Minnesota Life & Health Insurance License, Practice Exams

A producer who has held a life line of authority since 2015 and completed the old annuity training asks what she must now do to keep selling annuities. A newly licensed colleague asks when he may start. Their insurer asks what it must check, and whether a course from a neighbouring state counts.

1. Both producers must complete a new four-credit course approved after 1 July 2022, there being no one-credit route: the additional onetime one-credit course is open only to a producer who has allowed the life line to lapse and later reinstated it, so a producer who has held the line continuously since 2015 must sit the full four credits again; an individual who obtains a life line on or after 1 January 2023 may begin selling annuities at once and has six months from the date of licensing in which to finish the course, the six-month allowance in the subdivision running to every newly licensed producer alike; the insurer must verify completion before allowing the producer to sell its annuity products; and satisfaction of another state's substantially similar training requirements satisfies the requirement here.
2. A producer licensed by 31 December 2022 holding a life line who has previously completed the training must complete EITHER a NEW FOUR-CREDIT course approved after 1 July 2022 OR an ADDITIONAL ONETIME ONE-CREDIT course approved after that date on appropriate sales practices and replacement and disclosure requirements; an individual obtaining a life line on or after 1 January 2023 MAY NOT ENGAGE IN THE SALE OF ANNUITIES UNTIL the onetime FOUR-CREDIT course has been completed; the insurer must VERIFY completion BEFORE allowing the producer to sell its annuity products; and satisfaction of another state's SUBSTANTIALLY SIMILAR training requirements satisfies this one. ✓
3. The established producer need do nothing further, having completed the four-credit course the statute required of her when she took it, the additional course reaching only a producer whose earlier training was approved before 1 July 2022 and who has since added a second line of authority; the new colleague may not sell annuities until the onetime four-credit course has been completed; the insurer must verify completion by a certificate of completion or a report from a commissioner-sponsored database system before allowing him to sell its annuity products; and a course completed in a neighbouring state does not count here, substantially similar training satisfying this requirement only where the producer also holds a resident licence in the state whose department approved that course.
4. The training requirements are as described, but the insurer's obligation is lighter than the answer states: it need only obtain the producer's own written attestation that the course has been completed, the certificates of completion and the commissioner-sponsored database reports being routes an insurer may choose among rather than a standard it must meet, and no records need be maintained where an attestation has been taken; and a course completed in another state counts here only after the commissioner has separately approved that particular course for use in Minnesota, substantial similarity going to whether he may approve it rather than to whether it counts without approval, so a producer moving here from a neighbouring state begins the four credits again unless her course already appears on the approved list.

Why: Minn. Stat. 72A.2033 subd. 2(a) requires a producer otherwise entitled to sell annuities to "complete a ONETIME FOUR-CREDIT TRAINING COURSE approved by the commissioner and provided by a continuing education provider approved by the commissioner PRIOR TO COMMENCING THE TRANSACTION OF ANNUITIES", gives producers holding a life line on 31 December 2022 until six months after 1 January 2023, and provides that "individuals who obtain a life insurance line of authority ON OR AFTER JANUARY 1, 2023, MAY NOT ENGAGE IN THE SALE OF ANNUITIES UNTIL the annuity training course ... has been completed" - so the new colleague waits, which is the second option's error. Paragraph (f) is the route the third option misses: a producer licensed by 31 December 2022 holding a life line who has previously completed the training "shall complete EITHER: (1) a NEW FOUR-CREDIT training course approved by the Department of Commerce after July 1, 2022; OR (2) an ADDITIONAL ONETIME ONE-CREDIT training course" approved after that date "on appropriate sales practices and replacement and disclosure requirements". Paragraph (c) lists the seven topics the four-credit course must cover, including "the recognition of indicators that a prospective insured may lack the short-term memory or judgment to knowingly purchase an insurance product"; paragraph (d) forbids marketing information, sales technique training or insurer-specific product information in it; and all approved courses take the title "Best Interest Standards of Conduct for Annuity Sales". Paragraph (h): "The satisfaction of the training requirements OF ANOTHER STATE that are SUBSTANTIALLY SIMILAR to the provisions of this subdivision SATISFIES the training requirements of this subdivision in this state" - the third option's error. Paragraph (j) requires the insurer to "VERIFY that an insurance producer has completed the annuity training course ... BEFORE ALLOWING the insurance producer to sell an annuity product for that insurer", by certificates of completion or reports from commissioner-sponsored database systems or a reasonably reliable commercial database vendor, and where no such arrangement exists "an insurer MUST MAINTAIN RECORDS verifying that the producer has completed" it and make them available on request - the fourth option's error twice over.

Two people work for an admitted insurer and neither sells or solicits. One is an officer whose work is managerial and only indirectly related to the sale of insurance, and who receives a commission on policies covering Minnesota risks. The other does identical work and receives a commission, but only on policies covering risks located wholly in Iowa.

1. Neither needs a producer licence: the condition attached to the exception is that the person's activities be executive, administrative, managerial or clerical and only indirectly related to the sale, solicitation or negotiation of insurance, and both satisfy it; the reference to commission in the section describes the kind of role contemplated rather than imposing a separate condition on it.
2. The first needs a producer licence and the second does not: the exception for officers, directors and employees is conditioned on the person receiving no commission on policies written or sold to insure risks residing, located, or to be performed in this state, so a commission on out-of-state risks does not defeat it. ✓
3. Both need producer licences: the exception is conditioned on the person receiving no commission at all on policies written or sold, wherever the risks are located, the reference to risks in this state going to the reach of the licensing requirement rather than to the scope of the exception.
4. The first needs a producer licence and the second does not, but the distinction turns on where the work is done rather than on where the risks are: an officer whose managerial work is carried on in Minnesota is within the licensing requirement once any commission is paid to him, and one who works from an office in another state is outside it however the commission is calculated.

Why: Minn. Stat. 60K.34 subd. 2 clause (2) excepts “an officer, director, or employee of an insurer or of an insurance producer if the officer, director, or employee does not receive any commission on policies written or sold to insure risks residing, located, or to be performed in this state and” one of the three sub-clauses is satisfied. The structure is what decides the item: the commission condition and the activity condition are joined by “and”, so both must hold - which is what the second option denies by treating the commission words as description. The commission condition is not a bar on commission generally: it is confined to commission “on policies written or sold to insure risks residing, located, or to be performed in this state”, so the third option reads the geographic words out of the clause. And the words describe where the risks are, not where the person works, which is the fourth option's substitution. Both people here satisfy sub-clause (i), the activities being managerial and only indirectly related to sale, solicitation or negotiation; only the second also satisfies the commission condition.

A key feature of convertible term insurance is that it can be changed to a permanent policy:

1. Only if the insured becomes totally disabled first
2. Only after a new medical exam confirms insurability
3. Only during the first policy year
4. Without providing evidence of insurability ✓

Why: Convertible term can be converted to permanent coverage without evidence of insurability.

Adverse selection refers to the tendency of:

1. Agents to recommend only the most expensive available policies
2. Policyowners to let their coverage lapse during economic downturns
3. Higher-than-average risks to seek or keep insurance more than others ✓
4. Insurers to decline every applicant who has any health condition

Why: Adverse selection is the inclination of poorer-than-average risks to apply for and retain coverage, which insurers manage through underwriting.

A health carrier files rates for an individual market policy form projecting a 68 percent loss ratio and for a small employer form projecting 78 percent. The commissioner's review shows neither meets the standard. The carrier says it entered the small employer market in 2019 and should start at the beginning of the phase-in schedule.

1. Both forms fall short and the phase-in argument fails: health care policies or certificates may not be delivered or issued for delivery to an individual or to a small employer unless they can be expected to return to Minnesota policyholders in aggregate benefits AT LEAST 75 PERCENT of premiums earned in the SMALL EMPLOYER market, calculated on an aggregate basis, and AT LEAST 65 PERCENT in the case of each policy or certificate form in the INDIVIDUAL market - those percentages rising ONE POINT ON 1 JULY EACH YEAR from 1 July 1994 until 82 PERCENT in the small employer market and 72 PERCENT in the individual market were reached ON 1 JULY 2000; and A HEALTH CARRIER THAT ENTERS A MARKET AFTER 1 JULY 1993 DOES NOT START AT THE BEGINNING OF THE PHASE-IN SCHEDULE and must comply with the requirements applicable to other health carriers in that market for each time period. ✓
2. Neither form falls short: the small employer standard is 75 percent, which 78 percent clears, and the individual standard is 65 percent, which 68 percent clears, the annual one-point increases having stopped when the section was last amended and a carrier entering the market afterwards taking the percentages as they then stood; the phase-in argument therefore has nothing to bite on, and the commissioner's review has measured both filings against figures the section no longer imposes on anyone writing in either market today.
3. Both forms fall short of the percentages the market has now reached, but the phase-in argument succeeds: a carrier entering a market later takes the schedule from its own entry date, since the phase-in exists to let a carrier build the book of business against which a loss ratio can meaningfully be measured, and a carrier in its first years has neither the volume nor the claims history to hold a mature ratio; the reference in the section to carriers entering after 1 July 1993 describes when the concession first became available rather than the carriers who are denied it. This carrier's small employer percentage therefore starts at 75 percent and rises by one point on 1 July of each year from its own entry, and the commissioner's remedy in the meantime is to require annual filings with supporting documentation until the carrier reaches the standard the rest of the market carries.
4. Both forms fall short and the phase-in argument fails, but the individual market standard is calculated on an aggregate basis like the small employer one: the section applies the same method to both markets, so a carrier whose individual book as a whole returns 72 percent complies even where a particular policy form returns considerably less, which is what makes the standard workable for a carrier writing several forms with different benefit designs and different claims patterns across a large individual book; and the commissioner's remedy where a filing does not demonstrate compliance is to disapprove the form rather than to reduce the filed rates, a regulator having no power to fix an insurer's prices for it, which is why the section gives the carrier 30 days to file amended rates of its own before anything further happens to the form or to the business already written on it.

Why: Minn. Stat. 62A.021 subd. 1(a) sets two starting percentages and two end points. Policies or certificates must be expected to return "AT LEAST 75 PERCENT of the aggregate amount of premiums earned in the case of policies issued in the SMALL EMPLOYER MARKET ..., CALCULATED ON AN AGGREGATE BASIS; and AT LEAST 65 PERCENT of the aggregate amount of premiums earned IN THE CASE OF EACH POLICY FORM OR CERTIFICATE FORM ISSUED IN THE INDIVIDUAL MARKET". Note the difference in unit: aggregate for small employer, PER FORM for individual - which is the fourth option's error. "The applicable percentage for policies and certificates issued in the small employer market ... INCREASES BY ONE PERCENTAGE POINT ON JULY 1 OF EACH YEAR, beginning on July 1, 1994, UNTIL AN 82 PERCENT LOSS RATIO IS REACHED ON JULY 1, 2000. The applicable percentage for policy forms and certificate forms issued in the individual market increases by one percentage point on July 1 of each year, beginning on July 1, 1994, UNTIL A 72 PERCENT LOSS RATIO IS REACHED ON JULY 1, 2000." The phase-in is long complete, so 78 and 68 percent are both short of 82 and 72 - the second option's error. "A health carrier that ENTERS A MARKET AFTER JULY 1, 1993, DOES NOT START AT THE BEGINNING OF THE PHASE-IN SCHEDULE AND MUST INSTEAD COMPLY WITH THE LOSS RATIO REQUIREMENTS APPLICABLE TO OTHER HEALTH CARRIERS IN THAT MARKET FOR EACH TIME PERIOD" - the third option reverses the sentence. Paragraph (c) requires annual filing of rates, rating schedules and supporting documentation, gives the carrier 30 DAYS from the commissioner's written notice of a deficiency to file amended rates, and provides that on failure the commissioner SHALL ORDER the filed rates reduced to an amount that would have produced a complying loss ratio. Paragraph (d): each sale of a non-complying policy or certificate "IS AN UNFAIR OR DECEPTIVE ACT OR PRACTICE in the business of insurance and is subject to the penalties in sections 72A.17 to 72A.32."

An insurer writing individual accident and health policies in Minnesota has filed a number three qualified plan only, and declines to offer the other types to a healthy applicant. It also renews an unqualified policy with a $600,000 lifetime limit without mentioning major medical coverage. Assume the policies predate 2018 and are not ACA-subject.

1. Neither is a breach: an insurer chooses which types of qualified plan it will write and need only file what it writes, and the major medical offer is owed at the time of application alone, a renewal not being a new application.
2. The filing and offer of the other types is a breach, but the major medical point is not: the affirmative offer obligation attaches to unqualified policies with NO lifetime limit at all, a $600,000 limit being a lifetime benefit maximum that already caps the insurer's exposure and puts the policy outside the provision.
3. Both are breaches: for EACH TYPE of qualified plan an insurer issuing individual policies shall DEVELOP AND FILE with the commissioner a policy meeting that type's minimum standards and SHALL OFFER EACH TYPE to each person who applies and is eligible; and each insurer shall AFFIRMATIVELY OFFER coverage of major medical expenses to every applicant for a new unqualified policy with a lifetime benefit limit of LESS THAN $1,000,000, at application AND ANNUALLY to every holder of such a policy it renews. ✓
4. The major medical point is a breach but the filing is not: an insurer must offer major medical as described, but the requirement to develop and file each type of qualified plan is satisfied where the insurer has arranged to REINSURE the risk and administration of the coverages with the Comprehensive Health Association, which every member insurer is entitled to do, so that the filing obligation falls away for any type the insurer has elected to reinsure rather than write on its own paper, the election being made category by category and binding on every life in the category chosen.

Why: Minn. Stat. 62E.04, subd. 1 requires an insurer or fraternal issuing individual accident and health policies in Minnesota, other than group conversion policies, to develop and file with the commissioner a policy meeting the minimum standards of EACH TYPE of qualified plan described in section 62E.06, and to OFFER EACH TYPE to each person who applies and is eligible. Subd. 3 says the same for group policies. Subd. 4 is the major medical duty: an affirmative offer of coverage of major medical expenses to every applicant for a new UNQUALIFIED policy with a lifetime benefit limit of less than $1,000,000, at the time of application AND ANNUALLY to every holder of such a policy renewed by the insurer; the coverage must pay once a covered individual incurs $5,000 or more of out-of-pocket expenses in a calendar year for services covered by section 62E.06, subd. 1, and must contain no lifetime maximum on essential health benefits. It may be offered as a rider on the existing unqualified policy or as a new qualified plan. Subd. 6 does allow an insurer to fulfil its obligations by issuing the required coverages IN ITS OWN NAME and reinsuring the risk and administration with the association - which is the opposite of what the last distractor makes of it: the insurer still issues and still files. Subd. 7 preserves the insurer's underwriting and membership requirements, so a healthy applicant's position is not improved by them. Subd. 11 carves the whole section out for ACA-subject policies offered, sold, issued or renewed on or after 1 January 2018, which is why this question is set outside that class.

A licensed insurance producer dies. His surviving spouse asks the commissioner for authority to service the book of business while the agency is sold, and asks what such an authority would look like.

1. The commissioner may issue a temporary licence for a period not exceeding 90 days without requiring an examination, renewable once for a further 90 days on a showing that the sale has not completed, and the surviving spouse must in either case complete the prelicensing course of study for the lines carried on the deceased producer's licence before the temporary licence takes effect.
2. No temporary licence is available to a surviving spouse: the section reaches only a member or employee of a business entity licensed as an insurance producer and the designee of a producer entering active service in the armed forces, so the book must be serviced by another licensed producer under a written servicing agreement filed with the commissioner within ten days of the death.
3. The commissioner may issue a temporary licence for a period not exceeding 180 days without requiring an examination, may require a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for the temporary licensee's acts, and the temporary licence may not continue after the business is disposed of. ✓
4. The commissioner may issue a temporary licence for a period not exceeding 180 days, but only on the applicant passing the written examination for the lines concerned, the examination being the one requirement the section preserves; the sponsor requirement applies instead to a temporary licensee appointed on the disability rather than the death of a producer.

Why: Minn. Stat. 60K.42 subd. 1 lets the commissioner issue a temporary insurance producer licence “for a period not to exceed 180 days without requiring an examination” where a temporary licence is considered necessary for the servicing of an insurance business, and the first case listed is the surviving spouse or court-appointed personal representative of a producer who dies or becomes mentally or physically disabled, to allow time for the sale of the business, for the producer's recovery or return, or for training and licensing new personnel. That disposes of the third option, which reads the list as though the first case were absent. Subdivision 2 lets the commissioner limit the authority of any temporary licensee by order, require “a suitable sponsor who is a licensed producer or insurer and who assumes responsibility for all acts of the temporary licensee”, and revoke the temporary licence where the interests of insureds or the public are endangered; it closes by providing that a temporary licence “may not continue after the owner or the personal representative disposes of the business”. The examination is dispensed with rather than preserved, which is the fourth option's error, and the period is 180 days with no renewal mechanism and no prelicensing condition, which is the second option's.

An insurer prints the statutory replacement notice across two sheets of A4 and puts the definitions on a third. It abbreviates the definition of LAPSE and omits the definition of EVIDENCE OF INSURABILITY, and prints its trading name rather than its legal name in the space provided.

1. Two things are wrong - the sheet size and the omitted definitions. The definitions may be printed on a separate sheet so long as it accompanies the notice, the reference to the reverse side describing the usual arrangement rather than fixing it; and an insurer may print the name it trades under, which a policyholder will recognise where a legal name she has never seen on a letterhead means nothing at all to her.
2. Four things are wrong: the notice must be reproduced IN ITS ENTIRETY ON ONE SIDE OF AN 8-1/2 BY 11 INCH SHEET OF PLAIN PAPER; the definitions must be printed ON THE REVERSE SIDE of that same sheet; the definitions the statute sets out - including LAPSE and EVIDENCE OF INSURABILITY - MUST APPEAR, the section saying they must appear on the back of the notice forms; and the insurer may print its LEGAL NAME in the space provided. ✓
3. Three things are wrong; abbreviating a definition is not, because the definitions are explanatory material rather than part of the notice itself, and an insurer may put LAPSE in whatever words its own customers will understand, the requirement being that the listed subjects be covered rather than that the statutory wording be reproduced.
4. Four things are wrong, and a fifth: the notice must also be set in a typeface no smaller than 12 point and the definitions in no smaller than 10 point, a notice reproduced in its entirety on one side of a single sheet being useless to the applicant if the print is too small for her to read.

Why: Minn. Stat. 61A.60 subd. 4: "The notices in subdivisions 1 and 2 MUST BE REPRODUCED IN THEIR ENTIRETY ON ONE SIDE OF AN 8-1/2 BY 11 INCH SHEET OF PLAIN PAPER. The definitions contained in subdivision 3 MUST BE PRINTED ON THE REVERSE SIDE. The insurer MAY PRINT ITS LEGAL NAME in the space provided." One side of one sheet, the definitions on its back, and the legal name - three requirements the insurer broke, and no typeface requirement, which is the fourth option's addition. Subd. 3 opens: "The following definitions MUST APPEAR on the back of the notice forms provided in subdivisions 1 and 2", and then sets them out in full - PREMIUMS, CASH SURRENDER VALUE, LAPSE, SURRENDER, CONVERT TO PAID-UP INSURANCE, PLACE ON EXTENDED TERM, BORROW POLICY LOAN VALUES, EVIDENCE OF INSURABILITY, INCONTESTABLE CLAUSE and SUICIDE CLAUSE. The words "the following definitions" are what make the statutory wording mandatory rather than a model an insurer may paraphrase, which is the third option's error, and what make omitting EVIDENCE OF INSURABILITY a breach. The definitions are not free-standing material that may travel on its own sheet, which is the second option's.

An insurer mails an offer of a free booklet about recent changes to Medicare. The envelope carries the words “Important Medicare Update”. Inside, the letter says the booklet will be delivered by one of the insurer's representatives, but says nothing about the insurer's relationship to the programme and nothing about insurance.

1. Two requirements are missed - the disclaimer of connection with the programme and the statement that the mailing is an advertisement for insurance - but the envelope is unobjectionable: the bar on referring to the programme attaches to the reply envelope and to the address side of any reply postal card, the outgoing envelope being the one place the subject of a mailing may properly be identified, since a recipient who cannot tell what a mailing is about cannot decide whether to open it.
2. One requirement is missed - the statement that the mailing is an advertisement for insurance: the envelope is unobjectionable, and the disclaimer of connection with the programme is required only of an advertisement that offers to sell a Medicare supplement policy rather than one offering information about the programme.
3. Three requirements are missed - the reference to the programme on the envelope, the disclaimer of connection and the statement that this is an advertisement for insurance - and the promise of personal delivery is itself objectionable: an advertisement offering information about the federal Medicare programme must not condition delivery of the material on a personal visit by a representative of the insurer, a booklet offered to the public having to be available by post to anyone who asks for it.
4. Three requirements are missed: an advertisement offering information about the federal Medicare programme must include no reference to the programme on the envelope, must include on any page referring to the programme an equally prominent statement that the insurer and agent are not in any manner connected with the programme, and must contain a statement that it is an advertisement for insurance or is intended to obtain insurance prospects. ✓

Why: Minn. R. 2790.0500 subp. 33 governs an advertisement “which offers to provide information concerning the federal Medicare program or any related government program or changes in the program”, and imposes five requirements: “A. include no reference to the program on the envelope, the reply envelope, or on the address side of the reply postal card, if any; B. include on any page containing a reference to the program an equally prominent statement to the effect that in providing supplemental coverage the insurer and agent involved in the solicitation are not in any manner connected with the program; C. contain a statement that it is an advertisement for insurance or is intended to obtain insurance prospects; D. prominently identify the insurer or insurers which will issue the coverage; and E. prominently state that any material or information offered will be delivered in person by a representative of the insurer, if that is the case.” Item A names the envelope first, so the second option's confinement of it to reply media is wrong; item B is triggered by any page referring to the programme rather than by an offer of a supplement policy, which is the third option's error. Item E requires personal delivery to be DISCLOSED, which the mailing does - so it is not the objection the fourth option makes of it. Subpart 32 deals separately with an advertisement referring to a policy as a “Medicare supplement” policy, requiring among other things that it identify which Medicare benefits the policy is and is not intended to supplement, disclose gaps for which no benefit is provided, indicate the classification of the coverage as defined by Minnesota Statutes, section 62A.31, and not imply any relationship to the federal programme.

A Minnesota life insurer submits a policy form containing four features: forfeiture for failure to repay a policy loan while the indebtedness is still below the loan value; a two-year contractual limitation period for suit; a provision allowing the policy to be dated up to a year before the application; and a maturity settlement calculated on the face amount less indebtedness but also less an administrative charge.

1. Only the forfeiture provision is prohibited: a two-year limitation period is permissible because it matches the ordinary limitation for actions on a written contract, back-dating is unregulated so long as premiums are charged from the earlier date, and an administrative charge against the maturity settlement is a matter of contract between the parties provided the charge is disclosed on the face of the policy and applied uniformly to every policy written on that form as filed with the commissioner.
2. All four are prohibited: forfeiture while total indebtedness is less than the loan value; a provision limiting the time to commence an action to less than five years after the cause of action accrues; a provision purporting to make the policy take effect more than six months before the original application; and any mode of settlement at maturity of less value than the face amount plus dividend additions, less indebtedness and any premium deductible by the policy's terms. ✓
3. The forfeiture provision and the two-year limitation period are prohibited but the other two are not: a policy may be dated as the parties agree, the six months named in the section being the period within which the first premium must be paid, and the settlement clause fixes the components that must enter the calculation without preventing the deduction of a charge the policy discloses on its face, a charge so disclosed being part of the mode of settlement the policy prescribes.
4. All four are prohibited, and the forfeiture bar is absolute: a life policy may never be forfeited for failure to repay a policy loan or to pay interest on one, whatever the size of the indebtedness against the loan value and whatever notice the company has mailed to the insured and to any assignee of record.

Why: Minn. Stat. 61A.07 lists four prohibited provisions and the fact pattern trips all four. Clause (1) bars forfeiture for failure to repay a policy loan or pay interest “while the total indebtedness on the policy is less than the loan value thereof”, and bars any forfeiture provision at all unless it stipulates that no forfeiture occurs “until at least one month after notice shall have been mailed by the company to the last known address of the insured and of the assignee”. So the bar is conditional rather than absolute — a forfeiture IS possible once the indebtedness reaches the loan value and the month's notice has run, which is where the fourth option overstates. That is the same rule as 61A.03 subd. 1(g)(5) approached from the other direction: 61A.03 says what the policy must contain, 61A.07 says what it must not, and the one month and the loan-value threshold are one rule stated twice, not two. Clause (2) bars limiting the time to commence an action at law or in equity “to less than five years after the cause of action shall accrue”, so a two-year clause fails. Clause (3) bars a provision by which the policy “shall purport to be issued or to take effect more than six months before the original application for the insurance was made” — back-dating is regulated, and a year is too far. Clause (4) bars “any mode of settlement at maturity of less value than the amount insured on the face of the policy plus any dividend additions, less any indebtedness to the company on the policy, and less any premium that may be deducted by the terms of the policy” — the permitted deductions are exhaustively listed, so an administrative charge outside that list is not available however clearly disclosed. Note the scope provision at section 61A.08: sections 61A.02, 61A.03, 61A.07, 61A.23 and 61A.25 do not, except as expressly provided, apply to industrial or group term policies or to corporations or associations operating on the assessment or fraternal plan.

In a fixed annuity, the investment risk is borne by:

1. The annuitant, whose sub-accounts rise and fall with the market
2. The insurer, which guarantees a minimum interest rate ✓
3. A federal guaranty fund backing annuity values
4. The selling producer, under the agency contract

Why: A fixed annuity guarantees principal and a minimum interest rate, so the insurer bears the investment risk.

A distinguishing feature of adjustable life insurance is that the owner can:

1. Only ever convert it into a fixed single-premium immediate annuity
2. Invest the cash value directly in stocks and bonds of their choosing
3. Receive guaranteed dividends regardless of the insurer's experience
4. Change the premium, face amount, or coverage period as needs change ✓

Why: Adjustable life lets the owner modify premium, face amount, and protection period, effectively shifting between term and permanent coverage.

Three Minnesota residents apply to the state plan. One was laid off and cannot exercise state continuation; she applies on day 85. One's individual contract was cancelled by the carrier with no replacement coverage offered; he applies on day 100. One is covered by a conversion policy that is still in force and applies for no particular reason.

1. All three get the waiver: the 90-day periods are directory rather than mandatory, so an application received on day 100 is accepted where the applicant is otherwise eligible and the writing carrier has suffered no prejudice from the delay; the subdivision dealing with a terminated individual policy is aimed at the insurer that cancelled the contract rather than at the applicant, and the resident covered by a conversion policy may enroll at any time for any reason, which shows that the object of the section is to move residents out of the private market's cast-offs and into the state plan rather than to police calendars, the six-month preexisting condition limitation being waived in each case.
2. Only the first gets the waiver: the waiver for a terminated individual policy requires an application received no later than 90 days after termination and day 100 misses it, and a resident whose conversion policy is still in force has coverage and therefore no need of the state plan, the conversion waiver being available only once the conversion coverage has ended and then for 90 days, which is the shape the section gives to every other waiver; a resident still holding conversion coverage who applies for no particular reason is an ordinary applicant, who must produce the evidence of rejection required of applicants generally and serve the six-month preexisting condition period.
3. The first and second get the waiver, the third does not: the 90-day period for a terminated individual policy runs from the date the enrollee LEARNS of the termination rather than from the termination itself, which on these facts saves the applicant who applied on day 100; and the conversion waiver is confined to a resident whose conversion coverage has already ended, because a person whose conversion policy is in force cannot produce the evidence of rejection the application must contain and the section nowhere dispenses with that requirement - a conversion policy being coverage the applicant took as of right rather than coverage an insurer chose to write, so there is no rejection that could be evidenced.
4. The first and third get the waiver, the second does not: a laid-off employee unable to exercise continuation may enroll with a WAIVER OF THE PREEXISTING CONDITION LIMITATION by an application RECEIVED NO LATER THAN 90 DAYS after termination or layoff; a resident whose individual policy was terminated without qualifying replacement coverage may do the same by an application RECEIVED NO LATER THAN 90 DAYS AFTER TERMINATION, which day 100 misses; and a resident COVERED BY a conversion policy may enroll with a waiver of the preexisting condition limitation AND of the evidence of rejection AT ANY TIME FOR ANY REASON by an application received DURING THE TERM OF COVERAGE. ✓

Why: Minn. Stat. 62E.14 carries a long run of waivers of the subd. 3 preexisting condition limitation, and almost all of them share one deadline: an application RECEIVED BY THE WRITING CARRIER NO LATER THAN 90 DAYS after the triggering event. Subd. 5 covers an employee voluntarily or involuntarily terminated or laid off who is unable to exercise the option to continue coverage under section 62A.17 - 90 days from termination or layoff, so day 85 is inside it. Subd. 6 covers a resident holding an individual health maintenance contract, nonprofit health service corporation contract or individual insurance policy that has been terminated, provided no replacement coverage meeting section 62D.121 was offered and the termination was for a reason other than nonpayment, failure to make co-payments, moving out of the area served, or a materially false statement in the application - and again the application must be RECEIVED no later than 90 days after termination. Day 100 is out, and the period runs from termination, not from knowledge of it. Subd. 7 is the exception to the pattern: a resident who IS COVERED BY a conversion policy or contract may enroll with a waiver of both the preexisting condition limitation AND the evidence of rejection required by subd. 1, paragraph (c), AT ANY TIME FOR ANY REASON, by an application received during the term of coverage; and a resident who WAS so covered has 90 days after termination regardless of the reason for the termination or which party terminated. Note also subd. 3a (coverage through a rehabilitation facility), subd. 4 (terminated Medicare supplement coverage) and subds 4a to 4g, each with the same 90-day shape.

Reinstating a lapsed life policy generally starts a new:

1. Contestable period based on the reinstatement application ✓
2. Suicide exclusion period of ten years running from the reinstatement date
3. Schedule of guaranteed dividends recalculated from the reinstatement date
4. Free-look period of 30 days in which the owner may cancel for a full refund

Why: Reinstatement typically begins a new contestable period (often two years) covering statements made on the reinstatement application.

A clinic submits a clean claim on 1 March. The plan pays it on 20 April without any interest, and says the clinic must bill it separately for interest. A second claim is submitted seven months after the date of service, with no disruption to the clinic's operations and no recoupment having occurred.

1. Interest is owed but only on request, and the second claim may be billed to the patient: the prompt payment provisions in subd. 2 entitle a provider to interest that it claims, the sentence forbidding the plan to require a bill for interest being directed at the plan's own internal accounting and at the itemization it must show, not at the provider's entitlement, which is why the same paragraph requires interest to be paid no less frequently than quarterly rather than with each claim; and the six-month rule in subd. 3 bars REIMBURSEMENT BY THE PLAN of a late-filed charge while leaving the person who received the service liable for it, the bar on collection being confined to any other payer, so a clinic that files at seven months loses its claim against the plan and must look to the patient for the charge instead.
2. No interest is owed and the second claim cannot be collected from anyone: the deadline for a clean claim in subd. 2 is 30 BUSINESS days rather than 30 calendar days, a distinction the paragraph draws so that a plan is not charged for weekends and holidays it cannot work, and payment on 20 April is inside that window counted from 1 March; interest under paragraph (c) accrues only from the day after a deadline that has actually been missed, so nothing is owed and the plan's position on billing for it never arises; and the six-month filing bar in subd. 3 operates exactly as stated, denying the clinic reimbursement and forbidding it to collect the charge from the recipient of the service or any other payer, the 12-month extension being unavailable because the clinic reports no disruption to its normal operations.
3. Interest is owed automatically at 1.5 percent per month, but the second claim may still be paid: the interest provisions in subd. 2 work as stated, running from the day after the 30-day deadline and itemized separately without any bill from the provider; the six-month period in subd. 3, however, is a default that yields to a participation agreement, so a clinic whose contract sets a longer filing window may rely on it, and the section in any event extends the period to 12 months wherever the provider can substantiate a reason for the delay, the reference to a significant disruption describing the usual sort of reason rather than confining the extension to that case; and the bar on collecting from the recipient of the service bites only once every available extension has run, so a charge submitted at seven months remains collectable while the parties work the position out.
4. Interest is owed automatically at 1.5 percent per month and the second claim cannot be collected from anyone: a health plan company must PAY OR DENY CLEAN CLAIMS WITHIN 30 CALENDAR DAYS of receipt and must otherwise pay interest from the day after the required payment date at 1.5 PERCENT PER MONTH OR ANY PART OF A MONTH, itemized separately and paid no less frequently than quarterly, AND SHALL NOT REQUIRE THE PROVIDER TO BILL FOR THE INTEREST; and a provider that does not submit its charges WITHIN SIX MONTHS of the date of service or of learning the responsible payer SHALL NOT BE REIMBURSED and MAY NOT COLLECT THE CHARGE FROM THE RECIPIENT OF THE SERVICE OR ANY OTHER PAYER. ✓

Why: Minn. Stat. 62Q.75, subd. 2, paragraph (a) requires all health plan companies and third-party administrators to pay or deny CLEAN CLAIMS within 30 CALENDAR days after receipt - a clean claim being one with no defect, impropriety or missing substantiating documentation that prevents timely payment. Paragraph (c) makes interest run from the day after the required payment date until payment or denial, requires it to be itemized separately, forbids the plan from requiring the provider to bill for it, and requires interest payments no less frequently than quarterly. Paragraph (d) fixes the rate at 1.5 PERCENT PER MONTH OR ANY PART OF A MONTH. Paragraph (e) is the only excuse - no interest is owed on a claim delayed for the purpose of reviewing potentially fraudulent or abusive billing practices - and paragraph (f) lets the commissioner assess an administrative penalty where there is a PATTERN OF ABUSE showing a lack of good faith effort and systematic failure. Subd. 3 governs the second claim: unless otherwise provided by contract, by section 16A.124, subd. 4a, or by federal law, charges must be submitted within SIX MONTHS of the date of service or of the date the provider knew or was informed of the correct name and address of the responsible payer, whichever is later. A provider that misses the window SHALL NOT BE REIMBURSED and MAY NOT COLLECT THE CHARGE FROM THE RECIPIENT OF THE SERVICE OR ANY OTHER PAYER - the patient is protected, not exposed. The period extends to 12 months only where the provider has determined and CAN SUBSTANTIATE a significant disruption to normal operations, and by a further six months where the plan adjusts or recoups a payment.

An insurer proposes a life policy whose death benefit in the early years is below the face amount and rises over time. The first year premium is $600 and the proposed early-years benefit is $1,800. The policy also returns premiums plus interest if it is rescinded, and excludes death by suicide in the first two years.

1. The policy may be issued as proposed: a graded death benefit must be equal to at least THREE TIMES the first year premium, which is $1,800 here, so the benefit is exactly at the statutory floor; and the rescission and suicide provisions are permitted for the reason given, the section being concerned only with the relationship between the graded benefit and the premium paid in the first policy year rather than with what is returned on exit.
2. The policy may not be issued as proposed, and the rescission and suicide provisions are a second reason why: the section requires the graded benefit to be at least four times the first year premium and treats any arrangement returning less than the face amount on death as a graded benefit, so an exclusion that pays back only premiums plus interest is itself a graded benefit that fails the four times test whenever the premium exceeds a quarter of what is returned.
3. The policy may not be issued as proposed: a graded death benefit must be equal to at least FOUR TIMES the first year premium, which is $2,400 here, and $1,800 falls short; the return of premiums or premiums plus interest on a voluntary or judicially ordered rescission, or under an exclusion for suicide, aviation or war risk, is not prohibited by the section. ✓
4. The section does not reach this policy at all: it applies only to preneed insurance and to policies designed to cover funeral goods and services, those being the products in which graded benefits were abused, and an ordinary life policy with a graded benefit is regulated instead by the general prohibition on misrepresenting the benefits promised by a policy.

Why: Minn. Stat. 72A.207 defines a graded death benefit as "a provision within a life insurance policy in which the death benefit, in the early years of the policy, is less than the face amount of the policy, but which increases with the passage of time", and then provides: "No policy of life insurance paying a graded death benefit may be issued in this state unless the graded death benefit is equal to AT LEAST FOUR TIMES THE FIRST YEAR PREMIUM." Four times $600 is $2,400; $1,800 is below the floor, and three times is not the test, which is the second option's substitution. The section continues: it "does not prohibit the return of premiums or premiums plus interest in connection with the VOLUNTARY OR JUDICIALLY ORDERED RESCISSION of the policy, or according to the terms of the EXCLUSIONS FROM COVERAGE FOR SUICIDE, AVIATION, OR WAR RISK" - so neither provision in the stem is a further breach, which is the third option's error. The exemption runs the other way from the fourth option's reading: it is preneed insurance as defined in Minn. Stat. 61A.258, and policies designed to cover the goods and services described in that section, that are NOT SUBJECT to 72A.207, while ordinary life policies are.

A health policy renewed last year covers services that a licensed dentist or podiatrist may lawfully perform, but pays only when a physician performs them. It contains no coverage for temporomandibular joint disorder. The insurer also writes a specified-disease policy with no such coverage, and says treatment of the jaw joint is dental rather than medical.

1. The health policy breaches only the equal-provider requirement: the temporomandibular joint coverage is required of policies issued after 1 August 1987, and a policy merely RENEWED after that date is not caught, the subdivision listing issue, delivery and execution rather than renewal, so a carrier may keep an older form on the book indefinitely so long as it writes no new business on it; the specified-disease policy is outside the requirement in any event, as described in the second answer.
2. The health policy breaches the section twice and the specified-disease policy does not: a policy or contract providing coverage for services which CAN BE LAWFULLY PERFORMED WITHIN THE SCOPE OF THE LICENSE of a duly licensed DENTIST OR PODIATRIST shall provide benefits for those services WHETHER PERFORMED BY A DULY LICENSED PHYSICIAN, DENTIST OR PODIATRIST; and, EXCEPT FOR POLICIES WHICH ONLY PROVIDE COVERAGE FOR SPECIFIED DISEASES, no policy or certificate of health, medical, hospitalization or accident and sickness insurance, no subscriber contract under ch. 62C and no health maintenance organization contract under ch. 62D may be issued, renewed, continued, delivered, issued for delivery or executed in this state after 1 August 1987 unless it SPECIFICALLY PROVIDES COVERAGE FOR SURGICAL AND NONSURGICAL TREATMENT OF TEMPOROMANDIBULAR JOINT DISORDER AND CRANIOMANDIBULAR DISORDER, THE SAME AS FOR TREATMENT TO ANY OTHER JOINT IN THE BODY, and that coverage APPLIES IF THE TREATMENT IS ADMINISTERED OR PRESCRIBED BY A PHYSICIAN OR DENTIST. ✓
3. The health policy breaches the section twice and the insurer is right that jaw joint treatment is dental: the section requires the coverage to be provided under a dental plan where the insured holds one, the reference to treatment of any other joint in the body describing the LEVEL of benefit that must be paid rather than the plan that must pay it, so an insured who carries both a health policy and a dental plan looks to the dental plan for surgical and nonsurgical treatment of temporomandibular joint disorder and craniomandibular disorder, and to the health policy only for whatever the dental plan does not reach; treatment administered or prescribed by a dentist is therefore outside a medical policy altogether, which is why the closing words of the subdivision name the physician and the dentist together, marking out the two plans between which the cost is divided rather than obliging one of them to carry the whole of it whichever practitioner the patient happens to have consulted about the joint. A carrier that writes both plans may pay the whole cost from either of them so long as the insured is not asked to bear it twice over.
4. The health policy breaches the section twice and the specified-disease policy is caught as well: the exception for specified-disease policies belongs to the maternity provisions rather than to this section, and every policy of health, medical, hospitalization or accident and sickness insurance regulated under the chapter must carry temporomandibular joint coverage whatever its scope, which is why the section lists issue, renewal, continuation, delivery, issue for delivery and execution rather than confining itself to new business; and the equal-provider requirement in the same section reaches only services a DENTIST may lawfully perform, a podiatrist being licensed under a separate chapter and covered instead by the general rule about licensed practitioners of the healing arts found in the conditions on delivering an individual accident and sickness policy in this state, which reaches every licensed profession rather than only the two professions this section happens to name in the text of its own second subdivision. The registered nurse who meets the statutory requirements is on the same footing as the podiatrist and falls outside this section as well.

Why: Minn. Stat. 62A.043 subd. 1 applies the section to all individual or group policies or subscriber contracts providing payment for care in this state issued or renewed after 1 August 1976 by an accident and health insurer under ch. 62A or a nonprofit health service plan corporation under ch. 62C. Subd. 2: "Any policy or contract referred to in subdivision 1 WHICH PROVIDES COVERAGE FOR SERVICES WHICH CAN BE LAWFULLY PERFORMED WITHIN THE SCOPE OF THE LICENSE OF A DULY LICENSED DENTIST OR PODIATRIST, SHALL PROVIDE BENEFITS FOR SUCH SERVICES WHETHER PERFORMED BY A DULY LICENSED PHYSICIAN, DENTIST OR PODIATRIST." Subd. 3: "EXCEPT FOR POLICIES WHICH ONLY PROVIDE COVERAGE FOR SPECIFIED DISEASES, no policy or certificate of health, medical, hospitalization, or accident and sickness insurance regulated under this chapter, or subscriber contract provided by a nonprofit health service plan corporation regulated under chapter 62C, or health maintenance organization regulated under chapter 62D, SHALL BE ISSUED, RENEWED, CONTINUED, DELIVERED, ISSUED FOR DELIVERY, OR EXECUTED in this state AFTER AUGUST 1, 1987, unless the policy, plan, or contract SPECIFICALLY PROVIDES COVERAGE FOR SURGICAL AND NONSURGICAL TREATMENT OF TEMPOROMANDIBULAR JOINT DISORDER AND CRANIOMANDIBULAR DISORDER. COVERAGE SHALL BE THE SAME AS THAT FOR TREATMENT TO ANY OTHER JOINT IN THE BODY, AND SHALL APPLY IF THE TREATMENT IS ADMINISTERED OR PRESCRIBED BY A PHYSICIAN OR DENTIST." Renewal is in the list, so a renewed policy is caught - the second option's error - and the specified-disease exception opens the subdivision, which is the fourth option's. The closing sentence answers the insurer's argument and the third option: the benefit is measured against treatment to any other joint in the body and applies whether a physician or a dentist administers or prescribes it, so the medical policy pays.

A Medicare select insured suffers an unforeseen injury away from home and is treated by a nonnetwork provider; the issuer restricts payment. Eight months into the policy she asks to switch to a comparable policy without a restricted network, and is told she must be underwritten.

1. The issuer is wrong on both: a Medicare select policy SHALL NOT RESTRICT PAYMENT for covered services provided by NONNETWORK PROVIDERS if the services are for symptoms requiring EMERGENCY CARE OR ARE IMMEDIATELY REQUIRED FOR AN UNFORESEEN ILLNESS, INJURY OR CONDITION and it is NOT REASONABLE TO OBTAIN THE SERVICES THROUGH A NETWORK PROVIDER; and at the insured's request the issuer shall make available a Medicare supplement policy of COMPARABLE OR LESSER BENEFITS WITHOUT A RESTRICTED NETWORK PROVISION, WITHOUT REQUIRING EVIDENCE OF INSURABILITY, once the select policy HAS BEEN IN FORCE FOR SIX MONTHS. ✓
2. The issuer is right on both: a restricted network provision is the basis on which a Medicare select policy is priced and approved, so payment for care taken outside the network is governed by the schedule of benefits, and the right to buy an unrestricted policy without evidence of insurability arises only where the issuer discontinues its Medicare select programme; a mid-term switch made for the insured's own convenience is a fresh sale, which the issuer may underwrite in the ordinary way.
3. The issuer is wrong about the nonnetwork treatment but right about underwriting: payment may not be restricted where the services are for symptoms requiring emergency care or are immediately required for an unforeseen illness, injury or condition and it is not reasonable to obtain them through a network provider, so the injury away from home must be paid in full; but the right to move to a policy of comparable or lesser benefits without a restricted network provision and without evidence of insurability arises only where the secretary of the United States Department of Health and Human Services determines that the Medicare select programme should be discontinued, or where the issuer itself stops offering select coverage in the insured's county, and eight months in force without either event leaves her to ordinary underwriting.
4. The issuer is wrong about the nonnetwork treatment and about underwriting, but the replacement policy may carry greater benefits at the insured's option: payment may not be restricted for services immediately required for an unforeseen injury where it is not reasonable to reach a network provider, and after six months in force the issuer must make an unrestricted policy available without evidence of insurability; comparability, however, is defined by exclusion, a policy qualifying unless it contains one or more significant benefits not included in the select policy, so the insured may require the issuer to supply whichever of its unrestricted forms she selects, including one adding coverage of the Medicare Part A deductible, prescription drugs, at-home recovery services or Part B excess charges, subject only to the separate bar on outpatient prescription drug coverage in policies issued on or after 1 January 2006.

Why: A MEDICARE SELECT POLICY is defined by Minn. Stat. 62A.318, subd. 2, clause (4) as a Medicare supplement policy or certificate that CONTAINS RESTRICTED NETWORK PROVISIONS, and subd. 1 forbids advertising a policy as Medicare select unless it meets the section. Subd. 7 sets the two-part exception the first half of this question turns on: payment for covered services from a nonnetwork provider shall NOT be restricted if the services are for symptoms requiring emergency care OR are immediately required for an unforeseen illness, injury or condition, AND it is not reasonable to obtain the services through a network provider. Subd. 8 adds that the policy shall pay FULL coverage for covered services that are NOT AVAILABLE through network providers. Subd. 13, paragraph (a) answers the second half: at the request of the insured, the issuer shall make available a Medicare supplement policy it offers that has COMPARABLE OR LESSER benefits and does NOT contain a restricted network provision, WITHOUT REQUIRING EVIDENCE OF INSURABILITY, after the select policy has been in force for SIX MONTHS; if the issuer has no such policy for sale, it must provide enrollment information for the Minnesota Comprehensive Health Association Medicare supplement plans. Paragraph (b) defines COMPARABLE OR LESSER by exclusion - a policy qualifies unless it contains one or more SIGNIFICANT benefits not in the select policy, a significant benefit being coverage for the Part A deductible, prescription drugs, at-home recovery services or Part B excess charges. That definition LIMITS what the insured may demand rather than expanding it. Subd. 14 is the separate discontinuance route, and subd. 12 requires the issuer, at the time of initial purchase, to make available the opportunity to buy a Medicare supplement policy it otherwise offers.

An issuer describes its Medicare supplement plan with 50 percent coverage as paying half of everything for the whole year. A buyer asks what happens after she has spent a great deal out of pocket, and whether cancer screening is also paid at half.

1. Both statements hold: the plan pays half of each item of Medicare cost sharing for the whole calendar year, and the $4,000 out-of-pocket figure in section 62A.3161 marks the point at which the issuer may require evidence that the insured remains eligible for the plan rather than a threshold that changes the level of coverage; diagnostic procedures for cancer screening are paid at the same half rate as everything else.
2. The first statement fails but the second holds: the out-of-pocket limitation works exactly as described, the plan paying 100 percent of all Part A and Part B cost sharing for the balance of the calendar year once $4,000 indexed from 2006 has been spent; diagnostic procedures for cancer screening, however, are paid at 50 percent like the rest of the Part B cost sharing, the 100 percent preventive services clause belonging to the Medicare supplement plan with 75 percent coverage.
3. Neither statement holds, but for different reasons: the plan pays 100 percent of Medicare Part A hospitalization coinsurance from the first day and 100 percent of cancer screening after the Part B deductible, so it is not a 50 percent plan in any general sense; the out-of-pocket figure, however, is a lifetime rather than an annual limitation, and once it is reached the plan pays all Part A and Part B cost sharing for the remaining life of the policy rather than for the balance of the calendar year, which is why the statute states it against a base year and indexes it.
4. Neither statement holds: once the individual has reached the OUT-OF-POCKET LIMITATION on annual expenditures under Medicare Parts A and B - $4,000 in 2006, INDEXED EACH YEAR by the appropriate inflation adjustment by the secretary of the United States Department of Health and Human Services - the plan covers 100 PERCENT OF ALL COST SHARING under Parts A and B FOR THE BALANCE OF THE CALENDAR YEAR; and the plan covers 100 PERCENT of the cost sharing for Medicare Part B preventive services and DIAGNOSTIC PROCEDURES FOR CANCER SCREENING after the policyholder pays the Part B deductible. ✓

Why: Minn. Stat. 62A.3161 sets out the Medicare supplement plan with 50 PERCENT coverage, and the name understates it in two places. Clause (1) provides 100 percent of Medicare Part A hospitalization coinsurance PLUS coverage for 365 days after Medicare benefits end - not 50 percent. Clauses (2) to (6) are the ones at 50 percent: half of the Part A inpatient hospital deductible per benefit period; half of the coinsurance for each day from the 21st through the 100th day of posthospital skilled nursing care under Part A; half of the cost sharing for Part A eligible expenses and respite care; half of the reasonable cost of the first three pints of blood; and half of the cost sharing otherwise applicable under Part B after the policyholder pays the Part B deductible - each of them EXPRESSLY UNTIL THE OUT-OF-POCKET LIMITATION IS MET. Clause (7) then pays 100 percent of the cost sharing for Part B preventive services and diagnostic procedures for cancer screening described in section 62A.30, after the Part B deductible. Clause (8) is the limitation the other clauses point at: 100 percent of all cost sharing under Parts A and B FOR THE BALANCE OF THE CALENDAR YEAR once the individual has reached an out-of-pocket limitation on ANNUAL expenditures of $4,000 in 2006, indexed each year by the appropriate inflation adjustment by the secretary of the United States Department of Health and Human Services. Paragraph (b) carries the same newly-eligible-individual bar on covering any portion of the Part B deductible. Section 62A.3162 builds the 75 percent plan on the same skeleton.

Sharing or paying a commission to an unlicensed individual is generally:

1. Required by most state laws
2. Permitted for referrals only
3. Prohibited ✓
4. Allowed if the amount is small

Why: Commissions may be paid only to properly licensed persons; paying an unlicensed individual is prohibited (limited nominal referral fees aside).

A fraternal benefit society has two people on its books. Its lodge secretary spends substantially all his time on lodge administration, occasionally taking an application, and is paid a fixed salary with nothing turning on the number or amount of contracts. A representative wrote accident cover on 30 individuals last year and earned $1,200 in commission, and says she is well under half-time.

1. The secretary needs no licence; the representative is not caught by the presumption, which for kinds of insurance other than life is expressed in face amount in the same way as for life insurance, so that the number of individuals covered is immaterial and $1,200 in commission on modest sums does not raise it.
2. Both need licences: the exemption for an officer, employee or secretary is available only to a person who never solicits or negotiates at all, so an occasional application defeats it; and the representative is presumed to be at half-time on the figures given.
3. The secretary needs no licence, devoting substantially all his time to activities other than solicitation or negotiation and receiving no compensation directly dependent on the number or amount of contracts; the representative is presumed to be devoting half her time to the work, having covered more than 25 individuals with a kind of insurance other than life and received $1,000 or more. ✓
4. The secretary needs no licence, but only because he takes no commission; the time limb is not a separate condition. The representative is not presumed to be at half-time, the presumption requiring both more than 25 individuals covered and compensation of $1,000 or more in each of the two preceding calendar years rather than in one, and her accident business last year was her first of any size.

Why: Minn. Stat. 60K.35 makes representatives of fraternal benefit societies who solicit and negotiate insurance contracts insurance producers subject to the chapter, then exempts two groups. Clause (1) exempts “any officer, employee, or secretary of a fraternal benefit society or of any subordinate lodge or branch who devotes substantially all of that person's time to activities other than the solicitation or negotiation of insurance contracts and who receives no commission or other compensation directly dependent upon the number or amount of contracts solicited or negotiated”. “Substantially all” is not “all”, so occasional solicitation does not defeat it, which is the third option's error, and both limbs are conditions, which is the fourth option's. Clause (2) exempts a representative devoting or intending to devote less than 50 percent of her time, but raises a presumption against a person who in the preceding calendar year solicited and procured “life insurance in excess of $50,000 face amount, or, in the case of any other kinds of insurance that the society may write, on the persons of more than 25 individuals”, and received or will receive compensation “in the total amount of $1,000 or more”. For non-life business the measure is the number of individuals, not face amount - the second option's error - and the period is the preceding calendar year, not two of them.

An insured with a $6,000 monthly benefit has a residual disability with a 40% income loss. The residual benefit is:

1. $2,400 ✓
2. $6,000
3. $3,600
4. $1,200

Why: Residual benefit is proportional to income lost: 40% × $6,000 = $2,400.

A life insurer charges a higher rate to an applicant with a disability. It refuses to insure a National Guard member because of that status; he has received no order for active duty. It declines to reinstate a reservist's terminated family coverage after she returns from active duty, she having applied 70 days after removal from duty.

1. The rate is unfair discrimination UNLESS claims experience, actuarial projections and other data establish significant and substantial differences in class rates because of the disability; refusing to insure a member of a reserve component or the National Guard because of that status is an unfair practice unless the individual has received an order for active duty; and the refusal to reinstate is an unfair practice, the person having to apply within 90 days after removal from active duty, which she did. ✓
2. The rate is unfair discrimination and cannot be justified by any data, the subdivision prohibiting disability-based rating outright; the refusal to insure the Guard member is an unfair practice; and the reinstatement application was out of time, the period being 60 days after removal from active duty, so that a reservist who waits longer than two months must apply for new coverage and take whatever fresh terms the insurer chooses to offer her at that point, including any preexisting condition limitation the underwriting of a new application would ordinarily attract.
3. The rate may be justified by the claims experience and actuarial projections the actuary holds; the refusal to insure the Guard member is permissible because he has received no order for active duty, the exception protecting an insurer against a deployment risk that has not yet crystallised and leaving the prohibition to operate only once a member has actually been ordered up; and the refusal to reinstate is an unfair practice, the reservist having applied within the 90 days the paragraph allows and the coverage having been terminated while she was on active duty.
4. The rate may be justified by the data and the refusal to insure the Guard member is an unfair practice; but the reinstated coverage may lawfully carry a fresh preexisting condition limitation and a new waiting period, because the coverage terminated while she was on duty and is being written anew rather than continued, the paragraph restoring the reservist to the market on ordinary underwriting terms rather than restoring the contract she had; and a Veterans Administration determination that a disability was incurred in the line of duty operates to widen that limitation rather than to confine it.

Why: Minn. Stat. 72A.20 subd. 8(a) makes unfair discrimination between individuals of the same class and equal expectation of life - including rejection of an application, and the determination of the rate class, on the basis of a disability - an unfair practice “UNLESS the claims experience and actuarial projections and other data establish significant and substantial differences in class rates because of the disability”. It is a qualified prohibition, not an absolute one, which is the second option's error. Paragraph (b) catches refusing to insure or to continue to insure a member of a reserve component or the National Guard “due to that person's status as a member, or duty assignment ... unless the individual has received an order for active duty” - the exception operates where an order HAS been received, so the third option has it backwards. Paragraph (c) catches refusing to reinstate coverage for the insured or covered dependents whose coverage was terminated while the person was on active duty, and provides that “the person shall apply for reinstatement within 90 days after removal from active duty”; the reinstated coverage “must not contain any new preexisting condition or other exclusion or limitation”, subject only to a Veterans Administration line-of-duty disability determination and the unexpired remainder of a pre-existing limitation - which is what the fourth option ignores.

The coordination of benefits provision is designed to:

1. To extend the maximum benefit period under each plan
2. To stop an insured collecting more than the expenses incurred ✓
3. To increase the total benefits payable across all plans
4. To eliminate all policy deductibles when two plans apply

Why: COB establishes primary/secondary payer order so total reimbursement does not exceed the expenses incurred.

An insurer's disciplined current scale is more favourable to policy owners than its currently payable scale. It wants to illustrate on the disciplined current scale. It also asks whether a scale it has declared will take effect in 80 days can be its currently payable scale, and what separates a basic from a supplemental illustration.

1. It may not: the illustrated scale is a scale of nonguaranteed elements currently being illustrated that is not more favourable to the policy owner than the LESSER of the disciplined current scale and the currently payable scale, so the currently payable scale governs here; a scale declared to become effective within the next 95 days is within the definition of the currently payable scale; and a basic illustration shows both guaranteed and nonguaranteed elements, while a supplemental illustration is furnished in addition to a basic one, may differ in format, and may depict only a scale of nonguaranteed elements permitted in a basic illustration. ✓
2. It may: the illustrated scale may not be more favourable to the policy owner than the GREATER of the disciplined current scale and the currently payable scale, the disciplined current scale being the ceiling the designated illustration actuary certifies each year and the currently payable scale merely the scale the insurer happens to be paying; a scale declared to become effective in 80 days is within the definition of the currently payable scale; and a basic illustration shows both guaranteed and nonguaranteed elements, while a supplemental illustration is furnished in addition to a basic one, may be presented in a differing format, and may depict only a scale of nonguaranteed elements permitted in a basic illustration.
3. It may not, and a scale declared for 80 days hence is not the currently payable scale either: the currently payable scale is the scale of nonguaranteed elements in effect for the policy form as of the preparation date of the illustration and nothing more, the 95 days being the period within which an illustration must be delivered to the applicant after it is prepared; the two illustration types are as described above. On that reading an insurer that had declared a new scale but not yet brought it into effect would illustrate on the old one until the effective date arrived, and an applicant given it would be shown a scale the insurer had already resolved to abandon.
4. It may not, and the two illustration types differ in a further way: a supplemental illustration may depict a scale MORE favourable than a basic illustration may show, provided it is clearly labelled as supplemental and accompanies the basic illustration, which is why the definition allows it to be presented in a differing format. The illustrated scale is the lesser of the disciplined current scale and the currently payable scale, so the currently payable scale governs the basic illustration here, and a scale declared to become effective within the next 95 days is within the currently payable scale. The disciplined current scale is certified annually by the designated illustration actuary.

Why: Minn. Stat. 61A.705(g) defines “illustrated scale” as “a scale of nonguaranteed elements currently being illustrated that is not more favorable to the policy owner than the LESSER of: (1) the disciplined current scale; or (2) the currently payable scale”. The lesser, not the greater - which is the second option's error and the whole point of the definition. Paragraph (c): “'Currently payable scale' means a scale of nonguaranteed elements in effect for a policy form as of the preparation date of the illustration OR DECLARED TO BECOME EFFECTIVE WITHIN THE NEXT 95 DAYS”, so a scale declared for 80 days hence qualifies and the third option's delivery-period gloss has no source. Paragraph (h) defines “illustration” as a presentation including nonguaranteed elements over a period of years, of one of three types; clause (1) is the basic illustration, “a ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements”, and clause (2) the supplemental illustration, “furnished in addition to a basic illustration”, which “may be presented in a format differing from the basic illustration, but may only depict a scale of nonguaranteed elements that is permitted in a basic illustration” - the ceiling is the same, which is what the fourth option raises. Paragraph (d) makes the disciplined current scale a limit certified annually by a designated illustration actuary and reasonably based on actual recent historical experience.

An issuer is designing an extended basic Medicare supplement plan. It proposes to cover 80 percent of the Part A inpatient hospital deductible, to include an outpatient prescription drug benefit in a policy to be issued next year, and to cap the preventive medical care benefit at $120 a year.

1. The first two fail and the third is right: the extended basic plan must provide coverage for ALL OF THE MEDICARE PART A INPATIENT HOSPITAL DEDUCTIBLE AND COINSURANCE amounts and 100 percent of all Part A eligible expenses for hospitalization not covered by Medicare; AN OUTPATIENT PRESCRIPTION DRUG BENEFIT MUST NOT BE INCLUDED for sale or issuance in a Medicare supplement policy or certificate ISSUED ON OR AFTER 1 JANUARY 2006; and the preventive medical care benefit reimburses actual charges up to 100 percent of the Medicare-approved amount for each service TO A MAXIMUM OF $120 ANNUALLY. ✓
2. All three are right: the extended basic plan covers 80 percent of the Part A deductible as the counterpart of the 80 percent it pays on usual and customary expenses, the drug prohibition applies only to the basic plan, and the $120 cap is as described.
3. Only the first fails: the deductible must be covered in full as described, but an extended basic plan may still include an outpatient prescription drug benefit because it is the richer of the two categories and is certified as a qualified plan, and the $120 figure is correct.
4. The first and third fail and the second is right: the drug prohibition is as described, but an extended basic plan covers the Part A inpatient hospital deductible only for a newly eligible individual, and the preventive medical care benefit is capped at $120 PER SERVICE rather than annually, the annual figure in the section describing the point at which the issuer may require the attending physician to certify that further screening is medically appropriate rather than a ceiling on what is payable in the year, an annual cap of that size being far too small to cover the examination the clause itself describes.

Why: Minn. Stat. 62A.315, paragraph (a) sets nine requirements for the EXTENDED BASIC plan, which must have a level of coverage certifying it as a qualified plan under section 62E.07. Clause (1): coverage for ALL of the Medicare Part A inpatient hospital deductible AND coinsurance amounts, and 100 percent of all Part A eligible expenses for hospitalization not covered by Medicare - the whole deductible, not a share of it. Clause (3) covers the Part B coinsurance or co-payment regardless of hospital confinement AND the Part B deductible amount. Clause (4) covers 80 percent of the usual and customary hospital and medical expenses and supplies described in section 62E.06, subd. 1, including those incurred in a foreign country, and prescription drug expenses not covered by Medicare - and then adds the sentence that answers the second proposal: AN OUTPATIENT PRESCRIPTION DRUG BENEFIT MUST NOT BE INCLUDED for sale or issuance in a Medicare supplement policy or certificate ISSUED ON OR AFTER 1 JANUARY 2006. Clause (7) is the preventive medical care benefit - an annual clinical preventive medical history and physical examination, and preventive screening tests or services whose selection and frequency the attending physician determines to be medically appropriate - reimbursed at actual charges up to 100 percent of the Medicare-approved amount for each service, TO A MAXIMUM OF $120 ANNUALLY, and never for a procedure Medicare covers. Paragraph (b) carries the limit that runs through the whole run of plan sections: the plan must not provide coverage for 100 percent or any portion of the Medicare Part B deductible TO A NEWLY ELIGIBLE INDIVIDUAL.

An insurer proposes to pay 40 percent commission in the first policy year of a Medicare supplement plan and 12 percent in years two to four. It also proposes a higher commission rate on its basic plan than on its extended basic plan, and a sales trip for the top producer.

1. All three fail: the commission, sales allowance, service fee or compensation to an agent for the sale of a Medicare supplement plan MUST BE THE SAME FOR EACH OF THE FIRST FOUR YEARS of the policy; IN NO EVENT may the rate for the sale of a BASIC plan EXCEED THAT WHICH APPLIES TO the sale of an EXTENDED BASIC plan; and COMPENSATION INCLUDES PECUNIARY OR NONPECUNIARY REMUNERATION OF ANY KIND relating to the sale or renewal, including bonuses, GIFTS, PRIZES, AWARDS and finder's fees. ✓
2. Only the differential between years fails: the commission must be the same for each of the first four policy years, so 40 percent followed by 12 percent is the heaped structure the section exists to prevent; an insurer may, however, pay a higher rate on the plan that is harder to place, the basic and extended basic plans being separately priced products with separate acquisition costs, and a sales trip awarded on total production is an incentive rather than a commission, sales allowance or service fee, so it falls outside the section.
3. The first two fail but the sales trip does not: the commission must be level across the first four years, and in no event may the rate on a basic plan exceed the rate on an extended basic plan; the definition of compensation, however, reaches remuneration relating to the sale or renewal of a policy or certificate, which ties it to an identified transaction, and a company-wide incentive earned on aggregate production cannot be attributed to any one sale, making the trip a general expense of the insurer's marketing rather than compensation for the sale of a Medicare supplement plan.
4. The first and third fail but the second does not: the level-commission rule and the wide definition of compensation, which reaches bonuses, gifts, prizes, awards and finder's fees, are as described, but the section caps the rate on the EXTENDED BASIC plan by reference to the BASIC plan rather than the other way round, the concern being that an agent will otherwise steer a buyer into the more expensive extended basic plan for the sake of a larger commission on a larger premium, which is the classic suitability risk in this market and the mischief the sentence was written to prevent.

Why: Minn. Stat. 62A.436 has four sentences and three of them answer this question. First: the commission, sales allowance, service fee or compensation to an agent for the sale of a Medicare supplement plan MUST BE THE SAME FOR EACH OF THE FIRST FOUR YEARS of the policy. A 40 percent first-year rate followed by 12 percent is the heaped commission structure the sentence exists to prevent, because a heaped commission pays an agent to replace a policy rather than to keep it in force. Second: IN NO EVENT may the rate of commission, sales allowance, service fee or compensation for the sale of a BASIC Medicare supplement plan EXCEED that which applies to the sale of an EXTENDED BASIC plan. The cap runs in the direction the last distractor reverses - the basic plan may not pay MORE than the extended basic plan, so an agent is never given a financial reason to sell the thinner cover. Third: COMPENSATION includes pecuniary or NONPECUNIARY remuneration of any kind relating to the sale or renewal of the policy or certificate, INCLUDING BUT NOT LIMITED TO BONUSES, GIFTS, PRIZES, AWARDS AND FINDER'S FEES - a sales trip is a prize. The fourth sentence extends the whole section to sales of REPLACEMENT policies, which closes the obvious way round it.

A health insurer raises rates and writes to policyholders 20 days before the effective date. It does not write to individual certificate holders under its group contracts. It tells one policyholder the increase is due to a statutory change, without saying which statute or how much of the increase is attributable to it, and without separating out medical inflation.

1. The 20 days is short and the explanation is deficient, but the silence to certificate holders is wrong: a certificate holder is the person who pays and bears the increase, and the exclusion in the section applies to a certificate holder under a policy issued OUTSIDE Minnesota rather than to group certificate holders generally.
2. The 20 days is short, the silence to certificate holders is correct, and the explanation is deficient: a health insurer or service plan corporation must send WRITTEN NOTICE to its policyholders and contract holders at their last known address AT LEAST 30 DAYS IN ADVANCE of the effective date of a proposed rate change, and that requirement DOES NOT APPLY TO INDIVIDUAL CERTIFICATE HOLDERS COVERED BY GROUP INSURANCE POLICIES OR GROUP SUBSCRIBER CONTRACTS; and a health carrier that informs a policyholder that a rate increase is due to a statutory change must DISCLOSE THE SPECIFIC AMOUNT of the increase directly due to it, IDENTIFY THE SPECIFIC STATUTORY CHANGE, and SEPARATE any increase due to medical inflation or other reasons from the increase directly due to statutory changes. ✓
3. Everything is in order: 30 days is the period for a proposed rate change requiring the commissioner's approval and 20 days suffices for an ordinary renewal adjustment; and a carrier that attributes an increase to a statutory change need only say so, the detailed disclosure applying where the policyholder asks for a breakdown.
4. The 20 days is short and the silence to certificate holders is correct, but the explanation requirement is narrower than the answer states: a carrier must identify the statutory change and nothing more, the requirement to quantify the amount attributable to it and to separate out medical inflation being drawn from the chapters the section lists rather than imposed by the section itself, which is why those chapters are enumerated - they are the sources of the quantification duty and not merely the statutes whose amendment may be cited as a cause; and the thirty-day notice of a rate change reaches every person whose premium goes up, certificate holders included, the sentence about group certificate holders excusing the carrier only from writing to them separately where the group policyholder has undertaken to pass the notice on.

Why: Minn. Stat. 62A.023: "A health insurer or service plan corporation MUST SEND WRITTEN NOTICE to its policyholders and contract holders at their LAST KNOWN ADDRESS AT LEAST 30 DAYS IN ADVANCE of the effective date of a proposed rate change. THIS NOTICE REQUIREMENT DOES NOT APPLY TO INDIVIDUAL CERTIFICATE HOLDERS COVERED BY GROUP INSURANCE POLICIES OR GROUP SUBSCRIBER CONTRACTS." Two sentences, and the exclusion is for group certificate holders as such rather than for out-of-state ones - the second option's rewriting. Thirty days is the period for any proposed rate change, not only one requiring approval, which is the third option's. Minn. Stat. 62A.024: "IF any health carrier ... INFORMS A POLICYHOLDER OR CONTRACT HOLDER THAT A RATE INCREASE IS DUE TO A STATUTORY CHANGE, the health carrier MUST DISCLOSE THE SPECIFIC AMOUNT OF THE RATE INCREASE DIRECTLY DUE TO THE STATUTORY CHANGE AND MUST IDENTIFY THE SPECIFIC STATUTORY CHANGE. This disclosure must also SEPARATE ANY RATE INCREASE DUE TO MEDICAL INFLATION OR OTHER REASONS FROM THE RATE INCREASE DIRECTLY DUE TO STATUTORY CHANGES in this chapter, chapter 62C, 62D, 62E, 62H, 62J, 62L, or 64B." Three duties, all triggered by the carrier's own choice to attribute the increase to legislation and none of them waiting for a request - the third and fourth options' errors. The enumerated chapters identify which statutory changes may be cited, not the source of the duty.

A creditor requires credit life insurance as additional security and offers only its own affiliated insurer's cover. Separately, an insured wants to change the beneficiary named in his policy; the policy reserves no power to do so and the beneficiary will not consent. His marriage to that beneficiary has since been dissolved.

1. The creditor is wrong: where a creditor requires credit life or credit accident and health insurance as additional security, the debtor must be given the option of furnishing the required amount through existing policies the debtor owns or controls, or of procuring it from any insurer authorised to transact business here, and must be told of that right before the transaction is completed; and the insured may change the beneficiary, a change being permitted on the beneficiary's consent, or where a power is reserved, or on the beneficiary's death, or on dissolution of a marriage between the insured and the beneficiary, subject to any limitation imposed as a condition of the dissolution. ✓
2. The creditor is wrong as described; but the insured may not change the beneficiary, the dissolution of the marriage terminating the former spouse's interest automatically rather than opening a power to name someone else, so that the proceeds pass under the policy's contingent beneficiary clause and no change is either needed or available to him.
3. The creditor may require the cover to be written by its own affiliate, the debtor's right to furnish alternative insurance arising only where the creditor requires an amount of insurance exceeding the indebtedness; and the insured may change the beneficiary on dissolution of the marriage.
4. The creditor is wrong, but the debtor's right is only to furnish the required amount through existing policies he already owns or controls, not to procure the cover from another insurer authorised to transact business here; and the insured may change the beneficiary on dissolution without regard to any limitation imposed as a condition of the dissolution, a decree being unable to cut down a statutory power. On the credit insurance point the debtor must in any event be informed of whatever right he has before the transaction is completed, and a creditor offering only its affiliate's cover has not given him the option the subdivision requires, whatever view is taken of its extent.

Why: Minn. Stat. 61A.12 subd. 5: “When a creditor requires credit life insurance, credit accident and health insurance, or both, as additional security for an indebtedness, the debtor shall be given the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by the debtor OR procuring and furnishing the required coverage through any insurer authorized to transact insurance business in this state.” Two routes, not one - the fourth option drops the second - and “if this subdivision is applicable, the debtor shall be informed by the creditor of the right to provide alternative coverage before the transaction is completed.” Nothing conditions the right on the amount exceeding the indebtedness, which is the third option's addition. Subdivision 4: “The person applying for and procuring a policy may change the beneficiary or beneficiaries, if the consent of the beneficiary or beneficiaries named in the policy is obtained, or if a power so to do is reserved in the contract of insurance or in case of the death of the beneficiary, or in the case of the dissolution of a marriage between the insured and the beneficiary subject to any limitations on the power to change beneficiaries imposed as a condition of the dissolution.” Dissolution opens the power to substitute, which the second option denies, and the closing words preserve limitations imposed as a condition of the dissolution, which the fourth option reads out. Subdivisions 1 and 2 protect the proceeds against the creditors and representatives of the person effecting the insurance, subject to premiums paid in fraud of creditors, and give a policy payable to or assigned to a spouse effect for that person's separate use and that of the children.

A policy with an accelerated benefit rider is issued on 1 June. The insured is injured in an accident on 5 June and separately diagnosed with a covered illness on 10 June. A policy owner elsewhere asks what the insurer must send her when she requests an acceleration, and whether her accidental death benefit survives it.

1. Both the accident and the illness are covered from the effective date of the policy or rider, the 30 days being the period within which the insurer must decide a claim for an accelerated benefit rather than a period during which illness may be excluded; on request the insurer must send the policy owner and any irrevocable beneficiary a statement showing the effect of the payment on cash value, accumulation account, death benefit, premium, policy loans and liens, disclosing possible adverse effects on Medicaid or other government benefits and possible taxation; and where a death benefit remains, the accidental death benefit is reduced in the same proportion as the death benefit itself.
2. Neither event is covered so soon: the provision is effective for accidents on the effective date of the policy or rider and for illness no more than 30 days afterwards, and a diagnosis on day ten falls inside the window rather than outside it, so the illness is covered and the accident is not, the accident limb requiring the same 30 days to run first. The statement on a request for acceleration goes to the policy owner and to any irrevocable beneficiary and must disclose that receipt of the payment may adversely affect eligibility for Medicaid or other government benefits and may be taxable; and where any death benefit remains, the accidental death benefit provision is unaffected.
3. The accident is covered - the provision is effective for accidents on the effective date of the policy or rider - and the illness is not, the provision being effective for illness no more than 30 days following that date; on request the insurer must send the policy owner and any irrevocable beneficiary a statement showing the effect of the payment on cash value, accumulation account, death benefit, premium, policy loans and liens, disclosing possible adverse effects on Medicaid or other government benefits and possible taxation; and if any death benefit remains, the accidental death benefit provision is not affected by the payment. ✓
4. The accident is covered and the illness is not; but the statement goes to the policy owner alone, an irrevocable beneficiary receiving nothing until the accelerated benefit has actually been paid; and the accidental death benefit provision is unaffected by the payment.

Why: Minn. Stat. 61A.072 subd. 6: “The accelerated benefit provision shall be effective for accidents on the effective date of the policy or rider. The accelerated benefit provision shall be effective for illness no more than 30 days following the effective date of the policy or rider.” Two different starting points, and the sentence about illness sets the OUTSIDE date by which the provision must be effective - a policy may not push illness cover beyond 30 days - so an illness arising on day ten falls in the period the insurer is permitted to exclude, while the accident on day five does not. The third option reverses the two limbs and the second option turns the 30 days into a claims-handling period. Subdivision 5(d) requires the insurer, on a request for acceleration, to “send a statement to the policy owner or certificate holder AND IRREVOCABLE BENEFICIARY” showing the effect on cash value, accumulation account, death benefit, premium, policy loans and liens, disclosing that receipt may adversely affect eligibility for Medicaid or other government benefits and may be taxable - the irrevocable beneficiary is named, which is the fourth option's omission - and to issue an amended schedule page or notify a certificate holder of the reduced in-force face amount. Subdivision 4(c): “If any death benefit remains after payment of an accelerated benefit, the accidental death benefit provision, if any, in the policy or rider shall not be affected by the payment of the accelerated benefit.”

To open and contribute to a Health Savings Account (HSA), an individual must be:

1. Over the age of sixty-five and fully retired from work
2. Enrolled in a qualified high-deductible health plan ✓
3. Enrolled in a low-deductible managed-care HMO plan
4. Covered by Medicare Part A and Part B already

Why: HSA eligibility requires coverage under a qualified high-deductible health plan and no disqualifying coverage; HSAs offer a triple tax advantage.

A Minnesota health maintenance organization is examined by order of the commissioner. Its finance director asks what the organization must pay, where the money goes, and what happens to any surplus that accumulates in the fund the payments feed.

1. It pays a flat examination fee fixed by the commissioner by rule rather than the expenses and per diem salary fees of the examiners; that fee is deposited directly in the general fund; and no revolving fund exists for examinations, the salaries and expenses of examiners being met from the department's ordinary appropriation, as for other regular employees.
2. It pays nothing, because a health maintenance organization is not among the entities made liable for examination expenses, that liability reaching insurance companies, fraternals, township mutuals and reciprocal exchanges only, and the cost of examining a health maintenance organization falling on the revolving fund without reimbursement.
3. It pays the necessary expenses of the persons engaged in the examination plus the per diem salary fees of the departmental employees conducting or participating in it; those fees and expenses go into the Department of Commerce revolving fund; and the balance in that fund on June 30 of each year in excess of twenty-five thousand dollars is cancelled into the general fund. ✓
4. It pays the necessary expenses and the per diem salary fees, which go into the Department of Commerce revolving fund; but the fund retains its whole balance from year to year, the seven thousand five hundred dollar figure in the section being the ceiling above which the balance is cancelled into the general fund each June 30.

Why: Minn. Stat. 60A.03 subd. 5 makes the examined entity pay, and its list of who is caught is deliberately wide: it names companies “including, but not limited to, fraternals, township mutuals, reciprocal exchanges, nonprofit service plan corporations, HEALTH MAINTENANCE ORGANIZATIONS, vendors of risk management services licensed under section 60A.23, or self-insurance plans or pools”. What is payable is the necessary expenses of the persons engaged in the examination, visit, appraisal or desk audit, plus the per diem salary fees of the departmental employees conducting or participating in it, and the per diem fees may be based on the approved examination fee schedules of the National Association of Insurance Commissioners or otherwise determined by the commissioner. All of it “must be paid into the Department of Commerce revolving fund”. Subdivision 6 then governs that fund, and it carries TWO dollar figures doing two different jobs: the fund consists of “the $7,500 appropriated therefor” plus money transferred to it — that is the sum that created it — while clause (7) provides that “the balance in such fund on June 30 of each year in excess of $25,000 shall be forthwith canceled into the general fund”. The twenty-five thousand is the retention ceiling; the seven thousand five hundred is not. Clause (4) also draws a line the fourth option ignores: the fund pays per diem salaries and expenses of special examiners and appraisers and the expenses of named officials when participating in examinations, but “the salary of regular employees of the Division of Insurance shall not be paid out of this fund”.

Policy dividends paid on a participating life policy become taxable only when:

1. The insured reaches the age of fifty-nine and one-half
2. Cumulative dividends received exceed the total premiums paid ✓
3. The dividends are used to purchase paid-up additional insurance
4. The policy is first issued and the initial dividend is declared

Why: Dividends are treated as a return of premium and are not taxable until cumulative dividends exceed the policyowner's cost basis (premiums paid).

A cash refund annuity guarantees that, if the annuitant dies early, the beneficiary receives:

1. Double the original premium as an accidental-death style bonus payment
2. Any premium not yet paid out, in a lump sum ✓
3. Nothing, because all annuity payments stop at the annuitant's death
4. Continued lifetime payments for the rest of the beneficiary's own life

Why: A cash refund pays the beneficiary, in a lump sum, the difference between premiums paid and payments already received; an installment refund pays it out in continued installments.

A retiree with limited income and assets needs nursing-home care Medicare won't cover long term. The program that may help is:

1. Medicare Part B outpatient benefits
2. A Medicare Supplement policy covering Part A coinsurance
3. Social Security disability income
4. Medicaid (after meeting its means test) ✓

Why: Medicaid covers long-term custodial care for those who meet its income/asset limits, sometimes after a spend-down.

In an equity-indexed annuity using the 'annual point-to-point' crediting method, interest is based on the index value:

1. Averaged across all twelve monthly closing values of the year
2. Measured continuously on every single trading day of the year
3. At the start of the year compared to the end of the year ✓
4. At the single highest point the index reached during the term

Why: Annual point-to-point compares the index at the beginning and end of the year; high-water mark and monthly averaging are alternative methods.

A prepaid limited health service organization has annual gross premium income of $9,000,000 and no uncovered expenses above $100,000. It asks what tangible net equity it must hold and what it must place on deposit.

1. $100,000 of tangible net equity and a deposit of $75,000: the fixed sum governs because the percentage figure in subd. 1 operates as a CEILING on what the commissioner may require of a growing organization rather than as an alternative floor, the words up to a maximum in that paragraph doing the same work for the percentage as they do for the capital and surplus comparison; the deposit under subd. 3 is then $50,000 plus 25 percent of the $100,000 required, giving $75,000; and the deposit counts as an ADMITTED ASSET in computing tangible net equity, so requiring the larger figure would count the same dollars twice.
2. $180,000 of tangible net equity and a deposit of $95,000: the organization shall at all times maintain tangible net equity equal to THE GREATER of $100,000 or TWO PERCENT of annual gross premium income, up to a maximum of the required capital and surplus of an accident and health insurer - two percent of $9,000,000 is $180,000 - and shall deposit an amount equal to $50,000 PLUS 25 PERCENT OF THE TANGIBLE NET EQUITY REQUIRED, the deposit not being required to exceed $200,000. ✓
3. $180,000 of tangible net equity and a deposit of $200,000: the net equity calculation is the greater of $100,000 or two percent of the $9,000,000 of annual gross premium income, which is $180,000, but the deposit is then set at the statutory maximum of $200,000 for any organization whose required net equity exceeds $100,000, the $50,000 plus 25 percent formula in subd. 3 applying only to an organization at the $100,000 floor; the maximum is written as a fixed figure rather than as a percentage precisely so that every organization above the floor posts the same protection for its enrollees during a rehabilitation or conservation.
4. $225,000 of tangible net equity and a deposit of $106,250: the percentage is two and a half percent of annual gross premium income for an organization carrying no uncovered expenses above $100,000, the lower two percent figure applying only where the additional 25 percent uncovered-expense layer in paragraph (b) is being carried as well, and the deposit then following the $50,000 plus 25 percent formula on the resulting figure; that is how the section avoids charging the same organization twice for the same risk, and it is also why the commissioner may waive the requirement altogether for an organization holding net equity of at least $10,000,000.

Why: Minn. Stat. 62A.4523, subd. 1, paragraph (a) requires a prepaid limited health service organization to maintain at all times tangible net equity equal to THE GREATER of $100,000 or two percent of annual gross premium income, capped at the required capital and surplus of an accident and health insurer. Two percent of $9,000,000 is $180,000, which is the greater. Paragraph (b) would add 25 percent of any uncovered expense above $100,000, but there is none here. Subd. 3, paragraph (a) then sets the deposit at $50,000 PLUS 25 PERCENT OF THE TANGIBLE NET EQUITY REQUIRED under subd. 1, not to exceed $200,000: 25 percent of $180,000 is $45,000, plus $50,000, giving $95,000. The deposit is an ADMITTED ASSET in determining tangible net equity, its income belongs to the organization, and it may be withdrawn only against a substitute deposit of equal amount and value. It exists to protect enrollees and to keep limited health services running through a rehabilitation or conservation, and on receivership or liquidation it becomes an asset subject to chapter 60B. Subd. 4 lets the commissioner waive some or all of the net equity requirement where the organization itself has net equity of at least $10,000,000, or where an entity with that much net equity gives an acceptable written commitment to cover the organization's uncovered expenses. Context matters for the whole regime: under section 62A.451, subd. 5, LIMITED HEALTH SERVICE means pharmaceutical services covered under Medicare Part D and does NOT include hospital, medical, surgical or emergency services; the certificate of authority comes from the commissioner of COMMERCE; and under section 62A.4522 no individual may place such a contract without a licence to sell accident and health, nonprofit health service plan, or health maintenance organization coverage.

The key distinction between an agent and a broker is that an agent:

1. May write only one line of insurance, while a broker may write several
2. Represents the applicant's interests, while a broker is the insurer's appointed representative
3. Is paid a salary only, while a broker earns commission on placed coverage
4. Legally represents the insurer, while a broker represents the client ✓

Why: An agent is the insurer's legal representative (acting under an agency contract); a broker represents the insurance buyer in seeking coverage.

An individual accident and sickness policy provides medical expense benefits without naming the practitioners whose services are covered. A claim is made for a service within the lawful scope of practice of a licensed chiropractor. Another is made for the same service performed by a registered nurse meeting the statutory requirements. A Minnesota-domiciled insurer also asks about a policy it delivers to a resident of a state whose regulator does not review it.

1. Only the chiropractor's claim is payable: the equal reimbursement provision names the osteopathic physician, the optometrist and the chiropractor, a registered nurse being reimbursable only where the policy says in terms that it will pay for her services, since a nurse works under the direction of the practitioner who is treating the patient and her time is ordinarily paid for as part of the charge that practitioner makes; a provision that put her on an equal footing with the physician would allow a single service to be billed twice over. The medical benefits default and the commissioner's power to reach a policy delivered to a resident of a state whose regulator does not review it are as described in the fourth answer, so the claim within a chiropractor's lawful scope of practice is payable on an equal basis whoever performed it. The commissioner's ruling power over a policy delivered to a resident of a state that does not review it extends to Minn. Stat. 62A.03 subd. 1 and to Minn. Stat. 62A.04.
2. Neither claim is payable and the commissioner has no such power: a policy that does not name the practitioners whose services are covered covers physicians only, the reference to all licensed practitioners of the healing arts being a rule of construction that yields to the insurer's evident intent, and an insurer that has priced a medical expense benefit on physician charges cannot be taken to have contracted for the charges of every profession the state licenses; and a policy issued by an insurer domiciled here for delivery to a resident of another state is regulated by that state alone, the commissioner's authority over forms running to policies delivered in Minnesota, so that a regulator elsewhere who chooses not to review a form has made a decision for the insureds of that state which the commissioner has no power to disturb by ruling or otherwise. The medical benefits default and the equal reimbursement rule are in any event provisions the insurer may contract out of by naming the practitioners it will pay.
3. Both claims are payable and the commissioner may reach the out-of-state policy, but the equal reimbursement rule applies only to policies issued or entered into before 1 August 1974: the provision was a transitional measure for contracts written when the scope of practice of the named professions was narrower, later policies being governed by the medical benefits default alone; and that default is itself confined to a policy that names no practitioners at all, a policy that names even one profession being read as having specified the practitioners whose services are covered and as excluding every other, which is how an insurer that wishes to write a physician-only contract does so without listing the professions it is not paying for or explaining to an applicant why one practitioner is covered under her contract and another is not. The commissioner may reach the out-of-state policy by ruling and require it to meet the standards of Minn. Stat. 62A.03 subd. 1 and Minn. Stat. 62A.04.
4. Both claims are payable and the commissioner may reach the out-of-state policy: where a policy contains a provision for medical expense benefits, MEDICAL BENEFITS or similar terms INCLUDES TREATMENTS BY ALL LICENSED PRACTITIONERS OF THE HEALING ARTS unless the policy specifically states whose services are covered; where a policy provides reimbursement for a service within the lawful scope of practice of a duly licensed OSTEOPATHIC PHYSICIAN, OPTOMETRIST, CHIROPRACTOR OR REGISTERED NURSE meeting the requirements of Minn. Stat. 62A.15 subd. 3a, the person is entitled to reimbursement ON AN EQUAL BASIS whoever performed it; and where a domestic insurer delivers a policy to a resident of another state whose regulator has advised the commissioner that the policy is not subject to approval there, THE COMMISSIONER MAY BY RULING REQUIRE the policy to meet Minn. Stat. 62A.03 subd. 1 and 62A.04. ✓

Why: Minn. Stat. 62A.03 subd. 1(9), MEDICAL BENEFITS: "If the policy contains a provision for medical expense benefits, the term 'medical benefits' or similar terms as used therein INCLUDES TREATMENTS BY ALL LICENSED PRACTITIONERS OF THE HEALING ARTS UNLESS, subject to the qualifications contained in clause (10), THE POLICY SPECIFICALLY STATES THE PRACTITIONERS WHOSE SERVICES ARE COVERED." Silence produces the wide reading, not the narrow one, which is the third option's inversion. Clause (10): with respect to any individual accident and sickness policy "ISSUED OR ENTERED INTO SUBSEQUENT TO AUGUST 1, 1974, notwithstanding the provisions of the policy, if it contains a provision providing for reimbursement for any service which is in the lawful scope of practice of a duly licensed OSTEOPATHIC PHYSICIAN, OPTOMETRIST, CHIROPRACTOR, OR REGISTERED NURSE meeting the requirements of section 62A.15, subdivision 3a, the person entitled to benefits or person performing services under the policy is entitled to REIMBURSEMENT ON AN EQUAL BASIS for the service, WHETHER the service is performed by a physician, osteopathic physician, optometrist, chiropractor, or registered nurse ... licensed under the laws of this state." The registered nurse is in the list, which is the second option's omission, and the date is a floor - policies issued AFTER 1 August 1974 - not a ceiling, which is the fourth option's reversal. Subd. 2: where a policy is issued by an insurer domiciled in this state for delivery to a person residing in another state and that state's official "shall have advised the commissioner that any such policy is NOT SUBJECT TO APPROVAL OR DISAPPROVAL by such official, THE COMMISSIONER MAY BY RULING REQUIRE that such policy MEET THE STANDARDS SET FORTH IN SUBDIVISION 1 AND IN SECTION 62A.04."

The commissioner of health finds that an HMO has repeatedly failed to pay for a mandated benefit, affecting 900 enrollees. Rather than revoke the certificate, the commissioner proposes an administrative penalty of $25,000 and asks what the organization's options are and what becomes of the money.

1. The penalty exceeds the cap and the organization has 20 days to request a hearing: $25,000 is the maximum for a course of conduct rather than for each violation, and the hearing period is the same 20 days the chapter fixes for a response to a cease and desist order, administrative penalties and cease and desist orders being alternative forms of the same enforcement step.
2. The penalty is within the cap and the organization has 15 days to request a hearing, but the money is paid into the state treasury: an administrative penalty is a sanction rather than compensation, and the enrollees' remedy for an unpaid mandated benefit is the payment of the benefit itself, which the commissioner may compel by a cease and desist order.
3. The penalty is within the cap, the organization has 15 days to request a hearing, and half the money goes to the enrollees: the commissioner may, for any violation of statute or rule applicable to a health maintenance organization, OR IN LIEU OF SUSPENSION OR REVOCATION, levy an administrative penalty UP TO $25,000 FOR EACH VIOLATION; the organization may have 15 DAYS within which to file a written request for an administrative hearing and review; and if a penalty is levied the commissioner MUST DIVIDE 50 PERCENT OF THE AMOUNT AMONG THE AFFECTED ENROLLEES unless the commissioner certifies in writing that doing so would be too administratively complex or would give each enrollee less than $50. ✓
4. The penalty is within the cap, but the organization has no right to a hearing and the money goes to the affected enrollees in full: a penalty levied IN LIEU OF suspension or revocation is a concession the organization may accept or refuse, so the statute gives it no separate hearing right and instead leaves it to elect the formal proceedings under the suspension and revocation sections if it prefers them, and the whole of the penalty is distributed because the section's purpose is to make the affected enrollees whole rather than to raise revenue, the certification the commissioner may give being addressed to the mechanics of distribution rather than to the share distributed, so that where distribution is impracticable the money is applied for the benefit of the affected class in some other way.

Why: Minn. Stat. 62D.17, subd. 1 lets the commissioner of health levy an administrative penalty of up to $25,000 FOR EACH VIOLATION, either for any violation of a statute or rule applicable to a health maintenance organization or IN LIEU OF suspension or revocation under section 62D.15. Five factors govern the level: the number of enrollees affected; the effect on enrollees' health and access to health services; where only one enrollee is affected, the effect on that enrollee's health; whether the violation is isolated or part of a pattern; and the economic benefit derived by the organization or a participating provider. Reasonable written notice of the intent to levy and the reasons must be given, and the organization may have 15 days to file a written request for an administrative hearing and review, subject to judicial review under chapter 14. The distribution rule is the part most often missed: if a penalty is levied the commissioner MUST divide 50 percent of the amount among any enrollees affected, unless the commissioner certifies in writing that the division would be too administratively complex or that the number affected would produce less than $50 per enrollee. Note the neighbouring periods, which are the source of the distractors: 20 days is the minimum time before a hearing on denial, suspension or revocation under section 62D.16, subd. 1, and also the period after service of a cease and desist order within which the respondent may request a hearing under subd. 4. Subd. 2 makes a violation, or knowingly submitting false information in a required report, a misdemeanour.

A provider enters a contract with a viator who is also the insured, having obtained no physician's statement about the viator's state of mind. It tells the issuing insurer nothing for six weeks after the transfer documents are executed. The insurer, when a verification of coverage request finally arrives, takes seven weeks to answer. A broker carried out several of the steps instead of the provider.

1. The provider is in breach twice and the insurer once, but the broker's work does not count for the provider: the duties in the subdivision are imposed on the provider by name, and a provider cannot discharge a statutory obligation by leaving it to a person who is deemed to represent only the viator and owes the viator a fiduciary duty, the deeming provision working in the opposite direction to the one the answer supposes; so the provider remains answerable for the written statement from a licensed attending physician that the viator is of sound mind and under no constraint or undue influence, which must be obtained before the contract is entered into wherever the viator is the insured, and for the written notice to the issuing insurer, which is owed within 20 days after the viator executes the transfer documents; and the insurer's failure to answer a verification of coverage request within 30 calendar days is a violation of the fraudulent act and unfair trade practice provisions.
2. The provider is in breach twice, the insurer once, and the broker's work counts for the provider: a provider entering a viatical settlement contract shall FIRST OBTAIN, where the viator is the insured, A WRITTEN STATEMENT FROM A LICENSED ATTENDING PHYSICIAN THAT THE VIATOR IS OF SOUND MIND AND UNDER NO CONSTRAINT OR UNDUE INFLUENCE, and a document consenting to release of the insured's medical records; WITHIN 20 DAYS after the viator executes the transfer documents or enters any understanding to viaticate, the provider shall give WRITTEN NOTICE TO THE INSURER that the policy has or will become a viaticated policy; the insurer shall respond to a request for verification of coverage WITHIN 30 CALENDAR DAYS, failure being a violation of the fraudulent act and unfair trade practice provisions; and IF A BROKER PERFORMS ANY OF THESE ACTIVITIES REQUIRED OF THE PROVIDER, THE PROVIDER IS DEEMED TO HAVE FULFILLED THE REQUIREMENTS. ✓
3. The provider is in breach once only: a written statement from a licensed attending physician is required where the viator is TERMINALLY OR CHRONICALLY ILL rather than wherever the viator is the insured, and nothing is said about this viator's condition, so its absence is no breach; the written notice to the insurer is owed within 20 days and was six weeks late, the insurer's period is 30 calendar days and seven weeks exceeds it, and a broker who performs any of the activities required of the provider is treated as having performed them for it.
4. The provider is in breach twice and the broker's work counts, but the insurer is not in breach: the 30-day period applies only to a request for verification of coverage made on the National Association of Insurance Commissioners form, an insurer being entitled to take such time as it reasonably needs over a request made on a form of the provider's own devising, and to insist on an original rather than a facsimile or an electronic copy before it answers at all; and the 20-day notice to the insurer runs only from execution of the transfer documents, an informal understanding to viaticate the policy starting no period at all because there is nothing yet for the insurer to record against the policy, so the provider's six weeks may be measured from a later date than the answer supposes; the physician's statement and the medical release were both owed before the contract was entered into, and a broker who obtained them did so for the provider.

Why: Minn. Stat. 60A.9579 subd. 1(a): a provider entering a viatical settlement contract "SHALL FIRST OBTAIN: (1) IF THE VIATOR IS THE INSURED, a written statement from a LICENSED ATTENDING PHYSICIAN that the viator is OF SOUND MIND AND UNDER NO CONSTRAINT OR UNDUE INFLUENCE to enter into a viatical settlement contract; and (2) a document in which the insured CONSENTS TO THE RELEASE OF THE INSURED'S MEDICAL RECORDS" to the provider, the broker and the issuing company. The trigger is that the viator IS the insured, not that the viator is ill, which is the third option's substitution. Paragraph (b): "WITHIN 20 DAYS after a viator executes documents necessary to transfer any rights under an insurance policy or within 20 days of entering ANY AGREEMENT, OPTION, PROMISE, OR ANY OTHER FORM OF UNDERSTANDING, expressed or implied, to viaticate the policy, the ... provider SHALL GIVE WRITTEN NOTICE TO THE INSURER that issued that insurance policy that the policy HAS OR WILL BECOME A VIATICATED POLICY", accompanied by the medical release, the viator's application, the notice and a request for verification of coverage on the National Association of Insurance Commissioners form unless another is approved. Paragraph (d): "The insurer SHALL RESPOND to a request for verification of coverage submitted on an approved form ... WITHIN 30 CALENDAR DAYS", shall accept a request on the NAIC form "OR ANY OTHER FORM APPROVED BY THE COMMISSIONER", and "shall accept AN ORIGINAL OR FACSIMILE OR ELECTRONIC COPY" - which is the fourth option's two errors; failure "is a violation of sections 60A.9581, subdivision 3, and 60A.9585." Paragraph (e) requires a witnessed consent document from the viator before or at execution. Paragraph (f) is decisive on the last point: "IF A VIATICAL SETTLEMENT BROKER PERFORMS ANY OF THESE ACTIVITIES REQUIRED OF THE VIATICAL SETTLEMENT PROVIDER, THE PROVIDER IS DEEMED TO HAVE FULFILLED THE REQUIREMENTS OF THIS SECTION" - the second option's error.

An insured can perform some but not all job duties and returns to work part-time at reduced pay. The benefit that responds is:

1. Waiver of premium, which only suspends the premium obligation
2. Residual or partial disability benefit ✓
3. Presumptive total disability benefit
4. The accidental death benefit rider

Why: Residual/partial disability pays a reduced benefit when the insured can work partially or at reduced earnings.

An issuer files an individual Medicare supplement form projected to return 62 percent of earned premiums as aggregate benefits, and a group form projected at 70 percent. Its application form does not mention the loss ratio. It has filed no refund calculating form for the year.

1. Only the missing filing is wrong: the standards are 65 percent of aggregate earned premiums for group policies and 60 percent for individual policies, so a group form projected at 70 percent and an individual form projected at 62 percent both clear the mark; and the anticipated loss ratio is disclosed in the outline of coverage delivered with the policy rather than on the application form.
2. The individual form and the missing filing are wrong, but the group form and the application are not: the group standard is 65 percent of aggregate earned premiums, which a form projected at 70 percent comfortably satisfies, while the individual standard of 75 percent is missed by a form projected at 62 percent; and the anticipated loss ratio must be prominently disclosed and explained only where the issuer applies to the commissioner for a rate increase on a form already in use, that being the moment at which the ratio bears on what the policyholder is being asked to pay, so an application form silent on the point is unobjectionable at the original sale.
3. All three are wrong: a Medicare supplement policy form shall not be delivered or issued for delivery unless it can be expected to return to holders in aggregate benefits AT LEAST 75 PERCENT of aggregate earned premiums FOR GROUP policies and AT LEAST 65 PERCENT FOR INDIVIDUAL policies; the APPLICATION FORM MUST PROMINENTLY DISCLOSE THE ANTICIPATED LOSS RATIO AND EXPLAIN WHAT IT MEANS; and an issuer shall collect and file with the commissioner BY MAY 31 OF EACH YEAR the data contained in the National Association of Insurance Commissioners Medicare Supplement Refund Calculating form for each type of benefit plan. ✓
4. The group form and the missing filing are wrong, but the individual form and the application are not: the individual standard is 60 percent, reflecting the higher acquisition cost of individually sold coverage, and the disclosure duty attaches to the policy rather than to the application, since an applicant who has not yet bought anything has no use for a ratio computed across a whole block of business; the refund calculating form is likewise filed for each type of standard benefit plan on a statewide basis, a level of aggregation that tells an individual applicant nothing about the policy in front of her and would be positively misleading if printed on the application she is asked to sign.

Why: Minn. Stat. 62A.36, subd. 1, paragraph (a) sets the two loss ratio standards, and the higher one belongs to GROUP business: a Medicare supplement policy form or certificate form shall not be delivered or issued for delivery unless it can be expected, over the entire period for which rates are computed, to return to policyholders and certificate holders in aggregate benefits AT LEAST 75 PERCENT of aggregate earned premiums in the case of GROUP policies and AT LEAST 65 PERCENT in the case of INDIVIDUAL policies. Both filed forms fall short. The ratios are calculated on incurred claims experience - or incurred HEALTH CARE EXPENSES, as defined in section 62A.3099, subd. 10, where a health maintenance organization provides coverage on a service rather than reimbursement basis - and earned premiums, according to accepted actuarial principles, and the insurer must demonstrate that the THIRD YEAR loss ratio is at or above the applicable percentage. The same paragraph requires the APPLICATION FORM to prominently disclose the anticipated loss ratio and explain what it means; the disclosure sits on the application, before the sale, not in the policy. Paragraph (b) requires the issuer to collect and file with the commissioner BY MAY 31 EACH YEAR the data in the National Association of Insurance Commissioners Medicare Supplement Refund Calculating form for each type of Medicare supplement benefit plan; where the benchmark ratio since inception exceeds the adjusted experience ratio since inception, a refund or credit calculation is required, done on a statewide basis for each type of standard benefit plan and excluding experience on policies issued within the reporting year.

A producer has moved to Minnesota from the state where she has been licensed and where she remains licensed today. Two months after establishing legal residence here she applies to become a resident licensee for the same lines she held there. A colleague tells her that moving here restarts the whole process.

1. The colleague is right in part: the relief removes the prelicensing education but not the examinations, which must be taken for each line, and the 90 days run from the surrender of the prior state's licence rather than from the establishment of legal residence.
2. The colleague is right: the exemption operates only in favour of an applicant who remains a nonresident, a producer who establishes legal residence here applying as a resident and taking the ordinary requirements; her remedy was a nonresident licence taken before the move.
3. The colleague is wrong, but the relief is narrower: it removes education and examination for the major lines she held only, any limited line being qualified for afresh, and it is open only where the prior state gives Minnesota producers the same relief.
4. The colleague is wrong: where a producer licensed in another state moves here and applies within 90 days of establishing legal residence to become a resident licensee, no prelicensing education or examination is required for any line of authority previously held in the prior state. ✓

Why: Minn. Stat. 60K.40 subd. 2 provides that “if a person licensed as an insurance producer in another state who moves to this state makes application within 90 days of establishing legal residence to become a resident licensee under section 60K.37, no prelicensing education or examination is required of that person to obtain any line of authority previously held in the prior state”. Three things follow. The relief is for a person becoming a resident licensee, so the third option has it exactly backwards. It removes education and examination together, and the 90 days run from the establishment of legal residence, which are the two errors in the second option. And it reaches “any line of authority previously held in the prior state”, with no distinction between major and limited lines and no reciprocity condition - the reciprocity requirements in sections 60K.39 and 60K.53 govern nonresident licensing, not this relief, which is where the fourth option imports them.

The federal Genetic Information Nondiscrimination Act (GINA) generally restricts the use of genetic information in:

1. Health insurance and employment decisions ✓
2. Setting state automobile insurance premium rates
3. Property and casualty insurance underwriting only
4. Determining eligibility for federal student loans

Why: GINA limits how genetic information may be used in health coverage and employment, prohibiting discrimination based on genetic test results.

A mailing is headed with the name of the insurer's parent holding company and a shield device in blue and white closely resembling the emblem of a state agency. The insurer's own name appears only in small type in the footer. The insurer says it has used its group's real name and its own name, so nothing is untrue.

1. The government emblem breaches the part but the parent company name does not: the prohibition on names is directed at fictitious or borrowed names, and an insurer is entitled to advertise under the name of the group of which it is genuinely a member provided its own name appears somewhere in the material.
2. The parent company name breaches the part but the emblem does not: the part prohibits the use of the NAME of a government agency or programme, and a shield device that resembles a state emblem without reproducing any name is addressed instead through the general prohibition on misleading illustrations.
3. Neither breaches the part, though both would be objectionable if untrue: the identity requirement is satisfied where the insurer's name appears in the advertisement, and the prohibitions on names and symbols are engaged only where the material conveys something false about who the insurer is or who stands behind it. A group designation used by a company that genuinely belongs to the group says nothing false, and a shield in the state's colours says nothing at all until it is read alongside words claiming an official connection, which this mailing does not make.
4. Both features breach the part: the identity of the insurer, agents or agency must be made clear in all advertisements or representations, and an advertisement must not use a trade name, an insurance group designation, the name of the parent company, a service mark, a symbol or any other device which has the capacity or tendency to mislead as to identity, nor any combination of words, symbols or materials so similar to those used by a government agency that it tends to confuse or mislead buyers into believing the solicitation is connected with the agency. ✓

Why: Minn. R. 2790.0800 has three subparts. Subpart 1: “The identity of the insurer, agents, or agency must be made clear in all advertisements or representations, whether written or oral.” Clarity, not mere presence, is the standard - which is what the fourth option reduces it to. Subpart 2 lists what may not be used where it has the capacity or tendency to mislead or deceive as to the identity of the insurer, agents or agency: “a trade name, an insurance group designation, the name of the parent company of the insurer, the name of a government agency or program, the name of a department or division of an insurer, the name of an agency, the name of any other organization, a service mark, a slogan, a symbol, or any other device”. The parent company's name is named in that list, and the test is the capacity to mislead rather than the falsity of the name, which is where the second option's entitlement argument fails. Subpart 3 covers the emblem without needing a name at all: an advertisement must not use “any combination of words, symbols, or materials which, by its content, phraseology, shape, color, nature, or other characteristics, is so similar to combinations of words, symbols, or materials used by federal, state, or local government agencies that it tends to confuse or mislead prospective buyers into believing that the solicitation is in some manner connected with the government agency”. Shape and colour are expressly named, which is the third option's error.

'Unfair discrimination' in insurance means:

1. Setting premiums using actuarially sound mortality tables
2. Declining an applicant who genuinely presents a substandard risk
3. Offering preferred rates to applicants who do not use tobacco
4. Charging different rates to individuals of the same class and risk ✓

Why: Unfair discrimination is applying different rates or terms to insureds of the same class and equal risk; risk-based distinctions are permitted.

In an annuity, the person whose life the income payments are based on is the:

1. Insurer
2. Annuitant ✓
3. Beneficiary
4. Owner

Why: The annuitant is the measuring life for payments; the owner controls the contract and the beneficiary receives any death proceeds.

A withdrawal from a nonqualified deferred annuity is taxed:

1. Principal first, with no tax until basis is gone
2. Gain first (LIFO), as ordinary income ✓
3. Only when the contract is fully surrendered
4. At long-term capital-gains rates entirely

Why: Nonqualified annuity withdrawals come out earnings-first (LIFO) and are taxed as ordinary income (plus a possible penalty before 59½).

After a health policy is reinstated, losses from sickness are covered:

1. Only if the sickness begins more than 10 days after reinstatement ✓
2. Never, because reinstated policies exclude sickness entirely
3. Immediately, with no waiting of any kind after reinstatement
4. Only after a new full two-year contestable period has elapsed

Why: On reinstatement, accidents are covered immediately, but sickness is covered only if it begins more than 10 days after the reinstatement date.

A PPO member chooses an out-of-network provider. Compared with in-network care, the member will usually pay:

1. Exactly the same as in-network care
2. More in cost-sharing, but still receive some coverage ✓
3. A flat $5 copay regardless of the charge
4. Nothing, because PPOs never cover out-of-network care

Why: PPOs allow out-of-network care at higher cost-sharing; coverage continues but at a less favorable level.

In a variable life insurance policy, the investment risk on the cash value is borne by:

1. The producer who originally sold the policy contract
2. The state insurance guaranty association at all times
3. The insurance company, which guarantees the cash value in full
4. The policyowner ✓

Why: In variable life the cash value is held in separate accounts the owner directs, so the policyowner assumes the investment risk (a minimum death benefit is usually guaranteed).

An issuer delivers its Medicare supplement outline of coverage in 10-point type with the application, illustrates only the premium for the applicant's current age band, and states that the policy may be returned within ten days for a refund payable within 30 days.

1. Only the type size is wrong: the outline must be in 12-point type, but an issuer illustrates the premium actually applicable to the applicant rather than every premium in its schedule, and the ten-day return with a 30-day refund is the standard the section prescribes.
2. The type size and the premium illustration are wrong, but the return provision is right: the outline requirements are as described, while the free look for a Medicare supplement policy is ten days from receipt with the refund due within 30 days, which mirrors the general free look for individual accident and health policies.
3. The type size is wrong and the return provision has the periods reversed, but the premium illustration is right: the outline must show the premium and manner of payment for the plan APPLIED FOR, the requirement to illustrate all possible premiums applying to a solicitation in which more than one category of Medicare supplement plan is actually offered, and an applicant who has asked for a single plan being entitled to a single figure rather than to a schedule of figures that would only obscure the one premium that actually matters to her at the point of sale.
4. All three are wrong: the outline must contain the required information IN NO LESS THAN 12-POINT TYPE and be delivered to the applicant AT THE TIME THE APPLICATION IS MADE; the premium and manner of payment SHALL BE STATED FOR ALL PLANS OFFERED to the prospective applicant and ALL POSSIBLE PREMIUMS FOR THE PROSPECTIVE APPLICANT SHALL BE ILLUSTRATED; and the required right-to-return statement gives the holder 30 DAYS AFTER RECEIPT to send the policy back, whereupon it is treated as if it had NEVER BEEN ISSUED and ALL PAYMENTS ARE RETURNED WITHIN TEN DAYS. ✓

Why: Minn. Stat. 62A.39 forbids delivery or issue of an individual Medicare supplement plan, or of a certificate under a group plan, unless the plan is shown on the cover page and an outline containing at least the listed information IN NO LESS THAN 12-POINT TYPE is delivered to the applicant AT THE TIME THE APPLICATION IS MADE. Paragraph (c) requires a statement of the renewal provisions including any reservation of a right to change premiums, and then two further things: the premium and manner of payment SHALL BE STATED FOR ALL PLANS THAT ARE OFFERED to the prospective applicant, and ALL POSSIBLE PREMIUMS FOR THE PROSPECTIVE APPLICANT SHALL BE ILLUSTRATED. Paragraph (g) prescribes the right-to-return statement verbatim: if the holder returns the policy or certificate WITHIN 30 DAYS AFTER RECEIPT, the issuer will treat it as if it had never been issued and RETURN ALL PAYMENTS WITHIN TEN DAYS - 30 to return, ten to refund, and the question reverses them. The other required contents are a description of the principal benefits; a statement of exceptions, reductions and limitations carrying the prescribed bold-print warning that the policy does not cover all medical expenses beyond Medicare and does not cover custodial or residential nursing care; the statement that the outline is a summary and that the policy governs; the anticipated loss ratio in the prescribed words; the replacement warning not to cancel existing coverage until the new policy is received; and the notice that the policy may not fully cover all medical costs. Paragraph (f) requires a substitute outline, carrying a prescribed notice above the company name, where the policy is issued on a basis that would require the original outline to be revised.

An insurer's provider agreement says the clinic may not contract with any other payer at a lower price, that if it does the insurer may require the same lower price, and that the insurer may then terminate or renegotiate the contract. The clinic asks whether any of this is enforceable.

1. None of the three is permitted: an agreement between an insurer and a health care provider MAY NOT PROHIBIT, OR GRANT THE INSURER AN OPTION TO PROHIBIT, the provider from contracting with other insurers or payors to provide services AT A LOWER PRICE than the payment specified in the contract; MAY NOT REQUIRE, OR GRANT THE INSURER AN OPTION TO REQUIRE, the provider to ACCEPT A LOWER PAYMENT in the event the provider agrees to provide services to any other insurer or payor at a lower price; and MAY NOT REQUIRE, OR GRANT THE INSURER AN OPTION OF, TERMINATION OR RENEGOTIATION of the existing contract in that event. ✓
2. The first two are prohibited but the third is not: an insurer must be free to end a contract whose commercial basis has changed, and the section reaches clauses that dictate the provider's dealings with others rather than clauses about the life of the insurer's own contract; the first two are as described.
3. None of the three is permitted, but only where the insurer actually exercises the clause: the section prohibits an insurer from prohibiting, requiring or terminating, and a clause that merely grants an option has done none of those things until the option is taken up, which is why a provider's remedy arises on the exercise rather than on the signing.
4. All three are permitted so long as the provider agreed to them: most favoured nation clauses are ordinary commercial terms between sophisticated parties, and the section is directed at an insurer that imposes such a term on a provider who had no realistic choice, so a clinic that negotiated the agreement and signed it is bound by what it agreed, the remedy for overreaching lying in the general unfair trade practices provisions rather than in this section, which is aimed at a contract of adhesion offered on a take-it-or-leave-it basis to a provider with no bargaining power of its own to bring to the negotiation.

Why: Minn. Stat. 62A.64: "An agreement between an insurer and a health care provider MAY NOT: (1) PROHIBIT, OR GRANT THE INSURER AN OPTION TO PROHIBIT, the provider from contracting with other insurers or payors to provide services AT A LOWER PRICE than the payment specified in the contract; (2) REQUIRE, OR GRANT THE INSURER AN OPTION TO REQUIRE, the provider to ACCEPT A LOWER PAYMENT in the event the provider agrees to provide services to any other insurer or payor at a lower price; or (3) REQUIRE, OR GRANT THE INSURER AN OPTION OF, TERMINATION OR RENEGOTIATION OF THE EXISTING CONTRACT in the event the provider agrees to provide services to any other insurer or payor at a lower price." Clause (3) names termination and renegotiation expressly, which is the second option's error. Each clause is drafted in the same double form - the agreement may not do the thing, and may not GRANT THE INSURER AN OPTION to do it - so the vice is the clause itself and not its exercise, which is the third option's error. And the prohibition is on what the AGREEMENT may contain, so the provider's consent is beside the point: a term of this kind is outside what the parties may lawfully agree, which is the fourth option's.

A producer convinces a client to drop a policy at Company A and buy one at Company B using misleading comparisons. This is:

1. Coercion
2. Churning
3. Twisting ✓
4. Rebating

Why: Inducing a replacement between different insurers through misrepresentation is twisting; doing it within the same insurer is churning.

An insurer prepares annual reports for policies designated as ones for which illustrations will be used. For a flexible premium universal life policy it proposes to report the current death benefit, the policy value at the end of the period and the outstanding loan, and to say nothing about whether the net cash surrender value will carry the policy to the next report.

1. The report is adequate: the section prescribes the contents of the annual report for policies other than universal life, universal life reports being governed by the insurer's own practice, and the lapse notice is required only for FIXED premium policies, where the premium is not within the owner's control.
2. The report is deficient: for universal life policies it must include the beginning and end dates of the current report period, the policy value at the end of the PREVIOUS period as well as the current one, the total amounts credited or debited during the period identified by type, the current death benefit on each life covered, the net cash surrender value, the amount of any outstanding loans, and - for a flexible premium policy, assuming guaranteed interest, mortality and expense loads - a notice if the net cash surrender value will not maintain insurance in force to the end of the next reporting period unless further premiums are paid. ✓
3. The report is deficient, but the lapse notice for a flexible premium policy is assessed assuming CONTINUED SCHEDULED PREMIUM PAYMENTS as well as guaranteed interest, mortality and expense loads, so an insurer whose policy would survive on scheduled premiums need not give it.
4. The report is deficient, and it must also state the annual contract premium and the current cash surrender value: those items are required of every annual report under the section, the distinction it draws between universal life and other policies going to the order in which the items appear rather than to which of them are required at all. On that reading a universal life report and a whole life report would carry the same contents in a different order of presentation, which is plainly not how the two paragraphs of the section have been drafted, the one listing several items that the other does not mention anywhere at all in its own list.

Why: Minn. Stat. 61A.735(a) requires an insurer, for a policy designated as one for which illustrations will be used, to give each policy owner an annual report on the status of the policy. Paragraph (b) prescribes seven or eight items for UNIVERSAL LIFE policies specifically - so universal life is the case the section addresses first, not one it leaves to the insurer as the second option supposes: the beginning and end dates of the current report period; the policy value at the end of the previous period and at the end of the current period; the total amounts credited or debited during the period, identifying each by type; the current death benefit at the end of the period on each life covered; the net cash surrender value; the amount of outstanding loans; and then two alternative lapse notices. Clause (7) is the fixed premium form, assessed “assuming guaranteed interest, mortality, and expense loads AND CONTINUED SCHEDULED PREMIUM PAYMENTS”. Clause (8) is the flexible premium form, assessed “assuming guaranteed interest, mortality, and expense loads” and triggered where the net cash surrender value “will not maintain insurance in force until the end of the next reporting period UNLESS FURTHER PREMIUM PAYMENTS ARE MADE”. The scheduled-premium assumption belongs to the fixed premium clause, which is where the third option transplants it, and the notice is required for both kinds, which is the second option's error. Paragraph (c) sets out what the report must include “for all other policies” where applicable - current death benefit, annual contract premium, current cash surrender value and so on - so those items belong to the non-universal-life list rather than to every report, which is the fourth option's.

A producer is called up for military service shortly before her renewal falls due and cannot comply with the renewal procedures. On her return she has also moved house. She asks what relief is available for the renewal and what she must do about the move, and whether the Department may use an outside body to collect her fees.

1. She may request a waiver of the renewal procedures, but not of an examination requirement or of a fine or sanction already imposed for failing to comply with them, the waiver reaching the procedures alone; she must inform the commissioner of the change of address within thirty days; and the commissioner may contract out ministerial functions such as record keeping, but not the collection of fees, which stays with the Department.
2. No waiver is available, military service being met instead by the twelve-month reinstatement window open to any producer whose licence lapses; she must inform the commissioner of the change of address within thirty days; and the commissioner may contract with the NAIC for ministerial functions, though not for the collection of fees.
3. She may request a waiver of the renewal procedures, which is available for military service alone and for no other extenuating circumstance; she must inform the commissioner of the change of address before it takes effect rather than within any period after it; and the collection of fees must be performed by the Department itself.
4. She may request a waiver of the renewal procedures, and of any examination requirement or other fine or sanction imposed for failing to comply with them; she must inform the commissioner of the change of address within ten days of the change, by any means acceptable to the commissioner; and the commissioner may contract with nongovernmental entities, including the NAIC, to perform ministerial functions including the collection of fees. ✓

Why: Minn. Stat. 60K.38 subd. 4 lets a licensed producer “who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance, such as a long-term medical disability”, request a waiver of those procedures, and adds that the producer “may also request a waiver of any examination requirement or any other fine or sanction imposed for failure to comply with renewal procedures”. Military service is one example rather than the only ground, which is the fourth option's error, and the second limb of the waiver is express, which is the second option's. Subdivision 6 requires licensees to inform the commissioner “by any means acceptable to the commissioner, of a change of name or address within ten days of the change” - ten days after the change, not thirty and not before it. Subdivision 7 permits the commissioner to contract with nongovernmental entities, “including the National Association of Insurance Commissioners (NAIC) or any affiliates or subsidiaries that the NAIC oversees, to perform any ministerial functions, including the collection of fees, related to producer licensing”.

A disability advertisement says “benefits are paid in addition to any other insurance you carry”. The policy contains a coordination of benefits provision, a reduction based on social security benefits, and a workers' compensation exception. The insurer asks whether the statement can stand.

1. It can stand: the rule is engaged only by an “other insurance” exception, reduction, limitation or deductible in the strict sense, and a coordination of benefits provision, a social security offset and a workers' compensation exception each operate on a source of recovery that is not other INSURANCE within the meaning of the list. Those three provisions are dealt with instead by the general requirement that an advertisement not mislead as to the extent of a benefit payable, which is satisfied where the statement made is true of other private insurance policies, as this one is.
2. It cannot stand at all: where a policy contains any of the listed provisions the advertisement is prohibited from referring to other insurance in any way, the rule admitting of no cure, and an insurer wishing to make the comparison must instead set out the full coordination clause.
3. It can stand if the advertisement discloses the coordination of benefits provision: the social security reduction and the workers' compensation exception are not on the list, which is confined to provisions dealing with the interaction between two private insurance policies covering the same loss.
4. It cannot as it stands: where a policy contains any of the listed provisions - among them a coordination of benefits or nonduplication provision, a reduction based on social security or other disability benefits, and a workers' compensation, employer's liability, occupational disease or automobile no-fault exception, reduction or limitation - an advertisement must not state that benefits are payable in addition to other insurance unless it contains an appropriate reference to the coverage excepted. ✓

Why: Minn. R. 2790.0500 subp. 19 provides that if a policy contains any of eight listed provisions “or similar provisions”, an advertisement referring to the policy “must not state that benefits are payable in addition to other insurance unless the statement contains an appropriate reference to the coverage excepted”. The list is: A, an “other insurance” exception, reduction, limitation or deductible; B, a “coordination of benefits” or “nonduplication” provision; C, an “other insurance in this company” provision; D, an “insurance in another insurer's” provision; E, a “relation of earnings to insurance” provision; F, a workers' compensation, employer's liability, occupational disease law or automobile no-fault exception, reduction or limitation; G, a reduction based on social security benefits or other disability benefits; and H, a Medicare exception, reduction or limitation. Items F, G and H are all about recoveries that are not private insurance, which is why the second and fourth options' narrowing of the list to insurance-versus-insurance provisions cannot stand. The rule is a disclosure condition rather than an absolute bar - the statement may be made if it carries “an appropriate reference to the coverage excepted” - which is what the third option removes.

A home-care-only long-term care policy pays for home health care only where the insured would otherwise need skilled nursing facility care, restricts eligible services to those delivered by a registered or licensed practical nurse, and excludes adult day care. The carrier says a home-care-only policy may be sold at all.

1. The carrier is wrong that such a policy may be sold: a long-term care policy must provide benefits for prescribed long-term care in a nursing facility, and section 62A.48 sets the minimum standards for that coverage, so a product confined to home care is sold as an ordinary accident and health policy rather than as long-term care insurance; the three restrictions are therefore beside the point, since the prohibitions on limiting home health care benefits reach only a policy that qualifies as long-term care insurance to begin with.
2. The carrier is right on all four points: coverage providing home care services only is permitted, and because it exists as an exception to the general standards it is not held to them, so the insurer may fix its own benefit trigger, name the professionals whose services it will pay for and choose the settings it will cover; the only conditions are that any limited provider network and managed care practices be adequately disclosed in the policy and in advertising, and that the insurer not sell where providers are too few to meet policyholders' needs.
3. The carrier is right that such a policy may be sold and wrong about two of the three: the skilled nursing facility trigger and the exclusion of adult day care services are prohibited, but a policy may limit eligible services to those provided by a registered nurse or licensed practical nurse, since the prohibition in section 62A.49 is aimed at requiring a nurse or therapist to do work a home health aide could do within her own scope, which presupposes that the insurer may otherwise choose the level of professional it will pay for; the separate prohibition on requiring a level of certification greater than the eligible service requires would be redundant on any other reading of it.
4. The carrier is right that such a policy may be sold and wrong about all three restrictions: section 62A.48 DOES NOT PROHIBIT the sale of coverage providing HOME CARE SERVICES ONLY, provided the policy meets sections 62A.46 to 62A.56 except the conditions relating to long-term care in nursing facilities; and a long-term care policy providing home health care or community care benefits SHALL NOT limit or exclude benefits by REQUIRING THAT THE INSURED WOULD NEED CARE IN A SKILLED NURSING FACILITY if home health care were not provided, by LIMITING ELIGIBLE SERVICES TO SERVICES PROVIDED BY A REGISTERED NURSE OR LICENSED PRACTICAL NURSE, or by EXCLUDING COVERAGE FOR ADULT DAY CARE SERVICES. ✓

Why: Minn. Stat. 62A.49, subd. 1 permits home-care-only coverage: section 62A.48 does not prohibit the sale of policies, certificates, subscriber contracts or other evidences of coverage that provide HOME CARE SERVICES ONLY, provided they meet sections 62A.46 to 62A.56 except those conditions relating to long-term care in nursing facilities, with disclosures and representations adjusted to remove references to nursing home coverage. Subd. 3 then lists TEN prohibited ways of limiting or excluding home health care or community care benefits, and three of them are in this question: requiring that the insured WOULD NEED CARE IN A SKILLED NURSING FACILITY if home health care services were not provided; LIMITING ELIGIBLE SERVICES TO SERVICES PROVIDED BY A REGISTERED NURSE OR LICENSED PRACTICAL NURSE; and EXCLUDING COVERAGE FOR ADULT DAY CARE SERVICES. The others are: requiring that the insured first or simultaneously receive nursing or therapeutic services in a home, community or institutional setting; requiring a nurse or therapist to provide services that a home health aide or other licensed or certified home care worker could provide within their scope - a separate prohibition from clause (3), not a gloss on it; excluding personal care services by a home health aide; requiring a level of certification or licensure greater than the eligible service requires; requiring the insured to have an ACUTE condition; limiting benefits to Medicare-certified agencies or providers; and excluding coverage based on the location or type of residence where the services would be provided. Subd. 2 permits a limited provider network and managed care practices, if adequately disclosed in the policy and in any advertisements, but forbids selling in areas where there are not sufficient providers to meet policyholders' needs.

An agent sells a Medicare supplement plan to a man who already holds one, and it is not a replacement. The buyer asks for his money back; his claims to date are $900 and his premiums paid $1,400. The commissioner later finds the insurer has not acted to stop the practice.

1. The sale was prohibited and he gets $900, but the insurer faces no sanction beyond the refund: no agent may sell a Medicare supplement plan to a person who already has one in effect unless it is a replacement made in accordance with section 62A.40, and the insured recovers what the policy actually paid him, a refund of premiums being available only where no claim has yet been made; the section gives the insured a remedy rather than the commissioner a penalty.
2. The sale was permitted and no refund is due: the prohibition on selling a second plan binds the AGENT rather than the insurer, so the policy the insurer issued stands and the buyer's remedy lies in a complaint against the agent's licence rather than in any payment from the insurer; the refund provision operates only where the insurer has itself issued duplicate coverage on its own initiative, and the $10,000 civil penalty is reserved for the different case in which the commissioner determines that coverage sold as something else - a hospital indemnity or specified disease policy, say - is in substance Medicare supplement insurance and has been sold without the disclosures the chapter requires for that class of business.
3. The sale was prohibited, he gets $1,400, and the insurer faces suspension or a penalty: NO AGENT SHALL SELL a Medicare supplement plan TO A PERSON WHO CURRENTLY HAS ONE PLAN IN EFFECT, except a replacement in accordance with section 62A.40; the insurer shall AT THE REQUEST OF THE INSURED EITHER REFUND THE PREMIUMS OR PAY ANY CLAIMS ON THE POLICY, WHICHEVER IS GREATER, the refund being sent DIRECTLY TO THE INSURED WITHIN 15 DAYS of the request; and if the insurer fails to take reasonable action to prevent overselling the commissioner may REVOKE OR SUSPEND its authority to sell accident and health insurance in this state OR IMPOSE A CIVIL PENALTY NOT TO EXCEED $10,000, OR BOTH. ✓
4. The sale was prohibited, he gets $1,400 and the insurer faces suspension or a penalty, but only if he asks within 15 days: the refund provision is as described and the 15-day period is the window in which the insured must make the request, running from the date the second policy is delivered, after which he is treated as having accepted the duplication and is left with the ordinary free look, which for a Medicare supplement policy is 30 days from receipt; the greater-of measure is meant to leave the insured no worse off than if the prohibited sale had never happened, and a request made after the free look had run would hand him a year's claims and a full premium refund at once, which is why the section confines the remedy to a short period after delivery.

Why: Minn. Stat. 62A.43, subd. 1 prohibits an agent from selling a Medicare supplement plan to a person who currently has one plan in effect, the only exception being a replacement made in accordance with section 62A.40 and not made effective any sooner than necessary to provide continuous benefits for preexisting conditions. The same subdivision requires every application to carry a WRITTEN STATEMENT SIGNED BY THE APPLICANT listing all health and accident insurance maintained as of the date the application is taken and stating whether the applicant is entitled to any medical assistance, accompanied by a written acknowledgment SIGNED BY THE SELLER of the request for and receipt of that statement. Subd. 2 gives the remedy, and it is the more generous of two: at the request of the insured the insurer shall either refund the premiums OR pay any claims on the policy, WHICHEVER IS GREATER - $1,400 of premium beats $900 of claims - and any refund must be sent by the insurer DIRECTLY TO THE INSURED WITHIN 15 DAYS of the request. The 15 days is the insurer's deadline to pay, not the insured's deadline to ask. Subd. 3 supplies the enforcement: on determining after investigation that an insurer has issued a duplicate plan, the commissioner notifies the insurer in writing, and if the insurer then fails to take reasonable action to prevent overselling the commissioner may, under chapter 14, revoke or suspend its authority to sell accident and health insurance in this state or impose a civil penalty not to exceed $10,000, or both. Subd. 4 preserves the sale of a policy that pays without regard to other health coverage, provided the prescribed NAIC duplication disclosure statement is given with the application.

A Minnesota insurer breaches a written order the commissioner issued following an examination. The same substantially similar breach shows up in a number of files. The insurer, which has already put the matter right for the affected policyholders, asks how the penalty is calculated and whether each file counts separately.

1. A person who violates or aids and abets a violation of a written order issued under the section may be fined not more than ten thousand dollars for each day the violation continues for each violation of the order; but for conduct prohibited under chapters 60A to 79, multiple violations of an identical or substantially similar law, rule or order count as a single violation, and the commissioner must consider prompt corrective action and reduce or eliminate the penalty accordingly. ✓
2. A person who violates such an order may be fined not more than one thousand dollars for each violation, with no daily accrual; every file counts as a separate violation in all circumstances, the statute containing no aggregation rule; and corrective action taken after a violation is discovered is irrelevant to the amount, going only to whether the commissioner takes further enforcement action against the insurer in the future.
3. A person who violates such an order may be fined not more than ten thousand dollars per day per violation; multiple substantially similar violations always count as a single violation without exception, including where the insurer acted wilfully; and the commissioner has no discretion to reduce the penalty, the figure being fixed by statute once the number of days and the number of violations have been established by the department.
4. A person who violates such an order may be fined not more than ten thousand dollars for each day the violation continues; the aggregation rule applies only where the insurer has taken corrective action, so an insurer that has put matters right is exempt from any penalty altogether; and the ten thousand dollar figure applies in place of every other penalty in the insurance laws, later and more specific penalties being displaced by it wherever the conduct also amounts to a breach of a written order of the commissioner.

Why: Minn. Stat. 60A.031 subd. 6(a) sets the ceiling: notwithstanding section 72A.05, a person who violates or aids and abets any violation of a written order issued under the section “may be fined not more than $10,000 for each day the violation continues for each violation of the order”, the money recovered being paid into the general fund. Paragraph (b) then aggregates: for conduct prohibited under chapters 60A to 79, multiple violations of an identical or substantially similar law, rule or order “shall be considered a single violation” under the section and section 45.027. But that aggregation has TWO carve-outs, which is what the third and fourth options miss: it does not apply to wilful violations by the insurer, and it does not apply to violations the insurer has not taken corrective action for and which cause financial harm to the policyholder, constitute an unfair method of competition, or constitute an unfair or deceptive act or practice. Paragraph (c) is mitigation rather than exemption: for any applicable penalty the commissioner “must consider whether corrective action for the consumer was taken promptly after a violation was discovered or the violation was not part of a pattern or practice, and shall reduce or eliminate the penalty accordingly” — a duty to consider and adjust, not an automatic immunity. Paragraph (d) adds that the subdivision does not apply if a different penalty is specified under law, so it yields to a more specific penalty rather than displacing one. Two neighbouring provisions complete the picture. Under subdivision 5 the commissioner may, within a reasonable time of receiving an examination report, order the examinee to restore a deficiency where capital, reserves or surplus have become impaired, to cease and desist from any business or practice that might make its condition or further trading hazardous to policyholders, creditors or the public, or to cease and desist from any other violation of its charter or state law. And section 60A.032 requires the commissioner, on forwarding such an order, to report the fact immediately to the governor and the attorney general, and to submit a supplementary report to them within twenty days after submission of the report if the company has not complied. Separately, subdivision 10 limits enforcement: an action must generally be commenced within nine years of the violation, or within two years of discovery where the violation arises out of a contract that remains in force.

When a child is covered under both parents' health plans, the primary plan is usually determined by the:

1. Birthday rule, using the parent whose birthday is earlier in the year ✓
2. Alphabetical order of the two parents' last names on their policies
3. Age of the child at the time the particular medical expense was incurred
4. Plan that happens to charge the lower of the two monthly premiums

Why: The birthday rule makes primary the plan of the parent whose birthday falls earlier in the calendar year.

A producer is asked who the regulator is for a complaint about a health maintenance organization and for one about a nonprofit health service plan corporation, and whether an indemnity insurer that covers Minnesota residents through a preferred provider network is a "managed care organization" for purposes of the chapter.

1. The commissioner of health for the first, the commissioner of commerce for the second, and yes to the third: COMMISSIONER means the COMMISSIONER OF HEALTH for purposes of regulating HEALTH MAINTENANCE ORGANIZATIONS AND COMMUNITY INTEGRATED SERVICE NETWORKS, or the COMMISSIONER OF COMMERCE for regulating ALL OTHER HEALTH PLAN COMPANIES, and for all other purposes means the commissioner of health; and MANAGED CARE ORGANIZATION includes an insurance company licensed under chapter 60A TO THE EXTENT THAT IT COVERS health care services delivered to Minnesota residents THROUGH A PREFERRED PROVIDER ORGANIZATION OR A NETWORK OF SELECTED PROVIDERS. ✓
2. The commissioner of commerce for both, and no to the third: the Department of Commerce regulates the business of insurance in this state without distinction as to the corporate form of the carrier, and the reference to the commissioner of health in the definitions subdivision goes to that officer's public health duties rather than to the supervision of companies, which is why complaints about a health maintenance organization and about a nonprofit health service plan corporation are handled in the same office; and MANAGED CARE ORGANIZATION is confined to entities that bear risk on a prepaid basis, so an indemnity insurer licensed under chapter 60A remains an indemnity insurer however tightly it manages its preferred provider network, the network being a payment arrangement rather than an assumption of prepaid risk.
3. The commissioner of health for both, and yes to the third: the chapter assigns health plan regulation to the commissioner of health throughout, the reference to the commissioner of commerce describing that officer's separate licensing jurisdiction over producers rather than over the companies themselves; and an insurer covering Minnesota residents through a network of selected providers is within the definition.
4. The commissioner of health for the first, the commissioner of commerce for the second, and no to the third: the split of regulatory authority is as described, the commissioner of health taking health maintenance organizations and community integrated service networks and the commissioner of commerce all other health plan companies, so a nonprofit health service plan corporation under chapter 62C goes to commerce; but MANAGED CARE ORGANIZATION is limited to the first two limbs of the definition, a health maintenance organization under chapter 62D and a community integrated service network, the naming of insurance companies, nonprofit health service plan corporations and fraternal benefit societies in the subdivision being a saving clause that preserves their existing regulation rather than an extension of the term to them, which is why an indemnity insurer's preferred provider arrangements are policed through the network requirements applicable to insurers instead.

Why: Minn. Stat. 62Q.01, subd. 2 is the split-jurisdiction definition that governs the whole chapter: COMMISSIONER means the commissioner of health for purposes of regulating health maintenance organizations and community integrated service networks, or the commissioner of commerce for purposes of regulating all other health plan companies, and for all other purposes means the commissioner of health. A nonprofit health service plan corporation under chapter 62C is an "other health plan company", so commerce. Subd. 4 defines HEALTH PLAN COMPANY as a health carrier under section 62A.011, subd. 2, or a community integrated service network. Subd. 5 defines MANAGED CARE ORGANIZATION in three limbs: a health maintenance organization operating under chapter 62D; a community integrated service network; or an insurance company licensed under chapter 60A, a nonprofit health service plan corporation under chapter 62C, a fraternal benefit society under chapter 64B, or any other health plan company, TO THE EXTENT THAT IT COVERS health care services delivered to Minnesota residents through a preferred provider organization or a network of selected providers. The third limb is what brings a network-based indemnity insurer within the term - but only to the extent of that network business.

A life insurer declines an application solely because the proposed insured holds a prescription for an opiate antagonist. A long-term care carrier limits coverage for an applicant solely because she donated a kidney, with no additional actuarial risk identified. A health plan company sets premiums it concedes are below the cost of the benefits.

1. The first two are prohibited; the third is not, because the premium standard exists to protect policyholders against excessive charges and a company that chooses to price below the cost of the benefits harms only itself and its shareholders; the requirement that a premium be reasonable and not predatory is a ceiling on what a health plan company may charge, the reference to the actuarial projection of the cost of providing covered services supplying the measure against which an excessive rate is tested, and the commissioner's remedy for a company that has underpriced its book lies in the solvency and reserve provisions rather than in this subdivision.
2. All three are prohibited: when determining whether to issue, renew, cancel or modify a life policy an insurer may not make an underwriting determination based SOLELY on information revealing a prescription for an opiate antagonist; a life, long-term care or disability carrier may not decline or limit coverage or otherwise discriminate based SOLELY on status as a living organ or bone marrow donor and without additional actuarial risks; and premiums charged by a health plan company must be reasonable, ADEQUATE and not predatory in relation to the benefits. ✓
3. The first and third are prohibited; the second is not, because the living donor provision applies to life insurance alone and this is long-term care cover, which is underwritten on morbidity rather than on mortality and is left to the general prohibition on unfair discrimination.
4. All three are prohibited, and the first two are absolute: an insurer may not take a prescription for an opiate antagonist or a person's status as a living organ or bone marrow donor into account at all, the word solely going to the remedy rather than to whether a violation has occurred; and the premium standard is absolute in the other direction, a health plan company being bound to charge adequate premiums whatever the commissioner may have approved on filing, so that a rate later shown to have been below cost is unlawful from the date it took effect and the company must recover the shortfall from the enrollees who paid it.

Why: Minn. Stat. 72A.20 subd. 40: “When determining whether to issue, renew, cancel, or modify a policy of life insurance, an insurer may not make an underwriting determination based solely on information revealing that a proposed insured has a prescription for an opiate antagonist.” Subd. 41: “A life insurance, long-term care insurance, or disability insurance carrier is prohibited from declining or limiting coverage of an insured or otherwise discriminating in the premium rating, offering, issuance, cancellation, amount of coverage, or any other condition based solely upon the status of an insured as a living organ or bone marrow donor and without additional actuarial risks.” Long-term care is named in that list, which is the third option's omission. Both subdivisions turn on the word “solely”, and both leave room for a determination supported by something more - subd. 41 saying so expressly with “and without additional actuarial risks” - so the fourth option's absolute reading is wrong. Subd. 31 requires premiums charged by a health plan company to be “reasonable, ADEQUATE, and not predatory in relation to the benefits”, considering actuarial projection of the cost of providing the covered services, the costs of administration, and the reserves and surplus required by law. Adequacy is a requirement in its own right, which is why underpricing is caught and the second option is wrong.

Errors and omissions (E&O) insurance protects a producer against:

1. Losses caused by the producer's own intentional fraud, theft, or conversion of client premium funds
2. Claims arising from negligent acts or mistakes in their professional work ✓
3. The cost of premiums owed by clients who fail to pay before the grace period expires
4. Penalties for selling without a valid state license

Why: E&O is professional liability coverage for negligent errors or omissions; it excludes intentional or fraudulent conduct.

An employee is injured on the job and needs medical care and wage replacement. The coverage that responds is:

1. Workers' compensation ✓
2. Medicare Part B
3. A Medicare Supplement policy
4. An individual disability income policy only

Why: Workers' compensation is the state-mandated, no-fault coverage for job-related injuries and occupational disease.

A health plan company underwriting an application asks the applicant whether her brother has ever been tested for a hereditary condition. It also asks the applicant for a copy of a cholesterol panel taken by her own doctor. When she declines to take a presymptomatic test of her chromosomes, the company records the refusal and prices the cover accordingly.

1. Only the pricing on the refusal breaches the section: the prohibitions run to the individual applying for or already covered by the health plan and not to that person's relatives, whose test history is their own information and outside a section written to protect the applicant; the cholesterol request is outside the definition of a genetic test for the reason given; and asking about a brother is at worst an ordinary family-history question of the kind every underwriter puts, the section leaving family history untouched so long as the underwriter draws no inference from a presymptomatic test a relative has actually taken.
2. All three breach the section: the definition of a genetic test turns on what the insurer wants the result FOR rather than on what the test measures, so a cholesterol panel called for while assessing an applicant's inherited risk becomes a genetic test in the underwriter's hands, the exclusion in the definitions reaching only a cholesterol result the applicant volunteers unasked.
3. The question about the brother breaches the section but the pricing on the refusal does not: what the subdivision forbids is requiring or requesting the test, and an applicant who has made a free choice not to be tested has left the company to underwrite on the information it actually holds, a company being entitled to treat an unexplained gap in the medical evidence as it would treat any other gap and to load the premium for it; and the cholesterol request is outside the definition, a lipid panel measuring a gene product only in the loosest sense and not being conducted to determine the presence or absence of any gene.
4. The question about the brother and the pricing on the refusal both breach the section; the cholesterol request does not: a health plan company may not make any inquiry to determine whether an individual OR A BLOOD RELATIVE has taken or refused a genetic test, nor take into consideration the fact that a test was taken or refused, but the definition of a genetic test expressly excludes a cholesterol test or other test not conducted for the purpose of determining the presence or absence of a person's gene or genes. ✓

Why: Minn. Stat. 72A.139 subd. 3 bars a health plan company, in determining eligibility, establishing premiums, limiting coverage, renewing coverage "or any other underwriting decision", from four things: requiring or requesting that an individual "or a BLOOD RELATIVE of the individual" take a genetic test; making "any inquiry to determine whether an individual or a blood relative of the individual has taken or REFUSED a genetic test, or what the results of any such test were"; taking into consideration "the fact that a genetic test was taken or REFUSED"; and taking into consideration the results. Blood relatives are named in each of the first three, which is the second option's omission, and the refusal is named alongside the taking, which is the fourth option's. Subd. 2(b) defines a genetic test as "a presymptomatic test of a person's genes, gene products, or chromosomes" for the purpose of determining the presence or absence of abnormal, defective or deficient genes, including carrier status, and then says in terms: "'Genetic test' does not include a CHOLESTEROL TEST or other test not conducted for the purpose of determining the presence or absence of a person's gene or genes." The exclusion is written on the test, not on who asked for it or why, which is the third option's rewriting of it. Subd. 8 leaves enforcement with the commissioner, who under subd. 2(a) is the commissioner of commerce or of health depending on which regulates the company.

A 'period certain only' annuity option pays income:

1. Only if the annuitant survives the full accumulation period
2. For the annuitant's entire life and stops at their death
3. In a single lump sum at the end of the surrender-charge period
4. For a fixed number of years whether or not the annuitant lives ✓

Why: Period-certain-only pays for a set number of years; if the annuitant dies early, payments continue to a beneficiary for the remainder.

An insurer files a form for expedited review, is disapproved, and resubmits with a cover letter that says nothing about the earlier disapproval. On final disapproval it asks for a hearing three weeks later. It also complains that it has been charged the cost of the actuarial review.

1. One thing is wrong - the cover letter - but the charge is improper: the cost of reviewing a filing is a departmental expense met from the appropriation rather than one recoverable from the filer, and a hearing may be requested at any time before the disapproval becomes final, there being no fixed period for the request; the twenty days and the thirty days the subdivision does fix run against the commissioner, who must schedule the hearing within the first and hold it within the second.
2. One thing is wrong - the cover letter - and the hearing request was in time: the filer has thirty days from a final disapproval in which to request a hearing, ten days being the period within which the commissioner must schedule it after receiving the request and twenty days the period within which the hearing must then be held. The charge is proper, the cost of any actuarial review being payable by the insurer that submitted the filing.
3. Nothing is wrong: the cover letter requirements are expressed as what an insurer should do where possible rather than as conditions of resubmission, a hearing may be requested within twenty days of a final disapproval so that a request made three weeks later is in time, and the charge is proper because the cost of any actuarial review must be paid by the insurer that submitted the filing rather than met out of the department's own appropriation.
4. Two things are wrong: on resubmission the cover letter must note the disapproval and any changes made since the earlier filing, with an explanation of why the new filing should be approved; and a hearing must be requested within ten days of receiving a final disapproval, so three weeks is too late. The charge is proper - the cost of any actuarial review must be paid by the insurer submitting the filing. ✓

Why: Minn. Stat. 61A.02 subd. 2a governs the expedited procedure. Paragraph (a): any review must be completed within 60 days of receipt of a completed filing, and “the cost of any actuarial review must be paid by the insurer submitting the filing under this subdivision” - so the charge is proper, which is what the second option disputes. Paragraph (b): “If a filing has been disapproved and is resubmitted, the cover letter must note the disapproval and any changes made since the earlier filing, with an explanation of why the new filing should be approved. Resubmission of disapproved forms should, where possible, be made within 90 days of disapproval.” The cover letter requirement is expressed as “must” and only the 90-day resubmission window is softened to “should, where possible” - which is the distinction the fourth option collapses. Paragraph (c): “The filer may request a hearing within ten days of receiving a final disapproval. Within 20 days of the receipt of the request, the commissioner shall schedule a date for the hearing, which must occur within 30 days of the scheduling.” Ten days to request, twenty to schedule, thirty to the hearing - three periods, and the third option swaps the first two. Paragraph (e) requires every actuary used to review such filings to be a member of the American Academy of Actuaries and directs payments received into the revolving fund under section 60A.03.

Backdating a life insurance policy is sometimes done to:

1. Obtain a lower premium based on a younger age ✓
2. Guarantee that the policy can never lapse for non-payment
3. Avoid the need for any medical underwriting of the applicant
4. Extend the contestable period well beyond the legal limit

Why: Backdating dates the policy to an earlier date so the insured qualifies at a younger age (and lower premium); states typically limit it to about six months.

An HMO's grandfathered small group product has no participating general hospital within 45 miles of part of its service area, and no cardiologist within 75 miles. It asks what the travel standards are, what a waiver costs, and how long a waiver lasts.

1. Only the hospital distance is outside the standards, the waiver fee is $500 per application and a waiver lasts until the commissioner revokes it: the lesser of 30 miles or 30 minutes governs primary care, mental health and general hospital services, so the 45-mile hospital gap fails, but subd. 2 sets no distance or time standard for SPECIALTY PHYSICIAN services, which are left to the general network adequacy review and to the monthly published provider directory; the fee is charged once for each application whatever the number of counties or provider types it covers, and a waiver granted on specific data continues while the conditions that justified it persist.
2. Both distances are outside the standards, but the fee is $500 per application per year and a waiver lasts five years: the two mileage tiers are the lesser of 30 miles or 30 minutes and the lesser of 60 miles or 60 minutes, so both gaps fail, and the section charges a single annual fee because the waiver is granted to the organization rather than county by county.
3. Neither distance is outside the standards: the two tiers are the GREATER of 30 miles or 30 minutes and the GREATER of 60 miles or 60 minutes, which is what allows an organization serving a rural area to rely on travel time along a highway where the mileage alone would fail, and the organization's express power to designate which method it uses would otherwise be meaningless, since a rational organization would always designate whichever of the two figures it could meet; a 45-mile hospital reachable in under 30 minutes and a cardiologist 75 miles away reachable in under 60 minutes therefore both comply, and the waiver machinery in subd. 3, with its $500 fee and its three-year expiry, exists for the case where even the greater figure cannot be met.
4. Both distances are outside the standards; a waiver application costs $500 PER COUNTY PER YEAR and a waiver EXPIRES AUTOMATICALLY AFTER THREE YEARS: the maximum travel distance or time is the LESSER OF 30 MILES OR 30 MINUTES to the nearest provider of PRIMARY CARE, MENTAL HEALTH and GENERAL HOSPITAL services, and the LESSER OF 60 MILES OR 60 MINUTES for specialty physician services, ancillary services, specialized hospital services and all other health services, the organization designating which method it uses. ✓

Why: Minn. Stat. 62D.124, subds 1 and 2 set two tiers, and both are expressed as the LESSER of a distance and a time - the stricter reading, not the more generous one. Subd. 1: the lesser of 30 miles or 30 minutes to the nearest provider of primary care services, mental health services and general hospital services. Subd. 2: the lesser of 60 miles or 60 minutes to the nearest provider of specialty physician services, ancillary services, specialized hospital services and all other health services not listed in subd. 1. The organization must designate which method it uses. Subd. 3 sets the waiver machinery: an application on the commissioner's form, accompanied by a fee of $500 PER COUNTY PER YEAR for each application to waive subd. 1 or 2 for one or more provider types in that county, demonstrating with specific data that the requirement is not feasible and setting out the steps taken and to be taken to address the inadequacy with a time frame. A waiver expires automatically after three years, and a renewal is judged partly on whether the organization actually took the steps it proposed. Where there is no provider of a type in a county at all, the commissioner may approve a waiver allowing access by telehealth. One limit matters for scope: under subd. 4, paragraph (c), for coverage effective on or after 1 January 2015 subds 1 to 4 apply ONLY to individual or small group health plans that are GRANDFATHERED plans as defined in section 62A.011, subd. 1c - which is why the product in this question is described as a grandfathered small group product. Subd. 6 separately requires the organization to publish its provider network for each product on its website, update it at least monthly, and list its current waivers there in a searchable format.

A structured settlement annuity is typically used to:

1. Provide an employer's executives with deferred bonuses
2. Fund a child's college education through a trust
3. Replace a key employee who has died
4. Pay periodic settlement amounts from a legal claim over time ✓

Why: A structured settlement funds court/insurance settlement payments as periodic income; amounts for physical-injury claims are generally tax-free.

An individual resident producer let her licence lapse. Seven months after the due date of the renewal fee she wants the licence back, and she asks what the statute requires of her.

1. She must pass a written examination, the entitlement to reinstate without one running six months from the due date of the renewal fee, after which she is treated as a new applicant.
2. She may reinstate without an examination and without penalty, the penalty falling due only on a renewal fee received more than 12 months after its due date.
3. She may reinstate without an examination on paying the unpaid renewal fee and a penalty equal to it, and must file a fresh certification of the prelicensing course.
4. She may reinstate without passing a written examination, because she is within 12 months of the due date of the renewal fee, but she must pay a penalty of twice the unpaid renewal fee. ✓

Why: Minn. Stat. 60K.38 subd. 3 gives an individual insurance producer who allows the licence to lapse 12 months “from the due date of the renewal fee” to reinstate “without the necessity of passing a written examination”. It then adds that “a penalty in the amount of twice the unpaid renewal fee must be paid by the individual for any renewal fee received after the due date”. Two points fix the answer. The window runs from the due date, not from the date the producer notices the lapse, and seven months is inside it, so the second option's six-month window is an invention. The penalty attaches to any renewal fee received after the due date - not only to one received after the window closes - so the third option is wrong, and the penalty is twice the unpaid renewal fee rather than the fee plus an equal penalty applied to a fresh application, which is where the fourth option adds requirements the subdivision does not impose.

In the application process, the producer often acts as the 'field underwriter,' meaning they:

1. Approve and pay death claims for the insurer
2. Audit the insurer's annual financial statement and certify the adequacy of its policy reserves to the state
3. Gather information and make an initial assessment of the risk ✓
4. Set the final rate class, approve the application for issue, and calculate the reserve the insurer must hold

Why: As field underwriter the producer collects accurate information and screens obvious risks before formal underwriting.

In an annuity contract, the person whose life expectancy determines the income payments is the:

1. Insurer's actuary, who designs the payout schedule
2. Beneficiary, who receives any remaining value at death
3. Owner, who holds the contractual rights to the annuity in the policy
4. Annuitant, whose age and life expectancy set the payout ✓

Why: The annuitant is the measuring life; the owner holds the rights, and the beneficiary receives any death proceeds.

An examiner finds eleven policies written by one agent over two years where the applicant ticked 'no replacement' and an existing policy lapsed within weeks of each sale. The same agent had used a comparison sheet that misstated the surrender values of the policies being given up. The agent says the applicants completed their own forms.

1. Only the comparison sheet tells against the agent: what the applicants wrote on their own forms cannot be evidence against the agent who took the applications, and the replacement act creates no presumption of any kind, so the examiner must prove the agent's knowledge in each of the eleven cases from what the agent himself said or did at the time of that sale; a run of lapses following a run of sales shows only that policyholders change their minds, and the act meets that problem by requiring the applicant's signed statement about replacement rather than by turning a pattern into proof of what was in the agent's mind.
2. Both findings tell against the agent, and the pattern evidence is CONCLUSIVE rather than prima facie: the legislature having decided that a run of eleven such sales by one agent admits of no innocent explanation, the agent may not lead evidence to displace the inference and the only question left for the commissioner is the penalty; the paragraph raises a single conclusive presumption covering both the agent's knowledge that replacement was intended and his intent to violate the act, so a finding on the one carries the other with it and no separate proof of his state of mind is needed at all.
3. Only the pattern tells against the agent: the prohibition on a substantially inaccurate presentation or comparison applies to CONSERVATION alone, being aimed at an existing insurer talking a policyholder out of a change she has already decided on, and a replacing agent's optimistic comparison of surrender values is left to the general misrepresentation provisions of the trade practices chapter rather than to the replacement act; and the pattern evidence needs no more than a run of replacing sales by the same agent, whether or not the applications said anything about replacement, the point of the presumption being to spare the examiner the task of proving what was in the agent's mind on each of eleven occasions.
4. Both findings tell against the agent: an agent, broker or insurer SHALL NOT RECOMMEND the replacement or conservation of an existing policy BY USE OF A SUBSTANTIALLY INACCURATE PRESENTATION OR COMPARISON of an existing policy's premiums and benefits or dividends and values; and PATTERNS OF ACTION by policyholders who buy replacing policies from the same agent AFTER INDICATING ON APPLICATIONS THAT REPLACEMENT IS NOT INVOLVED are PRIMA FACIE EVIDENCE both of the agent's KNOWLEDGE that replacement was intended and of the agent's INTENT TO VIOLATE the replacement act. ✓

Why: Minn. Stat. 61A.59 paragraph (a): "An agent, broker, or insurer SHALL NOT RECOMMEND THE REPLACEMENT OR CONSERVATION of an existing policy or contract BY USE OF A SUBSTANTIALLY INACCURATE PRESENTATION OR COMPARISON of an existing policy's or contract's premiums and benefits or dividends and values, if any." Replacement AND conservation, so it binds the replacing agent as squarely as the existing insurer's - the fourth option's error. It continues: an insurer, agent, representative, officer or employee failing to comply with Minn. Stat. 61A.53 to 61A.60 "is subject to such penalties as may be appropriate under this chapter." Paragraph (b): "PATTERNS OF ACTION by policyholders or contract holders who purchase replacing policies or contracts FROM THE SAME AGENT OR BROKER, AFTER INDICATING ON APPLICATIONS THAT REPLACEMENT IS NOT INVOLVED, are PRIMA FACIE EVIDENCE of the agent's or broker's KNOWLEDGE that replacement was intended in connection with the sale of those policies, and the patterns of action are prima facie evidence of the agent's or broker's INTENT TO VIOLATE sections 61A.53 to 61A.60." Two distinct presumptions, both from the same pattern, and both PRIMA FACIE - the agent may answer them, which is what the third option removes; but they exist, which is what the second option denies.

An insured wants the death proceeds to provide a guaranteed monthly income to a spouse for life. The appropriate settlement option is:

1. Lump sum
2. Life income ✓
3. Fixed period
4. Interest only

Why: The life income option pays the payee a guaranteed income for life; the amount depends on the payee's life expectancy.