Section 40. Policy definitions

Except as otherwise provided in this chapter, no individual accident or sickness insurance policy delivered or issued for delivery to any person in this Commonwealth shall contain definitions respecting the matters set forth below unless such definitions comply with the requirements of this section.

"Accident," "accidental injury," or "accidental means" shall be defined to employ "result" language and shall not include words which establish an accidental means test or use words such as "external, violent, visible wounds" or similar words of description or characterization.

The definition shall not be more restrictive than the following: injury or injuries, for which benefits are provided, means accidental bodily injury sustained by the insured person which are the direct result of an accident, independent of disease or bodily infirmity or any other cause, and which occur while the insurance is in force.

Such definition may provide that injuries shall not include:

1. Injuries for which benefits are provided under any workers' compensation, employer's liability or similar law, motor vehicle no-fault plan, unless prohibited by law; or

2. Injuries incurred while the insured person is engaged in any activity pertaining to any trade, business, employment, or occupation for wage or profit.

"Convalescent nursing home," "extended care facility," or "skilled nursing facility" shall be defined in relation to its status, facilities, and available services.

1. A definition of such home or facility shall not be more restrictive than one requiring that it:

a. Be operated pursuant to law;

b. Be approved for payment of Medicare benefits or be qualified to receive such approval, if so requested;

c. Be primarily engaged in providing, in addition to room and board accommodations, skilled nursing care under the supervision of a duly licensed physician;

d. Provide continuous 24 hours a day nursing service by or under the supervision of a registered graduate professional nurse (R.N.); and

e. Maintain a daily medical record of each patient.

2. The definition of such home or facility may provide that such term shall not include:

a. Any home, facility or part thereof used primarily for rest;

b. A home or facility for the aged or for the care of drug addicts or alcoholics; or

c. A home or facility primarily used for the care and treatment of mental diseases, or disorders, or custodial or educational care.

"Guaranteed renewable" as used in a renewability provision, shall not be defined more restrictively, except as provided in the definition of "non-cancellable" or "non-cancellable and guaranteed renewable," than one providing the insured the right to continue the policy in force by the timely payment of premiums until age 65 or until eligibility for Medicare. During this 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 class. Class should be defined by age, sex, occupation, or other broad categories in order to eliminate any possibilities of individual discrimination. Any accident and sickness policy, however, which provides for periodic payments, weekly or monthly, for a specified period during the continuance of disability resulting from accident or sickness may provide that the insured has the right to continue the policy only to age 60 if, at age 60, the insured has the right to continue the policy in force at least to age 65 while actively and regularly employed.

"Hospital" may be defined in relation to its status, facilities and available services or to reflect its accreditation by the Joint Commission on Accreditation of Hospitals.

1. The definition of the term "hospital" shall not be more restrictive than one requiring that the hospital:

a. Be an institution operated pursuant to law;

b. Be primarily and continuously engaged in providing or operating, either on its premises or in facilities available to the hospital on a prearranged basis and under the supervision of a staff of duly licensed physicians, medical, diagnostic and major surgical facilities for the medical care and treatment of sick or injured persons on an inpatient basis for which a charge is made; and

c. Provide 24 hours a day nursing service by or under the supervision of a registered graduate professional nurse (R.N.).

2. The definition of the term "hospital" may state that such term shall not include:

a. Convalescent homes, convalescent, rest, nursing facilities;

b. Facilities primarily affording custodial, educational or rehabilitory care;

c. Facilities for the aged, drug addicts or alcoholics subject to the requirements of § 38.2-3412.1 of the Code of Virginia; or

d. Any military or veterans hospital or soldiers home or any hospital contracted for or operated by any national government or agency thereof, except as provided in 14VAC5-140-60 E, for the treatment of members or ex-members of the armed forces, except for services rendered on an emergency basis where a legal liability exists for charges made to the individual for such services.

"Medical necessity," or words of similar meaning, shall not be defined more restrictively than all services rendered to an insured that are required by his medical condition in accordance with generally accepted principles of good medical practice, which are performed in the least costly setting and not only for the convenience of the patient or his physician.

"Medicare" shall be defined in any hospital, surgical or medical expense policy which relates its coverage to eligibility for Medicare or Medicare benefits. Medicare may be substantially defined as the "Health Insurance for the Aged Act," Title XVIII of the Social Security Amendments of 1965 (42 USC § 1395 et seq.) or Title I, Part 1 of the Public Laws 89-97, as enacted by the Eighty-Ninth Congress of the United States of America and popularly known as the "Health Insurance for the Aged Act," (42 USC § 1395 et seq.), or words of similar import.

"Mental or nervous disorders" shall not be defined more restrictively than a definition including neurosis, psychoneurosis, psychopathy, psychosis, or mental or emotional disease or disorder of any kind including physiological and psychological dependence on alcohol and drugs subject to § 38.2-3412.1 of the Code of Virginia.

"Non-cancellable," or "non-cancellable and guaranteed renewable," as used in a renewability provision, shall not be defined more restrictively than one providing the insured the right to continue the policy in force by the timely payment of premiums set forth in the policy until age 65 or until eligibility for Medicare. During this period the insurer has no right to make unilaterally any change in any provision of the policy while the policy is in force. Any accident and sickness policy, however, which provides for periodic payments, weekly or monthly, for a specified period during the continuance of disability resulting from accident or sickness may provide that the insured has the right to continue the policy only to age 60, if at age 60, the insured has the right to continue the policy in force at least to age 65 while actively and regularly employed.

"Nurse" may be defined so that the description of nurse is restricted to a type of nurse, such as registered graduate professional nurse (R.N.), a licensed practical nurse (L.P.N.), or a licensed vocational nurse (L.V.N.). If the words "nurse," "trained nurse" or "registered nurse" are used without specific description as to type, then the use of such terms requires the insurer to recognize the services of any individual who qualifies under such terminology in accordance with the applicable statutes or administrative rules of the licensing or registry board of this Commonwealth.

"One period of confinement" means consecutive days of in-hospital service received as an inpatient, or successive confinements when discharge from and readmission to the hospital occurs within a period of not more than 90 days or three times the maximum number of days of in-hospital coverage provided by the policy to a maximum of 180 days.

"Partial disability" shall be defined in relation to the individual's inability to perform one or more but not all of the "major," "important," or "essential" duties of employment or occupation or may be related to a "percentage" of time worked or to a "specified number of hours" or to "compensation." Where a policy provides total disability benefits and partial disability benefits, only one elimination period may be required.

"Physician" may be defined by including words such as "duly qualified physician" or "duly licensed physician."

"Preexisting condition," except as defined in §§ 38.2-3432.3 and 38.2-3514.1 of the Code of Virginia, shall not be defined to be more restrictive than the following:

1. The existence of symptoms that would cause an ordinarily prudent person to seek diagnosis, care or treatment within a two-year period preceding the effective date of the coverage of the insured person; or

2. A condition for which medical advice or treatment was recommended by a physician or received from a physician within a two-year period preceding the effective date of the coverage of the insured person.

"Residual disability" shall be defined in relation to the individual's reduction in earnings and may be related either to the inability to perform some part of the "major," "important," or "essential" duties of employment or occupation, or to the inability to perform all usual business duties for as long as is usually required. A policy which provides for residual disability benefits may require a qualification period, during which the insured must be continuously and totally disabled before residual disability benefits are payable. The qualification period for residual benefits may be longer than the elimination period for total disability. In lieu of the term "residual disability," the insurer may use "proportionate disability" or other term of similar import that in the opinion of the commission adequately and fairly describes the benefit.

"Sickness" shall not be defined to be more restrictive than the following:

Sickness means sickness or disease of an insured person, which manifests itself after the effective date of insurance and while the insurance is in force. A definition of sickness may provide for a probationary period, which shall not exceed 30 days from the effective date of the coverage of the insured person. The definition may be further modified to exclude sickness or disease for which benefits are provided under any workers' compensation, occupational disease, employer's liability or similar law.

"Total disability" means:

1. A general description of total disability shall not be more restrictive than one requiring the individual to be totally disabled from engaging in an employment or occupation for which he is or becomes qualified by reason of education, training or experience and not in fact engaged in any employment or occupation for wage or profit.

2. Total disability may be defined in relation to the inability of the person to perform duties but may not be based solely upon an individual's inability to: (i) perform "any occupation whatsoever," "any occupational duty," or "any and every duty of his occupation"; or (ii) engage in any training or rehabilitation program.

3. An insurer may specify the requirement of the complete inability of the person to perform all of the substantial and material duties of his regular occupation or words of similar import. An insurer may require care by a physician (other than the insured or a member of the insured's immediate family).

Historical Notes

Derived from Regulation 19, Case No. INS880413, § 5, eff. January 1, 1989; amended, Volume 18, Issue 21, eff. July 1, 2002.

Statutory Authority

§§ 12.1-13, 38.2-223, and 38.2-3516 of the Code of Virginia.