatment plans are approved by a person described in
ORS 430.010 (4)(a) and which meet the standards established under
subsection (3) of this section.

(3) Subject to ORS 430.065, the Department of Human Services shall
adopt rules relating to the approval, for insurance reimbursement
purposes, of noninpatient chemical dependency programs that are not
related to the department or any county mental health program. The
department shall adopt rules relating to the approval, for insurance
reimbursement purposes, of noninpatient programs for mental or nervous
conditions that are not related to the department or any county mental
health program.

(4) A program that provides services for persons with both a
chemical dependency diagnosis and a mental or nervous condition shall be
considered to be a distinct and specialized type of program for both
chemical dependency and mental or nervous conditions. The Department of
Human Services shall develop specific standards related to such programs
for program approval purposes and shall adopt rules relating to the
approval, for insurance reimbursement purposes, of such noninpatient
programs that are not related to the department and any county mental
health program.

(5) As used in this section:

(a) “Chemical dependency” means the addictive relationship with any
drug or alcohol characterized by either a physical or psychological
relationship, or both, that interferes with the individual’s social,
psychological or physical adjustment to common problems on a recurring
basis. For purposes of this section, chemical dependency does not include
addiction to, or dependency on, tobacco, tobacco products or foods.

(b) “Child or adolescent” means a person who is 17 years of age or
younger.

(c) “Facility” means a corporate or governmental entity or other
provider of services for the treatment of chemical dependency or for the
treatment of mental or nervous conditions.

(d) “Program” means a particular type or level of service that is
organizationally distinct within a facility.

(6) Notwithstanding the limits for particular types of services
specified in this section, a policy shall not limit the total of payments
for all treatment of any kind under this section for chemical dependency,
together with payments for all treatment of any kind for mental or
nervous conditions, to less than $13,125 for adults and $15,625 for
children or adolescents. For persons requesting payments for treatment of
any kind for chemical dependency, but not requesting payments for
treatment of any kind of mental or nervous condition, a policy shall not
limit the total of payments for all treatment to less than $8,125 for
adults and $13,125 for children and adolescents.

(7) The limits for mental or nervous conditions specified in this
section shall apply to persons with diagnoses of both chemical dependency
and mental or nervous conditions, who are being treated for both types of
diagnosis, as well as persons with only a diagnosis of a mental or
nervous condition.

(8) The higher benefit levels in this section for children or
adolescents are in recognition of the longer period of treatment and the
greater levels of staffing that may be required for children or
adolescents and are intended to permit more services to meet the needs of
children and adolescents.

(9) Payments shall not be made under this section for educational
programs to which drivers are referred by the judicial system, nor for
volunteer mutual support groups.

(10) Except as permitted by subsections (1), (6) and (12) of this
section, the policy shall not limit payments for inpatient treatment in
hospitals and other health care facilities thereunder:

(a) For chemical dependency to an amount less than $5,625 for
adults and $5,000 for children or adolescents; and

(b) For mental or nervous conditions to an amount less than $5,000
for adults and $7,500 for children or adolescents.

(11) Except as permitted by subsections (1), (6) and (12) of this
section, the policy shall not limit payments for treatment in residential
programs or facilities or day or partial hospitalization programs:

(a) For chemical dependency to an amount less than $4,375 for
adults and $3,750 for children or adolescents; and

(b) For mental or nervous conditions to an amount less than $1,250
for adults and $3,125 for children or adolescents.

(12) Notwithstanding the minimum benefits for particular types of
services specified in subsections (10) and (11) of this section, and
except as permitted by subsection (1) of this section, the policy shall
not limit total payments for inpatient, residential and day or partial
hospitalization program care or treatment:

(a) For chemical dependency to an amount less than $10,625 for
children or adolescents; and

(b) For mental or nervous conditions to an amount less than $10,625
for adults and $13,125 for children or adolescents.

(13) Except as permitted by subsections (1) and (6) of this
section, in the case of benefits for outpatient services, the policy
shall not limit payments:

(a) For chemical dependency to an amount less than $1,875 for
adults and $2,500 for children or adolescents; and

(b) For mental or nervous conditions to an amount less than $2,500.

(14) If so specified in the policy, outpatient coverage may include
follow-up in-home service associated with any health care facility,
residential, day or partial hospitalization or outpatient services. The
policy may limit coverage for in-home service to persons who have
completed their initial health care facility, residential, day or partial
hospitalization or outpatient treatment and did not terminate that
initial treatment against advice. The policy may also limit coverage for
in-home service by defining the circumstances of need under which payment
will or will not be made.

(15) Under ORS 430.021 and 430.315, the Legislative Assembly has
found that health care cost containment is necessary and intends to
encourage insurance policies designed to achieve cost containment by
assuring that reimbursement is limited to appropriate utilization under
criteria incorporated into such policies, either directly or by reference.

(16) A group health insurance policy may provide, with respect to
treatment for chemical dependency or mental or nervous conditions, that
any one or more of the following cost containment methods shall be in
effect and the method or methods used by an insurer in one part of the
state may be different from the method or methods used by that insurer in
another part of the state:

(a) Proportion of coinsurance required for treatment in residential
programs or facilities, day or partial hospitalization programs or
outpatient services less than the proportion of coinsurance required for
treatment in health care facilities.

(b) Subject to the patient or client confidentiality provisions of
ORS 40.235 relating to physicians, ORS 40.240 relating to nurse
practitioners, ORS 40.230 relating to psychologists and ORS 40.250 and
675.580 relating to licensed clinical social workers, review for level of
treatment of admissions and continued stays for treatment in health care
facilities, residential programs or facilities, day or partial
hospitalization programs and outpatient services by either insurer staff
or personnel under contract to the insurer, or by a utilization review
contractor, who shall have the authority to certify for or deny level of
payment:

(A) This review shall be made according to criteria made available
to providers in advance upon request.

(B) To facilitate implementation of utilization review programs by
insurers, the Director of Human Services shall draft an advisory or model
set of criteria for appropriate utilization of inpatient, residential,
day or partial hospitalization, and outpatient facilities, programs and
services by adults, children and adolescents, and persons with both a
chemical dependency diagnosis and a mental or nervous condition. These
criteria shall be consistent with this section and shall not be binding
on any insurer or other party. However, at the time of contract
negotiation or amendment, with the agreement of the parties to the
contract, any insurer may adopt the criteria or similar criteria with or
without modification. The director shall revise these criteria at least
every two years. In developing and revising these criteria, the director
shall organize a technical advisory panel including representatives of
the Department of Consumer and Business Services, the Department of Human
Services, the insurance industry, the business community and providers of
each level of care. The director shall place substantial weight on the
advice of this panel.

(C) Review shall be performed by or under the direction of a
medical or osteopathic physician licensed by the Board of Medical
Examiners for the State of Oregon; a psychologist licensed by the State
Board of Psychologist Examiners; a nurse practitioner registered by the
Oregon State Board of Nursing; or a clinical social worker licensed by
the State Board of Clinical Social Workers, with physician consultation
readily available. The reviewer shall have expertise in the evaluation of
mental or nervous condition services or chemical dependency services.

(D) Review may involve prior approval, concurrent review of the
continuation of treatment, post-treatment review or any combination of
these. However, if prior approval is required, provision shall be made to
allow for payment of urgent or emergency admissions, subject to
subsequent review. If prior approval is not required, insurers shall
permit treatment providers, policyholders or persons acting on their
behalf to make advance inquiries regarding the appropriateness of a
particular admission to a treatment program. Insurers shall provide a
timely response to such inquiries. Approval of a particular admission
does not represent a guarantee of future payment.

(E) An appeals process shall be provided.

(F) An insurer may choose to review all providers on a sampling or
audit basis only; or to review on a less frequent basis those providers
who consistently supply full documentation, consistent with
confidentiality statutes on each case in a timely fashion to the insurer.

(17) For purposes of subsection (16)(b) of this section, a
utilization review contractor is a professional review organization or
similar entity which, under contract with an insurance carrier, performs
certification of reimbursability of level of treatment for admissions and
maintained stays in treatment programs, facilities or services.

(18) For purposes of subsection (16)(b) of this section, when
implemented through an insurance contract, reimbursability of inpatient
treatment requires demonstration that medical circumstances require
24-hour nursing care, or physician or nurse assessment, treatment or
supervision that cannot be readily made available on an outpatient basis,
or in:

(a) The current living situation;

(b) An alternative, nontreatment living situation;

(c) An alternative residential program or facility; or

(d) A day or partial hospitalization program.

(19) For purposes of subsection (16)(b) of this section, when
implemented through an insurance contract, reimbursability of treatment
at the residential, day or partial hospitalization level of treatment
shall require demonstration that outpatient services, if appropriate and
less costly than residential, day or partial hospitalization services:

(a) Are not presently appropriate and available;

(b) Cannot be readily and timely made available; and

(c) Cannot meet documented needs for nonmedical supervision,
protection, assistance and treatment, either in the current living
situation or in a readily and timely available alternative, nontreatment
living situation, taking into account the extent of both the available
positive support and existing negative influences in the occupational,
social and living situations; risks to self or others; and readiness to
participate consistently in treatment.

(20) For purposes of subsection (16)(b) of this section,
reimbursability of treatment at the level for outpatient facility,
service or program shall require demonstration that treatment is
justified, considering the individual’s history, and the current medical,
occupational, social and psychological situation, and the overall
prognosis.

(21) Discrete medical or neurologic diagnostic or treatment
services including any professional component of that service, costing in
excess of $300, occurring concurrently with but not directly related to
treatment of mental or nervous conditions shall not be charged against
the inpatient benefit level.

(22) The benefits described in this section shall renew in full
either on the first day of the 25th month of coverage following the first
use of services for the treatment of chemical dependency or mental or
nervous conditions, or both, or on the first day following two
consecutive contract years.

(23) Health maintenance organizations, as defined in ORS 750.005,
shall be subject to the following conditions and requirements in their
provision of benefits for chemical dependency or mental or nervous
conditions to enrollees:

(a) Notwithstanding the provisions of subsection (1) of this
section, health maintenance organizations may establish reasonable
provisions for enrollee cost-sharing, so long as the amount the enrollee
is required to pay does not exceed the amount of coinsurance and
deductible customarily required by other insurance policies which are
subject to the provisions of this chapter for that type and level of
service.

(b) Nothing in this section prevents health maintenance
organizations from establishing durational limits which are actuarially
equivalent to the benefits required by this section.

(c) Health maintenance organizations may limit the receipt of
covered services by enrollees to services provided by or upon referral by
providers associated with the health maintenance organization.

(d) The Department of Human Services shall make rules establishing
objective and quantifiable criteria for determining when a health
maintenance organization meets the conditions and requirements of this
subsection.

(24) Nothing in this section shall prevent an insurer or health
care service contractor other than a health maintenance organization,
except as provided in subsection (23) of this section, from contracting
with providers of health care services to furnish services to
policyholders or certificate holders according to ORS 743.531 or 750.005,
subject to the following conditions:

(a) An insurer or health care service contractor may establish
limits for contracted services which are actuarially equivalent to the
benefits required by this section, so long as the same range of treatment
settings is made available.

(b) An insurer or health care service contractor, other than a
health maintenance organization, may negotiate with contracting providers
as to the cost of actuarially equivalent benefits, and such actuarially
equivalent benefits for services of contracting providers shall be deemed
to equal the minimum benefit levels specified in this section.

(c) An insurer or health care service contractor is not required to
contract with all eligible providers, and payment for covered services of
contracting providers may be in alternative methods or amounts rather
than as specified in this section.

(d) Insurers and health care service contractors other than health
maintenance organizations shall pay benefits toward the covered charges
of noncontracting providers of services for the treatment of chemical
dependency or mental or nervous conditions at the same level of
deductible or coinsurance as would apply to covered charges of
noncontracting providers of other health services under the same group
policy or contract. The insured shall have the right to use the services
of a noncontracting provider of services for the treatment of chemical
dependency or mental or nervous conditions. Policies described in this
subsection shall be subject to the provisions of subsection (1) of this
section, whether or not the services for chemical dependency or mental or
nervous conditions are provided by contracting or noncontracting
providers.

(e) The department shall make rules establishing objective and
quantifiable criteria for determining that a contract meets the
conditions and requirements of this subsection and that actuarially
equivalent services of contracting providers equal or exceed services
obtainable with the minimum benefits specified in this section.

(25) The intent of the Legislative Assembly in adopting this
section is to reserve benefits for different types of care to encourage
cost effective care and to assure continuing access to levels of care
most appropriate for the insured’s condition and progress.

(26) The director, after notice and hearing, may adopt reasonable
rules not inconsistent with this section that are considered necessary
for the proper administration of these provisions. [1987 c.411 §2; 1989
c.721 §55; 1991 c.67 §198; 1991 c.470 §19; 1991 c.654 §2; 1999 c.1086 §1;
2001 c.900 §217; 2003 c.33 §5]Note: The amendments to 743.556 by section 1, chapter 705, Oregon
Laws 2005, take effect January 1, 2007, and apply to group health
insurance policies issued or renewed on or after January 1, 2007. See
sections 3 and 4, chapter 705, Oregon Laws 2005. The text that is
effective on and after January 1, 2007, is set forth for the user’s
convenience.

743.556. A group health insurance policy providing coverage for
hospital or medical expenses shall provide coverage for expenses arising
from treatment for chemical dependency, including alcoholism, and for
mental or nervous conditions at the same level as, and subject to
limitations no more restrictive than, those imposed on coverage or
reimbursement of expenses arising from treatment for other medical
conditions.The following apply to coverage for chemical dependency and
for mental or nervous conditions:

(1) As used in this section:

(a) “Chemical dependency” means the addictive relationship with any
drug or alcohol characterized by a physical or psychological
relationship, or both, that interferes on a recurring basis with the
individual’s social, psychological or physical adjustment to common
problems. For purposes of this section, “chemical dependency” does not
include addiction to, or dependency on, tobacco, tobacco products or
foods.

(b) “Facility” means a corporate or governmental entity or other
provider of services for the treatment of chemical dependency or for the
treatment of mental or nervous conditions.

(c) “Group health insurer” means an insurer, a health maintenance
organization or a health care service contractor.

(d) “Program” means a particular type or level of service that is
organizationally distinct within a facility.

(e) “Provider” means a person that has met the credentialing
requirement of a group health insurer, is otherwise eligible to receive
reimbursement for coverage under the policy and is:

(A) A health care facility;

(B) A residential program or facility;

(C) A day or partial hospitalization program;

(D) An outpatient service; or

(E) An individual behavioral health or medical professional
authorized for reimbursement under Oregon law.

(2) The coverage may be made subject to provisions of the policy
that apply to other benefits under the policy, including but not limited
to provisions relating to deductibles and coinsurance. Deductibles and
coinsurance for treatment in health care facilities or residential
programs or facilities may not be greater than those under the policy for
expenses of hospitalization in the treatment of other medical conditions.
Deductibles and coinsurance for outpatient treatment may not be greater
than those under the policy for expenses of outpatient treatment of other
medical conditions.

(3) The coverage may not be made subject to treatment limitations,
limits on total payments for treatment, limits on duration of treatment
or financial requirements unless similar limitations or requirements are
imposed on coverage of other medical conditions. The coverage of eligible
expenses may be limited to treatment that is medically necessary as
determined under the policy for other medical conditions.

(4)(a) Nothing in this section requires coverage for:

(A) Educational or correctional services or sheltered living
provided by a school or halfway house;

(B) A long-term residential mental health program that lasts longer
than 45 days;

(C) Psychoanalysis or psychotherapy received as part of an
educational or training program, regardless of diagnosis or symptoms that
may be present;

(D) A court-ordered sex offender treatment program; or

(E) A screening interview or treatment program under ORS 813.021.

(b) Notwithstanding paragraph (a)(A) of this subsection, an insured
may receive covered outpatient services under the terms of the insured’s
policy while the insured is living temporarily in a sheltered living
situation.

(5) A provider is eligible for reimbursement under this section if:

(a) The provider is approved by the Department of Human Services;

(b) The provider is accredited for the particular level of care for
which reimbursement is being requested by the Joint Commission on
Accreditation of Hospitals or the Commission on Accreditation of
Rehabilitation Facilities;

(c) The patient is staying overnight at the facility and is
involved in a structured program at least eight hours per day, five days
per week; or

(d) The provider is providing a covered benefit under the policy.

(6) Payments may not be made under this section for support groups.

(7) If specified in the policy, outpatient coverage may include
follow-up in-home service or outpatient services. The policy may limit
coverage for in-home service to persons who are homebound under the care
of a physician.

(8) Nothing in this section prohibits a group health insurer from
managing the provision of benefits through common methods, including but
not limited to selectively contracted panels, health plan benefit
differential designs, preadmission screening, prior authorization of
services, utilization review or other mechanisms designed to limit
eligible expenses to those described in subsection (3) of this section.

(9) The Legislative Assembly has found that health care cost
containment is necessary and intends to encourage insurance policies
designed to achieve cost containment by ensuring that reimbursement is
limited to appropriate utilization under criteria incorporated into such
policies, either directly or by reference.

(10)(a) Subject to the patient or client confidentiality provisions
of ORS 40.235 relating to physicians, ORS 40.240 relating to nurse
practitioners, ORS 40.230 relating to psychologists and ORS 40.250 and
675.580 relating to licensed clinical social workers, a group health
insurer may provide for review for level of treatment of admissions and
continued stays for treatment in health care facilities, residential
programs or facilities, day or partial hospitalization programs and
outpatient services by either group health insurer staff or personnel
under contract to the group health insurer, or by a utilization review
contractor, who shall have the authority to certify for or deny level of
payment.

(b) Review shall be made according to criteria made available to
providers in advance upon request.

(c) Review shall be performed by or under the direction of a
medical or osteopathic physician licensed by the Board of Medical
Examiners for the State of Oregon, a psychologist licensed by the State
Board of Psychologist Examiners or a clinical social worker licensed by
the State Board of Clinical Social Workers, in accordance with standards
of the National Committee for Quality Assurance or Medicare review
standards of the Centers for Medicare and Medicaid Services.

(d) Review may involve prior approval, concurrent review of the
continuation of treatment, post-treatment review or any combination of
these. However, if prior approval is required, provision shall be made to
allow for payment of urgent or emergency admissions, subject to
subsequent review. If prior approval is not required, group health
insurers shall permit providers, policyholders or persons acting on their
behalf to make advance inquiries regarding the appropriateness of a
particular admission to a treatment program. Group health insurers shall
provide a timely response to such inquiries. Noncontracting providers
must cooperate with these procedures to the same extent as contracting
providers to be eligible for reimbursement.

(11) Health maintenance organizations may limit the receipt of
covered services by enrollees to services provided by or upon referral by
providers contracting with the health maintenance organization. Health
maintenance organizations and health care service contractors may create
substantive plan benefit and reimbursement differentials at the same
level as, and subject to limitations no more restrictive than, those
imposed on coverage or reimbursement of expenses arising out of other
medical conditions and apply them to contracting and noncontracting
providers.

(12) Nothing in this section prevents a group health insurer from
contracting with providers of health care services to furnish services to
policyholders or certificate holders according to ORS 743.531 or 750.005,
subject to the following conditions:

(a) A group health insurer is not required to contract with all
eligible providers.

(b) An insurer or health care services contractor shall, subject to
subsections (2) and (3) of this section, pay benefits toward the covered
charges of noncontracting providers of services for the treatment of
chemical dependency or mental or nervous conditions. The insured shall,
subject to subsections (2) and (3) of this section, have the right to use
the services of a noncontracting provider of services for the treatment
of chemical dependency or mental or nervous conditions, whether or not
the services for chemical dependency or mental or nervous conditions are
provided by contracting or noncontracting providers.

(13) The intent of the Legislative Assembly in adopting this
section is to reserve benefits for different types of care to encourage
cost effective care and to ensure continuing access to levels of care
most appropriate for the insured’s condition and progress.

(14) The Director of the Department of Consumer and Business
Services, after notice and hearing, may adopt reasonable rules not
inconsistent with this section that are considered necessary for the
proper administration of these provisions.Note: Section 7, chapter 411, Oregon Laws 1987, provides:

Sec. 7. Application of ORS 743.700 to ORS 743.556 and 750.055. ORS
does not apply to section 2 of this Act
[743.556] because section 2 of this Act constitutes a reenactment of ORS
743.557 and 743.558 or to ORS 750.055 because of its amendment by this
Act. [1987 c.411 §7](1) A group health insurance policy shall
contain a provision allowing a minimum grace period of 10 days after the
premium due date for payment of premium.

(2) An insurer of a group health insurance policy providing
coverage for hospital or medical expenses, other than coverage limited to
expenses from accidents or specific diseases, that seeks to terminate a
policy for nonpayment of premium shall notify the policyholder as
described in ORS 743.565.

(3) An insurer of a group health insurance policy providing
coverage for hospital or medical expenses, other than coverage limited to
expenses from accidents or specific diseases, shall notify the group
policyholder when the policy is terminated and the coverage is not
replaced by the group policyholder. The notice required under this
subsection:

(a) Must be given on a form prescribed by the Department of
Consumer and Business Services;

(b) Must explain the rights of the certificate holders regarding
continuation of coverage provided by federal and state law and
portability coverage in accordance with ORS 743.760; and

(c) Must be given by mail and must be mailed not later than 10
working days after the date on which the group policy terminates
according to the terms of the policy.

(4) A group health insurance policy to which subsection (3) of this
section applies shall contain a provision requiring the insurer to notify
the group policyholder when the policy is terminated and the coverage is
not replaced by the group policyholder. Each certificate issued under the
policy shall also contain a statement of the provision required under
this subsection.

(5) If an insurer fails to give notice as required by this section,
the insurer shall continue the group health insurance policy of the group
policyholder in full force from the date notice should have been provided
until the date that the notice is received by the policyholder and shall
waive the premiums owing for the period for which the coverage is
continued under this subsection. The time period within which the
certificate holder may exercise any right to continuation or portability
shall commence on the date that the policyholder receives the notice.

(6) The insurer shall supply the employer holding the terminated
policy with the necessary information for the employer to be able to
notify properly the employee of the employee’s right to continuation of
coverage under state and federal law and portability coverage in
accordance with ORS 743.760. [1991 c.673 §§3,4; 1993 c.454 §1; 1997 c.716
§24; 2001 c.943 §11]ORS 743.560 applies to
multiple employer trusts when an employer ceases to participate therein.
[1991 c.673 §5]Before a health insurer selling an individual
policy or group health benefit plan, as defined in ORS 743.730, may
cancel a policy for nonpayment of premium, the insurer must mail a
separate notice to the policyholder at least 10 days prior to the end of
the grace period informing the policyholder that the premium was not
received and that the policy will be terminated as of the premium due
date if the premium is not received by the end of the applicable grace
period required by ORS 743.417 and 743.560. The notice shall be in
writing and mailed by first class mail to the last-known address of the
policyholder. [2001 c.943 §8] The Director of the
Department of Consumer and Business Services shall adopt rules necessary
for the implementation and administration of ORS 743.565 and the
amendments to ORS 743.417, 743.420, 743.560, 743.737, 743.754 and 743.766
by sections 9 to 14, chapter 943, Oregon Laws 2001. [2001 c.943 §16]Note: 743.566 was enacted into law by the Legislative Assembly but
was not added to or made a part of ORS chapter 743 or any series therein
by legislative action. See Preface to Oregon Revised Statutes for further
explanation.(Continuation)(1) A group health
insurance policy providing coverage for hospital or medical expenses,
other than coverage limited to expenses from accidents or specific
diseases, shall contain a provision that:

(a) The surviving spouse of a certificate holder may continue
coverage under the policy, at the death of the certificate holder, with
respect to the spouse and any dependent children whose coverage under the
policy otherwise would terminate because of the death of the certificate
holder if the surviving spouse is 55 years of age or older at the time of
the death; and

(b) The divorced or legally separated spouse of a certificate
holder may continue coverage under the policy, upon dissolution of
marriage with, or legal separation from, the certificate holder, with
respect to the divorced or legally separated spouse and any dependent
children whose coverage under the policy otherwise would terminate
because of the dissolution of marriage or legal separation, if the
divorced or legally separated spouse is 55 years of age or older at the
time of the dissolution or legal separation.

(2) Continued coverage for dental, vision care or prescription drug
expenses shall be offered to legally separated, divorced or surviving
spouses and any dependent children eligible under subsection (1) of this
section if such coverage is or was available to the certificate holder.
[Formerly 743.851](1) As used in subsections (1) to (6) of this section, “plan
administrator” means:

(a) The person designated as the plan administrator by the
instrument under which the group health insurance plan is operated; or

(b) If no plan administrator is designated, the plan sponsor.

(2) Within 60 days of legal separation or the entry of a judgment
of dissolution of marriage, a legally separated or divorced spouse
eligible for continued coverage under ORS 743.600 who seeks such coverage
shall give the plan administrator written notice of the legal separation
or dissolution. The notice shall include the mailing address of the
legally separated or divorced spouse.

(3) Within 30 days of the death of a certificate holder whose
surviving spouse is eligible for continued coverage under ORS 743.600,
the group policyholder shall give the plan administrator written notice
of the death and of the mailing address of the surviving spouse.

(4) Within 14 days of receipt of notice under subsection (2) or (3)
of this section, the plan administrator shall notify the legally
separated, divorced or surviving spouse that the policy may be continued.
The notice shall be mailed to the mailing address provided to the plan
administrator and shall include:

(a) A form for election to continue the coverage;

(b) A statement of the amount of periodic premiums to be charged
for the continuation of coverage and of the method and place of payment;
and

(c) Instructions for returning the election form by mail within 60
days after the date of mailing of the notice by the plan administrator.

(5) Failure of the legally separated, divorced or surviving spouse
to exercise the election in accordance with subsection (4) of this
section shall terminate the right to continuation of benefits.

(6) If a plan administrator fails to notify the legally separated,
divorced or surviving spouse as required by subsection (4) of this
section, premiums shall be waived from the date the notice was required
until the date notice is received by the legally separated, divorced or
surviving spouse.

(7) The provisions of ORS 743.600 to 743.602 apply only to
employers with 20 or more employees and group health insurance plans with
20 or more certificate holders. [Formerly 743.852; 2003 c.576 §557]If a legally separated, divorced or
surviving spouse elects continuation of coverage under ORS 743.601 (1) to
(6):

(1) The monthly premium for the continuation shall not be greater
than the amount that would be charged if the legally separated, divorced
or surviving spouse were a current certificate holder of the group plan
plus the amount that the group policyholder would contribute toward the
premium if the legally separated, divorced or surviving spouse were a
certificate holder of the group plan, plus an additional amount not to
exceed two percent of the certificate holder and group plan holder
contributions, for the costs of administration.

(2) The first premium shall be paid by the legally separated,
divorced or surviving spouse within 45 days of the date of the election.

(3) The right to continuation of coverage shall terminate upon the
earliest of any of the following:

(a) The failure to pay premiums when due, including any grace
period allowed by the policy;

(b) The date that the group policy is terminated as to all group
members except that if a different group policy is made available to
group members, the legally separated, divorced or surviving spouse shall
be eligible for continuation of coverage as if the original policy had
not been terminated;

(c) The date on which the legally separated, divorced or surviving
spouse becomes insured under any other group health plan;

(d) The date on which the legally separated, divorced or surviving
spouse remarries and becomes covered under another group health plan; or

(e) The date on which the legally separated, divorced or surviving
spouse becomes eligible for federal Medicare coverage. [Formerly 743.853](1) A group health
insurance policy providing coverage for hospital or medical expenses,
other than coverage limited to expenses from accidents or specific
diseases, shall contain a provision that certificate holders whose
coverage under the policy otherwise would terminate because of
termination of employment or membership may continue coverage under the
policy for themselves and their eligible dependents as provided in this
section.

(2) Continuation of coverage shall be available only to a
certificate holder who has been insured continuously under the policy or
similar predecessor policy during the three-month period ending on the
date of the termination of employment or membership.

(3) Continuation of coverage shall not be available to a
certificate holder who is eligible for:

(a) Federal Medicare coverage; or

(b) Coverage for hospital or medical expenses under any other
program which was not covering the certificate holder immediately before
the certificate holder’s termination of employment or membership.

(4) The continued coverage need not include benefits for dental,
vision care or prescription drug expense, or any other benefits under the
policy additional to hospital and medical expense benefits.

(5) A certificate holder who has terminated employment or
membership and who wishes to continue coverage must request continuation
in writing not later than 10 days after the later of the date on which
employment or membership terminated and the date on which the employer or
group policyholder gave the certificate holder notice of the right to
continue coverage. However, a certificate holder may not make a request
for continuation more than 31 days after the date of termination of
employment or membership.

(6) A certificate holder who requests continuation of coverage must
pay the premium on a monthly basis and in advance, as provided in this
subsection. The certificate holder shall pay the premium to the insurer
or to the employer or policyholder, whichever the group policy provides.
The required premium payment may not exceed the group premium rate, for
the insurance being continued under the group policy, as of the date the
premium payment is due. The certificate holder must pay the first premium
not later than 31 days after the date on which the certificate holder’s
coverage under the policy otherwise would end.

(7) Continuation of coverage as provided under this section shall
end upon the earliest of the following dates:

(a) Six months after the date on which the certificate holder’s
coverage under the policy otherwise would have ended because of
termination of employment or membership.

(b) The end of the period for which the certificate holder last
made timely premium payment, if the certificate holder fails to make
timely payment of a required premium payment.

(c) The premium payment due date coinciding with or next following
the date the certificate holder becomes eligible for federal Medicare
coverage.

(d) The date on which the policy is terminated or the certificate
holder’s employer terminates participation under the policy. However, if
the employer replaces the coverage which is terminating for the
certificate holder with similar coverage under another group policy:

(A) The certificate holder may obtain coverage under the
replacement group policy for the balance of the period that the
certificate holder would have remained covered under the replaced group
policy under this section;

(B) The minimum level of benefits to be provided the certificate
holder by the replacement group policy shall be the applicable level of
benefits of the replaced policy reduced by any benefits still payable
under that policy; and

(C) The replaced policy shall continue to provide benefits to the
certificate holder to the extent of that policy’s accrued liabilities and
extensions of benefits as if the replacement had not occurred.

(8) The group health insurance policy also shall contain a
provision that:

(a) The surviving spouse of a certificate holder, if any, who is
not eligible for continuation of coverage under ORS 743.600 may continue
coverage under the policy, at the death of the certificate holder, with
respect to the spouse and any dependent children whose coverage under the
policy otherwise would terminate because of the death, in the same manner
that a certificate holder may exercise the right under this section.

(b) The spouse of a certificate holder, if any, who is not eligible
for continuation of coverage under ORS 743.600 may continue coverage
under the policy, upon dissolution of marriage with the certificate
holder, with respect to the spouse and any children whose coverage under
the policy otherwise would terminate because of the dissolution of
marriage, in the same manner that a certificate holder may exercise the
right under this section.

(c) A spouse who requests continuation of coverage under this
subsection must pay the premium for the spouse and any dependent
children, on a monthly basis and in advance, as provided in this
paragraph. The spouse shall pay the premium to the insurer or to the
employer or policyholder, whichever the group policy provides. The
required premium payment under this subsection may not exceed the group
premium rate, for the insurance being continued under the group policy,
as of the date the premium payment is due.

(9) A certificate holder who has terminated employment by reason of
layoff shall not be subject upon any rehire that occurs within six months
of the time of the layoff to any waiting period prerequisite to coverage
under the employer’s group health insurance policy if the certificate
holder was eligible for coverage at the time of the termination and
regardless of whether the certificate holder continued coverage during
the layoff.

(10) This section applies only to employers who are not required to
make available continuation of health insurance benefits under Titles X
and XXII of the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, P.L. 99-272, April 7, 1986. [Formerly 743.850](Long Term Care) (1) ORS
743.650 to 743.656, 748.603 and 750.055 may be known and cited as the
“Long Term Care Insurance Act.”

(2) The purpose of ORS 743.650 to 743.656, 748.603 and 750.055 is
to:

(a) Promote the public interest in long term care insurance;

(b) Promote the availability of long term care insurance policies;

(c) Protect applicants for long term care insurance from unfair or
deceptive sales or enrollment practices;

(d) Establish standards for long term care insurance;

(e) Facilitate public understanding and comparison of long term
care insurance policies;

(f) Facilitate flexibility and innovation in the development of
long term care insurance coverage; and

(g) Assure that Oregon residents who purchase insurance for long
term care shall have access to policies providing for a comprehensive
range of benefits.

(3) The requirements of ORS 743.650 to 743.656, 748.603 and 750.055
apply to policies and certificates delivered or issued for delivery in
this state on or after December 31, 1989. ORS 743.650 to 743.656, 748.603
and 750.055 are not intended to supersede the obligations of entities
subject to ORS 743.650 to 743.656, 748.603 and 750.055 to comply with the
substance of other applicable insurance laws insofar as such laws do not
conflict with ORS 743.650 to 743.656, 748.603 and 750.055, except that
laws and rules designed and intended to apply to Medicare supplement
insurance policies shall not be applied to long term care insurance. A
policy that is not advertised, marketed or offered as long term care
insurance or nursing home insurance is not required to meet the
requirements of ORS 743.650 to 743.656, 748.603 and 750.055. [1989 c.1022
§§1,2,3] As used in ORS
743.650 to 743.656, 748.603 and 750.055, unless the context requires
otherwise:

(1) “Applicant” means:

(a) In the case of an individual long term care insurance policy,
the person who seeks to contract for benefits; and

(b) In the case of a group long term care insurance policy, the
proposed certificate holder.

(2) “Certificate” means any certificate issued under a group long
term care insurance policy, if the policy has been delivered or issued
for delivery in this state.

(3) “Director” means the Director of the Department of Consumer and
Business Services.

(4) “Elimination period” means the period at the beginning of a
disability during which no benefits are payable.

(5) “Functionally necessary” or “functionally impaired” means a
need of a person who is not able to perform independently activities of
daily living because of a physical or cognitive impairment.

(6) “Group long term care insurance” means a long term care
insurance policy that is delivered or issued for delivery in this state
and issued to:

(a) One or more employers or labor organizations, or to a trust or
to the trustees of a fund established by one or more employers or labor
organizations, or a combination thereof, for employees or former
employees or a combination thereof, or for members or former members, or
a combination thereof, of the labor organizations; or

(b) Any professional, trade or occupational association for its
members or former or retired members, or combination thereof, if such
association:

(A) Is composed of individuals all of whom are or were actively
engaged in the same profession, trade or occupation; and

(B) Has been maintained in good faith for purposes other than
obtaining insurance; or

(c)(A) An association or a trust or the trustee of a fund
established, created or maintained for the benefit of members of one or
more associations. Prior to advertising, marketing or offering such
policy within this state, the association or associations, or the insurer
of the association or associations shall file evidence with the director
that the association or associations have been organized and maintained
in good faith for purposes other than that of obtaining insurance; have
been in active existence for at least one year; and have a constitution
and bylaws that provide that:

(i) The association or associations hold regular meetings not less
than annually to further purposes of the members;

(ii) Except for credit unions, the association or associations
collect dues or solicit contributions from members; and

(iii) The members have voting privileges and representation on the
governing board and committees; and

(B) Sixty days after such filing, the association or associations
shall be considered to satisfy such organizational requirements, unless
the director makes a finding that the association or associations do not
satisfy those organizational requirements; and

(d) A group other than as described in paragraphs (a), (b) and (c)
of this subsection, subject to a finding by the director that:

(A) The issuance of the group policy is not contrary to the best
interest of the public;

(B) The issuance of the group policy would result in economies of
acquisition or administration; and

(C) The benefits are reasonable in relation to the premiums charged.

(7) “Long term care insurance” means any insurance advertised,
marketed, offered or designed to provide coverage for not less than 24
months for each covered person on an expense incurred, indemnity, prepaid
or other basis; for one or more functionally necessary or medically
necessary services, including but not limited to nursing, diagnostic,
preventive, therapeutic, rehabilitative, maintenance or personal care
services, provided in a setting other than an acute care unit of a
hospital. “Long term care insurance” includes group and individual
policies or riders whether issued by insurers; fraternal benefit
societies; nonprofit health, hospital and medical service corporations;
prepaid health plans; or health maintenance organizations, health care
service contractors or any similar organization. “Long term care
insurance” shall not include any insurance policy which is offered
primarily to provide basic Medicare supplement coverage, basic hospital
expense coverage, basic medical-surgical expense coverage, hospital
confinement indemnity coverage, major medical expense coverage,
disability income protection coverage, catastrophic coverage, accident
only coverage, specified disease or specified accident coverage.

(8) “Policy” means any policy, contract, subscriber agreement,
rider or indorsement delivered or issued for delivery in this state by an
insurer; fraternal benefit society; nonprofit health, hospital or medical
service corporation; prepaid health plan; or health maintenance
organization, health care service contractor or any similar organization.
[1989 c.1022 §4; 1993 c.744 §30; 1995 c.79 §364] No group long term care
insurance coverage may be offered to a resident of this state under a
group policy issued in another state to a group described in ORS 743.652
(6)(d), unless the other state has statutory and regulatory long term
care insurance requirements substantially similar to those adopted in
this state and the Director of the Department of Consumer and Business
Services has made a determination that such requirements are
substantially similar. [1989 c.1022 §5; 1991 c.67 §199] (1)(a) The Director
of the Department of Consumer and Business Services shall adopt rules
that include standards for full and fair disclosure setting forth the
manner, content and required disclosures for the sale of long term care
insurance policies, terms of renewability, initial and subsequent
conditions of eligibility, nonduplication of coverage provisions,
coverage of dependents, preexisting conditions, termination of insurance,
program for public understanding, continuation or conversion,
probationary periods, limitations, exceptions, reductions, elimination
periods, underwriting at time of application, requirements for
replacement, recurrent conditions and definitions of terms. The director
shall adopt rules establishing standards for loss ratios and reserves,
provided that a specific reference to long term care insurance is
contained in the rules.

(b) In adopting rules setting standards under this section, the
director shall give timely notice to, and shall consider recommendations
from the Director of Human Services.

(2) No long term care insurance policy shall:

(a) Be canceled, nonrenewed or otherwise terminated on the grounds
of the age or the deterioration of the mental or physical health of the
insured individual or certificate holder;

(b) Contain a provision establishing a new waiting period in the
event existing coverage is converted to or replaced by a new or other
form within the same company, except with respect to an increase in
benefits voluntarily selected by the insured individual or group
policyholder;

(c) Provide coverage for skilled nursing care only or provide
significantly more coverage for skilled care in a facility than coverage
for lower levels of care. This evaluation of the amount of coverage
provided shall be based on aggregate days of care covered for lower
levels of care, when compared to days of care covered for skilled care;

(d) Exclude coverage for Alzheimer’s disease and related dementias;

(e) Be nonrenewed or otherwise terminated for nonpayment of
premiums until 31 days overdue and then only after notice of nonpayment
is given the policyholder prior to expiration of the 31 days; or

(f) Be sold after December 31, 1989, to provide less than 24
months’ coverage.

(3)(a) No long term care insurance policy or certificate other than
a policy or certificate issued to a group, as defined in ORS 743.652
(6)(a), (b) or (c), shall use a definition of “preexisting condition”
which is more restrictive than the following: “Preexisting condition”
means the existence of symptoms which would cause an ordinarily prudent
person to seek diagnosis, care or treatment, or a condition for which
medical advice or treatment was recommended by, or received from a
provider of health care services, within six months preceding the
effective date of coverage of an insured person.

(b) No long term care insurance policy or certificate other than a
policy or certificate thereunder issued to a group as defined in ORS
743.652 (6)(a), (b) or (c) may exclude coverage for a loss or confinement
which is the result of a preexisting condition unless such loss or
confinement begins within six months following the effective date of
coverage of an insured person.

(c) The director may extend the limitation periods set forth in
paragraphs (a) and (b) of this subsection as to specific age group
categories or specific policy forms upon findings that the extension is
in the best interest of the public.

(d) The definition of preexisting condition does not prohibit an
insurer from using an application form designed to elicit the complete
health history of an applicant, over the 10 years immediately prior to
the date of application, and, on the basis of the answers on the
application, from underwriting in accordance with that insurer’s
established underwriting standards. Unless otherwise provided in the
policy or certificate, a preexisting condition, regardless of whether it
is disclosed on the application, need not be covered until the waiting
period described in paragraph (b) of this subsection expires. No long
term care insurance policy or certificate may exclude or use waivers or
riders of any kind to exclude, limit or reduce coverage or benefits for
specifically named or described preexisting diseases or physical
conditions beyond the waiting period described in paragraph (b) of this
subsection, unless such waiver or rider has been specifically approved by
the director.

(4) No long term care insurance policy shall be delivered or issued
for delivery in this state if the policy:

(a) Conditions eligibility for any benefits on a prior
hospitalization requirement; or

(b) Conditions eligibility for benefits provided in an
institutional care setting on the receipt of a higher level of
institutional care.

(5)(a) Individual long term care insurance policyholders shall have
the right to return the policy within 30 days of its delivery and to have
the premium refunded if, after examination of the policy, the
policyholder is not satisfied for any reason. Individual long term care
insurance policies shall have a notice prominently printed on the first
page of the policy or attached thereto stating in substance that the
policyholder shall have the right to return the policy within 30 days of
its delivery and to have the premium refunded if, after examination of
the policy, the policyholder is not satisfied for any reason.

(b) A person insured under a long term care insurance policy or
certificate issued in this state or any other state to a group described
in ORS 743.652 (6)(b), (c) or (d) shall have the right to return the
policy within 30 days of its delivery and to have the premium refunded
if, after examination, the insured person is not satisfied for any
reason. Long term care insurance policies shall have a notice prominently
printed in 10 point type on the first page or attached thereto stating in
substance that the insured person shall have the right to return the
policy within 30 days of its delivery and to have the premium refunded if
after examination the insured person is not satisfied for any reason.

(6)(a) An outline of coverage shall be delivered to a prospective
applicant for long term care insurance at the time of initial
solicitation through means which prominently direct the attention of the
recipient to the document and its purpose.

(A) The director shall prescribe a standard format including style,
arrangement and overall appearance and the content of an outline of
coverage.

(B) In the case of solicitations by an insurance producer, the
insurance producer must deliver the outline of coverage prior to the
presentation of an application or enrollment form.

(C) In the case of direct response solicitations, the outline of
coverage must be presented in conjunction with any application or
enrollment form.

(b) The outline of coverage shall include:

(A) A description of the principal benefits and coverage provided
in the policy;

(B) A statement of the principal exclusions, reductions and
limitations contained in the policy;

(C) A statement of the terms under which the policy or certificate,
or both, may be continued in force or discontinued, including any
reservation in the policy of a right to change premium. Continuation or
conversion provisions of group coverage shall be specifically described;

(D) A statement that the outline of coverage is a summary only, not
a contract of insurance, and that the policy or group master policy
contains governing contractual provisions;

(E) A description of the terms under which the policy or
certificate may be returned and premium refunded; and

(F) A brief description of the relationship of cost of care and
benefits.

(7) A certificate issued pursuant to a group long term care
insurance policy if the policy is delivered or issued for delivery in
this state shall include:

(a) A description of the principal benefits and coverage provided
in the policy;

(b) A statement of the principal exclusions, reductions and
limitations contained in the policy; and

(c) A statement that the group master policy determines governing
contractual provisions.

(8) No policy may be advertised, marketed or offered as long term
care or nursing home insurance unless it complies with the provisions of
ORS 743.650 to 743.656, 748.603 and 750.055.

(9) ORS 743.414 applies to long term care insurance regulated under
ORS 743.650 to 743.656, 748.603 and 750.055.

(10) Rules adopted pursuant to ORS 743.650 to 743.656, 748.603 and
750.055 shall be in accordance with the provisions of ORS chapter 183.
[1989 c.1022 §§6,7; 1991 c.67 §200; 2003 c.364 §110]
(1) No long term care insurance policy shall be delivered or issued for
delivery in this state unless the policy determines eligibility for
benefits through a determination that is not more restrictive than
requiring that:

(a) The policyholder be functionally impaired and needing
assistance in any three or more activities of daily living as defined by
the Director of the Department of Consumer and Business Services, by
rule, after consultation with the Director of Human Services.

(b) Benefits must be payable when the beneficiary is receiving
covered services from any of the following providers approved by the
insurer:

(A) Nursing home;

(B) Assisted living;

(C) Home care; and

(D) Adult foster care.

(c) The insurer shall approve nursing home, assisted living, home
care, adult foster home and any other providers of covered services by
using standards that have been submitted to and approved by the director
in consultation with the Director of Human Services.

(2) No long term care policy that offers only nursing home benefits
shall be sold in this state. [1989 c.1022 §§13,14; 2003 c.14 §449](Medicare Supplement) As used in ORS
743.680 to 743.689, unless the context requires otherwise:

(1) “Applicant” means:

(a) In the case of an individual Medicare supplement policy or
subscriber contract, the person who seeks to contract for insurance
benefits.

(b) In the case of a group Medicare supplement policy or subscriber
contract, the proposed certificate holder.

(2) “Certificate” means any certificate issued under a group
Medicare supplement policy, which certificate has been delivered or
issued for delivery in this state.

(3) “Medicare” means the “Health Insurance for the Aged Act,” Title
XVIII of the Social Security Amendments of 1965.

(4) “Medicare supplement policy” means a group or individual policy
of insurance or a subscriber contract which is advertised, marketed or
designed primarily as a supplement to reimbursements under Medicare for
the hospital, medical or surgical expenses of persons eligible for
Medicare. [1989 c.255 §1; 1993 c.113 §1] (1) Except as
otherwise specifically provided, ORS 743.680 to 743.689 apply to:

(a) All Medicare supplement policies and subscriber contracts
delivered or issued for delivery in this state on or after May 31, 1989;
and

(b) All certificates issued under group Medicare supplement
policies or subscriber contracts, which certificates have been delivered
or issued for delivery in this state on or after May 31, 1989.

(2) ORS 743.680 to 743.689 do not apply to a policy or contract of
one or more employers or labor organizations, or of the trustees of a
fund established by one or more employers or labor organizations, or
combination thereof, for employees or former employees or a combination
thereof, or for members or former members, or a combination thereof, of
the labor organizations. [1989 c.255 §2](1) No Medicare supplement insurance policy, contract or
certificate in force in the state shall contain benefits which duplicate
benefits provided by Medicare.

(2) The Director of the Department of Consumer and Business
Services shall adopt by rule specific standards for policy provisions of
Medicare supplement policies and certificates. The standards shall be in
addition to and in accordance with applicable laws of this state. No
requirement of the Insurance Code relating to minimum required policy
benefits, other than the minimum standards contained in ORS 743.680 to
743.689, shall apply to Medicare supplement policies. The standards may
cover, but not be limited to:

(a) Terms of renewability;

(b) Initial and subsequent conditions of eligibility;

(c) Nonduplication of coverage;

(d) Probationary periods;

(e) Benefit limitations, exceptions and reductions;

(f) Elimination periods;

(g) Requirements for replacement;

(h) Recurrent conditions; and

(i) Definitions of terms.

(3) Provisions established by the director governing eligibility
for Medicare supplement insurance shall not be limited to persons
qualifying for Medicare by reason of age.

(4) The director may adopt by rule standards that specify
prohibited policy provisions not otherwise specifically authorized by
statute which, in the opinion of the director, are unjust, unfair or
unfairly discriminatory to any person insured or proposed for coverage
under a Medicare supplement policy.

(5) Notwithstanding any other provision of law of this state, a
Medicare supplement policy may not deny a claim for losses incurred more
than six months from the effective date of coverage for a preexisting
condition. The policy may not define a preexisting condition more
restrictively than a condition for which medical advice was given or
treatment was recommended by or received from a physician within six
months before the effective date of coverage.

(6) The director shall adopt by rule standards for benefits and
claims payment under Medicare supplement policies. [1989 c.255 §§3,4;
1993 c.113 §3](1) Every insurer providing group Medicare supplement
insurance benefits to a resident of this state pursuant to ORS 743.682
shall file a copy of the master policy and any certificate used in this
state in accordance with the filing requirements and procedures
applicable to group Medicare supplement policies issued in this state.
However, no insurer shall be required to make a filing earlier than 30
days after insurance was provided to a resident of this state under a
master policy issued for delivery outside this state.

(2) Medicare supplement policies shall return benefits which are
reasonable in relation to the premium charged. The Director of the
Department of Consumer and Business Services shall adopt by rule minimum
standards for loss ratios of Medicare supplement policies on the basis of
incurred claims experience, or incurred health care expenses where
coverage is provided by a health maintenance organization on a service
rather than reimbursement basis, and earned premiums in accordance with
accepted actuarial principles and practices. Every entity providing
Medicare supplement policies or certificates in this state shall file
annually its rates, rating schedule and supporting documentation
demonstrating that it is in compliance with the applicable loss ratio
standards of this state. All filings of rates and rating schedules shall
demonstrate that the actual and expected losses in relation to premiums
comply with the requirements of ORS 743.680 to 743.689.

(3) No entity shall provide compensation to insurance producers
which is greater than the renewal compensation which would have been paid
on an existing policy if the existing policy is replaced by another
policy with the same company where the new policy benefits are
substantially similar to the benefits under the old policy and the old
policy was issued by the same insurer or insurer group. [1989 c.255 §5;
2003 c.364 §111] (1) In
order to provide for full and fair disclosure in the sale of Medicare
supplement policies, no Medicare supplement policy or certificate shall
be delivered in this state unless an outline of coverage is delivered to
the applicant at the time application is made.

(2) The Director of the Department of Consumer and Business
Services shall prescribe the format and content of the outline of
coverage required by subsection (1) of this section. The director shall
consult with the Governor’s Commission on Senior Services concerning the
content and format of the outline of coverage, especially in reference to
the ease with which senior citizens may understand the form and compare
the coverage provided under the policy to which the outline of coverage
refers. For purposes of this section, “format” means style, arrangements
and overall appearance, including such items as the size, color and
prominence of type and arrangement of text and captions. The outline of
coverage required by subsection (1) of this section shall include at
least the following:

(a) A description of the principal benefits and coverage provided
in the policy;

(b) A statement of the renewal provisions, including any
reservation by the insurer of a right to change premiums and disclosure
of the existence of any automatic renewal premium increases based on the
policyholder’s age; and

(c) A statement that the outline of coverage is a summary of the
policy issued or applied for and that the policy should be consulted to
determine governing contractual provisions.

(3) Insurers shall fill out the standardized form and have the
completed information included on the form approved by the director
before selling supplemental Medicare coverage in this state.

(4) In the purchase or renewal of a Medicare supplement policy, a
copy of the outline of coverage must be used in explaining policy
coverage to a purchaser and shall be provided to the applicant at the
time the sales presentation is made. The completed outline of coverage
shall be considered part of the sales presentation materials for the
purposes of ORS 742.009.

(5) The insurer shall obtain acknowledgment of receipt or certify
delivery of the outline of coverage at the time of sale.

(6) The director may adopt by rule a standard form and the contents
of an informational brochure for persons eligible for Medicare, which is
intended to improve the buyer’s ability to select the most appropriate
coverage and improve the buyer’s understanding of Medicare. Except in the
case of direct response insurance policies, the director may require by
rule that the information brochure be provided to any prospective
insureds eligible for Medicare concurrently with delivery of the outline
of coverage. With respect to direct response insurance policies, the
director may require by rule that the prescribed brochure be provided
upon request to any prospective insureds eligible for Medicare, but in no
event later than the time of policy delivery.

(7) The director may adopt by rule captions or notice requirements,
determined to be in the public interest and designed to inform
prospective insureds that particular insurance coverages are not Medicare
supplement coverages, for all health insurance policies sold to persons
eligible for Medicare, other than:

(a) Medicare supplement policies; or

(b) Disability income policies.

(8) The director may adopt rules governing the full and fair
disclosure of the information in connection with the replacement of
health insurance policies, subscriber contracts or certificates by
persons eligible for Medicare. [1989 c.255 §6; 1993 c.113 §2; 1997 c.96
§2] Medicare
supplement policies or certificates shall have a notice prominently
printed on the first page of the policy or certificate or attached
thereto stating in substance that the applicant shall have the right to
return the policy or certificate within 30 days of its delivery and to
have the premium refunded if, after examination of the policy or
certificate, the applicant is not satisfied for any reason. Any refund
made pursuant to this section shall be paid directly to the applicant by
the insurer in a timely manner. [1989 c.255 §7] Every insurer, health care service plan or
other entity providing Medicare supplement insurance or benefits in this
state shall provide a copy of any Medicare supplement advertisement
intended for use in this state whether through written, radio or
television medium to the Director of the Department of Consumer and
Business Services of this state for review or approval by the director to
the extent it may be required under state law. [1989 c.255 §8]Rules adopted pursuant to ORS 743.680 to 743.689
shall be subject to the provisions of ORS chapter 183. [1989 c.255 §9]In addition to any other applicable penalties for violations of
the Insurance Code, the Director of the Department of Consumer and
Business Services may require insurers violating any provision of ORS
743.680 to 743.689 or rules adopted pursuant to ORS 743.680 to 743.689 to
cease marketing any Medicare supplement policy or certificate in this
state which is related directly or indirectly to a violation or may
require such insurer to take such actions as are necessary to comply with
the provisions of ORS 743.680 to 743.689, or both. [1989 c.255 §10](Required Reimbursements) (1) All
insurers offering a health benefit plan as defined in ORS 743.730 shall
provide payment, coverage or reimbursement for the following
mastectomy-related services as determined by the attending physician and
enrollee to be part of the enrollee’s course or plan of treatment:

(a) All stages of reconstruction of the breast on which a
mastectomy was performed, including but not limited to nipple
reconstruction, skin grafts and stippling of the nipple and areola;

(b) Surgery and reconstruction of the other breast to produce a
symmetrical appearance;

(c) Prostheses;

(d) Treatment of physical complications of the mastectomy,
including lymphedemas; and

(e) Inpatient care related to the mastectomy and post-mastectomy
services.

(2) An insurer providing coverage under subsection (1) of this
section shall provide written notice describing the coverage to the
enrollee at the time of enrollment in the health benefit plan and
annually thereafter.

(3) A health benefit plan must provide a single determination of
prior authorization for all mastectomy-related services covered under
subsection (1) of this section that are part of the enrollee’s course or
plan of treatment.

(4) When an enrollee requests an external review of an adverse
decision by the insurer regarding services described in subsection (1) of
this section, the insurer must expedite the enrollee’s case pursuant to
ORS 743.857 (4).

(5) The coverage required under subsection (1) of this section is
subject to the same terms and conditions in the plan that apply to other
benefits under the plan.

(6) This section is exempt from ORS 743.700. [2003 c.748 §2] All
health benefit plans as defined in ORS 743.730 must provide payment or
reimbursement for expenses associated with pregnancy care, as defined by
ORS 743.845, and childbirth. Benefits provided under this section shall
be extended to all enrollees, enrolled spouses and enrolled dependents.
[1999 c.428 §2; 2001 c.104 §289]Note: See 743.700. (1)
Subject to other terms, conditions and benefits in the plan, group health
benefit plans as described in ORS 743.730 shall provide payment, coverage
or reimbursement for supplies, equipment and diabetes self-management
programs associated with the treatment of insulin-dependent diabetes,
insulin-using diabetes, gestational diabetes and noninsulin-using
diabetes prescribed by a health care professional legally authorized to
prescribe such items.

(2) As used in this section, “diabetes self-management program”
means one program of assessment and training after diagnosis and no more
than three hours per year of assessment and training upon a material
change of condition, medication or treatment that is provided by:

(a) An education program credentialed or accredited by a state or
national entity accrediting such programs; or

(b) A program provided by a physician licensed under ORS chapter
677, a registered nurse, a nurse practitioner, a certified diabetes
educator or a licensed dietitian with demonstrated expertise in diabetes.
[2001 c.742 §2]Note: See 743.700.As used in ORS 743.697,
“peer-reviewed medical literature” means scientific studies printed in
journals or other publications that publish original manuscripts only
after the manuscripts have been critically reviewed by unbiased
independent experts for scientific accuracy, validity and reliability.
“Peer-reviewed medical literature” does not include internal publications
of pharmaceutical manufacturers. [1997 c.573 §2] (1) No insurance policy or
contract providing coverage for a prescription drug to a resident of this
state shall exclude coverage of that drug for a particular indication
solely on the grounds that the indication has not been approved by the
United States Food and Drug Administration if the Health Resources
Commission determines that the drug is recognized as effective for the
treatment of that indication:

(a) In publications that the commission determines to be equivalent
to:

(A) The American Hospital Formulary Services drug information;

(B) “Drug Facts and Comparisons” (Lippincott-Raven Publishers);

(C) The United States Pharmacopoeia drug information; or

(D) Other publications that have been identified by the United
States Secretary of Health and Human Services as authoritative;

(b) In the majority of relevant peer-reviewed medical literature; or

(c) By the United States Secretary of Health and Human Services.

(2) Required coverage of a prescription drug under this section
shall include coverage for medically necessary services associated with
the administration of that drug.

(3) Nothing in this section requires coverage for any prescription
drug if the United States Food and Drug Administration has determined use
of the drug to be contraindicated.

(4) Nothing in this section requires coverage for experimental
drugs not approved for any indication by the United States Food and Drug
Administration.

(5) This section is exempt from ORS 743.700. [1997 c.573 §3] (1) All insurers offering a
health benefit plan shall provide coverage without prior authorization
for:

(a) Emergency medical screening exams;

(b) Stabilization of an emergency medical condition; and

(c) Emergency services provided by a nonparticipating provider if a
prudent layperson possessing an average knowledge of health and medicine
would reasonably believe that the time required to go to a participating
provider would place the health of the person, or a fetus in the case of
a pregnant woman, in serious jeopardy.

(2) All insurers described in subsection (1) of this section shall
provide information to enrollees in plain language regarding:

(a) What constitutes an emergency medical condition;

(b) The coverage provided for emergency services;

(c) How and where to obtain emergency services; and

(d) The appropriate use of 9-1-1.

(3) An insurer offering a health benefit plan may not discourage
appropriate use of 9-1-1 and shall not deny coverage for emergency
services solely because 9-1-1 was used.

(4) This section is exempt from ORS 743.700. [1997 c.651 §2; 2003
c.137 §1]Note: See definitions in 743.801.(1) Except as provided in subsection (4) of this
section, any statute described in subsection (2) of this section that
becomes effective on or after July 13, 1985, is repealed on the sixth
anniversary of the effective date of the statute, unless the Legislative
Assembly specifically provides otherwise.

(2) This section governs any statute that applies to individual or
group health insurance policies and does any of the following:

(a) Requires the insurer to include coverage for specific physical
or mental conditions or specific hospital, medical, surgical or dental
health services.

(b) Requires the insurer to include coverage for specified persons.

(c) Requires the insurer to provide payment or reimbursement to
specified providers of services if the services are within the lawful
scope of practice of the provider and the insurance policy provides
payment or reimbursement for those services.

(d) Requires the insurer to provide any specific coverage on a
nondiscriminatory basis.

(e) Forbids the insurer to exclude from payment or reimbursement
any covered services.

(f) Forbids the insurer to exclude coverage of a person because of
that person’s medical history.

(3) A repeal of a statute under subsection (1) of this section does
not apply to any insurance policy in effect on the effective date of the
repeal. However, the repeal of the statute applies to a renewal or
extension of an existing insurance policy on or after the effective date
of the repealer as well as to a new policy issued on or after the
effective date of the repealer.

(4) This section does not apply to ORS 743.693, 743.727, 743.728
No policy of health insurance shall exclude from
payment or reimbursement losses incurred by an insured for any covered
service because the service was rendered at any hospital owned or
operated by the State of Oregon or any state approved community mental
health and developmental disabilities program. [Formerly 743.116] Notwithstanding
any provision of any policy of health insurance, whenever the policy
provides for payment or reimbursement for a service that is within the
lawful scope of practice of a licensed optometrist, the insurer shall
provide payment or reimbursement for the service, whether the service is
performed by a physician or a licensed optometrist. Unless the policy
provides otherwise, there shall be no reimbursement for ophthalmic
materials, lenses, spectacles, eyeglasses or appurtenances thereto.
[Formerly 743.117; 2005 c.442 §4] (1)
The Legislative Assembly declares that all group health insurance
policies providing hospital, medical or surgical expense benefits include
coverage for maxillofacial prosthetic services considered necessary for
adjunctive treatment.

(2) As used in this section, “maxillofacial prosthetic services
considered necessary for adjunctive treatment” means restoration and
management of head and facial structures that cannot be replaced with
living tissue and that are defective because of disease, trauma or birth
and developmental deformities when such restoration and management are
performed for the purpose of:

(a) Controlling or eliminating infection;

(b) Controlling or eliminating pain; or

(c) Restoring facial configuration or functions such as speech,
swallowing or chewing but not including cosmetic procedures rendered to
improve on the normal range of conditions.

(3) The coverage required by subsection (1) of this section may be
made subject to provisions of the policy that apply to other benefits
under the policy including, but not limited to, provisions relating to
deductibles and coinsurance.

(4) The services described in this section shall apply to
individual health policies entered into or renewed on or after January 1,
1982. [Formerly 743.119](1) All individual and group health insurance policies
providing hospital, medical or surgical expense benefits that include
coverage for a family member of the insured shall also provide that the
health insurance benefits applicable for children in the family shall be
payable with respect to:

(a) A newly born child of the insured from the moment of birth; and

(b) An adopted child effective upon placement for adoption.

(2) The coverage of newly born and adopted children required by
subsection (1) of this section shall consist of coverage of injury or
sickness, including the necessary care and treatment of medically
diagnosed congenital defects and birth abnormalities.

(3) If payment of a specific premium is required to provide
coverage for a child, the policy may require that notification of the
birth of the child or of the placement for adoption of the child and
payment of the premium be furnished the insurer within 31 days after the
date of birth or date of placement in order to have the coverage extended
beyond the 31-day period.

(4) The following requirements apply to coverage of an adopted
child required by subsection (1)(b) of this section:

(a) In any case in which a policy provides coverage for dependent
children of participants or beneficiaries, the policy shall provide
benefits to dependent children placed with participants or beneficiaries
for adoption under the same terms and conditions as apply to the natural,
dependent children of the participants and beneficiaries, regardless of
whether the adoption has become final.

(b) A policy may not restrict coverage of any dependent child
adopted by a participant or beneficiary, or placed with a participant or
beneficiary for adoption, solely on the basis of a preexisting condition
of the child at the time that the child would otherwise become eligible
for coverage under the plan if the adoption or placement for adoption
occurs while the participant or beneficiary is eligible for coverage
under the plan.

(5) As used in this section:

(a) “Child” means, in connection with any adoption, or placement
for adoption of the child, an individual who has not attained 18 years of
age as of the date of the adoption or placement for adoption.

(b) “Placement for adoption” means the assumption and retention by
a person of a legal obligation for total or partial support of a child in
anticipation of the adoption of the child. The child’s placement with a
person terminates upon the termination of such legal obligations.

(6) The provisions of ORS 743.700 do not apply to this section.
[Formerly 743.120; 1991 c.674 §2; 1995 c.506 §10]
Whenever any provision of any individual or group health insurance policy
or contract provides for payment or reimbursement for any service which
is within the lawful scope of a psychologist licensed under ORS 675.010
to 675.150:

(1) The insured under such policy or contract shall be free to
select, and shall have direct access to, a psychologist licensed under
ORS 675.010 to 675.150, without supervision or referral by a physician or
another health practitioner, and wherever such psychologist is authorized
to practice.

(2) The insured under such policy or contract shall be entitled to
have payment or reimbursement made to the insured or on the insured’s
behalf for the services performed. Such payment or reimbursement shall be
in accordance with the benefits provided in the policy and shall be the
same whether performed by a physician or a psychologist licensed under
ORS 675.010 to 675.150. [Formerly 743.123]No policy of health insurance may be
denied or canceled by the insurer solely because the mother of the
insured used drugs containing diethylstilbestrol prior to the insured’s
birth. [Formerly 743.125] (1)
Whenever any policy of health insurance provides for reimbursement for
any service which is within the lawful scope of practice of a duly
licensed and certified nurse practitioner, including prescribing or
dispensing drugs, the insured under the policy is entitled to
reimbursement for such service whether it is performed by a physician
licensed by the Board of Medical Examiners for the State of Oregon or by
a duly licensed nurse practitioner.

(2) This section does not apply to group practice health
maintenance organizations that are federally qualified pursuant to Title
XIII of the Health Maintenance Organization Act. [Formerly 743.128] Notwithstanding
any provisions of any policy of insurance covering dental health,
whenever such policy provides for reimbursement for any service that is
within the lawful scope of practice of a denturist, the insured under
such policy shall be entitled to reimbursement for such service, whether
the service is performed by a licensed dentist or a licensed denturist as
defined in ORS 680.500. [Formerly 743.132; 1993 c.142 §15; 2005 c.22 §496]Note: 743.713 was added to and made a part of the Insurance Code by
the people in the exercise of their initiative power but was not added to
or made a part of ORS chapter 743 or any series therein. See Preface to
Oregon Revised Statutes for further explanation.
Whenever any individual or group health insurance policy or blanket
health insurance policy described in ORS 743.534 (3) provides for payment
or reimbursement for any service which is within the lawful scope of
service of a clinical social worker licensed under ORS 675.510 to 675.600:

(1) The insured under the policy shall be entitled to the services
of a clinical social worker licensed under ORS 675.510 to 675.600, upon
referral by a physician or psychologist.

(2) The insured under the policy shall be entitled to have payment
or reimbursement made to the insured or on behalf of the insured for the
services performed. The payment or reimbursement shall be in accordance
with the benefits provided in the policy and shall be computed in the
same manner whether performed by a physician, by a psychologist or by a
clinical social worker, according to the customary and usual fee of
clinical social workers in the area served. [Formerly 743.135] For purpose
of coverage by group health insurers, health care service contractors and
health maintenance organizations, reimbursement for treatment of Tourette
Syndrome shall be made on the basis of the diagnosis and treatment
modality employed. [Formerly 743.143]Note: See 743.700.
Any insurance policy issued or issued for delivery in this state that
provides coverage for ambulance care and transportation shall provide
that payments will be made jointly to the provider of the ambulance care
and transportation and to the insured, unless the policy provides for
direct payment to the provider. [Formerly 743.147]Notwithstanding any provision of a policy of health insurance,
whenever the policy provides for payment of a surgical service, the
performance for the insured of such surgical service by any dentist
acting within the scope of the dentist’s license is compensable if
performance of that service by a physician acting within the scope of the
physician’s license would be compensable. [Formerly 743.052]Each policy of health insurance shall provide:

(1) The same payments for costs of maternity to unmarried women
that it provides to married women, including the wives of insured persons
choosing family coverage; and

(2) The same coverage for the child of an unmarried woman that the
child of an insured married person choosing family coverage receives.
[Formerly 743.037] (1) Whenever any
individual or group health insurance policy provides for payment or
reimbursement for acupuncture services performed by a physician, the
policy also shall pay or reimburse the insured for acupuncture services
performed by an acupuncturist licensed under ORS 677.757 to 677.770. The
payment or reimbursement shall be in accordance with the benefits
provided in the policy and shall be computed in the same manner whether
performed by a physician or an acupuncturist, according to the customary
and usual fee of acupuncturists in the area served.

(2)(a) Subsection (1) of this section does not require the
employment of acupuncturists licensed under ORS 677.757 to 677.770 by
group practice health maintenance organizations that are federally
qualified pursuant to Title XIII subchapter XI of the Public Health
Service Act (42 U.S.C. 300e et seq.).

(b) When a group practice health maintenance organization
reimburses its members for acupuncture services performed by physicians
outside its employ, it shall also reimburse its members for acupuncture
services performed by an acupuncturist. [1989 c.832 §2; 1991 c.314 §3;
1995 c.79 §365]Note: See 743.700. (1) No insurer
shall refuse a claim solely on the ground that the claim was submitted by
a physician assistant practicing under the circumstances set forth in ORS
677.515 (4) rather than by the supervising physician for the physician
assistant.

(2) This section is exempt from ORS 743.700. [1997 c.695 §3
(enacted in lieu of 743.724); 2003 c.446 §1]Note: 743.725 is repealed October 4, 2009. See section 2, chapter
446, Oregon Laws 2003. (1) All
individual and group health insurance policies providing coverage for
hospital, medical or surgical expenses, other than coverage limited to
expenses from accidents or specific diseases, shall include coverage for
treatment of inborn errors of metabolism that involve amino acid,
carbohydrate and fat metabolism and for which medically standard methods
of diagnosis, treatment and monitoring exist, including quantification of
metabolites in blood, urine or spinal fluid or enzyme or DNA confirmation
in tissues. Coverage shall include expenses of diagnosing, monitoring and
controlling the disorders by nutritional and medical assessment,
including but not limited to clinical visits, biochemical analysis and
medical foods used in the treatment of such disorders.

(2) As used in this section, “medical foods” means foods that are
formulated to be consumed or administered enterally under the supervision
of a physician, as defined in ORS 677.010, that are specifically
processed or formulated to be deficient in one or more of the nutrients
present in typical nutritional counterparts, that are for the medical and
nutritional management of patients with limited capacity to metabolize
ordinary foodstuffs or certain nutrients contained therein or have other
specific nutrient requirements as established by medical evaluation and
that are essential to optimize growth, health and metabolic homeostasis.

Note: 743.726 is repealed July 3, 2009. See section 2, chapter 263,
Oregon Laws 2003.(1) Every health insurance policy that covers hospital,
medical or surgical expenses, other than coverage limited to expenses
from accidents or specific diseases, shall provide coverage of mammograms
as follows:

(a) Mammograms for the purpose of diagnosis in symptomatic or
high-risk women at any time upon referral of the woman’s health care
provider; and

(b) An annual mammogram for the purpose of early detection for a
woman 40 years of age or older, with or without referral from the woman’s
health care provider.

(2) An insurance policy described in subsection (1) of this section
must not limit coverage of mammograms to the schedule provided in
subsection (1) of this section if the woman is determined by her health
Note: See 743.700.All policies providing
health insurance, except those policies whose coverage is limited to
expenses from accidents or specific diseases that are unrelated to the
coverage required by this section, shall include coverage for pelvic
examinations and Pap smear examinations as follows:

(1) Annually for women 18 to 64 years of age; and

(2) At any time upon referral of the woman’s health care provider.
[1993 c.576 §2; 1999 c.429 §2]Note: See 743.700.(1) All policies providing health insurance, as defined
in ORS 731.162, except those policies whose coverage is limited to
expenses from accidents or specific diseases that are unrelated to the
coverage required by this section, shall include coverage for a
nonprescription elemental enteral formula for home use, if the formula is
medically necessary for the treatment of severe intestinal malabsorption
and a physician has issued a written order for the formula and the
formula comprises the sole source, or an essential source, of nutrition.

(2) The coverage required by subsection (1) of this section may be
made subject to provisions of the policy that apply to other benefits
under the policy including, but not limited to, provisions related to
deductibles and coinsurance. Deductibles and coinsurance for elemental
enteral formulas shall be no greater than those for any other treatment
for the condition under the policy. [1993 c.407 §2]Note: See 743.700.(Small Employer, Group, Individual and Portability Health Insurance,
Generally) As used in ORS
743.730 to 743.773:

(1) “Actuarial certification” means a written statement by a member
of the American Academy of Actuaries or other individual acceptable to
the Director of the Department of Consumer and Business Services that a
carrier is in compliance with the provisions of ORS 743.736, 743.760 or
743.761, based upon the person’s examination, including a review of the
appropriate records and of the actuarial assumptions and methods used by
the carrier in establishing premium rates for small employer and
portability health benefit plans.

(2) “Affiliate” of, or person “affiliated” with, a specified person
means any carrier who, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control
with a specified person. For purposes of this definition, “control” has
the meaning given that term in ORS 732.548.

(3) “Affiliation period” means, under the terms of a group health
benefit plan issued by a health care service contractor, a period:

(a) That is applied uniformly and without regard to any health
status related factors to an enrollee or late enrollee in lieu of a
preexisting conditions provision;

(b) That must expire before any coverage becomes effective under
the plan for the enrollee or late enrollee;

(c) During which no premium shall be charged to the enrollee or
late enrollee; and

(d) That begins on the enrollee’s or late enrollee’s first date of
eligibility for coverage and runs concurrently with any eligibility
waiting period under the plan.

(4) “Basic health benefit plan” means a health benefit plan for
small employers that is required to be offered by all small employer
carriers and approved by the Director of the Department of Consumer and
Business Services in accordance with ORS 743.736.

(5) “Bona fide association” means an association that meets the
requirements of 42 U.S.C. 300gg-11 as amended and in effect on July 1,
1997.

(6) “Carrier” means any person who provides health benefit plans in
this state, including a licensed insurance company, a health care service
contractor, a health maintenance organization, an association or group of
employers that provides benefits by means of a multiple employer welfare
arrangement or any other person or corporation responsible for the
payment of benefits or provision of services.

(7) “Committee” means the Health Insurance Reform Advisory
Committee created under ORS 743.745.

(8) “Creditable coverage” means prior health care coverage as
defined in 42 U.S.C. 300gg as amended and in effect on July 1, 1997, and
includes coverage remaining in force at the time the enrollee obtains new
coverage.

(9) “Department” means the Department of Consumer and Business
Services.

(10) “Dependent” means the spouse or child of an eligible employee,
subject to applicable terms of the health benefit plan covering the
employee.

(11) “Director” means the Director of the Department of Consumer
and Business Services.

(12) “Eligible employee” means an employee of a small employer who
works on a regularly scheduled basis, with a normal work week of 17.5 or
more hours. The employer may determine hours worked for eligibility
between 17.5 and 40 hours per week subject to rules of the carrier.
“Eligible employee” includes sole proprietors, partners of a partnership,
leased workers as defined in ORS 743.522 or independent contractors if
they are included as employees under a health benefit plan of a small
employer but does not include employees who work on a temporary, seasonal
or substitute basis. Employees who have been employed by the small
employer for fewer than 90 days are not eligible employees unless the
small employer so allows.

(13) “Enrollee” means an employee, dependent of the employee or an
individual otherwise eligible for a group, individual or portability
health benefit plan who has enrolled for coverage under the terms of the
plan.

(14) “Exclusion period” means a period during which specified
treatments or services are excluded from coverage.

(15) “Financially impaired” means a member that is not insolvent
and is:

(a) Considered by the Director of the Department of Consumer and
Business Services to be potentially unable to fulfill its contractual
obligations; or

(b) Placed under an order of rehabilitation or conservation by a
court of competent jurisdiction.

(16)(a) “Geographic average rate” means the arithmetical average of
the lowest premium and the corresponding highest premium to be charged by
a carrier in a geographic area established by the director for the
carrier’s:

(A) Small employer group health benefit plans;

(B) Individual health benefit plans; or

(C) Portability health benefit plans.

(b) “Geographic average rate” does not include premium differences
that are due to differences in benefit design or family composition.

(17) “Group eligibility waiting period” means, with respect to a
group health benefit plan, the period of employment or membership with
the group that a prospective enrollee must complete before plan coverage
begins.

(18)(a) “Health benefit plan” means any hospital expense, medical
expense or hospital or medical expense policy or certificate, health care
service contractor or health maintenance organization subscriber
contract, any plan provided by a multiple employer welfare arrangement or
by another benefit arrangement defined in the federal Employee Retirement
Income Security Act of 1974, as amended.

(b) “Health benefit plan” does not include coverage for accident
only, specific disease or condition only, credit, disability income,
coverage of Medicare services pursuant to contracts with the federal
government, Medicare supplement insurance policies, coverage of CHAMPUS
services pursuant to contracts with the federal government, benefits
delivered through a flexible spending arrangement established pursuant to
section 125 of the Internal Revenue Code of 1986, as amended, when the
benefits are provided in addition to a group health benefit plan, long
term care insurance, hospital indemnity only, short term health insurance
policies (the duration of which does not exceed six months including
renewals), student accident and health insurance policies, dental only,
vision only, a policy of stop-loss coverage that meets the requirements
of ORS 742.065, coverage issued as a supplement to liability insurance,
insurance arising out of a workers’ compensation or similar law,
automobile medical payment insurance or insurance under which benefits
are payable with or without regard to fault and that is statutorily
required to be contained in any liability insurance policy or equivalent
self-insurance.

(c) Nothing in this subsection shall be construed to regulate any
employee welfare benefit plan that is exempt from state regulation
because of the federal Employee Retirement Income Security Act of 1974,
as amended.

(19) “Health statement” means any information that is intended to
inform the carrier or insurance producer of the health status of an
enrollee or prospective enrollee in a health benefit plan. “Health
statement” includes the standard health statement developed by the Health
Insurance Reform Advisory Committee.

(20) “Implementation of chapter 836, Oregon Laws 1989” means that
the Health Services Commission has prepared a priority list, the
Legislative Assembly has enacted funding of the list and all necessary
federal approval, including waivers, has been obtained.

(21) “Individual coverage waiting period” means a period in an
individual health benefit plan during which no premiums may be collected
and health benefit plan coverage issued is not effective.

(22) “Initial enrollment period” means a period of at least 30 days
following commencement of the first eligibility period for an individual.

(23) “Late enrollee” means an individual who enrolls in a group
health benefit plan subsequent to the initial enrollment period during
which the individual was eligible for coverage but declined to enroll.
However, an eligible individual shall not be considered a late enrollee
if:

(a) The individual qualifies for a special enrollment period in
accordance with 42 U.S.C. 300gg as amended and in effect on July 1, 1997;

(b) The individual applies for coverage during an open enrollment
period;

(c) A court has ordered that coverage be provided for a spouse or
minor child under a covered employee’s health benefit plan and request
for enrollment is made within 30 days after issuance of the court order;

(d) The individual is employed by an employer who offers multiple
health benefit plans and the individual elects a different health benefit
plan during an open enrollment period; or

(e) The individual’s coverage under Medicaid, Medicare, CHAMPUS,
Indian Health Service or a publicly sponsored or subsidized health plan,
including but not limited to the Oregon Health Plan, has been
involuntarily terminated within 63 days of applying for coverage in a
group health benefit plan.

(24) “Multiple employer welfare arrangement” means a multiple
employer welfare arrangement as defined in section 3 of the federal
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
1002, that is subject to ORS 750.301 to 750.341.

(25) “Oregon Medical Insurance Pool” means the pool created under
ORS 735.610.

(26) “Preexisting conditions provision” means a health benefit plan
provision applicable to an enrollee or late enrollee that excludes
coverage for services, charges or expenses incurred during a specified
period immediately following enrollment for a condition for which medical
advice, diagnosis, care or treatment was recommended or received during a
specified period immediately preceding enrollment. For purposes of ORS
743.730 to 743.773:

(a) Pregnancy does not constitute a preexisting condition except as
provided in ORS 743.766;

(b) Genetic information does not constitute a preexisting condition
in the absence of a diagnosis of the condition related to such
information; and

(c) A preexisting conditions provision shall not be applied to a
newborn child or adopted child who obtains coverage in accordance with
ORS 743.707.

(27) “Premium” includes insurance premiums or other fees charged
for a health benefit plan, including the costs of benefits paid or
reimbursements made to or on behalf of enrollees covered by the plan.

(28) “Rating period” means the 12-month calendar period for which
premium rates established by a carrier are in effect, as determined by
the carrier.

(29) “Small employer” means any person, firm, corporation,
partnership or association actively engaged in business that, on at least
50 percent of its working days during the preceding year, employed no
more than 25 eligible employees and no fewer than two eligible employees,
the majority of whom are employed within this state, and in which a bona
fide partnership, independent contractor or employer-employee
relationship exists. “Small employer” includes companies that are
eligible to file a consolidated tax return pursuant to ORS 317.715.

(30) “Small employer carrier” means any carrier that offers health
benefit plans covering eligible employees of one or more small employers.
A fully insured multiple employer welfare arrangement otherwise exempt
under ORS 750.303 (4) may elect to be a small employer carrier governed
by the provisions of ORS 743.733 to 743.737. [1991 c.916 §3; 1993 c.18
§157; 1993 c.615 §25; 1993 c.649 §8; 1993 c.744 §31; 1995 c.603 §§1,36;
1997 c.716 §§1,2; 1999 c.547 §8; 1999 c.987 §6; 2001 c.943 §6; 2003 c.364
§112; 2005 c.744 §38]The purposes of ORS 743.730 to 743.773 are:

(1) To promote the availability of health insurance coverage to
groups regardless of their enrollees’ health status or claims experience;

(2) To prevent abusive rating practices;

(3) To require disclosure of rating practices to purchasers of
small employer, portability and individual health benefit plans;

(4) To establish limitations on the use of preexisting conditions
provisions;

(5) To make basic health benefit plans available to all small
employers;

(6) To encourage the availability of portability and individual
health benefit plans for individuals who are not enrolled in group health
benefit plans;

(7) To improve renewability and continuity of coverage for
employers and covered individuals;

(8) To improve the efficiency and fairness of the health insurance
marketplace; and

(9) To ensure that health insurance coverage in Oregon satisfies
the requirements of the Health Insurance Portability and Accountability
Act of 1996 (P.L. 104-191) and that enforcement authority for those
requirements is retained by the Director of the Department of Consumer
and Business Services. [1991 c.916 §2; 1993 c.18 §158; 1993 c.649 §11;
1995 c.603 §2; 1997 c.716 §4](1) For purposes of this
section, “qualified employees” means employees who work on a regularly
scheduled basis, with a normal workweek of 17.5 or more hours, but does
not include employees who work on a temporary, seasonal or substitute
basis.

(2) If an affiliated group of employers that is eligible to file a
consolidated tax return pursuant to ORS 317.715 includes one or more
small employers, a carrier may issue a group health benefit plan to the
affiliated group on the basis of the number of employees in the
affiliated group if the group requests such coverage.

(3) Subsequent to the issuance of a health benefit plan to an
employer pursuant to the provisions of ORS 743.733 to 743.737 and for the
purposes of determining eligibility, the number of employees of an
employer shall be determined annually by the small employer carrier.
Except as otherwise provided, the provisions of ORS 743.733 to 743.737
that apply to an employer shall continue to apply until the plan
anniversary date following the date the employer no longer meets the
requirements of this section.

(4) A carrier that offers health benefit plans covering employees
of an employer who employed an average of at least two but not more than
50 qualified employees on business days during the preceding calendar
year and who employs at least two qualified employees on the first day of
the plan year, in accordance with 42 U.S.C. 300gg as amended and in
effect on July 1, 1997, shall be considered a small employer carrier for
purposes of this section and ORS 743.736. A health benefit plan issued to
an employer described in this section, provided the employer does not
otherwise qualify as a small employer in accordance with ORS 743.730,
shall be considered a small employer health benefit plan for purposes of
ORS 743.737, except that the plan or carrier shall not be required to
comply with ORS 743.737 (7), (8), (10), (11) and (13). [1991 c.916 §4;
1993 c.18 §159; 1995 c.603 §3; 1999 c.987 §7](1) Every group health benefit plan shall be
subject to the provisions of ORS 743.733 to 743.737, if the plan provides
health benefits covering one or more employees of a small employer and if
any one of the following conditions is met:

(a) Any portion of the premium or benefits is paid by a small
employer or any eligible employee is reimbursed, whether through wage
adjustments or otherwise, by a small employer for any portion of the
health benefit plan premium; or

(b) The health benefit plan is treated by the employer or any of
the eligible employees as part of a plan or program for the purposes of
section 106, section 125 or section 162 of the Internal Revenue Code of
1986, as amended.

(2) Except as provided in ORS 743.733 to 743.737, no law requiring
the coverage or the offer of coverage of a health care service or benefit
applies to the basic health benefit plans offered or delivered to a small
employer.

(3) Except as otherwise provided by law or ORS 743.733 to 743.737,
no health benefit plan offered to a small employer shall:

(a) Inhibit a small employer carrier from contracting with
providers or groups of providers with respect to health care services or
benefits; or

(b) Impose any restriction on the ability of a small employer
carrier to negotiate with providers regarding the level or method of
reimbursing care or services provided under health benefit plans.

(4) Except to determine the application of a preexisting conditions
provision for a late enrollee, a small employer carrier shall not use
health statements when offering small employer health benefit plans and
shall not use any other method to determine the actual or expected health
status of eligible enrollees. Nothing in this subsection shall prevent a
carrier from using health statements or other information after
enrollment for the purpose of providing services or arranging for the
provision of services under a health benefit plan.

(5) Except in the case of a late enrollee and as otherwise provided
in this section, a small employer carrier shall not impose different
terms or conditions on the coverage, premiums or contributions of any
eligible employee in a small employer group that are based on the actual
or expected health status of any eligible employee.

(6) A small employer carrier may provide different health benefit
plans to different categories of employees of a small employer when the
employer has chosen to establish different categories of employees in a
manner that does not relate to the actual or expected health status of
such employees or their dependents. Except as provided in ORS 743.736
(10):

(a) When a small employer carrier offers coverage to a small
employer, the small employer carrier shall offer coverage to all eligible
employees of the small employer, without regard to the actual or expected
health status of any eligible employee.

(b) If the small employer elects to offer coverage to dependents of
eligible employees, the small employer carrier shall offer coverage to
all dependents of eligible employees, without regard to the actual or
expected health status of any eligible dependent. [1991 c.916 §5; 1993
c.18 §160; 1995 c.603 §4; 1997 c.716 §5; 1999 c.987 §8](1) In order to improve the availability
and affordability of health benefit coverage for small employers, the
Health Insurance Reform Advisory Committee created under ORS 743.745
shall submit to the Director of the Department of Consumer and Business
Services two basic health benefit plans pursuant to ORS 743.745. One plan
shall be in the form of insurance and the second plan shall be consistent
with the requirements of the federal Health Maintenance Organization Act,
42 U.S.C. 300e et seq.

(2)(a) The director shall approve the basic health benefit plans
following a determination that the plans provide for maximum
accessibility and affordability of needed health care services and
following a determination that the basic health benefit plans
substantially meet the social values that underlie the ranking of
benefits by the Health Services Commission and that the basic health
benefit plans are substantially similar to the Medicaid reform program
under chapter 836, Oregon Laws 1989, funded by the Legislative Assembly.

(b) The basic health benefit plans shall include benefits mandated
under ORS 743.556 until mental health, alcohol and chemical dependency
services are fully integrated into the Health Services Commission’s
priority list, and as funded by the Legislative Assembly, and chapter
836, Oregon Laws 1989, is implemented.

(c) The commission shall aid the director by reviewing the basic
health benefit plans and commenting on the extent to which the plans meet
these criteria.

(3) After the director’s approval of the basic health benefit plans
submitted by the committee pursuant to subsection (1) of this section,
each small employer carrier shall submit to the director the policy form
or forms containing its basic health benefit plan. Each policy form must
be submitted as prescribed by the director and is subject to review and
approval pursuant to ORS 742.003.

(4)(a) As a condition of transacting business in the small employer
health insurance market in this state, every small employer carrier shall
offer small employers an approved basic health benefit plan and any other
plans that have been submitted by the small employer carrier for use in
the small employer market and approved by the director.

(b) Nothing in this subsection shall require a small employer
carrier to resubmit small employer health benefit plans that were
approved by the director prior to October 1, 1996, nor shall small
employer carriers be required to reinitiate new plan selection procedures
for currently enrolled small employers prior to the small employer’s next
health benefit plan coverage anniversary date.

(c) A carrier that offers a health benefit plan in the small
employer market only through one or more bona fide associations is not
required to offer that health benefit plan to small employers that are
not members of the bona fide association.

(5) A small employer carrier shall issue to a small employer any
small employer health benefit plan offered by the carrier if the small
employer applies for the plan and agrees to make the required premium
payments and to satisfy the other provisions of the health benefit plan.

(6) A multiple employer welfare arrangement, professional or trade
association or other similar arrangement established or maintained to
provide benefits to a particular trade, business, profession or industry
or their subsidiaries shall not issue coverage to a group or individual
that is not in the same trade, business, profession or industry as that
covered by the arrangement. The arrangement shall accept all groups and
individuals in the same trade, business, profession or industry or their
subsidiaries that apply for coverage under the arrangement and that meet
the requirements for membership in the arrangement. For purposes of this
subsection, the requirements for membership in an arrangement shall not
include any requirements that relate to the actual or expected health
status of the prospective enrollee.

(7) A small employer carrier shall, pursuant to subsections (4) and
(5) of this section, offer coverage to or accept applications from a
group covered under an existing small employer health benefit plan
whether or not a prospective enrollee is excluded from coverage under the
existing plan because of late enrollment. When a small employer carrier
accepts an application for such a group, the carrier may continue to
exclude the prospective enrollee excluded from coverage by the replaced
plan until the prospective enrollee would have become eligible for
coverage under that replaced plan.

(8) No small employer carrier shall be required to offer coverage
or accept applications pursuant to subsections (4) and (5) of this
section if the director finds that acceptance of an application or
applications would endanger the carrier’s ability to fulfill its
contractual obligations or result in financial impairment of the carrier.

(9) Every small employer carrier shall market fairly all small
employer health benefit plans offered by the carrier to small employers
in the geographical areas in which the carrier makes coverage available
or provides benefits.

(10)(a) No small employer carrier shall be required to offer
coverage or accept applications pursuant to subsections (4) and (5) of
this section in the case of any of the following:

(A) To a small employer if the small employer is not physically
located in the carrier’s approved service area;

(B) To an employee if the employee does not work or reside within
the carrier’s approved service areas; or

(C) Within an area where the carrier reasonably anticipates, and
demonstrates to the satisfaction of the director, that it will not have
the capacity in its network of providers to deliver services adequately
to the enrollees of those groups because of its obligations to existing
group contract holders and enrollees.

(b) A carrier that does not offer coverage pursuant to paragraph
(a)(C) of this subsection shall not offer coverage in the applicable
service area to new employer groups other than small employers until the
carrier resumes enrolling groups of new small employers in the applicable
area.

(11) For purposes of ORS 743.733 to 743.737, except as provided in
this subsection, carriers that are affiliated carriers or that are
eligible to file a consolidated tax return pursuant to ORS 317.715 shall
be treated as one carrier and any restrictions or limitations imposed by
ORS 743.733 to 743.737 apply as if all health benefit plans delivered or
issued for delivery to small employers in this state by the affiliated
carriers were issued by one carrier. However, any insurance company or
health maintenance organization that is an affiliate of a health care
service contractor located in this state, or any health maintenance
organization located in this state that is an affiliate of an insurance
company or health care service contractor, may treat the health
maintenance organization as a separate carrier and each health
maintenance organization that operates only one health maintenance
organization in a service area in this state may be considered a separate
carrier.

(12) A small employer carrier that, after September 29, 1991,
elects to discontinue offering all of its small employer health benefit
plans under ORS 743.737 (5)(e), elects to discontinue renewing all such
plans or elects to discontinue offering and renewing all such plans is
prohibited from offering health benefit plans in the small employer
market in this state for a period of five years from one of the following
dates:

(a) The date of notice to the director pursuant to ORS 743.737
(5)(e); or

(b) If notice is not provided under paragraph (a) of this
subsection, from the date on which the director provides notice to the
carrier that the director has determined that the carrier has effectively
discontinued offering small employer health benefit plans in this state.
[1991 c.916 §6; 1993 c.649 §12; 1995 c.603 §5; 1997 c.716 §6; 1999 c.987
§9]Health benefit plans
covering small employers shall be subject to the following provisions:

(1) A preexisting conditions provision in a small employer health
benefit plan shall apply only to a condition for which medical advice,
diagnosis, care or treatment was recommended or received during the
six-month period immediately preceding the enrollment date of an enrollee
or late enrollee. As used in this section, the enrollment date of an
enrollee shall be the earlier of the effective date of coverage or the
first day of any required group eligibility waiting period and the
enrollment date of a late enrollee shall be the effective date of
coverage.

(2) A preexisting conditions provision in a small employer health
benefit plan shall terminate its effect as follows:

(a) For an enrollee, not later than the first of the following
dates:

(A) Six months following the enrollee’s effective date of coverage;
or

(B) Ten months following the start of any required group
eligibility waiting period.

(b) For a late enrollee, not later than 12 months following the
late enrollee’s effective date of coverage.

(3) In applying a preexisting conditions provision to an enrollee
or late enrollee, except as provided in this subsection, all small
employer health benefit plans shall reduce the duration of the provision
by an amount equal to the enrollee’s or late enrollee’s aggregate periods
of creditable coverage if the most recent period of creditable coverage
is ongoing or ended within 63 days of the enrollment date in the new
small employer health benefit plan. The crediting of prior coverage in
accordance with this subsection shall be applied without regard to the
specific benefits covered during the prior period. This subsection does
not preclude, within a small employer health benefit plan, application of:

(a) An affiliation period that does not exceed two months for an
enrollee or three months for a late enrollee; or

(b) An exclusion period for specified covered services, as
established by the Health Insurance Reform Advisory Committee, applicable
to all individuals enrolling for the first time in the small employer
health benefit plan.

(4) Late enrollees may be excluded from coverage for up to 12
months or may be subjected to a preexisting conditions provision for up
to 12 months. If both an exclusion from coverage period and a preexisting
conditions provision are applicable to a late enrollee, the combined
period shall not exceed 12 months.

(5) Each small employer health benefit plan shall be renewable with
respect to all eligible enrollees at the option of the policyholder,
small employer or contract holder except:

(a) For nonpayment of the required premiums by the policyholder,
small employer or contract holder.

(b) For fraud or misrepresentation of the policyholder, small
employer or contract holder or, with respect to coverage of individual
enrollees, the enrollees or their representatives.

(c) When the number of enrollees covered under the plan is less
than the number or percentage of enrollees required by participation
requirements under the plan.

(d) For noncompliance with the small employer carrier’s employer
contribution requirements under the health benefit plan.

(e) When the carrier discontinues offering or renewing, or offering
and renewing, all of its small employer health benefit plans in this
state or in a specified service area within this state. In order to
discontinue plans under this paragraph, the carrier:

(A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all policyholders
covered by the plans;

(B) May not cancel coverage under the plans for 180 days after the
date of the notice required under subparagraph (A) of this paragraph if
coverage is discontinued in the entire state or, except as provided in
subparagraph (C) of this paragraph, in a specified service area;

(C) May not cancel coverage under the plans for 90 days after the
date of the notice required under subparagraph (A) of this paragraph if
coverage is discontinued in a specified service area because of an
inability to reach an agreement with the health care providers or
organization of health care providers to provide services under the plans
within the service area; and

(D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the small
employer market in this state or in the specified service area.

(f) When the carrier discontinues offering and renewing a small
employer health benefit plan in a specified service area within this
state because of an inability to reach an agreement with the health care
providers or organization of health care providers to provide services
under the plan within the service area. In order to discontinue a plan
under this paragraph, the carrier:

(A) Must give notice to the director and to all policyholders
covered by the plan;

(B) May not cancel coverage under the plan for 90 days after the
date of the notice required under subparagraph (A) of this paragraph; and

(C) Must offer in writing to each small employer covered by the
plan, all other small employer health benefit plans that the carrier
offers in the specified service area. The carrier shall issue any such
plans pursuant to the provisions of ORS 743.733 to 743.737. The carrier
shall offer the plans at least 90 days prior to discontinuation.

(g) When the carrier discontinues offering or renewing, or offering
and renewing, a health benefit plan for all small employers in this state
or in a specified service area within this state, other than a plan
discontinued under paragraph (f) of this subsection. With respect to
plans that are being discontinued, the carrier must:

(A) Offer in writing to each small employer covered by the plan,
all health benefit plans that the carrier offers in the specified service
area.

(B) Issue any such plans pursuant to the provisions of ORS 743.733
to 743.737.

(C) Offer the plans at least 90 days prior to discontinuation.

(D) Act uniformly without regard to the claims experience of the
affected policyholders or the health status of any current or prospective
enrollee.

(h) When the director orders the carrier to discontinue coverage in
accordance with procedures specified or approved by the director upon
finding that the continuation of the coverage would:

(A) Not be in the best interests of the enrollees; or

(B) Impair the carrier’s ability to meet contractual obligations.

(i) When, in the case of a small employer health benefit plan that
delivers covered services through a specified network of health care
providers, there is no longer any enrollee who lives, resides or works in
the service area of the provider network.

(j) When, in the case of a health benefit plan that is offered in
the small employer market only through one or more bona fide
associations, the membership of an employer in the association ceases and
the termination of coverage is not related to the health status of any
enrollee.

(k) For misuse of a provider network provision. As used in this
paragraph, “misuse of a provider network provision” means a disruptive,
unruly or abusive action taken by an enrollee that threatens the physical
health or well-being of health care staff and seriously impairs the
ability of the carrier or its participating providers to provide services
to an enrollee. An enrollee under this paragraph retains the rights of an
enrollee under ORS 743.804.

(L) A small employer carrier may modify a small employer health
benefit plan at the time of coverage renewal. The modification is not a
discontinuation of the plan under paragraphs (e) and (g) of this
subsection.

(6) Notwithstanding any provision of subsection (5) of this section
to the contrary, any small employer carrier health benefit plan subject
to the provisions of ORS 743.733 to 743.737 may be rescinded by a small
employer carrier for fraud, material misrepresentation or concealment by
a small employer and the coverage of an enrollee may be rescinded for
fraud, material misrepresentation or concealment by the enrollee.

(7) A small employer carrier may continue to enforce reasonable
employer participation and contribution requirements on small employers
applying for coverage. However, participation and contribution
requirements shall be applied uniformly among all small employer groups
with the same number of eligible employees applying for coverage or
receiving coverage from the small employer carrier. In determining
minimum participation requirements, a carrier shall count only those
employees who are not covered by an existing group health benefit plan,
Medicaid, Medicare, CHAMPUS, Indian Health Service or a publicly
sponsored or subsidized health plan, including but not limited to the
Oregon Health Plan.

(8) Premium rates for small employer health benefit plans subject
to ORS 743.733 to 743.737 shall be subject to the following provisions:

(a) Each small employer carrier issuing health benefit plans to
small employers must file its geographic average rate for a rating period
with the director on or before March 15 of each year.

(b)(A) The premium rates charged during a rating period for health
benefit plans issued to small employers may not vary from the geographic
average rate by more than the following:

(i) 33 percent on or after October 1, 1999; and

(ii) 43 percent on or after July 1, 2004.

(B) The variations in premium rates described in subparagraph (A)
of this paragraph shall be based solely on differences in the ages of
participating employees, except that the premium rate may be adjusted to
reflect the provision of benefits not required to be covered by the basic
health benefit plan and differences in family composition. In addition:

(i) A small employer carrier shall apply uniformly the carrier’s
schedule of age adjustments for small employer groups as approved by the
director; and

(ii) Except as otherwise provided in this section, the premium rate
established for a health benefit plan by a small employer carrier shall
apply uniformly to all employees of the small employer enrolled in that
plan.

(c) The variation in premium rates between different small employer
health benefit plans offered by a small employer carrier must be based
solely on objective differences in plan design or coverage and must not
include differences based on the risk characteristics of groups assumed
to select a particular health benefit plan.

(d) A small employer carrier may not increase the rates of a health
benefit plan issued to a small employer more than once in a 12-month
period. Annual rate increases shall be effective on the plan anniversary
date of the health benefit plan issued to a small employer. The
percentage increase in the premium rate charged to a small employer for a
new rating period may not exceed the sum of the following:

(A) The percentage change in the geographic average rate measured
from the first day of the prior rating period to the first day of the new
period; and

(B) Any adjustment attributable to changes in age, except an
additional adjustment may be made to reflect the provision of benefits
not required to be covered by the basic health benefit plan and
differences in family composition.

(e) Premium rates for health benefit plans shall comply with the
requirements of this section.

(f) A small employer carrier may apply a participation credit of
five percent to the rates determined under paragraph (b) of this
subsection for a small employer if all eligible employees enroll in the
health benefit plan. If a carrier applies a participation credit under
this paragraph, the carrier must apply the credit to each small employer
that qualifies.

(9) In connection with the offering for sale of any health benefit
plan to a small employer, each small employer carrier shall make a
reasonable disclosure as part of its solicitation and sales materials of:

(a) The full array of health benefit plans that are offered to
small employers by the carrier;

(b) The authority of the carrier to adjust rates, and the extent to
which the carrier will consider age, family composition and geographic
factors in establishing and adjusting rates;

(c) Provisions relating to renewability of policies and contracts;
and

(d) Provisions affecting any preexisting conditions provision.

(10)(a) Each small employer carrier shall maintain at its principal
place of business a complete and detailed description of its rating
practices and renewal underwriting practices, including information and
documentation that demonstrate that its rating methods and practices are
based upon commonly accepted actuarial practices and are in accordance
with sound actuarial principles.

(b) Each small employer carrier shall file with the director
annually on or before March 15 an actuarial certification that the
carrier is in compliance with ORS 743.733 to 743.737 and that the rating
methods of the small employer carrier are actuarially sound. Each such
certification shall be in a uniform form and manner and shall contain
such information as specified by the director. A copy of such
certification shall be retained by the small employer carrier at its
principal place of business.

(c) A small employer carrier shall make the information and
documentation described in paragraph (a) of this subsection available to
the director upon request. Except in cases of violations of ORS 743.733
to 743.737, the information shall be considered proprietary and trade
secret information and shall not be subject to disclosure by the director
to persons outside the Department of Consumer and Business Services
except as agreed to by the small employer carrier or as ordered by a
court of competent jurisdiction.

(11) A small employer carrier shall not provide any financial or
other incentive to any insurance producer that would encourage the
insurance producer to market and sell health benefit plans of the carrier
to small employer groups based on a small employer group’s anticipated
claims experience.

(12) For purposes of this section, the date a small employer health
benefit plan is continued shall be the anniversary date of the first
issuance of the health benefit plan.

(13) A small employer carrier must include a provision that offers
coverage to all eligible employees and to all dependents to the extent
the employer chooses to offer coverage to dependents.

(14) All small employer health benefit plans shall contain special
enrollment periods during which eligible employees and dependents may
enroll for coverage, as provided in 42 U.S.C. 300gg as amended and in
effect on July 1, 1997. [1991 c.916 §7; 1993 c.18 §161; 1993 c.649 §10;
1995 c.603 §§6,37; 1997 c.716 §§7,8; 1999 c.987 §10; 2001 c.943 §12; 2003
c.364 §113; 2003 c.599 §4; 2003 c.748 §5]Note: The amendments to 743.737 by section 6, chapter 599, Oregon
Laws 2003, become operative January 2, 2008. See section 8, chapter 599,
Oregon Laws 2003. The text that is operative on and after January 2,
2008, is set forth for the user’s convenience.

743.737. Health benefit plans covering small employers shall be
subject to the following provisions:

(1) A preexisting conditions provision in a small employer health
benefit plan shall apply only to a condition for which medical advice,
diagnosis, care or treatment was recommended or received during the
six-month period immediately preceding the enrollment date of an enrollee
or late enrollee. As used in this section, the enrollment date of an
enrollee shall be the earlier of the effective date of coverage or the
first day of any required group eligibility waiting period and the
enrollment date of a late enrollee shall be the effective date of
coverage.

(2) A preexisting conditions provision in a small employer health
benefit plan shall terminate its effect as follows:

(a) For an enrollee, not later than the first of the following
dates:

(A) Six months following the enrollee’s effective date of coverage;
or

(B) Ten months following the start of any required group
eligibility waiting period.

(b) For a late enrollee, not later than 12 months following the
late enrollee’s effective date of coverage.

(3) In applying a preexisting conditions provision to an enrollee
or late enrollee, except as provided in this subsection, all small
employer health benefit plans shall reduce the duration of the provision
by an amount equal to the enrollee’s or late enrollee’s aggregate periods
of creditable coverage if the most recent period of creditable coverage
is ongoing or ended within 63 days of the enrollment date in the new
small employer health benefit plan. The crediting of prior coverage in
accordance with this subsection shall be applied without regard to the
specific benefits covered during the prior period. This subsection does
not preclude, within a small employer health benefit plan, application of:

(a) An affiliation period that does not exceed two months for an
enrollee or three months for a late enrollee; or

(b) An exclusion period for specified covered services, as
established by the Health Insurance Reform Advisory Committee, applicable
to all individuals enrolling for the first time in the small employer
health benefit plan.

(4) Late enrollees may be excluded from coverage for up to 12
months or may be subjected to a preexisting conditions provision for up
to 12 months. If both an exclusion from coverage period and a preexisting
conditions provision are applicable to a late enrollee, the combined
period shall not exceed 12 months.

(5) Each small employer health benefit plan shall be renewable with
respect to all eligible enrollees at the option of the policyholder,
small employer or contract holder except:

(a) For nonpayment of the required premiums by the policyholder,
small employer or contract holder.

(b) For fraud or misrepresentation of the policyholder, small
employer or contract holder or, with respect to coverage of individual
enrollees, the enrollees or their representatives.

(c) When the number of enrollees covered under the plan is less
than the number or percentage of enrollees required by participation
requirements under the plan.

(d) For noncompliance with the small employer carrier’s employer
contribution requirements under the health benefit plan.

(e) When the carrier discontinues offering or renewing, or offering
and renewing, all of its small employer health benefit plans in this
state or in a specified service area within this state. In order to
discontinue plans under this paragraph, the carrier:

(A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all policyholders
covered by the plans;

(B) May not cancel coverage under the plans for 180 days after the
date of the notice required under subparagraph (A) of this paragraph if
coverage is discontinued in the entire state or, except as provided in
subparagraph (C) of this paragraph, in a specified service area;

(C) May not cancel coverage under the plans for 90 days after the
date of the notice required under subparagraph (A) of this paragraph if
coverage is discontinued in a specified service area because of an
inability to reach an agreement with the health care providers or
organization of health care providers to provide services under the plans
within the service area; and

(D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the small
employer market in this state or in the specified service area.

(f) When the carrier discontinues offering and renewing a small
employer health benefit plan in a specified service area within this
state because of an inability to reach an agreement with the health care
providers or organization of health care providers to provide services
under the plan within the service area. In order to discontinue a plan
under this paragraph, the carrier:

(A) Must give notice to the director and to all policyholders
covered by the plan;

(B) May not cancel coverage under the plan for 90 days after the
date of the notice required under subparagraph (A) of this paragraph; and

(C) Must offer in writing to each small employer covered by the
plan, all other small employer health benefit plans that the carrier
offers in the specified service area. The carrier shall issue any such
plans pursuant to the provisions of ORS 743.733 to 743.737. The carrier
shall offer the plans at least 90 days prior to discontinuation.

(g) When the carrier discontinues offering or renewing, or offering
and renewing, a health benefit plan for all small employers in this state
or in a specified service area within this state, other than a plan
discontinued under paragraph (f) of this subsection. With respect to
plans that are being discontinued, the carrier must:

(A) Offer in writing to each small employer covered by the plan,
all health benefit plans that the carrier offers in the specified service
area.

(B) Issue any such plans pursuant to the provisions of ORS 743.733
to 743.737.

(C) Offer the plans at least 90 days prior to discontinuation.

(D) Act uniformly without regard to the claims experience of the
affected policyholders or the health status of any current or prospective
enrollee.

(h) When the director orders the carrier to discontinue coverage in
accordance with procedures specified or approved by the director upon
finding that the continuation of the coverage would:

(A) Not be in the best interests of the enrollees; or

(B) Impair the carrier’s ability to meet contractual obligations.

(i) When, in the case of a small employer health benefit plan that
delivers covered services through a specified network of health care
providers, there is no longer any enrollee who lives, resides or works in
the service area of the provider network.

(j) When, in the case of a health benefit plan that is offered in
the small employer market only through one or more bona fide
associations, the membership of an employer in the association ceases and
the termination of coverage is not related to the health status of any
enrollee.

(k) For misuse of a provider network provision. As used in this
paragraph, “misuse of a provider network provision” means a disruptive,
unruly or abusive action taken by an enrollee that threatens the physical
health or well-being of health care staff and seriously impairs the
ability of the carrier or its participating providers to provide services
to an enrollee. An enrollee under this paragraph retains the rights of an
enrollee under ORS 743.804.

(L) A small employer carrier may modify a small employer health
benefit plan at the time of coverage renewal. The modification is not a
discontinuation of the plan under paragraphs (e) and (g) of this
subsection.

(6) Notwithstanding any provision of subsection (5) of this section
to the contrary, any small employer carrier health benefit plan subject
to the provisions of ORS 743.733 to 743.737 may be rescinded by a small
employer carrier for fraud, material misrepresentation or concealment by
a small employer and the coverage of an enrollee may be rescinded for
fraud, material misrepresentation or concealment by the enrollee.

(7) A small employer carrier may continue to enforce reasonable
employer participation and contribution requirements on small employers
applying for coverage. However, participation and contribution
requirements shall be applied uniformly among all small employer groups
with the same number of eligible employees applying for coverage or
receiving coverage from the small employer carrier. In determining
minimum participation requirements, a carrier shall count only those
employees who are not covered by an existing group health benefit plan,
Medicaid, Medicare, CHAMPUS, Indian Health Service or a publicly
sponsored or subsidized health plan, including but not limited to the
Oregon Health Plan.

(8) Premium rates for small employer health benefit plans subject
to ORS 743.733 to 743.737 shall be subject to the following provisions:

(a) Each small employer carrier issuing health benefit plans to
small employers must file its geographic average rate for a rating period
with the director on or before March 15 of each year.

(b)(A) The premium rates charged during a rating period for health
benefit plans issued to small employers may not vary from the geographic
average rate by more than the following:

(i) 50 percent on October 1, 1996; and

(ii) 33 percent on October 1, 1999.

(B) The variations in premium rates described in subparagraph (A)
of this paragraph shall be based solely on differences in the ages of
participating employees, except that the premium rate may be adjusted to
reflect the provision of benefits not required to be covered by the basic
health benefit plan and differences in family composition. In addition:

(i) A small employer carrier shall apply uniformly the carrier’s
schedule of age adjustments for small employer groups as approved by the
director; and

(ii) Except as otherwise provided in this section, the premium rate
established for a health benefit plan by a small employer carrier shall
apply uniformly to all employees of the small employer enrolled in that
plan.

(c) The variation in premium rates between different small employer
health benefit plans offered by a small employer carrier must be based
solely on objective differences in plan design or coverage and must not
include differences based on the risk characteristics of groups assumed
to select a particular health benefit plan.

(d) A small employer carrier may not increase the rates of a health
benefit plan issued to a small employer more than once in a 12-month
period. Annual rate increases shall be effective on the plan anniversary
date of the health benefit plan issued to a small employer. The
percentage increase in the premium rate charged to a small employer for a
new rating period may not exceed the sum of the following:

(A) The percentage change in the geographic average rate measured
from the first day of the prior rating period to the first day of the new
period; and

(B) Any adjustment attributable to changes in age, except an
additional adjustment may be made to reflect the provision of benefits
not required to be covered by the basic health benefit plan and
differences in family composition.

(e) Premium rates for health benefit plans shall comply with the
requirements of this section.

(9) In connection with the offering for sale of any health benefit
plan to a small employer, each small employer carrier shall make a
reasonable disclosure as part of its solicitation and sales materials of:

(a) The full array of health benefit plans that are offered to
small employers by the carrier;

(b) The authority of the carrier to adjust rates, and the extent to
which the carrier will consider age, family composition and geographic
factors in establishing and adjusting rates;

(c) Provisions relating to renewability of policies and contracts;
and

(d) Provisions affecting any preexisting conditions provision.

(10)(a) Each small employer carrier shall maintain at its principal
place of business a complete and detailed description of its rating
practices and renewal underwriting practices, including information and
documentation that demonstrate that its rating methods and practices are
based upon commonly accepted actuarial practices and are in accordance
with sound actuarial principles.

(b) Each small employer carrier shall file with the director
annually on or before March 15 an actuarial certification that the
carrier is in compliance with ORS 743.733 to 743.737 and that the rating
methods of the small employer carrier are actuarially sound. Each such
certification shall be in a uniform form and manner and shall contain
such information as specified by the director. A copy of such
certification shall be retained by the small employer carrier at its
principal place of business.

(c) A small employer carrier shall make the information and
documentation described in paragraph (a) of this subsection available to
the director upon request. Except in cases of violations of ORS 743.733
to 743.737, the information shall be considered proprietary and trade
secret information and shall not be subject to disclosure by the director
to persons outside the Department of Consumer and Business Services
except as agreed to by the small employer carrier or as ordered by a
court of competent jurisdiction.

(11) A small employer carrier shall not provide any financial or
other incentive to any insurance producer that would encourage the
insurance producer to market and sell health benefit plans of the carrier
to small employer groups based on a small employer group’s anticipated
claims experience.

(12) For purposes of this section, the date a small employer health
benefit plan is continued shall be the anniversary date of the first
issuance of the health benefit plan.

(13) A small employer carrier must include a provision that offers
coverage to all eligible employees and to all dependents to the extent
the employer chooses to offer coverage to dependents.

(14) All small employer health benefit plans shall contain special
enrollment periods during which eligible employees and dependents may
enroll for coverage, as provided in 42 U.S.C. 300gg as amended and in
effect on July 1, 1997.Note: See note under 743.766.The Director of the Department of Consumer and Business Services
shall appoint a Health Insurance Reform Advisory Committee. This
committee shall consist of at least one insurance producer, one
representative of a health maintenance organization, one representative
of a health care service contractor, one representative of a domestic
insurer, one representative of a labor organization and one
representative of consumer interests and shall have representation from
the broad range of interests involved in the small employer and
individual market and shall include members with the technical expertise
necessary to carry out the following duties:

(1)(a) Subject to approval by the director, the committee shall
recommend the form and level of coverages under the basic health benefit
plans pursuant to ORS 743.736 to be made available by small employer
carriers and the portability health benefit plans to be made available
pursuant to ORS 743.760 or 743.761. The committee shall take into
consideration the levels of health benefit plans provided in Oregon and
the appropriate medical and economic factors and shall establish benefit
levels, cost sharing, exclusions and limitations. The health benefit
plans described in this section may include cost containment features
including, but not limited to:

(A) Preferred provider provisions;

(B) Utilization review of health care services including review of
medical necessity of hospital and physician services;

(C) Case management benefit alternatives;

(D) Other managed care provisions;

(E) Selective contracting with hospitals, physicians and other
health care providers; and

(F) Reasonable benefit differentials applicable to participating
and nonparticipating providers.

(b) The committee shall submit the basic and portability health
benefit plans and other recommendations to the director within the time
period established by the director. The health benefit plans and other
recommendations shall be deemed approved unless expressly disapproved by
the director within 30 days after the date the director receives the
plans.

(2) In order to ensure the broadest availability of small employer
and individual health benefit plans, the committee shall recommend for
approval by the director market conduct and other requirements for
carriers and insurance producers, including requirements developed as a
result of a request by the director, relating to the following:

(a) Registration by each carrier with the Department of Consumer
and Business Services of its intention to be a small employer carrier
under ORS 743.733 to 743.737 or a carrier offering individual health
benefit plans, or both.

(b) Publication by the Department of Consumer and Business Services
or the committee of a list of all small employer carriers and carriers
offering individual health benefit plans, including a potential
requirement applicable to insurance producers and carriers that no health
benefit plan be sold to a small employer or individual by a carrier not
so identified as a small employer carrier or carrier offering individual
health benefit plans.

(c) To the extent deemed necessary by the committee to ensure the
fair distribution of high-risk individuals and groups among carriers,
periodic reports by carriers and insurance producers concerning small
employer, portability and individual health benefit plans issued,
provided that reporting requirements shall be limited to information
concerning case characteristics and numbers of health benefit plans in
various categories marketed or issued, or both, to small employers and
individuals.

(d) Methods concerning periodic demonstration by small employer
carriers, carriers offering individual health benefit plans and insurance
producers that the small employer and individual carriers are marketing
or issuing, or both, health benefit plans to small employers or
individuals in fulfillment of the purposes of ORS 743.730 to 743.773.

(3) Subject to the approval of the Director of the Department of
Consumer and Business Services, the committee shall develop a standard
health statement to be used for all late enrollees and by all carriers
offering individual policies of health insurance.

(4) Subject to the approval of the director, the committee shall
develop a list of the specified services for small employer and
portability plans for which carriers may impose an exclusion period, the
duration of the allowable exclusion period for each specified service and
the manner in which credit will be given for exclusion periods imposed
pursuant to prior health insurance coverage. [1991 c.916 §12; 1993 c.18
§164; 1995 c.603 §§10,38; 1999 c.987 §11; 2003 c.364 §114](1) Each carrier offering a health benefit plan shall
submit to the Director of the Department of Consumer and Business
Services on or before April 1 of each year a report that contains:

(a) The following information for the preceding year that is
derived from the exhibit of premiums, enrollment and utilization included
in the carrier’s annual report:

(A) The total number of members;

(B) The total amount of premiums;

(C) The total amount of costs for claims;

(D) The medical loss ratio;

(E) The average amount of premiums per member per month; and

(F) The percentage change in the average premium per member per
month, measured from the previous year.

(b) The following aggregate financial information for the preceding
year that is derived from the carrier’s annual report:

(A) The total amount of general administrative expenses, including
identification of the five largest nonmedical administrative expenses and
the assessment against the carrier for the Oregon Medical Insurance Pool;

(B) The total amount of the surplus maintained;

(C) The total amount of the reserves maintained for unpaid claims;

(D) The total net underwriting gain or loss; and

(E) The carrier’s net income after taxes.

(2) A carrier shall electronically submit the information described
in subsection (1) of this section in a format and according to
instructions prescribed by the Department of Consumer and Business
Services by rule after obtaining a recommendation from the Health
Insurance Reform Advisory Committee.

(3) The advisory committee shall evaluate the reporting
requirements under subsection (1)(a) of this section by the following
market segments:

(a) Individual health benefit plans;

(b) Health benefit plans for small employers;

(c) Health benefit plans for employers described in ORS 743.733; and

(d) Health benefit plans for employers with more than 50 employees.

(4) The department shall make the information reported under this
section available to the public through a searchable public website on
the Internet. [2005 c.765 §2]Note: Sections 3 and 4, chapter 765, Oregon Laws 2005, provide:

Sec. 3. Notwithstanding section 2 (1) of this 2005 Act [743.748
(1)], a carrier described in section 2 (1) of this 2005 Act shall submit
its first report to the Director of the Department of Consumer and
Business Services on or before July 1, 2006. [2005 c.765 §3]

Sec. 4. Notwithstanding section 2 (1) of this 2005 Act [743.748
(1)], a carrier shall include the information described in section 2
(1)(a)(F) of this 2005 Act beginning with the annual report for 2007.
[2005 c.765 §4] All carriers
that offer individual or group health benefit plans shall provide
certifications and disclosure of coverage in accordance with 42 U.S.C.
300gg(e) and 300gg-43 as amended and in effect on July 1, 1997. [1997
c.716 §20] (1)
Except to determine the application of a preexisting conditions provision
for a late enrollee, a carrier offering group health benefit plans shall
not use health statements when offering such plans to a group of two or
more prospective certificate holders and shall not use any other method
to determine the actual or expected health status of eligible prospective
enrollees. Nothing in this section shall prevent a carrier from using
health statements or other information after enrollment for the purpose
of providing services or arranging for the provision of services under a
health benefit plan or from obtaining aggregate group information related
to historical medical claims expenses and health behavior surveys for
rating purposes.

(2) Subsection (1) of this section applies only to group health
benefit plans that are not small employer health benefit plans. [1995
c.603 §15; 1997 c.716 §10](1) Except in the case of a late enrollee and as otherwise
provided in this section, a carrier offering a group health benefit plan
to a group of two or more prospective certificate holders shall not
decline to offer coverage to any eligible prospective enrollee and shall
not impose different terms or conditions on the coverage, premiums or
contributions of any enrollee in the group that are based on the actual
or expected health status of the enrollee.

(2) A carrier that elects to discontinue offering all of its group
health benefit plans under ORS 743.754 (6)(e), elects to discontinue
renewing all such plans or elects to discontinue offering and renewing
all such plans is prohibited from offering health benefit plans in the
group market in this state for a period of five years from one of the
following dates:

(a) The date of notice to the Director of the Department of
Consumer and Business Services pursuant to ORS 743.754 (6)(e); or

(b) If notice is not provided under paragraph (a) of this
subsection, from the date on which the director provides notice to the
carrier that the director has determined that the carrier has effectively
discontinued offering group health benefit plans in this state.

(3) Subsection (1) of this section applies only to group health
benefit plans that are not small employer health benefit plans.

(4) Nothing in this section shall prohibit an employer from
providing different group health benefit plans to various categories of
employees as defined by the employer nor prohibit an employer from
providing health benefit plans through different carriers so long as the
employer’s categories of employees are established in a manner that does
not relate to the actual or expected health status of the employees or
their dependents.

(5) A multiple employer welfare arrangement, professional or trade
association, or other similar arrangement established or maintained to
provide benefits to a particular trade, business, profession or industry
or their subsidiaries, shall not issue coverage to a group or individual
that is not in the same trade, business, profession or industry or their
subsidiaries as that covered by the arrangement. The arrangement shall
accept all groups and individuals in the same trade, business, profession
or industry or their subsidiaries that apply for coverage under the
arrangement and that meet the requirements for membership in the
arrangement. For purposes of this subsection, the requirements for
membership in an arrangement shall not include any requirements that
relate to the actual or expected health status of the prospective
enrollee. [1995 c.603 §16; 1997 c.716 §11; 1999 c.987 §12]The following requirements apply to all group
health benefit plans covering two or more certificate holders:

(1) A preexisting conditions provision in a group health benefit
plan shall apply only to a condition for which medical advice, diagnosis,
care or treatment was recommended or received during the six-month period
immediately preceding the enrollment date of an enrollee or late
enrollee. As used in this section, the enrollment date of an enrollee
shall be the earlier of the effective date of coverage or the first day
of any required group eligibility waiting period and the enrollment date
of a late enrollee shall be the effective date of coverage.

(2) A preexisting conditions provision in a group health benefit
plan shall terminate its effect as follows:

(a) For an enrollee not later than the first of the following dates:

(A) Six months following the enrollee’s effective date of coverage;
or

(B) Twelve months following the start of any required group
eligibility waiting period.

(b) For a late enrollee, not later than 12 months following the
late enrollee’s effective date of coverage.

(3) In applying a preexisting conditions provision to an enrollee
or late enrollee, except as provided in this subsection, all group
benefit plans shall reduce the duration of the provision by an amount
equal to the enrollee’s or late enrollee’s aggregate periods of
creditable coverage if the most recent period of creditable coverage is
ongoing or ended within 63 days of the enrollment date in the new group
health benefit plan. The crediting of prior coverage in accordance with
this subsection shall be applied without regard to the specific benefits
covered during the prior period. This subsection does not preclude,
within a group health benefit plan, application of:

(a) An affiliation period that does not exceed two months for an
enrollee or three months for a late enrollee; or

(b) An exclusion period for specified covered services applicable
to all individuals enrolling for the first time in the group health
benefit plan.

(4) Late enrollees may be excluded from coverage for up to 12
months or may be subjected to a preexisting conditions provision for up
to 12 months. If both an exclusion from coverage period and a preexisting
conditions provision are applicable to a late enrollee, the combined
period shall not exceed 12 months.

(5) All group health benefit plans shall contain special enrollment
periods during which eligible employees and dependents may enroll for
coverage, as provided in 42 U.S.C. 300gg as amended and in effect on July
1, 1997.

(6) Each group health benefit plan shall be renewable with respect
to all eligible enrollees at the option of the policyholder except:

(a) For nonpayment of the required premiums by the policyholder.

(b) For fraud or misrepresentation of the policyholder or, with
respect to coverage of individual enrollees, the enrollees or their
representatives.

(c) When the number of enrollees covered under the plan is less
than the number or percentage of enrollees required by participation
requirements under the plan.

(d) For noncompliance with the carrier’s employer contribution
requirements under the health benefit plan.

(e) When the carrier discontinues offering or renewing, or offering
and renewing, all of its group health benefit plans in this state or in a
specified service area within this state. In order to discontinue plans
under this paragraph, the carrier:

(A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all policyholders
covered by the plans;

(B) May not cancel coverage under the plans for 180 days after the
date of the notice required under subparagraph (A) of this paragraph if
coverage is discontinued in the entire state or, except as provided in
subparagraph (C) of this paragraph, in a specified service area;

(C) May not cancel coverage under the plans for 90 days after the
date of the notice required under subparagraph (A) of this paragraph if
coverage is discontinued in a specified service area because of an
inability to reach an agreement with the health care providers or
organization of health care providers to provide services under the plans
within the service area; and

(D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the group
market in this state or in the specified service area.

(f) When the carrier discontinues offering and renewing a group
health benefit plan in a specified service area within this state because
of an inability to reach an agreement with the health care providers or
organization of health care providers to provide services under the plan
within the service area. In order to discontinue a plan under this
paragraph, the carrier:

(A) Must give notice of the decision to the director and to all
policyholders covered by the plan;

(B) May not cancel coverage under the plan for 90 days after the
date of the notice required under subparagraph (A) of this paragraph; and

(C) Must offer in writing to each policyholder covered by the plan,
all other group health benefit plans that the carrier offers in the
specified service area. The carrier shall offer the plans at least 90
days prior to discontinuation.

(g) When the carrier discontinues offering or renewing, or offering
and renewing, a health benefit plan for all groups in this state or in a
specified service area within this state, other than a plan discontinued
under paragraph (f) of this subsection. With respect to plans that are
being discontinued, the carrier must:

(A) Offer in writing to each policyholder covered by the plan, one
or more health benefit plans that the carrier offers in the specified
service area.

(B) Offer the plans at least 90 days prior to discontinuation.

(C) Act uniformly without regard to the claims experience of the
affected policyholders or the health status of any current or prospective
enrollee.

(h) When the director orders the carrier to discontinue coverage in
accordance with procedures specified or approved by the director upon
finding that the continuation of the coverage would:

(A) Not be in the best interests of the enrollees; or

(B) Impair the carrier’s ability to meet contractual obligations.

(i) When, in the case of a group health benefit plan that delivers
covered services through a specified network of health care providers,
there is no longer any enrollee who lives, resides or works in the
service area of the provider network.

(j) When, in the case of a health benefit plan that is offered in
the group market only through one or more bona fide associations, the
membership of an employer in the association ceases and the termination
of coverage is not related to the health status of any enrollee.

(k) For misuse of a provider network provision. As used in this
paragraph, “misuse of a provider network provision” means a disruptive,
unruly or abusive action taken by an enrollee that threatens the physical
health or well-being of health care staff and seriously impairs the
ability of the carrier or its participating providers to provide services
to an enrollee. An enrollee under this paragraph retains the rights of an
enrollee under ORS 743.804.

(L) A carrier may modify a group health benefit plan at the time of
coverage renewal. The modification is not a discontinuation of the plan
under paragraphs (e) and (g) of this subsection.

(7) Notwithstanding any provision of subsection (6) of this section
to the contrary, a group health benefit plan may be rescinded by a
carrier for fraud, material misrepresentation or concealment by a
policyholder and the coverage of an enrollee may be rescinded for fraud,
material misrepresentation or concealment by the enrollee.

(8) A carrier that continues to offer coverage in the group market
in this state is not required to offer coverage in all of the carrier’s
group health benefit plans. If a carrier, however, elects to continue a
plan that is closed to new policyholders instead of offering alternative
coverage in its other group health benefit plans, the coverage for all
existing policyholders in the closed plan is renewable in accordance with
subsection (6) of this section.

(9) This section applies only to group health benefit plans that
are not small employer health benefit plans. [1995 c.603 §17; 1995 c.603
§40; 1997 c.716 §§12,13; 1999 c.987 §13; 2001 c.943 §13; 2003 c.748 §6] (1) As
used in this section, “guaranteed association” means an association that:

(a) The Director of the Department of Consumer and Business
Services has determined under ORS 743.524 meets the requirements
described in ORS 743.522 (1)(b); and

(b) Is a statewide nonprofit organization representing the
interests of individuals licensed under ORS chapter 696.

(2) A carrier may offer a health benefit plan to a guaranteed
association if the plan provides health benefits covering 500 or more
members or dependents of members of the association.

(3) When a carrier offers coverage to a guaranteed association
under subsection (2) of this section, the carrier shall offer coverage to
all members of the association and all dependents of the members of the
association without regard to the actual or expected health status of any
member or any dependent of a member of the association.

(4) A carrier offering a health benefit plan under subsection (2)
of this section shall establish premium rates as follows:

(a) For the initial 12-month period of coverage, the carrier shall
submit to the director a certified statement that the premium rates
charged to the guaranteed association are actuarially sound. The
statement must be signed by an actuary certifying the accuracy of the
rating methodology as established by the American Academy of Actuaries.

(b) For any subsequent 12-month period of coverage, according to a
rating methodology as established by the American Academy of Actuaries.

(5) A member of a guaranteed association may apply for coverage
offered by a carrier under subsection (2) of this section only:

(a) If the member has been an active member of the association for
no less than 30 days;

(b) During an annual open enrollment period offered by the
association; and

(c) After meeting any additional eligibility requirements agreed
upon by the association and the carrier.

(6) Notwithstanding subsection (5) of this section, if a member or
a dependent of a member of a guaranteed association terminates coverage
under the health benefit plan, the member or dependent shall be excluded
from coverage for 12 months from the date of termination of coverage. The
member may enroll for coverage of the member or the dependent during an
annual open enrollment period following the expiration of the exclusion
period. [2005 c.571 §2]The Department of Consumer and
Business Services may adopt rules incorporating, implementing and
administering the Health Insurance Portability and Accountability Act of
1996 (P.L. 104-191) and federal regulations that are issued in
conjunction with the Act, to the extent that such federal law and
regulations are not inconsistent with any provision of Oregon law. [1997
c.716 §21](1) As used in
this section:

(a) “Carrier” means an insurer authorized to issue a policy of
health insurance in this state. “Carrier” does not include a multiple
employer welfare arrangement.

(b)(A) “Eligible individual” means an individual who:

(i) Has left coverage that was continuously in effect for a period
of 180 days or more under one or more Oregon group health benefit plans,
has applied for portability coverage not later than the 63rd day after
termination of group coverage issued by an Oregon carrier and is an
Oregon resident at the time of such application; or

(ii) On or after January 1, 1998, meets the eligibility
requirements of 42 U.S.C. 300gg-41, as amended and in effect on January
1, 1998, has applied for portability coverage not later than the 63rd day
after termination of group coverage issued by an Oregon carrier and is an
Oregon resident at the time of such application.

(B) Except as provided in subsection (12) of this section,
“eligible individual” does not include an individual who remains eligible
for the individual’s prior group coverage or would remain eligible for
prior group coverage in a plan under the federal Employee Retirement
Income Security Act of 1974, as amended, were it not for action by the
plan sponsor relating to the actual or expected health condition of the
individual, or who is covered under another health benefit plan at the
time that portability coverage would commence or is eligible for the
federal Medicare program.

(c) “Portability health benefit plans” and “portability plans” mean
health benefit plans for eligible individuals that are required to be
offered by all carriers offering group health benefit plans and that have
been approved by the Director of the Department of Consumer and Business
Services in accordance with this section.

(2)(a) In order to improve the availability and affordability of
health benefit plans for individuals leaving coverage under group health
benefit plans, the Health Insurance Reform Advisory Committee created
under ORS 743.745 shall submit to the director two portability health
benefit plans pursuant to ORS 743.745. One plan shall be in the form of
insurance and the second plan shall be consistent with the type of
coverage provided by health maintenance organizations. For each type of
portability plan, the committee shall design and submit to the director:

(A) A prevailing benefit plan, which shall reflect the benefit
coverages that are prevalent in the group health insurance market; and

(B) A low cost benefit plan, which shall emphasize affordability
for eligible individuals.

(b) Except as provided in ORS 743.730 to 743.773, no law requiring
the coverage or the offer of coverage of a health care service or benefit
shall apply to portability health benefit plans.

(3) The director shall approve the portability health benefit plans
if the director determines that the plans provide for appropriate
accessibility and affordability of needed health care services and comply
with all other provisions of this section.

(4) After the director’s approval of the portability plans
submitted by the committee under this section, each carrier offering
group health benefit plans shall submit to the director the policy form
or forms containing at least one low cost benefit and one prevailing
benefit portability plan offered by the carrier that meets the required
standards. Each policy form must be submitted as prescribed by the
director and is subject to review and approval pursuant to ORS 742.003.

(5) Within 180 days after approval by the director of the
portability plans submitted by the committee, as a condition of
transacting group health insurance in this state, each carrier offering
group health benefit plans shall make available to eligible individuals
the prevailing benefit and low cost benefit portability plans that have
been submitted by the carrier and approved by the director under
subsection (4) of this section.

(6) A carrier offering group health benefit plans shall issue to an
eligible individual who is leaving or has left group coverage provided by
that carrier any portability plan offered by the carrier if the eligible
individual applies for the plan within 63 days of termination of prior
coverage and agrees to make the required premium payments and to satisfy
the other provisions of the portability plan.

(7) Premium rates for portability plans shall be subject to the
following provisions:

(a) Each carrier must file the geographic average rate for each of
its portability health benefit plans for a rating period with the
director on or before March 15 of each year.

(b) The premium rates charged during the rating period for each
portability health benefit plan shall not vary from the geographic
average rate, except that the premium rate may be adjusted to reflect
differences in benefit design, family composition and age. Adjustments
for age shall comply with the following:

(A) For each plan, the variation between the lowest premium rate
and the highest premium rate shall not exceed 100 percent of the lowest
premium rate.

(B) Premium variations shall be determined by applying uniformly
the carrier’s schedule of age adjustments for portability plans as
approved by the director.

(c) Premium variations between the portability plans and the rest
of the carrier’s group plans must be based solely on objective
differences in plan design or coverage and must not include differences
based on the actual or expected health status of individuals who select
portability health benefit plans. For purposes of determining the premium
variations under this paragraph, a carrier may:

(A) Pool all portability plans with all group health benefit plans;
or

(B) Pool all portability plans for eligible individuals leaving
small employer group health benefit plan coverage with all plans offered
to small employers and pool all portability plans for eligible
individuals leaving other group health benefit plan coverage with all
health benefit plans offered to such other groups.

(d) A carrier may not increase the rates of a portability plan
issued to an enrollee more than once in any 12-month period. Annual rate
increases shall be effective on the anniversary date of the plan issued
to the enrollee. The percentage increase in the premium rate charged to
an enrollee for a new rating period may not exceed the average increase
in the rest of the carrier’s applicable group health benefit plans plus
an adjustment for age.

(8) No portability plans under this section may contain preexisting
conditions provisions, exclusion periods, waiting periods or other
similar limitations on coverage.

(9) Portability health benefit plans shall be renewable with
respect to all enrollees at the option of the enrollee, except:

(a) For nonpayment of the required premiums by the policyholder;

(b) For fraud or misrepresentation by the policyholder;

(c) When the carrier elects to discontinue offering all of its
group health benefit plans in accordance with ORS 743.737 and 743.754; or

(d) When the director orders the carrier to discontinue coverage in
accordance with procedures specified or approved by the director upon
finding that the continuation of the coverage would:

(A) Not be in the best interests of the enrollees; or

(B) Impair the carrier’s ability to meet its contractual
obligations.

(10)(a) Each carrier offering group health benefit plans shall
maintain at its principal place of business a complete and detailed
description of its rating practices and renewal underwriting practices
relating to its portability plans, including information and
documentation that demonstrate that its rating methods and practices are
based upon commonly accepted actuarial practices and are in accordance
with sound actuarial principles.

(b) Each such carrier shall file with the director annually on or
before March 15 an actuarial certification that the carrier is in
compliance with this section and that its rating methods are actuarially
sound. Each such certification shall be in a form and manner and shall
contain such information as specified by the director. A copy of such
certification shall be retained by the carrier at its principal place of
business.

(c) Each such carrier shall make the information and documentation
described in paragraph (a) of this subsection available to the director
upon request. Except in cases of violations of the Insurance Code, the
information is proprietary and trade secret information and shall not be
subject to disclosure by the director to persons outside the Department
of Consumer and Business Services except as agreed to by the carrier or
as ordered by a court of competent jurisdiction.

(11) A carrier offering group health benefit plans shall not
provide any financial or other incentive to any insurance producer that
would encourage the insurance producer to market and sell portability
plans of the carrier on the basis of an eligible individual’s anticipated
claims experience.

(12) An individual who is eligible to obtain a portability plan in
accordance with this section may obtain such a plan regardless of whether
the eligible individual qualifies for a period of continuation coverage
under federal law or under ORS 743.600 or 743.610. However, an individual
who has elected such continuation coverage is not eligible to obtain a
portability plan until the continuation coverage has been discontinued by
the individual or has been exhausted. [1995 c.603 §18; 1997 c.716 §25;
1999 c.987 §14; 2003 c.364 §115](1) A carrier approved pursuant
to subsection (4) of this section that offers individual health benefit
plans may satisfy the requirements of ORS 743.760 by issuing any
individual health benefit plan offered by the carrier to any eligible
individual as defined in ORS 743.760 who:

(a) Is leaving or has left a group health benefit plan provided by
that carrier;

(b) Applies for the policy; and

(c) Agrees to make the required premium payments and to satisfy the
other provisions of the plan.

(2) All health benefit plans issued pursuant to subsection (1) of
this section shall:

(a) Comply with ORS 743.767 and 743.769; and

(b) Contain no preexisting conditions provisions, exclusion
periods, waiting periods or other similar limitations on coverage.

(3) A carrier offering plans pursuant to this section shall offer
plans that meet the standards and requirements described in ORS 743.760
(2).

(4) The Director of the Department of Consumer and Business
Services shall adopt standards for minimum participation in the
individual market necessary for a carrier to offer policies under this
section and shall develop a program for approval of carriers under this
section. [1995 c.603 §19](1)
All carriers who offer individual health benefit plans and evaluate the
health status of individuals for purposes of eligibility shall use the
standard health statement established by the Health Insurance Reform
Advisory Committee and may not use any other method to determine the
health status of an individual. Nothing in this subsection shall prevent
a carrier from using health information after enrollment for the purpose
of providing services or arranging for the provision of services under a
health benefit plan.

(2)(a) If an individual is accepted for coverage under an
individual health benefit plan, the carrier shall not impose exclusions
or limitations on coverage greater than:

(A) A preexisting conditions provision that complies with the
following requirements:

(i) The provision shall apply only to a condition for which medical
advice, diagnosis, care or treatment was recommended or received during
the six-month period immediately preceding the individual’s effective
date of coverage; and

(ii) The provision shall terminate its effect no later than six
months following the individual’s effective date of coverage;

(B) An individual coverage waiting period of 90 days; or

(C) An exclusion period for specified covered services applicable
to all individuals enrolling for the first time in the individual health
benefit plan.

(b) Pregnancy may constitute a preexisting condition for purposes
of this section.

(3) If the carrier elects to restrict coverage through the
application of a preexisting conditions provision or an individual
coverage waiting period provision, the carrier shall reduce the duration
of the provision by an amount equal to the individual’s aggregate periods
of creditable coverage if the most recent period of creditable coverage
is ongoing or ended within 63 days of the effective date of coverage in
the new individual health benefit plan. The crediting of prior coverage
in accordance with this subsection shall be applied without regard to the
specific benefits covered during the prior period.

(4) If an eligible prospective enrollee is rejected for coverage
under an individual health benefit plan, the prospective enrollee shall
be eligible to apply for coverage under the Oregon Medical Insurance Pool.

(5) If a carrier accepts an individual for coverage under an
individual health benefit plan, the carrier shall renew the policy except:

(a) For nonpayment of the required premiums by the policyholder.

(b) For fraud or misrepresentation by the policyholder.

(c) When the carrier discontinues offering or renewing, or offering
and renewing, all of its individual health benefit plans in this state or
in a specified service area within this state. In order to discontinue
the plans under this paragraph, the carrier:

(A) Must give notice of the decision to the Director of the
Department of Consumer and Business Services and to all policyholders
covered by the plans;

(B) May not cancel coverage under the plans for 180 days after the
date of the notice required under subparagraph (A) of this paragraph if
coverage is discontinued in the entire state or, except as provided in
subparagraph (C) of this paragraph, in a specified service area;

(C) May not cancel coverage under the plans for 90 days after the
date of the notice required under subparagraph (A) of this paragraph if
coverage is discontinued in a specified service area because of an
inability to reach an agreement with the health care providers or
organization of health care providers to provide services under the plans
within the service area; and

(D) Must discontinue offering or renewing, or offering and
renewing, all health benefit plans issued by the carrier in the
individual market in this state or in the specified service area.

(d) When the carrier discontinues offering and renewing an
individual health benefit plan in a specified service area within this
state because of an inability to reach an agreement with the health care
providers or organization of health care providers to provide services
under the plan within the service area. In order to discontinue a plan
under this paragraph, the carrier:

(A) Must give notice of the decision to the director and to all
policyholders covered by the plan;

(B) May not cancel coverage under the plan for 90 days after the
date of the notice required under subparagraph (A) of this paragraph; and

(C) Must offer in writing to each policyholder covered by the plan,
all other individual health benefit plans that the carrier offers in the
specified service area. The carrier shall offer the plans at least 90
days prior to discontinuation.

(e) When the carrier discontinues offering or renewing, or offering
and renewing, an individual health benefit plan for all individuals in
this state or in a specified service area within this state, other than a
plan discontinued under paragraph (d) of this subsection. With respect to
plans that are being discontinued, the carrier must:

(A) Offer in writing to each policyholder covered by the plan, one
or more individual health benefit plans that the carrier offers in the
specified service area.

(B) Offer the plans at least 90 days prior to discontinuation.

(C) Act uniformly without regard to the claims experience of the
affected policyholders or the health status of any current or prospective
enrollee.

(f) When the director orders the carrier to discontinue coverage in
accordance with procedures specified or approved by the director upon
finding that the continuation of the coverage would:

(A) Not be in the best interests of the enrollee; or

(B) Impair the carrier’s ability to meet its contractual
obligations.

(g) When, in the case of an individual health benefit plan that
delivers covered services through a specified network of health care
providers, the enrollee no longer lives, resides or works in the service
area of the provider network and the termination of coverage is not
related to the health status of any enrollee.

(h) When, in the case of a health benefit plan that is offered in
the individual market only through one or more bona fide associations,
the membership of an individual in the association ceases and the
termination of coverage is not related to the health status of any
enrollee.

(i) For misuse of a provider network provision. As used in this
paragraph, “misuse of a provider network provision” means a disruptive,
unruly or abusive action taken by an enrollee that threatens the physical
health or well-being of health care staff and seriously impairs the
ability of the carrier or its participating providers to provide service
to an enrollee. An enrollee under this paragraph retains the rights of an
enrollee under ORS 743.804.

(j) A carrier may modify an individual health benefit plan at the
time of coverage renewal. The modification is not a discontinuation of
the plan under paragraphs (c) and (e) of this subsection.

(6) Notwithstanding any other provision of this section, a carrier
may rescind an individual health benefit plan for fraud, material
misrepresentation or concealment by an enrollee.

(7) A carrier that withdraws from the market for individual health
benefit plans must continue to renew its portability health benefit plans
that have been approved pursuant to ORS 743.761.

(8) A carrier that continues to offer coverage in the individual
market in this state is not required to offer coverage in all of the
carrier’s individual health benefit plans. However, if a carrier elects
to continue a plan that is closed to new individual policyholders instead
of offering alternative coverage in its other individual health benefit
plans, the coverage for all existing policyholders in the closed plan is
renewable in accordance with subsection (5) of this section. [1995 c.603
§§22,41; 1997 c.716 §§15,16; 1999 c.987 §15; 2001 c.943 §14; 2003 c.748
§7]Note: Sections 2, 3 and 9, chapter 599, Oregon Laws 2003, provide:

Sec. 2. (1) Notwithstanding ORS 743.766 (2), if an individual is
accepted for coverage under an individual health benefit plan, the
carrier may impose a waiver of coverage for one or more preexisting
conditions identified by the carrier at the time the individual is
enrolled for the first time in the individual health benefit plan if the
following requirements are met:

(a) Each preexisting condition must be identified on an addendum to
the individual health benefit plan and must include the appropriate
disease code from the International Classification of Diseases, Ninth
Revision, Clinical Modification, including the disease category and a
written description of the condition;

(b) Each addendum to the individual health benefit plan must be
limited to the specific disease code identified in paragraph (a) of this
subsection and may not be extended to include any other disease code or
secondary condition that might be directly or indirectly related to the
preexisting condition; and

(c) Each addendum to the individual health benefit plan must be
agreed to in writing by both parties before or on the effective date of
coverage.

(2) The carrier may not impose a waiver of coverage under
subsection (1) of this section that is less than six months or greater
than 24 months following the individual’s effective date of coverage.

(3) If an individual is accepted for coverage under an individual
health benefit plan and the carrier imposes a waiver of coverage under
subsection (1) of this section, the individual is eligible to apply for
coverage under the Oregon Medical Insurance Pool. [2003 c.599 §2]

Sec. 3. Each carrier offering individual health benefit plans or
small employer health benefit plans shall submit to the Director of the
Department of Consumer and Business Services any information requested by
the director for the purpose of assessing the impact on the health
insurance marketplace of section 2 of this 2003 Act and the amendments to
ORS 743.737 and 746.600 by sections 4 and 5 of this 2003 Act. [2003 c.599
§3]

Sec. 9. Sections 2 and 3 of this 2003 Act are repealed on January
Premium
rates for individual health benefit plans shall be subject to the
following provisions:

(1) Each carrier must file the geographic average rate for its
individual health benefit plans for a rating period with the Director of
the Department of Consumer and Business Services on or before March 15 of
each year.

(2) The premium rates charged during a rating period for individual
health benefit plans issued to individuals shall not vary from the
individual geographic average rate, except that the premium rate may be
adjusted to reflect differences in benefit design, family composition and
age. For age adjustments to the individual plans, a carrier shall apply
uniformly its schedule of age adjustments for individual health benefit
plans as approved by the director.

(3) A carrier may not increase the rates of an individual health
benefit plan more than once in a 12-month period except as approved by
the director. Annual rate increases shall be effective on the anniversary
date of the individual health benefit plan’s issuance. The percentage
increase in the premium rate charged for an individual health benefit
plan for a new rating period may not exceed the sum of the following:

(a) The percentage change in the carrier’s geographic average rate
for its individual health benefit plan measured from the first day of the
prior rating period to the first day of the new period; and

(b) Any adjustment attributable to changes in age and differences
in benefit design and family composition.

(4) Notwithstanding any other provision of this section, a carrier
that imposes an individual coverage waiting period pursuant to ORS
743.766 may impose a monthly premium rate surcharge for a period not to
exceed six months and in an amount not to exceed the percentage by which
the rates for coverage under the Oregon Medical Insurance Pool exceed the
rates established by the Oregon Medical Insurance Pool Board as
applicable for individual risks under ORS 735.625. The surcharge shall be
approved by the Director of the Department of Consumer and Business
Services and, in combination with the waiting period, shall not exceed
the actuarial value of a six-month preexisting conditions provision.
[1995 c.603 §23; 1999 c.987 §16](1) Each carrier shall actively market all individual
health benefit plans sold by the carrier.

(2) Except as provided in subsection (3) of this section, no
carrier or insurance producer shall, directly or indirectly, discourage
an individual from filing an application for coverage because of the
health status, claims experience, occupation or geographic location of
the individual.

(3) Subsection (2) of this section does not apply with respect to
information provided by a carrier to an individual regarding the
established geographic service area or a restricted network provision of
a carrier.

(4) Rejection by a carrier of an application for coverage shall be
in writing and shall state the reason or reasons for the rejection.

(5) The Director of the Department of Consumer and Business
Services may establish by rule additional standards to provide for the
fair marketing and broad availability of individual health benefit plans.

(6) A carrier that elects to discontinue offering all of its
individual health benefit plans under ORS 743.766 (5)(c) or to
discontinue offering and renewing all such plans is prohibited from
offering and renewing health benefit plans in the individual market in
this state for a period of five years from the date of notice to the
director pursuant to ORS 743.766 (5)(c) or, if such notice is not
provided, from the date on which the director provides notice to the
carrier that the director has determined that the carrier has effectively
discontinued offering individual health benefit plans in this state. This
subsection does not apply with respect to a health benefit plan
discontinued in a specified service area by a carrier that covers
services provided only by a particular organization of health care
providers or only by health care providers who are under contract with
the carrier.

(7) If an individual is accepted for coverage under an individual
health benefit plan, the carrier may limit the individual health benefit
plans in which the individual may elect to enroll. If the individual is
denied coverage under the initial plan elected by the individual, the
individual is eligible to apply for coverage under the Oregon Medical
Insurance Pool. [1995 c.603 §24; 1999 c.987 §17; 2003 c.364 §116; 2003
c.590 §1]Note: The amendments to 743.769 by section 3, chapter 590, Oregon
Laws 2003, become operative January 2, 2008. See section 5, chapter 590,
Oregon Laws 2003. The text that is operative on and after January 2,
2008, is set forth for the user’s convenience.

743.769. (1) Each carrier shall actively market all individual
health benefit plans sold by the carrier.

(2) Except as provided in subsection (3) of this section, no
carrier or insurance producer shall, directly or indirectly, discourage
an individual from filing an application for coverage because of the
health status, claims experience, occupation or geographic location of
the individual.

(3) Subsection (2) of this section does not apply with respect to
information provided by a carrier to an individual regarding the
established geographic service area or a restricted network provision of
a carrier.

(4) Rejection by a carrier of an application for coverage shall be
in writing and shall state the reason or reasons for the rejection.

(5) The Director of the Department of Consumer and Business
Services may establish by rule additional standards to provide for the
fair marketing and broad availability of individual health benefit plans.

(6) A carrier that elects to discontinue offering all of its
individual health benefit plans under ORS 743.766 (5)(c) or to
discontinue offering and renewing all such plans is prohibited from
offering and renewing health benefit plans in the individual market in
this state for a period of five years from the date of notice to the
director pursuant to ORS 743.766 (5)(c) or, if such notice is not
provided, from the date on which the director provides notice to the
carrier that the director has determined that the carrier has effectively
discontinued offering individual health benefit plans in this state. This
subsection does not apply with respect to a health benefit plan
discontinued in a specified service area by a carrier that covers
services provided only by a particular organization of health care
providers or only by health care providers who are under contract with
the carrier. The Director of the
Department of Consumer and Business Services shall adopt all rules
necessary for the implementation and administration of ORS 743.766 to
743.769. [1995 c.603 §25]Each carrier that offers individual health benefit
plans shall submit to the Director of the Department of Consumer and
Business Services any information requested by the director for the
purpose of assessing the impact of the amendments to ORS 743.769 and
746.600 by sections 1 and 2, chapter 590, Oregon Laws 2003. [2003 c.590
§8]

(1) “Carrier” has the meaning given that term in ORS 743.730.

(2) “Enrollee” has the meaning given that term in ORS 743.730.

(3) “Health benefit plan” has the meaning given that term in ORS
743.730. [2001 c.549 §2] (1) A carrier that
provides coverage for prescription drugs provided on an outpatient basis
and issues a card or other technology for claims processing, or an
administrator of a health benefit plan including, but not limited to, a
third party administrator for a self-insured plan, a pharmacy benefits
manager and an administrator of a state administered plan, shall issue to
an enrollee a prescription drug identification card or other technology
that contains all information required for proper claims adjudication.

(2) Upon renewal of a health benefit plan, a carrier or
administrator shall issue a prescription drug identification card or
other technology containing all current information required for proper
claims adjudication.

(3) A carrier or administrator of a health benefit plan is not
required to issue a prescription drug identification card or other
technology separate from another identification card or technology issued
to an enrollee under the health benefit plan if the identification card
or technology contains all of the information required for proper claims
adjudication. [2001 c.549 §3] The
Director of the Department of Consumer and Business Services may adopt
rules to implement ORS 743.788 and may consider any relevant standards
developed by a standards development organization accredited by the
American National Standards Institute that represents organizations
interested in electronic standardization with the pharmacy services
sector of the health care industry and the requirements of the Health
Insurance Portability and Accountability Act of 1996, Public Law 104-191.
[2001 c.549 §4](Additional Required Reimbursements) (1) A
health insurance policy that covers hospital, medical or surgical
expenses, other than coverage limited to expenses from accidents or
specific diseases, shall provide coverage for a complete and thorough
physical examination of the breast, including but not limited to a
clinical breast examination, performed by a health care provider to check
for lumps and other changes for the purpose of early detection and
prevention of breast cancer as follows:

(a) Annually for women 18 years of age and older; and

(b) At any time at the recommendation of the woman’s health care
provider.

(2) An insurance policy must provide coverage of physical
examinations of the breast as described in subsection (1) of this section
regardless of whether a health care provider performs other preventative
women’s health examinations or makes a referral for other preventative
women’s health examinations at the same time the health care provider
performs the breast examination.

(3) This section applies to health care service contractors, as
defined in ORS 750.005, and trusts carrying out a multiple employer
welfare arrangement, as defined in ORS 750.301. [2005 c.482 §2]Note: See 743.700.Note: 743.791 was added to and made a part of the Insurance Code by
legislative action but was not added to ORS chapter 743 or any series
therein. See Preface to Oregon Revised Statutes for further explanation.(1) All health insurance policies that provide a
prescription drug benefit, except those policies in which coverage is
limited to expenses from accidents or specific diseases that are
unrelated to the coverage required by this subsection, must include
coverage for prescription drugs dispensed by a licensed practitioner at a
rural health clinic for an urgent medical condition if there is not a
pharmacy within 15 miles of the clinic or if the prescription is
dispensed for a patient outside of the normal business hours of any
pharmacy within 15 miles of the clinic.

(2) The coverage required by subsection (1) of this section is
subject to the terms and conditions of the prescription drug benefit
provided under the policy.

(3) As used in this section, “urgent medical condition” means a
medical condition that arises suddenly, is not life-threatening and
requires prompt treatment to avoid the development of more serious
medical problems. [2003 c.91 §4]Note: See 743.700. (1)
An insurer offering a health insurance policy that covers hospital,
medical or surgical expenses, other than coverage limited to expenses
from accidents or specific diseases, shall provide coverage for prostate
cancer screening examinations including a digital rectal examination and
a prostate-specific antigen test:

(a) For men who are 50 years of age or older biennially or as
determined by the treating physician; and

(b) For men younger than 50 years of age who are at high risk for
prostate cancer as determined by the treating physician, including
African-American men and men with a family medical history of prostate
cancer.

(2) Health care service contractors, as defined in ORS 750.005, and
trusts carrying out a multiple employer welfare arrangement, as defined
in ORS 750.301, are subject to subsection (1) of this section. [2005
c.477 §2]Note: See 743.700.(1) An insurer offering a health insurance policy that
provides coverage for hospital, medical or surgical expenses, other than
coverage limited to expenses from accidents or specific diseases, shall
provide payment or reimbursement for professional services performed by a
registered nurse whose certification as a registered nurse first
assistant has been recognized by the Oregon State Board of Nursing under
ORS 678.366.

(2) This section also applies to health care service contractors,
as defined in ORS 750.005, and trusts carrying out multiple employer
welfare arrangements, as defined in ORS 750.301. [2005 c.628 §2]Note: See 743.700.(1) An insurer offering a health insurance policy that
covers hospital, medical or surgical expenses, other than coverage
limited to expenses from accidents or specific diseases, shall provide
coverage for the following colorectal cancer screening examinations and
laboratory tests:

(a) For an insured 50 years of age or older:

(A) One fecal occult blood test per year plus one flexible
sigmoidoscopy every five years;

(B) One colonoscopy every 10 years; or

(C) One double contrast barium enema every five years.

(b) For an insured who is at high risk for colorectal cancer,
colorectal cancer screening examinations and laboratory tests as
recommended by the treating physician.

(2) For the purposes of subsection (1)(b) of this section, an
individual is at high risk for colorectal cancer if the individual has:

(a) A family medical history of colorectal cancer;

(b) A prior occurrence of cancer or precursor neoplastic polyps;

(c) A prior occurrence of a chronic digestive disease condition
such as inflammatory bowel disease, Crohn’s disease or ulcerative
colitis; or

(d) Other predisposing factors.

(3) Health care service contractors, as defined in ORS 750.005, and
trusts carrying out a multiple employer welfare arrangement, as defined
in ORS 750.301, are also subject to this section. [2005 c.765 §6]Note: See 743.700.Note: 743.799 was added to and made a part of the Insurance Code by
legislative action but was not added to ORS chapter 743 or any series
therein. See Preface to Oregon Revised Statutes for further explanation.MISCELLANEOUS

(1) “Emergency medical condition” means a medical condition that
manifests itself by acute symptoms of sufficient severity, including
severe pain, that a prudent layperson possessing an average knowledge of
health and medicine would reasonably expect that failure to receive
immediate medical attention would place the health of a person, or a
fetus in the case of a pregnant woman, in serious jeopardy.

(2) “Emergency medical screening exam” means the medical history,
examination, ancillary tests and medical determinations required to
ascertain the nature and extent of an emergency medical condition.

(3) “Emergency services” means those health care items and services
furnished in an emergency department and all ancillary services routinely
available to an emergency department to the extent they are required for
the stabilization of a patient.

(4) “Enrollee” has the meaning given that term in ORS 743.730.

(5) “Grievance” means a written complaint submitted by or on behalf
of an enrollee regarding the:

(a) Availability, delivery or quality of health care services,
including a complaint regarding an adverse determination made pursuant to
utilization review;

(b) Claims payment, handling or reimbursement for health care
services; or

(c) Matters pertaining to the contractual relationship between an
enrollee and an insurer.

(6) “Health benefit plan” has the meaning provided for that term in
ORS 743.730.

(7) “Independent practice association” means a corporation wholly
owned by providers, or whose membership consists entirely of providers,
formed for the sole purpose of contracting with insurers for the
provision of health care services to enrollees, or with employers for the
provision of health care services to employees, or with a group, as
described in ORS 743.522, to provide health care services to group
members.

(8) “Insurer” has the meaning provided for that term in ORS
731.106. For purposes of ORS 743.699, 743.801, 743.803, 743.804, 743.806,
743.807, 743.808, 743.811, 743.814, 743.817, 743.819, 743.821, 743.823,
743.827, 743.829, 743.831, 743.834, 743.837, 743.839, 743.854, 743.856,
743.857, 743.858, 743.859, 743.861, 743.862, 743.863, 743.864, 743.866,
743.868, 750.055 and 750.333, “insurer” also includes a health care
service contractor as defined in ORS 750.005.

(9) “Managed health insurance” means any health benefit plan that:

(a) Requires an enrollee to use a specified network or networks of
providers managed, owned, under contract with or employed by the insurer
in order to receive benefits under the plan, except for emergency or
other specified limited service; or

(b) In addition to the requirements of paragraph (a) of this
subsection, offers a point-of-service provision that allows an enrollee
to use providers outside of the specified network or networks at the
option of the enrollee and receive a reduced level of benefits.

(10) “Medical services contract” means a contract between an
insurer and an independent practice association, between an insurer and a
provider, between an independent practice association and a provider or
organization of providers, between medical or mental health clinics, and
between a medical or mental health clinic and a provider to provide
medical or mental health services. “Medical services contract” does not
include a contract of employment or a contract creating legal entities
and ownership thereof that are authorized under ORS chapter 58, 60 or 70,
or other similar professional organizations permitted by statute.

(11)(a) “Preferred provider organization insurance” means any
health benefit plan that:

(A) Specifies a preferred network of providers managed, owned or
under contract with or employed by an insurer;

(B) Does not require an enrollee to use the preferred network of
providers in order to receive benefits under the plan; and

(C) Creates financial incentives for an enrollee to use the
preferred network of providers by providing an increased level of
benefits.

(b) “Preferred provider organization insurance” does not mean a
health benefit plan that has as its sole financial incentive a hold
harmless provision under which providers in the preferred network agree
to accept as payment in full the maximum allowable amounts that are
specified in the medical services contracts.

(12) “Prior authorization” means a determination by an insurer
prior to provision of services that the insurer will provide
reimbursement for the services. “Prior authorization” does not include
referral approval for evaluation and management services between
providers.

(13) “Provider” means a person licensed, certified or otherwise
authorized or permitted by laws of this state to administer medical or
mental health services in the ordinary course of business or practice of
a profession.

(14) “Stabilization” means that, within reasonable medical
probability, no material deterioration of an emergency medical condition
is likely to occur.

(15) “Utilization review” means a set of formal techniques used by
an insurer or delegated by the insurer designed to monitor the use of or
evaluate the medical necessity, appropriateness, efficacy or efficiency
of health care services, procedures or settings. [1995 c.672 §1; 1997
c.343 §18; 2001 c.266 §1; 2001 c.747 §5; 2003 c.87 §21; 2003 c.137 §§3,4;
2005 c.418 §2](1) A medical services contract may not
require the provider, as an element of the contract or as a condition of
compensation for services, to agree:

(a) In the event of alleged improper medical treatment of a
patient, to indemnify the other party to the medical services contract
for any damages, awards or liabilities including but not limited to
judgments, settlements, attorney fees, court costs and any associated
charges incurred for any reason other than the negligence or intentional
act of the provider or the provider’s employees;

(b) To charge the other party to the medical services contract a
rate for services rendered pursuant to the medical services contract that
is no greater than the lowest rate that the provider charges for the same
service to any other person;

(c) To deny care to a patient because of a determination made
pursuant to the medical services contract that the care is not covered or
is experimental, or to deny referral of a patient to another provider for
the provision of such care, if the patient is informed that the patient
will be responsible for the payment of such noncovered, experimental or
referral care and the patient nonetheless desires to obtain such care or
referral; or

(d) Upon the provider’s withdrawal from or termination or
nonrenewal of the medical services contract, not to treat or solicit a
patient even at that patient’s request and expense.

(2) A medical services contract shall:

(a) Grant to the provider adequate notice and hearing procedures,
or such other procedures as are fair to the provider under the
circumstances, prior to termination or nonrenewal of the medical services
contract when such termination or nonrenewal is based upon issues
relating to the quality of patient care rendered by the provider.

(b) Set forth generally the criteria used by the other party to the
medical services contract for the termination or nonrenewal of the
medical services contract.

(c) Entitle the provider to an annual accounting accurately
summarizing the financial transactions between the parties to the medical
services contract for that year.

(d) Allow the provider to withdraw from the care of a patient when,
in the professional judgment of the provider, it is in the best interest
of the patient to do so.

(e) Provide that a doctor of medicine or osteopathy licensed under
ORS chapter 677 shall be retained by the other party to the medical
services contract and shall be responsible for all final medical and
mental health decisions relating to coverage or payment made pursuant to
the medical services contract.

(f) Provide that a physician who is practicing in conformity with
ORS 677.095 may advocate a decision, policy or practice without being
subject to termination or penalty for the sole reason of such advocacy.

(g)(A) Entitle the party to the medical services contract who is
being reimbursed for the provision of health care services on a basis
that includes financial risk withholds, or the party’s representative, to
a full accounting of health benefits claims data and related financial
information on no less than a quarterly basis by the party to a medical
service contract who has made reimbursement, as follows:

(i) The data shall include all pertinent information relating to
the health care services provided, including related provider and patient
information, reimbursements made and amounts withheld under the financial
risk withhold provisions of the medical services contract for the period
of time under reconciliation and settlement between the parties.

(ii) Any reconciliation and settlement undertaken pursuant to a
medical services contract shall be based directly and exclusively upon
data provided to the party who is being reimbursed for the provision of
health care services.

(iii) All data, including supplemental information or
documentation, necessary to finalize the reconciliation and settlement
provisions of a medical