Date:July 24, 2009 (Revised September 1, 2009)
To:Insurers and Intermediaries Licensed to do Business in Wisconsin
From:Sean Dilweg, Commissioner of Insurance
Subject:Insurance Statutory Provisions Contained in the 2009-2011 Wisconsin State Budget - 2009 Wisconsin Act 28

The following is a summary of the statutory provisions contained in the 2009-2011 Wisconsin State Budget. The purpose of this summary is to make licensees aware of these new provisions. Please review the actual language in order to determine how it affects you or your company.

Intermediary Fees

Section 601.31 has been amended to increase intermediary appointment fees to $16 for resident agents and $50 annually for nonresident agents. The statute also provides that the Commissioner may, by rule, set a higher fee. The new fees will be reflected in the next billing cycle.

Fraternal Benefit Societies

Section 614.10 (2) (c) 3 has been amended to include domestic partners as defined in ch. 770 as a definition for a covered person in the context of the statute.

Auto Insurance

Section 344.01 (2) (am) increases the motor vehicle liability minimum limits to the following:

  1. From January 1, 2010, to December 31, 2016, $50,000 because of bodily injury to or death of one person in any one accident and, subject to such limit for one person, $100,000 because of bodily injury to or death of two or more persons in any one accident, and $15,000 because of injury to or destruction of property of others in any one accident.
  2. After December 31, 2016, the limits shall be the amounts established by the Department of Transportation under newly created s. 344.11.

For those policies that are issued for the purpose of complying with financial responsibility requirements, these provisions take effect on January 1, 2010. For all other purposes, these provisions take effect on June 1, 2010.

Subchapter VI of Chapter 344, mandatory motor vehicle liability insurance, is created with the following provisions:

  1. No person may operate a motor vehicle unless the owner or operator of the vehicle has in effect a motor vehicle liability policy with respect to the vehicle being driven.
  2. No person may operate a motor vehicle unless the person, while operating the vehicle, has in his or her immediate possession proof of motor vehicle liability insurance.
  3. Exceptions:
    1. If the owner or operator has in effect a bond that meets the requirements of the law.
    2. If the motor vehicle is a school bus and is insured as required under s. 121.53, or if the motor vehicle is insured as required under a commercial motor vehicle policy under s. 191.41, or is a commercial vehicle with the required proof of financial responsibility and the vehicle is being operated by the owner or with the owner's permission.
    3. The motor vehicle is owned by a self-insurer holding a valid certificate of self-insurance and the vehicle is being operated with the owner's permission.
    4. The owner or operator of the vehicle has made a deposit of cash or a security meeting the requirements of the law and the vehicle is being operated by or with the permission of the person who made the deposit.
    5. The motor vehicle is subject to the financial responsibility requirements for rented and human service vehicles (s. 344.51), the financial responsibility requirements for foreign rented vehicles (s. 344.52) and the insurance requirements for human service vehicles (s. 344.55).
    6. The vehicle is owned by or leased to the United States, this or another state, or any county or municipality of this or another state, and the vehicle is being operated with the owner's or lessee's permission.

These provisions take effect on June 1, 2010.

Subchapter IV of Chapter 632 is amended as follows:

  1. Uninsured motorists coverage limits have increased to a minimum of $100,000 per person and $300,000 per accident [s. 632.32 (4) (a) 1].
  2. The definition of an uninsured motor vehicle has been changed to include an unidentified motor vehicle that does not actually hit another vehicle, provided that an independent third party provides evidence in support of the unidentified motor vehicle's involvement in the accident [s. 632.32 (2) (g) 2].
  3. Underinsured motorists coverage limits have increased to a minimum of $100,000 per person and $300,000 per accident [s. 632.32 (4) (a) 2m].
  4. A definition of underinsured motorist coverage has been added. Underinsured motorist coverage means coverage for the protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury, death, sickness, or disease from owners or operators of underinsured motor vehicles [s. 632.32 (d)].
  5. A definition of underinsured motor vehicle has been added. Underinsured motor vehicle means a motor vehicle to which all of the following apply [s. 632.32 (2) (a)]:
    1. The motor vehicle is involved in an accident with a person who has underinsured motorist coverage,
    2. A bodily injury liability insurance policy applies to the motor vehicle at the time of the accident, and
    3. The limits under the bodily injury liability insurance policy are less than the amount needed to fully compensate the insured for his or her damages.
  6. Underinsured motorist coverage must be included in a motor vehicle policy and may no longer be rejected by the applicant or insured.
  7. Medical payments coverage has increased to the amount of at least $10,000 [s. 632.32 (4) (a) 3m]. However, applicants and insureds may still reject medical payments coverage.
  8. Insurers that provide umbrella or excess liability coverage that insure, with respect to a motor vehicle, against loss resulting from liability imposed by law for bodily injury or death of a person arising out of the ownership, maintenance or use of a motor vehicle must provide written offers of uninsured and underinsured motorist coverage as follows [s. 632.32(4r)]:
    1. Each application for an umbrella or excess liability policy issued on or after the effective of this requirement shall contain a written offer of uninsured and underinsured.
    2. For umbrella or excess liability policies that are in effect on the effective date of this requirement, the insurers must, at the time of first renewal, provide a written offer of uninsured motorist coverage to the named insureds under each policy that does not include uninsured motorist coverage and a written offer of underinsured motorist coverage to the named insureds under each policy that does not include underinsured motorist coverage.
    3. The offers may be rejected by the insureds or applicants. The insurer is not required to make such offers in subsequent renewal notices.
    4. If an umbrella or excess liability policy in effect on the date of enactment or issued on or after the date of enactment does not provide for either uninsured or underinsured motorist coverage and the insurer failed to provide the written offer for these coverages, then, on the request of the insured, a court shall reform the policy to include these coverages with the same limits as the liability coverage limits under the policy.
    5. The above requirements do not apply to town mutual insurers.
  9. A policy may limit the number of motor vehicles to 3 for which the limits for coverage for uninsured and underinsured motorists coverage may be added together [s. 632.32 (6) (d) and (e)].
  10. A policy may limit the number of motor vehicles to 3 for which the limits for coverage for medical payments coverage may be added together [s. 632.32 (6) (f)].
  11. A policy may not provide that the limits under the policy for uninsured motorist or underinsured motorist coverage for bodily injury or death resulting from any one accident may be reduced by [s. 632.32 (6) (g)]:
    1. Amounts paid by or on behalf of any person or organization that may be legally responsible for the bodily injury or death for which the payment is made;
    2. Amounts paid or payable under any workers' compensation law; and
    3. Amounts paid or payable under any disability benefits laws.
  12. An insurer may not place an applicant or insured in a high-risk category on the basis that the applicant or insured has not previously had motor vehicle insurance [s. 632.355].

The above provisions are effective for policies issued or renewed November 1, 2009.

It should also be noted that the above provisions, where applicable, do not result in a renewal with altered terms notification requirement under s. 631.36 (5) because they are not on less favorable terms as contemplated under the statute for such notice.

Health Insurance

Section 601.41 concerns the use of a uniform application for individual health insurance and contains the following provisions:

  1. OCI is required by rule to prescribe uniform questions and the format for applications which may not exceed 10 pages in length for individual major medical health insurance policies;
  2. After the effective date of the rules promulgated by the office, an insurer may only use the prescribed questions and format; and
  3. For the uniform application requirements, an individual major medical policy includes health coverage provided on an individual basis through an association.

Section 601.428 requires, beginning in 2009, every insurer that issues individual health insurance policies to annually report to the office the total number of individual health insurance policies issued in the preceding year and the total number of individual health insurance policies with respect to which the insurer initiated or completed a cancellation or rescission in the preceding year. OCI will prescribe a reporting form.

Section 609.655 requires defined network plans to include a licensed mental health professional as defined in s. 632.89 (1) (e) 2, 3, or 4 in covering the clinical assessment of a dependent student's nervous or mental disorder or alcoholism or other drug abuse.

Section 632.7495 (4) concerning the renewability of individual health insurance policies designed to provide short-term coverage as bridge coverage is amended. An insurer is not required to renew a bridge policy so long as:

  1. The coverage is marketed and designed to provide short-term coverage as a bridge between coverage periods;
  2. The coverage has a term of not more than 12 months; and
  3. The coverage term aggregated with all consecutive periods of the insurer's coverage of the insured by individual health benefit plan coverage not required to be renewed does not exceed 18 months. Coverage periods are consecutive if there are no more than 63 days between the coverage periods.

The Commissioner is required to promulgate rules governing the disclosures related to, and may promulgate rules setting standards for, the sale of these products.

The above provisions take effect for those policies issued or renewed on or after January 1, 2010.

Section 632.7497 concerning policyholder or certificate holder rights under an individual major medical policy or comprehensive health benefit plan, including a group policy that is underwritten on an individual basis, includes the following provisions:

  1. At the time of renewal and at the request of an insured, an insurer must permit the insured to do either of the following:
    1. Change the coverage to
      1. A different but comparable individual major medical or comprehensive health benefit plan currently offered by the insurer;
      2. An individual major medical or comprehensive health benefit plan offered by the insurer with more limited benefits; or
      3. An individual major medical or comprehensive health benefit plan offered by the insurer with higher deductibles.
    2. Modify the existing coverage by electing an optional higher deductible, if any, under the individual major medical or comprehensive health benefit plan.
  2. The insurer may not impose new preexisting condition exclusions under the new or modified coverage selected by the insured that did not apply to the original coverage and shall allow credit under the new or modified coverage for the period of original coverage.
  3. The insurer may not rate for health status for the new or modified coverage other than the insured's health status at the time the insured applied for original coverage and as disclosed on the original application.
  4. Annually, insurers shall mail, not more than 3 months nor less than 60 days before the renewal date, to each insured under an individual major medical or comprehensive health benefit plan a notice containing the following:
    1. The right to elect alternative coverage;
    2. A description of the alternative coverage(s) available; and
    3. The process for making the election.
  5. Insurers are not required to offer alternative coverage if the individual major medical or comprehensive health benefit plan are cancelled or nonrenewed for the reasons contained in s. 632.7495 (2), (3) (b), or (4).
  6. Notwithstanding the provisions of s. 600.01 (1) (b) 3 and 4, the above applies to group health benefit plans if the group health benefit plans are individual major medical or comprehensive health benefit plans as defined in this section.

The provisions of this section first apply to individual major medical and comprehensive health benefit plans that are renewed on or after January 1, 2010.

For short-term plans, the treatment of s. 632.7495 (5), the renumbering and amendments to s. 632.7495 (4), and the creation of s. 632.7495 (4) (b), (c), and (d) first apply to individual health benefit plans that are short-term plans and that are issued or renewed on or after January 1, 2010.

Section 632.76 (2) (ac) concerning preexisting condition limitations for individual disability insurance coverage includes the following:

  1. No claim incurred after 12 months from the date of issue of an individual disability insurance policy as defined in s. 632.895 (1) (a) may be reduced or denied on the ground that a disease or physical condition existed prior to the effective date of coverage, unless the condition was excluded from coverage by name or specific description by a provision effective on the date of the loss.
  2. An individual disability insurance policy as defined in s. 632.895 (1) (a), other than a short-term policy subject to s. 632.7495 (4) and (5), may not define a preexisting condition more restrictively than a condition, whether physical or mental, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received within 12 months before the effective date of coverage.
  3. All of the following apply to short-term disability insurance policies subject to s. 632.7495 (4) and (5):
    1. A short-term individual disability insurance policy may not define a preexisting condition more restrictively than a condition, whether physical or mental, regardless of the cause of the condition, for which medical advice, diagnosis, care, or treatment was recommended or received before the effective date of the coverage;
    2. The policy shall reduce the length of time during which a preexisting condition exclusion may be imposed by the aggregate of the insured's consecutive periods of coverage under the insurer's individual short-term disability policies. Coverage periods are consecutive if there are no more than 63 days between the coverage periods.

The above provisions take effect for those policies issued or renewed on or after January 1, 2010.

Section 632.835 concerning independent review of adverse insurer findings has been expanded to include coverage denial determinations, including preexisting condition exclusion denial determinations and rescissions of a policy or certificate, and contains the following new statutory provisions:

  1. New definitions are included in the section:
    1. "Coverage denial determination" means an adverse determination, an experimental treatment determination, a preexisting condition exclusion denial determination, or a rescission of a policy or certificate.
    2. "Preexisting condition exclusion denial determination" means a determination by or on behalf of an insurer that issues a health benefit plan denying or terminating treatment or payment for treatment on the basis of a preexisting condition as defined in the statutes.
  2. The statute affirmatively states that nothing in the section affects an insured's right to commence a civil proceeding relating to a coverage denial determination [s. 632.835 (2) (e)].
  3. The $25 required fee of the person requesting the independent review has been eliminated [s. 632.835 (3) (a)].
  4. The statute states that the decision of the independent review organization regarding a preexisting condition exclusion denial determination or a rescission is not binding on the insured [s. 632.835 (3) (f) 2].
  5. OCI must make a determination that at least one independent review organization has been certified by the office to effectively provide independent reviews for preexisting condition exclusion denial determinations and rescissions and must publish a notice in the Wisconsin Administrative Register that states a date that is 2 months after the office makes the determination. The date contained in the notice is the date on which the independent review procedure begins operating with respect to preexisting condition exclusion denial determinations and rescissions [s. 632.835 (8) (b)].
  6. The independent review concerning preexisting condition exclusion denial determinations and rescissions is available to an insured who receives an adverse notice of the disposition of his or her internal grievance [s. 632.835 (9) (b)].

The above provisions take effect on July 1, 2009.

Section 632.845 prohibits an insurer that provides coverage under a health care plan, as defined in s. 628.36 (2), to refuse to cover health care services that are provided to an insured under the plan and for which there is coverage under the plan on the basis that there may be coverage for such services under a liability insurance policy.

The above provision takes effect on November 1, 2009.

Section 632.885 concerns coverage of dependents. It applies to disability insurance policies as defined in s. 632.895 (1) (a) and self-insured health plans of the state or of a county, city, village, town, or school district, along with limited service health organizations, preferred provider plans and defined network plans. It contains the following provisions:

  1. Insurers that offer disability insurance policies and self-insured health plans are required to offer, and if requested by an applicant or insured, coverage for an adult child of the applicant or insured as a dependent of the applicant or insured if the child satisfies all of the following:
    1. The child is over 17 but less than 27 years of age;
    2. The child is not married; and
    3. The child is not eligible for coverage under a group health benefit plan that is offered by the child's employer and for which the amount of the child's premium contribution is no greater than the premium amount for his or her coverage as a dependent under the parent's plan.
  2. Notwithstanding the above requirements, the coverage requirements apply to an adult child who satisfies all of the following:
    1. The child is a full-time student, regardless of age;
    2. The child is not married and the child is not eligible for coverage under a group health benefit plan that is offered by the child's employer and for which the amount of the child's premium contribution is no greater than the premium amount for his or her coverage as a dependent under the parent's plan; and
    3. The child was under 27 years of age when he or she was called to federal active duty in the National Guard or in a reserve component of the U.S. armed forces while the child was attending, on a full-time basis, an institution of higher education.
  3. An insurer or self-insured plan is required to determine the premium for coverage of a child who is over 18 on the same basis as the premium is determined for a dependent who is 18 years of age or younger.
  4. An insurer or self-insured health plan may require documentation from an applicant or an insured seeking coverage of a dependent child initially and annually thereafter that the child meets the criteria for coverage under this provision.

The above provisions take effect on January 1, 2010

Section 632.89 (1dm) adds the definition of licensed mental health professional to mean a clinical social worker who is licensed under ch. 457, a marriage and family therapist who is licensed under s. 457.10, or a professional counselor who is licensed under s. 457.12.

Section 632.89 (1) (e) 3 is repealed and recreated to read a psychologist licensed under ch. 455.

Section 632.89 (1) (e) 4 is created to read a licensed mental health professional practicing within the scope of his or license under ch. 457 and applicable rules.

The above provisions apply to policies issued or renewed on or after July 1, 2009.

Section 632.895 (12m) requires coverage for the treatment of autism spectrum disorders. Following are major provisions of the statute. OCI will promulgate an administrative rule interpreting and implementing certain provisions of the statute.

  1. Autism spectrum disorder means any of the following:
    1. Autism disorder;
    2. Asperger's syndrome; or
    3. Pervasive developmental disorder not otherwise specified.
  2. This requirement applies to every disability insurance policy and self-insured health plan of the state, county, city, town, village, or school district. It also applies to defined network plans as contained in s. 609.87. It does not apply to:
    1. A disability policy that covers only certain specified diseases;
    2. A health care plan offered by a limited service health organization or by a preferred provider plan that is not a defined network plan;
    3. A long-term care insurance policy; or
    4. A Medicare replacement or a Medicare supplement policy.
  3. The coverage required shall provide at least $50,000 for intensive-level services per insured per year, with a minimum of 30 to 35 hours of care per week for a minimum duration of 4 years, and at least $25,000 for nonintensive-level services per insured per year, except that these minimum coverage monetary amounts shall be adjusted annually, beginning in 2011, to reflect changes in the consumer price index for all urban consumers, U.S. city average, for the medical group, as determined by the U.S. Department of Labor.
  4. The coverage may be subject to deductibles, coinsurance, or co-payments that generally apply to other conditions covered by the policy or plan. The coverage may not be subject to limitations or exclusions, including limitations on the number of treatment visits.

The above provisions apply to policies issued or renewed on or after November 1, 2009.

Section 632.895 (15), coverage of student on medical leave, has been amended so that the provisions contained in newly created s. 632.885, coverage for dependents, are extended to coverage for students on medical leave.

Section 632.895 (17) was created to require coverage for contraceptives and services in all disability insurance policies and self-insured health plans of the state or of a county, city, town, village, or school district, that provide coverage for outpatient health care services, preventive treatments and services, or prescription drugs and devices, including limited service health organizations, preferred provider plans and defined network plans, as follows:

  1. Coverage for contraceptives prescribed by a health care provider;
  2. Coverage for outpatient consultations, examinations, procedures, and medical services, if covered for any other drug benefits under the policy or plan;
  3. Coverage may only be subject to the exclusions, limitations, and cost-sharing provisions that apply generally to the applicable coverage under the policy or plan;
  4. This requirement does not apply to:
    1. A disability policy that covers only certain specified diseases;
    2. A health care plan offered by a limited service health organization or by a preferred provider plan that is not a defined network plan;
    3. A long-term care insurance policy; or
    4. A Medicare replacement or a Medicare supplement policy.

The above provisions take effect on January 1, 2010.

As stated earlier, this is a summary of most of the provisions contained in Act 28 affecting insurance. You are strongly advised to review the actual language in determining how the new provisions in the Act affect you or your company.

Unless otherwise noted, the newly enacted provisions take effect on the first day beginning after publication of this Act.

Some of these changes require policy form filings. As a reminder, Wisconsin is now a file and use state for most policy form filings. Most policy forms can be used 30 days after they are filed with OCI. In addition, you should know that applications are considered policy forms and need to be filed with the OCI before they can be used. However, offer and rejection notices are not considered policy forms requiring filing with OCI. Finally, the policy form checklists are being updated and will be available on the OCI Web site.

OCI continues to review Act 28 and its provisions. We fully expect to issue further Bulletins concerning the implementation of many of these provisions.

If you have any questions concerning this bulletin, please e-mail them to the following:

Mandatory auto insurance and
enforcement of financial responsibility
Wisconsin Department of Transportation
(608) 266-2353
Auto insurance issuesRhonda Peterson
rhonda.peterson@wisconsin.gov
Section 601.41, uniform health
application
Mike Honeck
mike.honeck@wisconsin.gov
Section 601.428, cancellation and
rescission reports
Diane Dambach
diane.dambach@wisconsin.gov
Sections 609.655 and 632.89,
licensed mental health professionals
Diane Dambach
Section 632.7495 (4), renewability of
short-term policies
Diane Dambach
Section 632.7497, modifications of
Individual health policies
Mike Honeck
Section 632.76 (2) (ac), preexisting
conditions
Mike Honeck

Section 632.835, independent review
for preexisting condition denials

Barbara Belling
barbara.belling@wisconsin.gov
Section 632.845, prohibition on health
care plans refusing to cover services that
may be covered under a liability policy
Mike Honeck
Sections 632.885 and 632.895 (17),
Coverage of dependents
Mike Honeck
Section 632.895 (12m), treatment for
Autism Spectrum Disorder
Diane Dambach
Section 632.895 (17), coverage for
contraceptives
Diane Dambach
Questions on the filing of policy formsocicomplaints@wisconsin.gov
All other questionsocicomplaints@wisconsin.gov