Compilation of Rules and Regulations of the State of Georgia
Department 120 - OFFICE OF COMMISSIONER OF INSURANCE, SAFETY FIRE COMMISSIONER AND INDUSTRIAL LOAN COMMISSIONER
Chapter 120-2 - RULES OF COMMISSIONER OF INSURANCE
Subject 120-2-10 - REGULATIONS REGARDING INSURANCE CONTRACT
Rule 120-2-10-.10 - Group Coverage Discontinuance and Replacement

Universal Citation: GA Rules and Regs r 120-2-10-.10

Current through Rules and Regulations filed through September 23, 2024

(1) This Rule is applicable to all insurance policies, subscriber contracts, and any other insurance coverage by whatever name called issued in this State or provided through an out-of-state multiple employer trust or arrangement by an insurer on a group or group-type basis covering persons as employees of employers or as members of unions (or associations).

(2) The term "group type basis" means a benefit plan, other than "salary budget" plans utilizing individual insurance policies or subscriber contracts, which meets 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 in connection with the particular organization or group.

(c) There are arrangements for bulk payment of premiums or subscription charges to the insurer or non-profit service corporation.

(d) There is sponsorship of the plan by the employer, union (or association).

(3) The effective date of discontinuance for non-payment of premium or subscription charges:

(a) If a policy or contract subject to these rules and regulations provides for automatic discontinuance of the policy or contract after a premium or subscription charge has remained unpaid through the grace period allowance for such payment, the carrier shall be liable for valid claims for covered losses incurred prior to the end of the grace period.

(b) 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 shall be liable for valid claims for losses beginning prior to 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 shall not be prior to midnight at the end of the third scheduled work day after the date upon which the notice is delivered.

(4) Requirements for notice of discontinuance for other than nonpayment of premiums: Any notice of discontinuance by the insurer shall be mailed or delivered not less than sixty (60) days prior to the effective date of cancellation. Such written notice of discontinuance given by the insurer may also 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 notice of discontinuance required by this paragraph shall not be required where a policy is cancelled due to nonpayment of premium or subscription charges following the end of any required grace period.

(5) Extension of Benefits.

(a) Every group or other contract subject to these rules and regulations hereafter issued, or under which the level of benefits is hereafter altered, modified, or amended, must 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 paragraphs of this section.

(b) In the case of a group life plan which contains a disability benefit extension of any type (e.g., 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 operate to terminate such extension.

(c) 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 shall have no effect on benefits payable for the disability or confinement.

(d) In the case of hospital or medical expense coverages, a reasonable extension of benefits or accrued liability provision is required. Such a provision will be 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 (e.g., an accident).

(e) 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 or accrued liability may be subject to the policy's or contract's regular benefit limits (e.g., benefits ceasing at exhaustion of a benefit period or of maximum benefits).

(6) The continuance of coverage in situations involving replacement of one carrier by another:

(a) This section shall indicate the carrier responsible for liability in those instances in which one carrier's contract replaces a plan of similar benefits of another.

(b) Liability of prior carrier. 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 policyholders or other entity secures replacement coverage from a new carrier, self insures, or foregoes the provision of coverage.

1. Each person who is eligible for coverage in accordance with the succeeding carrier's plan of benefits (in respect of classes eligible and actively at work and non-confinement rules) shall 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 paragraph 1. above must nevertheless be covered by the succeeding carrier in accordance with the following rules if such individual was validly covered (including benefit extension) under the prior plan on the date of discontinuance and if such 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 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.

(i) The minimum level of benefits to he provided by a succeeding carrier shall be the applicable level of benefits of the prior carrier's plan reduced by any benefits payable by the prior plan.

(ii) 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 paragraph 1. above.

(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 (e.g., 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 paragraph 5. of this Rule requires an extension of accrued liability, the end of any period of extension of accrued liability which is required of the prior carrier by paragraph (5) of this Rule or, if the prior carrier's policy or contract is not subject to that paragraph, would have been required of that carrier had its policy or contract been subject to paragraph 5. 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 or persons becoming covered by the succeeding carrier's plan in accordance with this subparagraph during the period of time this 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; and

(ii) 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 shall apply for the same or overlapping benefit periods and shall be given for expenses actually incurred and applied against the deductible provisions of the prior carrier's plan during the ninety (90) 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 provision.

5. In any situation where a determination of the prior carrier's benefits 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 purpose of this section, benefits of the prior plan will 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 will be made as if coverage had not been replaced by the succeeding carrier.

(d) Replacement, for the purposes of this Rule for groups or subgroups of fifty-one (51) or more insured employees, members or enrollees (not including dependents), includes, but is not limited to, any group or group-type replacement coverage which becomes effective within ninety (90) days of the date of discontinuance of a group policy or contract or within ninety (90) days of the date of discontinuance of an employer group insured under a group policy or contract covering multiple employer groups. Replacement, for the purposes of this Rule for groups or subgroups of fifty (50) or less insured employees, members or enrollees (not including dependents), shall be defined in Rule 120-2-10-.(1)(k).

1. The succeeding carrier's plan may be effective on the date agreed upon by the policyholder and insurer for the period for which a premium is paid.

2. The succeeding carrier shall not be liable for new conditions arising during the period of no coverage. Such conditions may be subject to the succeeding carrier's preexisting conditions limitation.

Ga. L. 1960, pp. 289, 305; O.C.G.A. Sec. 33-2-9.

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