S*411 Session 106 (1985-1986)
S*0411(Rat #0197, Act #0131 of 1985) General Bill, By
Senate Banking and Insurance
Similar(S 289)
A Bill to amend the Code of Laws of South Carolina, 1976, by adding Section
38-35-941 so as to provide for group accident and health insurance coverage,
discontinuance, and replacement standards and to amend Section 38-35-944,
relating to accident and health insurance coverage extended to residents under
group policies issued outside the State, so as to provide that these group
policies substantially conform to the group accident and health insurance
statutes of this State.
03/26/85 Senate Introduced, read first time, placed on calendar
without reference SJ-1011
04/04/85 Senate Read second time SJ-1346
04/09/85 Senate Read third time and sent to House SJ-1401
04/10/85 House Introduced and read first time HJ-2227
04/10/85 House Referred to Committee on Labor, Commerce and
Industry HJ-2227
05/23/85 House Committee report: Favorable Labor, Commerce and
Industry HJ-3447
05/28/85 House Read second time HJ-3531
05/29/85 House Read third time and enrolled HJ-3603
06/03/85 Ratified R 197
06/06/85 Signed By Governor
06/06/85 Effective date 01/01/86
06/06/85 Act No. 131
06/17/85 Copies available
(A131, R197, S411)
AN ACT TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING SECTION
38-35-941 SO AS TO PROVIDE FOR GROUP ACCIDENT AND HEALTH INSURANCE COVERAGE,
DISCONTINUANCE, AND REPLACEMENT STANDARDS AND TO AMEND SECTION 38-35-944,
RELATING TO ACCIDENT AND HEALTH INSURANCE COVERAGE EXTENDED TO RESIDENTS UNDER
GROUP POLICIES ISSUED OUTSIDE THE STATE, SO AS TO PROVIDE THAT THESE GROUP
POLICIES SUBSTANTIALLY CONFORM TO THE GROUP ACCIDENT AND HEALTH INSURANCE
STATUTES OF THIS STATE.
Be it enacted by the General Assembly of the State of South Carolina:
Applicability of section
SECTION 1. The 1976 Code is amended by adding:
"Section 38-35-941. (A) This section applies to a group accident and
health insurance policy or certificate that is delivered, 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. It specifically includes a certificate issued under a policy that was
issued to a trust located out of the State but which includes participating
employers located in the State. Renewal of these policies or certificates is
presumed to occur on the anniversary date of the date that coverage was first
effective on the employees of such employer unless another renewal date is
specifically stated in the certificates.
(B) If a policy or contract subject to this article provides for automatic
discontinuance of the policy or contract after a premium or subscription charge
has remained unpaid through the grace period allowed for the payment, the carrier
is liable for valid claims for covered losses incurred prior to the end of the
grace period.
(C) If the actions of the carrier after the end of the grace period indicate
that it 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 on or before
the effective date of 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 must not be prior to
midnight at the end of the third scheduled work day after the date upon which the
notice is delivered.
(D) Any notice of discontinuance by the carrier shall include a request to the
group policyholder or other entity involved to notify employees covered under the
policy or subscriber contract of the date when the group policy or contract will
discontinue and advise that, unless otherwise provided in the policy or contract,
the carrier is not liable for claims for losses incurred after such date. The
notice also shall advise, when 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 for which the contributions are collected.
(E) The carrier shall prepare and furnish to the policyholder or other entity
at the same time an appropriate sample notice form to be distributed to the
employees or members concerned indicating the effective date of the
discontinuance and urge the employees or members to refer to their certificates
or contracts in order to determine what rights are available to them as a result
of the discontinuance.
(F) Every group policy or other contract issued subject to this article or
under which the level of benefits is modified or amended shall provide a
reasonable provision for extension of benefits in the event of total disability
at the date of discontinuance of the group policy or contract as required by the
following subsections.
(G) In the case of a group life plan which contains a disability benefit
extension of any type such as 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 does not operate to
terminate the extension.
(H) In the case of a group plan providing benefits for loss of time from work
or specific indemnity during hospital confinement, discontinuance of the policy
during a disability has no effect on benefits payable for that disability or
confinement.
(I) In the case of hospital or medical expense coverages other than dental
expense, a reasonable extension of benefits or accrued liability provision is
required. The provision is considered reasonable if it provides an extension of
at least twelve months under major medical and comprehensive medical type
coverages and under other types of hospital or medical expense coverages provides
either an extension of at least ninety days or an accrued liability for expenses
incurred during a period of disability or during a period of at least ninety days
starting with a specific event which occurred while coverage was in force such
as an accident.
(J) Any applicable extension of benefits or accrued liability must be
described in any policy or contract involved as well as in group insurance
certificates. The benefits payable during any period of extension or accrued
liability may be subject to the policy's or contract's regular benefit limits
such as benefits ceasing at exhaustion of a benefit period or of maximum
benefits.
(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.
(L) The prior carrier remains liable only to the extent of its accrued
liabilities and extensions of benefits. The position of the prior carrier is the
same whether the group policyholder or other entity secures replacement coverage
from a new carrier, self-insurers, or foregoes the provision of coverage.
(M) This subsection applies to all groups with thirteen or more enrolled
employees. It also applies to all groups with less than thirteen employees
unless a prominent notice which has been filed with and approved by the
Commissioner as to form is given to and signed by the policyholder which serves
to warn the policyholder that the limitations, waiting periods, or restrictions
referred to in this subsection do apply.
(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 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.
(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 that item, 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 during the period of time this limitation applies
under the new plan must be the lessor 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, must 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 shall 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."
Coverage may not be extended
SECTION 2. Subsection (1) of Section 38-35-944 of the 1976 Code is amended to
read:
"(1) No group accident, group health, or group accident and health
insurance coverage may be extended to residents of this State under a policy
issued outside this State which does not provide in substance the provisions of
this article unless the Commissioner determines that certain provisions are not
appropriate for the coverage provided."
Time effective
SECTION 3. This act shall take effect January 1, 1986. |