S*935 Session 109 (1991-1992)
S*0935(Rat #0200, Act #0131 of 1991) General Bill, By
Senate Banking and Insurance
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Section
38-57-45 so as to provide requirements for solicitation material by insurance
agencies, insurers, and health maintenance organizations; to amend the 1976
Code by adding Section 38-71-325 so as to provide for additional requirements
for the approval of individual major medical expense coverage policies; to
amend the 1976 Code by adding Section 38-71-650 so as to grant to any person
purchasing an individual accident, health, or accident and health insurance
policy after July 1, 1991, the right to transfer to any other individual
policy of equal or lesser benefits offered for sale by the insurer at the time
the transfer is sought, with waiting periods and preexisting condition periods
to be served after the transfer; to amend Article 5, Chapter 71, Title 38,
relating to group accident and health insurance by adding Subarticle 3, so as
to provide for certain mechanisms whereby health insurance coverage is made
available to small employers; to amend Section 38-71-730, as amended, relating
to requirements for group accident, group health, and group accident and
health insurance policies, so as to reduce the size of the groups for which
individual evidence of insurability may not be required, to further provide
for this group coverage, and to require an insurer under certain conditions to
give credit for the satisfaction of a preexisting condition period if a
covered person moves from one insured group to another; to amend Section
38-71-760, relating to standards for group accident and health insurance
coverage, so as to reduce the required size of certain groups to which various
discontinuance and replacement provisions apply, and to establish when a
replacement carrier becomes a succeeding carrier; and to amend Section
38-71-770, as amended, relating to mandatory continuation and conversion
privileges for accident and health insurance policies, so as to establish the
standard by which a group policy becomes a successor policy.-amended title
04/25/91 Senate Introduced, read first time, placed on calendar
without reference SJ-15
04/26/91 Senate Amended SJ-7
04/26/91 Senate Read second time SJ-7
04/29/91 Senate Read third time and sent to House SJ-13
04/30/91 House Introduced and read first time HJ-20
04/30/91 House Referred to Committee on Labor, Commerce and
Industry HJ-20
05/08/91 House Recalled from Committee on Labor, Commerce and
Industry HJ-32
05/16/91 House Amended HJ-14
05/16/91 House Read second time HJ-25
05/16/91 House Unanimous consent for third reading on next
legislative day HJ-26
05/17/91 House Read third time and returned to Senate with
amendments HJ-63
05/21/91 Senate Concurred in House amendment and enrolled SJ-119
05/27/91 Senate Ratification rescinded SJ-32
05/30/91 Senate Request House to rescind ratification SJ-37
06/05/91 House Point of order- Rescind. rat. can only be done by
adoption of Conc.Res. HJ-3
06/05/91 Senate Concurrent Res. introduced to rescind ratification
06/05/91 House Concurrent Res. (S.1034) to rescind ratification
table HJ-36
06/06/91 Ratified R 200
06/12/91 Signed By Governor
06/12/91 Act No. 131
06/12/91 See act for exception to or explanation of
effective date
07/18/91 Copies available
(A131, R200, S935)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH
CAROLINA, 1976, BY ADDING SECTION 38-57-45 SO AS TO
PROVIDE REQUIREMENTS FOR SOLICITATION MATERIAL BY
INSURANCE AGENCIES, INSURERS, AND HEALTH
MAINTENANCE ORGANIZATIONS; TO AMEND THE 1976 CODE
BY ADDING SECTION 38-71-325 SO AS TO PROVIDE FOR
ADDITIONAL REQUIREMENTS FOR THE APPROVAL OF
INDIVIDUAL MAJOR MEDICAL EXPENSE COVERAGE POLICIES;
TO AMEND THE 1976 CODE BY ADDING SECTION 38-71-650 SO AS
TO GRANT TO ANY PERSON PURCHASING AN INDIVIDUAL
ACCIDENT, HEALTH, OR ACCIDENT AND HEALTH INSURANCE
POLICY AFTER JULY 1, 1991, THE RIGHT TO TRANSFER TO ANY
OTHER INDIVIDUAL POLICY OF EQUAL OR LESSER BENEFITS
OFFERED FOR SALE BY THE INSURER AT THE TIME THE
TRANSFER IS SOUGHT, WITH WAITING PERIODS AND
PREEXISTING CONDITION PERIODS TO BE SERVED AFTER THE
TRANSFER; TO AMEND ARTICLE 5, CHAPTER 71, TITLE 38,
RELATING TO GROUP ACCIDENT AND HEALTH INSURANCE BY
ADDING SUBARTICLE 3, SO AS TO PROVIDE FOR CERTAIN
MECHANISMS WHEREBY HEALTH INSURANCE COVERAGE IS
MADE AVAILABLE TO SMALL EMPLOYERS; TO AMEND
SECTION 38-71-730, AS AMENDED, RELATING TO
REQUIREMENTS FOR GROUP ACCIDENT, GROUP HEALTH, AND
GROUP ACCIDENT AND HEALTH INSURANCE POLICIES, SO AS
TO REDUCE THE SIZE OF THE GROUPS FOR WHICH INDIVIDUAL
EVIDENCE OF INSURABILITY MAY NOT BE REQUIRED, TO
FURTHER PROVIDE FOR THIS GROUP COVERAGE, AND TO
REQUIRE AN INSURER UNDER CERTAIN CONDITIONS TO GIVE
CREDIT FOR THE SATISFACTION OF A PREEXISTING
CONDITION PERIOD IF A COVERED PERSON MOVES FROM ONE
INSURED GROUP TO ANOTHER; TO AMEND SECTION 38-71-760,
RELATING TO STANDARDS FOR GROUP ACCIDENT AND
HEALTH INSURANCE COVERAGE, SO AS TO REDUCE THE
REQUIRED SIZE OF CERTAIN GROUPS TO WHICH VARIOUS
DISCONTINUANCE AND REPLACEMENT PROVISIONS APPLY,
AND TO ESTABLISH WHEN A REPLACEMENT CARRIER
BECOMES A SUCCEEDING CARRIER; AND TO AMEND SECTION
38-71-770, AS AMENDED, RELATING TO MANDATORY
CONTINUATION AND CONVERSION PRIVILEGES FOR ACCIDENT
AND HEALTH INSURANCE POLICIES, SO AS TO ESTABLISH THE
STANDARD BY WHICH A GROUP POLICY BECOMES A
SUCCESSOR POLICY.
Be it enacted by the General Assembly of the State of South Carolina:
Solicitation material requirements
SECTION 1. The 1976 Code is amended by adding:
"Section 38-57-45. (A) No insurance agency, insurer, or
health maintenance organization may make, publish, disseminate, circulate,
or place before the public or cause, directly or indirectly, to be made,
published, disseminated, circulated, or placed before the public, in a
newspaper, magazine, or other solicitation material, an advertisement,
representation, or statement with respect to the business of insurance which
utilizes the Seal of South Carolina or any symbol which contains, includes,
or is derivative of the Seal of South Carolina without the approval of the
State Budget and Control Board.
(B) An insurance agency, an insurer, or a health maintenance
organization must include in a prominent manner in solicitation material it
utilizes specifically directed at and distributed to state employees a
statement that the insurance program or health maintenance program is not
officially endorsed by the State unless the program officially has been
endorsed by the Budget and Control Board."
Requirements for approval
SECTION 2. Subarticle 1, Article 3, Chapter 71, Title 38 of the 1976
Code is amended by adding:
"Section 38-71-325. On the effective date of this section, in
addition to any other requirements of law, no new individual major medical
expense coverage policy, as defined in regulations promulgated by the
commissioner, may be approved unless:
(1) Premium rates, after appropriate allowance for the actuarial value
of the difference in benefits, for any such policy form first approved for use
by the insurer in South Carolina within the two-year period immediately
prior to the effective date of this section and any such policy form first
approved for use after the effective date of this section do not exceed the
premium rates for any other such policy form first approved for use during
this period by more than thirty percent.
(2) The actuarial value of the difference in benefits set out in such
policy forms of the insurer, as specified in an opinion by a qualified actuary
or other qualified person acceptable to the commissioner, is reported not
less often than once a year to the commissioner and used in demonstrating
compliance with item (1) above.
(3) The anticipated (target) loss ratio for the combined experience for
all the policy forms specified in item (1) must be equivalent to or greater
than the most recent loss ratios detailed within the National Association of
Insurance Commissioner's `Guidelines for Filing of Rates for Individual
Health Insurance Forms' or successor publications. The anticipated (target)
loss ratio for the combined experience is defined as the average anticipated
(target) loss ratio for all these policy forms included in the combined
experience weighted by premium volume.
With respect to the policy form, the insurer shall have the right to file a
loss ratio guarantee in accordance with the procedures specified in Section
38-71-310(E) or to request approval of any rate change before the use
thereof, but the anticipated loss ratios of each policy form whether or not a
loss ratio guarantee has been filed must be combined as provided in the
preceding item (3).
The initial policy form proposed to be used by a domestic insurer after
its organization under the laws of this State and the initial policy form
proposed to be used by a foreign insurer after authorization by the
commissioner to do business in this State may be disapproved by the
commissioner if he determines that the rates proposed to be used with the
policy form are set at a level substantially less than rates charged by other
insurers in this State offering comparable coverage.
Nothing contained in this section may be construed to prevent the use of
age, sex, area, industry, occupational, and avocational factors or to prevent
the use of different rates for smokers and nonsmokers or for any other habit
or habits of an insured person which have a statistically proven effect on
the health of the person and are approved by the commissioner. Also,
nothing contained in this section shall preclude the establishment of a
substandard classification based upon the health condition of the insured,
but the initial classification may not be changed adversely to the applicant
after initial issue.
The commissioner has the right, upon application by any insurer, to
grant relief, for good cause shown, from any requirement of this
section."
Right to transfer
SECTION 3. Subarticle 5, Article 3, Chapter 71, Title 38 of the 1976
Code is amended by adding:
"Section 38-71-650. Any person purchasing an individual
accident, health, or accident and health insurance policy after July 1, 1991,
shall have the right to transfer to any individual policy of equal or lesser
benefits offered for sale by the insurer at the time the transfer is sought.
Any special provision excluding coverage for a specified condition may
remain after transfer, and any waiting period or preexisting condition
period specified in the policy to which the transfer is made may be required
to be served after the transfer."
Designations
SECTION 4. Sections 38-71-710 through 38-71-810 of the 1976 Code
are designated as Article 5, Subarticle 1, General Provisions.
Small employers
SECTION 5. Article 5, Chapter 71, Title 38 of the 1976 Code is
amended by adding:
"Subarticle 3
Small Group Health Insurance
Section 38-71-910. The intent of this subarticle is to promote the
availability of health insurance coverage to small employers, to prevent
abusive rating practices, to require disclosure of rating practices to
purchasers, to establish rules for continuity of coverage for employers and
covered individuals, and to improve the efficiency and fairness of the small
group health insurance marketplace.
Section 38-71-920. As used in this subarticle:
(1) `Small employer' means any person, firm, corporation, partnership,
or association actively engaged in business who, on at least fifty percent of
its working days during the preceding year, employed no more than
twenty-five eligible employees. In determining the number of eligible
employees, companies which are affiliated companies or which are eligible
to file a combined tax return for purposes of state taxation must be
considered one employer.
(2) `Insurer' means any person who provides health insurance in this
State. For the purposes of this subarticle, insurer includes a licensed
insurance company, a prepaid hospital or medical service plan, a health
maintenance organization, a multiple employer welfare arrangement, or any
other person providing a plan of health insurance subject to state insurance
regulation.
(3) `Health insurance plan' or `plan' means any hospital or medical
expense incurred policy or certificate, hospital, or medical service plan
contract, or health maintenance organization subscriber contract. Health
insurance plan does not include accident-only, credit, dental, or
disability-income insurance; coverage issued as a supplement to liability
insurance; worker's compensation or similar insurance; or automobile
medical-payment insurance.
(4) `Small employer insurer' means an insurer which offers health
insurance plans covering the employees of a small employer.
(5) `Case characteristics' means demographic or other relevant
characteristics of a small employer, as determined by a small employer
insurer, which are considered by the insurer in the determination of
premium rates for the small employer. Claim experience, health status, and
duration of coverage since issue are not case characteristics for the
purposes of this subarticle.
(6) `Commissioner' means the Chief Insurance Commissioner.
(7) `Department' means the Department of Insurance.
(8) `Base premium rate' means, for each class of business as to a rating
period, the lowest premium rate charged or which could have been charged
under a rating system for that class of business, by the small employer
insurer to small employers with similar case characteristics for health
insurance plans with the same or similar coverage.
(9) `New business premium rate' means, for each class of business as
to a rating period, the premium rate charged or offered by the small
employer insurer to small employers with similar case characteristics for
newly issued health insurance plans with the same or similar coverage.
(10) `Index rate' means for each class of business for small employers
with similar case characteristics the arithmetic average of the applicable
base premium rate and the corresponding highest premium rate.
(11) `Class of business' means all or a distinct grouping of small
employers as shown on the records of the small employer insurer.
(a) A distinct grouping may be established only by the small employer
insurer on the basis that the applicable health insurance plans:
(i) are marketed and sold through individuals and organizations
which are not participating in the marketing or sale of other distinct
groupings of small employers for such small employer insurer;
(ii) have been acquired from another small employer insurer as a
distinct grouping of plans;
(iii) are provided through an association with membership of not
less than fifty small employers which have been formed for purposes other
than obtaining insurance; or
(iv) are in a class of business that meets the requirements for
exception to the restrictions related to premium rates provided in Section
4(A)(1)(a).
(b) A small employer insurer may establish no more than two
additional groupings under each of the subparagraphs in subitem (a) on the
basis of underwriting criteria which are expected to produce substantial
variation in the health care costs.
(c) The commissioner may approve the establishment of additional
distinct groupings upon application to the commissioner and a finding by
the commissioner that action would enhance the efficiency and fairness of
the small employer insurance marketplace.
(12) `Actuarial certification' means a written statement by a member of
the American Academy of Actuaries or other individual acceptable to the
commissioner that a small employer insurer is in compliance with the
provisions of Section 38-71-940, based upon the person's examination,
including a review of the appropriate records and of the actuarial
assumptions and methods utilized by the insurer in establishing premium
rates for applicable health insurance plans.
(13) `Rating period' means the calendar period for which premium rates
established by a small employer insurer are assumed to be in effect, as
determined by the small employer insurer.
Section 38-71-930. (A) Except as provided in subsection (B), the
provisions of this subarticle apply to any health insurance plan which
provides coverage to one or more employees of a small employer.
(B) The provisions of this subarticle do not apply to individual health
insurance policies which are subject to policy form and premium rate
approval as may be provided in Title 38.
Section 38-71-940. (A) Premium rates for health insurance plans
subject to this subarticle are subject to:
(1) The index rate for a rating period for any class of business
may not exceed the index rate for any other class of business by more than
twenty percent.
The provisions of this item do not apply to a class of business if all of
the following apply:
(a) The class of business is one for which the insurer does not
reject, and never has rejected, small employers included within the
definition of employers eligible for the class of business or otherwise
eligible employees and dependents who enroll on a timely basis, based
upon their claim experience or health status.
(b) The insurer does not transfer involuntarily, and never has
involuntarily transferred, a health insurance plan into or out of the class of
business.
(c) The class of business is currently available for purchase.
(2) For a class of business, the premium rates charged during a
rating period to small employers with similar case characteristics for the
same or similar coverage, or the rates which could be charged to these
employers under the rating system for that class of business, may not vary
from the index rate by more than twenty-five percent of the index rate.
(3) The percentage increase in the premium rate charged to a
small employer for a new rating period may not exceed the sum of:
(a) the percentage change in the new business premium rate
measured from the first day of the prior rating period to the first day of the
new rating period. In the case of a class of business for which the small
employer insurer is not issuing new policies, the insurer shall use the
percentage change in the base premium rate.
(b) an adjustment, not to exceed fifteen percent annually and
adjusted pro rata for rating periods of less than one year, due to the claim
experience, health status, or duration of coverage of the employees or
dependents of the small employer as determined from the insurer's rate
manual for the class of business.
(c) any adjustment due to change in coverage or change in the
case characteristics of the small employer as determined from the insurer's
rate manual for the class of business.
(4) In the case of health insurance plans issued prior to the
effective date of this subarticle, a premium rate for a rating period may
exceed the ranges described in subsection (A)(1) or (2) for five years
following the effective date of this subarticle. In that case, the percentage
increase in the premium rate charged to a small employer in such a class of
business for a new rating period may not exceed the sum of:
(a) the percentage change in the new business premium rate
measured from the first day of the prior rating period to the first day of the
new rating period. In the case of a class of business for which the small
employer insurer is not issuing new policies, the insurer shall use the
percentage change in the base premium rate.
(b) any adjustment due to change in coverage or change in the
case characteristics of the small employer as determined from the insurer's
rate manual for the class of business.
(B) Nothing in this section is intended to affect the use by a small
employer insurer of legitimate rating factors other than claim experience,
health status, or duration of coverage in the determination of premium
rates. Small employer insurers shall apply rating factors, including case
characteristics, consistently with respect to all small employers in a class of
business.
(C) A small employer insurer may not transfer involuntarily a small
employer into or out of a class of business. A small employer insurer may
not offer to transfer involuntarily a small employer into or out of a class of
business, unless the offer is made to transfer all small employers in the
class of business without regard to case characteristics, claim experience,
health status, or duration since issue.
Section 38-71-950. (A) Except as provided in subsection (B), a
health insurance plan subject to this subarticle is renewable to all eligible
employees and dependents at the option of the small employer, except
for:
(1) nonpayment of required premiums;
(2) fraud or material misrepresentation of the small employer, or,
with respect to coverage of an insured individual, fraud, or material
misrepresentation by the insured individual or the individual's
representative. If the fraud or material misrepresentation is made by a
person with respect to any person's prior health condition, the insurer shall
have the right also to deny coverage to that person or to impose as a
condition of continued coverage the exclusion of the condition
misrepresented;
(3) noncompliance with plan provisions;
(4) the number of individuals covered under the plan is less than
the number or percentage of eligible individuals required by percentage
requirements under the plan; or
(5) the small employer is no longer actively engaged in the
business in which it was engaged on the effective date of the plan.
(B) A small employer insurer may cease to renew all plans under a
form within a class of business or may cease to renew all plans under a
class of business. In either case the insurer shall provide notice to all
affected health insurance plans and to the commissioner in each state in
which an affected insured individual is known to reside at least ninety days
before termination of coverage. An insurer which exercises its right to
cease to renew all plans under a form within a class of business may not
transfer or otherwise provide coverage to any of the employers from the
nonrenewed form or class of business unless the insurer offers to transfer or
provide coverage to all affected employers and eligible employees and
dependents without regard to case characteristics, claim experience, health
status, or duration of coverage. In addition, any insurer which exercises its
right to cease to renew all plans within a class of business may not establish
a new class of business for five years after the nonrenewal of the plans
without prior approval of the commissioner.
Section 38-71-960. Each small employer insurer shall make reasonable
disclosure in solicitation and sales materials provided to small employers
of:
(1) the extent to which premium rates for a specific small
employer are established or adjusted due to the claim experience, health
status, or duration of coverage of the employees or dependents of the small
employer;
(2) the provisions concerning the insurer's right to change
premium rates and the factors, including case characteristics, which affect
changes in premium rates;
(3) a description of the class of business in which the small
employer is or will be included, including the applicable grouping of
plans;
(4) the provisions relating to renewability of coverage.
Section 38-71-970. (A) A small employer insurer shall maintain at
its principal place of business a complete and detailed description of its
rating practices and renewal underwriting practices, including information
and documentation which demonstrate that its rating methods and practices
are based upon commonly accepted actuarial assumptions and are in
accordance with sound actuarial principles.
(B) Each small employer insurer shall file each March first with the
commissioner an actuarial certification certifying that the insurer is in
compliance with this section and that the rating methods of the insurer are
actuarially sound. A copy of the certification must be retained by the
insurer at its principal place of business.
(C) A small employer insurer shall make the information and
documentation described in subsection (A) available to the commissioner
upon request. The information must be considered proprietary and trade
secret information and is not subject to disclosure by the commissioner to
persons outside of the department except as agreed to by the insurer or as
ordered by a court of competent jurisdiction.
Section 38-71-980. The commissioner may suspend all or any part of
Section 38-71-940 as to the premium rates applicable to one or more small
employers for one or more rating periods upon a filing by the small
employer insurer and a finding by the commissioner that either the
suspension is reasonable in light of the financial condition of the insurer or
that the suspension would enhance the efficiency and fairness of the
marketplace for small employer health insurance.
Section 38-71-990. The provisions of this subarticle apply to each
health insurance plan for a small employer that is delivered, issued for
delivery, renewed, or continued in this State after the effective date of this
subarticle. For purposes of this section, the date a plan is continued is the
first rating period which commences after the effective date of this
subarticle."
Group coverage and size requirements
SECTION 6. Section 38-71-730(3) of the 1976 Code is amended to
read:
"(3) Except as hereinafter provided, for all groups, no evidence
of individual insurability may be required at the time the person first
becomes eligible for insurance or within thirty-one days thereafter.
Nothing in this section precludes the obtaining of medical information with
respect to the members of the group for use in determining the insurability
of the group, but the information may not be used to exclude an individual
from coverage. However, for groups of ten or less persons, evidence of
individual insurability may be required for persons first becoming eligible
for insurance after the effective date of the policy. An insurer may exclude
these persons from coverage or may impose those condition riders,
preexisting condition limitations, or waiting periods as are in accordance
with law."
Credit for satisfaction of preexisting condition period
SECTION 7. Section 38-71-730(4) of the 1976 Code is amended to
read:
"(4) The policies may contain a provision limiting coverage for
preexisting conditions. The preexisting conditions must be covered no later
than twelve months without medical care, treatment, or supplies ending
after the effective date of the coverage or twelve months after the effective
date of the coverage, whichever occurs first. Preexisting conditions are
defined as `those conditions for which medical advice or treatment was
received or recommended no more than twelve months before the effective
date of a person's coverage'. However, whenever a covered person moves
from one insured group to another, and is neither excluded from coverage
nor subject to the imposition of preexisting condition limitations as
permitted by Section 38-71-730(3), the insurer of the group to which the
covered person moves shall give credit for the satisfaction of the
preexisting condition period or portion thereof already served under the
prior plan if the coverage is selected when the person first becomes eligible
and the coverage is continuous. Service under a probationary period
required by the employer is not considered to interrupt continuous
service."
Replacement carrier considered a succeeding carrier
SECTION 8. Section 38-71-760(k) of the 1976 Code is amended to
read:
"(k) The carrier responsible for liability in those instances in
which one carrier's contract replaces a plan of similar benefits of another
must be indicated. A replacement carrier is considered to be a succeeding
carrier within the meaning of this section if the effective date of the
coverage provided by it is sixty-two days or less after the date of
termination of coverage of the prior carrier."
Group standards revised
SECTION 9. Section 38-71-760(m) of the 1976 Code is amended to
read:
"(m) This subsection applies to all groups.
(1) Each person who is eligible for coverage in accordance with the
succeeding carrier's plan of benefits with respect to classes eligible and
activity at work and nonconfinement rules must be covered by that carrier's
plan of benefits.
(2) Each person not covered under the succeeding carrier's plan of
benefits in accordance with item (1) of this subsection (m) nevertheless
must 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 of individuals eligible for coverage under the
succeeding carrier's plan. Any reference in the following rules 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.
(A) The minimum level of benefits to be provided by the succeeding
carrier must be the applicable level of benefits of the succeeding carrier's
plan reduced by any benefits payable by the prior plan.
(B) Coverage must be provided by the succeeding carrier until at
least the earliest of the following dates:
(i) The date the individual becomes eligible under the succeeding
carrier's plan as described in item (1) of this subsection (m).
(ii) For each type of coverage, 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, as the case may be.
(iii) In the case of an individual who was totally disabled, and in
the case of a type of coverage for which subsections (f) through (j) of this
section require an extension of accrued liability, the end of any period of
extension or accrued liability which is required of the prior carrier by those
subsections or, if the prior carrier's policy or contract is not subject to those
subsections, would have been required of that carrier had its policy or
contract been subject to those subsections at the time the prior plan was
discontinued and replaced by the succeeding carrier's plan.
(3) In the case of a preexisting conditions limitation included in the
succeeding carrier's plan, the level of benefits applicable to preexisting
conditions of persons becoming covered by the succeeding carrier's plan in
accordance with this subsection (m) during the period of time this
limitation applies under the new plan must be the lesser of:
(A) the benefits of the new plan determined without application of
the preexisting conditions limitation; and
(B) the benefits of the prior plan.
(4) The succeeding carrier, in applying any deductibles or waiting
periods in its plan, shall give credit for the satisfaction or partial
satisfaction of the same or similar provisions under a prior plan providing
similar benefits. In the case of deductible provisions, the credit must apply
for the same or overlapping benefit periods and must be given for expenses
actually incurred and applied against the deductible provisions of the prior
carrier's plan during the ninety days preceding the effective date of the
succeeding carrier's plan but only to the extent these expenses are
recognized under the terms of the succeeding carrier's plan and are subject
to similar deductible provisions.
(5) In any situation where 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
section, benefits of the prior plan are 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
must be made as if coverage had not been replaced by the succeeding
carrier."
Group policy considered a successor policy
SECTION 10. The first paragraph of Section 38-71-770 of the 1976
Code, as last amended by Act 127 of 1989, is further amended to read:
"A group policy issued for delivery or renewed in this State which
provides hospital, surgical, or major medical expense insurance, or any
combination of these coverages, on an expense incurred basis must provide
that an employee or member who has been insured continuously under the
group policy for at least six months whose insurance under the group policy
has been terminated for any reason other than nonpayment of the required
contribution is entitled to continue coverage under the group policy for the
fractional policy month remaining at termination plus six additional policy
months. A group policy is considered to be a successor policy within the
meaning of this section if the effective date of the coverage provided by it
is sixty-two days or less after the date of termination of coverage of the
prior carrier. The employee or member is not entitled to have his coverage
continued if the employee or member was entitled under federal law to
continuation of his coverage for a period of greater duration than provided
by this section. Continuation of coverage is subject to the group policy or a
successor policy remaining in force and the employee paying the entire
group premium, including any portion usually paid by the former employer,
before the date each month that the group policy month begins. Policies
which provide benefits for other than hospital, surgical, major medical, or
which provide benefits for specific diseases or accidental injuries only are
not affected by this section."
Time effective
SECTION 11. The provisions of Sections 2, 3, and 5 of this act take
effect January 1, 1992. The remaining provisions of this act take effect
upon approval by the Governor.
Approved the 12th day of June, 1991. |