84
th Legislative Session _ 2009
29ja
On the printed bill, delete everything after the enacting clause and insert:
"
Section 1. That chapter
58-16
be amended by adding thereto a NEW SECTION to read as
follows:
Terms used in this Act mean:
(1) "Carrier," a person or an entity that offers or provides a policy, contract, or certificate of
group life insurance coverage in this state. Carrier includes an insurer, or any other person
or entity providing a policy, contract, or certificate of group life insurance coverage
subject to regulation under this title;
(2) "Group-type basis," a benefit plan, other than a salary budget plan utilizing individual
insurance policies or subscriber contracts, which meets the following conditions:
(a) Coverage is provided through insurance policies to classes of employees or
members defined in terms of conditions pertaining to employment or membership;
(b) The coverage is not available to the general public and can be obtained and
maintained only because of the covered person's membership in or connection with
the particular organization or group;
(c) There are arrangements for bulk payment of premiums or subscription charges to
the carrier; and
(d) There is sponsorship of the plan by the employer, union, or association.
Section 2. That chapter
58-16
be amended by adding thereto a NEW SECTION to read as
follows:
The provisions of this Act apply to any group life insurance policy issued or provided by a carrier
on a group or group-type basis covering persons as employees of employers or as members of unions
or associations.
Section 3. That chapter
58-16
be amended by adding thereto a NEW SECTION to read as
follows:
If a policy or contract subject to the provisions of this Act provides for automatic discontinuance
of the policy or contract after a premium or subscription charge has remained unpaid through the
grace period allowed for such payment, the carrier is liable for valid claims for covered losses
incurred prior to the end of the grace period.
If the actions of the carrier after the end of the grace period indicate that the carrier considers the
policy or contract as continuing in force beyond the end of the grace period, such as, by continuing
to recognize claims subsequently incurred, the carrier is liable for valid claims for losses beginning
prior to the effective date of the written notice of discontinuance to the policyholder or other entity
responsible for making payments or submitting subscription charges to the carrier. The effective date
of discontinuance may not be prior to midnight at the end of the third scheduled workday after the
date upon which the notice is delivered.
Section 4. That chapter
58-16
be amended by adding thereto a NEW SECTION to read as
follows:
A notice of discontinuance given by the carrier shall include a request to the group policyholder
or other entity involved to notify employees covered under the policy of the date as of which the
group policy, contract, or certificate will discontinue and to advise that, unless otherwise provided
in the policy, contract, or certificate, the carrier is not liable for claims for losses incurred after the
date of discontinuance. The notice of discontinuance also shall advise, in any instance in which the
plan involves employee contributions, that if the policyholder or other entity continues to collect
contributions for the coverage beyond the date of discontinuance, the policyholder or other entity
may be held solely liable for the benefits with respect to which the contributions have been collected.
The carrier shall prepare and furnish to the policyholder or other entity at the same time the
carrier gives a notice of discontinuance, a supply of, or access to, notice forms to be distributed to
the employees or members concerned, indicating the discontinuance and the effective date of the
discontinuance, and urging the employees or members to refer to their certificates or contracts in
order to determine what rights, if any, are available to them upon the discontinuance.
Section 5. That chapter
58-16
be amended by adding thereto a NEW SECTION to read as
follows:
Each group policy, contract, or certificate subject to the provisions of this Act, issued on or after
the effective date of this Act, or under which the level of benefits is altered, modified, or amended
on or after the effective date of this Act, shall provide a reasonable provision for extension of
benefits in the event of total disability at the date of discontinuance of the group policy, contract, or
certificate as required by this section.
In the case of a group life plan that contains a disability benefit extension of any type, including
premium waiver extension, extended death benefit in event of total disability, or payment of income
for a specified period during total disability, the discontinuance of the group policy, contract, or
certificate may not operate to terminate the extension.
Any applicable extension of benefits or accrued liability shall be described in any policy or
contract involved as well as in group insurance certificates. The benefits payable during any period
of extension of benefits or accrued liability may be subject to the policy's, contract's, or certificate's
regular benefit limits, such as benefits ceasing at exhaustion of a benefit period or of maximum
benefits.
Section 6. That chapter
58-16
be amended by adding thereto a NEW SECTION to read as
follows:
The following provisions dictate the responsibility of the prior carrier and succeeding carrier
when coverage is discontinued:
(1) After discontinuance of the policy, contract, or certificate, the prior carrier remains liable
only to the extent of its accrued liabilities and extensions of benefits. The position of the
prior carrier shall be the same whether the group policyholder or other entity secures
replacement coverage from a new carrier, self-insures, or foregoes the provision of
coverage;
(2) If the individual was validly covered under the prior plan on the date of discontinuance,
each individual who is eligible for coverage in accordance with the succeeding carrier's
plan of benefits is, with respect to the class or classes of individuals, eligible and shall be
covered under the succeeding carrier's plan if (a) any actively-at-work and
nonconfinement rules are met, and (b) if required by the succeeding carrier, the individual
requests enrollment;
(3) Each person not covered under the succeeding carrier's plan of benefits in accordance with
subdivision (2) shall nevertheless be covered by the succeeding carrier in accordance with
the following rules if the individual was validly covered, including benefit extension,
under the prior plan on the date of discontinuance and if the individual is a member of the
class or classes of individuals eligible for coverage under the succeeding carrier's plan.
Any reference in the following subdivisions to an individual who was or was not totally
disabled is a reference to the individual's status immediately prior to the date the
succeeding carrier's coverage becomes effective;
(4) The minimum level of benefits to be provided by the succeeding carrier shall be the
applicable level of benefits of the prior carrier's plan reduced by any benefits payable by
the prior plan;
(5) Coverage shall be provided by the succeeding carrier until the earliest of the following
dates:
(a) The date the individual becomes eligible under the succeeding carrier's plan as
described in subdivision (1);
(b) The date the individual's coverage would terminate in accordance with the
succeeding carrier's plan provisions applicable to individual termination of
coverage, such as at termination of employment or ceasing to be an eligible
dependent; or
(c) In the case of an individual who was totally disabled, and in the case of a type of
coverage for which section 5 of this Act requires an extension of benefits or
accrued liability, the end of any period of extension benefits or accrued liability
that is required of the prior carrier by section 5 of this Act, or if the prior carrier's
policy, contract, or certificate is not subject to that section, but would have been
required of the prior carrier had the policy, contract, or certificate been subject to
section 5 of this Act at the time the prior carrier's plan was discontinued and
replaced by the succeeding carrier's plan;
(6) In any situation in which a determination of the prior carrier's benefit is required by the
succeeding carrier, at the succeeding carrier's request the prior carrier shall furnish a
statement of the benefits available or pertinent information, sufficient to permit
verification of the benefit determination or the determination itself by the succeeding
carrier. For the purposes of this subdivision, benefits of the prior plan shall be determined
in accordance with all of the definitions, conditions, and covered expense provisions of
the prior plan rather than those of the succeeding plan. The benefit determination shall be
made as if coverage had not been replaced by the succeeding carrier;
(7) A succeeding carrier's policy may contain a provision limiting benefits to employees who
are actively at work. However, for any individual, who remains as an employee, was
covered by the prior carrier, and was disabled as of the date the succeeding carrier
coverage became effective for that employer, will continue to be covered by the prior
carrier as long as the individual remains an employee. An individual who is not disabled
and is not at work on the date the succeeding carrier's coverage commences is considered
actively at work as long as the absence from work is an employer-approved absence."
29jta
On page 1, line 1, of the printed bill, after "replacement" insert "or discontinuance".