Sec. 1. 24-A MRSA §2717-A is enacted to read:

§2717-A.__Disclosure of benefit offsets to applicants

At or before the time of application for any policy subject to this chapter that provides disability income benefits, the insurer shall provide the applicant with a clear and conspicuous written notice, on the face of or separate from the application form, that accurately explains to the applicant all sources of income that may result in a reduction of the benefits payable under the policy and the manner in which such reductions are calculated.

Sec. 2. 24-A MRSA §2829-A is enacted to read:

§2829-A.__Disclosure of benefit offsets to enrollees

At or before the time that an individual enrolls for coverage under any policy subject to this chapter that provides disability income benefits, the insurer shall provide the individual with a clear and conspicuous written notice, on the face of the application form or certificate of coverage or on a separate page, that accurately explains to the individual all sources of income that may result in a reduction of the benefits payable under the policy and the manner in which such reductions are calculated.

SUMMARY

Disability income insurance policies routinely provide that benefits payable under a policy will be reduced by amounts received from other sources, including claims under other insurance polices such as workers' compensation or social security disability and retirement benefits. These offsets are not always clearly understood by a prospective insured at the time coverage is purchased or selected. This bill requires a clear, written disclosure of any such offsets at or before the time of application or enrollment to ensure that the prospective insured understands the limitation of any benefits under the policy before deciding whether to purchase coverage.