Ariz. Admin. Code § R20-6-208 - Group Coverage Discontinuance and Replacement
A. Definitions. The following definitions
apply in this Section:
1. "Group insurance"
means an insurance benefit that meets all the following conditions:
a. Coverage is provided through insurance
policies or subscriber contracts 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. Coverage is paid for by
bulk payment of premiums to the insurer; and
d. An employer, union, or association
sponsors the plan.
2.
"Health insurance coverage" means a hospital and medical expense incurred
policy, a nonprofit health care service plan contract, a health maintenance
organization subscriber contract, or any other health care plan or arrangement
that pays for or furnishes medical or health care services whether by insurance
or otherwise, but does not include the following:
a. Coverage only for accident, or disability
income insurance, or any combination of accident and disability income
insurance;
b. Coverage issued as a
supplement to liability insurance;
c. Liability insurance, including general
liability insurance and automobile liability insurance;
d. Workers' compensation or similar
insurance;
e. Automobile medical
payment insurance;
f. Credit-only
insurance;
g. Coverage for onsite
medical clinics; and
h. Other
insurance coverage similar to the coverage specified in subsections (2)(a)
through (g), of the Health Insurance Portability and Accountability Act of 1996
(Pub.L.No.
104-191 ) (HIPAA), under which benefits for medical
care are secondary or incidental to other insurance benefits.
i. The following benefits, if the benefits
are provided under a separate policy, certificate, or contract of insurance or
are otherwise not an integral part of the coverage:
i. Limited-scope dental or vision
benefits;
ii. Benefits for
long-term care, nursing home care, home health care, community-based care, or
any combination of those benefits;
iii. Other similar, limited benefits
specified in federal regulations issued under HIPAA.
j. The following benefits if provided under a
separate policy, certificate, or contract of insurance with no coordination
between provision of benefits and any exclusion of benefits under a group
health plan maintained by the same plan sponsor and if the benefits are paid
for an event regardless of whether the benefits are provided under a group
health plan maintained by the same plan sponsor:
i. Coverage only for a specified disease or
illness, or
ii. Hospital indemnity
or other fixed indemnity insurance.
k. The following benefits if the benefits are
offered as a separate policy, certificate, or contract of insurance:
i. Medicare supplemental policy as defined
under § 1882(g)(1) of the Social Security Act,
42 U.S.C.
1395 ss;
ii. Coverage supplemental to the coverage
provided under, 10 U.S.C. Title 10, Chapter 55; or
iii. Similar supplemental coverage provided
to coverage under a group health plan.
3. "Health status-related factor" means any
of the following:
a. Health status;
b. Medical condition, including a physical or
mental illness;
c. Claims
experience;
d. Receipt of health
care;
e. Medical history;
f. Genetic information;
g. Evidence of insurability, including
conditions arising out of acts of domestic violence; or
h. Disability.
4. "Insurer" means an insurer that offers or
provides group health insurance coverage, and includes an insurer that issues
disability insurance as defined in A.R.S. §
20-253,
a medical, dental, or optometric service corporation as defined in A.R.S.
§
20-822,
and a health care services organization as defined in A.R.S. §
20-1051.
B. This Section applies to all
group insurance issued by an insurer.
C. Effective date of discontinuance for
non-payment of premium.
1. If a group
insurance policy provides for automatic discontinuance of the policy after a
premium remains unpaid through the grace period allowed for payment, the
insurer is liable for valid claims for covered losses incurred before the end
of the grace period.
2. If the
insurer's actions after the end of the grace period indicate that the insurer
considers the group insurance policy as continuing in force beyond the end of
the grace period the insurer is liable for valid claims for losses beginning
before the effective date of written notice of discontinuance to the
policyholder or other entity responsible for paying premiums.
a. The following actions indicate that the
insurer considers the policy in force:
i.
Continued recognition, acknowledgement, or payment of subsequently incurred
claims, or
ii. Continued enrollment
of employees or dependents.
b. The following actions shall not indicate
that the insurer considers that policy in force:
i. Recognition, payment, or acknowledgement
of a claim by an insurer or processing a denial based on eligibility or other
denial reasons set forth in the group benefit plan booklet; or
ii. Recognition, payment, or acknowledgement
of claims due to the group's failure to notify the insurer that the employee or
member is no longer eligible for coverage or the group policy is
terminated.
3. The effective date of discontinuance shall
not be before midnight at the end of the third scheduled work day after the
date on which the notice of discontinuance is delivered.
D. Requirements for notice of discontinuance.
1. An insurer's notice of discontinuance
shall include a request to the group policyholder to notify covered employees
of the date when the group policy or contract will discontinue and to advise
that, unless otherwise provided in the policy or contract, the insurer is not
liable for claims for losses incurred after the date of discontinuance. If the
plan involves employee contributions, the notice of discontinuance shall also
advise that if the policyholder continues to collect employee contributions
beyond the date of discontinuance, the policyholder is solely liable for
benefits for the period which contributions were collected.
2. The insurer shall also provide the
policyholder with a supply of notice forms that the policyholder can distribute
to the covered employees. The notice forms shall explain the discontinuance and
the effective date, and advise employees to refer to their certificates or
contracts to determine their rights on discontinuance.
E. Extension of benefits.
1. A group policy shall provide a reasonable
provision for extension of benefits for an employee or dependent who is totally
disabled on the date of discontinuance as follows:
a. For a group life plan with a disability
benefit extension of any type such as a premium waiver extension, extended
death benefit in the event of total disability, or payment of income for a
specified period during total disability, the discontinuance of the group
policy shall not terminate the benefit extension.
b. For a group plan providing benefits for
loss of time from work or specific indemnity during hospital confinement,
discontinuance of the policy during a disability or hospital confinement shall
not effect benefits payable for that disability or hospital
confinement.
c. A hospital or
medical expense coverage, other than dental and maternity expense, shall
include a reasonable extension of benefits or accrued liability provision. A
provision is reasonable if:
i. It provides an
extension of at least 12 months under "major medical" and "comprehensive
medical" type coverage; or
ii.
Under other types of hospital or medical expense coverage, it provides either
an extension of at least 90 days or an accrued liability for expenses incurred
during a period of disability or during a period of at least 90 days starting
with a specific event that occurred while coverage was in force, such as an
accident.
2.
An insurer shall ensure that the policy and group insurance certificates
includes a description of the extension of benefits or accrued liability
provision.
3. An insurer shall
ensure that benefits payable during a period of extension or accrued liability
are subject to the policy's regular benefit limits, such as benefits ceasing at
exhaustion of a benefit period or of maximum benefits.
4. For hospital or medical expense coverage,
an insurer may limit benefit payments to payments applicable to the disabling
condition only.
F.
Continuance of coverage in situations involving replacement of one plan by
another.
1. When a group policyholder secures
replacement coverage with a new insurer, self-insures, or foregoes provision of
coverage, the replaced insurer is liable only to the extent of its accrued
liabilities and extensions of benefits after the date of
discontinuance.
2. The succeeding
insurer shall cover each individual who:
a.
Was eligible for coverage under the prior plan on the date of discontinuance,
and
b. Is eligible for coverage
according to the succeeding insurer's plan of benefits with respect to a class
of individuals eligible for coverage.
3. For the purpose of successive health
insurance coverage under subsection (F)(2), a succeeding insurer's plan of
benefits shall:
a. Not have any
non-confinement rules; and
b.
Provide, as to any actively-at-work rules, that absence from work due to a
health status-related factor is treated as being actively-at-work.
4. Nothing in subsection (F)(2)
prohibits an insurer from performing coordination of benefits.
5. A succeeding insurer shall cover each
individual not covered under the succeeding insurer's plan of benefits under
subsection (F)(2) according to subsections (a) and (b) if the individual was
validly covered, including benefit extension, under the prior plan on the date
of discontinuance and is a member of a class of individuals eligible for
coverage under the succeeding insurer's plan. Any reference in subsection (a)
or (b) to an individual who was or was not totally disabled is a reference to
the individual's status immediately before the effective date of coverage for
the succeeding insurer.
a. The minimum level
of benefits to be provided by the succeeding insurer shall be the level of
benefits of the prior insurer's plan reduced by any benefits payable by the
prior plan.
b. The succeeding
insurer shall provide coverage until at least the earliest of the following
dates:
i. The date the individual becomes
eligible under the succeeding insurer's plan as described in subsection
(F)(2);
ii. The date the
individual's coverage would terminate according to the succeeding insurer's
plan provisions applicable to individual termination of coverage such as at
termination of employment or ceasing to be eligible dependent; or
iii. For an individual who was totally
disabled, and covered by a type of coverage for which subsection (E) requires
an extension of accrued liability, the end of any period of extension of
benefits or accrued liability that is required of the prior insurer under
subsection (E), or if the prior insurer's policy is not subject to subsection
(E), would have been required of the insurer had its policy been subject to
subsection (E) at the time the prior plan was discontinued and replaced by the
succeeding insurer's plan;
c. For health insurance coverage, if an
individual who was totally disabled at the time the prior insurer's plan was
discontinued and replaced by the succeeding insurer's plan, and if subsection
(E) requires an extension of benefits or accrued liability, the minimum level
of benefits to be provided by the succeeding insurer shall be the level of
benefits of the prior insurer's plan, reduced by any benefits paid by the prior
plan.
d. If the succeeding
insurer's plan has a preexisting conditions limitation, the level of benefits
applicable to preexisting conditions of persons becoming covered by the
succeeding insurer's plan according to subsection (F) during the period the
limitation applies under the new plan shall be the lesser of:
i. The benefits of the new plan determined
without application of the preexisting conditions limitation, or
ii. The benefits of the prior plan.
e. The succeeding insurer, in
applying any deductibles, coinsurance amounts applicable to out-of-pocket
maximums, or waiting periods, shall give credit for the satisfaction or partial
satisfaction of the same or similar provisions under a prior plan providing
similar benefits. For deductibles or coinsurance amounts applicable to
out-of-pocket maximums, the credit shall apply for the same or overlapping
benefit periods and shall be given for expenses actually incurred and applied
against the deductible or coinsurance provisions of the prior plan during the
90 days before the effective date of the succeeding insurer's plan but only to
the extent these expenses are recognized under the terms of the succeeding
insurer's plan and are subject to similar deductible or coinsurance
provisions.
f. If the succeeding
insurer is required under this Section to make a determination about the
benefits in the prior plan, the succeeding insurer may ask the prior plan to
provide a statement of the benefits available or other pertinent information
sufficient to permit the succeeding insurer to verify the benefit
determination. For the purposes of this Section, all definitions, conditions,
and covered-expense provisions of the prior plan shall govern the benefit
determination. The benefit determination is made as if the succeeding insurer
had not replaced coverage.
Notes
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