23-86-115. Group accident and health insurance — Entitlement to conversion policy upon termination of group policy.

23-86-115. Group accident and health insurance — Entitlement to conversion policy upon termination of group policy. (a)(1) Every group policy, contract, or certificate of accident and health insurance delivered or issued for delivery in this state that provides hospital, surgical, or major medical coverage on an expense-incurred basis, other than coverage limited to expenses from accidents or specified diseases, shall provide that an employee, member, or covered dependent whose insurance under the group policy has been terminated for any reason, including the discontinuance of the group policy in its entirety, shall be entitled to have issued to him or her by the insurer a policy of accident and health insurance referred to in this section as a “conversion policy”. (2) An employee, member, or dependent shall not be entitled to a conversion policy, if the termination of the group policy, contract, or certificate was a result of his or her failure to pay any required contribution or if the terminated policy is replaced by similar coverage within thirty-one (31) days. (3) An individual wishing to exercise his or her conversion privilege must apply for the conversion policy in writing not later than thirty (30) days after the termination of the group coverage. (b)(1)(A) The conversion policy shall provide coverage equal to or greater than the minimum standards established by the Insurance Commissioner. (B) All conversion policies shall contain a wording in bold print that “the benefits in this policy do not necessarily equal or match those benefits provided in your previous group policy”. (2) The conversion policy shall not exclude coverage for pregnancy or other illness or injury on the grounds of a preexisting condition, provided that the combination of time served under the group and the conversion policy equals or exceeds any waiting periods under the group policy or contract. Moreover, the conversion policy shall include benefits for maternity coverage for any pregnancies in existence at the time of the conversion. (c)(1) The insurer shall not be required to offer the conversion policy to any individual who is eligible for: (A) Medicare coverage; or (B) Full coverage under any other group accident and health policy or contract. This coverage must provide benefits for all preexisting conditions to be considered full coverage. (2) Accordingly, under this subsection, an individual may convert to a conversion policy and remain covered by that policy until all preexisting conditions are covered or would be covered under another group policy or contract. (d) This section shall not be applicable to self-insured plans. (e)(1)(A) The initial premium for the conversion policy for the first twelve (12) months and subsequent renewal premiums shall be determined in accordance with premium rates applicable to individually underwritten standard risks for the age and class of risk of each person to be covered under the conversion policy and for the type and amount of insurance provided. (B) The experience under conversion policies shall not be an acceptable basis for establishing rates for conversion policies. (2) For purposes of subdivision (e)(1) of this section: (A) The phrase “premium rates applicable to individually underwritten standard risks” means the premium charged to individuals who qualify for coverage without modification, determined from a rate table based on aggregate individually underwritten policy experience; (B) “Aggregate individually underwritten policy experience” means the policy experience is drawn from a mature combination of newly selected insureds and insureds for whom selection effects no longer exist; and (C) “Class” means any actuarially determined characteristic, except health status or individual claims experience. (3) If an insurer experiences incurred losses that exceed earned premiums for a period of two (2) successive years on conversion policies that have been in force for at least one (1) year, the insurer may file with the commissioner amended renewal rates for the subsequent year, which will produce a loss ratio of not less than one hundred percent (100%). (4)(A) Even though a renewal premium is established in accordance with subdivision (e)(3) of this section, a holder of the conversion policy shall not be required to pay the full renewal premium until the beginning of the policy's fourth year. (B) The premium for the second policy year shall be the initial premium plus thirty-three and one-third percent (33 1/3%) of the difference between the initial premium and the renewal premium in effect on the policy's first anniversary date. (C) The premium for the third policy year shall be the initial premium plus sixty-six and two-thirds percent (66 2/3%) of the difference between the initial premium and the renewal premium in effect on the policy's second anniversary date. (D) The premium for the fourth year shall be one hundred percent (100%) of the renewal premium in effect on the policy's third anniversary date. (5) This subsection shall be applicable to any conversion policy issued after March 22, 1995.